House of Commons

Tuesday 7th September 2010 Commons Chamber

Tuesday 7 September 2010

The House met at half-past Two o’clock

Prayers

Tuesday 7th September 2010 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 7th September 2010 Commons Chamber

The Secretary of State was asked—

[Neil Carmichael (Stroud) (Con)]

1. What steps he is taking to work with clinicians and patient groups in the design of the cancer drugs fund.

[The Secretary of State for Health (Mr Andrew Lansley)]

We are committed to ensuring that the cancer drugs fund, which is to be introduced in April next year, will enable NHS patients to have greater access to new cancer drugs. We will soon consult the public and clinicians on our plans for this. From 1 October this year, as an interim measure, regional panels led by expert clinicians will respond to requests to fund cancer drugs that have not been funded locally.

[Neil Carmichael]

I am delighted with the answer from the Secretary of State. Some people are concerned about the possibility of a postcode lottery. Has the Department thought about that, and what actions does it plan to avoid the fund being subject to that?

[Mr Lansley]

I am grateful to my hon. Friend. Many people are concerned about their experience of a postcode lottery and access to new cancer drugs. Indeed, there is not just a postcode lottery but an international lottery, with patients in this country not getting access through the NHS to new cancer drugs while patients in other countries do get access to those drugs in the same clinical circumstances. That is why we will not only establish the cancer drugs fund next year, but, this year, we have found £50 million by making savings on management and marketing costs to enable new cancer drugs to be made available, at a regional level across England, where they are not funded locally.

[Valerie Vaz (Walsall South) (Lab)]

Has the Secretary of State had any discussions with the National Institute for Health and Clinical Excellence about the fund, and is it cash-limited?

[Mr Lansley]

Yes, I did have discussions with NICE. The interim measure this year is indeed cash-limited—£50 million is available between October and the end of March.

[Anne Marie Morris (Newton Abbot) (Con)]

Will the Secretary of State consider seriously the situation with regard to Avastin—a drug that particularly relates to bowel cancer? I have a constituent who is dying of that complaint, and their primary care trust has refused treatment under current NICE guidance. NICE is currently reviewing the situation. I would be grateful if the Secretary of State will say that he will support positive findings.

[Mr Lansley]

My colleagues and I are very well aware of the issues relating to Avastin, and I am grateful to my hon. Friend for her question. In terms of the interim measure that starts on 1 October, patients should go through all the normal procedures of seeking treatment through their hospital with the consent of their PCT. However, if that fails, a regional panel of expert clinicians will be able to look at their circumstances, with a special fund to enable patients to have access to cancer drugs which previously they would not have received.

[Diana R. Johnson (Kingston upon Hull North) (Lab)]

Of course we support efforts to ensure that those with rarer cancers get access to the drugs that they need, but there are serious concerns about the cancer drugs fund. Professor Alan Maynard says that

“this will run a coach and horses through the work done by NICE”.

The Lancet has called the fund a product of political opportunism and intellectual incoherence leading to the potential for a postcode lottery between strategic health authorities. Where does this leave NICE—an organisation that the Secretary of State said that he wants to strengthen?

[Mr Lansley]

It in no way undermines the role of NICE, which continues to play a very important role in giving advice to the NHS on the relative clinical effectiveness and cost-effectiveness of drugs. However, there are many circumstances at the moment whereby patients are not getting access to medicines. NICE, through its thresholds, is setting limitations on access to new cancer medicines. The hon. Lady should know, because the research was commissioned under her Government, that we need to look at international variations in drug use across health economies. Her Government did not publish that information; we have published it. It demonstrates that in this country we have relatively poor access to new cancer medicines, often before the point at which NICE has undertaken a full cost-effectiveness appraisal. We are going to ensure that patients in this country do not lose out as a consequence of those delays.

[David Tredinnick (Bosworth) (Con)]

When considering the drugs fund, will the Secretary of State bear it in mind that many patients who have had chemotherapy find relief from using herbal medicine and acupuncture? When will he come forward with proposals to interface with next year’s European directive so that herbal and acupuncture practitioners can conform to the law?

[Mr Speaker]

I know that the Secretary of State’s response will relate to the cancer drugs fund.

[Mr Lansley]

The answer to my hon. Friend’s question is soon.

[Mr Speaker]

We are grateful.

[Emma Reynolds (Wolverhampton North East) (Lab)]

2. What account he took of arrangements for the provision of mental health services in developing his proposals for GP commissioning.

[The Minister of State, Department of Health (Mr Paul Burstow)]

GPs play a crucial role in co-ordinating patient care and committing NHS resources through daily clinical decisions. Our new model of commissioning builds on the regular contact that GPs have with patients and their understanding of patients’ wider health care needs. Our proposals will create an effective dialogue across all health and social care, with professionals putting in place the conditions for a more integrated and personalised approach to both physical and mental health.

[Emma Reynolds]

I thank the Minister for his answer. According to a recent survey by the leading mental health charity Rethink, 58% of GPs questioned said that they did not feel they had the level of expertise required to commission mental health services. Given that, what specific measures will the Government take to ensure that GPs have the skills and expertise needed to commission those highly specialised services?

[Mr Burstow]

I do not accept that that is the case, and from the consultation and engagement that the Department and I have already had with GPs and others, it is quite clear that there is huge enthusiasm for the reforms that we propose in the White Paper and a real desire both to see patients put at the heart of the NHS and for GPs to have real control over commissioning again, to ensure that services really meet patients’ needs. When it comes to specialist commissioning, we have said in the White Paper that there will be opportunities for charities, other providers and local authorities to access support to harness those skills.

[Mr Stewart Jackson (Peterborough) (Con)]

Parnwell, in the east of Peterborough, which has specific health needs, faces the loss of its current single general practitioner upon his retirement at the end of October. Can the Minister confirm that there is no necessity to remove single practitioner GP facilities, and that they can be incorporated into the new GP commissioning system as we go forward?

[Mr Burstow]

I am very happy to give that confirmation.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

It is of great concern that medical charities such as Rethink tell us that most GPs that they have surveyed feel that they lack the expertise needed to commission mental health services, and also that campaigning groups such as the Muscular Dystrophy Campaign feel that GPs have too little knowledge of muscle wasting conditions to commission services for their patients. Given Government plans to hand commissioning over to GPs, to abolish primary care trusts and, according to the White Paper, to reduce the role of the Department of Health in training, can the Minister say more to the House about how the considerable shortfall in expertise in commissioning services will be tackled over the next year or two?

[Mr Burstow]

It is perhaps worth noting that the Select Committee on Health, when there was a Labour majority on it before the election, back in March, identified significant weaknesses in PCT commissioning. In particular, it identified the lack of clinical input. Our White Paper puts that clinical input back into commissioning. When one considers that one in four of all consultations involve mental health problems and that 90% of all mental health care is delivered in primary care settings, one sees that putting the GP right at the centre is critical to better outcomes.

[Dr John Pugh (Southport) (LD)]

On the subject of consultation, what consultations have taken place with the mental health charities, either prior or subsequent to the proposals?

[Mr Burstow]

In July, I and the Secretary of State had a successful and long engagement with all the mental health charities, and we are continuing to have a dialogue with them.

[Mr Jim Cunningham (Coventry South) (Lab)]

3. What estimate he has made of the number of redundancies which would result from the abolition of strategic health authorities and primary care trusts?

[The Secretary of State for Health (Mr Andrew Lansley)]

Our White Paper set out proposals for greater devolution to clinical leadership in the NHS and an enhanced role for local authorities in setting health strategies and improving public health. That means that we will abolish primary care trusts and strategic health authorities. General practice-led consortiums will make decisions about their requirements for management support, as will the new NHS commissioning board and local authorities. However, the requirement to cut management costs and protect the front line will mean reduced numbers of administrative posts. The extent of that will depend on local plans, and we will publish an impact assessment in due course.

[Mr Cunningham]

The coalition agreement stated that PCTs would be a strong voice for the public. How will the Government achieve that if they are going to abolish them?

[Mr Lansley]

We set out clearly in the White Paper how we will increase accountability to the public, including by establishing Health Watch. Before the election, the hon. Gentleman’s party’s Government demolished the patient representative voice in community health councils and patients’ forums and created nothing effective in its place. Health Watch will be an effective voice for patients, and democratic accountability through local authorities will be far stronger because Health Watch will enable NHS services, public health services and social care to be joined together through co-ordination in a local authority’s health and well-being partnership.

[Mark Pawsey (Rugby) (Con)]

On the question of redundancies, the hon. Member for Coventry South (Mr Cunningham) and I represent adjacent constituencies covered by the same NHS trust, in which there is currently a review of urgent care provision at the hospital of St Cross in my constituency. Candidates for the Labour leadership recently visited the area, and one spoke to the Rugby Advertiser about his concern that the review was an example of the

“economic masochism being unveiled across the country by the Tories who continue to show no compassion for the vulnerable.”

Does the Secretary of State share my outrage at the choice of language by the likely Leader of the Opposition, and will he confirm that since this Government have committed themselves to real-terms increases in NHS funding, any reforms considered for Rugby will have nothing to do with the amount of funding for the local NHS?

[Mr Lansley]

I am grateful to my hon. Friend. We visited St Cross hospital together, so he knows the importance that we both attach to the service that is provided there for his constituents locally, but that happens in the context of the resources that we provide to enable the NHS to do its job. The Government have made an historic commitment to increase resources for the NHS in real terms each year, notwithstanding the appalling financial circumstances that we inherited from the Labour party.

The policy of the right hon. Member for Leigh (Andy Burnham) is to cut the NHS budget. Under those circumstances and under the policies of the Labour party, the number of redundancies in the NHS would proliferate.

[Andy Burnham (Leigh) (Lab)]

The right hon. Gentleman is planning the biggest reorganisation in the history of the NHS, and yet he is unable to give basic information on it, such as how many people may lose their jobs, to my hon. Friend the Member for Coventry South (Mr Cunningham). Tens of thousands of people who work for primary care trusts and strategic health authorities are at risk of losing their jobs, so it is no wonder that after a just a few short weeks in his job, the Secretary of State has brought morale in the NHS to rock bottom.

In his letter to the NHS, the NHS chief executive says that £1.7 billion should be set aside to pay for the Secretary of State’s reorganisation. Others have said that the cost of his reform could be up to £3 billion. At a time when the NHS needs every penny to maintain standards of patient care, it is scandalous for money to be diverted in that way. He may be ignoring the human cost, but can he tell the House today his latest estimate from the Department of how much his ideological reorganisation will cost?

[Mr Lansley]

I do wish the right hon. Gentleman would at least remember what he was responsible for before the election. He said that the NHS in this financial year should set aside 2%—£1.7 billion—for the cost of reorganisation. I have not changed that figure by one penny. However, I have taken his policies, which led to a proliferation in management costs—an 80% increase in the cost of management consultants in the NHS in two years and a doubling of management costs in PCTs and SHAs in eight years—and reversed them. We are cutting management costs in the NHS this year by more than £220 million and by up to £1 billion over four years. I make no apology for that, because if we are to protect front-line services and improve health outcomes, that is exactly what we need to do.

[Andy Burnham]

rose—

[Mr Speaker]

Order. The remainder of this exchange—on both sides— needs to be shorter.

[Andy Burnham]

Let us first get some facts straight. I asked PCTs to set aside money to invest in patient care, changing patient pathways and better services. I did not say that a Labour Government would cut the NHS budget; I said that we would maintain it in real terms, not increase it, as the Secretary of State proposes. The effect of his increase will mean severe cuts to councils, which need to provide care support to older people to get people out of hospital.

However, the Secretary of State would not today tell us what his proposals would cost. Is it not the case that the plans were not in the Conservative or Liberal Democrat manifestos, and that there is no democratic mandate for the break-up of the NHS? Given that there is now a chorus of protest at his plans, will he step back, listen to patients and staff and consult on those reforms before taking them forward further?

[Mr Lansley]

I and my colleagues are engaging right across the country with patients, the public, local authorities, PCTs and general practitioners, and we are meeting enthusiasm for our proposals. Why? Because we are focusing on delivering improving outcomes for patients, and doing so in the context of an historic commitment by this coalition Government to increase resources for the NHS in real terms each year. The right hon. Gentleman’s policy would be to cut the NHS budget.

[Andy Burnham]

The Secretary of State thinks he can behave any way he likes with the NHS, the most beloved institution in this country, but we will not let him—we will give him a fight every inch of the way. The latest example of his high-handed and arrogant behaviour came on the eve of a bank holiday weekend, when he casually let slip that NHS Direct would be scrapped. NHS Direct is a valued service that receives 27,000 calls every day and saves millions of pounds for the NHS, and that has more than 3,000 staff working for it. Will he today apologise for making that statement in such an outrageous manner? Will he listen to the 14,000 people who signed a petition to save NHS Direct, and going forward, stop acting in such a cavalier manner with our NHS?

[Mr Speaker]

Order. A question should be a question—it should not really be three questions.

[Mr Lansley]

Once again, the right hon. Gentleman should remember what he did before the election. A press release from his Department on 18 December 2009, when he was Secretary of State, said that he would establish a new 111 national number for non-emergency health care, and that this could become the single number to access non-emergency care services, including NHS Direct. I did not announce anything: I simply said that we were going to get on with that—he never did.

[Mr Peter Bone (Wellingborough) (Con)]

4. What plans he has for the future of the national capitation formula.

[The Minister of State, Department of Health (Mr Simon Burns)]

Revenue allocations post 2010-11 will be set following the spending review. From 2013-14, the NHS Commissioning Board will allocate the majority of NHS resources to GP consortiums on the basis of seeking to secure equivalent access to NHS services relative to the burden of disease and disability. Public health resources will be separately allocated to reflect relative population health need and to seek to reduce health inequalities.

[Mr Bone]

Under the Labour Government, Northamptonshire was the worst funded primary care trust in the country. That was because the Government never met the national capitation formula in full, denying Wellingborough a hospital, for instance. Will the Minister’s new proposals be fairer and encourage my constituents in the belief that they will get a better deal?

[Mr Burns]

I am grateful to my hon. Friend for that question, because he is right—under the Labour Government, Northamptonshire Teaching PCT was underfunded and is currently receiving 1.4% below its target allocation. That is why my right hon. Friend the Secretary of State and I are seeking, under the vision outlined in the White Paper, to free the NHS from day-to-day political interference so that the allocation of resources will be the responsibility of the NHS Commissioning Board which can seek to address the problems highlighted by my hon. Friend.

[Mr David Hanson (Delyn) (Lab)]

5. What recent discussions he has had with the Welsh Assembly Government on the effects of proposed changes to health services in England on patients living in Wales who use those services.

[The Parliamentary Under-Secretary of State for Health (Anne Milton)]

Since the election, there have been informal, but no formal, discussions between my right hon. Friend the Secretary of State for Health and the Welsh Assembly Government. However, I understand that a meeting is planned for later this year. Clearly, there have been discussions between officials about the impact of the White Paper and the changes.

[Mr Hanson]

May I respectfully suggest that someone in the Government gets on and talks to the Welsh Assembly Government? A third of my constituents, who live in Wales, use the Countess of Chester hospital in England, and they use hospitals in Manchester, including the Christie and the Clatterbridge for cancer services, as well as the Robert Jones and Agnes Hunt hospital in Shropshire for orthopaedic services. They are as appalled as I am by the changes being proposed by the Conservatives to destroy the NHS. Get on and talk to someone please.

[Anne Milton]

May I thank the right hon. Gentleman for his question and assure him that officials have got on with it and do it constantly? It is important that we ensure that any changes are synchronised across the two areas, and I know that he will continue to raise cross-border issues. I can reassure him that we have already got on with it and he need not remind us to do so.

[David T. C. Davies (Monmouth) (Con)]

Given that patients in Wales, served by the Welsh Assembly, have to wait far longer for routine operations and ambulance responses, is it not the case that the only problem that the Department will face is that the people of Wales will be galvanised by the excellent policies of this Government into suggesting that the Welsh Assembly Government ditch their failed health policies and copy those of the coalition Government?

[Anne Milton]

I thank my hon. Friend for that wonderful advertisement for the changes that we are bringing in. I agree with him and I am sure that the people of Wales will see the changes that we are bringing in and contact the right hon. Member for Delyn (Mr Hanson) to urge him to ensure that the changes are also introduced in Wales.

[Hywel Williams (Arfon) (PC)]

Fourteen thousand people from Wales are registered with GPs in England, and 19,000 people from England are registered with GPs in Wales. Will the Under-Secretary ensure that the changes that she brings in do not lead to any dangers to the services provided for both sets of people travelling across the border, and that adequate financial recompense is made as well?

[Anne Milton]

It is extremely important that people receive similar and safe passage and continuity of care across the borders, and we will continue to have conversations, both at ministerial level and between officials, to ensure that any hitches that arise are smoothed out as soon as possible.

[Caroline Flint (Don Valley) (Lab)]

7. How many GPs in Doncaster have expressed an interest in establishing GP consortiums.

[The Minister of State, Department of Health (Mr Simon Burns)]

The Yorkshire and Humber strategic health authority has informed me that two existing practice-based commissioning consortiums are currently working on behalf of all Doncaster’s 45 GP practices. GPs in Doncaster are enthusiastic about the agenda and, in partnership with Doncaster primary care trust, have established a transition team meeting to oversee the process.

[Caroline Flint]

Yes, there is something called the “Doncaster commissioning consortium” in Doncaster, which provides clinical leadership to Doncaster PCT when it comes to commissioning. From what I understand from the Government’s proposals, as a result of these changes the Doncaster commissioning consortium, made up of the majority of GPs, will have to employ people, either from the PCT or other sectors, to do the budget and management of commissioning. Is this restructuring not just a rebranding to make the Government look as if they are being innovative in health care when in fact they are pouring money down the drain and conducting a restructuring that we just do not need?

[Mr Burns]

May I recommend that the right hon. Lady, who from her past ministerial career is familiar with health issues, study not only the White Paper that we have published, but the documents, particularly on commissioning, that flowed from that, because I am afraid that her interpretation of the situation is wrong? This is a great change from the PCT system, because it will basically ensure that commissioning will no longer be remote but be carried out by GPs at the forefront of dealing with patients’ needs and care, who know best how to ensure that patients get the finest and best health care possible.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

8. What plans he has to assist GP commissioning in rural areas.

[The Parliamentary Under-Secretary of State for Health (Anne Milton)]

Our proposals in the White Paper will enable general practices to structure commissioning to reflect the character of the area they serve. Practices in rural areas, such as Cumbria and Cambridgeshire for instance, are exploring commissioning models. To support GP consortiums, we will create a statutory NHS commissioning board.

[Dr Poulter]

The Minister will be aware that many women make the choice to have a home birth and delivery, but unfortunately, in many rural areas, maternity services have historically been under-resourced. What steps does the Minister envisage better to support home delivery in rural areas, and to support GPs in their commissioning of these services in the future?

[Anne Milton]

I congratulate my hon. Friend on taking up the chairmanship of the all-party group on maternity. I know that his work with it will be very valuable, particularly in the light of his previous experience in the health service. Contrary to what Labour Members believe, this is an important opportunity to put general practices—in all their shapes and forms within all the professions—at the very heart of shaping services. As he said, home births and choice in maternity services are crucial for women.

[Ann Coffey (Stockport) (Lab)]

I have concerns about the effect of the Secretary of State’s proposals for GP commissioning on services in rural areas and urban areas such as mine. Greater Manchester PCT provided strategic leadership in the recent reconfiguration of children’s services, which was very contentious. Can the Minister clarify how that strategic leadership will be provided in the future reconfiguration of cancer, maternity and ambulance services in Greater Manchester, as GP commissioning will be focused on local health needs and national commissioning on national specialities?

[Anne Milton]

The hon. Lady made the point that urban and rural areas have very different needs. What is vital are the people on the front line, making decisions and offering the leadership and vision to shape those services. I do not think that she will find many people lining up to save PCTs, whose commissioning has not always been as successful as she would like to believe.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I should like to suggest to the Minister that it might help GPs who are commissioning in rural areas if the formula for capitation were to include the information that their patients live in sparsely populated areas, as well as information about their age, especially in constituencies such as mine and that of my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter).

[Anne Milton]

My hon. Friend is right to raise the issue of the distances covered in rural areas. I believe that only ambulance trusts currently have the opportunity to reflect that. This is why it is so important that local commissioners will shape the services for their patients. It is they, not the pen-pushers in the PCT, who know best what is right for their patients.

[Keith Vaz (Leicester East) (Lab)]

9. What steps his Department is taking to inform young people about diabetes prevention.

[The Minister of State, Department of Health (Mr Paul Burstow)]

I thank the right hon. Gentleman for his question, and for his tireless campaigning to raise awareness of diabetes. We know that being physically active and maintaining a healthy weight can reduce an individual’s risk of developing type 2 diabetes and cardiovascular disease. Our approach is to support families and young people to eat healthily and be physically active.

[Keith Vaz]

I thank the Minister for his comments. I declare an interest as one who has type 2 diabetes. As he knows, we spend £1 million an hour treating diabetes-related illnesses, and more and more people are now being diagnosed at a much younger age. What steps are the Government taking to alert parents and young people to the perils of diabetes?

[Mr Burstow]

The right hon. Gentleman is absolutely right to draw our attention to the rising rate of diabetes in our country. When it comes to diabetes in children, we have to bear in mind that the diagnosis for type 1 diabetes—which affects about 23,000 children in this country—is a genetically predisposed condition that cannot easily be prevented. We need to do more about type 2 diabetes, however, by tackling the obesity problems in this country. We need to deliver physical and healthy eating programmes through schools and other partners, and those things are much better done in the context of the local authorities, which will now have a new responsibility for public health that the last Government never gave them.

[Mr Adrian Sanders (Torbay) (LD)]

Information and education are also important for people with the condition of diabetes, to help them to get the maximum benefit from their prescribed course of treatment. May I urge the Minister to make an assessment of the improvements to health that education and information can contribute?

[Mr Burstow]

My hon. Friend makes a good point about the value of information in empowering patients, and about the value of education. That is why we want to do more with NHS information prescriptions, which is an important tool, and to ensure that the care planning process that delivers tailored care plans also includes structured education. There is no doubt that providing education really does make a difference to the outcomes for people with diabetes.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his response to the question. I also wish to declare an interest as a type 2 diabetic. The junk food culture of the moment is a serious problem, so what steps is the Minister taking to address that in his effort to reduce the number of people being diagnosed as diabetic over the next year?

[Mr Burstow]

The best way of responding to the hon. Gentleman’s very appropriate question is to say that we are taking a four-pronged approach to diabetes. First, we need to tackle the causes of the condition through a renewed impetus on public health. We shall announce more of our plans in our White Paper later this autumn. Secondly, we need earlier identification and diagnosis so that we can help people to manage their condition at an earlier stage so that it does not progress. Thirdly, we need effective management and self-directed care. Finally, we need world-class research so that we can better understand the condition and deliver better treatments.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

10. What steps he is taking to ensure the adequacy of resources allocated to hospital accident and emergency departments.

[The Minister of State, Department of Health (Mr Simon Burns)]

It is the responsibility of local NHS commissioners to plan and arrange adequate A and E health services according to the needs of their local populations. Attendances at hospital A and E departments are reimbursed through mandatory national tariffs.

[Mr Sheerman]

Is the Minister aware that my constituents in Huddersfield are very pleased with the improvements to their A and E services over recent years? They put that down to fewer people going to A and E because they have NHS Direct to take the pressure off A and E, and to the guarantee of being seen within four hours, and having the right to complain pretty vigorously—as we do in Huddersfield—if that does not happen. Are not the measures that the Government are introducing simply going to make A and E impossible again?

[Mr Burns]

May I reassure the hon. Gentleman’s constituents that they will be just as pleased with the responses that they receive from a 111 line, where professional advice and help will be given to people who need to contact it about their health needs? May I also reassure his constituents on the question of four-hour targets? The target that was introduced caused distortions; it was a political target. We are relying on clinical decisions and activity to ensure that people are seen as quickly and relevantly as possible.

[Mr Stephen Dorrell (Charnwood) (Con)]

Does my hon. Friend agree that in addition to the proper funding of A and E departments, it is also important to take steps to manage the demand on those departments? In particular in urban areas, that means that commissioners should accept the responsibility to look for improvements in the delivery of primary care so that patients have more easy access to less urgent care in the primary care context, thus reducing the demand on A and E departments.

[Mr Burns]

My right hon. Friend is absolutely right. It is, of course, not only a question of correctly identifying those people who should use A and E; the other assistance given through the health service is also important. We need a first-class and relevant out-of-hours service as well.

