Westminster Hall

Wednesday 21st July 2010 Westminster Hall

Wednesday 21 July 2010

[Martin Caton in the Chair]

National Apprenticeship Scheme

Wednesday 21st July 2010 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(James Duddridge.)

09:30

[Richard Graham (Gloucester) (Con)]

I am grateful to Mr Speaker for enabling me to re-secure this debate. I am also grateful to him and many others for their kind reminders about its starting time, which, together with the help of three alarm clocks and several telephone calls from my wife in Gloucester, have ensured that this parliamentary apprentice has already rehearsed his speech in this Chamber this morning. I am sorry that the shadow Minister for apprenticeships, the hon. Member for Cardiff West (Kevin Brennan), is unable to be with us, but if he has any difficulties with a faulty printer, I am available to offer assistance.

It is important to hold this debate on apprenticeships, and I am grateful that the Minister, who knows the subject so well, is here to respond. It is telling that the majority of Members here are Conservatives. One irony of the past 13 years is that the previous Government could have done so much more to promote the importance and perception of apprenticeships. I have not found a single secondary school in my constituency that has made presentations on apprenticeships to its pupils, but they all worked assiduously on the previous Government’s drive to get 50% of students into university—a target that was never achieved and which has thankfully now been dropped. That took place when the previous Government allowed manufacturing to decline at its fastest pace ever and youth unemployment to grow to its highest ever. Those sad facts are not unrelated.

Let us be clear about what is at stake. Without apprentices, our national and local capability to do and make things, and our ability to stem the decline in manufacturing and retain, if not improve, our status as the world’s sixth greatest manufacturer will simply not produce results. Only 10 years ago, Gloucestershire manufactured 24% of its GDP; today, the figure is 16%. That is not because our service sectors have grown, but because manufacturing has shrunk faster than anything else. That is not acceptable. The situation must be turned around, and apprentices are the key, just as they are to reducing the 18%—almost one in five—of our 16 to 24-year-olds who are neither learning nor earning. If ever there was a time to support apprenticeships, not only in the manufacturing and construction sectors, it is now.

It is true that the previous Government did some rebranding and restructuring work on apprenticeships, and put some taxpayers’ money behind that.

[Alison McGovern (Wirral South) (Lab)]

The hon. Gentleman makes some interesting points about the previous Government’s work, but is he aware that in the borough of Wirral between 1997 and 2008, the number of apprenticeships rose from 90 to 2,000? His characterisation of the past decade as one of no growth is, certainly in my area, a mischaracterisation.

[Richard Graham]

I thank the hon. Lady for her intervention. I recognise what she says. If she waits a second, I will cover that specific point.

The previous Government put some taxpayers’ money behind their restructuring and promised to create 500,000 apprenticeships. I appreciate that, but it is also true that they missed that target, like so many others, by a very wide margin—about 50%. The restructuring broadly fitted the epitaph for his party given by the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), who said that a day without a new initiative was a day wasted for new Labour. The idea of the restructuring was more important than the outcome. I will touch on that later.

I have a suspicion that the shadow Minister here today, the hon. Member for Wrexham (Ian Lucas), might try to distract us by referring to the decision by the Department for Work and Pensions not to extend the future jobs fund and to redeploy the cash as part of the Work programme. However, we are not talking about future jobs; in Gloucester, we are talking about placements in the public sector or quangos, which have kept people out of the unemployment statistics for six months and provided some useful skills, but which have not led to job offers. That is different from an employment contract for a serious three-year apprenticeship, which is what business wants.

It therefore falls to the coalition Government to recognise and restore the vital role of apprenticeships for future business growth in many sectors, increase the number of apprenticeships so that our record youth unemployment can be reduced and implement an expanded Government programme of apprenticeships in a much leaner, more flexible and user-friendly way.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on securing this interesting debate. The new coalition has announced 50,000 new apprenticeships over a number of years. Does he agree that those apprenticeships need to be relevant to today’s needs and future needs, and that there need to be linkages with industry so that we can find out exactly what those needs are? The courses offered by universities and further education colleges also need to be relevant.

Furthermore, young people need easy access to apprenticeships. In Northern Ireland, they must be sponsored by industry—whether the building industry or whatever—to go into apprenticeships, but that is difficult today, and the financial reward is not what it should be. I trust that the new coalition will consider those points, and I am sure that the hon. Gentleman will agree with me on them.

[Richard Graham]

The hon. Gentleman makes a number of good points, some of which I am coming to. He is absolutely right that training providers need to tailor their courses to be most relevant to business needs.

That leads conveniently to my next point. The approach that the coalition Government should take is about not simply good management practice, but a political philosophy. I agree with the former Labour Minister, Lord Myners, who told the other House that his colleagues never understood the fact that the Government do not create jobs, but set, or fail to set, the framework in which businesses create jobs. I also agree with Oona King, who recently regretted that new Labour’s belief in social justice counted for nothing if it forgot successful economic stewardship. Our mission is therefore to spread apprenticeships, which are critical to restoring the economy, and to boost social justice. There is no justice in increasing the number of those dependent on handouts. My city of Gloucester is a proud working city, not a centre of benefits, and apprenticeships are a major gateway to work and a better life.

[Esther McVey (Wirral West) (Con)]

I want to pick up on the point about the Wirral apprenticeships raised by the hon. Member for Wirral South (Alison McGovern). Although we are doing well in Wirral, we are seriously over-subscribed. Last year, more than 1,000 young people submitted 3,117 applications to the fewer than 150 businesses involved. To move forward, we are looking to build on something that has done so well.

Do colleagues agree that although we are talking about apprenticeships, there is something that each and every one of us in the room could do? It is good to talk about these things, but we in Wirral West are about to embark on taking on political apprentices, and I know that other colleagues are doing the same. Former apprentices include Sir Alex Ferguson, Alan Titchmarsh, Henry Ford, Vincent van Gogh, Isambard Kingdom Brunel—

[Martin Caton (in the Chair)]

Order. I am being indulgent with a new Member, but interventions should be brief. If the hon. Lady wants to make a speech, she should try to catch my eye.

[Esther McVey]

Thank you, Mr Caton. I was responding to what had been said.

[Richard Graham]

My hon. Friend makes a number of good points and anticipates brilliantly what was going to be my punchline.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

Will my hon. Friend say a word about the problem of girls? Two per cent. of apprenticeships go to girls and something needs to be done about it. Does he have any ideas on how to encourage girls to go into engineering, science, technology or mathematics?

[Richard Graham]

My hon. Friend began by asking whether I could do something about the problem of girls; on the whole, I would encourage them. He makes a valid point, as always, and I am also grateful to my hon. Friend the Member for Wirral West (Esther McVey) for pointing out the need for more apprenticeships in her constituency. I hope that many will benefit from the expansion of apprenticeships that the Minister has announced, which I shall encourage him to continue with in due course.

If Alan Sugar did much to bring the word “apprentice” to our TV screens, ours must be the Government who bring apprentices into many more large, medium and even small companies. There are different programmes of help for the young, emerging from three different Departments under the coalition Government: the Work programme from the Department for Work and Pensions, the national citizen scheme from the Cabinet Office, and apprenticeships through the Department for Business, Innovation and Skills. Those will require some cross-departmental co-ordination, perhaps through the new Cabinet Committee on social justice. The Minister may want to offer his thoughts on that co-ordination later, but today I shall focus on apprenticeships.

[Alison McGovern]

Business confidence is crucial for expanding apprenticeships and we are in a difficult and uncertain time, especially given the alterations to business support through the regional development agencies. What would the hon. Gentleman suggest to the Government to keep business confidence high in a period of uncertainty, and how could the Government fill the gap in work on skills at a regional level, as we move—perhaps—towards local economic partnerships, maybe in two years’ time?

[Richard Graham]

The hon. Lady asks what I would do to boost business confidence. My feeling, as a former businessman, is that business confidence depends above all on a stable macro-economic situation. That is precisely what the coalition Government are pledged to restore, and I believe that they made significant steps forward with that in the emergency Budget a few weeks ago. Business confidence depends on that, and I believe that it is growing. That is reflected in several indicators, not least falling unemployment, at the moment.

[Mr Heald]

I do not know whether my hon. Friend is aware that Essex county council recently sponsored, I think, 140 apprenticeships to ensure that the engineering base will be maintained in the county, which is of course run by a Conservative authority. Is that perhaps an example to follow?

[Richard Graham]

My hon. Friend makes a good point and gives a striking example. My congratulations go to Essex county council.

Today’s debate could have centred on the situation in my own city and the county of Gloucestershire, but I decided to widen it into a national debate, because the issues are mostly generic. Our experience in Gloucester can help to bring alive the national picture, and other hon. Members will supplement that with their remarks. I want to begin by discussing the value of apprenticeships, and I shall make suggestions about their status, the role of schools, the structure and measurement of administrative organisations, and the current types of apprenticeship, including matters of price and flexibility. I am grateful to the many organisations and individuals who have given me their time and thoughts.

When I was a boy, one of my favourite stories was that of the 12th century meeting, before their armies, of the giant Richard the Lionheart and the more slender Saladin. Richard showed his great strength by bringing down his enormously heavy double-handed sword to break in half a steel anvil. Saladin then tossed a silk scarf into the air and slashed it in two with his curved scimitar, with great strength of wrist. The important thing was that neither could have done what the other did. Both were remarkable. So it is with degrees and apprenticeships. I am quite incapable of fixing many things—including faulty printers, but also things under the bonnet of my car—and some of my friends who are engineering geniuses might struggle with essays and speeches. We need both skills, but it is absurd to rate the degree more highly than the apprenticeship, and the marketplace will often reward the practical skill more highly.

My key message to students, parents and schools in my constituency and more widely is that an apprenticeship, especially a higher apprenticeship, is every bit as much of an achievement as a good degree from a good university. I urge the Minister to direct the Department for Education to encourage all secondary schools to provide their students with presentations on apprenticeships from training providers, employers and apprentices themselves. Those presentations could start by making the important distinction that from day one apprentices earn to learn, rather than building up debt. They could spell out the differences between the second, third and fourth, or higher, levels of apprenticeship, which many people are unaware of.

I hope that the Minister will confirm that under this Government more status and recognition will be given to apprentices. I propose that we should create a national apprenticeship day to celebrate what apprentices have achieved and what they contribute throughout the country. A special stamp issue, for example, could commemorate some of the world’s most famous apprentices, some of whom my hon. Friend the Member for Wirral West alluded to, such as Vincent van Gogh, Isambard Kingdom Brunel and Alexander McQueen.

As to the structure of Government bodies involved with apprenticeships, I am not absolutely sure that the previous Government’s disbanding of one quango, the Learning and Skills Council, to create three, led by the Skills Funding Agency, just as the budget deficit began to reach record proportions, was the right move. I would welcome the Minister’s comments on that. I believe that employers and training providers broadly welcome the National Apprenticeship Service, but I am sure that the administrative cost associated with the programme could be reduced. Perhaps he will say something about that too.

The structure is also very top-down. There is a quota system, parcelled out to regional offices of the NAS and from there to the shires—rather like the unloved regional spatial strategies in the planning sector—and constructed on the basis of historical demand, which is a bit like looking out of the rear window while driving. The system—in Gloucestershire, anyway—is inflexible. If training providers find that demand for one sector or age group has increased, and demand for another has diminished, they cannot swap or trade quotas. In an era when businesses can trade carbon emissions, it surely should be possible to trade apprenticeships, or to do away with the regional approach and give my county and others a sum of money for apprenticeships. The local economic organisation, which in our case is Gloucestershire First, and the NAS could decide how to manage it.

That leads me to the question of marketing, which in Gloucestershire is done by one employee of the NAS. That is ambitious and she depends on distributors, whose co-operation will vary without any direct, commission-style incentive. I sense that the quality of the NAS database and access to employers varies, and I believe that the service should work more closely with the local economic organisation to target and penetrate leading employers. That would be easier if the funds were controlled locally.

A related matter is penetration of the small and medium-sized enterprise market. The Department has figures that show that the majority of employers with apprenticeships are SMEs, but I believe that those figures are distorted by, for example, the number of hairdressers, and that take-up by members of the Federation of Small Businesses—5,000 of them in Gloucestershire—remains very small.

Many small firms, such as IT consultants, public relations companies or recruitment firms, could benefit from taking on apprentices as their order books expand again, but they are reluctant to get involved, for fear of bringing excessive paperwork into the office. The NAS should focus on the FSB and SME market, using examples of clients who have found that the business of taking on apprentices is not nearly as cumbersome as it might at first appear.

Will the Minister also consider breaking training provider courses into bite-sized chunks or units? That would be popular, especially with SMEs, which do not always need a complete training course alongside work-based learning. There is, effectively, a market for an apprenticeship-lite. My final suggestion on this theme would be for the NAS to consider the provision of courses in Gloucester relative to actual or likely high-growth sectors, as one or two hon. Members have mentioned. Examples might be green energy and even more conventional sectors such as real estate agency, which are not covered at the moment.

The NAS needs to talk to some of our newest and most entrepreneurial companies, such as Gloucester’s Book Depository, which yesterday was awarded the Queen’s Award for Enterprise as the UK’s third-fastest-growing company. There is plenty more marketing to be done, and Gloucestershire First and similar agencies in other counties can and should help the NAS to gain access to it.

On pricing, the package of Government support is worth about three times as much for 16 to 18-year-olds as it is for those aged 19 to 24. What is the formula for arriving at that ratio? Does the Minister believe that it is right? Several employers have told me that they would like a level playing field for the various age groups. In some cases, as with the electrical engineering training specialist Clarkson Evans, it appears that health and safety requirements disadvantage employers who cannot take 16 to 18-year-olds. Under a flexible scheme, they could swap x 16 to 18-year-old places for y 19 to 24-year-olds. However, as I pointed out earlier, that cannot easily be done.

Although the cash value of Government support for apprenticeships is fixed, the price from the training provider and the salary from the employer vary considerably. That can be seen either as choice and market freedom, with the price being weighed against the service quality of the training, or as a distortion of the market that encourages market consolidation and might drive out niche private sector providers. My instinct is that we have a bit of both, which may not necessarily help the smaller players. One way around that would be to provide employers with more advice on apprenticeship quality.

Quality of delivery is hard to analyse. The NAS can offer some pointers, but it cannot offer much qualitative judgment; after all, the trainers are their customers. I would love to see a simplified Ofsted-like report on each training provider’s apprenticeship training schemes, and their good and not so good points, just as I hope that the Gloucester-based Quality Assurance Agency will one day do something similar for universities. Parents could then see immediately on websites what was best and worst about universities and apprenticeship schemes. Choice is good, but informed choice on universities and apprenticeships would be even better.

Equally important is the way different bodies are measured. The NAS is proud of the fact that, at 79%, its success rate in Gloucester—I would put inverted commas around that term—is high for the south-west, and that the south-west has the highest in the country, up significantly from a few years ago. I consider such success rate measures misleading. First, this measures only how many of those who started apprenticeships actually finished them. The NAS has no involvement with the individual apprentice. Should a judgment be made on that measure—in reality, it is customer service—or would a better benchmark be success in persuading a higher percentage of employers to take on apprentices, and in cross-selling new apprenticeships in different sectors to existing clients?

We need effective sales benchmarks for the marketing arm, not customer experience ones, which are more relevant to the training provider. My recommendation is that the Government should reconsider the measurement of various organisations. If the Minister was looking for a third way, he could measure success on both sales and customer service criteria. The important thing, however, is that the current success criteria do not prove success. That, I am sorry to say, is very new Labour; it is like the future jobs fund, which should have been called the “keep me off the unemployment stats” fund.

I draw the attention of the House to one innovative way in which Gloucestershire has succeeded in stimulating employer demand for apprenticeships. Our newspaper, The Citizen, together with Gloucestershire college and other colleges, challenged businesses to create 100 new apprentices in 100 days. They succeeded, and will shortly launch the next “100 in 100” challenge. That marketing initiative has been copied in the south-west by related Associated Newspapers titles, and it could resonate elsewhere.

I invite the Minister to join the launch of the next “100 in 100” challenge to see the wide range of companies, from many sectors, that are interested in apprenticeships—they range from hairdressing to engineering—and which are encouraged by our local newspaper and our leading further education college. The launch will also give him the chance to show that the coalition Government are doing more with less. Last year, the Minister with responsibility for apprenticeships and the Minister for the South-West were both present, but the coalition Government have dispensed with regional Ministers—something, I believe, that not even the shadow apprenticeships Minister would greatly mourn.

I realise that other Members wish to speak, so I shall summarise the main points of my argument. I hope that I have made clear our need for apprenticeships and my enormous support for them—and as many of them as possible. I would be delighted if the Minister said when we are to have the additional 50,000 apprenticeships that I and many others here today have welcomed. Does he agree that doubling our already strong commitment to 100,000 new apprenticeships—a figure that we had in mind during the election campaign, before the full truth of the previous Government’s accounts was exposed—is a desirable goal, and might achieving it be possible over the next year or so?

I have raised questions about the number of quangos involved, who gets what budgeting quota, and how that is measured and against what targets. I hope that the Minister agrees that it is time to scrap the regional approach, and that we should devolve responsibility as soon as possible, giving training providers more flexibility and making apprenticeships more responsive to the marketplace and business demands. I hope that he agrees also that the NAS and local economic entities should work together, and that the NAS and the FSB should engage to ensure more apprenticeships in the SME market.

I hope that the Minister and everyone here today agrees that the impact of apprenticeships on youth unemployment can and should be striking. Gloucestershire took up 4,500 apprenticeships in 2009, of which the city of Gloucester had 1,200—almost the same number as the current record number of young unemployed. Doubling the number of apprenticeships would have a significant impact on those young people not earning or learning, with knock-on benefits for their families and communities, and probably a good effect on antisocial behaviour and the cost of policing and probation work. It would also contribute to growing business and tax revenues.

Lastly, does the Minister agree that apprenticeships are a genuine example of investment by Government and employers that can have a positive impact on the community in several ways? I believe that the combination of more opportunities provided by the Government and better co-operation from schools, with more courses and more flexibility, the transferability of unused quotas and a national apprenticeship day, would increase employer interest and make the future for our youngsters much brighter.

Reviving apprenticeships was a Labour idea, but it is for the coalition Government to sort it out, take it forward and make it work effectively, and to make the renaissance of apprenticeships a reality. That is my goal for my city of Gloucester and for Gloucestershire, and I intend to put my money where my speech is. I shall follow the example set by my hon. Friend the Member for Harlow (Robert Halfon) and hire an apprentice for my office in Gloucester, who will do a business admin course at Gloucestershire college. It is not often that we MPs have the chance to practise what we preach, but today provides such an opportunity.

09:57

[Robert Halfon (Harlow) (Con)]

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on initiating the debate. The quality of his speech and the thoughtfulness of his remarks will be noted by the House. From what I have heard about previous Parliaments, I think that support for apprenticeships among my right hon. and hon. Friends, both here and elsewhere in the House, has definitely increased. I am grateful to my hon. Friend and to the Minister for allowing me time to speak today.

I spoke at length about apprenticeships in my maiden speech on 2 June. I said that one in eight adults in Harlow have literacy problems and that one in five have difficulties with numeracy. We have a huge skills deficit, with nearly 4,000 young people not in employment, education or training. Harlow is one of the towns worst affected by that problem. I have come to the conclusion that education and skills are the real answer, but we need to transform the nature of vocational training and apprenticeships. If we give the young the necessary skills and training, we will give them opportunities and jobs. Expanding and improving apprenticeships is not just about economic efficiency based on pure utilitarianism; it involves profoundly conservative ideas—helping people to help themselves, the work ethic, opportunity and, most important, social justice. I have seen for myself the power of apprenticeships to transform lives.

I have two substantial points to make. First, a change in policy must be supported by a change in culture. Secondly, the pioneering apprenticeship scheme run by Essex county council, to which my hon. Friend the Member for North East Hertfordshire (Mr Heald) alluded, could, I believe, be replicated throughout the United Kingdom.

Despite the grand wishes of the previous Government, they made going to university their primary symbol of aspiration, and that came at the expense of vocational training. The right hon. Member for South Shields (David Miliband) says he wants 60% of all young people to go to university. Not so long ago, young people going to university would get their picture in the local newspaper—I was in my local paper for being only the second ever member of my family to do so. Now, youngsters are burdened with debt and struggle to find skilled jobs when they graduate, and some smart young people are beginning to recognise that a university degree is not always the right qualification—one size does not fit all. The problem is that apprenticeships lack cachet. There is no graduating ceremony, little institutional prestige and few opportunities to network and make friends. The social side of apprenticeship, too, does not hold a candle to that of attending university.

There is also a perception problem. Edge, the apprenticeship organisation, says that two-thirds of teachers regard their knowledge of apprenticeships as poor and that just one in four teachers recommends apprenticeships over higher education. As an MP, I intend to play my part in changing how we regard apprenticeships. I want a Britain in which apprenticeships are not just promoted by teachers, Government and businesses, but seen as the No. 1 option by both students and their families. I want being an apprentice to be as highly regarded as going to Cambridge or any other university.