[Hugh Bayley (York Central) (Lab)]

11. What recent assessment his Department has made of the clinical effectiveness of facet joint injections; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Health (Anne Milton)]

Recommendations on facet joint injections were made by the National Institute for Health and Clinical Excellence in its 2009 clinical guidelines on low back pain. NICE did not find sufficient research evidence that strongly supported the effectiveness of facet joint injections and recommended that more research should be done. I understand that the National Institute for Health Research is looking at whether it will commission further research.

[Hugh Bayley]

Access to these injections is restricted in North Yorkshire and York PCT, although it is widely available on the NHS in other areas. The consultant in charge of York’s pain clinic believes that the PCT is not following the most recent NICE guidelines. What are the Government doing to reduce this kind of postcode lottery? Will the Minister contact the PCT and arrange for it to meet me and the consultant to discuss how these guidelines ought to be applied in North Yorkshire and York?

[Anne Milton]

I thank the hon. Gentleman for his remarks and point out that it is precisely because of the situation that he describes that we are bringing in some of our reforms. It is important that decisions about treatment and care are made by clinicians—GPs and a large number of other people, including some voluntary and charitable organisations—and that they are clinically led, evidence-based and also include patient choice.

[Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)]

12. What recent discussions he has had on the effectiveness of the National Institute for Health and Clinical Excellence’s procedures to review the cost-effectiveness of drugs; and if he will make a statement.

[The Minister of State, Department of Health (Mr Simon Burns)]

Ministers discuss NICE’s work from time to time as part of routine business. We attach great importance to the work NICE does in giving advice to commissioners and clinicians on the relative clinical and cost-effectiveness of treatments. The right hon. Gentleman will know that we also propose reforms that will better reflect the value of new drugs in the relevant prices paid by the NHS.

[Mr Kennedy]

In thanking the Minister for that helpful reply, I note that my question rather overlaps with the pertinent question just asked by the hon. Member for York Central (Hugh Bayley). Can the Minister give us any indication of where the Government, at this stage of their Administration, are on the proposed cancer drugs fund, particularly with reference to the drugs used for kidney cancer treatment, which NICE is still evaluating? Can these drugs be issued under the interim cancer drugs fund, not least given the terrible delays some patients face with the local PCTs, when by the time things are resolved it is sometimes, sadly, too late?

[Mr Burns]

May I reassure the right hon. Gentleman that we will shortly consult on the cancer drugs fund. On the question of Afinitor, in which I know he has a particular interest, I appreciate that there has been some concern expressed by families and patients about the issuing of the interim guidance. I would like to emphasise that the guidance is only interim, that the appraisal is ongoing and that we await the final guidance from NICE. I hope that he will be reassured that, since the publication of the draft guidance, the manufacturer of Afinitor has proposed a revised patient access scheme for the drug, which is now being considered as part of the NICE appraisal. In the light of that, we will have to await the announcement of the final decision.

[Mr John Baron (Basildon and Billericay) (Con)]

13. What recent representations he has received on the proposed one-year cancer survival measure.

[The Minister of State, Department of Health (Mr Paul Burstow)]

I have received many helpful representations on the proposed one-year survival measure, including his own when I met him along with a number of leading cancer charities in July. We have launched a full public consultation to shape the first ever outcomes framework for the NHS, and I urge all interested parties to contribute. The consultation document has put forward a range of possible outcome measures, including a one-year cancer survival rate that could be included in the framework. A full response to the consultation will be provided when it closes on 11 October.

[Mr Baron]

The one-year cancer survival measure is welcome, because it will encourage earlier diagnosis. As the Minister will know, however, under-treatment of the elderly in the NHS remains a pressing problem, which was highlighted in a recent report on cancer inequalities by the all-party parliamentary group on cancer. Can he assure us that the over-75s will not be excluded from the one-year or the five-year cancer survival measures once they are constructed?

[Mr Burstow]

The hon. Gentleman makes an important point. It is essential for us to ensure that the NHS delivers treatments that are both based on evidence and age-appropriate, which means ensuring that older people receive treatments that will enable them to survive cancers. His representations will need to be taken fully into account as we consider the results of the consultation on the outcomes framework.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Has the Minister seen today’s report from Cancer Research UK? It suggests that many primary care trusts and hospitals focus on drug therapy, and that radiotherapy—particularly targeted and image-guided radiotherapy—is often not given enough priority. Can the Minister assure us that, when considering cancer drugs expenditure, he will give equal priority to radiotherapy treatment?

[Mr Burstow]

The hon. Gentleman’s question is also relevant to surgery, but Cancer Research UK was right to produce this snapshot of the lamentable record of the last Government on access to radiotherapy. Spending on the NHS has now reached European levels, but we have not seen an equivalent achievement in terms of outcomes. That is why the present Government have been consulting on outcomes, and why we have asked Mike Richards, clinical director for cancer services, to examine these very issues in his review of the cancer reform strategy.

[Gordon Birtwistle (Burnley) (LD)]

14. What steps his Department takes to ensure that local NHS trusts observe its guidelines on reconfigurations involving transfer of facilities from one hospital to another.

[The Secretary of State for Health (Mr Andrew Lansley)]

Commissioners should ensure that current and future reconfigurations demonstrate evidence of compliance with the four criteria that I announced in May. That should be a rigorous process, involving GPs and other local clinicians, local authorities, patients and the public, as set out in guidance. For current schemes, the local assessment should be concluded by 31 October this year.

[Gordon Birtwistle]

Is my right hon. Friend aware that East Lancashire Hospitals NHS Trust is breaching his guidelines by transferring a children’s ward from Burnley to Blackburn without the approval of local GPs and the local council or the support of the local population? Will he please intervene?

[Mr Lansley]

My hon. Friend and I have had a conversation in Burnley about emergency and children’s services at Burnley hospital. I was not aware of the position that he has just described, but I will ensure that any reconfigurations that have taken place in the past and are still being reviewed, or that are currently being proposed or acted on, comply with the criteria that I set out in May, and I will write to him.

[Anna Soubry (Broxtowe) (Con)]

15. What mechanisms are in place to assess the effectiveness of assertive outreach teams in providing support for people with severe mental illness; and if he will make a statement.

[The Minister of State, Department of Health (Mr Paul Burstow)]

The Department of Health has issued guidance on the key components of an effective assertive outreach team. It is for each local trust to put in place robust quality assurance arrangements to ensure that it delivers the high-quality and effective service that the public expect. That is further underpinned by the work of the Care Quality Commission.

[Anna Soubry]

I am grateful to the Minister for his response. One of my constituents, William Barnard, who was profoundly mentally ill, went on to kill his grandfather as a result of the poor system that was operating in relation to his care. What progress has been made in ensuring that other teams do not suffer from the same failings in their systems?

[Mr Burstow]

The hon. Lady and I debated this issue in the Chamber back in July. One of the most concerning aspects of the case of William Barnard was a singular failure to listen to the concerns expressed by family members and carers on the part of those who could have taken the necessary action to improve matters. I continue to take a close interest in the investigations being undertaken by the local NHS. We want to ensure that when lessons can be learned nationally, they are reflected in the Government’s forthcoming mental health policies.

[Miss Anne Begg (Aberdeen South) (Lab)]

Have the Minister or others in his Department had any discussions with the Department for Work and Pensions, because in the coming months a large number of people with mental health problems will be called in for interview to be reassessed from incapacity benefit on to employment and support allowance? This is already causing a great deal of anxiety among my constituents because Aberdeen is one of the trial areas. I wonder whether any of the mental health professionals have been informed and are ready for the influx that might result from that change in policy.

[Mr Burstow]

There are several parts to that question. First, we have already made commitments to invest in talking therapies, which are improving hugely the quality of lives of many people with mental health conditions. Secondly, I and departmental officials have had meetings with colleagues in the DWP, and I will have further meetings shortly, particularly to discuss the DWP input into a cross-Government mental health strategy.

[Andrea Leadsom (South Northamptonshire) (Con)]

16. What recent representations he has received on requirements for doctors to record the primary cause of death on a death certificate.

[The Parliamentary Under-Secretary of State for Health (Anne Milton)]

I am not aware of any such representations. Doctors are required under the Births and Deaths Registration Act 1953 to complete the medical certificate of cause of death “to the best” of their “knowledge and belief”. They receive information on this as part of their medical training. The Office for National Statistics produces reference material from time to time, including a video and training pack to assist doctors in completing the medical certificate on cause of death.

[Andrea Leadsom]

I thank the Minister for that answer. We have in my constituency of South Northamptonshire the Progressive Supranuclear Palsy Association headquarters. That is a neuro-degenerative disease with some similarities to motor neurone disease, although the big difference is that I doubt that many Members will have heard of it before now. Many people suffer from it, however, yet it is often not recorded on the death certificate. It is always fatal, giving a life expectancy of about two years. Might the Minister be prepared to review the situation and give some consideration to requiring doctors to put the primary cause of death on the death certificate so that we can properly assess the magnitude of this awful degenerative disease?

[Anne Milton]

I thank my hon. Friend for raising this issue. As a result of inquiries from the Progressive Supranuclear Palsy Association and others, the ONS is carrying out a special exercise to attempt to identify the true number of deaths involving PSP. However, it is extremely difficult to diagnose. I should just point out that medical examiners, when appointed, will be confirming the cause of death in all cases not investigated by the coroner. I think that that will make a difference to the information recorded on death certificates.

[Caroline Flint (Don Valley) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Health (Mr Andrew Lansley)]

My responsibility is to lead the national health service in delivering improved heath outcomes in England, to lead a public health service that improves the health of the nation and reduces health inequalities, and to lead the reform of adult social care that supports and protects vulnerable people.

[Caroline Flint]

In recent years more research and evidence has demonstrated that the trans fats present in our food are a major heath hazard. That is how the National Institute for Health and Clinical Excellence has described them, and the World Health Organisation has described them as toxic, but many people do not even know they are in our foods because they are not listed on the front of our food packaging. Is the Secretary of State prepared to consider banning trans fats in our food, as is happening in other countries around the world, or at the very least consider making sure they are labelled on the products we buy so that we can make an informed choice?

[Mr Lansley]

The right hon. Lady will know that we have made progress in this country in reducing the amount of trans fats in foods. My personal view is that we should seek to eliminate them, rather than have them in foods and have them labelled. It is important that we have front-of-pack food labelling that identifies the extent to which there are saturated fats, and I am looking forward to making greater progress in getting a more consistent front-of-pack food labelling than we have achieved in the past.

[Tony Baldry (Banbury) (Con)]

T2. GPs and GP practice managers in my constituency are keen to get on with GP commissioning because they see that that can lead to better outcomes for local people but, unsurprisingly, they have a number of detailed questions as to how GP commissioning will work. Who will best answer those questions, and when will that happen?

[Mr Lansley]

My ministerial colleagues, and many other leadership colleagues across the NHS, are engaged in meeting staff and potential commissioners, and existing commissioners and patients and public across the country. I had a meeting of that kind in Hampshire just last week, which illustrated precisely the point my hon. Friend makes: people came from general practices across Hampshire, and they fully endorse the principle of this change and they just want to get on with it. They did not want to wait for the full transition, and they now wanted to go through some of the detailed questions. We issued a consultation document following the White Paper, which was focused on general practice commissioning. I urge my hon. Friend’s constituents and others to respond to that before 11 October, which will enable us then to proceed to set out the full details of how general practice-led commissioning will work.

[Mary Creagh (Wakefield) (Lab)]

The Secretary of State had a difficult summer, with his plans to scrap free milk for the under-fives being attacked across the spectrum and eventually vetoed by the Prime Minister, but he met the new chair of Unilever, Amanda Sourry, on 21 July. On the following day, Ms Sourry wrote him a letter, some of which is blanked out. She wrote that

“with a clear signal from you, I would be happy to engage with retailers and manufacturers to find resolution on front-of-pack labelling”.

The Department has tried to black out that sentence, perhaps because it shows an unhealthy closeness between the Secretary of State and Unilever. Does the Secretary of State have an opinion on how food should be labelled, and, if so, will he tell the House what it is? Will he tell the House what other areas of food policy he plans to subcontract out to multinational food giants?

[Mr Lansley]

I hardly know where to begin due to the absurdity of some of the assertions in that question. How does the hon. Lady imagine that we are going to make progress on front-of-pack food labelling, on which her Government never made sufficient progress—there is no consistency on front-of-pack food labelling? This Government and this Parliament have no unilateral power to mandate what front-of-pack food labelling should look like and we have to achieve consensus in Europe and consensus in this country. We must do that with the manufacturers, the retailers, the charities and the health experts. That is precisely why our public health commission, when we were in opposition, brought together all those people around a table for the first time. I intend to create a realistic and effective partnership to deliver improving public health in this country, where her Government failed.

[Mr Philip Hollobone (Kettering) (Con)]

T5. Kettering general is a wonderful hospital but recently its paperwork has got out of control. Some 30 occasional chaplaincy visitors from the local Catholic Church, many of whom are retired, have recently had to complete Criminal Records Bureau checks, employer references and an intrusive personal health questionnaire. Does the Minister agree that if we are to create the big society that the Prime Minister would like us to create, such bureaucracy must be minimised?

[The Minister of State, Department of Health (Mr Simon Burns)]

I have considerable sympathy with the problems that my hon. Friend’s constituents had. Although they are necessary, I would like to think that vital checks could happen through a process that is easy to manage for those who have to go through them. My view is that hospitals must ensure that checks on volunteers are proportionate and do not discourage good and well-meaning people from becoming involved in local care. I hope that my hon. Friend is reassured by the fact that my right hon. Friend the Home Secretary announced on 15 June that the CRB regime would be scaled back to common-sense levels. The Government will announce the terms of reference of the review shortly.

[Keith Vaz (Leicester East) (Lab)]

T3. Some 1,800 patients in the Belgrave area of my constituency have been left without their local surgery because it has closed. Will the Minister assure me that despite the scrapping of the primary care trust, the new Belgrave health centre will be built? If he cannot tell me now, it would be very helpful if he could write to me.

[Mr Lansley]

I am grateful to the right hon. Gentleman, but in the absence of notice of that question, I fear that I shall have to tell him that I shall certainly look into that and write to him.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

T6. The Minister of State wrote to me on 25 August to say that all future service changes must be led by clinicians and patients. How can it be that, although all the clinicians and patients oppose the downgrading and possible closure of the Ryedale ward of Malton hospital, that can proceed? Will he please use his good offices to block any such change?

[Mr Burns]

I am very grateful to my hon. Friend and would like to tell her that I have been informed by NHS Yorkshire and the Humber that NHS North Yorkshire and York has proposed incrementally to alter the balance between resources in the community and the in-patient areas by slowly reducing the number of beds open for admission and slowly transferring staff into the community. We understand that that forms part of the PCT’s ongoing strategic plan for Malton. However, given my hon. Friend’s concerns, I would be more than happy to meet her to discuss the issue further.

[Gloria De Piero (Ashfield) (Lab)]

T4. When the Government say that the NHS budget will be ring-fenced, people might assume that whatever cash a hospital gets in this financial year will be matched next financial year. So could the Health Secretary explain why the King’s Mill hospital in my constituency has been told to expect its budget to treat patients next year to fall by 8.2% or £14.9 million?

[Mr Lansley]

The answer to the hon. Lady’s question is probably because that is what the Labour Government’s spending intentions implied. All over the country primary care trusts are telling their hospitals that they can expect a zero increase in tariff and a reduction in activity, and hence a reduction in budget. I am making it clear that we are intending an historic commitment by this coalition Government to increase the resources for the NHS in real terms. That does not mean an increase in real terms for every part of the NHS all the time. It does mean, however, that resources will be realised through efficiency savings and that increase to enable us to improve the service we provide through the NHS and to meet rising demand.

[Mr John Baron (Basildon and Billericay) (Con)]

T8. Is any flexibility available to allow the interim cancer drug fund to review earlier and more speedily adverse National Institute for Health and Clinical Excellence decisions—because in certain cases, as we know with Avastin for late-stage bowel cancer, a few months, or even a few weeks, can make a big difference to patients.

[Mr Lansley]

My hon. Friend will be aware that we have proceeded as rapidly as we possibly can in finding savings this year, so that from 1 October the regional panels of expert clinicians can look at individual cases. It is not a matter of their reviewing NICE decisions; it is a matter of their looking at individual cases that cannot be funded under existing guidance or local decisions, but being able to apply clinical criteria to individual cases using an additional fund.

[Emma Reynolds (Wolverhampton North East) (Lab)]

T7. Wolverhampton is the 28th most deprived local authority area in the country, resulting in major health inequalities. Can the Secretary of State reassure me that in future funding allocations, levels of deprivation will be taken into account?

[Mr Lansley]

Yes and more than that. I could make it clear that in the future, we will be moving—not for next year necessarily, but in years beyond, as we will make clear in the public health White Paper—to an explicit allocation of public health resources taking account of relative health outcomes and health inequalities, and those funds will be used to deliver improving public health. At the moment the formula to the NHS may take account of relative deprivation as measured by, for example, access to income support, but the money does not get spent on reducing those health inequalities and on an effective public health strategy. That is why we shall be very clear about separate, ring-fenced, public health resources used, together with local authorities, to deliver an effective public health strategy locally.

[Andrew Selous (South West Bedfordshire) (Con)]

Leighton Buzzard is one of the larger towns in the country not to have a community hospital. What reassurance can my hon. Friend give me that the wishes of local GPs will be respected in deciding what services the proposed community hospital will have?

[Mr Burns]

I think I am in the fortunate position of being able to give my hon. Friend considerable reassurance. NHS Bedfordshire has the full support of local GPs, and they continue to develop a business case for the primary health care facility in Leighton Buzzard. They will go to full public consultation on the proposals. The centre is planned to open in 2012 and would be funded by NHS Bedfordshire.

[John Mann (Bassetlaw) (Lab)]

Some 36,000 of my constituents, who voted by ballot, and every single GP in both local authorities, all believe that Bassetlaw accident and emergency department should remain a full 24-hour service. Can the Secretary of State conceive of any reason why that might not be the case during this Parliament?

[Mr Lansley]

The hon. Gentleman will be reassured to recognise that one of the commitments of the coalition Government in our programme was to stop the forced closure of accident and emergency departments. I am sure he will take comfort from the commitment of this Government, and from our commitment to increasing resources for the NHS in real terms each year, to enable the services that his constituents and others’ require to continue to be provided and improved.

[Jo Swinson (East Dunbartonshire) (LD)]

Information in a parliamentary answer given on 19 July showed that the cost to the NHS of emergency admissions in cases of anaphylaxis has risen by 45% in four years. Will the Minister look at how allergy support services could be enhanced in primary care to reverse the rising trend in emergency cases and in doing so save money and, crucially, lives?

[Mr Lansley]

Yes I will gladly do that. I have had the privilege and pleasure of visiting the specialist allergy service at my local hospital, Addenbrooke’s, one of a small number across the country. I think it was the House of Lords Select Committee that produced an excellent report on allergy services, and I hope that this is one of those areas where clinical relationships between GPs and hospital specialists will enable both community and specialist services to be improved to meet this need.

[Mr Kevin Barron (Rother Valley) (Lab)]

Given that 50% of health inequalities are created by tobacco use, will the Secretary of State give us an assurance that the targeted smoking cessation programmes in the national health service will survive?

[Mr Lansley]

We are going to improve the effectiveness of our public health services. As the right hon. Gentleman will know from past debates, I entirely recognise the extreme importance of reducing tobacco use. After the introduction of legislation on smoking in public places, there was a reduction in prevalence, but at the moment there is no continuing further reduction, especially among manual workers and young people; we need to achieve that reduction, and we will continue to look at measures to do that. We will say more about the issue in our public health White Paper.

[Mr Steve Brine (Winchester) (Con)]

Many of my constituents, and indeed many practitioners, have grave concerns about the pending closure of Winchester ambulance station. Will the Minister assure the House that no changes to static ambulance bases will take place until local consortiums, when they are formed, are happy that a suitable alternative is in place?

[Mr Burns]

I am extremely pleased to be able to give my hon. Friend some reassurance. South Central strategic health authority has informed me that the service to the people of Winchester will not be affected, as there will be static provision for Winchester; ambulances will be deployed via a control centre in Otterbourne, 2 miles from Winchester. Those changes are set to take place in December, and the existing station will not be closed until there is new provision.

[Mr David Lammy (Tottenham) (Lab)]

A decision has been taken in the past few days, without any consultation at all, to transfer the out-of-hours service for 950,000 north Londoners from the GP-run co-operative to a private provider. Will the Secretary of State intervene to ensure that local people and GPs make that determination?

[Mr Lansley]

I am aware of the matter. The right hon. Gentleman will be perfectly well aware of my view: we want to involve general practitioners much more in commissioning out-of-hours services. I will undertake to look at what is proposed by the primary care trusts in north London and see whether it is consistent with the development that we are looking for in the White Paper.

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

If local GPs fail to support reconfiguration plans en masse—if, say, 97% fail to do so—what would be the Secretary of State’s response?

[Mr Lansley]

As I said in response to a previous question, one of the four criteria that I set out on 21 May was that reconfigurations must have the support of local general practitioners as the future commissioners of services. To that extent, a reconfiguration that did not have the support of local general practices would not be able to meet that test.

[Ian Paisley (North Antrim) (DUP)]

What discussions, if any, has the Secretary of State had with the Minister for Health, Social Services and Public Safety in Northern Ireland about making Avastin and other specialist cancer drugs available on the same terms and conditions under which they are available to people who suffer from cancer here on the mainland? Will those drugs be made available in Northern Ireland under the same terms and conditions?

[Mr Lansley]

I have had very helpful and productive conversations with the Health Minister in Northern Ireland, but I have to say that they did not include that particular subject. Of course, decisions on the availability of medicines in Northern Ireland are a devolved matter, but I should be perfectly happy to take account of those issues when we next talk.

[Dr Sarah Wollaston (Totnes) (Con)]

One year on from the implementation of the European working time directive, there is evidence that patient care is suffering. Handovers have been inadequate in some cases, and junior doctors’ training time has been reduced. Will my right hon. Friend reassure me that he will take action to allow some acute specialities to opt out of the European working time directive?

[Mr Lansley]

Yes. I am very clear that, together with my right hon. Friend the Secretary of State for Business, Innovation and Skills, we need to take the European working time directive back to the European Union. We need to discuss it again. We need to go to the European Union with the intention of maintaining the opt-out and of giving ourselves, not least in the health context, the flexibility that we lack, so that junior doctors, in particular, have the capacity to undertake the training that they need. It is not that we want to go back to the past, when there were excessive hours—100-hour weeks and so on—but we want junior doctors to be confident that they will get the training that they require in the period allocated for training.

Audit Commission

Tuesday 7th September 2010 Commons Chamber

15:34

[Mr Clive Betts (Sheffield South East) (Lab)]

(Urgent Question): To ask the Secretary of State for Communities and Local Government if he will make a statement on his intention to abolish the Audit Commission.

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

On 13 August, I announced plans to disband the Audit Commission and to refocus audit on helping local people to hold councils and local public bodies to account for local spending decisions. Those changes will pass power down to people, replace bureaucratic accountability with democratic accountability and save the taxpayer £50 million a year.

Earlier that day, I spoke to the commission’s chairman, Michael O’Higgins, informing him of my decision. I also informed him that I intended to invite Lord Adebowale of Thornes and Bharat Shah to serve a second term as members of the commission. As we have announced today, I am pleased to confirm that they have agreed to continue to serve, with Bharat Shah as deputy chairman. As I have also announced today, further commissioners will be recruited to the board through open competition to bring in new private sector expertise, as the commission focuses on the changes that I have announced.

These changes mean that the commission’s responsibilities for overseeing and delivering local audits stop. Its research activities will end. Its in-house audit practice will be moved to the private sector, and we will consider a range of options for doing that. Councils will be free to appoint their own independent external auditors from a more competitive and open market. There will be new audit arrangements for local health bodies. All local audits will be regulated within a statutory framework, overseen by the National Audit Office and the profession.

With the ending of the inspection regime of comprehensive area assessment, many of the Audit Commission’s functions have disappeared. While its corporate centre may have lost its way, the well-respected in-house audit practice has consistently done a good job, and it is to protect the future and to increase competition in auditing that we seek to put it into the private sector. The Government are happy to see a mutual set up by existing staff. My intention is that those arrangements will be in place from 2012-13, which involves introducing legislation this Session.

We will now work closely with local government, the health sector, the commission, the accounting profession and other partners to complete the detailed design of the new arrangements, and to take forward, in the most effective way, the transfer of the commission’s in-house audit practice to the private sector.