This Government stood on a platform of change: people voted for change and they have got it. However, if we look closely at the policies of the coalition Government, we will see that they are also about conserving some of the great traditions of our history. Apprenticeships are just one such tradition. Records of British apprenticeships date from the 12th century. By the 14th century, they were flourishing and parents could apprentice their child to a master craftsman from the ages of 14 to 19; they would pay a premium to the craftsman and a contract would be signed. In 1563, the Statute of Artificers and Apprentices was passed to regulate and protect apprenticeships, forbidding anyone from practising a trade without first serving as an apprentice.

From 1601, parish apprenticeships were introduced under Queen Elizabeth’s Poor Law. They were a way of training poor orphans—boys and girls—in farm labour, brick-making and running a 17th century household. The worshipful livery companies of the City of London were the apex of that tradition. They brought to apprenticeships not only rigour, but pageantry and cultural prestige, as we see in the engravings of Hogarth and the novels of Charles Dickens. To be a freeman of the City of London in a livery company was a higher honour than graduating from Oxford or Cambridge university. That is the sort of prestige that I hope this Government will restore to vocational training.

I should like to see a royal society of apprentices, rather like the Law Society or the British Medical Association, with a social and professional network similar to that provided by universities. As my hon. Friend the Member for Gloucester said, we should have an annual apprenticeships day in every local authority, which would build on the already successful vocational qualifications day. It would be like a formal graduation ceremony and act as a celebration of apprentices. In addition, the pageantry that is associated with traditions such as the freedom of the City of London could be expanded, localised and made appropriate for different parts of the British Isles. That would give apprentices a sense of civic pride in their area. Young school pupils would see the example of older apprentices and aspire to join their ranks.

In modern times, traditional apprenticeships probably reached their lowest point in the 1970s. By then, the universities were expanding hugely and apprenticeships were allowed almost to vanish. Margaret Thatcher’s Government introduced NVQs—national vocational qualifications—in an attempt to revive the great British tradition. John Major took the policy further: in 1994, his Conservative Government introduced modern apprenticeships that were based on proper frameworks. The effort to restore apprenticeships has always been a key priority for Conservatives.

I am glad that the Minister has had the good sense to examine not just the zeitgeist of the past few years, but the 1,000-year-old history of apprenticeships in Britain. He is not alone. In the 14th century, it was good practice to employ apprentices from the ages of 14 to 19. Now, we have Lord Baker’s university technical college, which will employ apprentices from the ages of 14 to 19. There is a lot to learn from the past, and the technical colleges will make a huge difference to young people across the country who want to pursue vocational education.

I am pleased to announce that a proper apprentice will soon serve in my Westminster office, placed at Harlow college and part-sponsored by Essex county council. The Essex county council wage subsidy for highly skilled apprentices is a pioneering and unique scheme that could serve as a model for local authorities across the UK. I encourage all MPs and Ministers to follow suit. I am pleased to learn that the Minister has decided to have an apprentice in his office.

In addition to providing a 50% wage subsidy for local apprentices in targeted industries, such as engineering and manufacturing, the Essex county council scheme funds apprenticeships in deprived areas and for lone parents returning to work. I urge the Minister to consider such a scheme. Essex county council has provided a blueprint that could be replicated by many local authorities around Britain. By way of an advert—I hope that you will allow me this, Mr Caton—Harlow college runs an excellent course in business administration for apprentices placed in MPs’ offices. If the Minister decides to have an apprentice, I will happily introduce him to the principal, Mr Colin Hindmarch.

In conclusion, I urge the Government to restore the prestige of apprenticeships and to consider whether local authorities can play a larger role in delivering targeted wage subsidies for apprentices, as Essex council does. On the prestige side, a great step forward would be the establishment of a royal society of apprentices, to replicate the vibrant social life of university, and a formal graduation ceremony for every apprentice. I hope that other hon. Members will have suggestions, too.

I welcome the advancement in policy. Despite the troubles we face, this Government have provided more funding for apprenticeships than has ever been provided in our long history. As I said, I want a Britain in which apprenticeships are seen as the No. 1 option by both students and their families. Funding, prestige and local flexibility will be important. We need to encourage local authorities to support the industrial needs of their area.

10:08

[Margot James (Stourbridge) (Con)]

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing the debate. We have heard interesting speeches from him and my hon. Friend the Member for Harlow (Robert Halfon).

Let me start by reflecting on my days as an apprentice. Although it was not formally known as an apprenticeship—it was many years ago—I thought that I would mention it because I also had a degree. I am sympathetic to my hon. Friends’ view that we should not regard apprenticeships or vocational skills as a second-rate alternative to academic qualifications; the two are not mutually exclusive. Indeed, the Minister with responsibility for higher education and science has stressed that one of the benefits of the national apprenticeship scheme is that it can be a transition into higher education. In my case, the reverse applied: I had already done a degree when I joined my father’s company in Coventry, essentially as an apprentice to him and the firm. I had a very good secondment to the selling function for security systems, which provided good training for life in selling. I also spent a lot of time shadowing my father and learning from him directly as he bought and sold companies, dealt with banks, lawyers and other professional advisers, managed people and sought advice.

The skills that I learned in my father’s company were invaluable to me when I set up my own business. That apprenticeship, which lasted only for about 18 months, undoubtedly enabled me to do well running my own company. However, I did what many companies fear apprentices will do: I left. That is why many companies, especially small and medium-sized enterprises, resist investing in apprenticeships. It is commonly believed that apprenticeships just build up skills for competitors. Businesses need to be educated about the benefits of investing in skills and about most people’s inclination to remain loyal to a company that invests in them. Businesses must take some responsibility in this matter.

Several issues have dogged the past decade. My colleagues have mentioned the importance of manufacturing. Apprenticeships are fundamental to manufacturing, but it is important that young people understand that manufacturing is not just about plant, machinery and making processes work. These days, information technology is crucial, as is intellectual property. Manufacturing is a huge part of the knowledge-based economy. People who do not work in the sector tend to have a rather old-fashioned view of manufacturing, involving grimy factories—the very name for my part of the UK, the black country, implies it—but things have moved on hugely. In many cases, manufacturing is now high-tech, and apprenticeships are fundamental to the recovery of our manufacturing sector.

The Government are learning, as we must, from the last Government’s problems with skills and apprenticeships. Train to Gain was not without success. Stourbridge college had record numbers of students in programmes, some of them in business. The trouble with the training offered was that much of it duplicated skills that young people already had. There was too much training at level 2 and not enough at level 3. That was not all the college’s or the Government’s fault; it was partly because business did not want to invest, as I said earlier. Level 2 was free, but level 3 required a significant payment. That is one challenge facing us as we go about making improvements.

My colleagues have mentioned the dreadful complexity of funding streams, which I fear has not improved. The Learning and Skills Council was one of the most shameful fiascos of any quango set up by the previous Government. I am sure that we are all familiar with the story, so I shall not dwell on it. However, to replace the LSC with three funding streams—the Skills Funding Agency, the Young People’s Learning Agency and a plethora of local authorities—is a great risk. There is a good expression for it, which I forget. Stourbridge college must deal with three or four local authorities, not just one, because it has students from different local authority areas. The bureaucracy necessary to deal with all the funding streams is worrisome. I am sure that the Government are right not to rush to change the structure, but I hope that we will keep it under close review to ensure that the problems endemic in the previous Government’s arrangements will not be repeated.

The other major issue is what I call the food chain. The budget started in the Department for Business, Innovation and Skills. It was then devolved to the Learning and Skills Council, then to colleges and then to other providers. The supposed beneficiaries—students and businesses—are right at the bottom of the food chain. The new Government’s immediate action to reform the system by putting power in the hands of businesses and allowing money to follow the student will be a big improvement.

The final lesson to be learned involves the inflexibility of the previous Government’s approach. Colleges were tied up in knots and companies could not access what they needed. For example, the managing director of an engineering company employing about 25 people—the Minister will be pleased to know that it was based in Lincolnshire—wanted training for the company’s accounts staff. Only a couple of people were to be trained, as the staff numbered only 25, but the provider told the company that it had to supply a minimum of eight people or the course would not be viable. That was too inflexible.

I am delighted by some of the new measures, which I know will improve the system. I will return to those measures in a minute, but first I congratulate the Government on creating 400,000 additional training placements and 50,000 new apprenticeship placements. I hope that many of those will be targeted at sectors that need skills training, such as the green economy and information technology, which traditionally has a poor record of investing in apprenticeships. We should target investment towards those sectors.

Under the old system, not all businesses had the critical mass of people necessary to get apprenticeship support. The group training associations that the Government intend to set up will do an awful lot for SMEs in my area. Overton Recycling, a wonderful company in Stourbridge with a turnover of £5 million, wants to start to offer apprenticeships, but is a bit nervous about investing in too many straight away, as it does not feel that it has the infrastructure to support apprentices’ needs. The group training association, which will bring together apprentices training in different companies and provide them and the companies with infrastructure and support, will be a great boon to companies such as Overton Recycling. I urge the local enterprise partnerships being set up to encourage businesses to take advantage of the new apprenticeship places.

It was marvellous to hear from my hon. Friend the Member for North East Hertfordshire (Mr Heald) about Essex council’s work. I am proud that Dudley council has an apprenticeships scheme as well. In 2009, the council offered 50 apprenticeships in customer service, IT and other disciplines; some 90% of apprentices got their NVQ and 50% found full-time employment after the apprenticeship ended. I was delighted when my colleague, Councillor Adrian Turner, announced that Dudley council would offer 50 new apprenticeship places in the upcoming civic year.

I congratulate the Government on moving fast to improve dramatically skills, learning and apprenticeship policy. That is fundamental to the revival of manufacturing, as the revival of the private sector is fundamental to our country’s recovery. The Budget will play a key role in encouraging the private sector. I am delighted to see the Department for Business, Innovation and Skills fitting so neatly into the Budget provisions and getting off to such a flying start.

10:18

[Chris Skidmore (Kingswood) (Con)]

I thank you, Mr Caton, for calling me to speak in this important debate, and my hon. Friend the Member for Gloucester (Richard Graham) for securing it. I know that he feels passionately about the subject—so passionate that he has managed to secure two debates on it. I appreciate the opportunity to speak on this second occasion. I also thank the Minister for giving up his valuable time to reply to the debate.

I am sure that there is not one of us in this Chamber who does not believe that we should have more apprenticeships. The Minister has stated on the record that his ambition is to build a system that facilitates more apprenticeships in England than we have ever had. That is extremely welcome. I shall briefly explore what such a system might mean and how we can facilitate more apprenticeships. It will not be achieved by Government action alone or by taking a top-down approach; we must bring employers with us and encourage society as a whole to value apprenticeships.

I want to highlight the “100 apprenticeships in 100 days” campaign taking place in my local area in Kingswood, Bristol. The campaign, organised by the Bristol Evening Post, began on 17 June. At the first launch event, 100 apprenticeships were achieved within 100 minutes. That is a fantastic achievement, which I am sure the Minister will welcome. The editor of the Evening Post, Mike Norton, has already stated on the record that apprenticeships provide a

“highly flexible, highly effective work and training programme”

that we need more of.

It is clear that apprenticeships bring in new talent, ideas and passion to businesses. A Populus study shows that 81% of businesses stated that apprenticeships make their business more productive and 67% agreed that apprenticeships led to lower recruitment costs as a whole. We need to show businesses that it is in their interests to take on apprentices. It is not always a case of saying, “Let’s give an apprenticeship to an apprentice for their benefit.” The businesses, too, can benefit. Apprenticeships are a good step for young people and employers. I hope that society in general will move forward under this new Government and take on new apprenticeships.

10:20

[Ian Lucas (Wrexham) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Caton—possibly for the first time—and to have heard the speeches of hon. Members who have contributed to the debate. I am pleased to hear apprentices and apprenticeships being valued so highly by hon. Members from all parties. Such comments are something of a damascene conversion on the part of the Conservative party because, as the hon. Member for Gloucester (Richard Graham) said, reviving apprenticeships was a Labour idea.

It was a Labour idea because in 1997, after 18 years of Conservative Governments, the British apprenticeship was dead on its feet. The enthusiasm that we have heard from the Conservatives this morning was certainly not felt by the Conservative Governments between 1979 and 1997, who effectively sounded the death knell of apprenticeship schemes in the UK. Hon. Members should be aware of the tremendous record of the Labour Government in reviving the apprenticeship scheme within the UK. I am very proud indeed of the steps that were taken by the previous Government in re-establishing the importance and status of apprenticeships.

[Chris Skidmore]

Will the hon. Gentleman give way?

[Ian Lucas]

I want to make some progress at this stage, but I will give way in due course. I agree that we need to elevate the respect that people have for apprenticeships in industry and across the training field. However, the performance of further education colleges and other providers has improved dramatically over the past decade. The satisfaction rates of employers and learners have risen. Since 2001, about 3 million adults have improved their basic skills and achieved a national qualification and, since 1997, more than 2 million people have commenced apprenticeships, compared with the position under the previous Conservative Government. Even more importantly, completion rates for apprenticeships have more than doubled.

The focus of this morning’s debate is apprenticeships, but it is also important to mention the union learning fund, which is now worth £21.5 million a year. As a result of the fund, more than 23,000 union learning reps across the country are encouraging people to learn within their workplaces and develop their skills. That is what we all want to happen to improve the performance of UK industry. Those representatives helped nearly 250,000 workers into learning last year.

It would be remiss of me not to mention the highly successful transformation fund that supports adult learning. The fund has generated a marked increase in participation and there has been a huge investment of more than £2 billion into the Building Colleges for the Future programme, which has transformed the places in which people learn. In my constituency, through investment via the Welsh Assembly Government, Yale college has rebuilt its Bersham road site to enable it to help train apprentices equipped for 21st-century manufacturing. I hope that the Minister can reaffirm that all the schemes announced in the Building Colleges for the Future programme earlier this year will be going ahead. As manufacturing changes, it is important that colleges’ facilities improve to equip modern apprentices for modern engineering, modern industry and modern work.

The impact of the capital investment in our further education colleges under the Labour Government is part of our proud legacy on skills. Not a single penny was spent on further education capital for colleges in the final year of the Conservatives’ last term in office. Although the £50 million that the Minister has announced is very welcome, it is a one-off raid on revenue, not a long-term commitment.

Our White Paper, “Skills for Growth”, was published last November. It set out clearly the skills challenges for the next decade and gave a clear set of proposals to meet those challenges, including an ambition to ensure that three quarters of people participate in higher education or complete an advanced apprenticeship by the age of 30. The proposals include the expansion of the apprenticeship system to build a new technical class, by doubling apprenticeship places for young adults; apprenticeship scholarships; and focusing the skills budget on the areas from which future jobs will come.

[Chris Skidmore]

Does the hon. Gentleman not agree that there is a huge gulf between the image and the reality of what happened under the previous Government? For example, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Prime Minister, promised 500,000 apprenticeships, but the number of apprenticeships fell by 13,200 in 2006-07. Furthermore, between 2007-08 and 2008-09 there was a decrease of 7.5% in the number of 16 to 18-year-olds taking on apprenticeships. The reality of the figures does not match up with what was in the White Paper.

[Ian Lucas]

What is absolutely clear is that, under the Labour Government, there were far more apprentices than in 1997 and the apprenticeship scheme has a value now that it did not have at that time. Later in my speech, I will talk about some individual examples of young people and not-so-young people who have benefited from the progress made under the Labour Government.

I should say to Conservative Members that I am simply not going to allow the previous Government’s record to be trashed in the way that the Conservative party is determined to trash it. The reality is that if it were not for the Labour Government, there would not be any apprentices at all in UK industry; the support that existed in 1997 was parlous in the extreme.

[Chris Skidmore]

Does the hon. Gentleman seriously believe that if it were not for the Labour Government, there would not be a single apprenticeship in this country? Is he willing to make that statement or would he like to retract it? The fact is that the number of young people not in education, employment or training has increased significantly—the figure is even higher than 1997 levels—to 837,000 in 2010, which is up from 618,000 in 2005. It is delusional to suggest that there would not be a single apprenticeship in this country and that apprenticeships would not exist if it were not for the Labour Government. In fact, youth unemployment skyrocketed under the Labour Government. He cannot deny that.

[Ian Lucas]

What I can say is that the Labour Government’s approach to apprenticeships from 1997 was a marked contrast to that of the preceding Government, and that it placed far more emphasis on the apprenticeships scheme. I will come on to talk about some specific examples from my area of which I am personally aware and mention the individuals I have met who have benefited hugely from the apprenticeships scheme.

[Richard Graham]

Will the hon. Gentleman give way?

[Ian Lucas]

I will just make a little progress and then I will certainly give way to the hon. Gentleman, whom I should have congratulated on securing the debate; I do so now.

The White Paper’s proposals included a joint investment scheme with sector skills councils, more national skills academies, skills accounts, user-friendly public ratings for colleges and providers, and better skills provision for those on out-of-work benefits. The promotion of apprenticeships as a priority in public procurement is important and we also wish to reduce the number of publicly funded skills agencies by more than 30. It is important that we make apprenticeship schemes as easy as possible for employers to access, and we need to focus resources on key economic strategic areas, so that we can make real progress.

The Labour Government have a strong record of achievement and the Labour party has a clear strategy for the future. I have heard the Minister speak many times of his passion for apprenticeships and I profoundly admire his rhetoric, so I hope that the Government will carry that through with real action. I hope that he will be clear this morning on whether he intends to follow the strategy set out in the White Paper or whether he intends to jettison it.

[Richard Graham]

The hon. Gentleman suggested earlier that the Conservatives had had a damascene conversion on apprenticeships. I suggest gently that if he looks at the Members on this side of the Chamber, he will see that none of us was on any road in 1997, let alone the road to Damascus, as we are all new Members. It is rather telling that few Members from his party, old or new, have attended. Although we could argue about the role of the previous Government and their achievements on apprenticeships, does he not recognise that several positive suggestions for taking forward apprenticeships have been made today and that he might agree with them?

[Ian Lucas]

I do not wish to be churlish in any way and at the outset I welcomed the fact that the debate was taking place. I also welcome the genuine and sincere contributions that have been made. However, my political views were forged in the 1980s and 1990s and my perceptions were based on the Conservatives’ attitude to manufacturing as I saw it in the north-east of England. I know that progress has been made in the apprenticeships scheme and I want to put that on the record, because we have heard a contrary view during the debate.

We have also heard from the Minister, who has been trying to soften the savage in-year cuts that the Chancellor has imposed on his budget by recycling £200 million from the skills budget into 50,000 apprenticeship places, costing £150 million—£3,000 per place. What kind of apprenticeship places will the Minister be able to get for a unit cost of £3,000? How has he costed those places, and what will be the breakdown by sector? He sometimes tries to give the impression that he is the first Minister ever to announce investment for extending apprenticeships, but the fact is that the previous Government rescued apprenticeships from the oblivion they faced under the Conservatives, who allowed the number of apprenticeships to fall to 65,000, with a completion rate of only one third.

Yesterday, I had the privilege of attending a reception for the Society of Motor Manufacturers and Traders in the House of Commons and of meeting young apprentices. Some were from General Motors at Ellesmere Port, some were from Toyota at Burnaston and some were from Ford at Dagenham. They were of varied ages and backgrounds, but they all shared a passionate belief in what they were doing and the part that they would play in the future of automotive manufacturing in the UK. It was an inspiring reception. I was disappointed not to see a Minister there, who could not only have met the apprentices, but listened to an interesting speech by Ron Dennis, from McLaren, on the future of UK manufacturing. Earlier this year, I attended the Airbus annual awards scheme, where the largest apprenticeships scheme in the UK was celebrated.

[Justin Tomlinson (North Swindon) (Con)]

I, too, attended yesterday’s reception and met some of the apprentices from Honda UK, whose head office is based in my constituency. For me, the telling point was that 85% of those who take part in that scheme end up in employment with Honda, and the majority of the remaining 15% find jobs elsewhere, potentially being paid more money. That contrasts with the number of graduates who are unable to find work, as all the newspapers have been reporting. That shows the value of giving people real applied skills with real job opportunities at the end.

[Ian Lucas]

The hon. Gentleman makes a valid point. To bring a little local experience to that observation, I should say that a successful scheme is operating at the Airbus factory in Broughton, close to my constituency. It is very attractive to young people in their teens who are still at school, whether they are capable of going to university or not. I know young people who are perfectly capable of going to university, but who have chosen to go through an apprenticeship programme because they regard it as the best way of developing their future careers. The scheme has been taken forward by combining study at further education colleges with development of that study through a foundation degree at a local university, and there is the added bonus of earning, which for many young people is preferable to incurring debt.

One point on which we can all agree is that apprenticeships need to be valued and their status recognised. The hon. Member for Harlow (Robert Halfon) made the interesting suggestion that there should be a royal society for apprenticeships, which is a good idea. The level of expertise and skill required by many apprentices to carry out their jobs is entirely equivalent to that acquired through a degree. Larger companies, such as the car manufacturers I met yesterday—I have visited Honda in Swindon, which was an interesting experience—are doing a great deal to support apprenticeships.

The real challenge lies with smaller businesses, and that is the most difficult area on which we should concentrate. We need to carry forward the good work that has been so successful with many of the large investment companies that I have mentioned, develop it and learn the lessons so that we can extend the apprenticeships scheme to smaller businesses.