[Mr Betts]

I thank the Secretary of State for his response, but I am not sure that I am any clearer about the precise reasons for his decision. First, may I ask why it was necessary to announce this decision in the middle of the recess, rather than coming to the House and making a statement? There did not seem to be any particular time imperative. Will he place in the Library of the House all the detailed papers that he must have gone through showing how he came to his decision? Presumably it was not a rushed one, or a knee-jerk reaction.

As for the annual audit function, does the Secretary of State believe that the private sector has the capacity to carry it out at the same cost as the district audit service? If business is transferred to the private sector, will there be a return to the public purse? Value-for-money studies are not, as he tried to make out, some attempt to dictate to local authorities, but an important way of making comparisons between authorities, which are useful to the authorities and to the electorate in holding them to account. Who will undertake those studies in future? Finally, if the Secretary of State really believes in localism, why did he not consult local councils and the Local Government Association before announcing his decision?

[Mr Pickles]

I am grateful for the hon. Gentleman’s questions and, indeed, I look forward eagerly to meeting him and his Committee next Monday to go through this in a more discursive way.

Of course I think there is plenty of capacity to deal with this. After all, the Audit Commission is the fifth-largest accounting practice in the country. The hon. Gentleman will readily understand that the Audit Commission was thinking along identical lines, and had already begun to engage in discussions with some of the larger practices regarding a potential sale, long before I talked to the chairman.

Do I think that going to private practice will operate at the same level of audit fees as currently? The answer is no. I expect it to be a lot cheaper. After all, audit fees have doubled in the past 13 years. With regard to the value-for-money practices and services, in the past the Audit Commission performed a very useful function. When it started out, it was virtually alone in doing that, but now there are many organisations providing those services, not least the National Audit Office. We should not be duplicating such reports.

[Mr Edward Leigh (Gainsborough) (Con)]

I welcome the announcement. One of the problems with the Audit Commission, as opposed to the National Audit Office, is that it did not have a dedicated Committee in this place to which it could report—namely, the Public Accounts Committee. Presumably, this will now change. Can my right hon. Friend reassure me that with regard to local government and other matters covered by the Audit Commission, such as what goes on in hospital wards, the value-for-money work can now be taken up by the National Audit Office through the Public Accounts Committee and reported to the House?

[Mr Pickles]

The short answer is yes, and I thank my hon. Friend for that contribution. The House should celebrate the rigour that the National Audit Office has brought to the study of value for money, the work that it has done to offer good practice, and its accountability to the House. What the coalition Government have done will increase accountability to the House.

[Margaret Hodge (Barking) (Lab)]

I share with others the concern that the Minister felt he could make such an extremely important announcement in the middle of recess, without making it to the House. I understand that he wishes the National Audit Office to have a new role, but does he understand that the National Audit Office is not a Department of Government but is accountable to Parliament, and that it is staffed not by civil servants but by officers of the Crown? In that context, is he aware that he cannot instruct the National Audit Office to play any particular role in this instance? Will he undertake to have proper consultations—I do not think my Committee has even had a letter from him—both with the Public Accounts Commission and with my Committee before he makes any other proposals, to ensure that these proposals are workable and bring to proper public account the massive expenditure and many programmes from local government?

[Mr Pickles]

I am sure it was a slip of the tongue by the right hon. Lady when she said that she had received no communication from me. She was one of the first people to whom I wrote—

[Margaret Hodge]

I have not had a letter.

[Mr Pickles]

I am amazed at that. I will send the right hon. Lady a copy. I assure her that I was at great pains to write to her, and I spoke to her principal officer to ensure that she would be briefed on the matter, so I am very surprised at that and will seek to speak to her immediately after this urgent question.

I apologise to the hon. Member for Sheffield South East (Mr Betts) for not dealing with why the announcement had to be made during recess. The simple truth is that we needed to appoint a number of commissioners. Had I appointed a commissioner on a short-term basis, it would have been obvious what was happening and that would have led to all kinds of speculation. I appointed just a sufficient number of commissioners at the end of August to ensure that the commission would remain quorate and that we would have an opportunity of appointing some commissioners with experience of transferring such a valuable asset to the private sector.

[Margot James (Stourbridge) (Con)]

As the Secretary of State knows, the Audit Commission appointed ConnectPR to lobby parliamentary candidates, MPs and Ministers in the last Parliament. What is his Department doing to end the scandal of Government agencies that are supposed to be independent using public money to lobby other arms of Government in that way?

[Mr Pickles]

I share my hon. Friend’s concerns about that. At a time when money and resources are short, it is clearly inappropriate for public bodies to use public money to lobby other public bodies. Indeed, my Department has issued instructions to all our bodies, including arm’s length bodies, to cancel all existing contracts with lobbyists, and we will shortly issue guidance to public bodies on the use of lobbyists.

[Mr John Denham (Southampton, Itchen) (Lab)]

Over the past 15 years, is it not true that the efficiency and effectiveness of local government improved significantly? By 2008, four out of five top-tier councils were rated in the top two performance categories. Councils were making £5.5 billion of efficiency savings in the current spending period, and the Commonwealth Fund recently judged the national health service to be the most efficient health care system among industrialised countries.

Is it not the case that the independent Audit Commission played a significant role in achieving those improvements? Why was the decision to abolish the commission taken in secrecy? It was not in the coalition agreement or in the published work plan of the right hon. Gentleman’s Department. Why did it have to be rushed out without consultation? Will the Secretary of State apologise for briefing that the commission was spending money on trips to the races, when he knew that it hired a meeting room on a non-race day? Why did he hide behind tabloid headlines that he knew were wrong?

When the noble Lord Heseltine set up the Audit Commission, he said that

“because local authorities appoint their own auditors, audit is not seen to be obviously independent of local government.”—[Official Report, 18 January 1982; Vol. 16, c. 53.]

Was not the noble Lord right? Are not the Government recreating between local councils and auditors the cosy, incestuous relationships that also failed Enron and, more recently, the banking system?

The Audit Commission was increasingly looking at whether local services as a whole were working together to provide quality and cost-effective services, and letting the public compare the value for money that taxpayers receive from area to area. Is it not true that the Secretary of State stopped that work because he wants to see unjustified variations in service quality and an unfair postcode lottery?

The Conservatives said at the election that the independent Audit Commission would judge whether changes to local government finance were fair. Has not the right hon. Gentleman now abolished that body so that he can make changes without any effective scrutiny?

The Audit Commission was not perfect. I too blocked the appointment of an unduly highly paid chief executive, but is the Secretary of State not destroying one of the tools for challenge and improvement? It was the Audit Commission to which I could turn to investigate the boomerang bosses who walk out with big pay-offs and go into new jobs. It was the Audit Commission that advised first me and then him on the action to be taken with Doncaster city council. The House might share my fears that this move will end up costing local taxpayers far more than it will save.

[Mr Pickles]

The right hon. Gentleman seems to have changed his tune slightly, because at the time of the announcement he said:

“I…warned the Audit Commission against excessive wage increases and their fate seemed to be sealed when they ignored this”.

The right hon. Gentleman refers to the use of Newmarket race course. I am not concerned that the Audit Commission spent £40,000 on pot plants, £8,000 on a conference at that race course or £4,600 on bagels. Nor am I worried that it spent £6,000 to celebrate its 25th anniversary at the Reform club, £3,000 on fine dining at Shepherd’s or £170,000 on role-playing and training for its staff. The commission might have made a number of mistakes and errors of judgment, but this measure is about saving the audit function.

The Audit Commission itself recognised that it was working on identical sets of proposals, because it recognised that the future of audit was in the private sector. John Seddon, a visiting professor at Cardiff university business school, recently described the commission as

“an instrument of the regime…The regime has fostered compliance rather than innovation, and compliance with wrong-headed ideas to boot.”

It was once a great organisation, and it did make a change to local government. However, local government has changed itself and it is time to move on. No doubt the right hon. Gentleman will spend some considerable time living on past glories, but the Audit Commission cannot do that. It is time to pass the baton to the National Audit Office for the supervision of the process, and it is massively important to ensure that audit remains rigorous.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I hold no brief for the present regime, but will the Secretary of State explain the mechanism under the new arrangements whereby local communities will be able to tell on an annual basis whether their council is good value for money? If an individual or company wants to bring a particular query to the attention of auditors and get a quick reply, will they be able to do that, so that there is relevance both politically and economically?

[Mr Pickles]

The hon. Gentleman has a long and distinguished record of supporting localism. What we are doing passes the power to local people. We will ensure that a rigorous auditor is appointed and that there is rotation of auditors so that no cosy relations are built up. Auditors will have a responsibility for public probity and if a member of the public is unhappy about how their council is operating and has reason to believe that what it is doing is financially inappropriate, they will be able to report that directly. In addition to that, we will ensure that the ombudsman’s powers are increased and made legally binding.

[Barry Gardiner (Brent North) (Lab)]

The Secretary of State has said that he expects the costs to the public purse to go down as a result of abolition. Will he undertake to publish each year the actual costs of the arrangements with the private sector? Will he also ensure that there is a method whereby constituents can see comparability across the audits conducted for each area?

[Mr Pickles]

I am delighted to tell the hon. Gentleman that I can do better than that. We will ensure that all local authorities—and, indeed, my Department—will publish every single item of expenditure over and above £500. Members of the public will have a very clear idea where their money is being spent. That is not in any way meant to replace the auditing function. The cost of the auditing function will be made available to the public. There will be no hiding place for the Government; £50 million a year—at a Conservative estimate, if you’ll pardon the pun—will be saved for the public.

[Brandon Lewis (Great Yarmouth) (Con)]

I welcome this decision and, like councillors across the country, I suspect, I am looking forward to one of the benefits. We are all here to represent residents, and councils are there to serve them. Am I right in thinking that one of the key benefits for residents, thanks to this measure, is that councils will be able to move forward and make decisions based on what their residents want and need, rather than just ticking a box for the Audit Commission, which leads to unpopular decisions such as fortnightly waste collections?

[Mr Pickles]

My hon. Friend makes a valid point about fortnightly waste collections. He is not alone in this; he will be delighted to know that he is in the company of the former Mayor of London, Ken Livingstone, who has welcomed the abolition of the Audit Commission. He said:

“This is one Tory cut I support”.

I am sure that we are all with him on that—although it is, of course, a coalition cut, not a Tory cut.

My hon. Friend has mentioned a prime example of the Audit Commission being keen to please the Government rather than perform its functions. When the Government were clear that they wanted fortnightly collections, it went out of its way to push local authorities in that direction. My hon. Friend is right: this measure means more power to local people.

[Fiona Mactaggart (Slough) (Lab)]

After the implementation of this decision, what will happen to the rigorous but usually free audit support that the Audit Commission gives to small parish councils?

[Mr Pickles]

Given that 30% of all audit functions in public bodies are now in the private sector, I suspect that it will make no difference.

[Bob Blackman (Harrow East) (Con)]

I am very pleased to hear the Secretary of State’s announcement. I am also pleased to hear that these contracts will be rotated. However, one of the things we will all want to see is vigour in the process and expertise built up. What regulation or guidance will be issued on the length of contracts to ensure not only that a cosy arrangement does not grow up between auditors, but that expertise can be built up to speed up the process and reduce costs?

[Mr Pickles]

My hon. Friend is quite right to wish to ensure that there is a rigorous regime. He is also right to warn about the consequences of auditors remaining within a particular local authority for too long; it is always important to have a fresh eye. We will be looking to the National Audit Office and the professions to build up a very rigorous regime that will last and will pass the test of time.

[Jon Trickett (Hemsworth) (Lab)]

The guarantee of probity is one of the central functions of the audit, and achieving that requires independence. One remembers very clearly the role of the Audit Commission in the political corruption at Westminster council, which revealed millions of pounds effectively being taken away from the public—the ratepayers—there.

May I draw to the House’s attention the remarkable coincidence that the day on which this announcement was made—13 August—was the same day that Sir Philip Green was appointed the Government’s efficiency tsar? Was there any connection between the two announcements? Can the Secretary of State give the House an assurance that Sir Philip Green, given his tax arrangements, will play no role whatsoever in guaranteeing probity in public expenditure?

[Mr Pickles]

I have known the hon. Gentleman for a long time, so I am genuinely sorry to do this to him, but may I politely remind him that the auditor in Westminster was a private sector auditor working for KPMG? It was not a district auditor—it was somebody in the private sector.

With regard to any outside organisations dealing with these matters, we are looking to the National Audit Office and the professions.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

May I congratulate my right hon. Friend on doing this and on the speed with which he is carrying it out? I think it will be welcome right across the public sector. Does he agree that the problem with the Audit Commission has been one of function, structure and, I am afraid, on occasion, questionable leadership? Will he distinguish that from the excellent audit function that many who work at the coal face in the commission carry out and will presumably continue to carry out under different managerial structures?

[Mr Pickles]

I am very glad to make that distinction. There was an element within a part of the Audit Commission that was about press releases, sucking up to Government and being part of the latest fad. That never percolated to the audit function, which has always upheld a very high standard. While we will pursue all options, I certainly hope that the workers within the Audit Commission get the opportunity to be able to set up a co-operative. We are keen to see that it is not the bosses of the Audit Commission who benefit from this but the workers.

[Sir Peter Soulsby (Leicester South) (Lab)]

May I remind the Secretary of State that the auditor for Westminster was appointed and supported by the Audit Commission? What assurance can he give us that the rigour that was shown by that auditor will be repeated in future when auditors are appointed and chosen by local authorities themselves, inevitably leading to cosy relationships?

[Mr Pickles]

I note that the hon. Gentleman has conceded the point, although a little reluctantly and perhaps not with the greatest grace, that the auditor was a private sector auditor. That clearly demonstrates that the private sector can be trusted as auditors. The majority of those dealing with industry are private sector auditors, and that is the best guarantee of probity. We will ensure that the National Audit Office and the professions oversee this. There is a distinction, and it is this: we trust local authorities; Labour Members clearly do not.

[James Morris (Halesowen and Rowley Regis) (Con)]

Does the Secretary of State agree that under the previous Government, the Audit Commission became increasingly an agent of central control? The decision that he has rightly made sends a very important signal that this coalition Government have confidence in local government and in driving through a decentralisation agenda. That is why I welcome his decision—it is the beginning of a decentralisation path that I wholly support.

[Mr Pickles]

I am most grateful to my hon. Friend for his support, and he is quite right. That is one reason why I believe the Audit Commission, despite all its defects, recognised that the time had come to acknowledge that the fifth-largest auditing function in the country would be better, safer and regulated more safely in the private sector.

Pakistan Floods

Tuesday 7th September 2010 Commons Chamber

16:01

[The Secretary of State for International Development (Mr Andrew Mitchell)]

With permission, Mr Speaker, I would like to make a statement about the floods in Pakistan. I am sure that Members of all parties will wish to express their profound sadness at the terrible suffering and devastation that the catastrophe has caused. Our thoughts are with all those families, both in Pakistan and here, whose lives have been touched by this terrible natural disaster.

It is now nearly a month since the devastating floods hit Pakistan, and it is almost impossible to describe the magnitude of what has happened. Ten years’ equivalent of rainfall fell in one week, and subsequently a wall of water has travelled 1,200 miles down the country. Some 12.5 million people are in need of immediate assistance and 1.2 million homes have been damaged or destroyed. More than 1 million head of livestock have been lost and 3.5 million hectares of standing crops damaged or lost. The estimated cost to Pakistan’s economy this year alone is $4 billion.

Britain will continue to do everything we can to help. I am particularly concerned about the potential for a secondary humanitarian public health crisis due to the slow draining of waters from Sindh province and parts of Punjab, the lack of access to clean water and sanitation facilities, and inadequate health facilities to treat the outbreak of water-borne disease. I have discussed all those concerns on a number of occasions with the United Nations Secretary-General, and he has assured me that the UN, working with partners on the ground, will do all it can to respond to the threat.

I am pleased to be able to say that the UK has been at the forefront of the international community’s response to the disaster and was the first major country to come to Pakistan’s support in significant scale in its hour of need. The Department for International Development has sent 3,500 all-weather tents to provide shelter for up to 10,000 people. More plane loads of aid quickly followed, providing tents, shelter kits, water containers and blankets to help many thousands more affected by the floods. We have drawn upon all resources available to the Government. The Royal Air Force has flown in five plane loads of relief, and I am sure that the whole House will join me in paying tribute to the contribution of our armed forces in this crisis.

Our assistance to date includes help for 500,000 malnourished children and pregnant or breastfeeding women through the provision of high-energy food supplements, treatment for severely malnourished children and the training of health workers. We are providing safe drinking water, sanitation and hygiene for 800,000 people, and have prioritised clean water and health interventions in Punjab and Sindh. Our support is helping to provide hygiene kits for more than 500,000 people and is being channelled through Save the Children, Concern and Oxfam. We are also providing shelter for up to 40,000 households through the Pakistan Red Crescent movement and working closely with Islamic Relief.

In addition, I am pleased to announce the overnight arrival in Karachi, in Pakistan, of the first of three new flights delivering DFID relief goods. It will bring much needed water purification units, pumps and water tanks to assist those in desperate need of clean drinking water. The other two flights will carry a range of items, including water carriers and shelter kits. We are also starting emergency production lines in two factories in Pakistan to produce hygiene kits and water containers that will help stop the spread of water-borne diseases in southern Pakistan, and are helping to set up an emergency field operation and co-ordination base camp near Sukkur to provide a base for relief workers in the middle of the worst flood-affected area.

My Department has also brought forward a bridge rehabilitation programme as part of the recovery effort. The first 10 bridges left Tilbury docks last week and will arrive in Karachi later this month. That assistance will help to open access routes and reduce the pressure on much-needed air assets.

Soon after the flooding started, I travelled to Pakistan with my noble Friend Baroness Warsi to see for myself the devastation. I visited the town of Pir Sabaq in Khyber Pakhtunkhwa province and saw the 12 foot-high watermarks on the remaining walls of the houses. It is not easy to imagine the terror and panic that must have affected particularly older, less mobile people and children as the mountain of water swept through the town. I know that the Deputy Prime Minister’s visit to Pakistan last week made a similarly deep impression on him. During our visits, the Deputy Prime Minister and I discussed the situation with President Zardari and Prime Minister Gilani, as well as with representatives of UN agencies, non-governmental organisations and donors.

Following my visit to Pakistan, I went immediately to attend the UN General Assembly special session on the Pakistan floods, to support the UN Secretary-General’s appeal. The initial response of the international community was woefully inadequate. I used that meeting to encourage other nations to contribute more and announced the doubling of the UK’s contribution to the relief effort to £64 million. We have consistently worked to co-ordinate the effort of the donor community and on the ground with Pakistan’s National Disaster Management Authority, under the experienced leadership of General Nadeem. The Pakistan authorities, the Pakistan Red Crescent Society and local and international agencies, including many brilliant British non-governmental organisations, have worked tirelessly throughout. We will continue to work closely with all partners to ensure that the response is as effective as it can be.

I should like to assure the House that my Department has throughout been committed to transparency and achieving value for money. We have not simply signed a cheque and handed it over. Our contributions to this humanitarian crisis have been based on detailed and rigorous assessments of needs on the ground. We are working night and day to ensure that every penny spent achieves a meaningful output that alleviates the suffering of the victims of this disaster. We have recently put a floods monitor on DFID’s website to enable everyone to see where and how British aid is being spent to help those affected by the floods in Pakistan. All the UK’s humanitarian assistance is provided through impartial agencies or through goods in kind.

I should also like to express my profound gratitude and respect for the unstinting hard work and skill shown by all British Government officials—both in DFID and from across Whitehall—throughout this emergency.

In addition to the UK taxpayer’s contribution, the British people have once again demonstrated their compassion and generosity. I am sure all hon. Members will wish to join me in commending the magnificent response from the British public, who have committed more than £47 million to the Disasters Emergency Committee appeal. We continue to urge people to give, and to give generously, to that appeal.

Our commitment is not just for the current emergency relief phase but also for the long haul. We will remain at Pakistan’s side to help people to rebuild their lives and livelihoods. We will also support the longer-term reconstruction needs, such as schools, health clinics and other essential infrastructure, which are being considered as part of the bilateral aid review of our development programme.

Although the floods have been a terrible tragedy, their aftermath offers a genuine opportunity for Pakistan. It is an opportunity for the international community to come together and provide exceptional support to Pakistan in its hour of need, but equally, the situation offers an unprecedented opportunity for the Government of Pakistan to drive forward a radical economic reform agenda that could make a real difference to the future of the country.

The UK and Pakistan are bound together by bonds of history and family, which underline our support for Pakistan in good times and in bad. The Pakistani diaspora living in Britain ensures that our two countries remain closely linked. This bond will remain strong over the coming months and years, as we work together to help Pakistan to recover from this unprecedented catastrophe.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

May I thank the Secretary of State for his statement and for the early sight of it? I join him in expressing my deep sympathy for and solidarity with the people of Pakistan in the wake of this terrible flooding. The thoughts of all us are undoubtedly with all those families in Pakistan and their relatives here in the United Kingdom who have been affected by these unprecedented events.

May I, on behalf of the Opposition, also join the right hon. Gentleman in paying tribute to the work of the officials in the Department for International Development, as well, of course, to our armed forces, especially the Royal Air Force, and many other officials across Whitehall, in responding so effectively to this emergency? There is also common ground across this Chamber in paying tribute once again to the incredible generosity of the British people. As the Secretary of State mentioned, the DEC appeal has now raised upwards of £47 million and many outstanding British charities are contributing to the relief effort.

It is nevertheless incumbent on me to ask a number of questions. First, the Secretary of State and the Deputy Prime Minister were right to criticise the response of the international community to this disaster as “woefully inadequate” and far too slow. Will he therefore give us more detail on which specific donors and international organisations he and the Deputy Prime Minister have spoken with over the past few weeks to encourage them to make more generous contributions? Will he also tell us what meetings have taken place at the EU level, and what meetings in particular he has had with Commissioner Georgieva?

Secondly, I thank the Secretary of State for providing us with a detailed list of what the Government aim to fund in the relief effort. He has indicated that he decided to bring forward some projects, including bridge building. That strikes me as a sensible approach, but could he clarify how much of the funding announced comes from sums already earmarked for Pakistan in the DFID budget, and how much of it is new and additional financing?

Thirdly, I join the Secretary of State in expressing concern about the secondary health crisis now emerging. According to the most recent reports, more than 200,000 cases of acute diarrhoea, 260,000 cases of skin disease and more than 200,000 cases of acute respiratory infection have already been reported. Does he believe that the health situation is under control? What further steps will he be taking to help to improve access to clean water and sanitation?

I wish to conclude by raising two final issues. As many in the House will know, there has been a series of concerning revelations over the summer about the Government’s policies on international development. However, I do not think it appropriate to raise those in the context of today’s statement, and I hope that the Secretary of State will do us the courtesy of coming to the House again soon to clarify his position on those matters. Nevertheless, there are two particular matters on which I seek further clarification today, relating specifically to this disaster.

First, as the poor initial response by donors showed, there is a clear need for greater pooled and co-ordinated funding able to be easily and quickly disbursed in disasters such as this—one of the main reasons why we championed the expansion of the UN central emergency response fund. Can the Secretary of State therefore tell us what role CERF has played in responding to this disaster, whether adequate funds were available, and whether or not he intends to increase Britain’s contributions to the fund in future?

Secondly, it is clear that there is a need for continued reform of the global humanitarian system, including the UN, to increase its efficiency and effectiveness in responding to disasters such as the Pakistan floods. Can the Secretary of State therefore tell us whether or not he intends to continue the drive of the previous Government in pushing for global humanitarian reform and investing in a reformed international system, what lessons he believes need to be learned from this particular crisis, and what discussions he plans with the new UN Secretary-General?

The Secretary of State was of course right to point out the common bonds of history, culture and family that unite the UK and Pakistan. We must continue to be resolute in our support for the poor and vulnerable in Pakistan, particularly at this troubling time. Be assured, Mr Speaker, that the Government will have our support on this side of the House in their continued efforts to do so.

[Mr Mitchell]

I thank the right hon. Gentleman for his welcome for the statement and I will try to answer his questions.

First, may I thank him for his comments about the hard work of officials across Whitehall and the brilliant work that is being done by British charities throughout the flooded area? He asked me about the meetings that have taken place. Off the top of my head, I cannot speak for all the meetings that the Deputy Prime Minister has had, but I can tell the right hon. Gentleman that I had a raft of meetings when I was in Pakistan and New York, as well as having numerous phone calls since I got back. I talked to the Finance Minister and the Prime Minister in Pakistan, to all the leading non-governmental organisations, and to the head of the Office for the Co-ordination of Humanitarian Affairs in Islamabad, who has responsibility on the ground for the cluster system. I also had bilateral meetings with Canada, Norway, the United Arab Emirates, Japan, Australia, and with the World Bank, the International Monetary Fund and the European Union while I was in Pakistan. In New York, I had meetings with the UN Secretary-General and John Holmes, and I lobbied hard with the UAE Minister for Foreign Affairs. I also spoke to my opposite number in the United States, Raj Shah, the Pakistani Foreign Minister, the Swedish Development Minister, the Irish Development Minister and Lord Malloch-Brown. I hope, therefore, that the right hon. Gentleman feels that the British Government have used this opportunity to lobby hard and to get across the points on which he and I are agreed.