[Mr Robin Walker (Worcester) (Con)]

Does the hon. Gentleman agree that part of the problem with the apprenticeships scheme under the previous Government—I accept that there were many achievements—was that too often they were in a rush to increase the numbers and so approached large companies, particularly in retail and catering, that could easily transform traineeships into apprenticeships to get the numbers up? We must do much more to reach smaller companies, particularly those in manufacturing, such as Aeromet, an aerospace company based in my constituency, whose representatives I met yesterday. They told me that they had not been approached by central or local government at any time about apprenticeships and that they would like to learn more.

[Ian Lucas]

We certainly need to work hard with smaller companies to develop apprenticeship schemes, but there are good examples. I will mention another company in my constituency, Lloyd Morris Electrical. It is a small construction company that deals with electrics. It places great store by its apprentices and the training of its young people. There is a great appetite for apprenticeships among young people. Some of them could go to university but simply do not want to do so because they see their lives developing along an alternative route.

An important point was made earlier when we mentioned teachers and their attitude to apprenticeships. We need to give teachers a much more accurate and up-to-date representation of modern apprenticeships, and I mean that not in a particular sense, but in a broad sense. High-skill, high-technology and high-value jobs are involved, and teachers should encourage their students to follow them.

The Minister has made a commitment on apprenticeships, and I welcome his language, which contrasts, I am afraid, with what was said and done by the Conservative Government before 1997. He needs to be transparent about the details of what will happen in future and not pretend that his commitment is something that it is not. He hopes to announce the creation of 50,000 extra apprenticeships, giving the impression that they are new jobs for young people. First, it is one thing to promise apprenticeship places and another to deliver them—the devil is in persuading businesses, small ones in particular, to take on apprentices. I have often had that discussion with businesses in my area.

[Priti Patel (Witham) (Con)]

Small and medium-sized businesses are at the heart of my constituency, creating something like 80% of local jobs in Witham. The hon. Gentleman spoke about small businesses. Having been in government, what practical measures would he recommend to enable small businesses to take on more apprentices? The small businesses that I speak to in my constituency are struggling and are fed up with the paperwork and bureaucracy associated with taking on apprentices.

[Ian Lucas]

I ran a small business myself and was Minister with responsibility for regulatory reform, so I do not like paperwork or bureaucracy—no one does, and every Government talks about reducing the burden.

We need to reduce regulations and burdens as much as possible. Saying that is easy, but doing it is difficult, because we have to be accountable for the use of public money. It is important that we should have a scheme tailored to what small businesses need, and that requires commitment by business. Businesses cannot expect such tailoring to happen by accident; they have to commit to working with providers and putting together an appropriate scheme that will be of benefit. That is what we need.

My first point was that it is easy to say that 50,000 apprenticeship places should be delivered, but that we need to get them delivered. Secondly, even if 50,000 places were supported, the Minister needs to guarantee that they will be quality places, helping those who need them most.

We need the Minister to be clear today and to answer questions about his plans. How many of the 50,000 apprentices does he expect to be new recruits and how many will be existing employees? How many will be under 25? That is an important issue. Those questions need to be addressed. Will he please respond to the question about level 3 and level 2 qualifications? Does he value level 2 apprenticeships? We need to look at the detail of what will happen. It is easy, when talking about apprentices, to talk the talk; what we need from the Minister is an assurance that he will walk the walk.

10:42

[The Minister of State, Department for Business, Innovation and Skills (Mr John Hayes)]

Thank you very much, Mr Caton, and it is a pleasure to serve under your chairmanship. It is a pleasure, too, to participate in the debate secured by my hon. Friend the Member for Gloucester (Richard Graham), who cares about such matters deeply. I welcome the shadow Minister, the hon. Member for Wrexham (Ian Lucas), who is not in his normal territory but standing in for the shadow apprenticeships Minister, who cannot be here. I know how keen the hon. Member for Cardiff West (Kevin Brennan) says he is to debate apprenticeships and I hope that he will find the time to do so with me in due course.

The debate is timely. My hon. Friend the Member for Gloucester spoke at some length about why he, like me and the Government, is so committed to the apprenticeship programme. In his maiden speech on 9 June, he treated the House to a striking description of his constituency past and present, as well as announcing his intention to convene an all-party group on urban regeneration. Many of the issues that he and other hon. Members raised this morning spring logically from such commitment, because they are closely connected with the economic future of all our constituencies.

Like many other places up and down the country, Gloucester remains a city whose prospects depend in large measure on the skill of its people and the success of its businesses, in particular the small and medium-sized enterprises. I shall speak a little about the challenge made by the hon. Member for Wrexham in a minute. Before I do so, however, I will answer one other point made by him. I shall also try to respond to all the points made, although they are numerous. If I cannot do so, I will happily engage with hon. Members one to one and take up the matters not covered today.

The shadow Minister mentioned the White Paper and a strategy for skills. The Government are absolutely determined to build on the best of what the previous Government did. No Government are all bad or all good; they each have good policies, people and ideas. We will take the best of those ideas and build them into our strategy. I look forward to putting that strategy together over the coming months, on a highly consultative basis, but of course it will be coloured by the comprehensive spending review. The hon. Gentleman knows that Ministers are in discussion with the Treasury about spending constraints. The Government are determined that we should spend only what we earn as a nation, but he can be assured, as can this Chamber, that in that context I will make a vigorous case not only for skills in general but for apprenticeships in particular. Our strategy will have apprenticeships at its heart, so I am not by any means ignoring the important principles laid out in the previous Government’s strategy; we will absorb the best of them into a plan for the future.

My hon. Friend the Member for Gloucester and others who have spoken understand, as I do, that apprenticeships must play a vital part in securing our economic future. In the latest year for which figures are available, more than 500 people started an apprenticeship in the city of Gloucester, in sectors as diverse as health and social care, retail and hospitality, catering, hairdressing, construction and engineering. I expect the National Apprenticeship Service and its local partners to increase still further the number and range of apprenticeships in my hon. Friend’s city.

The belief that apprenticeships can play a major role in building the future of Gloucester and our nation as a whole is not founded on transient political fashion or a preoccupation with the zeitgeist, but on the evidence of centuries. To paraphrase Chesterton, education is simply the soul of a nation as it passes from one generation to another, and apprenticeships are indeed time honoured, as hon. Members have described this morning.

I take the point made by my hon. Friends the Members for Gloucester and for Harlow (Robert Halfon) and others that the aesthetic of apprenticeships is critical. I have already made that point to my departmental officials. I am determined to ensure that the role of practical learning is elevated, in terms of its “prestige”—the word used by my hon. Friend the Member for Harlow—and we will look closely at the issue of local apprenticeship days.

We already have annual apprenticeship awards. I was at the ceremony last week and spoke with some eloquence—

[Ian Lucas]

Even though the hon. Gentleman says so himself.

[Mr Hayes]

Even though I say so myself. I was greeted with warmth and appreciation, because of the commitment that the coalition, of which I am a humble member, has made to skills and to apprenticeships in particular.

The important thing to emphasise when considering that aesthetic is that apprenticeships involve not only the crafts we think of when considering the craftsmen who built the great cathedral church of St Peter and the Holy and Undivided Trinity, but those in the modern economy. Growth industries mentioned by various hon. Members include the green economy, the IT industry and high-tech engineering. The whole range of advanced apprenticeships in advanced subjects in the modern economy will do so much to fuel our nation’s recovery and future prosperity.

I have already had meetings with sector skills councils about such high-tech, high-growth areas, and with individual employers, missioning them to develop new apprenticeship frameworks and to make the best of existing ones. In that way, we will make apprenticeships, as described by the hon. Member for Upper Bann (David Simpson), relevant to businesses and current economic need, and exciting and seductive from the perspective of learners. That those sectors matter is absolutely right, as the hon. Member for Wrexham said. We will focus on those high-growth sectors because that is what we must do to feed national economic growth. We see our skills strategy as very much tied to our growth strategy. My Department, the Department for Business, Innovation and Skills, is after all the Department for growth.

Let me pick up some of the other points made by hon. Members this morning. There has been a welcome for the Government’s conviction of the value of apprenticeships and the view that they should be an indispensable component of any effective and responsible further education system. There has also been an appreciation of the fact that we have put our money where our mouth is, and I am grateful for what the hon. Member for Wrexham said in that regard. One of the first things we did in government was transfer £150 million from Train to Gain to the apprenticeship budget. We did that because we know what competencies apprenticeships deliver, how long they take, how much they cost, and that they are valued by employers and supported by learners. Nevertheless, there are important questions to ask about them.

Our plan involves transferring resources from Train to Gain to the apprenticeship programme. That is a challenge for providers, which they have discussed with me and are willing to take up with relish. None the less, it is a challenge. It is important that the apprenticeships that evolve from that are meaningful and are the right product for employers, and it is absolutely right that employers buy into them.

My hon. Friend the Member for Kingswood (Chris Skidmore) said that such things cannot be managed from the top down but have to be built from the bottom up. We need to look at some of the supply-side reforms mentioned by various hon. Members, including my hon. Friend the Member for Stourbridge (Margot James), and how small businesses in particular are disincentivised from taking on apprentices.

We must ensure that the framework matches current economic need. The economy is dynamic. Perhaps, Mr Caton, I might be allowed, at a tangent, to give a short lecture in economics, as I believe that it will be relevant to the debate. As economies advance, they not only require greater skills but also become more dynamic. Skills needs become more dynamic, too, so it is critical that the skills system is as responsive and flexible as possible.

The best way to deal with that kind of economic change is to ensure that money and competence are devolved to the sharp end—to businesses and those who serve them in terms of training. That is why we are so determined to free up provision and to give further education colleges and independent training providers more flexibility and freedom to respond to employer need. Apprenticeships are at the heart of that, and I have had discussions with the FE sector, which welcomes the changes that I have recently introduced to free up colleges, and with independent training providers, who relish the opportunity in a more freed-up market to be more responsive to an increasingly dynamic economy. But let me move on from that short tributary on the subject of macro-economics that we have travelled up together back to the questions that have been put properly by hon. Members in the course of the few minutes that we have had to discuss apprenticeships.

It is important that we are absolutely certain about where apprenticeships are to be delivered and how. The hon. Member for Wrexham knows very well that we are talking about an average when we talk about £50,000. Some apprenticeship frameworks cost much more than others. An apprenticeship in hair and beauty, for example, will cost the Government less than an apprenticeship in aeronautical engineering, so we are discussing an average. In the end, such things must be demand-led. I cannot dictate exactly how many apprenticeships there will be in a particular sector at a particular time. The dynamism that I described earlier will dictate exact requirements for skills in particular parts of the country.

My hon. Friend the Member for Gloucester said that the programme is too target-driven. I have done some research on the basis of earlier discussions that he and I have had on the subject. I know that he is extremely concerned that there should be flexibility for the National Apprenticeship Service to respond to changing local demand. I assure him that we will not be rigid about setting unalterable targets, and in a meeting that I had earlier today, just after my extremely luxurious breakfast in the Tea Room upstairs, I asked officials to look at those issues.

The truth of the matter is that the success of our plan will depend on our motivating—indeed, galvanising—businesses, and I will look at how we can help small and medium-sized enterprises. There is an argument for giving them particular support, both on supply-side reform and through a series of incentives. We spoke in opposition about an apprenticeship bonus to support SMEs in that way, but hon. Members will understand that we live in difficult economic times. We have inherited circumstances that no incoming Government would have wanted, and we have to see how we can deliver more for less. Nevertheless, I remain committed to the idea that, in particular sectors and for particular kinds of business, we need to have carefully tailored policies that help to make our ambitions for apprenticeships a reality. We must walk the walk and not just talk the talk, although I am immensely grateful for the complimentary comments of the hon. Member for Wrexham about my rhetoric.

I do not want to be too hard on the previous Government and, particularly as the hon. Gentleman is performing outside his natural brief—he is a full back performing as a striker today—I do not want to be too hard on him, either. Nevertheless, it has to be said that the culture of aspiration that apprenticeships should embody—the culture that they feed aspiration and satisfy economic need, which unites people across this House—was previously, unfortunately, swallowed up by a series of meaningless targets and inflated figures. The previous Government forgot Einstein’s dictum:

“Everything that can be counted does not necessarily count”,

And we had the curious business of confusion between level 2 and 3 qualifications. The hon. Gentleman asked me particularly about that.

Let me be clear: it is vital that we identify levels in a meaningful way. I am looking at building a progressive ladder of training, beginning with re-engagement for those who are outside the work force altogether—that might involve small, bite-size, modular chunks of learning as described by various hon. Members—running through to level 2. Of course, much level 2 training is useful and purposeful, but we would move to full apprenticeships at level 3. The idea that we are exploring is for foundation apprenticeships at level 2, full apprenticeships at level 3, and advanced apprenticeships at levels 4 and 5. We are working on and consulting on that kind of clarity, which I feel the previous Government did not deliver.

In addition, we need to look at the costs of what we deliver through the apprenticeship programme and the effects of how it is delivered. In these times in particular, we need to look closely at whether more money can be delivered directly to employers, as my hon. Friend the Member for Stourbridge suggested, whether we can be less bureaucratic about how we manage the apprenticeship programme, and whether that too can be made more cost-effective.

Yes, we are committed to the idea of apprenticeships as a route into further learning, whether that further learning is at levels 4 and 5 in a college or in an institution of higher education. My right hon. Friend the Minister for Universities and Science and I have worked together, hand in glove, for many years on these matters and share a view that the division between FE and HE should be more permeable, that the university sector can play an important part in assisting us with the elevation of practical learning, and that we do not need to see this as an either/or, as it is sometimes seen. He is the personification of how one can be both a practical achiever and an academic.

[Esther McVey]

Will the Minister give way?

[Mr Hayes]

I will, but then I must move to my exciting peroration.

[Esther McVey]

Does my hon. Friend agree that we will increase the status of apprenticeships by introducing the apprenticeship rate tied in with the minimum wage from October 2010?

[Mr Hayes]

That is a complex question which I would rather deal with offline, but my hon. Friend is right to say that we need to look at the rewards for businesses and the rules for individuals. People who do apprenticeships accept that they will not earn money while they are doing so at the rate that they might have if they were not training. However, the evidence from cost-benefit analyses carried out in 2007, as she will know, is that a person with an advanced apprenticeship is likely to earn £105,000 more over their working life than someone with a lower qualification. There is a sense that people get trained because they know that they will do better later.

I shall now move to my conclusion. Once again, I thank my hon. Friend the Member for Gloucester for drawing these matters to the attention of the House. As a distinguished historian, he will know that there was another Richard Graham, also a Tory, who was elected successively to represent Cockermouth and then Cumberland. He rose to become Lord President of the Council but, unfortunately, fell when he became involved in Jacobite plots. I hope that my hon. Friend does not fall, and that he continues to advocate the case for apprenticeships. He will certainly have my support. His position is in line with the Government’s policy, as I can assure him and others in this Chamber—

[Martin Caton (in the Chair)]

Order. We must move on to the next debate.

Offshore Financial Centres

Wednesday 21st July 2010 Westminster Hall

11:00

[Mr Mark Field (Cities of London and Westminster) (Con)]

As international organisations and major Governments seek to understand the cause of the global financial crisis, small international financial centres have repeatedly endured political attacks and misguided criticisms—from pejorative sniping about their being tax havens and offshore centres for avaricious bankers, to allegations that they provide secrecy jurisdictions for shady figures in the international business community. Those criticisms suggest that they are partly to blame for the shortcomings in the financial markets. The debate about the role of small IFCs has, to date, been remarkably one-sided, which is unfortunate as it demonstrates a fundamental lack of understanding about their function and the benefits that they provide to the wider global economy.

Before the United Kingdom and our global partners look to develop further rigorous international standards on financial regulation, it is critical that politicians and policy makers should formulate and implement policy in an informed, consistent and balanced manner and vital that we should now take a dispassionate view of the offshore IFCs and look sensibly at the significant benefits that they can offer, both to our nation and the broader global financial system.

The UK has an almost unique position in the debate about IFCs. We have a constitutional relationship, through our Crown dependencies and overseas territories, with half of the top 30 offshore financial centres. With the Chinese Government successfully lobbying the G20 last month for both Macao and Hong Kong to be excluded from any OECD grey list on matters of tax transparency, it looks increasingly likely that the standards and regulations currently being formulated may be imposed in some jurisdictions yet overlooked in others. Not only is that incompatible with the need to find a global response to the formation of new financial regulation, but it risks undermining the UK’s financial sector and the wider British economy, which is a major recipient of investment capital raised through small IFCs.

Some small international financial centres, such as Jersey and Guernsey, are used by the global financial community for various reasons, including political stability and a favourable economic outlook; familiar legal systems, often based on English common law; a very high quality of service providers; the ability to meet important investor requirements, such as a legal infrastructure to sell shares; a lack of foreign exchange controls that remove restrictions on the payment of interest of dividends; tax neutrality—not to be confused with tax evasion—which enables investors from multiple jurisdictions to ensure they do not meet multiple layers of taxation as funds pass through the global financial system; and legal neutrality, which ensures that no nationality is given special treatment.

For those reasons there has been a mutually beneficial relationship between the City of London, in my constituency, and many Crown dependencies and overseas territories. That is demonstrated not only by the massive capital flows between the two, aiding market liquidity and investment in the UK, but by the legal and constitutional similarities and the transfer of skilled professionals.

To give some idea of the scale of the capital flows, I should say that UK banks had net financing from Guernsey alone—one of the 30 top centres—of $74.1 billion at the end of June 2009. Unfortunately, because the public debate is largely myopic in respect of IFCs, these benefits are often overlooked or conveniently ignored, in part as a result of small IFCs’ relatively low profile and partly because of a lack of seats on intergovernmental bodies that design global financial regulation.

There now needs to be a much greater understanding of the role and proven benefits provided by small international financial centres as part of the City of London’s transaction chain. I therefore seek to dispel some of the popular myths that surround such centres. The first myth is that IFCs have a negative impact on growth in the global economy. In reality, many of the smallest IFCs are able to provide a stable, well regulated and neutral jurisdiction through which to facilitate international and cross-border business. Investment channelled into small IFCs will in turn provide much-needed liquidity, further investment opportunities, genuine competitiveness and access to capital markets for businesses and investors in both the major developed world and, increasingly, in countries with vast emerging markets.

The recent Treasury review of this area, undertaken by Michael Foot—not that one, Mr Caton—concluded:

“The Crown Dependencies make a significant contribution to the liquidity of the UK market. Together they provided net financing to UK banks of $332.5 billion in the second quarter of 2009.”

Those funds are largely accounted for by the up-streaming of deposits collected by UK banks to their UK head offices, including the nationalised or part-nationalised Lloyds Banking Group and Royal Bank of Scotland, as well as Barclays, HSBC, Santander and a number of building societies.

In addition to aiding capital flows, a report by the university of Michigan’s Professor James Hines on the relation between IFCs and the world economy reveals that expanding investment opportunities through offshore centres leads to increased domestic investment and employment, creating jobs both at the financial centre and in the domestic economies.

Small IFCs play an important role in helping to allocate capital efficiently. To this end, they act as important financial intermediaries, matching the capital provided by savers in one country with the investment needs of borrowers in another. Although that has, understandably, led to concerns about “round tripping”, in which capital is recycled through an offshore centre to give it the appearance of foreign investment and attract a more favourable tax regime, the experience of China and India throws those concerns into doubt, because both of those countries have removed tax breaks for foreign investment during the past decade and both have seen internal and inward investment continue to soar. As a major net recipient of capital flows from small IFCs, our firms in the City might suffer if they found it more difficult to access capital via the international markets.

A second myth is that small IFCs played a part in causing the global financial crisis over the past three years. Although it is convenient to blame offshore centres for causing the crisis, even those who work in the financial markets do not accept that small IFCs were a major cause. Last year, the Treasury Committee found that Guernsey did not contribute at all to global financial contagion. Indeed, it could be argued that the liquidity provided by the small IFCs was significantly positive for the UK during the crisis.

The third myth is that IFCs engage in harmful tax practices. The Foot review suggested that the potential for tax leakage from so-called full tax jurisdictions, such as the UK, towards low-tax or zero-tax regimes, is relatively limited. Although the TUC has argued that the tax gap created in UK Government tax receipts as a result of offshore centres is some £25 billion, the Deloitte report commissioned by the Treasury at the time of the Foot report showed that only £2 billion is potentially lost in tax leakage per annum. Foot also concluded that the real figure might even be lower than that.

Concerns about the UK’s tax base being stripped by unfair competition have also been overstated. It is clear that the debate about tax competition needs to be properly redefined and any further policy initiatives need to protect the important principle of tax sovereignty, as well as adequately recognising the impact of tax regimes on the productive sector. The OECD has clearly warned about the detrimental effects of high corporate tax on productivity. In that regard, I welcome the moves to reduce corporation tax and peg capital gains tax. The recent attacks on the zero-10 tax regimes reveal a worrying trend, in which the sovereignty of independent states to set their own tax rates is undermined and high-tax countries seek to export their high tax rates around the world.

Economic models vary country by country. The adoption of a tax regime premised on the principles of lower tax burdens, efficient government and dynamic private sector activity is legitimate and some degree of tax competition should therefore be recognised as positive. Regardless of that, small IFCs have shown a willingness to engage with the concerns raised by their tax regime—for example, Guernsey and Jersey are voluntarily undertaking a corporate tax review to act within the spirit of the EU tax code.

A fourth myth suggests that small IFCs have a negative impact on transparency, regulation and information exchange. With the G20 placing tax transparency at the top of its agenda, understandably, small IFCs are actively participating in the expansion of the Global Forum on Transparency and Exchange of Information. Indeed, an International Monetary Fund review of Jersey’s regulatory standards in September last year concluded that it was in the top division of financial centres, and gave it the highest ranking ever achieved by a financial centre in respect of compliance with IMF recommendations.

[Mark Pritchard (The Wrekin) (Con)]

My hon. Friend makes an important point about tax transparency, and he also mentions capital flows. Does he accept that offshore centres such as the British Virgin Islands, which are on the OECD’s white list and peer review group, have set the trend in many ways on transparency? The Government should recognise that, and that such centres help rather than hinder the UK’s economy.

[Mr Field]

I agree, and that is greatly to the credit of the British Virgin Islands and other overseas dependencies, as well as some of the Crown dependencies to which I have referred. They have played an important role and led the way in the transparency agenda.

One of the great myths to have grown up is that small offshore centres do not benefit developing countries. Small IFCs have been accused of supporting capital flight out of developing countries, but the Commonwealth secretariat is publishing a new report this month to illustrate the importance of the role played by IFCs in helping developing countries, by enabling them to rent financial expertise from other countries while they develop their own financial centres. Crucially, they also offer investors greater protection of their property rights against domestic political uncertainty.

It is no exaggeration to say that without smaller offshore financial centres many developing countries would not secure key funding for project finance, which makes a substantial improvement to the lives of some of the most vulnerable global citizens. Furthermore, the financial action task force gives many IFCs a positive assessment in meeting its 49 rigorous recommendations on anti-money laundering and terrorism finance. Centres such as the Channel Islands perform better in fighting financial crime compared even with bigger countries such as France, Italy, the US or—dare I say it?— the United Kingdom.

Finally, the UK’s Crown dependencies are often accused of being fiscally unsustainable. Again, nothing could be further from the truth. The debate within the UK Government has, naturally, been framed by events surrounding the collapse of Iceland’s banking system. When the Icelandic banks imploded in September 2008, it quickly became apparent that the contagion would spread to British savers and ultimately to British taxpayers. Furthermore, the role of the Isle of Man as a core financial intermediary between British savers and Icelandic borrowers illustrated the UK’s exposure to offshore centres.

However, the subsequent Treasury review went some way towards allaying the two main concerns. In particular, the worries over the fiscal sustainability of UK Crown dependencies proved to be massively overstated. Throughout the years, IFCs such as Gibraltar, the Isle of Man, Guernsey and Jersey, have amassed large budget surpluses while actively diversifying their tax base, as Foot recommended. Indeed, the Foot report commented on the fact that none of Britain’s Crown dependencies has taken on significant levels of borrowing.

It is important that the G20 summit in Korea later this year is made aware of the beneficial role that small IFCs play in the global economy. Above all, we must stand up to misinformed or narrow views of the valuable contributions that small IFCs can offer to the world economy in terms of liquidity, efficiency, investment and economic growth. Let us make no mistake: ensuring that the voices of small IFCs are heard in Korea is very much in our national interest. If we look at the example of Jersey and its positive effect on the wider UK economy, we see that the island provides a conduit through which mobile capital from around the world can be aggregated and invested, primarily here in London.

[Andrew Rosindell (Romford) (Con)]

My hon. Friend’s speech is very welcome. People from overseas territories and Crown dependencies will thank him for raising these important matters. Does he agree that one issue that is always ignored, and which is linked to what he is saying, is that we, unlike other countries with overseas territories and dependencies, do not allow the Governments or people of those territories any say in this place? They have no way of being represented or of speaking up for themselves. They depend on Members of Parliament to raise issues. Does he also believe that, as with other countries with overseas territories and dependencies, there should be some way for those people to be able to speak and to raise their concerns here, in the Parliament that makes laws on their behalf?

[Mr Field]

I have some sympathy with my hon. Friend’s view. This debate is an example of the way in which we are to do that. If he is suggesting that we have a constituency, similar to the French system, that takes in Gibraltar, Jersey and Guernsey, I am sure that he would be only too happy to be a Member. Most people in Gibraltar already believe that my hon. Friend is the Member who looks after their interests. He makes a serious point, and the tremendous contribution that our Crown dependencies and overseas territories make to this country should not be understated. I hope that this debate plays a small part in addressing some of the myths that have arisen.

I want to speak about Jersey, which is a significant provider of administrative and legal services to international businesses that are active in the City of London and help to make it a more attractive place to do business. For example, Vallar plc successfully raised more than £700 million in an initial public offering in London earlier this month, and used a Jersey structure. That showed the respect that investors, professional advisers and companies have for Jersey as a jurisdiction. It also provides banking services to a large number of UK expatriates who are unable to access the UK banking system because they do not have a UK address.

The Crown dependencies also provide an important platform from which to learn about and access the British economy. For example, the Isle of Man acts as the No. 1 jurisdiction for the incorporation of Indian businesses listed in London, and has been identified by a Chinese Government economic unit as an important link in China’s “going out” strategy in relation to Chinese businesses setting up in the EU.

The Isle of Man plays an important and symbiotic role in London’s shipping and insurance markets, inter alia by having such a successful white list ship registry, as well as its fast-growing aircraft registry. Similarly, with satellite, space and film business, the Isle of Man brings into a British sphere of influence important strategic global businesses that might otherwise be drawn to a competitor such as Singapore, Hong Kong or the US. The Crown dependencies are keen to continue acting on this hub-and-spoke basis with the UK and adding value to Britain’s international offering in a proper and transparent way.

Small IFCs desire fair recognition for their high regulatory and supervisory standards and therefore wish to make policy makers from all G20 member countries aware of their true operation, as well as allowing them an effective voice at the table. In that regard, it would be helpful if the Minister gave an indication of what measures the Government can take to ensure that the G20 process is more inclusive, and that policy prescriptions that aim to restore financial stability strike the right balance between the onshore and offshore financial communities and recognise the mutual interests that exist between the two. It would also be helpful to have an update on progress in meeting the Foot recommendations and information on the progress being made through EU and OECD efforts to assist the overseas territories in meeting their own international requirements.

In conclusion, too few people who now seek to impose rigorous regulation on offshore jurisdictions truly understand how those jurisdictions operate. They fail to understand their positive rankings of compliance with major regulatory standards or their beneficial role in promoting investment and growth in the widest elements of the global economy.

It is inevitable that Governments will attempt to prevent further financial crises from occurring—and so they should—and I fear that that will result in the development of global standards that may have an unintended impact on all jurisdictions. It is critical that politicians and policy makers should not depart from the need to formulate and implement policy in an informed, consistent and balanced way. When it comes to our naked self-interest, it would be foolish at this juncture if the UK ignored the proven benefits provided by small international financial centres as part of the City of London’s world-class operations.

11:19

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I congratulate my hon. Friend the Member for Cities of London and Westminster (Mr Field) on securing the debate and talking very clearly about the challenges and benefits that arise from offshore financial centres. He is right to highlight the UK’s particular interest in this area. Crown dependencies and offshore territories that have a link with the UK form half the top 30 offshore financial centres, so we have an interest.

My hon. Friend is right to highlight the important link in retail financial services with the Crown dependencies. A number of hon. Members will have had correspondence from constituents or former constituents about the impact of the Icelandic banking crisis on them, because they had deposits in the Isle of Man with Kaupthing Singer & Friedlander (Isle of Man) or in Guernsey with Landsbanki Guernsey. We have an interest on that level because those places are used as centres for banking by expatriates and a number of people who want to place their money offshore.

It is also right to identify the significant links between these offshore financial centres and the City of London. My hon. Friend highlighted their importance as a mechanism for providing funding for the UK financial services sector: people place their money on deposit in offshore financial centres and then deals flow through to London. I was struck by the fact that in quarter 2 of 2009, as mentioned in the Foot review, $332 billion of funding was provided to the City of London from those centres. That shows their importance.

I am sorry that my hon. Friend the Member for The Wrekin (Mark Pritchard) is no longer in his place, as I am about to refer to the British Virgin Islands, which he mentioned in an intervention, saying that the BVI are on the OECD white list. We welcome the fact that offshore financial centres are keen to take steps to appear on that list and we would encourage more to do so.

My hon. Friend the Member for Romford (Andrew Rosindell) asked about representation in this place for Crown dependencies and overseas territories. Under the present Government, the imperial days of the Treasury are long gone. It is very much for the Foreign and Commonwealth Office and the Ministry of Justice to take responsibility in that regard, and I am sure that since the election my hon. Friend has not been slow in making his views known to Ministers in those Departments, either.

The financial crisis highlighted the need to protect our public finances. The Government have taken steps to deal with the fiscal deficit that we inherited, and we will follow that up with the comprehensive spending review in the autumn. However, that increased vigilance must run through everything that the Government do, and part of that involves pressing for high international standards that protect against the risks posed by jurisdictions that fail effectively to impose prudential regulation, tax transparency, anti-money laundering measures and standards on countering the financing of terrorism. At last year’s G20 summit in London, leaders called on all jurisdictions to adhere to international standards in those areas. They called on the appropriate international bodies to strengthen peer review to assess jurisdictions’ compliance with the standards and to consider possible counter-measures for those that fail to comply. It is important that the international standards are applied without discrimination, allowing all jurisdictions that meet them to compete freely in international markets.

Michael Foot was asked by the previous Government to conduct an independent review of British offshore financial centres, and he reported his conclusions last October. The aim of the review was to deal with concerns about the risks caused by the financial crisis to the Crown dependencies and overseas territories and, by association, to the UK. The report provided a health check of the economic sustainability and viability of the financial services sectors in the Crown dependencies and overseas territories. The message from the report was clear: offshore financial centres must meet international standards if they want to maintain active and trusted financial sectors. The challenge for offshore financial centres was to take greater responsibility for their economic future, demonstrating that they are capable of responding to financial stability risks, while strengthening their long-term commitment to meeting globally recognised standards—issues raised by my hon. Friend the Member for Cities of London and Westminster.

Michael Foot’s report set out a series of steps that jurisdictions must take to ensure that they are inside the scope of international regulation and that they secure their long-term sustainability. To demonstrate their performance against international standards, British offshore financial centres were invited periodically to publish the details of their progress, setting out the international standards that they have met, covering tax transparency, prudential regulation and preventing financial crime, and the standards that they have not met, with details of how they intend to meet them in the future and how soon they expect to do so. We are talking about the setting out of clear benchmarks about what the territories should do and how far they are going in achieving those standards. That sends a clear signal that both we and the wider global community are interested in what they are doing. The more transparency there is about how much progress the territories are making towards those goals, the greater the acceptance will be of their activities in the wider global community.

[Mr Field]

I am also keen to ensure that the point is made robustly about capital flows. We have had a credit crunch quite recently and we may be facing another one with all the sovereign default concerns in Europe. The free movement and liquidity provided by IFCs is key. That case needs to be made robustly at a time when others are dismissive of offshore financial centres.

[Mr Hoban]

Indeed. My hon. Friend makes an important point. Adherence to the standards makes the case that offshore financial centres should be part of the global network of financial centres and that they are valued. It is also important to ensure that when people talk about offshore financial centres, the debate is proportionate and evidence based. That is the best basis for debate in the UK, EU and G20. My hon. Friend made important points in that respect in his remarks.

The Foot review recommended that Crown dependencies and overseas territories should have to meet key international standards on tax information exchange, financial regulation, countering the financing of terrorism and anti-money laundering. The review strongly recommended that British Crown dependencies and overseas territories need to diversify their tax bases in a way that helps to secure their long-term economic sustainability. My hon. Friend made the argument that a number of territories had already done that and had withstood the financial crisis.

[Andrew Rosindell]

My hon. Friend the Minister talks about long-term stability. Does he agree that any attempt to undermine the ability of Crown dependencies and overseas territories to be self-sufficient and to look after their own affairs would in the end rebound on the British Government, with the possibility that we would have to finance some of those territories, so it is vital that policies from here, from Brussels or from anywhere else do not undermine the ability of our territories to be self-sufficient for the long term?

[Mr Hoban]

My hon. Friend makes an important point, but what he refers to must be done within the context of adhering to the highest possible international standards. We need to ensure that that international framework exists and that the territories comply with it; otherwise they are open to attack by other nations. Yes, it is important that the territories are economically sustainable and are not dependent on the UK, but at the same time they must meet those international standards, and a number of territories have made quite significant progress towards that goal.

With regard to the sustainability of overseas territories, they were encouraged to improve the management of their public finances to ensure that they were well equipped to withstand unexpected economic and financial shocks without external fiscal assistance. We need to recognise the progress that has been made to comply with the standards. I understand that 28 jurisdictions—almost exclusively tax havens and offshore financial centres—have moved into the category of jurisdictions that have substantially implemented international standards on tax transparency. That shows that overseas territories are taking the measures seriously, and we encourage them to continue to do so. Over the next three years, 100 jurisdictions will be peer reviewed, which will be an important part of the process to give confidence in how the standards are being implemented.

I recognise the importance of the role that offshore financial centres can play. They are an important contributor to the City of London. They provide services to UK citizens, whether at home or abroad. However, it is vital that they comply with the highest international standards on tax transparency and dealing with terrorism financing and money laundering. Adhering to those standards would be the best safeguard for their future prosperity.

11:29

Sitting suspended.

Building Schools for the Future

Wednesday 21st July 2010 Westminster Hall

[Mr James Gray in the Chair]

14:30

[Derek Twigg (Halton) (Lab)]

This is the first opportunity formally to debate the consequences of the announcement made by the Secretary of State for Education on 5 July about axing the previous Labour Government’s Building Schools for the Future programme. There is widespread anger and disbelief among colleagues from all parties about the devastating impact that such a move will have on education provision in the communities that they serve. Proportionally, no community has felt the impact more than Halton.

My hon. Friend the Member for West Bromwich East (Mr Watson) intended to contribute to the debate, but he cannot attend due to unforeseen circumstances. He takes a particular interest in the issue. The announcement by the Secretary of State for Education will affect the following schools in my constituency: Ashley special school, Cavendish special school and Chestnut Lodge special school. Fairfield high school had been proposed for closure, but the Secretary of State decided that the programme should be stopped, due to a clerical error on the form. That decision was made in the same week that a party was held as a thank you to those people who supported the school over the years prior to its closure—another error. Saints Peter and Paul Catholic high school will also be affected, as will St Chad’s Catholic high school, the Bankfield school—my former school—the Bridge pupil referral unit, the Gateway pupil referral unit, and the Heath school.

Three school-building programmes are pending review: Halton high school academy, which is not in my constituency, but in that of the hon. Member for Weaver Vale (Graham Evans); Grange comprehensive; and the Wade Deacon high school, which was to absorb those pupils who would have gone to Fairfield high school prior to its closure.

All the secondary schools in Halton have been affected, as have the lives of 7,300 children, together with their teachers, parents and the wider community. The dedication of staff and governors and the hard work of pupils has produced a marked improvement in GCSE results over recent years, making Halton one of the most improved areas in the country. Last year, 72% of pupils acquired at least five top grades, surpassing the national average, and for the second year running, Halton has achieved more than 70% attainment. That is a remarkable increase of 34% from 1998 results. The percentage of pupils in Halton who gained a minimum of five A to C grades at GCSE, including English and maths, has increased by nearly one fifth since 1998, from 24.7% to 44.4% in 2009. In one of the most deprived boroughs in the country, that is a spectacular result.

It is disgraceful that the new Conservative-Liberal Democrat coalition Government have taken a devastating axe to the vital funding for schools in Halton, which is one of four Labour-held constituencies among the six seats in England and Wales where school culls that go into double figures have been inflicted. We all remember how the previous Conservative Government left many school buildings dilapidated and crumbling, and the Labour Government had to pick up the pieces and initiate the biggest school building programme in over a century.

[Charlotte Leslie (Bristol North West) (Con)]

Although I appreciate the pain that is felt across communities due to the cuts that have had to be made, is the hon. Gentleman aware of some of the downfalls in the mechanism of the BSF programme and the local education partnerships that delivered it? I have heard representations from schools that have undergone rebuilding under BSF. They were concerned that 90% of the local education partnerships that delivered the programme were owned by the contractor, and therefore the interests of the local education partnership and the builder were those of the contractor, not of the school. Another concern was that the contractor operated at an overhead and profit level of 8% plus, as opposed to 4% on the market. Those concerns were raised by teachers and head teachers who saw money going not to their school but to contractors and consultants.

[Derek Twigg]

I do not try to pretend that the BSF programme was perfect. If the hon. Lady is patient, I shall deal with some of those issues later in my speech. She raises an important point.

It seems abundantly clear that many of the assertions made by the Secretary of State in his announcement of 5 July are plain wrong. First, his boast about the Government’s determination

“to make opportunity more equal”

and

“to help the most disadvantaged pupils”—[Official Report, 5 July 2010; Vol. 513, c. 47.]

is laughable—well, it would be laughable if the consequences of his policies were not so tragically devastating to communities such as those in Halton that I represent. I fail to see how targeting the second smallest unitary authority in England, which serves the country’s 30th most deprived area, with the worst cuts to the BSF programme in the north-west will bring any benefit to the disadvantaged. Will the Minister explain how the cull of 100 BSF projects, with a further 21 under discussion, in the relatively deprived region of the north-west—over half the projects affected are in Cheshire and Merseyside—constitutes proportionate, fair and decent action by the Government?

[Mary Macleod (Brentford and Isleworth) (Con)]

Does the hon. Gentleman agree that if the Labour party had returned to government, it would have cut BSF funding?

[Derek Twigg]

We were committed to the programme as it stood, but a myth has been put around by the Government. With the loss of five new schools in Wigan, 10 in Blackpool, 25 in Liverpool and 27 across Greater Manchester, the only aspect of equality in the policies of the Secretary of State is the collective discrimination against the schools and colleges of the north-west. I also wish to challenge the Secretary of State’s implicit view that the BSF programme is incompatible with prioritising the raising of school standards in pupil attainment and behaviour through the quality of teaching and learning.

[Ben Gummer (Ipswich) (Con)]

On the hon. Gentleman’s point about the policy commitments given by the previous Government, a commitment was made, but it was dependent on underspend—something that the Treasury has subsequently confirmed does not exist. Therefore, the policy was unobtainable.

[Derek Twigg]

We need to get to the nub of the problem. We can go back and look at who was responsible for the economic crisis, the world crisis and so forth. The Conservative party keeps trying to suggest that somehow this problem is down to the way that the previous Government managed the economy.

[Mr Rob Wilson (Reading East) (Con)]

Will the hon. Gentleman give way?

[Derek Twigg]

I have not yet answered the last question. The permanent secretary in the Department for Education wrote to my right hon. Friend the Member for Morley and Outwood (Ed Balls) and clearly said that the money was there. He would have asked for a letter of direction if there had been any impropriety or problems with that, but he did not do so. That is the key point, and something that the Conservative party keeps trying to push, although it is plain wrong.

I would like to make some progress. It is self-evident that the quality of the built teaching and learning environment, which embraces school buildings and the state-of-the-art facilities that they should house, will have a bearing on pupil attainment and the quality of teaching.

[Lyn Brown (West Ham) (Lab)]

Does my hon. Friend agree that although the cuts to the BSF programme are devastating, cuts to the information and communications technology upgrade are equally, if not more, damaging to the future of our children’s education?

[Derek Twigg]

My hon. Friend makes an excellent point. I shall return to it at the end of my speech in some of the questions that I put to the Minister. He should not take my word on the situation, but should consider the findings of the 2010 school environment survey, conducted by the British Council for School Environments and the Teacher Support Network, in conjunction with the Association of Teachers and Lecturers. The report shows that 95.8% of teachers believe that the school built environment influences pupil behaviour, and over half felt that their surroundings had a negative effect. Investment in school buildings has had a more positive impact on teachers and learners, and such work must continue. That is evidenced by the fact that three quarters of teachers now regard their school as effective and adequate at providing an effective learning environment. That compares with two thirds of teachers in 2007.

Dr Mary Bousted, general secretary of the Association of Teachers and Lecturers, asserts:

“Teachers work incredibly hard to give their pupils a good education regardless of the physical environment, but it is much harder for children to concentrate if the classroom is too hot or cold or they can’t hear properly. We can’t stress enough that for teachers and children to teach and learn in an effective manner, school buildings need to be safe, clean, and inspiring.”

I also draw the Minister’s attention to last year’s report by the Government’s favourite auditor, KPMG, on the effects of the private finance initiative, which is central to many BSF projects, on education standards. It concluded that student attainment is 44% higher in PFI schools than in conventional schools, and it built on an American report from 2002 entitled, “Do school facilities affect academic outcomes?” That report found that

“spatial configurations, noise, heat, cold, light and air quality obviously bear on students’ and teachers’ ability to perform. This can be achieved within the limits of existing knowledge, technology and materials; it just requires adequate funding, competent design, construction and maintenance.”

In his article in The Guardian on 8 July, John Crace said that Michael Gove underestimates the impact of surroundings on school pupils.

[Craig Whittaker (Calder Valley) (Con)]

I hear what the hon. Gentleman says about buildings and their impact on teaching and children. I also heard him talk of dilapidated and crumbling schools. I wonder what he would say to the parents and teachers at two schools in my constituency: Todmorden and Calder high schools’ buildings are falling down and are among the five worst in the country. The local authority has spent more than £3.5 million in the last two years alone to keep them open. However, the previous Government’s BSF programme did not apply to those schools because they attain too highly and are not considered to have deprivation. What would the hon. Gentleman say to my constituents?