The right hon. Gentleman asked how much of the funding is new money and how much is coming from existing programmes. I cannot tell him that at the moment. Obviously, we first ensured that we found the money required, and in due course we will see what budget line it will come from.

The right hon. Gentleman next asked whether I am satisfied with the preparations made to tackle the secondary health crisis. He will be aware that the water is draining from Sindh extremely slowly because it is built on clay, and it might be many months before that drainage takes place. He is right to identify water-borne diseases and the dangers from them spreading rapidly through the vulnerable community, particularly among children and older people. All I can say is that we are on the case. I have spoken personally to the Secretary-General about that specific point, and all the money announced by the Deputy Prime Minister when he was in Pakistan last week will go directly to confronting that issue, which the right hon. Gentleman rightly raised.

Finally, the right hon. Gentleman mentioned leaks. I have seen these leaks, and I think that he will understand, having held this office, that there is probably less to them than meets the eye. However, he made two specific points. On the central emergency response fund—this proves my point—when his predecessor, the right hon. Member for Leeds Central (Hilary Benn), announced the setting up of CERF, we gave it strong support in opposition. I pressed in New York for additional amounts from that fund to be made available, and as part of our review, we will certainly see whether we can build on the substantial benefits accrued from that decision.

The right hon. Member for Paisley and Renfrewshire South (Mr Alexander) made another point about the lessons to be learned from this disaster. I am sure that there will be lessons—although obviously at the moment we are focused on confronting the emergency phase of this disaster—and I hope very much that they will be picked up and learned by the emergency humanitarian review that we have set up and is being chaired by Lord Ashdown.

[Malcolm Bruce (Gordon) (LD)]

I welcome the Secretary of State’s statement and agree with him that the UK’s response, from his Department, across Whitehall and the private sector, and from private citizens, has been a leadership to the world, and also cements the relationship between the United Kingdom and Pakistan, which is very close and important. In the reconstruction effort, will he ensure that there is co-ordination between the World Bank, the United Nations, the IMF and the European Commission so that reconstruction is done to a standard that will ensure that, even if floods like this never happen again, future floods will not result in the same scale of devastation, because the standards will be higher and able to withstand the pressures? Finally, Pakistan has suffered from earthquakes and these devastating floods, and is tackling a very difficult insurgency. In those circumstances, would it not be appropriate for Pakistan to be promoted probably to the top of our bilateral aid list?

[Mr Mitchell]

On the last point raised by the Chairman of the International Development Committee, I said before these floods hit Pakistan that I thought it likely that, as a result of the bilateral aid review, Pakistan, within a comparatively short period, would become Britain’s most significant bilateral aid programme—so I underline the point that he made in his third question.

On his first point, I thank him for what he said about British leadership. It is encouraging to note that there has been a significant increase in support for the Secretary-General’s appeal fund. On his second point, about the reconstruction effort, he is clearly right that there needs to be strong co-ordination between all those taking part, and I hope that it will be provided by the pledging conference, which undoubtedly will take place before too long, and which I hope will take place in Islamabad.

[Stephen Timms (East Ham) (Lab)]

The Secretary of State will know that concern has been expressed about the effectiveness of Pakistan Government agencies in responding to the terrible crisis that has engulfed that country, perhaps with the exception of the Pakistan army. However, he has rightly drawn attention to the contribution of NGOs—he mentioned Save the Children, Oxfam and Islamic Relief. What is his judgment of the right balance for the deployment of his Department’s funding to, on the one hand, agencies of the Pakistan Government and, on the other hand, the NGOs that he has mentioned and others?

[Mr Mitchell]

The right hon. Gentleman is right to focus on those points. It is fair to say that no Government in the world would have been able to handle a catastrophe of this scale, and there are many who believe that the Government of Pakistan have done rather better than might have been expected. Despite the experience from the earthquake gained by General Nadeem, who is in charge of the disaster authority on behalf of the Government, and whom I met during my visit, there has clearly been a struggle. However, the Government have done better than many people expected.

The right hon. Gentleman asked how British taxpayers’ money and the money so generously donated to the Disasters Emergency Committee by the British people is being allocated. None of it goes through the Government of Pakistan; it all goes through the United Nations or through the NGOs that he mentioned, which are doing such good work in very difficult circumstances.

[Mr James Clappison (Hertsmere) (Con)]

I join the welcome for the Secretary of State’s statement. There will be widespread public support for the international lead that this country has taken in responding to this immense disaster. Does it follow from what he just said to the right hon. Member for East Ham (Stephen Timms) that British aid is being administered through his Department and through NGOs and charities directly and promptly, so that the public can have confidence that the money being spent by the Department and the money that they are generously donating is getting through directly and promptly to those in need?

[Mr Mitchell]

My hon. Friend is absolutely right to say that the money that is going from the British taxpayer and from people’s generous donations to the Disasters Emergency Committee does not go through the Government of Pakistan. It goes through the UN cluster system, with which he will be familiar, and through the NGOs that have been mentioned. If he cares to visit the DFID website, he will see an easily accessible monitor that enables people to track where British aid is going and what it is buying.

[Anas Sarwar (Glasgow Central) (Lab)]

I join the Secretary of State’s tribute to the British people. Every time there is a disaster, they put out their hands in friendship and donate generously. They have done so again now, and we must pay tribute to them for that. I also agree with his comments about the woeful response of the international community, and I understand the answer that he gave to the shadow Secretary of State about the discussions that he has had. It is always easy to get a response and donations when people can see the sad scenes and the high waters on their television screens, but what will happen when the waters subside and the cameras are switched off? The communities and the people of Pakistan will not overcome this tragedy in a matter of days; it will take months, if not years. The message that we need to get across to the international community is that, yes, Pakistan needs its support now, but it will also need it in the months and years to come. On that last point, what work is DFID doing alongside the NGOs and other international organisations on the ground to ensure that there is a co-ordinated response through the Disasters Emergency Committee?

[Mr Mitchell]

The hon. Gentleman speaks eloquently about the needs that will continue for many years as a result of this crisis and of the development needs of Pakistan. Three phases are involved. The first is the emergency phase, which I hope can be brought to a conclusion as swiftly as possible. The second is the rehabilitation and rebuilding phase, which will involve the pledging conference, to which I referred, in order to co-ordinate the international effort. The third will involve the long-term development programme. We are currently reviewing Britain’s contribution to that through the bilateral aid review. There will need to be great co-ordination between all members of the donor community and the Government of Pakistan to ensure that the programme addresses the long-term needs of the country and offers hope to the people who are in a pretty desperate position today.

[Sajid Javid (Bromsgrove) (Con)]

I welcome my right hon. Friend’s statement and commend the swift action that he and his Department have taken. He will know, however, that the Pakistani state is unfortunately riddled with corruption on many different levels of bureaucracy and politics. Will he reassure us that his Department is taking whatever action it can to ensure that British taxpayers’ money is being spent wisely and used to provide relief and humanitarian aid?

[Mr Mitchell]

My hon. Friend is right to focus on the importance of bearing down on corruption, but I have made it clear that, in regard to all the emergency relief work that is being done through my Department on behalf of the British taxpayer, and through the Disasters Emergency Committee, none of the money goes through the Government of Pakistan.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Understandably, the emphasis at the moment is on the immediate assistance required, and tributes have rightly been paid to the magnificent response of the people of the United Kingdom in that regard. Towards the conclusion of his statement, the Secretary of State referred to the need to drive forward a radical economic reform agenda. How does he envisage that panning out over the next few months as the Government and people of Pakistan prepare for the future?

[Mr Mitchell]

The hon. Gentleman will be aware that discussions are ongoing between the IMF and the World Bank and the whole of the donor community. A number of plans, particularly for macro-economic reform in Pakistan, are already in train. The point I sought to make in my statement was that an unprecedentedly strong offer of support from the international community also merits an unprecedentedly strong focus by the Government of Pakistan on implementing the reforms that everyone is agreed need to be made, but which perhaps seem to be taking quite a long time to get through.

[Paul Uppal (Wolverhampton South West) (Con)]

I thank the Secretary of State for delivering this ministerial statement. I am glad to see that he is conscious of the developing problem in Sindh province and also, as he mentioned, in parts of Punjab. Does he share with me the general concern he highlighted about the lack of a proper response and the poor response from the international community? It is crucial in this politically sensitive area to address this issue because it affects hearts and minds. He may be aware of initial media reports showing that Taliban-inclined elements were helping with the very initial relief. If it were ever the case that people remember who their friends are in times of need, it applies now.

[Mr Mitchell]

I thank my hon. Friend for his contribution. On his first point, all the money announced in New York—the second tranche, which is the doubling of our funding—is now being spent in Sindh and Punjab, for reasons that a number of hon. Members on both sides of the House have underlined.

My hon. Friend is right to identify the poor response, although while I was in New York there was a big increase in support from Saudi Arabia, Canada and Australia, and a number of other countries have followed since. I very much hope that at the European Union meetings taking place in the next fortnight, there will be a strong focus on ensuring that all the countries that can come to the assistance of Pakistan in its hour of need do what they can to help.

[Geraint Davies (Swansea West) (Lab/Co-op)]

In respect of flood risk management in the future, to what extent will the UK Government support sustained investment in the adaptation of Pakistan to climate change, therefore making the country’s infrastructure and communities more resilient to future flooding?

[Mr Mitchell]

The hon. Gentleman is absolutely right to talk about the importance of ensuring that there is effective investment in flood defences. It is something that the international community and the Government of Pakistan will want to look at in all three of the phases I described.

[Dr Julian Lewis (New Forest East) (Con)]

May I ask my right hon. Friend to focus a little more closely on the second point raised by my hon. Friend the Member for Wolverhampton South West (Paul Uppal)? Was the Secretary of State as appalled and disgusted as I was to hear of the threats being issued by the Pakistani Taliban to murder “infidel” aid workers who presume to try and help their fellow countrymen? I know that his emphasis must be on the relief of suffering at the moment, but when that issue has moved further forward, will he have conversations with Foreign Office Ministers on how best to make it clear to the Pakistani people in future what sort of atrocious attitude and immorality is rife among those who say that people who want to help the people of Pakistan ought to be murdered?

[Mr Mitchell]

My hon. Friend makes an eloquent contribution and I can assure him that we discuss on a regular basis these and every other matter related to the emergency in Pakistan with colleagues right across Whitehall. It seems to me that in confronting the specific issue he raised, it must be right to try to ensure that the international community and the Government of Pakistan get the relief as effectively as possible to the people who are earnestly waiting for it because they have been cut off from it. In a sense, that is the answer to his question about what the international community can do to combat the malign influences that he described.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

In comparing the inadequate and belated response of the international community with the heartwarming and generous response of the British public, may I draw the right hon. Gentleman’s attention to the numerous fundraising activities that are taking place in my constituency? Many of my constituents have relatives in the afflicted area. Will he enable his Department to work closely with Manchester airport to ensure that goods sent as a result of those fundraising activities are conveyed from Manchester to Pakistan as soon as possible?

[Mr Mitchell]

I thank the right hon. Gentleman for the encouragement that he has rightly given to communities in and around his constituency. I will certainly refer his point about Manchester airport to my officials, who will write to him shortly with an answer.

The right hon. Gentleman is also right to pay tribute to the extraordinary generosity of the diaspora communities in raising funds. I am thinking particularly of Islamic Relief, which is doing incredible work, but it is not the only organisation involved. Last Friday I had a chance to spend time with the Pakistani diaspora community in Birmingham, where I experienced a thought process very similar to the right hon. Gentleman’s.

[Dan Byles (North Warwickshire) (Con)]

I echo the Secretary of State’s thanks to our overstretched armed forces for their assistance to people who have been devastated by the flood. Does he agree that their logistic capabilities represent a uniquely effective resource for conveying aid to where it is needed, quickly and flexibly, at such times of crisis? Will his Department be making a submission to the Ministry of Defence as part of the strategic defence review, urging it to preserve that capability?

[Mr Mitchell]

My hon. Friend is right to draw attention to the strong support that has been provided across Whitehall throughout the weeks of the emergency. I have already mentioned the work of the Royal Air Force and the assistance that has been given with the supply of bridges. MOD officials in Islamabad are working more than 18 hours a day with officials from the Foreign Office and from my Department. Moreover, NATO has offered to provide 300 hours of flying time in support of the United Nations and others involved in the relief effort, and I know that they are considering how and when to take up that offer.

[Joan Walley (Stoke-on-Trent North) (Lab)]

My constituents with families in Pakistan will welcome the statement; they will also welcome the web monitor enabling them to track progress. Given the scale of the emerging public health problems and the need to consider long-term reconstruction, will the Secretary of State tell us a little more about his discussions with the World Bank about debt cancellation?

[Mr Mitchell]

I thank the hon. Lady for her comments. I know that she is heavily engaged with the community in her constituency on these matters. As I have said, we are doing everything we can to support all who are involved in combating the public health crisis, especially in Sindh, where the problem of water-borne diseases is so dangerous and prevalent. As for public debt, it amounts to only about 3% of Pakistan’s budget, so it should be seen in context. However, all those issues will be considered during the ongoing discussions with the International Monetary Fund and the World Bank.

[Greg Mulholland (Leeds North West) (LD)]

Like other Members, I have received an incredible response from people in my constituency. I am sorry that I cannot attend this evening, with the lord mayor of Leeds, a late breakfast at the Makkah mosque, where there has been some wonderful activity.

May I take the point made by the hon. Member for Stoke-on-Trent North (Joan Walley) a little further and refer the Secretary of State to the ONE International Pakistan debt campaign? Surely, as happened in the case of Haiti, we should consider diverting some of Pakistan’s debt payments over the next couple of years to people who need the money so desperately now.

[Mr Mitchell]

I agree with the hon. Gentleman’s final point, and I know that the IMF and the World Bank will show great sensitivity in that regard. As I said in my previous answer, we are dealing with relatively small interest payments, but he is right to suggest that we should be sensitive about the matter at this time. I also refer him to my earlier remarks about the importance of macro-economic reform. That will undoubtedly be one of the issues dealt with in the discussions on that subject.

[Barry Gardiner (Brent North) (Lab)]

The Secretary of State spoke of the devastation caused when a wall of water travelled 1,200 miles down the country. A question that his officials will, of course, have considered is why it was able to do that, and no doubt the answer that they will have given the Secretary of State is that there was demand for wood from the forests to provide cooking fuel and enable construction to take place in Pakistan. Once the immediate need no longer exists and reconstruction is under way, will the Secretary of State consider the need for reconstruction of green infrastructure and the forests that would, in the past, have stopped that wall of water from travelling those 1,200 miles?

[Mr Mitchell]

I am grateful to the hon. Gentleman for both asking and answering his question. He is right to talk about the importance of developing green infrastructure as part of the recovery phase, and I can assure him that that will be considered, but the truth is that a flood of such a completely unprecedented scale would have swept away almost everything in its path.

[Mr David Nuttall (Bury North) (Con)]

I thank the Secretary of State for his statement. I also thank him on behalf of my constituents, many of whom have family in Pakistan, for the work his Department has done. While declaring an interest as a member of the Rotary club of Bury, may I ask the Secretary of State to join me in paying tribute to the work of Rotary International for the work it has done in helping to relieve the suffering of those in Pakistan who have been affected by the floods, particularly through the work of its ShelterBox scheme?

[Mr Mitchell]

I thank my hon. Friend for his comments, and he is of course right to say that the 1 million or so members of the Pakistani diaspora, many of whom have relations directly affected by the flooding, have been extremely concerned and worried. We have been able through a number of mechanisms to give both information and reassurance. I pay tribute to my noble Friend Baroness Warsi, who has been very heavily involved with all the diaspora community and who came with me to Pakistan. I also join my hon. Friend in paying tribute to the work of Rotary, which makes such a tremendous contribution in this and so many other areas of development.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

I welcome the Secretary of State’s statement. I remind the House that the community in my constituency has, with the rest of the British public, been working hard to raise money. A third of my constituents are of Bangladeshi origin and they are no strangers to floods causing such devastation as has happened in Pakistan.

I urge the Secretary of State to work with the EU countries to focus on what steps can be taken to tackle the long-term challenges of climate-related disasters. What additional funding, on top of what has already been committed and Government aid funding and emergency aid, is he committing to climate change adaptation?

[Mr Mitchell]

On that final point, the hon. Lady must wait for the outcome of the spending review, which will be announced on 20 October, but I assure her that the points she made so eloquently are being actively considered. This morning, I discussed with the Foreign Secretary the point she made about ensuring that we work closely with EU members to take forward our common endeavours. Her comment about closer EU co-ordination is very well made.

[Jeremy Lefroy (Stafford) (Con)]

I thank the Secretary of State for his statement and join him in thanking all those across the country who have given so generously. This weekend, Staffordshire county council will host a dinner involving members of the local community to raise funds for disaster relief.

The Secretary of State will be aware that there are great concerns about the effect of the floods on agricultural land. Will he keep under review the long-term effect on agriculture, particularly the effect on upcoming planting, and how the UK can assist in relieving the problems that Pakistan is likely to suffer?

[Mr Mitchell]

My hon. Friend is absolutely right about the devastation that has struck both livestock and crops, upon which people in Pakistan are absolutely reliant. I set out in my statement the scale and extent of that devastation. We are already providing funding for seeds for the forthcoming planting season and we will keep under close review the important aspect my hon. Friend highlights, which will directly affect the extent of food security in Pakistan in the forthcoming year.

[John Cryer (Leyton and Wanstead) (Lab)]

I, too, welcome the Secretary of State’s statement, as will many of my constituents in Leyton and Wanstead. On the question of economic reform, in his discussions with the IMF and other international bodies, will he guard carefully against any suggestion of anything that resembles structural adjustment programmes? They might not be called that any more, but the fact is that elements in many international bodies are still keen on such programmes, which in the past have wrought the kind of devastation that we have seen in many countries, including environmental devastation.

[Mr Mitchell]

The hon. Gentleman makes a good point. After my discussions not only with the IMF but with the Minister of Finance, who is working so hard in Pakistan on these reforms, I can assure the hon. Gentleman that a measured approach is being taken on those matters.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

The Secretary of State’s statement and answers show our solidarity with Pakistan and practical aid. Is he willing to add to what he has said by continuing to press both European and Commonwealth colleagues to increase their contributions, by exploring expressly with the IMF a two-year moratorium on the repayment of debt, and by seeing whether the good experience on Haiti, where a trust fund was established, might be repeated, to give reassurance internationally as well as nationally that money will continue to be spent well and in a way that is acceptable to the whole community?

[Mr Mitchell]

On the hon. Gentleman’s third point about a trust fund, that is a mechanism for which there might clearly be a significant role, but we must allow the pledging conference and the other discussions that are going on in the donor community to develop to see precisely what role it might play. He is right, in particular, to identify the Commonwealth. A number of fellow Commonwealth members came quite rapidly to the support of Pakistan, but it is important that all European countries and donor nations that have the significant ability to help do so at this time.

[Fiona Mactaggart (Slough) (Lab)]

Does the Secretary of State agree with me that the generosity that our constituents have shown puts to shame the laziness and inadequate support of other countries? In Slough over the past couple of weekends, I have been involved in bucket collections that have raised more than £3,000 in a small town. Will he ensure that as well as a short-term urgent response to the health crisis, he makes a more strategic long-term investment in improving Pakistan’s health infrastructure, which is grossly inadequate? That is illustrated, more than anything else in my view, by the fact that the maternal mortality rate is much worse in Pakistan than in many much poorer countries.

[Mr Mitchell]

The hon. Lady is absolutely right to draw attention to the maternal mortality figures in Pakistan. That is one of the reasons why, at the G8 summit earlier this year, the Prime Minister focused on millennium development goal 5 and maternal mortality—a strong priority for the United Kingdom. I hope that this is something that we will be able to take forward at the forthcoming MDG summit. On her other points, I pay tribute to the work that she is doing to support fundraising efforts in her constituency. I know that Members on both sides of the house are doing that, and we need to continue to do it.

[Andrew Stephenson (Pendle) (Con)]

I welcome the statement from my right hon. Friend. In my constituency, there has been huge support for the victims of the floods, and I pay tribute to the work of the Secretary of State and his Department. However, I have attended a number of fundraisers for the flood appeal where many people have expressed concerns about the effectiveness of the Pakistani authorities. I know that he has already provided the House with reassurances that the aid to deal with the immediate crisis is being delivered through non-governmental organisations, but what reassurances can he give us that similar scrutiny will be given to long-term infrastructure and reconstruction projects?

[Mr Mitchell]

My hon. Friend is right to talk about bearing down on corruption and ensuring that for every pound of hard-earned taxpayers’ money, as well as of hard-pressed donor money that is spent, we get 100p of value. That is a preoccupation in all the work we do in my Department, and it will continue to be so throughout all the phases of recovery that we have discussed today.

[Hugh Bayley (York Central) (Lab)]

I welcome the Secretary of State’s response. News reports from Pakistan in recent weeks seem to indicate a high level of support from the Pakistani people for the actions of the military, but a much lower level of support for the actions of the civilian Government. I do not want to be alarmist about the future of civilian rule in Pakistan, but will the Secretary of State give me an assurance that his Department will continue to make improvements in governance a very high priority indeed, and will make bolstering civilian government in Pakistan an important part of our aid programme over years to come?

[Mr Mitchell]

Yes.

[Dr William McCrea (South Antrim) (DUP)]

The people throughout the United Kingdom have raised an amazing £47 million, in addition to the money coming from Government. Can the Secretary of State assure me that there is proper co-ordination of where all that money is being directed, to ensure that those who need it most will be able to get that aid?

[Mr Mitchell]

I believe I can give the hon. Gentleman the assurance that he rightly seeks. All of the taxpayers’ money is allocated through my officials in Islamabad, after careful discussion of what results will be delivered by the spending of that British taxpayers’ money. Sometimes it takes a little longer to allocate the funds precisely, but we do so with the confidence that it will have the effect that those who have provided the money would rightly insist on seeing.

[Mark Durkan (Foyle) (SDLP)]

If the international community’s initial response was so woefully inadequate, can the Secretary of State tell us that he is now confident that it will be better geared in response to the secondary humanitarian public health crisis that he anticipates; and will others be there for the long-term reconstruction needs, in the way that he has underlined in the commitments that he has given today?

[Mr Mitchell]

The answer to the hon. Gentleman can only be that time will tell, but I am confident that we are all focused on trying to ensure that is indeed the case, and that focus will continue throughout not only the emergency phase but the subsequent two phases, which I have described.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Members across the House have rightly spoken of the work being done by people in their communities. I mention the work being done by the small non-governmental organisation, Edinburgh Direct Aid, which is headquartered in my constituency; it does various work in the areas concerned and is working on this issue as well.

On the question of a long-term response, the rather general information that the Secretary of State is able to give about the EU response—this is no criticism of him—makes me worried that the EU response is not building up as quickly as it should. When does he expect next to meet some of his EU colleagues to try to get not just a short-term response, but a longer-term response of the type that my hon. Friend the Member for Foyle (Mark Durkan) just mentioned?

[Mr Mitchell]

The hon. Gentleman is right to point to the inadequacy of the response from members of the European Union in the early days of the crisis. I think there was a significant improvement in the second week. I had a discussion this morning with the Foreign Secretary, who will attend a significant EU meeting within the next two weeks, where he will make precisely the points that inform the hon. Gentleman’s question.

[Mr Denis MacShane (Rotherham) (Lab)]

As in the past, the Department for International Development and its leadership have risen to the challenge of the crisis and have done our country proud, but I wonder whether the Secretary of State would consider involving more directly the Pakistani diaspora community leadership in our country, perhaps by organising a common trip to Pakistan of himself, the shadow DFID Secretary and the Chairman of the International Development Committee, to show how our Parliament, our Government and our community are now working with British citizens to help solve some of the terrible problems that their linked communities face in Pakistan.

[Mr Mitchell]

I thank the right hon. Gentleman for his generous remarks about my officials, which I will pass on to them, and to others in Whitehall. He is right to stress the importance of the very inclusive approach that we are taking in working with the diaspora communities and with all people who want to assist in tackling this dreadful crisis. The spirit of what he said is embodied in the decision by the Government of Pakistan to take up a proposal from the Opposition to set up a high-level committee to co-ordinate the Government response to the crisis, so I hope he feels that notice is being taken of the importance of everyone putting aside any differences and concentrating on helping in a disaster, which even today is still leaving millions of people without any form of support.