[Derek Twigg]

I do not know about schools attaining too highly, but I shall mention later a couple of schools in my constituency in that regard. The fact remains that, during all the years in the 1980s and 1990s when the Conservative party was in government, schools fell into a state of ever more disrepair, because there was little money for repairs. When Labour was in government, at least £24 million was spent in my constituency on improving the state of school buildings.

In his statement to the House on 5 July, the Secretary of State referred to a BSF school from which pupils had been sent home because of bad ventilation, leading to the use of additional mobile air conditioners in the summer months. However, as a direct consequence of the measures that he announced this month, mobile classrooms, decades-old prefabs and the occasional shipping container that are either too hot in summer or too cold in the winter will not now be replaced with 21st century state-of-the-art facilities, leaving staff and students at dozens of schools dejected at having dilapidated classrooms after years of work on Building Schools for the Future.

The BSF cuts mean that Halton goes from being an authority with sufficient school places overall to one with insufficient capacity. They mean that an increasing number of children will have their lessons in mobile classrooms when they should have been in brand new schools. With Labour, it was building for the future; with the Con-Lib coalition, it is more like “Back to the Future” of the 1980s, with rampant ideological cuts and failing facilities in schools.

The Secretary of State justified his axing of Building Schools for the Future on the ground that it failed to provide value for money. I suggest to the Minister that precisely the opposite is true. Although the National Audit Office of March last year made some criticisms of BSF, on the question of value for money it said:

“The cost of the programme has increased by 16 to 23 per cent in real terms to between £52 and £55 billion, in large part because of decisions to increase its scope but also because of increased building cost inflation.”

Tellingly, the NAO went on to say:

“The Department and PfS”—

Partnerships for Schools—

“have taken measures to help control capital costs so that BSF school capital costs are similar to most other school buildings programmes and cheaper than Academies built before their integration into BSF.”

[Graham Jones (Hyndburn) (Lab)]

My local authority is Lancashire county council, which has just lost Building Schools for the Future phases 4 and 5. The administrative cost of the £100 million programme for phase 4 work was £893,000. I return to the point that my hon. Friend made about politics. Does he agree that the comments made by Conservative Members are focused on the politics, not on the facts, given that £893,000 is less than 1% of £100 million and construction was due to start at the end of this year?

[Derek Twigg]

The focus should be that our children have been robbed of state-of-the-art school buildings. The fact remains that the money was there to carry out the programme, but the coalition Government chose, for ideological reasons, to put it towards free schools. It was their choice.

I return to the importance of the changes in my constituency. In Halton and across the piece, I suspect, the reduction in the number of school sites would have led to reduced operational staffing and running costs, allowing more money to be spent on improving pupil attainment and ensuring the high-quality teaching that the Secretary of State purports to prioritise. Indeed, Halton council was commended by the previous Government for the manner in which it approached the proposed reorganisation of secondary school provision throughout the borough, not least for achieving value for money. In Halton, significant costs savings have been achieved since the inception of the programme through the establishment of a joint delivery team with Warrington borough council. That enabled both authorities to share procurement costs, staff, expertise and best practice. At each stage of the BSF programme, the authority met the key milestones and used the lessons learned to reduce the time scale and milestones for the Warrington wave 7 programme.

Another key point is that, whereas the Secretary of State says that the money is not there and that BSF was badly bureaucratic, Halton borough council has shown that it can be done and that there are benefits.

[Mr Rob Wilson]

The hon. Gentleman seems to be living in a parallel universe in which no cuts would have been made under Labour. However, the former Education Secretary said in The Sunday Times that he would like to cut the number of heads and deputy heads by 3,000.

[Derek Twigg]

The hon. Gentleman is now quite an experienced Member and I respect him, but we have never said that there would have been no cuts. There would have been cuts. I put it to him that his Government said that they would not cut front-line education services, but what is more front-line than school buildings and the importance of improving them?

Going back to what was done by Halton borough council, the timeline for the programme has been reduced by 50% compared with the PFS standard. Efficiencies were also planned through the integration of multi-agency services within school facilities such as health, leisure and outreach services. A strategic approach to ensure that we moved away from a “patch and mend” model—the hallmark of the Conservative years—to an overarching model that considers condition, suitability and sufficiency is now in jeopardy.

The Secretary of State says that the Government remain committed to supporting capital spending in schools and has instituted a review aimed at ensuring that value for money is guaranteed through the process. However, he could not answer my written question of 12 July about when he expects the review to be completed. That is more evidence of a rushed decision. Investing in capital spending and culling BSF would appear to be an oxymoron of the highest order. I fear that, like their vague aspiration to replace the future jobs fund, the nation will be lumbered with another watered-down and ineffective alternative, published at a yet unspecified time.

Another feature of the ill thought out and rushed nature of the policy is the prospect hanging over local authorities of legal action by contractors following the termination of school building projects. Last week, I asked whether the Education Department intends to issue advice to councils that may face litigation. The Minister said that he would reply as soon as possible, so I ask him again whether he can provide me with an answer to that question. Again, it shows that this was a rushed, botched job.

As in the wider economy, the Government seem intent on choking growth and development, and the BSF cull will play its part. Although it is easy to recognise the physical benefits that will be lost due to the end of the building programme, added value benefits will also be lost that would have been a major boost for the local economy and would have addressed many of the social, economic and educational challenges faced by Halton and Warrington. Halton borough council has told me that a number of social, economic and regeneration initiatives had been developed within its BSF submissions. The management and ongoing development of those initiatives were fully costed and allocated within the local education partnership, and the generation of social and economic benefits would have given truly additional value. Some 500 jobs would have been created, whether directly or through the supply chain and so on. that would have been a most important factor in the process.

It is important to recognise how schools in my borough, such as Heath and St Chad schools, will be hit. They are expanding schools and would have had extra capacity, but that is now in jeopardy. Those schools will not be able to expand, despite their popularity, even though it is an important part of the Government’s policy to recognise and expand such schools. That is also the case with Bankfield school, my old school, which will now have difficulty in expanding. As a result, yet more children will have to be educated in mobile classrooms, which takes us back to the conditions of the 1980s and 1990s.

Wade Deacon high school, which had a 100% pass mark for grades A to C last year, serves both disadvantaged and more prosperous areas. When it amalgamates with Fairfield school, which has been closed, it will face a difficult job managing the two sites. The situation is far from ideal; there are busy roads to cross and it will be hard to manage teachers’ timetables. Under the BSF programme, the two schools would have been on one site. In another example, the Grange would have been an all-through school, catering for children between the ages of three and 16, with a number of schools coming together on one site. There will be major consequences if that school does not go ahead. There are significant public health and safety concerns—I mentioned Bankfield and the problems of moving between different school buildings—as well as a problem of insufficient capacity at other schools. Visiting schools in my constituency last week, I saw that profound impact of the decision on them.

Community access to schools has many advantages, not least in raising educational interest and encouraging adult involvement, which leads to the development of a better learning culture. In areas such as mine, where that culture has not always prevailed in many homes, community access provides a massive opportunity for improvement.

[Charlotte Leslie]

Does the hon. Gentleman recognise that problems were caused in many schools by the private finance initiative of the BSF programme? Communities have had to pay extra money, or there has been a lack of flexibility in their being able to use rebuilt BSF school facilities.

[Derek Twigg]

I can speak only for my own constituency. Having spoken to a number of head teachers in the past week, I found the exact opposite to be the case. Schools were being designed to bring in the communities and increase involvement, particularly through some of the wider initiatives. Schools in my constituency did not face that problem—quite the opposite.

Because Halton’s population suffers some of the poorest health in the country, health is a top priority, which is why it was part of the BSF project. A lot of work was done locally to consider how better community facilities could be used to promote improvements in health and to tackle, for instance, the very high teenage pregnancy rate within the Halton borough. The social return on investment in terms of savings from reductions in the numbers of exclusions and of those not in employment, education or training, from welfare benefits and from improvements to mental health and community inclusion and cohesion—all goals the Government claim to aspire to and cherish—could amount to something like £34 million. Yet gone are the opportunities that have already consumed thousands of work hours and millions of pounds to create well designed, environmentally sustainable, Disability Discrimination Act-compliant state-of-the-art classrooms and facilities fit for purpose for the 21st century in schools in Halton and throughout the country.

I end with a few questions. What are the Government doing about the ICT funding that is part of the project? If the sample schools in my constituency were to get the go-ahead—that would be superb—they would get ICT funding as well, but what about the other schools that are not given capital funding to rebuild, after the Government’s review is finished?

I also have a question about the terms of reference for the capital spending review—I hope that we will get some idea when that will report. Buried deep down in those terms is the requirement to look at regulations relating to school playing fields. The regulations are there to protect school playing fields, so can the Minister give a categorical assurance that no changes will be made that will make the sale of school playing fields easier, or is he content not only to steal schools out of the hands of children but to sell off their playing fields as well? Will the Minister guarantee a strategic approach to the school estate following the demise of BSF by delivering 21st century learning space in the schools in my constituency? BSF would have provided them with a 25-year commitment to continue to invest in their buildings.

The chaos caused by the various incorrect lists continues. The Department does not take a consistent approach to the different education authorities and schools. For instance, academies or their sponsors had five days to provide the information that was requested from them, whereas the sample schools were asked last Friday to provide the information this Monday. At 8 o’clock last night, my local authority had a phone call asking it to provide building condition information for one school by 8 this morning, and for another school at 8.20 am. In addition, the local authority was told that Partnerships for Schools officers would be in Halton today, taking photographs of the condition problems that had been highlighted. That just shows the continued chaos that we are having to put up with as part of the process started by the Secretary of State. Why have some schools been asked to provide condition surveys and others not? That is a simple question.

The Prime Minister says that he wants to change the image of his party and its policies, but the Liberal Democrat fig leaf is barely disguising a return to the nakedly ideological attacks against predominantly Labour-supporting areas. The full extent of the severity of the austerity cuts to be implemented by the coalition Government is only beginning to be realised by the general public. It is a sombre thought that it will take the destruction of buildings of hundreds of schools and colleges across the country to reduce to ashes the claims of the Conservatives and the Liberal Democrats to stand up for fairness, and with it their electoral fortunes.

14:56

[Tony Baldry (Banbury) (Con)]

The hon. Member for Halton (Derek Twigg) mentioned chaos. As far as the Building Schools for the Future programme is concerned, I very much hope that at some stage there will be an independent inquiry into the conduct of Ministers in the previous Labour Government; the more I hear about the scheme and the conduct of Labour Ministers, the more scandalous it all becomes.

A project that was originally supposed to cost £45 billion ended up costing £55 billion. The previous Government spent £10 million simply setting up the procurement vehicle for Building Schools for the Future before a single brick had been laid. One person received £1.35 million in consultancy fees. It is difficult to see how that sum can possibly be justified. A single individual in this project received more than £1 million.

[Mr Iain Wright (Hartlepool) (Lab)]

Will the hon. Gentleman name the individual?

[Tony Baldry]

The hon. Gentleman who has just intervened was a Minister of the Crown in the last Government. Is he asserting from the Front Bench that no individual received more than £1 million in consultancy fees from this project? Is that what the hon. Gentleman is saying?

[Mr Wright]

indicated assent.

[Tony Baldry]

So the hon. Gentleman is inferring that the Secretary of State, in putting that forward on the advice of officials, was misleading the House?

[Mr Wright]

indicated assent.

[Tony Baldry]

What I am saying is what the Secretary of State asserted in the main Chamber last week. The hon. Gentleman is essentially asserting that the Secretary of State misled the House. Is that what he is saying?

[Mr Wright]

I am suggesting that not one single individual received the amount of money that the hon. Gentleman alludes to. It was a consultancy firm that received that money, following a wide range of different projects relating to BSF. It was not a single individual.

[Tony Baldry]

This is an important point. The hon. Gentleman is implying that the Secretary of State misled the House last week when he said very clearly, in terms, that an individual had received more than £1 million. I am confident that the Secretary of State would not have misled the House, either knowingly or unknowingly.

[Mr Andy Slaughter (Hammersmith) (Lab)]

Will the hon. Gentleman give way?

[Tony Baldry]

Let me finish this point.

That is all the more reason why we need an independent inquiry into the BSF programme and the chaos in which the previous Government left it.

[Mr Slaughter]

Will the hon. Gentleman give way?

[Tony Baldry]

Let me finish my next points.

The money that went in consultancy fees could have gone into the front line. The BSF scheme took no account of the fact that, in many parts of the country, there is a real need for new school building as a result of the growing population. That is particularly true for primary schools, but the BSF project simply did not cover primary schools at all.

In the run-up to the general election, the previous Government sought to pretend that there was more money in the BSF programme, but they did so on the basis of hoping that they would get funds from the Treasury through the use of end-of-year flexibility of capital. It is becoming apparent, as the permanent secretary to the Department for Education has now made clear, that that was never properly cleared with the Treasury by the right hon. Member for Morley and Outwood (Ed Balls), then Secretary of State for Children, Schools and Families. The Treasury has said clearly that the right hon. Gentleman was playing fast and loose with that particular capital stream. The Treasury has made clear its opposition.

I would very much welcome an inquiry into what went wrong with the Building Schools for the Future programme and Partnerships for Schools under the previous Government. It is very unreasonable to attach any culpability to new Ministers for a grim situation that they clearly inherited and are having to deal with.

Banbury school, a large comprehensive in my constituency, was put into the Building Schools for the Future programme. Its principal has written to the Secretary of State and she has made her comments clear in local newspapers. I should like to share with hon. Members what she said in her letter to the Secretary of State:

“I wanted to write to support your decision to stop the vast majority of BSF projects currently under way, and for the reasons that you outlined. Whilst Banbury School was one of the last schools to be included in the BSF programme, nevertheless, the huge bureaucratic hurdles and ridiculous amount of wasted time in meetings with advisors and consultants, etc, means there could never be value for money for the investment…On an immediate positive note, both myself and our Senior Vice Principal now have days released from former BSF meetings, where we can spend time looking directly at our school, the needs of our youngsters and how we can support further improvement in standards.”

Even the schools in the BSF programme thought that it was a bureaucratic nightmare.

[Mr Alan Campbell (Tynemouth) (Lab)]

In 2009, North Tyneside elected a Conservative mayor with a Conservative cabinet, and one of the first things that they did was to review the BSF programme because they were concerned about bureaucracy, consultants and value for money. Is the hon. Gentleman surprised that they confirmed that they would continue with the programme in my constituency without any change whatever?

[Tony Baldry]

The hon. Gentleman can make his points—[Interruption.] No, the hon. Gentleman can make his points about his constituency because I am not in a position to cross-examine or test the evidence. What I am giving hon. Members is the primary advice—the primary evidence—of a principal in my constituency. Let me repeat what that principal said:

“bureaucratic hurdles and ridiculous amount of wasted time in meetings with advisors and consultants…means there could never be value for money for the investment.”

With all due respect to the hon. Member for Tynemouth (Mr Campbell), I am content to take the advice of the principal of Banbury school on this matter.

[Mr Slaughter]

The hon. Gentleman was in a position to assert that a single individual received £1.35 million. He has been asked to name that individual. It appears from his comments that he was simply parroting what the Secretary of State said in the House. If the hon. Gentleman cannot name that individual, will he withdraw that accusation today?

[Tony Baldry]

The position of the Opposition on this issue is pathetic. They come to this Chamber with synthetic anger, having got the country and schools up and down the country into a real position of difficulty, and they then have the audacity to suggest—[Interruption.] No, they then have the audacity to suggest that the Secretary of State was misleading the House. That is what the hon. Member for Hartlepool (Mr Wright) has been saying.

I want to make it very clear to the hon. Member for Hammersmith (Mr Slaughter) that I will trust my right hon. Friend the Secretary of State for Education implicitly on this, because I do not believe that he would have misled the House on this matter. If that is the best point that the hon. Gentleman can make to defend the previous Government’s being so incompetent that they gave more than £1 million to an individual consultant, it is a very sad situation.

The Secretary of State has made it clear that the present Government intend to continue to invest in school capital projects, whether they involve primary or secondary schools, either to ensure that the most dilapidated schools are repaired as quickly as possible or to provide extra school places where they are needed in areas of growing population. It would be helpful if the Minister gave us all an indication of how the Government intend to approach that. I think that all Government Members recognise that the Building Schools for the Future programme was a travesty of a scheme, but there clearly are schools that require capital investment.

It is clear, for example, that Banbury school, on my patch, still requires capital investment. It serves an area that includes a number of wards with a disadvantaged school population and it has some very mature buildings. I hope that the review that the Secretary of State has set up will make recommendations about capital investment that adhere to the principles of value for money and ensure that capital investment goes to the front line to benefit pupils and schools, not consultants. It would be helpful to have an indication of how the Government intend to invest money in school buildings in the future.

Another important point is that in the Building Schools for the Future programme, the previous Government simply ignored primary schools, although often in our constituencies it is in primary schools where the school population is growing. In counties such as Oxfordshire, there is a double whammy at the moment. The fact that the previous Government left our nation’s finances in such a parlous state, with one pound in every four being spent on interest, means that it is increasingly difficult for county councils, through their schools capital programme, to allocate money for new school building projects.

For example, the Grange school in Banbury, which has a number of temporary classrooms, was hoping that it would be able to receive money from the county council’s own capital programme. That is looking increasingly difficult, simply because there is not the money in the budget.

None of us in any way underestimates the difficult decisions that have to be made by Ministers. I hope that this Minister will not be distracted by the rather synthetic anger from those on the Opposition Benches, because they are the guilty men who have got us into this situation. Rather than coming to this Chamber and chuntering as they are this afternoon, they should be ashamed of themselves for the position in which they left our nation’s schools and our nation’s education.

No debate or contribution on education should pass without our remarking on the fact that 10 years ago, the United Kingdom was fourth in the world for the quality of our science education; we are now 14th. Ten years ago, we were seventh in the world for the quality of our children’s literacy; we are now 17th. Ten years ago, we were eighth in the world for the quality of our children’s mathematics; we are now 24th. So we are talking about every area of academic endeavour over the past 10 years. It is not just the Building Schools for the Future programme that the Labour party left in a shambles, but educational standards as a whole. The present Government will have to sort out all that in the coming years.

[Several hon. Members]

rose—

[Mr James Gray (in the Chair)]

Order. We have about half an hour until the winding-up speeches and at least seven or eight hon. Members are trying to catch my eye. I therefore ask Members to be as brief as possible to allow others to speak. For the benefit of new Members, I point out in passing that it is helpful if Members write to Mr Speaker in advance of Westminster Hall debates, indicating their wish to speak. That makes it easier to work out who is to speak next.

15:08

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate my hon. Friend the Member for Halton (Derek Twigg) on securing the debate. Like him and like thousands of people in my constituency and millions throughout the country, I was appalled that the very first casualty of the Conservative and Lib Dem policy of savage cuts was investment in our schools. That will be deeply damaging to education and demoralising for students, parents, governors and teachers alike. It is also a big political mistake, because a lot of people who voted Lib Dem or Conservative were certainly not voting for that. In future, when people think of this Government, they will remember that the very first thing Ministers did was take the axe to our schools.

I want to highlight the casualties among schools in my constituency. Iffley Mead is a great special school. Ofsted rated it outstanding for care, guidance and support, and for personal development and well-being, and good in all other respects. The school anticipated the total replacement of outdated buildings, with state-of-the-art teaching areas for special needs, residential accommodation for looked-after children and respite facilities for families in need of additional support. People will find it impossible to understand why they evidently do not figure as part of the big society.

Cheney school, which is a community secondary, has been doing excellent work and has been building on an overall good Ofsted rating. It was looking forward to extensive rebuilding, including the replacement of science labs that were condemned as unsafe last year and which have now been closed. The school has significant numbers of children with special needs, for whom the current buildings, which do not have lifts, are not fit for purpose.

[Lyn Brown]

I am enjoying my right hon. Friend’s contribution very much, and it chimes totally with what is happening in Newham, where the John F Kennedy special school is one of 14 projects to have been cancelled by the Conservative party. Is it not ironic that some mainstream schools will be far better resourced than some schools that cater specifically for special needs children, who are the most vulnerable children in our communities?

[Mr Smith]

Indeed. My hon. Friend makes a good point.

Cheney is a good school that serves mixed communities and gets great results. It is a specialist school in languages and leadership, but, to add insult to injury, it has now heard that its £250,000 specialist schools money is also being cut.

We have to ask what message it sends simply to hack support away from schools such as these. I can assure the hon. Member for Banbury (Tony Baldry), who has just spoken, that there is nothing synthetic about the anger of Labour Members or the teachers, students and communities affected. There has been no assessment or evaluation of schools’ particular needs, and programmes are simply cut. Schools are now in limbo: they are told that Building Schools for the Future has been cancelled, yet they do not know what resources, if any, will be available to meet their pressing needs. That is a kick in the teeth for everybody who cares about those schools and who has been working hard for their success. What is the Minister’s message to those schools for the future?

I would also like to press the case of Bayards Hill primary school, which is due for total rebuilding and which had primary capital grant approved a couple of years ago. The catchment area includes one of the most disadvantaged communities in my constituency, and rebuilding would be a huge boost to aspiration and confidence. The school’s plans were all set to go, but they are now at real risk because Oxfordshire county council is looking at making huge cuts in all its programmes. I call on the county council to honour the pledges that have been made and to ensure that the project can go ahead.

This saga of school cuts is a shameful indictment of the priorities of the coalition Government, who are diverting resources from good schools with a proven track record and a clear need for investment to the damaging ideological experiment of their so-called free schools—let us remember that that is where the money is going. If the Government were listening to parents, teachers and governors, they would abandon this damaging policy now and reinstate investment in schools in our communities so that they could deliver the best opportunities and standards. If the Government do not listen, everyone will know in the years to come that the first big message from this coalition Government was that whereas Labour invested in the future of our schools and brought hope and opportunity, the Conservatives and Lib Dems brought cuts and despair. It is a tragedy that children’s education is paying the price for the Government’s monumental misjudgment.

15:14

[Jessica Lee (Erewash) (Con)]

I wish to highlight two key issues: the problems with the Building Schools for the Future scheme and the financial difficulties that the country is in. We have to place any discussion of future programmes for schools in that context.

We know that the financial crisis exists, and that has to be the background for our debate. Bennerley school, which is in my constituency in the east midlands, is one of 151 schools that are up for discussion. It is a possible academy school; indeed, I have spoken to the relevant Minister to put the school’s case on behalf of parents, teachers and our local community. In doing that, however, I am mindful of the context of the financial crisis that the country faces, and any decisions that the Government make will reflect that context.

I want to make three points about why the Building Schools for the Future programme is failing and needs to be looked at. The first relates to bureaucracy, the second to delays and the third to construction and design difficulties.

The Secretary of State summed up the design difficulties when he addressed the House on 5 July:

“One… school was built with corridors so narrow the whole building had to be reconstructed; another had to be closed because the doors could not cope with high winds. One was so badly ventilated that additional mobile air conditioners had to be brought in during the summer, and pupils were sent home.”—[Official Report, 5 July 2010; Vol. 513, c. 49.]

Nobody here could possibly agree that that is a sensible use of public money, and such cases raise concerns about some of the design and construction that has taken place.

The Times Educational Supplement accepts that there has been a problem with the scheme. Although it is concerned about part of the programme coming to an end or being paused, it comments:

“BSF suffered from too much bureaucracy and wasted costs in the procurement process, and that should be addressed.”

I agree with it on that point.

Professionals working in the sector also acknowledge and recognise the problems in the scheme. Sir Bruce Liddington commented:

“The current BSF programme is very bureaucratic, slow and unwieldy and I would welcome a review.”

Oasis Community Learning commented:

“We welcome the review of the BSF programme as to learn lessons from past experience in order to find a better way of working for the future can only be a good thing.”

The problems with the scheme are not to be underestimated, and some professionals have acknowledged that. Debbie Jones, chair of the Association of Directors of Children’s Services, which has good first-hand knowledge of the issues, says of the programme:

“While the aims were sound, the process left a lot to be desired, embroiling local authorities and head teachers in some torturous bureaucracy and wasteful procedures and did not make the most of the expertise in local authorities in managing capital projects.”

Again, that cannot be right, and we must address such problems.

Finally, if the point has still not been made clear, the Secretary of State set out for the House on 5 July the structure in place under the Building Schools for the Future programme. The process is quite long, and I hope that hon. Members can bear with me. It begins with the Department for Education. There is then the quango, Partnerships for Schools. Then there is another body, 4Ps, and Partnerships UK. Following that, local authorities set up a project governance and delivery structure, including a project board of 10 people, a separate project team of another 10 people and a separate stakeholder board of 20 people. They form the core group supervising the project. Then we have a design champion and a client design adviser—the list goes on and on.

I have said a few times that any programme of reforms must be put in the context of this country’s financial state, and it never ceases to amaze me that Opposition Members appear to sigh, moan and raise their eyebrows when that point is made on the Floor of the House. However, we cannot ignore the position that our country is in. “There is no money.” That was the note that was left; we all know that.

There are difficult decisions facing us. National debt is approaching £1 trillion and there is a budget deficit of £155 billion. The debt interest costs every year are more than the entire schools budget. This country must prioritise. The concern is that if Labour had formed the next Government, they would have turned their attention to jobs and that head or deputy head teachers’ jobs might have been at risk. The coalition Government are looking elsewhere. I urge the Department to consider the merits of each school that is being reviewed, but I accept, on behalf of the school in Erewash that I mentioned, that that consideration must take place in the context of our limited budget.

A responsible Government must make hard decisions. I am in agreement with the steps that the Government are taking to review the BSF project for two reasons: it is responsible to take those steps in the light of the bureaucratic problems with the scheme, and because of the financial mess that has been inherited from the previous Government. On the doorstep during the general election campaign, Erewash constituents would often ask me why, since they must balance their household budgets, the Government cannot do the same. They have a point.

The new Government have real will and a bold, reforming programme for education: the academies programme, free schools and getting to grips straight away with the bureaucratic problems of Building Schools for the Future. Those are positive ways to start, because we need to set teachers and schools free and support them in making choices so that they can make the best decisions for their pupils and the future. The time for writing blank cheques is over. I support the Government in prioritising good teaching and sensibly-afforded programmes for building in schools.

[Mr James Gray (in the Chair)]

I call Mr Chuka Umunna, and apologise if I have mispronounced his name. He may want to correct me.

15:21

[Mr Chuka Umunna (Streatham) (Lab)]

Thank you, Mr. Gray; you did okay.

I start by declaring an interest: two projects in my constituency have been scrapped and one hangs in the balance. The two that have been scrapped are the La Retraite and Bishop Thomas Grant secondary schools projects, and the one in the balance is for Dunraven school.

I have lived in my constituency all my life. I love my area and think that our young people are fantastic—they have drive and talent and want to succeed. I do not buy into the view that is often promulgated in the media that our young people are a problem. To answer the point made by the hon. Member for Banbury (Tony Baldry) about so-called synthetic anger, that is where my anger comes from: there is nothing synthetic about it. I want to provide young people in my constituency with a platform from which to succeed. That is why I feel emotional about the topic, and if the hon. Gentleman does not get that, I am not sure he will get anything.

[Damian Hinds (East Hampshire) (Con)]

Will the hon. Gentleman give way?

[Mr Umunna]

I will make some progress, if the hon. Gentleman will allow me, and perhaps take interventions a bit later.

Having declared my interest, I want to discuss the manner in which the BSF cuts were announced. I welcome the Secretary of State’s apology, but that does not excuse the shabby, dysfunctional way in which he made the announcement on 5 July. One of the problems was that he came to the Chamber almost as if he were attending an Oxford Union debating society-type event. He made the announcement in a way that seemed to show no recognition or appreciation of the gravity of what he was saying, or its effect on communities such as mine. As for the content, it included massively sweeping statements about the BSF project, some of which we have heard again this afternoon. We were told, at column 49 of Hansard, that it was “dysfunctional” and “did not guarantee quality”. It was portrayed as a wasteful programme, delivering second-rate buildings and facilities or, as I think the Secretary of State put it at column 48 on the same occasion, “botched construction projects”. I do not think that any Labour Members would say that the BSF programme was perfect, or that every aspect of it operated perfectly, or that it was 100% efficient; however, big and sweeping statements have been made, and I want to know—I will be grateful if the Minister elaborates—where the overall evidence is to support those statements.

A National Audit Office report on the BSF programme was produced last year. Although it noted that initial timings and budgets were too optimistic, it found that BSF was delivering school buildings more cheaply than academies and other school building programmes, and it was making it easier for local authorities to use their capital funding strategically. The hon. Member for Banbury put a premium on what school principals say about the project, and I would not disagree with taking note of what school heads and principals say about it. PricewaterhouseCoopers published an evaluation of BSF in February in which more than four fifths of head teachers agreed that the programme would contribute to educational transformation in their schools; three quarters agreed that it had more potential to deliver educational transformation than previous capital investment programmes; and all the head teachers surveyed agreed that it delivered a more stimulating environment and tackled fundamental design issues in schools. That is the overall evidence.

There are examples in my constituency of the BSF programme being very effective and highly successful. They undermine and contradict the overall view put forward by the Government and the Secretary of State. One example is Elm Court school, a special school in the Brixton area. An old Victorian building was transformed into a modern learning space, with fantastic new facilities including a theatre, a drama space and multi-use games and sports areas. The young people love it. Again, I ask for the evidence for what the Government say.

The lack of evidence calls into question the coalition’s motives for the announcement that they have made. They have said that the money being taken from the programme is not being diverted into free schools, but do they not accept that it adds insult to injury when the parents and teachers in my constituency, whose schools are affected by the cuts, see all that money being ploughed into the Secretary of State’s pet project, the free school model? The hon. Member for Erewash (Jessica Lee) mentioned the structural deficit, which tends to come up every time we talk about anything relating to resource. [Hon. Members: “ Of course it does.”] Okay, I accept that, but one of the ways of dealing with the deficit is to bring about growth. That is ultimately the best way to eradicate the deficit, in many respects. Why take investment away from the people to whom we are looking for the growth of the economy in the future? It does not make sense to me.

Above all, although I accept that BSF may not operate perfectly—the hon. Member for Erewash outlined the process—why not review and reform the process? Why sweep away an entire programme? I do not know whether there are any Liberal Democrat Members in the Chamber, but I cannot believe that they are going along with what is happening.

[Mary Macleod]

Does the hon. Gentleman realise that the Government are reviewing what is currently in the programme? If he accepts that the programme was not perfect, he should welcome a review to ensure that the capital funding that is being provided is spent in the right schools.

[Mr Umunna]

I argue that we need to wait until after the review, instead of scrapping all the ongoing projects. I shall talk about what doing that will mean for schools in my area, and I am sure that the same effects will be felt in other constituencies.

I mentioned the Liberal Democrats because, for the best part of two years, they have been spending literally hundreds of thousands of pounds in my constituency flowering their leaflets with their promises of the best start for children and pledging a boost for schools. There was recently a by-election in the Tulse Hill ward—this was after the announcement— and the literature promised:

“We will provide a fair start to all children by giving schools the extra money they need”.

Well, gosh. I would say they have forfeited any right to claim to speak for my community after the announcement that has been made.

The bottom line is this: we need the money. We need the projects to go ahead, and not only because school buildings in my area need reforming and updating. We have plenty of statistics to show that where we have invested in infrastructure using the BSF programme, it has massively increased the educational attainment of pupils in Lambeth, the London borough in which my constituency is located. School places are an issue there and the impact of the decision will be massive.

Just before coming to the debate, I received a copy of a letter that Susan Powell, the head teacher at La Retraite school, had just sent to the Secretary of State about the significance of the scrapping of the BSF project at her school. She explains how, in anticipation of receiving the BSF moneys, her school took on site three mobile classrooms:

“The reason for these mobile classrooms was that, two years ago, we agreed with the local authority to take on extra pupils and to extend the intake to 5 forms of entry. We agreed to do this as part of the arrangements for BSF; it was part of our bid. We believe that we have a moral right to new buildings to house the extra pupils, which we only took on in return for this promise. You may not know that pupil places are at a premium in Lambeth which is, as an authority, extremely short of places.”

Many hours, weeks and months of planning have gone into projects in my community that have been scrapped. I appeal to the Minister not only to approve the project at Dunraven school, which is in the balance, but to reverse the decision on the La Retraite and Bishop Thomas Grant schools. We are talking about our children’s future, and the coalition needs to wake up and come to its senses.

As I have already mentioned, last week the Secretary of State came and apologised to the House, saying that:

“when mistakes are made, we apologise and we take responsibility.”—[Official Report, 12 July 2010; Vol. 513, c. 641.]

In 1997, the Labour party inherited a legacy of chronic underinvestment from successive Conservative Governments. That is a fact, and the new Administration need to learn the lessons of the past. I am more interested in that than in any apology.

15:31

[Patrick Mercer (Newark) (Con)]

I am delighted to serve under your chairmanship, Mr Gray. It is a pleasure to follow the hon. Member for Streatham (Mr Umunna), who made some extremely good points, and I congratulate the hon. Member for Halton (Derek Twigg) on having procured the debate. He knows how much I respect his views, but he weakened his case with needless party political posturing, especially with his reference to the burden of the changed scheme falling particularly on Labour-held constituencies. That is not the case, as I am about to explain.

I thank the Minister for two things. First, the Secretary of State has promised that I may visit him to talk about this subject—I shall return to that in a moment. Secondly, the Minister will be aware that a promise has also been made that either the Secretary of State or a Minister will visit my Newark constituency. I am extremely grateful, and I await both dates with great interest. My point is that, in just a few weeks, I have received two promises from this Government that I got absolutely nowhere near receiving from the previous Government.

The Minister and all Members present will know that in 2001, very few seats changed hands from the Labour party to the Conservative party. Newark was one of those that did. I campaigned hard upon the fact that the disgraceful state of the schools in my constituency would be addressed, and with urgency. To give credit where credit is due, two outstanding schools have been refurbished in the west and north parts of my constituency: one in Tuxford, of which I am a governor, and one in Southwell. They are both excellent schools and look grand, they really do. However, the four secondary schools—now three—in the centre of Newark remained in a dreadful state. I campaigned again in 2005 on the principal point that something would be done about those schools. I constantly asked Labour Ministers for meetings. The requests were refused. I constantly asked Labour Ministers to visit the constituency. That was refused. Views constantly changed, amounts of money changed and there was obfuscation about which particular wave of the Building Schools for the Future programme my schools would be in. I never knew. When the education authority came under Conservative control, it was similarly frustrated by a process that left it flabbergasted by its incompetence.

Enough. Enough of complaining about the past. The hon. Member for Streatham made the point that this debate is about the future. It is about our children and delivering the education that they need. I am not interested in knowing what has gone before. I am not interested in the incompetence. I am interested in why The Grove school in Newark has to cease teaching when there is a heavy fall of rain and the children have to hold buckets under the roof. I am interested to know why Magnus school, which is just coming out of special measures, has nothing to look forward to. I am interested to know why the Orchard special needs school similarly has no idea what its future will be. Whatever the faults of the past, I am interested to know what the future is for these three schools on four sites—covering all the secondary schooling in the centre of my constituency—which have had their projects cancelled without a glimmer of hope being given to them.

We are told, “You can teach in a tent,” and I am sure that that is possible. The staff in Newark are first class, but the grave difficulty is recruiting new staff to a site that is a shambles. The new schools that I have are recruiting staff and pupils easily. The difficulty in Newark, which is right on the border between Nottinghamshire and Lincolnshire, is that so many of my children are drifting away over the border into Lincolnshire to be educated there.

My message is very simple: one does not take away a lollipop without promising a child a visit to the zoo the next weekend, or something similar. It is basic psychology. All sorts of members of staff from The Grove, Orchard and Magnus schools have expressed their disappointment and horror and have asked why schools in north Lincolnshire and Sheffield, for example, are totally unaffected while all Nottinghamshire schools are affected. The Grove school has been described by the local authority as having the worst buildings in Nottinghamshire, although I think that it has strong competition from Toot Hill, in Bingham, which is also in my constituency. What is the future for those schools?

The Building Schools for the Future programme was deeply flawed. I had nothing from it but frustration, anger and obfuscation, and the performance of those who were trying to administer it was simply bathetic—not pathetic. I ask the Minister please to give me some dates for the visits and for when I can see the Secretary of State, and to let me say something to my head teachers that gives us some hope that the schools’ capital projects will help Newark and that I can deliver on the promises that I made in 2001, 2005 and 2010, which took Newark out of the hands of Labour and delivered it to the Conservative party with a 16,000 majority.

15:38

[Andrea Leadsom (South Northamptonshire) (Con)]

I believe that the Building Schools for the Future programme is a classic example of what we have seen over the past 13 years of Labour: a project that was supposed to cost £45 billion and ended up being costed at £55 billion. Bureaucracy was the absolute cornerstone. As my hon. Friend the Member for Erewash (Jessica Lee) so graphically described, there were nine stages of preparation with multiple sub-stages, and many councils that entered the process six years ago only now have building work starting.

Labour, of course, set up a quango to deliver the project: Partnerships for Schools. I understand that running the quango cost the taxpayer £24.4 million last year and that the CEO earns about £215,000 a year—very nice work if one can get it. Finally, Labour achieved completion of works on only 97 secondary schools in seven years. That is absolutely typical of the endlessly aspirational but completely failing projects in so many areas. If that were not enough, the issue that I wish to raise is even more fundamental.

[Mr Umunna]

The hon. Lady has cited one example. Can she provide us with detailed evidence suggesting how widespread that alleged dysfunctionality was overall?

[Andrea Leadsom]

The hon. Gentleman will have to forgive me. I do not have time to go into the details, but I will happily speak to him after the debate.

None of south Northamptonshire’s six secondary schools had any prospect of a look-in on the programme before 2015. My constituency has one school in special measures and another that has just come out. The buildings are appalling, presumably because attainment is reasonable. Like many partly rural constituencies, mine has great areas of deprivation. That is simply not fair. I urge the Minister to ensure that our plans provide fairness across the country.

15:40

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate my hon. Friend the Member for Halton (Derek Twigg) on securing this timely and hugely important debate. He has campaigned tenaciously on this issue on behalf of the schools in his constituency and I applaud him for it.

This has been an energetic and passionate debate, and rightly so. Education fires up people’s passions. Many hon. Members from various parties were drawn into politics because they want to work to give all our children and young people the best possible start—an aim with which I think we all agree. However, the whole House should also agree that cutting Building Schools for the Future so soon after the birth of the coalition Government is a shameful and shambolic example of ministerial arrogance and incompetence.

Time and time again in this debate, we have heard of the anger in hon. Members’ constituencies—real anger, not synthetic—about the decision to scrap school buildings. My hon. Friend the Member for Halton, my right hon. Friend the Member for Oxford East (Mr Smith) and my hon. Friend the Member for Streatham (Mr Umunna) have made excellent speeches. I also highlight the excellent contribution made by the hon. Member for Newark (Patrick Mercer), who illustrated the cross-party anger about the matter. The rally in London on Monday organised by the teaching unions and my right hon. Friend the shadow Secretary of State for Education showed the depth of anger not just in the House, but across the country among parents, young people, teachers, school governors and local authorities.

We have heard that the manner in which the decision was made showed breathtaking incompetence and arrogance. It was incompetent because the Secretary of State, whom I like very much and think is an incredibly intelligent man, was not on top of his brief. It was a debacle because information was not provided to hon. Members when the Secretary of State made his statement to the House on 5 July. It was a shambles because error after error appeared in the cancellation lists. I think that we are currently on our fifth or sixth list, but I might be a bit behind the curve.

What matters more than any of that is the fact that 735 schools will now not be refurbished or rebuilt as planned. It is confusing. Dyke House school in my constituency was due for financial closure this Friday. It has decanted all its students to another site ahead of the two-year building programme. The head teacher has invested another £400,000 to facilitate the build, and the local authority has invested £3 million to ensure that it takes place. There has been no word whatever about whether the project can proceed. I asked a named day question about Dyke House school on 6 July, to be answered on 12 July. Almost two weeks after that answer was due to be provided, I have not yet got a response from the Department. I had the privilege to serve as a Minister in the Department for Children, Schools and Families, and I found it an incredible honour to work with the most passionate, energetic and professional officials anywhere in Whitehall. This is not the officials’ fault; it is a symptom and a sign of ministerial dysfunction and incompetence, and the ministerial team should be ashamed of themselves.

[Mr Slaughter]

My hon. Friend is identifying some of the perhaps unintended consequences. It is not just that schools are being left with crumbling buildings; local authorities’ plans for redeveloping schools have also been thrown into chaos, causing not only financial loss but the sort of loss that my hon. Friend is discussing. In some local authorities, including mine, academies have had a full modernisation programme but other schools have been left to rot, resulting in a two-tier system. It is a complete shambles.

[Mr Wright]

I agree absolutely. At the moment, we are debating the Academies Bill on the Floor of the House; I think that we are about to suspend for a Division on it. The Academies Bill will set up a two-tier system of education as well.

15:45

Sitting suspended for a Division in the House.

16:00

On resuming—

[Mr Iain Wright]

rose—

[Mr James Gray (in the Chair)]

Minister—[Interruption.] I beg your pardon; I mean Mr Iain Wright.

[Mr Wright]

If only that were still the case, Mr Gray, some school buildings might still be being refurbished and rebuilt.

Before the Division, we were discussing the arrogance and incompetence of the current ministerial team. When the Secretary of State announced his decision, he committed the cardinal sin of failing to ask the right questions. That was arrogant, because he thought that there was no need to consult or ask whether his information was correct and accurate. That is an example of top-down government—the belief that the Minister in Whitehall knows best and that there is no need to check data or facts with schools, trade unions or local authorities.

Building Schools for the Future was not perfect; I have not suggested that and nor has any other hon. Member who has contributed to this debate. However, it was ambitious in its scope, and that was something that we had not seen in this country for the best part of a century. It represented nothing less than a 15-year programme to refurbish or replace every single secondary school in England.

[Ben Gummer]

Will the hon. Gentleman give way?

[Mr Wright]

The hon. Gentleman must forgive me, but I have only four minutes left. In cancelling BSF, the Secretary of State told the House that rising standards in schools are not based on new or improved school buildings.

[Derek Twigg]

Will my hon. Friend give way?