[Jim Shannon (Strangford) (DUP)]

I thank the Secretary of State for his very positive response. In my church on Sunday, as in many churches in my constituency and further afield—in fact, right across the United Kingdom—there was a collection for the people of Pakistan. It is therefore disturbing to be made aware that there is discrimination in some cases—more localised than systematic, I have to say—against people in the Christian community, who say that they are not receiving the relief aid that they should. In his statement, the right hon. Gentleman said that “every penny spent achieves a meaningful output that alleviates the suffering” of all the victims. Will he assure us today that the people in the Christian community in Pakistan, who have been discriminated against through no fault of their own and who are equally subject to the effects of the floods, will be looked after, and will receive the relief that we in the United Kingdom wish them to have?

[Mr Mitchell]

I have not heard the details of what the hon. Gentleman has said, but in view of his concerns, I will certainly look in detail at what he said, and I shall write to him to advise him of what I discover.

Point of Order

Tuesday 7th September 2010 Commons Chamber

16:51

[Dr Julian Lewis (New Forest East) (Con)]

On a point of order, Mr Speaker. You will recall granting an urgent question before the recess to, I think, the hon. Member for Islington South and Finsbury (Emily Thornberry) about the death of Ian Tomlinson, a bystander at the G20 riots who was struck by a policeman. The evidence of the pathologist concerned, Dr Patel, was irreconcilably different from that of other experts, and that was cited as the reason for no action being taken. Given that he was last week struck off the register by the General Medical Council, can you tell the House whether you have received any indication from a Law Officer or a Justice Minister that a further statement will be made about the terrible circumstances of the case, which has caused concern throughout the country and on both sides of the House?

[Mr Speaker]

I am grateful to the hon. Gentleman. The short answer is that I have received no such request at all. However, the great likelihood is that Ministers, including Law Officers, will have heard his point of order.

Freedom of Information (Amendment)

Tuesday 7th September 2010 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

16:52

[Tom Brake (Carshalton and Wallington) (LD)]

I beg to move,

That leave be given to bring in a Bill to amend the Freedom of Information Act 2000 to remove provisions permitting Ministers to overrule decisions of the Information Commissioner and Information Tribunal; to limit the time allowed for public authorities to respond to requests involving consideration of the public interest; to amend the definition of public authorities; and for connected purposes.

The day when Members of this House backed the Freedom of Information (Amendment) Bill put forward by the right hon. David Maclean, the then Member for Penrith and The Border, will rightly go down in history as one of the most embarrassing days of the previous Parliament. The arguments deployed in favour of that Bill were spurious and specious and collapsed after the most cursory scrutiny. In an article in The Daily Telegraph headlined “House of Knaves”, the Bill was described as “an abysmal decision”, with MPs

“Acting in a way uncomfortably reminiscent of Communist officials in East Germany”.

A Daily Mail headline at the time was no more flattering. It said “MPs’ freedom of information cover-up is a dark day for democracy”. The Sun was characteristically blunt, saying “MPs back ‘squalid’ secrecy bill”. Members of this House—not only those who were whipped into voting for the Bill, but those who failed to anticipate the skulduggery and subterfuge that the Front-Bench teams were willing to contrive, and who were therefore attending to important constituency business on that Friday—have had ample opportunity to consider the damage caused by that capricious and self-serving vote.

It is timely to revisit the issue in the week in which our former Prime Minister, Tony Blair, chose to denounce the Freedom of Information Act as a “blunder”. I would be more inclined to agree with his assertion in 1996 that

“information is power, and any government’s attitude about sharing information with the people actually says a great deal about how it views power itself and how it views the relationship between itself and the people who elected it.”

It was with that view in mind that I sought to introduce the Freedom of Information (Amendment) (No. 2) Bill in 2007, so that I might demonstrate to our constituents that Members were committed not only to protecting FOI legislation but to reinforcing it. In the spirit of the coalition’s pledge both to extend the scope of the Freedom of Information Act and to provide greater transparency, I have introduced today’s Freedom of Information (Amendment) Bill, which will strengthen FOI powers in four key areas. I make no apologies for the sense of déjà vu that some Members may have. The Bill is, broadly speaking, identical to my 2007 Bill, because the weaknesses of the FOI Act remain, with one exception, as academies will now be covered by the Act.

The four key areas that I seek to address are the removal of the ministerial veto; an extension of the time limit within which proceedings can be brought for the offence of deliberately altering a record to prevent the disclosure of information; a limit on the time allowed for public authorities to respond to requests involving consideration of the public interest; and an extension of the range of bodies covered by FOI legislation.

In 2007, I noted that the ministerial veto had never been exercised. Furthermore, I entertained the idea that Members might consider that that was a reason for maintaining it, because Ministers had shown considerable self-restraint in not exercising it.

That argument is now sadly redundant. In the intervening period, the ministerial veto has been used twice by the right hon. Member for Blackburn (Mr Straw), in his then role as Justice Secretary, in the first instance, to block the release of minutes of Cabinet meetings in the run-up to the Iraq war, because releasing the papers would do “serious damage” to Cabinet government and outweigh public interest needs. In the second instance, it was used to block the disclosure of minutes of the Cabinet Sub-Committee on Devolution to Scotland, Wales and the Regions from 1998.

The exercise of the ministerial veto introduces a veil of secrecy and affords an opportunity for arguments in favour of the public interest to be dismissed out of hand. Furthermore, its deployment sets a dangerous precedent and paints a worrying picture of a disdainful relationship between Government and the electorate.

Similarly, it may appear that there is no need to extend the period during which proceedings can be brought for the offence of deliberately altering a record to prevent disclosure of information under section 77 of the FOI Act—that is a new proposal. There do not appear to have been any prosecutions for the offence.

In the wake, however, of the climatic research unit e-mail controversy—or “Climategate”, as it is known to the tabloid media—the Information Commissioner’s Office found evidence that the CRU tried to avoid disclosure by deleting information. In a letter from the ICO to the CRU, the deputy commissioner confirmed the fact that

“elements of a section 77 offence may have been found here, but cannot be acted on because of the elapsed time”,

and said that that was “a very serious matter.”

In its subsequent report, the Select Committee on Science and Technology recommended that the six-month time limit between offence and prosecution for breaches of section 77 of the Freedom of Information Act be reviewed. The amendment proposed by my Bill would allow a prosecution to be brought within six months of sufficient evidence of the offence coming to the prosecutor’s knowledge, rather than within six months of the offence being committed. However, a prosecution could not be brought more than three years after an offence had been committed.

I would now like to move on to the subject of time limits within which public authorities must respond to public interest FOI requests. In 2009, 1,551 requests to central Government Departments and other monitored bodies were subject to an extension beyond the 20-working-days period, so that the issue of whether information should be disclosed on public interest grounds could be considered. That is allowed, as public authorities can use whatever additional time is “reasonable in the circumstances” to consider the Act’s public interest test. Figures from a Ministry of Justice publication, “Freedom of Information Act 2000: 2009 Annual Statistics on implementation in central government” show that of those extensions, in 155 cases, the extension was between 21 and 30 days; in 129 cases, it was between 31 and 40 days; and in 276 cases, it was over 40 days, but how far over is not known. If the Bill is introduced, all those requests, totalling more than 500, would receive a response in fewer than 40 days. Departments such as the Home Office, which set a record in 2007—I do not know whether that is still the case—of 18 months for tardiness in answering an FOI request would no longer be able to use delaying tactics to postpone the release of embarrassing information.

Finally, the Bill proposes an extension to the definition of public authorities to include publicly owned companies, publicly funded “not for dividend” companies, and private contractors delivering high-value public sector contracts. At present, a company that is wholly owned by a public authority is subject to the FOI Act in its own right under section 6(1) of the Act. However, where a company is jointly owned by two or more public authorities, it is not subject to the Act. Equally, where a public authority owns 99% of the shares and someone else owns only 1%, the company is not covered. The proposed amendment would bring within the scope of the Act any company where at least 51% of the shares were owned by one or more public authorities. Not-for-dividend companies such as Network Rail, which are not covered by FOI although the Government are the sole shareholder, would have their secrets revealed if the Bill were to become law.

The argument about private contractors doing public work for public authorities is less clear. The Secretary of State has the power to designate private contractors under the Act, but has never done so. The Bill would include only a very small number of very large private contractors working for a public authority—organisations such as Capita or Serco, for instance—which had contracts of a value exceeding £1 million and covering a period of more than 12 months. Clearly, such organisations are in effect quasi-public authorities delivering public services and they must not be allowed to avoid the scrutiny provided by FOI legislation. They must be covered by FOI rules too.

I have set out today in this Bill four simple measures that demonstrate the Government’s commitment to extending FOI and demonstrate that the decision taken three years ago to support the FOI (Amendment) Bill was an aberration. This Bill will strengthen FOI legislation, not emasculate it. I urge Members to support the Bill.

17:01

[Mr Denis MacShane (Rotherham) (Lab)]

I congratulate the hon. Member for Carshalton and Wallington (Tom Brake) on a vigorous speech. I found little in it with which I would disagree, but I think his Bill should be taken much further forward. My only slight worry was the way in which he so enthusiastically prayed in aid at the beginning of his speech quotes from The Sun and the Daily Mail. I gently say to him, even if he is now sitting on the Government Benches, that if he lies down with those papers, he may end up getting very flea-bitten indeed.

However, the hon. Gentleman is right to bring to the House concerns about the Freedom of Information Act, and he is right to quote the former Prime Minister, Tony Blair. I have his book, which says:

“Freedom of Information. Three harmless words. I look at those words as I write them, and feel like shaking my head till it drops off my shoulders. You idiot. You naïve, foolish, irresponsible nincompoop”—

and that is only on freedom of information. I find it rather touching and a healthy thing that we have a former Prime Minister prepared so to describe himself. I have searched in vain in the memoirs of Baroness Thatcher or Sir John Major for any similar recognition that they now have the slightest scintilla of doubt about something that they did.

I suggest gently to the House that the Freedom of Information Act, which became fully operational in 2005—some five years ago—was meant to lead to better government and better journalism. It has been an article of my faith since I first joined the National Union of Journalists about 40 years ago; in the 1970s, it was loony lefties like me who argued for freedom of information. Bit by bit we won the argument. We could not persuade the then Labour Government, we could not persuade the 1979-1997 Government, but we did persuade Tony Blair, and we now have freedom of information on the statute book.

I ask the question again: have we better government as a result? In May, the British people gently suggested that they were not quite so sure that their Government were a paragon of virtue who should be re-elected. If any right hon. or hon. Member in the House is prepared to aver that we now have much better journalism and newspapers as a result of freedom of information, I kindly ask them to put up their hand. Quite.

Freedom of information has coincided—I am not saying that it is cause and effect—with poorer government, and I very much hope that the hon. Gentleman gets his turn with a company car, because then he will find out what I am talking about. In large areas of government, the written discussion and advice that are now on offer to the Ministers who have to make decisions are weaker, because the deciders—the policy makers—are looking over their shoulders and saying, “Will one tiny section of what I am writing appear on the front page of the Daily Mail, The Sun, The Daily Telegraph or any other paper?” As a result, they hedge their bets.

I started to see that happening during my time as a Minister in the Foreign Office, when it was a privilege to receive, frankly, some of the most brutal assessments of what was happening in the world from very, very able foreign service officers. As the dawn of freedom of information approached, however, those assessments became softer and more careful, because, although there are provisions for not revealing policy and the rest of it, they were not sure whether some of what they might write might, in some other context, be made available for the delectation of our journalists.

I do not have a solution to the issue. Freedom of information is still my article of faith, but we may have imported the model in America, where there is a clear separation between the legislature and the Executive and, on the whole, newspapers are more sensitive about facts, to our system, where the Executive and the legislature are fused and a great number of requests—not all, because many diligent journalists use FOI very effectively—are made purely to seek out sensationalist tittle-tattle. I look at the disgraceful story about the Foreign Secretary last week, in which some of those blog rats, those blog boys, used freedom of information only and exclusively to try to peddle innuendo, smear and rumour. I do not know the answer, but I do believe that we need a serious review of the Act. We need to have a discussion, because the employer of the UK Information Commissioner is, according to Wikipedia, the

“Parliament of the United Kingdom”.

But is he in any way accountable to us? Does he make formal reports to us? Is there a Committee to which I might put questions about what he does? The answer is no, and we as a House need to look into that.

I would go further than the hon. Member for Carshalton and Wallington. He is a radical and a liberal, but he is in this wretched coalition, so suddenly we can see his liberalism being slowly vitiated as he becomes more and more conservative. We saw that process yesterday, when there was absolutely no intervention from senior Liberal Democrats on the Andy Coulson affair. It was left to the hon. Member for Torbay (Mr Sanders) to raise the issues.

I would like to see the Freedom of Information Act extended to all those organisations and companies that have any formal status within the public realm. We have referred to the fourth estate, and it is time for freedom of information laws to extend fully to all our media organisations. They have far more power than many public agencies, local councils and the rest, which are covered by FOI legislation. What our media organisations and the oligarchs—often from overseas—who own them decide to do has a huge impact on our public life, and any company that is in receipt of taxpayers’ money should also be covered by FOI. [Interruption.] I am glad to see the hon. Member for Carshalton and Wallington, from a sedentary position, giving me some gentle support; I hope that we can secure some cross-party agreement on the matter and, perhaps, even consider temporarily re-forming the old alliance.

We also need to look at the UK Information Commissioner. That distinguished gentleman spent the early part of his life serving as a Liberal Democrat councillor, and he has twice stood as a Liberal Democrat candidate for Parliament. I wonder whether the Information Commissioner should be so connected, in such a direct political way, with one of the parties now in government.

We also need to discuss the exact gap between freedom of information and the freedom to have a private life, although I do not want to repeat my remarks about last week’s appalling slurs against the Foreign Secretary. We now have the extraordinary example, well known to the House, of our own Independent Parliamentary Standards Authority, which has been leaking details about right hon. and hon. Members to the press. When the sensationalist press have applied to it under freedom of information, the authority has given details of secret notes kept about MPs.

Perhaps Ministers are all good gentlemen who never use swear words, blow their tops or get cross; I certainly know that the Minister for the Cabinet Office, who is sitting opposite me, has never, ever used naval language in his life and is a paragon of niceness to his subordinates when he is feeling upset. Frankly, however, if his subordinates kept secret notes about him that were released every other week under FOI, there would be the most wondrous headlines to amuse us. IPSA did that. It did not stand up for a modicum of privacy and it allowed FOI information to be used against hon. Members.

My hon. Friend the Member for Glasgow South (Mr Harris) has asked IPSA for some information but it has refused to provide it, so he put in a freedom of information request, but IPSA has refused to comply with that. This public body is willing to put FOI information into the public domain to the detriment of right hon. and hon. Members, yet tries to shelter itself from and refuses to co-operate with FOI requests.

Those are some of the paradoxes. We need a debate and a review. The hon. Member for Carshalton and Wallington has done the House a great service. Now let us have a wider debate on the reform of how FOI works.

Question put (Standing Order No. 23) and agreed to.

Ordered,

That Tom Brake, Caroline Lucas, Dr Julian Huppert, Dan Rogerson, Tim Farron, Mike Crockart, Stephen Lloyd, Mr Richard Shepherd and Simon Hughes present the Bill.

Tom Brake accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 12 November and to be printed (Bill 68).

Superannuation Bill

Tuesday 7th September 2010 Commons Chamber

[Relevant document: The oral evidence taken before the Public Administration Select Committee on 27 July (HC 397) on the Civil Service compensation scheme.]

Second Reading

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I have to inform the House that Mr Speaker has selected the reasoned amendment in the name of the right hon. and learned Member for Camberwell and Peckham (Ms Harman).

17:13

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

I beg to move, That the Bill be now read a Second time.

In a statement to the House on 6 July, I made clear the Government’s intention to make the civil service compensation scheme affordable and I set out our intention to legislate to underpin the negotiations about achieving that. I start by stating my unqualified support for the British civil service; I firmly believe that our system of a permanent civil service is one of the jewels of our constitution.

The service’s values of political impartiality, recruitment and advancement on merit, and the public service ethos are as much to be cherished and nurtured today as they ever were. The service is admired throughout the world for the way in which it serves the elected Government of the day. A steady stream of visitors from other countries send their civil servants to find out how it is done here. It is a pleasure, on returning to government—after an 18-year sabbatical, in my case—to discover that those virtues and values remain intact.

In the latter part of the last Parliament, I was pleased to support the previous Government’s actions in introducing, rather belatedly, it has to be said, civil service legislation—only 154 years after it was promised in the Northcote-Trevelyan report, but better late than never. That was an important step in ensuring the continuance of an impartial civil service.

I am also delighted to find that the service continues to attract the best and the brightest, with the civil service fast stream recognised as one of the most prestigious graduate programmes in the country. So the Bill is emphatically not an attack on the civil service: it is a necessary measure to deliver fairness and affordability in the appallingly challenging fiscal circumstances in which the last Government left Britain.

It might be helpful to the House if I set out some of the history and background to how we have got to where we are today. The history of compensation in the civil service is a long one, with the first legislation covering it having been passed more than 150 years ago. The ability of the state to pay compensation to civil servants on the loss of office was created under the Superannuation Act 1859. That Act did not create a right to compensation, but it created a framework under which such payments could be made. The Superannuation Act 1965 consolidated the previous Acts and included provision for the early payment of pensions to those aged 50 or over who were asked to take early retirement in the interests of efficiency. The same Act repeated the provision of an earlier Act that spelled out that civil servants had no legal entitlement or legal right to the benefits referred to in the 1965 Act, which was itself supplemented by an administrative code that set out the payments that a civil servant could expect, making it crystal clear that there was no entitlement to such benefits.

In the late 1960s and early 1970s, the Fulton committee reviewed the position of civil servants. Alongside that committee, the joint superannuation committee of the national Whitley Council was set up to review the provisions of the 1965 Act. It reported in 1972, noting that improvements were needed to the superannuation scheme

“to restore to the Civil Service the position it had traditionally held as one of the leaders in pension practice.”

That view was reflected in the Superannuation Act 1972, which granted civil servants rights to their pensions. In 1987, the compensation scheme was amended to its current form.

The previous Administration concluded that the current scheme was both unsustainable and indefensible. In the summer of 2008, with support from all parts of the House, Ministers embarked on lengthy negotiations to reform the compensation scheme. The right hon. Member for Dulwich and West Norwood (Tessa Jowell) was one of those Ministers. I think it is fair to say that those negotiations were very long drawn out and protracted. I pay tribute to the efforts of successive Ministers in trying to achieve an agreed outcome; they really did go the extra mile to try to achieve consensus. Arguably, they went too far, because the new scheme that was finally agreed in February this year was still out of kilter with most of the rest of the public sector and would have been unrecognisable, frankly, to anyone in the private sector.

The compromises that created what I still regard as a hard-to-defend scheme were made with the expectation that all six civil service trade unions present at the negotiations would agree it. That appeared to have been achieved, but sadly when the agreement was referred back to the leadership of the Public and Commercial Services Union—the biggest and most numerous union, representing very largely lower-paid civil servants—the rug was pulled from under the feet of the lead PCS negotiator and the agreement was rescinded. So after 18 months of tortuous negotiations, with perhaps an excess of flexibility on the part of the then Government, consensual reform of the scheme seemed as far away as ever. Ministers then took the view, correctly, that PCS’s last-minute volte-face could not be allowed to stand in the way of much-needed reform. Therefore, with the agreement of five out of the six unions, the right hon. Member for Dulwich and West Norwood laid the necessary order to give effect to the reformed scheme.

I have at all times made clear our view that the February scheme did not go far enough. Had it come into effect, however, when the coalition Government took office in May this year, a pressing case would have been made to let it remain in force. Sadly, that option simply did not exist. PCS unilaterally, and without the support of the other five trade unions, sought and obtained judicial review and obtained an order that quashed the February scheme. The option of allowing the scheme agreed and negotiated by the last Government was removed from the table by PCS’s unilateral action.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Whatever the rights and wrongs of seeking judicial review, I am sure the Minister will accept that PCS represents some of the poorest-paid workers in the civil service. His scheme, rather than being fair, will be a lot less generous to them. Why is he introducing a scheme that gives the poorest-paid junior jobcentre official only as much protection as a head of Department in the civil service, when on 6 July he promised protection for the poorest- paid?

[Mr Maude]

I will come on to precisely that point, because the hon. Gentleman puts his finger on a real concern that I have. I will deal with it in detail later, if I may, because how to protect effectively the position of the lowest-paid in the civil service is a really important issue that will concern everyone in the House.

It is now more than 20 years since the last serious reform of the compensation scheme and more than two years since the current reform process began, with an unchanged set of arrangements still in place. Frankly, that position cannot be allowed to continue. The current scheme is unaffordable and unsustainable. It allows for payments of up to three times annual salary or, for older workers, enhancements to pension and lump sum payments costing more than five times salary. For some, those enhancements can total as much as six and two thirds times annual salary. That compares with a maximum of 30 weeks’ pay under the statutory redundancy scheme, with a weekly cap on the salary allowable of £380, giving a total of about £11,000.

The level of payments under the current scheme would be excessive even if we were not facing such a difficult financial situation. The last Government left the country with, in the immortal words of their last Chief Secretary to the Treasury, “no money left”. The Government are having to borrow a pound out of every four just to keep pensions paid and schools and hospitals functioning.

[Dr John Pugh (Southport) (LD)]

The Minister has mentioned that the scheme was last revised in 1972, but did not that revision leave all previously accrued rights in place? Is he not doing something different now?

[Mr Maude]

The extent to which rights are accrued is an issue to consider. We are talking not strictly about redundancy but about compensation for loss of office under a statutory scheme, and the relevant rights are those in force at the time when redundancy or loss of office happens. If the statutory redundancy scheme changes, the terms that govern the entitlement are those in place at the time when the redundancy happens. I understand my hon. Friend’s point, but I do not believe it applies in this case. I shall deal with that matter a little more in due course.

Our view is that to maintain the current scheme would be unfair as between taxpayers and civil servants and as between workers in the civil service and those in the private sector or the wider public sector. It is unfair also to less well-paid civil servants, which is related to exactly the point that the hon. Member for Birmingham, Selly Oak (Steve McCabe) made, with which I shall deal.

The effect of the current scheme is that it is prohibitively expensive to make redundant civil servants who are highly paid and long-serving. The result is therefore that when money has to be saved by reducing head count, the burden currently falls disproportionately on the lower-paid, more of whom lose their jobs than is necessary or desirable. My view is that lower-paid civil servants suffer disproportionately and are more likely to lose their jobs under the current scheme than would be the case under the arrangements that we are seeking to negotiate. In addition to the very simple cap incorporated in the Bill, we are seeking in parallel to negotiate different arrangements with significantly enhanced protection for lower-paid civil servants.

[Steve McCabe]

Let me say that I want to assume that the Minister’s long-term intentions are exactly as he says, but is it not a fact that under the Bill he will penalise, to an extraordinary degree, the poorest paid people in the civil service? That is the effect of the measure that he is asking us to vote for today.

[Mr Maude]

No. The effect of the legislation will be identical on all civil servants. Under the Bill, the cap would apply uniformly to civil servants. I shall come in a moment to the negotiations that are going on in parallel, because that will deal exactly with the hon. Gentleman’s point.

[John Hemming (Birmingham, Yardley) (LD)]

Obviously we do not want to make civil servants redundant. Does the Bill not make it less likely that lower-paid civil servants will lose their jobs, so in 10 years’ time they will still be employed within the civil service?

[Mr Maude]

My hon. Friend is exactly right and puts his finger on an important point. Because it is so disproportionately expensive under the current scheme to make redundant long-serving and high-paid civil servants, instead of one civil servant who earns 10 times the average—there are some—losing their job, 10 or more lower-paid civil servants might lose their jobs to save the same amount of money. We are seeking to address exactly that issue.

[Mr Alan Reid (Argyll and Bute) (LD)]

I, too, was pleased to hear the Minister say that the Government want a scheme that will be better for the lower-paid, but the Bill does not differentiate the lower and higher paid. Will the Government seek to amend it to allow better compensation for the lower-paid?

[Mr Maude]

It is not my intention to propose amendments of that nature, because in our view such arrangements are difficult to engineer—this is tricky stuff—and are not amenable to incorporation in primary legislation. Such matters should be negotiated. It is precisely for that reason that we are engaged in a parallel process of negotiation with the Council of Civil Service Unions, which I shall talk a little about in a moment, because we are seeking to achieve two things.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

It is interesting to hear the Minister talking about parallel negotiations with the unions. Will he help me by explaining what negotiations, discussions or consultations there were with any of the civil service trade unions before the publication of the Bill?