[Mr Wright]

Given that my hon. Friend secured the debate, I feel that I should give way.

[Derek Twigg]

On the point about rising standards, there was some suggestion that standards had not risen under Labour, yet in Halton they have risen significantly in all secondary schools. In fact, only today Bankfield school, my old school, has been rated as outstanding by Ofsted.

[Mr Wright]

I congratulate Bankfield school on that achievement. Hartlepool local education authority was the fastest-improving education authority in the past 10 years, with regard to rising economic standards, and we have just lost out on £104 million of BSF funding. That could have been the last piece in the jigsaw that would allow our young people in Hartlepool, Halton and elsewhere to meet their potential and thrive.

The Labour Government were allowing teachers, who are professional and well respected, to use their professionalism to inspire and impart knowledge. The CBI produced an interesting report last year that found that exam results in BSF schools improved at more than four times the rate of other schools. It also found that in those schools 30% of pupils felt safer, that bullying and vandalism had decreased by 23% and 51% respectively and that 13% more pupils said that they intended to stay on for the sixth form. Therefore, there is a close relationship between rising standards and inspiring buildings.

To allow Britain to compete in the modern globalised economy, surely we need world-class facilities. If we are to lead the world in science in the 21st century, surely we need state-of-the-art science labs to help motivate and inspire the next generation of scientists. If we are to be at the cutting edge of climate change mitigation, surely a good start would be to demonstrate to pupils, from the youngest possible age, that green buildings can help protect the environment. On a slightly more mundane level, surely it is right that this country, which is still the world’s fifth largest economy—despite the comments of Government Members who want to run down our economic performance—should be able to provide school buildings that do not leak.

The Minister must answer several questions that the Secretary of State seems pathologically incapable of answering. If the Minister does not have time to answer them, I would appreciate it if he wrote to me, and to the Members who have participated in the debate, with specific answers.

Did the Secretary of State at any point receive written or oral advice from his officials or from Partnership for Schools urging him not to publish a list of schools until after he had consulted local authorities to ensure that his criteria were sound and his facts right? Was he advised of the risk of legal challenge from private building contractors? What contingency has his Department put in place for possible judicial reviews from schools, local authorities and private contractors? Will the Minister admit that the decision was not about inefficiency, cumbersome bureaucracy or insufficient funds, but was considered necessary by the Secretary of State to free up money for his dogmatic and ideological free market experiment in schools?

When the Secretary of State announced the cuts to BSF to the House, he stated:

“Action is urgently needed today because the whole of my predecessor’s Department’s spending plans were based on unsustainable assumptions and led to unfunded promises.”—[Official Report, 5 July 2010; Vol. 513, c. 50.]

That is a serious allegation about the financial controls and the accountancy and budgetary procedures at the Department for Children, Schools and Families. It alleges that the permanent secretary, as accounting officer, allowed the then Secretary of State to make uncosted promises for short-term political gain.

However, the permanent secretary has stated in a letter to my right hon. Friend the Member for Morley and Outwood (Ed Balls):

“During your time as Secretary of State, I can confirm that the Department for Children, Schools and Families worked closely with Her Majesty’s Treasury to ensure that appropriate cover was provided for spending decisions. Decisions on capital expenditure, including those relating to Building Schools for the Future, were subject to Treasury clearance where appropriate...If any actions on this or any matter were in breach of the requirements of propriety or regularity, I would have sought a ministerial direction. I can confirm that I made no such requests during your time as Secretary of State.”

Will the Minister concede that there were no unfunded promises in the BSF programme and that all schemes went through appropriate procedures of appraisal at both the Department and the Treasury? Will he now apologise for the scurrilous allegations about my right hon. Friend’s conduct?

In conclusion, the Secretary of State’s decision on Building Schools for the Future has cost him a lot; in the space of an afternoon, his reputation—hard won over many years—was reduced to tatters. More importantly, the decision has cost the private sector the potential for recovery and local authorities millions of pounds in opportunity costs and sunk spending. Even more importantly, by denying hundreds of thousands of children and young people the opportunity to be taught in world-class facilities of outstanding design, that decision will be to the cost of the educational potential, and hence the social and economic progress, of this country for many decades to come.

16:06

[The Parliamentary Under-Secretary of State for Education (Tim Loughton)]

I am sure that we are all glad that the former Minister has got that off his chest, but he has not left me much time in which to answer the real questions that hon. Members have asked. This is the first time that I have served under your chairmanship, Mr Gray, and it is a pleasure. I welcome the large number of Members who have sought to participate in the debate. That demonstrates the interest in this matter, although it is notable that there are twice as many Conservative Members present as there are Labour Members.

[Lyn Brown]

Will the Minister give way?

[Tim Loughton]

I will not give way.

[Lyn Brown]

I have sat through the whole debate to ask one question—

[Mr James Gray (in the Chair)]

Order.

[Tim Loughton]

Conservative Members have shown great interest in the debate, while Labour Members who have jumped up and down cannot be bothered to come here in the numbers we were promised.

[Lyn Brown]

Will the Minister give way?

[Tim Loughton]

I will not give way.

I congratulate the hon. Member for Halton (Derek Twigg) on securing this interesting debate. I certainly recognise his passion for the subject and for the schools in his constituency. I also recognise the big impact that the Building Schools for the Future changes have had on his constituency and the good progress that those schools have made. He acknowledged that the BSF system was certainly not perfect, but he did not state what the effect on BSF would have been in the event of the re-election of a Labour Government committed to axing 50% from capital spending. The cuts have not just come about—

[Derek Twigg]

Will the Minister give way?

[Tim Loughton]

I will not give way because I want to answer the specific questions that the hon. Gentleman has asked. I can either take more interventions and not answer his questions, or I can answer his questions. The choice is his.

[Lyn Brown]

Will the Minister give way?

[Tim Loughton]

I will try to answer the hon. Gentleman’s questions.

The right hon. Member for Oxford East (Mr Smith) said in his speech that the coalition Government’s first cut was to the BSF budget, but it would have been the same had the Labour Government been re-elected because the money was never there for the scheme, despite all their vague promises.

Many hon. Members from both sides of the House have spoken passionately about the effects of the BSF changes in their constituencies. My hon. Friend the Member for Newark (Patrick Mercer) has built a reputation for standing up for the schools in his constituency since his election in 2001, and I will certainly nudge my colleagues about the visits to his constituency and to the Department that he was promised. I also acknowledge the passion with which the hon. Member for Streatham (Mr Umunna) spoke, particularly on his work in the interests of the young people in his constituency. I will answer three of the specific questions from the hon. Member for Halton, but if I miss any other hon. Members’ questions I will be happy to write to them if they nudge me afterwards.

First, the hon. Member for Halton asked about the review. It is led by Sebastian James, the director of DSG International, and is due to be completed by the end of the calendar year, with interim advice to be produced in September, ahead of the comprehensive spending review. Secondly, he asked about the impact on ICT funding. Basically, those decisions will be taken along with those on schools still under consideration and on the future of the scheme, which is being decided under the James review. Such considerations will be part of that review.

Thirdly, the hon. Gentleman made a point about playing fields. The review will include consideration of all requirements on schools, including their buildings and land. However, there is simply no intention to get rid of playing field regulations. I can assure the hon. Gentleman that the review will support the coalition aim to protect such playing fields.

I also want to respond to the specific point made by the former Minister, the hon. Member for Hartlepool (Mr Wright), about the consultant paid £1.35 million. The National Audit Office’s BSF report of 2009 said clearly, on page 37, in section 4.8, that the £1.35 million was paid to the firm KPMG for the financial services of “one individual” exclusively in that period. The hon. Gentleman knew that—[Interruption.] If he did not know that, he had not done his homework. He was a Minister in the Department at the time.

Let me restate the Government’s absolute commitment to raising standards of education in this country, an ambition shared by all hon. Members and certainly those in the Chamber today. From day one, we have been totally committed to raising educational standards and to tackling head-on some of the big problems bequeathed to us by the former Government.

The achievement gap between private and state schools has grown over the past 13 years. Just as painfully, standards have declined to the point at which 42% of pupils eligible for free school meals are not achieving a single GCSE above grade D. Only a quarter of GCSE students are achieving five or more GCSEs including English, maths, science and a foreign language. We are 24th in the league table for maths, as my hon. Friend the Member for Banbury (Tony Baldry) mentioned.

The hon. Member for Halton claimed that all the changes to BSF are ideologically driven. That is true: the Government are ideologically ambitious to raise the quality of education for every child and to raise the standard of education in every school. The hon. Gentleman also said that the changes were the biggest attack against Labour-supporting areas. What about the attack on the aspirations of the constituents in those areas, building up their hopes of new school buildings when there was never any prospect of a re-elected Labour Government delivering them? That is the attack, and it was misleading, dishonest, opportunistic and immoral. Yet now Labour Members cry foul about how things are happening.

In contrast, we have committed to doubling the number of highly accomplished graduates teaching in our schools, to make sure that every child—especially the poorest—has access to excellent teaching.

I understand the grave disappointments of hon. Members about the BSF programme. I also understand the disappointment of the affected heads, teachers and pupils in the constituencies of the hon. Member for Halton and others who have spoken. It would have been wonderful to have inherited a decent financial legacy so that we could carry on with an efficient building programme to renew all our schools.

The hon. Member for Streatham said that abandoning the BSF programme made no sense. However, what does not make any sense is to leave our Government with a Budget deficit of £155 billion and a public sector net debt of £926.9 billion, or 63.9% of GDP. That is what does not make sense, and that is what is unfair to the children, teachers and parents who are now being let down by a plan that would never have been delivered in practice. It also discriminated against many schools in the later phases. They had no prospect of the money, because it had been lavished disproportionately—wasted—on the earlier schools. That is the truth of the matter.

It is vital to repeat the fact that, contrary to some of the wild reports, the BSF changes do not mean that school buildings and capital works will suddenly be stopped dead in their tracks. We remain committed to investing in the schools estate, to ensure that pupils are educated in buildings of a good standard, where they feel safe, comfortable and ready to learn. However, we must acknowledge that, as the Chancellor made clear in his Budget last month, we are living in a difficult fiscal climate and one in which £1 of every £4 we spend is borrowed. Increasingly, professionals across all public services are being asked to do more with less.

BSF was the flagship programme of the previous Government. Where it has delivered, it has seen some impressive new buildings, but at a huge cost—rebuilding a school under BSF is three times more expensive than a commercial building and twice as expensive as building a school in Ireland.

Social Housing (Houghton and Sunderland South)

Wednesday 21st July 2010 Westminster Hall

16:15

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Gray. I refer to the Register of Members’ Financial Interests, in which I declare that I own a house, which I rent out privately.

The debate is the first in Westminster Hall that I have secured. I am pleased to take the opportunity to raise an issue of such importance to my constituents. Housing remains a pressing priority in Houghton and Sunderland South, and indeed across the north-east region. Time and again, constituents tell me of their frustration at being unable to secure a home to rent, in particular in a community in which they grew up and where their family continue to live. Their expectations are not unreasonable, and shortage of supply understandably gives rise to frustration and resentment.

In April 2009, there were 2,184 households on Sunderland city council’s waiting list for social housing. In 2008-09, 217 people in Sunderland were accepted as homeless and in priority need. That figure is down from 597 in 2004-05, and I commend Sunderland city council’s housing advice team, whose preventive work, advice and mediation prevent more families from becoming homeless. In 2008-09, the team undertook 710 homelessness prevention cases outside the statutory framework, helping to protect families from the misery and chaos of losing their home and all the social problems that that causes.

However, I am concerned that cuts to local authority funding, with more expected in the autumn, will financially squeeze councils such as Sunderland. Councils will find it increasingly difficult to invest in the vital preventive work that ultimately saves money and alleviates pressure on social housing. I seek reassurance from the Minister on that point.

Under the previous Labour Government, Sunderland’s largest registered social landlord, Gentoo, secured a grant of £34 million from the Homes and Communities Agency under the kick-start scheme. That funding has been crucial in regenerating key areas in Houghton and Sunderland South, such as Doxford Park and the Racecourse estate. I know that such funding has also been crucial in the constituency of my hon. Friend the Member for Sunderland Central (Julie Elliott).

Research carried out by Gentoo estimates that the overall benefit to the local economy of that Government investment was £60 million—from a grant of £34 million. Jobs in construction and associated trades were secured and created through the investment, which is important in the context of the global recession, when construction workers were struggling to find work as home building ground to a halt.

Local people have benefited from hundreds of new homes to rent and much needed regeneration. I must also commend Gentoo for ensuring that all its social housing stock meets the decent homes standard, five years ahead of the previous Government’s deadline. The challenge is not simply ensuring that we have adequate social housing built to meet our needs, but enabling existing tenants to live in modern homes.

Social housing, which many of us used to know as council housing, has an important role to play in our society. For too long, we heard negative comment about so-called sink estates, with social housing seen as, at best, a second-class option and, at worst, a last resort. As someone who grew up in a council street, the major problem to affect our quality of life and that of our neighbours was the lack of investment in our homes in the 1980s and 1990s—no proper heating systems, damp, no damp-proof course and rotten windows.

[Julie Elliott (Sunderland Central) (Lab)]

As my hon. Friend said, mine is the neighbouring constituency—Sunderland Central has housing provided by Gentoo and Sunderland city council. Does she agree that the standard of housing built in recent years by Gentoo in my constituency, such as Leafields, has not only improved the standard of housing that people live in, but had a great impact on reviving communities and improving their facilities? Often, such housing projects have been built in conjunction with other new builds such as Sure Start centres and schools. That impact is in danger of being lost through the cuts being threatened in such areas.

[Bridget Phillipson]

Yes, I agree absolutely with my hon. Friend. Doxford Park is a particularly good example in my constituency of social housing at its best. Like the development in her constituency, it has a variety of homes: bungalows, flats and family homes. Equally, there is mixed tenure in such developments. There are homes for rent and homes that can be bought, often at affordable prices that are in the reach of local people.

My hon. Friend makes the good point that such development needs to be continued. We still have a pressing need for regeneration in some areas of Sunderland. I appreciate and accept the concerns of many of my constituents that, at times, regeneration has been too slow. I am keen to see it continue, but from discussions that I have had with Gentoo I know about the difficulty that it faces. It would like to build more homes for rent, but because of lack of money from the Government, at times it has little option but to reduce the number of homes it can rent, relative to the number of affordable homes it can sell.

In 1997, the Labour Government inherited a vast backlog of necessary repairs to the social housing stock. The homes were simply not fit for habitation and were crumbling. Social housing should be a genuine choice for my constituents, and I would argue strongly for that choice. Owning a home remains out of the reach of many of them due to their income, so investment in social housing must remain a key priority of the new Government.

As the housing market has slowed and the deposit required for a mortgage has sharply increased, turnover of social homes has dropped significantly in Houghton and Sunderland South, and across Sunderland. That particularly affects young families, who are forced to turn to the private sector, where rents are often higher, there are still unscrupulous landlords and there is not the same security of tenure.

I contend that if the Government will not prioritise investment in social housing, it is all the more important that additional safeguards are put in place to tackle rogue private landlords. However, the Government have offered no commitment on that issue and have dismissed as bureaucratic any suggestion that further regulation of the private rented sector is needed. Further measures are required to provide protection to private tenants in constituencies such as mine, and to provide protection against antisocial behaviour committed by tenants where the landlord does not take action, or where properties are left to stand idle by absentee landlords who are sometimes as far afield as Hong Kong.

My hon. Friend the Member for Blaydon (Mr Anderson) used to live in my constituency. Some of the private landlords who bought properties in the area lived in Hong Kong, and the city council had significant difficulty tracking them down to push forward much-needed regeneration. Sometimes homes become a public health hazard or a focus of antisocial behaviour.

Moreover, the proposed reforms to the housing benefit system will push private tenants into poverty as they struggle in constituencies such as mine to make up the shortfall. It is not uncommon for private tenants in Houghton and Sunderland South to top up their rent by some £10 to £15 a week. For such tenants, the top-up could double when their finances will already be under pressure because of a freeze in child benefits, cuts to tax credits and the VAT rise.

The changes to housing benefit will increase homelessness in my constituency, which will, in turn, lead to greater pressure on social housing stock when we already have a shortage. Local authority housing advice teams such as those in Sunderland will struggle to deal with the additional people who register as homeless. In fact, many local councils support homeless people in accessing private tenancies, and they will now face a massive strain on their already limited budgets. I urge the Government to rethink that damaging element of the housing benefit reforms. In my constituency, it will prove divisive and punitive, and exacerbate social housing need.

Along with many others, I urged the Labour Government to prioritise investment in social housing and recognise the need felt in communities such as Houghton and Sunderland South. Investment did increase, and I was pleased that they listened. However, I am deeply concerned that that progress will be lost. The House of Commons Library makes it clear that the Homes and Communities Agency will see a 10% reduction in its capital budget this year—a total of £450 million when our need for social housing remains as strong as ever, and when crucial construction industry jobs might be secured or created.

Indeed, that cut, combined with the cuts to the Building Schools for the Future programme, will damage the already struggling construction industry in Sunderland, where vital jobs could have been created and much-needed projects could have gone ahead for the benefit of my constituents.

I shall draw my comments to a close as I am anxious to hear the Minister’s response. Again, I am grateful for this early opportunity to draw attention to a serious issue that affects my constituency and wider Sunderland.

16:19

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

I congratulate the hon. Member for Houghton and Sunderland South (Bridget Phillipson). She is following in the path of her distinguished parliamentary predecessor, Fraser Kemp, and I am sure that she will in time establish the same strong reputation that he had for sticking up for constituents. She has done so very well just now. I thank her for bringing this question to the attention of the House and for giving me an opportunity to respond to it.

We need to start with the real situation facing this country as far as financial circumstances are concerned. The hon. Lady made it sound as though the coalition Government have taken decisions purely on a whim—as though we had a choice—and overlooked the fact that we have inherited the worst financial situation of any Government in western Europe, save Ireland.

[Mr David Anderson (Blaydon) (Lab)]

I welcome my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) to the House. It is great that she is now the MP for the place where I spent some of the happiest years of my life.

The Minister makes a point that we hear continuously—that there was no choice. The truth is that there was a choice. We all agree that we have a terrible deficit to sort out, but the choice that the Government parties are taking is different from the one that my party would have taken if it had been in government. We do not have to choose what the Minister has chosen. That needs to be nailed to the wall now.

[Andrew Stunell]

I thank the hon. Gentleman for his contribution, which is one that I have heard several times from Members on the other side of the House. Unfortunately, it is no more relevant or close to reality than the projections that were made before the election, which were that everything was fine and that we could just carry on.

If things were so good beforehand, it is astonishing that so little social housing was built by the previous Government. House building in England is now at its lowest level since 1946, with just 118,000 completions in 2009. I remind Opposition Members that they were in charge at that time. Excluding the war years, they achieved the lowest rate of house building across England and Wales since 1923. That is not a record that allows them the strength to criticise what this Government are doing now.

[Bridget Phillipson]

The argument that the Minister makes is a good one in many ways. He refers to 1946 as a key point. Much of my constituency is composed of post-war modern developments built when Britain was groaning under the weight of the debt we accrued to fight the second world war. Surely, sometimes it is a question of priorities. We choose to prioritise what matters, and if we choose to prioritise housing, we not only secure the future of our communities and regenerate them, but, equally, create much-needed jobs in a time of deficit.

I accept the Minister’s point that the previous Government should have done more on social housing. I pushed hard on that point. I would contend that latterly they were doing more, but that the rug is now being pulled—

[Mr James Gray (in the Chair)]

Order. Interventions should be as brief as possible.

[Andrew Stunell]

I thank the hon. Lady, who acknowledged the reality of what I said. As she correctly says, this is a matter of priority. I shall come to exactly what the Government’s priorities are, and why we took the decisions that we have announced.

We need to be clear that there is a significant gap between the supply and demand for new homes. For decades, the housing market failed to keep up with the needs of our growing population, which has led to problems with affordability, people coming on to the council house waiting list and people seeking to buy their first home. That, in turn, has led to social and economic problems, and the hon. Lady eloquently set out some of the problems affecting her own community.

The long-term demand for housing is strong and fed by rising population, increasing affluence—taking 10 or 20 years at a time—and people’s strong cultural preference for homes of their own. Under-supply has led to some serious consequences for us.

I want to make it clear to the hon. Lady that we, too, share her commitment to having more affordable housing, and we remain committed to the provision of social rented housing for those in need. We will promote shared ownership schemes and help social tenants and others to get on to the housing ladder, although that has to be done within the constraints of the financial position that the Government find themselves in.

If constituents came to hon. Members’ surgeries with a problem and explained that they were on £300 a week but were spending £400 a week and putting the extra £100 on their credit cards, which had £50,000 on them, we would, as responsible Members of Parliament, say, “You need to see whether you can increase your income and reduce your expenditure.” People would get such advice from any sensible debt counsellor or MP. We, as sensible MPs, and as a sensible coalition Government, have to say that our commitments and aspirations must be measured against the resources available and the constraints of the financial position that we are in.

[Pat Glass (North West Durham) (Lab)]

We hear that mantra from the Government every time they open their mouth; it is their answer to every question. The Government are looking to wipe out the deficit in three to four years simply so that they can deliver tax cuts before an election. They are doing that at the expense of the constituents of my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson).

[Andrew Stunell]

It would be nice to think that we could wipe out the deficit, but the Government’s financial plans say that we will have stopped adding to the overdraft. It is not that we will reduce the £50,000 credit card debt that I mentioned, but that we will stop increasing it. The hon. Lady needs to get a grip on reality.

To return to the subject of the debate, we are absolutely committed to wider home ownership and helping those who aspire to own their own home; the figure is estimated at some 1.4 million households. We want first-time buyers who cannot get into the housing market to do so, and we want social housing waiting lists to be reduced. We want to ensure that the affordable housing supply is increased.

That means building new homes, where they are sustainable, in places that are attractive to people and near to work. We know from the performance of the previous Government that top-down targets are not the right way to go about that. In fact, the higher the targets were raised by the Labour Government, the fewer houses were completed.

We intend to return decision making to democratically elected councils and to remove regional housing targets. We will reform the planning system to give neighbourhoods more say, provide incentives to local authorities to deliver sustainable development and create new land trusts that will make it simpler for communities to provide homes for local people. We will drive up housing supply by providing financial incentives to local authorities that build additional housing. I would have thought that that was helpful to the hon. Member for Houghton and Sunderland South in respect of the debate.

Ours will be a bottom-up approach, allowing local communities to control the way villages, towns and cities develop through local plans and letting them derive direct benefits from the proceeds of growth in their areas. We need to remind ourselves again that the affordable housing supply was down by more than a third under the previous Government. We recognise that there is continued need for affordable housing for social rent and for low-cost home-ownership housing, and we remain committed to delivering on that.

Some Library figures on spending reductions being applied to the Homes and Communities Agency were mentioned. If the hon. Lady looks carefully at the expenditure plans that we have set before the House, she will see that the previous Government’s housing pledge committed £1.5 billion to the agency’s funding. We have now secured and authorised £1.25 billion. In other words, by struggling and kicking we have pushed forward a sum that is just £250 million short of the original pledge, which was based on wobbly finance. The Government are strongly committed to pushing that programme forward. We will make the radical changes needed to incentivise housing supply and ensure that local communities are empowered so that they can take advantage of that.

On Monday, the Prime Minister and the Secretary of State for Communities and Local Government attended an event in Liverpool, which was the first of a series of events to kick-start the big society. It was announced that four pilot local authorities would immediately be given the opportunity to take forward some of the ideas for devolving power and making things happen locally, to supersede top-down decision making from Whitehall and get things going on the ground. I hope that, soon, the hon. Lady will see those pilots delivering success and that she will strongly encourage Sunderland city council to join in.

The hon. Lady mentioned housing benefit, which I want to discuss. We—the Government and taxpayers—are paying more in housing benefit than we do for the police and universities combined. In real terms, the cost of housing benefit has risen from £14 billion to £21 billion in the past 10 years. I will give her the opportunity after the debate to score a few points at my expense. This is the second time that I have debated housing benefit in Westminster Hall with a Member representing Sunderland South. The previous time was on 12 January 2000, with her predecessor—she may want to look it up in Hansard—who said:

“The overriding objective of the housing benefit system is to enable those with no income of their own and those on low incomes to provide for their reasonable housing costs… housing benefit should not subsidise someone to live in a property that is unreasonably expensive. If it did, tenants would… have no incentive to look for more reasonably priced accommodation and landlords would have no incentive to seek more reasonable rents.”—[Official Report, 12 January 2000; Vol. 342, c. 108WH.]

At that time, her predecessor was a Minister with responsibility for communities and I was in the hon. Lady’s place, making bitter complaints about what was happening to housing benefit. Since then, housing benefit expenditure has risen by £7 billion.

[Bridget Phillipson]

Does the Minister accept that, subsequently, the local housing allowance was introduced to deal with that problem and that although the reforms of the housing benefit system were far from perfect—it is a complicated, means-tested system—the LHA was designed to tackle some of the difficulties, including rents being too high or tenants not being encouraged to find more affordable accommodation? We do not need wholesale cuts to adapt system more adequately to meet the needs of tenants.

[Andrew Stunell]

I am sure that those matters will be debated during the consultation on the plans that have been announced. Since the hon. Lady’s predecessor made that statement to the Chamber, expenditure on housing benefit has increased by 50%, from £14 billion to £21 billion. A simple ready reckoner helpfully provided by my Department shows that that £7 billion would have allowed us to build 60,000 social houses in each of the past 10 years—600,000 houses could have been constructed. That would have satisfied her and me, but it would have required restraint on housing benefit.

If the coalition Government’s proposals are implemented in the form in which they have been introduced, they will save £1.8 billion, which is equivalent to 20,000 social houses. In a time of constraint, the hon. Lady and I must weigh up housing benefit costs against the possibility of increased social housing. Those are the tough choices that her predecessor offered to me 10 years ago, and which it is now my duty to offer to her today. The reforms that have been announced will allow us to make better use of our social housing. A key point relates to the way that social housing is occupied. We all know that there is a mismatch between the size of households and the size of many council houses. We know that that is also an issue.

When resources, affordable housing and rented accommodation are scarce, waiting lists are high, and financial constraints on the country are great, we must ensure that we make efficient and effective use of the resources and homes that we have. The hon. Lady referred to the hardship that will be caused to her constituents as a result of applying the new rules, but I remind her that the discretionary housing payment allowance to local authorities is £20 million, which will rise threefold to £60 million to help households to adjust. As the name suggests, the payments will be entirely at the discretion of local authorities.

Hon. Members are rightly interested in housing need, which increased under the previous Government, despite a 50% increase in spending through housing benefit. I suspect that there is not much of a gap between the hon. Lady and me on what might have been a better use of that money in delivering social housing for people to rent. We have inherited record-low house building. We have waiting lists for social housing of 1,800,000 households, and turning that around will not be easy. However, I assure the hon. Lady and other hon. Members that we are absolutely committed to turning it around and to providing safe, secure, sustainable housing for all who need it.

[Mr Anderson]

I thank the Minister for taking this intervention; I did not want to interrupt his flow. Will he provide us with the figures? I lost track a little, but I think he said that 600,000 houses could be built for £7 billion. Can those figures be put in the Library or shared with Members so we can check them out?

[Andrew Stunell]

It is a good job that I did not say that, because if I had it would have been completely incorrect. If I conveyed that impression, it is a good job I am responding now, because that allows me to say that the difference in the cost of housing benefit in real terms between 10 years ago and now is £7 billion a year. I believe that the hon. Gentleman has seen my point. I do not think that there was anything wrong with what I meant to say. If there was something wrong with what I actually said, I am happy to put that right.

Local Education Partnerships

Wednesday 21st July 2010 Westminster Hall

16:44

[Charlotte Leslie (Bristol North West) (Con)]

Thank you, Mr Speaker. This is my first Westminster Hall debate, so if I mess up the protocol—

[Mr James Gray (in the Chair)]

You addressed me as Mr Speaker, which is flattering, but incorrect. I am not yet the Speaker. Mr Gray is perfectly sufficient.

[Charlotte Leslie]

Thank you, Mr Gray. That was my first mess-up.

The focus in recent weeks has been on the Building Schools for the Future programme, but I wanted to bring this debate to Westminster Hall because the mechanisms underlying that programme—local education partnerships—have been overlooked. They are public-private partnerships between local authorities and a private sector partner selected to carry out contracting for the local authority. I have initiated this debate because I want to talk about the inefficiencies of local education partnerships and a certain lack of democratic accountability.

On value for money, I have previously worked with academy sponsors and a number have come to me in little less than despair about the measures and mechanisms that they have to go through with local education partnerships, to the extent that one even told me that the introduction of the partnership would be enough to put them off sponsoring another academy. I shall give a few details of an academy sponsor who sponsored an academy before the local education partnership came into effect, and then did so again after that, to give the Minister the benefit of experiences that that academy sponsor related to me about the way the partnership process works.

I shall also speak about the democratic accountability of local education partnerships. I shall refer, for illustration only, to a specific case in my constituency: the rebuild of Elmlea infants school, which badly needs a rebuild and has a very hard-working head teacher. That rebuild will not be done under the Building Schools for the Future programme.

First, on the academy sponsor and its concerns about efficiencies, the sponsor told me that the local education partnership in Bristol—the contractor partner was Skanska—was 90% owned by Skanska as contractor and 10% owned by the local authority. Obviously, that raises questions. The interests not of the school but of Skanska were put first, because of its stake in the LEP. Moreover, the local authority was a 10% shareholder, so it was compromised because the higher the building costs for Skanska, the higher the fees to the LEP. It was apparent that the school’s interests were not represented in that dynamic.

My second concern is about responsibilities. A partnership may function very well, but there may be a lack of accountability as to who takes responsibility for what. That problem has been raised frequently in connection with academy projects. In a local education partnership academy project, the school that is converting to an academy is not the client; the local authority is the client. In the case that I am referring to—it may be replicated because of the structural nature of LEPs—the council is reluctant to accept responsibility for the contract, because the school that it is looking after will no longer be its school. There is an imbalance in responsibility for the LEP contract and responsibility for the school afterwards. During discussions on the rebuild and the education to be provided in the new academy, the school was unable to speak directly to the architect dealing with the build but had to go through the contractor, Skanska, which did not necessarily have the expertise that the school had in providing buildings fit for educational purpose.

On costs, the school, which was being sponsored by sponsors who had sponsored other academies, was forced to take on the LEP procurement process rather than open tender. That caused much concern and some frustration, because the sponsor had managed to bring in an academy on time and under budget—the Minister will know that that is unusual for academy procurement and set-up. The sponsors had proved to be extremely efficient and had found extremely efficient partners, and they wanted to replicate that best practice, but were unable to do so because of the rigidity of the local education partnership. They also reported that Skanska had an overhead and profit margin of 8% plus, compared with the market rate of 4%. The sponsor estimated that that deprived the school of £500,000 of new build for that element alone.

On legal fees, because of the nature of the local educational partnership, there were three sets of solicitors. There were no challenges to the legal costs, which were substantial and, I would suggest, in a number of cases arose from replication of a task.

Those are illustrations of a wider problem that I am sure is replicated up and down the country. In another case, a school was forced to take the LEP ICT option, even though it already had its own ICT equipment that it could run itself, and which was fully functioning and used to great effect. That equipment was not compatible with the LEP version of ICT equipment required, so it was replaced at great cost, with complex contracts having to be negotiated. New ICT equipment had to be bought in at the taxpayer’s expense, and the school’s existing, perfectly functional ICT equipment became redundant because of the rigidity of the procurement process.

I could go on and on—I have a long list of inefficiencies, but I know that the Minister has better things to do, so I will not do that. Those examples of waste were provided to me by just one academy sponsor, which came to me with its concerns, but they are an indication of the kind of waste that is occurring under local educational partnerships. In this climate of economic austerity, I suggest that such waste should be looked at carefully.

My second concern is slightly less reported and has to do with democratic accountability and transparency. To illustrate my point, I will refer to the rebuild of Elmlea infants school in my constituency. The infants school shares a site with Elmlea junior school. Both schools have playgrounds and Elmlea junior school has a large playing field, which is an excellent facility for the community and is used to fulfil the curriculum requirements of both the infants and the junior school. The infants school is in urgent need of a rebuild—it has classrooms with no windows. The head teacher works hard for her children and the school is successful despite its substandard facilities.

The local educational partnership was responsible for drawing up a projected rebuild of Elmlea infants school. All along the line, the LEP process has derailed, been postponed and caused confusion among almost all the stakeholders—the local authority, head teachers in the schools and, most particularly, parents and the public. In January 2009, a feasibility study presented options 1, 2 and 3 for a rebuild of Elmlea infants school—this will get technical, but it illustrates the point. Options 1 and 2 were based on rebuilding on the existing site, and option 3 was based on rebuilding on the junior school’s playing field.

Throughout the process, it seemed that there was an LEP bias towards option 3. Option 2 was presented as the favoured option in January 2009, but rather undemocratically and quickly—it is difficult to get to the bottom of why this happened—option 3 was suddenly presented as the preferred option. All sorts of questions were raised about why that happened. Questions were asked by parents and by myself at public meetings, because incomparable costs had been presented in an attempt to move public opinion and the opinion of those in the local authority in favour of option 3—the rebuild on the playing field. The key question is why the LEP was able to provide incomparable costs. I have asked for breakdowns of the costs for the individual options so that the process can be conducted in a transparent manner and value for money can be ascertained; but to date, I have not received those breakdowns, so it is difficult to see how the money is being spent.

In conjunction with the knowledge that, in the academies process, 90% of the LEP was owned by Skanska, it has been asked whether Skanska’s interests are driving the school rebuild, or whether the rebuild is being driven by the interests of the school, parents and education. In my constituency, it has become a massive issue. The lack of transparency has delayed the process because people are seeking democratic accountability and answers. The school is worried that the rebuild it needs so much will be jeopardised because the LEP process has been so long-winded and has evaded so many questions that need answering.

I could go on and on about the failings and the questions that hang over the local educational partnership, but I will mention just a few. The preferred option for rebuild presented to the elected member for education on the council was changed at the last minute, with no debate or scrutiny. That put people on the council in a difficult position. The local educational partnership refers to independent partners, such as KEY Educational Associates, as independent in their scrutiny, whereas in fact at least one member of that independent body is employed by Skanska, so there is a question about that independence. More generally, democratic accountability has been poor.

In conclusion, I ask the Minister what his views are—if he has formed any—on the role of local educational partnerships, given that the Building Schools for the Future programme has been reviewed. Will he look closely at the value for money and the democratic accountability and efficiency represented by local educational partnerships, over which I have grave concerns?

16:55

[The Parliamentary Under-Secretary of State for Education (Tim Loughton)]

May I say what a double pleasure it is, Mr Gray, to serve under your chairmanship again this afternoon?

I congratulate my hon. Friend the Member for Bristol North West (Charlotte Leslie) on securing the debate, especially as it is her first in Westminster Hall. I also offer my congratulations on her recent election. I am sure that she will serve the people of Bristol North West for many years to come with the greatest distinction and dedication. Even if her endeavours this afternoon were not witnessed by a packed Chamber, the quality of her exposition of the problem, which showed great technical know-how, did her great credit. Her points about local education partnerships, waste, value for money, democratic accountability and transparency, are important.

I also congratulate my hon. Friend on her election to the Education Committee, and I hope that she will have a rather larger audience during that Committee’s deliberations. As a leading expert in the field, she brings us a wealth of experience and knowledge of a range of educational matters—we heard about one this afternoon—and I look forward to working closely with her and the rest of the Committee.

My hon. Friend wishes specifically to discuss the role of local education partnerships and academies in her part of Bristol. I am delighted to do that, but I shall first put matters into a wider context. In her excellent maiden speech, my hon. Friend eloquently described the huge disparity between the opportunities extended to the richest and the poorest children in her constituency—the achievement gap. That poverty of attainment marks too much of the educational system, particularly for those in the most deprived areas. She described it as

“a tale of two cities, whereby extreme poverty and deprivation exist side by side with some of the richest wards in the country.”—[Official Report, 2 June 2010; Vol. 510, c. 499.]

She is right, but that problem is by no means unique to Bristol North West or even the rest of Bristol. It is a sad reflection on our education system that, out of a cohort of 600,000 pupils, 80,000 are eligible for free school meals, of whom just 45 made it to Oxbridge last year.

Making opportunity more equal is the aim of the coalition Government in all of their policies, and it also guides our approach to education. That comes against the backdrop of the appalling state of public finances. Our first priority must be to reduce the deficit, but we must also ensure that we improve public services in order to improve the chances of every child. Because we prioritised education, my right hon. Friend the Chancellor was able to announce that we will protect front-line spending this year on schools, on 16-to-19 funding and on Sure Start. Because tackling educational inequality is at the heart of our reforms, we will introduce a pupil premium to ensure that money is better targeted at the poorest pupils. I know that my hon. Friend has contributed both energy and enthusiasm to that policy in the past and we are extremely grateful to her for that.

Because we are determined to ensure that every child—especially the poorest—has access to excellent teaching, we will double the number of highly accomplished graduates teaching in our schools, recruit hundreds more graduate teachers into areas of poverty where they can help to raise attainment in the most challenging places and, for the first time, fund the expansion of graduate teachers into primary schools. As my hon. Friend pointed out, we must ensure that we spend taxpayers’ money in the most efficient and responsible way possible at all times and on all elements of our programme, especially capital spending on refurbishing existing schools and building new ones—including, of course, academies.

It is deeply regrettable that, throughout its life, the Building Schools for the Future programme, which included academies, has been characterised by massive overspends, tragic delays and needless bureaucracy. Its startling inefficiency means that stopping the programme was the right thing to do. Having extended its scope, its budget bulged from £45 billion to £55 billion, and its time scale went from 10 years to a projected 18. Of the £250 million spent before building began, £60 million was spent on consultants or advisory costs to support layer upon layer of process. In some areas, it took more than two years to negotiate the bureaucracy, and that was before a single builder had been engaged or a single brick laid. Only 5% of the 3,500 secondary schools in this country were rebuilt, refurbished or received BSF funding for ICT—only 185 schools, which is astonishingly few given how much money was spent. Perhaps worst of all, considering the state of public finances, is that BSF schools cost three times what it costs to procure buildings in the commercial world, and twice what it costs to build a school in Ireland.

The programme could not be allowed to continue, so my right hon. Friend the Secretary of State for Education announced on 5 July that we would end the previous Government’s school rebuilding programme. However, the end of the BSF programme does not mean the end of investing in our schools. We are still absolutely committed to rebuilding and refurbishing, but we do not believe that the BSF programme was spending taxpayers’ money anywhere near efficiently enough, and money wasted on that programme was money that could not be used elsewhere, either in schools or other parts of the education establishment. We want to review all ways in which schools are built to ensure that money is allocated more efficiently, less expensively and, most important, more fairly. The cancellation of BSF does not represent the end of capital investment in schools. The review announced on 5 July will consider how the Department invests capital money, and its recommendations will help to shape the design of future capital investment in schools to ensure that we have enough school places in enough good buildings where pupils can learn effectively.

I turn to local education partnerships. As the previous Government’s preferred mechanism for local areas procuring BSF building services, local education partnerships have been a major component of the old process. Although the reason for establishing LEPs was specifically to support BSF projects, some local authorities chose to use their LEPs for projects outside BSF, as happened in the case of Elmlea school, cited by my hon. Friend. However, whether or not LEPs are part of the BSF programme, they should take responsibility for offering value for money to the taxpayer in all their capital spending—indeed, we would expect nothing less. That is why we will be reviewing procurement and delivery models as part of the terms of reference in our capital review.

The aim of the review is to ensure that future capital investment represents good value for money and that it responds to schools’ real needs. The review is already under way, and I shall not pre-empt its findings today. It will report to Ministers in mid-September, and a forward plan for capital investment over the next spending review period will be produced by the end of the calendar year. However, it is as clear to me as it is to my hon. Friend that LEPs are part of a truly cumbersome process, which needs to be closely examined and fundamentally re-engineered to ensure that a higher proportion of our capital investment gets rapidly to the schools that need it most. I therefore congratulate my hon. Friend on the immense detail that she has given us on the LEP that covers her constituency.

Whatever the detailed outcome of the review, we must ensure that the views of head teachers, teachers, parents and local communities are more effectively and swiftly acted upon and that there is a much greater focus on achieving value for money. When it comes to procuring services to build schools, we should have proper accountability and real efficiency. That will be good for local areas, schools, pupils and the taxpayer.

I turn to the Bristol local education partnership. My hon. Friend said that the partnership was split 90% to Skanska and 10% to Bristol city council. I gather that the figures are 80% to Skanska, 10% Bristol city council and 10% to a local BSF partnership, which is a slightly different equation. I have deep sympathy with the plight of those in my hon. Friend’s constituency who have suffered from the excessive bureaucracy of the current process. I hope the situation at Elmlea school can be resolved for the long-term benefit of the pupils, and that a solution is found that is efficient and effective and that represents good value for money.

The Bristol LEP has delivered four PFI-funded schemes on time and on budget, with six further secondary school projects in various stages of completion and a further three academy projects either handed over or under construction. Aside from one slightly delayed handover of a new building, its track record has been generally solid in terms of budget, quality and programme. However, the LEP model in Bristol has not proved so adept in delivering smaller-scale primary school projects where the needs of the local communities required a greater level of consultation and understanding. We are aware of the demand of parents in north-west Bristol for more primary school places and for more choice in secondary schools. We will have to wait for greater certainty about the various ideas that have emerged from there and the outcome of the review before decisions can be made, but whatever comes out of the review, we can be sure that future investment will be characterised by speediness and value for money.

I reiterate our commitment to investing in schools in Bristol and around the country. We have set out a comprehensive programme of reforms, founded on the need to make opportunity more equal. Part of that will be to ensure that schools across the country that need rebuilding and renovation will, in future, receive that money in a more timely and efficient manner. That is the only way to give every pupil in Bristol and beyond a better chance of success.

I congratulate my hon. Friend on having considered the problem, and I would be more than happy were she to highlight further anomalies in the local education partnership. If she refers them to the Secretary of State or the Minister for Schools, I shall ensure that they receive proper attention. I congratulate her on bringing the matter to a not entirely crowded Chamber, and I note that in her short time in the House as Member for Bristol North West she has made great endeavours to ensure a fairer and better education system for all her constituents.

Question put and agreed to.

17:06

Sitting adjourned.