[Mr Maude]

Negotiations were carried out by the previous Government over the 18 months before the order was laid, which, as I understand it, exhaustively explored all the options. I met the Council of Civil Service Unions before the election and immediately after. I have had several meetings with the council—at least two, I think—since, and I am proposing to meet the chairman later this week. There is a continual process of discussion and dialogue, which I regard as very important. I do not want the measure to be unilaterally imposed; I want a genuine consensual arrangement, whereby all six civil service unions agree to a new, sustainable and long-term scheme.

[Richard Graham (Gloucester) (Con)]

As my right hon. Friend knows, I am a former civil servant. I am very conscious of the large numbers of low-paid civil servants in this country. He and other hon. Members will know that on average, the UK civil servant receives no more than £24,000 a year, so there are issues of fairness. I give him my full support in taking forward in his negotiations with the various trade unions every possibility of increasing the statutory minimum available for low-paid civil servants. That will fulfil exactly one of the major tasks for the Bill: greater fairness in the system.

[Mr Maude]

I can reassure my hon. Friend that that is exactly our aim. It is one of the great myths—I have sometimes heard this expounded even in this august House—that all civil servants are highly paid. That is simply not the case. As he says, the average pay of the civil servant is, I believe, around £23,000, and half of civil servants are paid £21,000 or less. In the pecking order, as it were, of the different sectors, average pay is highest in the wider public sector, private sector pay is next, and civil service pay is the lowest. So my concern for lower-paid civil servants is real and genuine, and it is based on a proper understanding of the concerns that exist.

[Mr David Hamilton (Midlothian) (Lab)]

Is it not the case that many of the low-paid workers have accepted those low wages because of the conditions of employment, which included a pension scheme and superannuation scheme that meant something? To take that away from them takes away the very essence of why they are there.

[Mr Maude]

I hear what the hon. Gentleman says, and the fact is that in any employment the terms that apply are those that apply when an event happens. People get sick pay when they are sick; they get redundancy pay when they are made redundant. The statutory redundancy scheme, which has the force of law—as indeed this scheme does, as it is a statutory compensation scheme for loss of office—and the compensation to which people are entitled when they lose their office is that which is in force at the time. That is the view that the previous Government took, robustly, having considered—I presume—all the issues as carefully as we have done. So there is a strong view on both sides of the House that this scheme is unsustainable and unaffordable. Even in good circumstances it would be unaffordable, but in today’s tragically difficult financial position—with the budget deficit that we inherited so out of control and high—it would be indefensible to allow it to remain unreformed, as a matter of fairness.

[Stewart Hosie (Dundee East) (SNP)]

I was pleased when, a few moments ago, the Minister suggested that he did not want to impose this change unilaterally. Of course, that ties in with Mr Justice Sales’s comments that that might not be possible without agreement anyway. How confident is the Minister that agreement will be reached, perhaps before this legislation completes its passage?

[Mr Maude]

All I can say is that it would be rash to make predictions. I can express the hope and aspiration that agreement will be reached. I stand ready to meet the Council of Civil Service Unions at any time, and my officials are engaged in genuine and sustained negotiations and discussions with the unions, which are continuing on an almost daily basis. I have to say that I was discouraged this morning when Mark Serwotka, the general secretary of PCS—a man for whom I have considerable respect—said, when asked whether he would challenge the result in the courts again, that he would do so. That does not bode well for a consensual outcome, and the fact is that five of the six unions had agreed the previous scheme, but the rug was pulled by one union, to the disbenefit of everyone concerned.

I have made it clear that I do not see this Bill as the last word. It remains our desire to reform the scheme by negotiated agreement, so there have been significant and continuing discussions. There are two key goals in the negotiations. The first is to deliver additional protection for lower-paid civil servants, and that has to be done by negotiation—

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

The Minister has said several times that he aims to protect the lower-paid, but I do not follow his argument. Under the current arrangements, someone who is earning £20,000 a year with 20 years’ service in the civil service would receive £60,000 in compensation. Under the February 2010 deal, proposed by the Labour Government, that individual would have received £58,000 in compensation. Under the present proposals, that civil servant would receive £20,000 compensation. Conversely, someone who is higher paid—for example, £40,000 a year—would receive £120,000 compensation under the current arrangements, given that three years is the maximum payment. Under the February 2010 deal, that amount would have been £60,000 because that was the cap, and under the present proposals it would be £40,000. Can the Minister please explain how the lower-paid will be protected?

[Mr Maude]

rose—

[Mr Deputy Speaker]

Order. Before the Minister replies, may I point out that interventions should be short, with quick questions?

[Mr Maude]

The answer to the hon. Gentleman is, as I have said several times already, that this Bill is not the last word and that the additional protection for lower-paid workers has to be done by agreement. I do not want to be in a position where we design as if in some laboratory a complicated scheme to try to give protection for the lower paid, because the right way to do it is by proper negotiations and discussions with the unions—and that is exactly what is going on at the moment. As I said, that is the principal aim of the—

[Several hon. Members]

rose—

[Mr Maude]

I am besieged by suitors, but I will give way to my hon. Friend the Member for Ceredigion (Mr Williams).

[Mr Mark Williams (Ceredigion) (LD)]

I am grateful to the Minister for giving way. I respect the sincerity with which he puts his case, and I also accept that the rightful place for the detailed discussions will be the negotiations with the unions. However, I think what the hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann) is looking for—and I am, too—is a little more detail on, and justification for, those words that the Minister uttered about protecting lower-paid workers. The anxiety out there is real, and the Minister needs to address that a bit more, if he can.

[Mr Maude]

I am reluctant to start conducting those negotiations in public. It would be regarded by the unions, which I think are engaged in good faith in these discussions—certainly, all the indications are that they are engaged in good faith in these private discussions in order to achieve an agreed outcome—as bad faith were we to start to explore them here. All I would say at this stage is that we completely and genuinely understand the need for additional protection for lower-paid workers, of whom there are many in the civil service, and we will seek to achieve that.

[John Hemming]

Does the Minister agree that the difficulty is that the Government need to act and cannot allow one of six trade unions simply to veto all changes, and that if the Government are therefore to put something through, they need negotiating room to offer something better in the negotiations? Obviously, this Bill will not be as good as a final deal that could be agreed with the trade unions.

[Mr Maude]

That is completely right. My hon. Friend puts his finger precisely on the point. Our view is that one union cannot be allowed to prevent necessary reform of a scheme that is unsustainable and unaffordable—and, of course, that is precisely the view taken by the last Government. The order laid by the right hon. Member for Dulwich and West Norwood, which came into effect, I think, in April this year—before it was rapidly quashed by the judicial review sought by the Public and Commercial Services Union—was made on the basis that one union could not be allowed to hold up the necessary process of reform. However, I stress again that we seek genuinely to negotiate additional protection for the lower paid.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I have been listening to these exchanges closely, but will the Minister tell me whether I have understood him correctly? Is he saying that, whatever special measures may be made for the lower paid, which he is not prepared to discuss now for the reasons he outlined, he has no intention of trying to impose them through legislation, and that they will be negotiated come what may, but that this legislation might become necessary in order to provide the framework for such a settlement? Is that correct?

[Mr Maude]

Indeed. I will say more about the relationship between the negotiations and the Bill in a little while. The aim would be to have a whole new negotiated scheme that would make this Bill redundant. Sadly, however, the experience of the last Government shows that it is impossible to place absolute reliance on the ability to achieve total consensus on that. Proper additional protection for the lower paid is a central part of our aim in the negotiations. I will say briefly as well that the other side of that coin should be a cap on payments for the highest paid. Again, it seems to us that basic fairness requires that.

Our second goal in the negotiations is to negotiate a higher cap for voluntary redundancy schemes. It is the essence of most redundancy schemes that there should be scope for voluntary redundancy terms to be more generous than those for compulsory redundancy. However, I would like to make it clear, if it needs to be made clear, that no one wants redundancies at all, but if they are unavoidable, which sadly I believe they will be—they were under the last Government, and in the current fiscal environment, they are even more likely—it will surely be much better to be able to offer more generous voluntary redundancy terms. That is simply impossible under the current scheme, because of its unaffordably generous terms.

We have made some progress in the talks, but they have not yet delivered an approach that is agreeable to all the unions involved and to the Government. If we can secure agreement with the civil service unions to introduce a comprehensive new scheme, we will implement that package rapidly. Until we reach that point, however, we would be failing in our duty to the tax-paying public—and to lower-paid workers outside the civil service who daily confront much less generous terms—if we were to allow the excesses of the current scheme to continue unchecked.

That is why we have introduced a Bill to limit the size of compensation payments. It has only two clauses, which cap the amounts payable under the current scheme. The first creates caps on the level of payment possible. Staff who depart on voluntary terms will receive payments calculated under the current terms, but limited to a maximum of 15 months’ pay. For those leaving on being formally dismissed—effectively, compulsory redundancy—the limit will be 12 months’ pay. Where the civil service compensation scheme terms provide for early retirement instead of or in addition to a severance payment, the total value of the package will be subjected to the same cap of 12 or 15 months’ pay. In these cases, if the actuarially assessed cost of the total package exceeds the appropriate cap, the Bill provides that those individuals will instead receive 12 months’ salary—or 15 months’ salary in the case of voluntary departures—and no change to their pension entitlement.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

Could the Minister please explain the rationale for proposing these particular terms, which are so much worse than those that were almost agreed before?

[Mr Maude]

My hon. Friend says that those terms were “almost agreed”, but that was far from being the case. In fact, one of the trade unions refused to agree to them, sought judicial review and had the agreement quashed. Given that one of the unions had refused to contemplate agreeing to the relatively modest—if we are honest—changes to the current scheme, it would be unrealistic to assume that we could then go back and say, “Oh, PCS, please feel completely differently, and please execute a rapid volte face from your position of a few months ago.” I take the view that the previous Government took, which is that the situation is not sustainable, and that one union cannot be allowed to stand in the way of necessary reform. That is why we have introduced the Bill, and why we are engaged in a concurrent process of negotiation, through which we genuinely want to achieve a long-term, sustainable settlement.

[Mark Durkan (Foyle) (SDLP)]

The Minister has stressed that five unions—not the PCS—had agreed to the arrangements in February. How many of the unions are in agreement with the framework that will be imposed by the Bill?

[Mr Maude]

Just to be clear, we are seeking to negotiate a new scheme, which would effectively make the terms in the Bill redundant. I make no bones about this: the Bill is a bit of a blunt instrument. It does not seek to create an entire, comprehensive new scheme. It simply imposes a cap on the amounts payable under the current scheme, so that it will be possible for the scheme to operate in a way that is fair to the taxpayer and to workers in other sectors outside the civil service. This is a complex process, and no one should be surprised that there is not instant agreement on a comprehensive new scheme. We are seeking to negotiate all the terms, but particularly those relating to additional protection for lower-paid workers and to a cap on what can be paid to the highest-paid workers.

[Lindsay Roy (Glenrothes) (Lab)]

Can the Minister explain the rationale behind giving preferential treatment to those who seek voluntary redundancy, as opposed to those who are forced to take a compulsory redundancy package?

[Mr Maude]

Almost by definition, if a compulsory scheme offered less work and better terms, no one would take up voluntary redundancy. Voluntary redundancy is better because it can be negotiated and a scheme can be fashioned to meet the precise circumstances of the employing organisation and the work force. It can be designed to be as sensitive as it can be to the particular needs of the situation. Obviously, if a compulsory scheme were more generous than a voluntary one, no one would ever take voluntary redundancy. It is of the essence of any redundancy scheme that voluntary terms should be capable of being more generous. That is why we framed the provision in this way and why part of what we are seeking to achieve in the negotiated comprehensive new scheme is to enable employers in the civil service to configure voluntary redundancy schemes that are more generous than the compulsory scheme.

[Mr McCann]

Will the right hon. Gentleman give way?

[Mr Maude]

I will, but then I will have to make some progress.

[Mr McCann]

I am grateful. Will the Minister confirm that if the negotiations with the civil service unions fail, he will impose the terms that are part of this Bill?

[Mr Maude]

If this Bill progresses through the House, achieves Royal Assent and goes on to the statute book, it will come into effect, so the cap will apply as of the day of commencement. As I said, I hope that we achieve something frankly more grown up, more sustainable and more long term by having an agreed long-term comprehensive settlement. If both Houses of Parliament agree that the Bill should be passed, however, it will come into effect.

[Mr Nigel Dodds (Belfast North) (DUP)]

The Minister is generous in giving way. On numerous occasions, he has mentioned the issue of lower-paid civil servants. There is a great deal of anxiety out there about it and many of us have received representations in respect of it. How does he define “lower paid”? What is his definition of a lower-paid civil servant when it comes to these parallel negotiations?

[Mr Maude]

Well, that is one of the issues that is being negotiated. It can be defined in all sorts of different ways. It can be defined in terms of a proportion of the median salary or it can be defined by an absolute number, which would subsequently need to be updated from time to time. That is precisely one of the issues that is the subject of negotiations, and I hope we can make progress on it.

[Several hon. Members]

rose—

[Mr Maude]

I really have to make some progress and draw to a conclusion because Members of all parties wish to participate in the debate.

I emphasise that if the Bill comes into effect, it will affect only those staff issued with a notice of dismissal or in respect of whom a departure date was agreed after the legislation came into effect. Any civil servant already issued with a redundancy notice or who receives one before the Bill passes into law will not be affected by the restrictions it introduces. The first clause provides definitions to clarify who is covered by the compulsory cap and who is covered by the cap on voluntary departures. The second clause provides for the Bill’s effects to be time-limited. I stress again that we have no desire to see this legislation continue any longer than is absolutely necessary. The inclusion of a sunset provision prevents the legislation from continuing ever onwards. Instead, if we wish to renew it, the Government will be obliged to return to the House to seek approval by an affirmative resolution.

Alongside the provision for prolonging the effects of clause 1, there is also the option to bring forward the termination date. As I have already said, my intention is absolutely to resolve the issue by discussion and negotiation rather than by legislation, and I look forward to making the order that will repeal section 1 of the Act. It was disappointing, as I said earlier this morning, to hear Mark Serwotka, the general secretary of the PCS, pledge to return to the law courts to try to thwart further reform. That bodes ill for the chances of an agreed settlement, but we will strive—we will genuinely strive—to achieve that agreement. It is essential to deliver additional protection, which, I stress, is especially directed at members of Mr Serwotka’s own union. For the sake of his own members, as well as in the national interest and the interest of the taxpayer, I urge him to engage in the negotiations as wholeheartedly as the other five civil service trade unions.

I earnestly hope that a successful negotiation will render the Bill a dead letter before it even hits the statute book. That is my aim, and I will do all that I can to deliver it. In the meantime, however, the Bill is indispensable, and I commend it to the House.

17:50

[Tessa Jowell (Dulwich and West Norwood) (Lab)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House, whilst affirming its belief that civil service compensation should be reformed, declines to give a Second Reading to the Superannuation Bill because it provides inadequate protection for some of the lowest paid and longest serving public sector workers; believes that the reform proposals of February 2010 were fair, reasonable and non-age discriminatory, offering protection for the lowest paid workers whilst making substantial savings; and is strongly of the opinion that the publication of such a Bill should have been preceded by a full process of pre-legislative scrutiny of a draft Bill and in full consultation with Civil Service employees.”

I hope that the Minister has studied the amendment closely, because Labour Members believe that it holds the answers he seeks.

At the end of the last parliamentary session, the day before the Bill was published, the Minister declared that when it came to reform of civil service compensation, he wanted to negotiate an arrangement that had fairness built into it. Obviously we welcome that ambition, but we argue that as the negotiations have progressed and the detail of the Bill has become clear, he has failed to live up to his commitment.

The Minister says that he wants a fair settlement, but he has proposed reforms that are harsh, and harshest of all for some of the longest-serving, often low-paid, civil servants. The Minister says that he wants a negotiated settlement, but he has thrown out the progress made by the last Government through just such negotiations, and instead seeks to impose a short-term solution which lacks the legitimacy that comes from open and honest dialogue with the trade unions representing the people who will be affected by the reforms.

I welcome the Minister’s generous remarks, which were sincerely meant, about our nation’s public servants. I join him in recognising the important role that they play in our national life. However, I also argue that they deserve better than the proposals in the Bill. Public servants are too often represented as dead-weight on the taxpayer, as if they were somehow the cause of the deficit.

[Mr Maude]

No, we entirely blame you.

[Tessa Jowell]

That is also misguided, and we can have a further debate about it.

In fact, it is public servants who make our borders safe, help unemployed people back to work, run our courts and prisons, collect our taxes, and support our armed forces both at home and abroad, in Iraq and Afghanistan. With professionalism and integrity, they make the process of government work. The representations that I suspect we have all received in our constituency surgeries seek to make that point. It is being made by the people who provide those services, many of whom are members of the PCS but feel that their motives and their importance are being misrepresented.

[Mr Maude]

Let me make it absolutely clear that we do not blame public servants at all for the disgraceful budget deficit that the coalition Government inherited. Like Tony Blair, we blame the last Prime Minister, who as Chancellor and then as Prime Minister presided over an incontinent approach to the public finances.

[Tessa Jowell]

And let me make it absolutely clear that the Minister has grossly misrepresented the words of the former Prime Minister. Let me also remind him that the deficit arose because of a global financial crisis, and that it was our Government—led by the last Labour Prime Minister—who steered our economy at that stage, who, indeed, provided leadership for the world, and who drew our economy back from the brink of disaster. Let us have no more trivial point-scoring on that subject. I hope that during this debate we shall be able to move on from some of the crass misrepresentation of our country’s public servants and once more recognise the importance of their work, both public and private.

[Richard Graham]

As the right hon. Lady knows, a number of Members on this side of the House, as former civil servants, have already said how important they believe the civil service to be. The amendment, however, focuses on fairness and affordability. Does the right hon. Lady agree that affordability is critical in the current economic climate, and will she tell the House what approach she intends to take? As for fairness, does she agree that the outline given by my right hon. Friend the Minister of his negotiations with the trade unions represents exactly the sort of fair approach that we should be seeking?

[Tessa Jowell]

I intend to test the Minister’s commitment to fairness—with respect, I think that he asked more questions than he answered—and, if the hon. Member for Gloucester (Richard Graham) will contain his impatience, I shall respond to both his tests in relation to the fairness and the affordability of our alternative.

The Minister has made it clear that the civil service compensation scheme is in need of reform, and we agree. The cost of the scheme needs to be reduced. We fully recognise that, in the present climate, it provides over-generous and disproportionate benefits for some very highly paid people. I believe we are all agreed on the need for reform, which is why in February we set out changes to end what would be regarded by the wider public, and by any measure, as over-generous settlements.

The February 2010 scheme would have saved £500 million over the next three years. That was part of our Government’s plan to reduce the deficit. Yes, reform is needed, but it must be the right reform, delivered in the right way. It must be fair and workable, and in particular—here I echo the Minister’s words—it must provide protection for the lowest-paid. It must also be underpinned by open and honest dialogue with the civil service unions representing those who are likely to be affected.

[Martin Horwood (Cheltenham) (LD)]

The right hon. Lady keeps presenting the last Government as the Government who pursued a path of negotiation and what she has just described as open dialogue. In February this year, however, she too pursued the route of compulsion. Does she now regret the precedent that that set?

[Tessa Jowell]

There is all the difference in the world between a settlement that recognises reasonably the proper expectation of the lowest-paid, and the proposals in the Bill. That is the difference that the hon. Gentleman needs to understand.

[John Hemming]

Will the right hon. Lady give way?

[Tessa Jowell]

I am going to make a bit of progress.

In the current environment in which many civil servants are understandably concerned about their jobs, it is even more important for any reform package to be achieved in full consultation and, wherever possible, agreement with the work force. As a result of the Equality Act 2010, which formed such an important part of the last Government’s legislative programme, the Bill is subject to an equality impact assessment, which I took the time to study.

Against the commitments to full consultation and transparent negotiation, we might look at some of the evidence in the equality impact assessment. It asks:

“Does this policy affect the experiences of staff? How? What are their concerns?”

For staff, the following answer is given:

“Exit terms are set out in Civil Service Compensation Scheme, to be capped at levels set out in the Bill.”

That is a perfectly fair statement of fact. The impact assessment then asks whether the policy affects the experiences of staff networks and associations. The answer given is: “As above”—for staff—but also:

“(no consultation due to urgent need for affordable provisions).”

The answer for trade unions is the same:

“As above (but no consultation due to urgent need for affordable provisions).”

When the equality impact assessment looks at the impact on voluntary organisations, the conclusion is that that is “N/A”—not applicable. The impact on race is also deemed not applicable, as are the impacts on faith, disability rights, gender, sexual orientation and age. The impact assessment also asks:

“What were the main findings of the engagement exercise and what weight should they carry?”

That, too, is said to be not applicable.

“Does this policy have the potential to cause unlawful direct or indirect discrimination? Does this policy have the potential to exclude certain groups of people from obtaining services, or limit their participation in any aspect of public life?”

That is not applicable as well.

“How does the policy promote equality of opportunity?”

That is not applicable also. I could go on.

That is not by any stretch of the imagination a proper assessment of the impact of the proposals on the work force, taking account of the obligations that sit on the coalition Government to recognise equality of opportunity.

[Mr Jenkin]

I am interested in what the right hon. Lady is saying, but I think it is incumbent on her to explain to the House why she thinks the Bill might be discriminatory in some way, rather than just advert to a negative and say that that is not good enough. Does she honestly believe that the measures could be discriminatory in some way? If she could explain that to the House, it would be very helpful.

[Tessa Jowell]

The hon. Gentleman asks a fair question, but it is his responsibility to test that. However, because compared with the existing situation these proposals in effect levy the greatest penalty on the longest-serving, and almost inevitably the oldest, civil servants, there is at least a prima facie case for considering whether they are age discriminatory. I draw no conclusions, but I say to the House that I consider that the equality impact assessment has not taken full account of the impact of the proposed measures across the work force. The Opposition consider the terms put forward to be both unfair and punitive.

[John Hemming]

The right hon. Lady often uses the word “unfair”. I assume that she employs her own staff in her parliamentary office and that they are subject to the statutory scheme, with a maximum of 30 weeks’ pay. How does she argue that that, which was set by Parliament, is fair compared with the scheme the Government proposed in February this year?

[Tessa Jowell]

For the very simple reason that, in order to meet the terms of the judicial review, the proposals in the Bill are removing entitlements, expectations and accrued rights from staff who have a reasonable expectation of receiving them. That is why they are unfair.

[John Hemming]

Will the right hon. Lady give way?

[Tessa Jowell]

No, I am going to make progress because many Members wish to speak in the debate.

We argue that no adequate protection is offered to the lowest-paid, with a junior official in a job centre receiving no more protection than a permanent secretary of a Government Department. In introducing the Bill, the Government have insufficiently consulted their employees. The scant information in the equality statement makes that very clear.

[Alison McGovern (Wirral South) (Lab)]

Does my right hon. Friend agree that the fear, which I have come across in my constituency, about these changes is exacerbated by what seems to be scant consultation? Having more consultation would be helpful in dealing with the worry and fear that I have picked up on in Wirral.

[Tessa Jowell]

My hon. Friend makes an important point based on extensive discussions in her constituency with civil servants likely to be affected. She is absolutely right in identifying that fear, but that does not mean that change is not necessary, nor that members of the Council of Civil Service Unions are not reasonable people who are prepared to negotiate in the spirit that they recognise is necessary.

[Richard Graham]

Will the right hon. Lady give way?

[Tessa Jowell]

No, I am going to make some progress—and I think that the hon. Gentleman has already made an intervention.

The very fact that the Bill is designed to expire within 12 months makes its own case for its unworkability as a long-term solution. Instead the Bill is being deliberately used to force the trade unions into compliance. As such it should be seen as a very unusual use of parliamentary procedure to ask Parliament to pass legislation that—as the Minister has made clear—it is hoped will not be implemented.

The Deputy Prime Minister has stated—presumably on behalf of the Government—that fairness will be at the heart of everything the Government do. However, as with so much that the coalition does, the terms put forward under the Bill do not meet the first basic test: they are not fair because some of our longest-serving, and often lowest-paid, civil servants receive no protection under the proposals.

[Mr David Hamilton]

Did the Minister not give it away when he made the point in his opening remarks that it is more expensive to get rid of those at the top of the tree, and therefore there would be an encouragement to get rid of those at the bottom of the tree? Will not low-paid civil servants be really concerned by the attitude now being taken?

[Tessa Jowell]

I think that those at the higher earnings end and those at the lower earnings end are equally entitled to be apprehensive about the proposals.

[Mr Maude]

Let me make it absolutely clear that the point I was making is that, under the current scheme, lower-paid people are more likely to lose their jobs because it is so prohibitively expensive to make higher-paid, longer-serving senior officials redundant. As a result, more lower-paid civil servants get made redundant. The reform is therefore necessary for this reason alone: to protect the jobs of lower-paid workers.

[Tessa Jowell]

Well, let us see how that commitment plays out in practice. I entirely agree with the right hon. Gentleman that the people who work in job centres and at our borders often doing relatively low-paid jobs are the people who make those services happen at all, and I think there would be a marked degree of cross-party agreement about ensuring fairness and protection for such employees. We on the Opposition Benches, however, feel considerable scepticism about whether the proposals will deliver that.

Let me illustrate that and pick up on the point made by my hon. Friend the Member for Midlothian (Mr Hamilton). A member of staff earning less than £20,000 made compulsorily redundant after more than 20 years’ service would see their redundancy package more than halved under the provisions of the Bill; and staff covered by the civil service compensation scheme would receive substantially less in redundancy terms than comparable public sector employees, despite being among the lowest-paid public servants. The proposed cap is half that often seen in local government, education and the NHS.

On the question of protection for the lowest-paid, let me repeat the words used by the Minister in the House in July—he was right about this:

“Contrary to general belief, large numbers of civil servants are not very well paid—half of them earn £21,000 a year or less—and we want there to be extra protection for them.”—[Official Report, 14 July 2010; Vol. 513, c. 931-32.]

So say all of us, but the fact is that the Bill gives no confidence to those lower-paid employees.

[Matthew Hancock (West Suffolk) (Con)]

The right hon. Lady made the comparison between civil service and other public sector redundancy packages. Can she also make a comparison between civil service and private sector mandatory redundancy packages?

[Tessa Jowell]

I am surprised that the hon. Gentleman feels it necessary to ask that question. If employers in the private sector use the basic statutory scheme, it is considerably less generous than even the proposals in the Bill. In a way, that is not the point, because the value that we attach to public servants, to the importance of the jobs that they do and to the commitment to invest in security to prevent turnover and to compensate for what are often lower levels of pay is one of the reasons that such provisions have traditionally tended to be more generous. It is worth reminding the hon. Gentleman—the Minister took us through the history—that the scheme was created by a Conservative Government and amended by a Conservative Government and that attempts at reform were made under a Labour Government. Now, under the coalition Government, we have what amounts to a hollowed out version of the original scheme.

[Richard Graham]

Will the right hon. Lady give way?

[Nick de Bois (Enfield North) (Con)]

Will the right hon. Lady give way?

[Tessa Jowell]

No, I am going to make some progress so that Back-Bench Members can get in.

We expect the Government to take seriously the need for proper dialogue and negotiation in circumstances where the individual impact of the changes is so substantial. It is fair to reflect disappointment among the trade unions that the Bill makes no attempt to put in place a long-term solution to the big challenge of the reform of civil service compensation and, as such, no solution is possible given the Government’s failure to engage constructively with their employees and their representatives. That is implicit in the Bill’s final provisions, which are designed to ensure that it is sunsetted, or expires within 12 months, can be repealed at any time and can only be extended for a further six months through recourse to secondary legislation.

The Bill to which the House is being asked to give a Second Reading tonight does not even represent the Government’s settled position. The Minister tells us that his ambition is now a negotiated, sustainable and practical long-term solution, but that ambition merely serves to remind us that the Bill fails to provide such a sustainable solution or one that has been subject to proper dialogue with those affected.

There are questions that the coalition Government and the right hon. Gentleman must answer. The Opposition have made absolutely clear the anticipated level of savings—figures in which there can be confidence—that would have been produced by the February reform package, so I ask the right hon. Gentleman what savings the Government expect to make from the proposals in the Bill. Why do we not have a complete and workable scheme in front of the House as part of the Bill for which a Second Reading is sought? Why are we spending parliamentary time on legislation that simply seeks to provide the right hon. Gentleman with a negotiating tool to use with the civil service unions?

There is, of course, an alternative. It is fair and it is workable. As shown in our reasoned amendment, the February 2010 scheme should form the basis for the reform that we all agree is needed. As the right hon. Gentleman has made clear, it emerged from an eight-month consultation between the Government and civil service staff and would provide a fair resolution to the issue. Now, although five trade unions have agreed and continue to support the proposal, all six have expressed their support for the use of the principles underpinning the scheme as a basis for moving forward. That is an invitation and an offer to the right hon. Gentleman. Such an approach would meet the tests that we have set out for reform and save at least £500 million over the next three years.

Our challenge to the Minister is to put back on the table the February 2010 proposals, which are fair to the lowest-paid, will contribute £500 million to reducing the deficit and will reform the existing scheme. The right hon. Gentleman has already conceded in exchanges with my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) that, had all the unions agreed to this, there would have been—as he put it—a pressing case for acceptance. We therefore ask that he accepts the case now and supports the reasoned amendment. I call on the House to reject the Bill.

18:17

[Alun Cairns (Vale of Glamorgan) (Con)]

Like every Member of this House, I have received significant communications and representations from individuals and from the unions on this matter. Many of us will have significant numbers of public sector employees in our constituencies. I would say that Wales as a whole has a disproportionate dependence on public sector employees—quite obviously, including employees of the civil service—and the Vale of Glamorgan is no different.

It is quite sad for all those individuals and for the House that we are in this position today. The financial state of the nation has led us to this position. The unrealistic position taken by the unions has driven the Minister to introduce such a Bill, sadly without complete settlement with the unions. I was encouraged by some of the statements that he made about the negotiations and I shall come back to them a little later.

It is difficult to believe some of the payments that are made under the current system. In 2007-08, the Department of Health, in 76 individual cases, paid severance compensation of more than £7.8 million—an average of more than £102,000 per employee. I wonder how many of those who were made redundant or who took voluntary redundancy were then re-employed by the Department of Health as consultants, which would obviously have increased the costs to the public purse. In the Department for Environment, Food and Rural Affairs, there are two examples: in one, compensation in excess of £500,000 was paid and, in the other, compensation in excess of £1 million was paid. That position clearly cannot continue and is wholly unreasonable not only to those in the civil service who are paid at lower levels but to the taxpayer who must ultimately foot the bill.

When I discussed those levels of payments with some of the constituents who got in touch with me expressing concern about their own interests, they showed equal disdain towards the levels of compensation that are paid, and they would recognise the absolute need for reform. Such levels of severance paid at the higher level simply cannot continue. It is a burden on the taxpayer and, as has been highlighted, is prohibitive to the reform of the public sector when the taxpayer really needs every efficiency measure to be driven through. Not only is it prohibitive in terms of the level of payments and the high cost of making many of these individuals redundant, but it is prohibitive and damning for people at the lower levels who will have to be made redundant when those at the higher levels cannot be laid off because it would be unaffordable, even when many of their roles have become redundant as a result of the evolution of the Department or because of new technology. The Bill goes further than the previous proposals, but as the financial situation of the country is much worse than was previously stated, the bill must be affordable, and that imperative has obviously influenced my right hon. Friend the Minister in introducing the Bill in such a form.

I do have concerns about the effect on civil servants at lower levels of the pay bands, and we need to recognise their interests. I was encouraged by my right hon. Friend, who highlighted his concerns and the need for negotiations. I would look to the trade unions, particularly the PCS Union, to see that statement in a positive light and negotiate, in the interests of those at the lower levels, a settlement that is in the interests of the whole of the civil service and, obviously, of the taxpayer.

In research and when chatting to constituents, it was highlighted to me that at the Department for Work and Pensions, someone who is at the maximum of the lowest pay band—band B—earns between £15,000 and £18,000. To put that in perspective, a fraud officer—an individual who we expect and hope would save some money for the taxpayer over the coming years—is a band C. That demonstrates how much responsibility can reside at the lower levels of some civil service pay bands. Currently, if made compulsorily redundant, such an officer would receive three times their salary if they were older than 42 and had more than 20 years’ service. Before the court judgment, the intention was to provide such officers with the equivalent of two years’ service, and now it is to provide one year’s salary in compensation.

I am encouraged by my right hon. Friend’s statements to the effect that he is interested in negotiating at this level. I recognise the difficulties in sharing some of those concerns with the House, because it is obviously not the place to negotiate with Ministers, but I ask him, in the summing-up, to go as far as he can in sharing the objectives that he would like to achieve in the interests of people at the lower levels of the salary and responsibility grades.

I would advise the right hon. Member for Dulwich and West Norwood (Tessa Jowell), who was asked a question about the average for private sector redundancy pay, that it is in the region of £9,000, which we should recognise is less than is being offered, and in the affordability debate we need to recognise the generosity of that.

Interestingly, the 2009 civil service statistics show that 36% of civil servants earn less than £20,000 and 58% less than £25,000. Clearly, there is a need for some sort of protection at the lower levels. The Government have taken positive steps—when they formulated their policy on the pay freeze, they protected those at the bottom end of the scale, and I think that principle should carry through to this Bill and to the negotiations that my right hon. Friend is undertaking.

[Mark Durkan]

The hon. Member will recall that, when the Minister was asked to say at what level he thought people were low paid, he said he could not say. It would not be for him to say—it would be almost impertinent to suggest that outside the negotiations—but the hon. Member has rightly recalled that the coalition Government had no problem deciding that £21,000 was the threshold at which people should be protected from the pay freeze.

[Alun Cairns]

I have no doubt that that would be part of the negotiations, but I wholly accept the point that my right hon. Friend has made that one does not start negotiations at the point where one expects to finish, bearing in mind the actions that the PCS Union and some of the other unions involved have taken to date. However, the point about the £21,000 threshold that the hon. Gentleman highlighted demonstrates the compassion and support shown by the Government, and I have absolutely no doubt that that compassion and support can and will be shown towards civil servants in the negotiations that are led by my right hon. Friend.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Considering that there are ongoing negotiations, does not the hon. Gentleman agree that the Government are using the Bill effectively as a battering stick to coerce the unions during those negotiations?

[Alun Cairns]

I am grateful to the hon. Gentleman for the question, but I think the Government have been left in an extremely difficult situation—a sad situation, as I highlighted—from the outset. We have such a large deficit. A decision is needed on this question, particularly given the reforms and cuts that are likely to follow the comprehensive spending review, so I look positively at the action that my right hon. Friend is taking to resolve that position to bring certainty to those people whom I have rightly sought to champion.

18:26

[John McDonnell (Hayes and Harlington) (Lab)]

I chair the PCS parliamentary group. It is a cross-party group that was formed a number of years ago, and several Members of Parliament on both sides of the Chamber tonight are members of it. I think it has been helpful for Members of Parliament to gain a knowledge, through the union, of what the union’s members undertake, how they effect their work and the role that they play.

PCS represents the largest number of civil servants, and certainly the largest number affected by the compensation scheme, and I want to add my name to the compliments that have been paid today, across the Chamber, with regard to civil servants and the role that they play. It is an admirable tradition, serving Governments of all political colours, with commitment and dedication that is second to none across the globe. It is slightly ironic that we praise them now, and yet, by the looks of it, in a month’s time we are going to lay off and make redundant the largest number of civil servants ever in our history, as a consequence of the comprehensive spending review. Anyway, we are all committed to the existence of a civil service that implements the policies of a directly elected Government.

There are certain measures that Governments introduce that can be described as land mine Bills. Judging by the type of the legislation or their subject matter, they might appear relatively innocuous at first, but they are political land mines that can permanently damage and taint an Administration. I think the art of good governance is to identify—perhaps from bitter experience—the potential disasters, those land mines, and avoid them. This Bill is a political land mine. It is potentially extremely potent and it is an explosive issue. I think it is potentially disastrous for this Government and I think, coming at it as an ex-bureaucrat myself, that it will undermine their ability to implement their overall programme. Why? Well, many Members have commented that they have discussed with constituents and civil servants and they have received representations, so many Members will share the feeling that I have. I think morale is being affected by this legislation and the way in which it is being handled. I think morale at the moment in the civil service is at an all-time low as a result.

The Government have been democratically elected and have the right to implement their policy programme, but every manager, whether in the public or the private sector, needs not only resources and clear objectives but a committed, dedicated and motivated staff. The imposition of the Bill is undermining that morale, that commitment, that dedication, that we so need among the work force.

There is a depth of feeling about the unfair way in which people are being treated in the civil service. I have met many PCS members, including many who are my constituents, and there is resentment of the Government’s political action on this issue. The most common response that I—and, I am sure, other Members—have met is the simple statement, “We didn’t cause this economic crisis, but we’re having to pay for it with our jobs and with cuts in our conditions of service, and this is the latest round of those cuts.” There is a real, palpable sense of grievance, particularly as the bankers who did cause the crisis are not just back in position, but have, in some cases, been appointed to higher positions. Some have even been appointed to ministerial positions in recent weeks. Bankers are coming back for their obscene bonuses and obscene pay. There does not seem to be any equity or equivalence of suffering. There is a feeling among civil servants that we are not all in this together.

[Sajid Javid (Bromsgrove) (Con)]

The hon. Gentleman will know that the budget deficit that this Government inherited from the previous Government is £155 billion, but even the structural deficit, which was there before the economic crisis commenced, was £128 billion. The country was already living way beyond its means. That is why his Government tried to make changes to the scheme, and it is a reason why we need to do so. It is no good trying to blame the problem on a particular profession. If he is going to pick a profession to blame it on, he should pick the political class represented in the previous Government.

[John McDonnell]

The hon. Gentleman came to the House at the last election, so he may not know that I was probably not the most vociferous supporter of the economic policies of the previous Government. I was a critic, and if he looks at the alternative Budgets that I provided annually—which this House rejected, but never mind—he will see that there would have been no deficit if I had implemented them. There would have been a redistribution of wealth and an increase in taxation, which would have enabled us to afford the public expenditure that our society requires.

I am not a Keynesian; I am a Marxist—[Laughter.] Well, it is interesting how true some of the predictions in “Das Kapital” are coming. Even if one takes a Keynesian position, the last thing one would do at this point in time is reduce aggregate demand and cut jobs, wages and conditions of service. It flies in the face of reality to lay off large numbers of civil servants, and then cut the income and compensation arrangements that they receive. Anyway, Mr Deputy Speaker would rule us out of order if we went into another economic diatribe.

[John Hemming]

The hon. Gentleman appears to be arguing, relatively coherently, for no change whatever to the terms and conditions of public servants. Is that what he is arguing, or is he arguing that some change is reasonable? If so, what change would be reasonable?

[John McDonnell]

I recognise that a range of negotiations need to take place. In the last set of negotiations with the previous Government, there were various issues to do with changes tackling age discrimination in particular. My view—we have to come on to the reality of the negotiations that will have to take place—is that we can create a climate of opinion in this House and elsewhere that will enable those negotiations to come to fruition, and that we should protect the lowest paid, in particular, as best we can. That has been the commonly voiced demand in the Chamber today.

[John Hemming]

Does the hon. Gentleman agree that the best way to protect the low paid is to protect them from redundancy?

[John McDonnell]

Yes, and that is why I have consistently put forward alternative economic policies and strategies.

Let me press on, if I may. This is a serious debate, and I am trying to get across the feelings expressed to me through the PCS parliamentary group. As I say, I have met PCS members, I have attended meetings of the executive, I have been on picket lines, and I have been at various meetings around the country. There is anger about the proposals in the Bill—I shall come on to that—but also about the way in which the issue has been handled by Ministers.

In interview after interview, and even in the Chamber today, Ministers and Government Members have focused, in their descriptions of the compensation scheme, on payments to the highest-paid civil servants; it has almost been a portrayal of “Yes Minister”-type permanent secretaries, retiring to their Whitehall clubs on large-scale pay-offs. There are some individual examples of that, and they have been quoted today, but PCS is one of the leading unions that has pointed out that issues around high pay within the civil service have undermined the equitable distribution of rewards in the public sector.

Time and again, including today, we have had repeated the example of some civil servants receiving up to six years’ wages as a redundancy settlement. Let us get this point on the record as best we can: if I may refer Members to the Library note, of 500,000 civil servants, only 4,400 are in the senior civil service. The maximum compensation for most is capped at three years’ pay under the compulsory scheme, and two years’ pay under the flexible, voluntary scheme. For a small number of people who joined the service before 1987 with reserved rights regarding severance payments, payments are higher.

Ministers were asked by the Public Accounts Committee and, I believe, in parliamentary questions on the Chamber Floor, for information on the number of individuals currently getting a package worth six years’ salary. We were told that the information was unavailable because it could be provided only—there is a sense of irony here—at disproportionate cost. The six-year allegation is consistently used, even today. I would welcome some facts on how many people we are talking about and what the costs are.

[Martin Horwood]

Perhaps I could be of assistance to the hon. Gentleman. One of my constituents, a civil servant, calculated that to qualify for that six-year maximum, one would have had to have joined the civil service just after one’s 17th birthday and have been made redundant just before one’s 50th. I suspect that we are talking about a very small number.

[John McDonnell]

Would it not have been useful, though, if we actually had the number so that we could have a properly informed debate, rather than allegation, counter-allegation and, almost, smear?

Ministers were also asked how much public expenditure the imposed scheme would save—my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) on the Front Bench raised the issue again today—but that information has not been forthcoming. The Secretary of State has said that the amount is impossible to calculate. I have been there; I have advised decision makers—and in the private sector it is exactly the same—and when one is entering a redundancy situation, one does a rough, or even a back-of-an-envelope, calculation of the numbers one is looking to lose, the amounts, the average rates of pay, the distribution of the rates of pay across the service, and therefore roughly what the cost would be. That is not too much to ask before we make a momentous decision on this legislation. In fact, the Public Accounts Committee raised the issue again in July, and the Minister refused to respond.

I deal now with the myth of the highly paid civil service. Some people have already mentioned the subject today, but it is important that we get the point on the record. Even though this has been denied today, it has been part of the Government’s strategy to promulgate the myth of a highly paid civil service.

[Kwasi Kwarteng (Spelthorne) (Con)]

I am unclear about the hon. Gentleman’s position on the status quo. Does he believe that the system is sustainable at current levels, given the economic climate?

[John McDonnell]

I believe that people who are made redundant should be properly compensated and, yes, I believe that the system put forward by the last Government was certainly affordable. I actually believe that the mechanism previous to that is still affordable. However, I accept that there was a need for reform. That is what the unions were negotiating on. It was not the PCS’s fault that the last scheme fell apart; the Government ruled that the process by which it was introduced was unlawful—it is as simple as that.

Let me return to the myth of a highly paid civil service that is promulgated, if not today, certainly elsewhere, including by the media. Yes, there are some highly paid civil servants, and we have dealt with that today. The unions themselves are at the forefront of highlighting the need to tackle high pay and bonuses. However, as had been said, the average civil service pay on which redundancy payments are based is £22,850 a year, compared with £24,970 in the private sector. There are 35,000 civil servants who earn less than £15,000 a year. Some 210,000 people—40% of the civil service—are paid £20,000; 350,000, less than £25,000. The bulk of our civil servants are on low or relatively modest pay.

The other tactic that is used—and it has been paraded again today by Ministers and Members in the debate—is a justification of the attack on the compensation scheme by divide and rule, playing public sector workers off against private sector workers. The Government have argued that many people in the private sector receive only statutory minimum redundancy payments or low-level additional scheme payments, but the reality is that most private sector workers are covered by some form of additional scheme, and are usually protected by its being written into their contract of employment. The fact that the level of many of those compensation payments is disgracefully low in some parts of the private sector is no justification whatsoever for undermining standards in the public sector. It is an argument for raising levels and standards in the private sector, even in these economic times.

The argument that when civil servants take on their job they weigh up the merits of going into the public or private sector has been made today. Wages in the public sector are lower, but the benefits are better, and usually more secure—that is the calculation that is made. If we compare civil service grades with jobs in the private sector, we can see that admin officers in the civil service earn 21% less than people in comparable jobs in the private sector.

[Sajid Javid]

I thank the hon. Gentleman for giving way to me again. The latest report by the Office for National Statistics in 2009 stated that the median weekly salary in the public sector was about £540 versus £470 in the private sector.

[John McDonnell]

I shall refer the hon. Gentleman to the figures, so we can base the debate on them. I repeat: average civil service pay is £22,850 a year compared with £24,970 in the private sector.

[Sajid Javid]

The hon. Gentleman might want to pick up the report from the House of Commons Library which contains the exact numbers: £539 a week in the public sector versus £465 in the private sector.

[John McDonnell]

I will not quote the figures again, but I refer the hon. Gentleman to the income data survey. I am happy to provide him with a PCS briefing that sets out the figures. [Interruption.] Well, the briefing is based on information independently issued by the income data survey.

In the executive grades, supervisors in the public sector—people with vocational qualifications—earn 18% less than supervisors in the private sector. The decision to go into the public sector, as I have said, is based on a judgment in the round about security, benefits, pensions and, yes, redundancy payments, which are described as accrued benefits that people earn over time. They are part of their wages. What is happening today is a Government unilaterally tearing up the contract that was entered into when many of these civil servants entered employment. I think that that will be open to challenge on the grounds of human rights compliance. Inevitably, members not just of the PCS but of other unions will wish to exercise their rights in law. What is happening is the worst of all worlds for civil servants.

[Andrew Bridgen (North West Leicestershire) (Con)]

Does the hon. Gentleman believe that it is fair or affordable in the current economic situation for anyone to be given six years’ pay as redundancy pay?

[John McDonnell]

Perhaps the hon. Gentleman was not listening. The period of six years has been used time and again to justify the measure. A tiny number of cases are involved, but we would like the exact number. If he can help us to extract that information from his own Ministers, that would be useful.

The vast bulk of civil servants who have been made redundant have been laid off on conditions of no more than three years’ pay, and the majority of them on considerably less. Under the terms of this measure, that will be reduced by two thirds. It is not about the tiny minority who receive six years’ pay, but about the vast majority who will lose up to two thirds of their payment.

[Matthew Hancock]

rose—

[John McDonnell]

I will press on, and give way to the hon. Gentleman shortly.

The position now is the worst of all worlds for civil servants, who are facing a double whammy. They enter a service in which they are paid less than the private sector, but at least they receive some benefits as a result of the security of pension and redundancy payments and so on, but their redundancy payments are to be cut while at the same time their pay is frozen or cut.

There is no protection in the Bill for the low-paid—we all agree about that. Members have appealed for details, but the ministerial response is that this is not the place to begin negotiations. The Bill begins negotiations, and it is a negotiating ploy. The Minister could at least set out the parameters or the options available to protect the low-paid. The argument goes that that will be negotiated with the unions in separate negotiations, but do Members of Parliament not have an additional responsibility to represent the interests of their constituents? When hon. Members vote on the Bill, they need security of information to protect their constituents’ interests. They need to know in more detail how their low-paid constituents will be protected as a result of the legislation. However no fragment of information has been given, nor have parameters been set by the ministerial words we have heard today.

When we deal with legislation of this sort, we need to consider the impact on people’s lives. The worst feature of the Bill is the Government’s almost brutal disregard of the human consequences. Tens of thousands of civil servants are likely to lose their job in the coming years. In the economic crisis, even if there is no double-dip recession, and we just rattle along the bottom for the next three years, most of those people will struggle to get back into work at all or find work offering similar wages. If we look at previous recessions, particularly for older workers, we can see that some of them never work again. We must recognise the devastating impact that that will have on individuals and families.

Most people in this country lack savings. Various reports by citizens advice bureaux show that even people in work lack savings beyond a month’s salary or wages. Most people have enough for only two months’ mortgage payments, so are close to default. Reducing redundancy payments in this way undermines people’s ability to survive the devastating impact of losing their job. It also undermines their ability to get back into work in many instances, because it is a costly exercise to travel around the country looking for work. The measure will introduce poverty and stress, and put pressure on people who have lost their job. The irony is that whatever savings are found will be significantly reduced by the benefits that we pay out. Many of the people we employ to administer unemployment benefits will receive those benefits themselves as a result of cuts in public expenditure.

Many of the PCS members I meet are desperate as a result of the anxieties engendered by the Bill, and they are becoming angry. When people perceive that an injustice has been done to them, they react. Boiling point has been reached as a result of the autocratic methods used by the Government to impose their way. They have introduced legislation before serious negotiations have taken place. It is like putting a cosh on the table before beginning a dialogue. The use of the money Bill device to prevent full parliamentary scrutiny is despicable. I have looked at “Erskine May”, and I urge other Members to do so. I cannot see how this can be defined as a money Bill. I hope the Speaker will rule against it after Third Reading. If it is passed as a money Bill, it will be implemented within a limited time scale, with no potential for amendment in the other Chamber.

The introduction of a sunset clause sends out a message that if the economic situation worsens, the Government will come back for more, and there will be further cuts in the scheme after that year. The Bill immediately soured the industrial relations climate under the new Government, and that does not apply just to the civil service. Across the public sector teachers, local government workers, health workers and those working in the emergency services are all on better terms than the terms introduced by the scheme in the Bill, so they see the legislation as the starting gun for an attack on their conditions and their redundancy payments.

Some have put a more sinister construction on the Government’s intentions. It is clear that the Government’s strategy is that the economic recession will be solved on the basis of cuts in the jobs, services, wages and conditions of employment of working people. For those of us who have been around a while, it smacks of the same old policies of the 1980s. In that period a Conservative Government decided that the unions had to be broken if the Government were to be able to force through harsher cuts. They took on the miners’ union, for which I worked at the time. It was an attempt to break a union as an example to others. The present Government appear to have identified the group of public sector unions as the modern day target. I am sure we will soon be hearing statements about enemies within and so on.

If that is the Government’s strategy, they are sorely mistaken. My sense is that the public servants who will be affected by such legislation will not take it lying down. Members have been lobbied already. They are aware of the growing anger, and there will be resistance. That will have public support, particularly as our communities begin to experience the impact of the cuts to their services and increasingly appreciate the scale of the damage that will be incurred by our society.

I appeal to the Government to pull back from this mistaken approach of imposition, which will lead to confrontation. I urge them to get back to the negotiating table and to agree a serious and sensible way forward. They should take the cosh of this legislative proposal off the table to allow proper negotiations. Ministers could sensibly withdraw the Bill tonight. Failing that, I urge Members to reject it because there is nothing in the Bill or in the words uttered by Ministers today that gives us the guarantee of the protection of our constituents that we require. The Bill will damage the civil service that we have all commended in today’s debate as an exemplar to the world.

I warn the Government that issues such as those raised by the Bill, which appear minor at first glance, become the combustible material that eventually brings down a Government. I urge Members to reject the Bill tonight.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. A considerable number of Members are trying to catch my eye, as the House can see. If speeches go much beyond eight minutes, we will not get everybody in, so I ask Members to focus and show discipline in order to help other Members to be able to deliver their speeches also.

18:53

[Dr John Pugh (Southport) (LD)]

I shall be fairly brief, as I have only one fundamental concern. Despite the persuasive skills of the Minister, I sensed in what he said the iron fist within the velvet glove.

I have concerns about the scheme which focus on the fundamental issue of a unilateral alteration of contract and how that stands in this place. I accept that the scheme as it stands is, as many hon. Members have said, generous. It is certainly superior to any available to other public sector workers, such as teachers, NHS staff or local government workers. It is expensive and everybody accepts that it needs an overhaul. I am aware that successive Governments, worried about affordability, have sought agreement on changes and got very close to agreement, which must give some hope for the future.

What I have difficulty with—it is a genuine difficulty, and perhaps the Minister can help me—is a unilateral variation of contract in any context, and not because it is ruled out, as it was in the courts, by the Superannuation Act 1972, which Parliament is, of course, free to amend, and which we are in the process of amending here. Let me briefly explain why. The scheme as I see it is referenced in civil service contracts of employment. Those contracts are freely entered into by the state and by the employees who work for the state. The scheme therefore features, though not in specific detail, as a term and condition of that contract.

When an employment contract is ignored or discarded by any other employer, there is normally a redress in law. Some unscrupulous employers view that as an occupational hazard, preferring to pay people off with meagre compensation than to honour contracts. That is a calculation, but it is not something that a Government should engage in. Such people belong to what I would call the brutalist school of management, and working for such people is a unhappy experience. The hon. Member for Hayes and Harlington (John McDonnell) mentioned how things could go in the civil service.

The state should, in theory, be a model employer, and legislates in this place on employment law for other employers. What we have here, apparently, is the courts telling the civil service that they cannot vary a contract unilaterally as a result of action by the previous Government, and this Government legislating to ensure that they can. However it is dressed up, that represents the naked—albeit legal—use of power to alter a contract unilaterally. Such managerial brutalism, as I call it, is likely to have long-term detrimental consequences, in terms of morale and the willingness of employees to engage satisfactorily in their employment.

Leaving aside the fact that this sets a poor example, there is a danger that it may also be poor politics. Good politics is based on ethics, and who wants to defend breaking contracts at one’s convenience? To be sure, keeping to them in this case costs money—Members have spoken about affordability—and more money than people ever thought it would. We do not argue in this place that because private finance initiative contracts cost much more than imagined, we should pass legislation to drop some of their clauses, but that strikes me as an exact parallel of what the Bill appears to do.

Keeping contracts is fundamental to any scheme of law. Even when football teams that are saddled with managers who drag them down into lower divisions finally come to sack them, they honour contracts that they have made with them, sometimes at huge cost: they keep the terms and conditions of their contract. We do not hire people to work on our premises or our houses and, when our bank balance declines and our fortunes get worse, insist on paying them less than agreed, unless we have some sort of justification. Only in the direst national emergency can a democratic Government sacrifice the principle of honouring contracts, and they should do so only when there is no alternative course of action.

I genuinely appreciate the Government’s dilemma. I wish to see the scheme reformed to become more affordable, at less public cost. We must all accept that since 1972 the scheme has grown and grown, and there might be a difference between reneging on the scheme and varying some detail of it, but that is a legal question above my pay grade. I do not seek to answer whether that difference exists, or to create difficulties for anyone. I simply want to know whether the Bill before us is in effect a unilateral variation—a rewrite of a contract. If it is, how in this case can we provide a wholly rational and ethical defence for it?

19:09

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

May I declare an interest? In the Chamber tonight, I am representing thousands of civil servants who live and work in my constituency, home to Her Majesty’s Revenue and Customs, the Department for International Development and the Department for Work and Pensions. Many other constituents work in the Scottish Court Service, the Scottish Prison Service, the Forestry Commission and many other Departments, agencies and non-departmental public bodies throughout Scotland.

I have another interest to declare: I was a civil servant between 1982 and 1992; I became a full-time official with the Civil and Public Services Association, a predecessor of the Public and Commercial Services Union; and then I became a senior full-time official for the PCS. I know all the protagonists in this debate very well indeed, including the aforementioned Mr Serwotka.

The motto of the new coalition Government is, “We are all in this together,” and I should like to put that to the test by asking them to put their motto into actions rather than words, because, despite what was said amid the heady atmosphere of the Queen’s Speech debate, every Member recognises that we have to tackle the fiscal deficit. The difference—well, there may be more than one—between Opposition and Government Members is how we do so. The Opposition believe that there are other options, that the Government are going far too far, far too quickly and that the damage that occurs will create more problems for the economy.

The proposal before us is the first real acid test of the Government’s plans for deficit reduction, because we all know that the whole economy of the United Kingdom benefited from the economic bail-out. The private sector, the public sector and what people call the third sector all benefited, and in order to reduce the deficit every part of the economy must contribute. I shall argue strongly that that contribution must be proportionate and depend on how much people can afford. For example, the bankers, who perpetrated the biggest crime against our country’s economy, must pay the most in order to rebalance our books.

We know from the Budget that people will be asked to pay a 20% VAT rate, and that there will be what Opposition Members regard as a puny levy on the banks. We must also consider the proposal before us, and taking matters in the round I have reached the judgment that we are not all in this together, because we are asking those who can least afford it, those who are vulnerable and public sector workers to pay the largest price. That is the collective impact of the proposal. Despite what the Minister said, that is the message that the Government are sending out. I appreciate his point about the negotiations, but, having taken part in many negotiations over the years, I now recognise when I had the upper hand and when the employer did, so I recognise that in the current negotiations the employer—the Government—has very much the upper hand.

Ministers still have an opportunity to reach a common-sense resolution for the civil service compensation scheme, however. A lot of inaccurate information has been put out in the press, and there is a great deal of confusion about the difference between severance and early retirement. For example, on the BBC’s “Today” programme, I heard that some civil servants would receive six and two-thirds years’ payments after they had been made redundant. That clearly confused severance with retirement, because severance is simply based on length of service and salary, and the maximum payout under the current CSCS scheme is three years. In respect of retirement, the terms are for the over-50s, involving an enhancement, through added years, to their pensions.

The Labour Government’s comprehensive proposal to the civil service unions would have saved between £500 million and £650 million—not inconsiderable amounts of money, I hope Government Members will agree—and protected all the different bases in respect of early severance and early retirement.

[Harriett Baldwin (West Worcestershire) (Con)]

I want to clarify the hon. Gentleman’s point about severance, because the Library research paper states that early severance can cost “6 years’ pay” under the 1987 terms. Is that the case?

[Mr McCann]

The hon. Lady is absolutely correct, but earlier contributors made it clear that that refers to a very tiny proportion of the civil service staff; the vast majority are under the terms that I have given the House—[Interruption.] The hon. Member for West Suffolk (Matthew Hancock) shakes his head, but it is absolutely true that the vast majority will receive severance terms based on a maximum three years’ payout. [Interruption.] His colleagues nod in agreement, so he seems to be in the minority.

[Matthew Hancock]

The surprise that I express is due to the argument that, because not many people will receive enormous payouts, there is somehow not a problem. I also want to add a couple of facts to the debate. In the past three years at the Department of Health, the average payout has been more than £100,000 each year. The argument that large payouts amount to a couple of small examples contravenes the facts.

[Mr McCann]

I thank the hon. Gentleman very much for that intervention, but he is simply wrong. A minute number of individuals will attract substantial payments; the vast majority will receive a maximum three years’ payment under severance terms and, for early retirement, up to six and two thirds added years. The Minister nodded when I mentioned that the maximum is a six and two-thirds years’ enhancement.

The most important thing about the February 2010 proposals that the previous Labour Government put forward was that they would have protected the lowest-paid civil servants. The cap was two years’ salary, with a maximum payout of £60,000, but given that the average salary of a civil servant is £20,000—that figure has been bandied about a lot in the debate—Labour’s proposals would have protected those individuals. Under the Bill, they face a two-thirds cut, which is unreasonable and, with the greatest respect to Government Members, demonstrates that we are not all in this together. The Bill anticipates that, as a result of the comprehensive spending review, many thousands of civil servants will be made redundant in the months to come, and it effectively says, “While we give you the pain of making you redundant, we’ll also hammer you financially as you walk out the door.” That is unacceptable.

[Richard Graham]

Does the hon. Gentleman agree that his comments are focused on the Bill, rather than on the parallel aim of the negotiations with the trade unions? The fundamental aim of those talks, which is to increase the minimum statutory amount for the less well paid civil servants, is critical and fair. Does he support it?

[Mr McCann]

I understand the hon. Gentleman’s point, but may I make this point in return? If the February deal was unacceptable to one trade union in the negotiations, it strikes me as logical that that deal would have to be significantly improved in order to make it acceptable to the PCS. I do not get from the Minister any impression that there will be any significant move to improve that deal financially, which leads me to conclude that those negotiations might not be as fruitful as Government Members hope.

[Richard Graham]

Does the hon. Gentleman support the concept of making the proposal to the trade unions more attractive to the lower paid, even if it is less attractive to the better paid?

[Mr McCann]

One of my final points is that the February deal should be put back on the table. That is the simple fact of the matter. That deal represents the best opportunity to reach an agreement, as the shadow Minister, my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell), said.

The Minister said that the Government have proposed a 15-month deal for those who volunteer for redundancy, and from a negotiating point of view I can understand why that might seem attractive, but it will not be attractive to the many low-paid civil servants who work in my constituency. They will see it as a pearl-handed revolver to the temple, implying that they can take 12 months’ pay if redundancy is compulsory, but 15 months’ pay if they go quietly. That is not fair to civil servants.

I gave an example when I intervened on the Minister. Let us take a 42-year-old civil servant with 20 years’ service—I have chosen that age because it is, almost, close to mine. Under the current, pre-February deal, which is in place because, owing to legal action, the legislation has not changed, that individual would receive £60,000. Under the February proposals that the Labour Government put forward, that individual would have received £58,000. Under this Bill, they would receive £20,000 in compulsory terms or £25,000 if they went voluntarily.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I respect the hon. Gentleman’s argument, but on a point of clarity, I should say that he talked about a 42-year-old who had worked for 28 years. That suggests that he or she would have started work at 14. I would have a bit more understanding if the hon. Gentleman used a more realistic example.

[Mr McCann]

The hon. Lady should forgive my accent; she probably did not catch it, but I said 20 years’ service. That should clear it up. My example was a 42-year-old civil servant who had worked for 20 years. Is that okay?

[Dr Coffey]

indicated assent.

[Mr McCann]

The numbers are okay. Forgive me; I was not trying to suggest that we introduced new legislation in Scotland under which people started work earlier. My point is that the lowest-paid are still paying the biggest price. That is unfair, and I hope that Government Members will take that on board.

A number of people have said in this debate that the private sector does not get the same treatment. I was a full-time negotiator for the Public and Commercial Services Union and its predecessors for many years, and let me tell the House what happened in the public sector. When times were good and we went into negotiations asking, Oliver-style, for more, we got the answer back that we had to set an example. We could not share in the country’s wealth because of that. When times were bad, the argument from the opposite side of the table changed—it became, “We can’t afford it.” That is why the civil service has been a battleground for a number of years.

Sadly, I am old enough to remember the 1980-81 pay disputes. In the late 1980s, Margaret Thatcher, the then Prime Minister, put new arrangements in place. Those were ripped up in September 1992 when we had to pull out of the disastrous exchange rate mechanism. In 1993, the Conservative Government imposed a 1.5% pay limit on the whole public sector to take account of their economic problems. I mention all that to demonstrate the link between Conservative Governments and cuts to the civil service and the fact that the civil service is always the easy scapegoat.

There is always a dilemma between the public and private sectors. We were trying to emulate in some way the private sector’s efficiency—there is an eternal debate about how we can make the public sector more efficient. The conundrum is this: the private sector can make a profit, but the public sector is about service and delivery. The public sector must always be efficient, but low salaries are the price that public servants are prepared to pay in return for better terms and conditions of service. That is the simple fact of the matter.

[Nick de Bois]

My hon. Friend the Member for West Suffolk (Matthew Hancock) highlighted the fact that there is little difference between weekly salaries in the private and public sectors. How does the hon. Gentleman equate that with his argument that a differential has been growing?

[Mr McCann]

The simple fact of the matter is that I can pluck any statistic out of the air that will disprove that. When I was a negotiator, I used the retail prices index, RPIX, the consumer prices index—whichever best backed up my claims on behalf of my members. That is the simple fact of the matter. I respect the fact that the figures come from the Library; I do not doubt them at all, but I could quote other figures that would support my argument, and mine are more accurate.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

My understanding is that the Government’s figure was from 2009, with no other years being considered. I am sure that my hon. Friend will agree that 2009 was in the midst of the deepest recession since the 1930s. At that stage, the private sector had taken the real hit, which perhaps explains what a statistician would describe as an “outlier figure”. Most statisticians and statistics would suggest that there is a pay premium in the private sector; that has been established over 30 or 40 years. To cite figures from only 2009 is a little naughty.

[Mr McCann]

I shall defer to my hon. Friend’s greater knowledge of these matters and get back to the point that I was trying to make.

Public sector workers take poorer salaries in return for more reasonable terms and conditions. When things go pear-shaped, they expect reasonable protection. Things have gone pear-shaped without a shadow of a doubt; the problem is that the safety net that public sector workers thought was there is going to be withdrawn. Ministers can do the right thing, and I hope that they take heed of my arguments and those made by some other Members.

To demonstrate his desire for fairness, the Minister for the Cabinet Office said in a sitting of the Public Administration Committee:

“Our view was that had the scheme that was introduced by the last Government, which was diluted as the negotiations went on, I understand, in order to secure the agreement of all of the unions, including PCS, remained in place then there would have been a very pressing case made for us to retain that and work with that.”

The right hon. Gentleman should take that position away; he should drop the Bill and move back to the February 2010 proposals as a basis on which, hopefully, negotiations can be concluded.

What worries me is that in that same sitting, the Minister also said:

“the truth is that there are significant numbers of people within the Civil Service for whom through no fault of their own but simply because of the way life has moved on there is no job in reality but who are not made redundant because the terms are prohibitively expensive at the moment.”

With the greatest respect, that is arrant nonsense. I have visited Government Departments, agencies and non-departmental public bodies the length and breadth of the country, and I have never seen highly paid workers sitting around doing nothing. I do not believe that what the Minister said is accurate and I hope that he will withdraw the comment. He should know that 40% of civil servants earn £20,000 or less and four fifths earn less than £30,000. It is for the right hon. Gentleman to tell us in which Departments these people are sitting around doing nothing and earning money.

The trade union position is another stumbling block that we cannot hide from in this debate; it is important that that should be covered as well. The fact is that five of the six trade unions backed the February 2010 deal and that the Public and Commercial Services Union rejected it. To the Public Administration Committee, the PCS said that half of its 300,000 members—the higher-earning members—would lose out because of that deal. I fully understand the concerns, but then I look at the other trade unions involved in the negotiations—the FDA and Prospect, for example. The FDA represents the most senior civil servants in the United Kingdom and Prospect’s predecessor unions have represented professionals, managers and scientists, who are more highly paid. Both those trade unions accepted that they had to make some compromises in the negotiations under the last Labour Government. They probably reached the conclusion, before the words were said by Government Members, that “we are all in this together” and that the public sector also had to make a contribution to the rebalancing of the economy.

The PCS rejected the deal, took legal action and stopped it. However, they stopped it not only for their own members but for all the trade unions that are part of the Council of Civil Service Unions. Now, this Bill tells us that all bets are off. The Minister for the Cabinet Office states that had that deal been accepted, this Government would probably have honoured it. He then offers a significantly poorer deal, which is linked to future negotiations. The Minister may feel that there is an opportunity to save more money or to humiliate the PCS for what he might perceive to be its exceptionally foolish action.

[Gavin Williamson (South Staffordshire) (Con)]

With hindsight, does the hon. Gentleman think that the PCS should have accepted the offer in February?

[Mr McCann]

I always tend to go with the majority; that is the democratic thing to do. When five out of six trade unions accept a deal, that tells us something. I would have taken the view that the majority position should have won through.

[John McDonnell]

For the sake of accuracy on the record, I should point out that the vast majority of members affected are PCS members; the numbers from the other unions are relatively smaller. Actually, when balloted, 63% of PCS members affected voted against the proposal for the scheme and in favour of industrial action.

[Mr McCann]

My hon. Friend is correct that 70% of those covered by the negotiations were PCS members, but we should bear in mind that 150,000, or 50%, of them would have been protected by the Labour Government’s proposals. It is also dangerous to go down the line of citing figures from ballots because we then tend to look at how many people voted in them.

[John McDonnell]

Just to be accurate for the record, it was one of the highest ballot turnouts that any union has had. The turnout was excellent.

[Mr McCann]

With the greatest respect, I do not think that people should worry about numbers—we need to go to the meat of the debate, which is about protecting low-paid civil servants who would be disproportionately affected by the proposals.

The Minister may feel that the PCS has been foolish. He may feel that he wishes to take advantage of the PCS’s vulnerability at this time and punish it. I genuinely urge him not to do so, because we anticipate a hard time for civil servants, many of whom may be made redundant as a result of the comprehensive spending review, and it would be vindictive in the extreme to hit them with the double whammy of redundancy and then a poor redundancy payment to boot, and to strip them of the hard-won conditions of service that they had.

You will be delighted to hear, Mr Deputy Speaker, that I am now going to sum up. The February 2010 deal was a fair deal, in my view. It saved money, it protected the lowest-paid, and it covered the protection of civil servants’ redundancy payments and early retirement provision. We should not be attempting to punish members of the five trade unions who backed the February 2010 deal, nor should we punish PCS members, even if Ministers believe that the PCS strategy was somehow misplaced. To use the motto of Government Members, if we are all in this together, we should be fair to civil servants. We should put the February 2010 deal back on the table, legislate for those changes, and get the deal done. Then, we can ensure that all public servants who work in the civil service are protected properly.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. The hon. Member for East Kilbride, Strathaven and Lesmahagow said several times that we are all in this together. We are all in this debate together, and if everybody takes about 20 minutes, we will get fewer than 10 Members in, so please be focused. We have not introduced a time limit on this debate, but if it carries on like this, I will have no hesitation in doing so.

19:19

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I am grateful for that comment, Mr Deputy Speaker, and I will truncate my remarks as best I can. Perhaps it is just an irony that the PCS is the single union that held up the agreement and a representative of the PCS held up the debate for 21 minutes after being implored to speak for only eight minutes. I reflect on that.

The Public Administration Committee, which I chair, recently took evidence from my right hon. Friend the Minister for the Cabinet Office and the principal civil service unions about the provisions of the Bill and the prospects for a negotiated settlement of the dispute about ongoing compensation for civil servants who are forced to leave their jobs or voluntarily accept redundancy. The hope then was that the parties would reach a negotiated settlement, but regrettably that settlement has not been reached.

It is appropriate at this stage to remind ourselves of why we are having this debate. We are here because there was no agreement. The agreement reached with the five other unions by the previous Government was challenged in the courts, and we finished up with the courts ruling that the compensation payable represents legally enforceable rights. That was never the intention of the original legislation, and that is why we have this Bill. We are not undoing previous legislation; we are undoing the work of the courts on previous legislation. In my view, it is about the culture of judicial review and judicial activism that we now live in. It is unfortunate but it is where we are.

Let us have no illusions about why this is necessary from an economic viewpoint. We are facing the worst public expenditure crisis since the 1930s. It is inconceivable that compensation arrangements that were reached as part of voluntary arrangements between Government Departments and civil servants, and have become legally enforceable by accident, should be respected as though they were contracts entered into and signed in blood. I do not accept what the hon. Member for Southport (Dr Pugh) said about these arrangements. They were intended to be flexible and negotiable, and the Bill is attempting to restore that position, albeit now putting in place a statutory baseline that is harsh—let us have no illusions about that. It is sobering to reflect how harsh these arrangements are in comparison with the existing arrangements.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

Will the hon. Gentleman give way?

[Mr Jenkin]

I hesitate to give way because we are very short of time, but I will do so briefly.

[Michael Connarty]

This is obviously a very brief Bill, and the hon. Gentleman will have read it; I have read it also. Could he tell me where it says that this is in any way negotiable and flexible?

[Mr Jenkin]

The hon. Gentleman misunderstood me. The Government have made it clear that they want a negotiated settlement, and that they are not prepared to talk about the terms of that settlement in this debate. Obviously, however, what we enact here provides a legally enforceable baseline that ultimately is not negotiable—the hon. Gentleman is quite right. The point is that the Government have made it absolutely clear that they want a negotiated settlement. With five of the six unions having negotiated in good faith, I hope that the PCS will also do so, whether or not the Bill passes on to the statute book and comes into force.

The need to reform the civil service compensation scheme is well understood. In fact, all the evidence that we received from the trade union representatives conceded that we need to deal with it as a matter of urgency in the current economic climate. This short Bill is simply a reflection of the accumulated mess that successive Governments and successive decisions in the courts have got us into. If there is one thing I regret, it is that there is not more understanding from the official Opposition of the mess that they were in on this same subject and that we cannot present more of a united front, but that is the prerogative of opposition and our democratic process, and I respect that.

I have two particular concerns about the Bill, and I would be grateful if the Minister could address them when he winds up. The first is technical and raises an important issue of principle. Clause 2 provides for early termination or an extension of the 12-month applicability of the legislation. Of course, sunset clauses are not unknown, and in many respects they are welcome provisions because they provide an opportunity to declutter the statute book. However, this Bill is unusual in providing what one might call a “sunrise” clause whereby, if desired, the legislation can be revived by an order under the affirmative resolution procedure in this House. The only similar provision was made in relation to section 13 of the Prevention of Terrorism Act 2005. I worry that the matters in this Bill are hardly in the same category, and that the ability of this House properly to control the law is being excessively compromised for nothing more than the managerial convenience of the Government. Can the Minister explain what the special circumstances are that justify such a provision in this case?

Secondly, I should like to focus on the possibility of a further legal challenge to the provisions of the Bill given the High Court’s decision to quash the earlier agreement. In his judgment, Mr Justice Sales took the view that compensation payments under the scheme should be taken to be accrued rights in the same way as pension entitlements. In his answers to me about the Bill’s compatibility with the European convention on human rights, the Minister for the Cabinet Office was, if I may say so, not entirely persuasive that he had addressed the legal point made by the unions and potentially to be made in a future action. The PCS argues that the Bill is unlawful because it offends against the principles of the ECHR, namely that the legitimate expectations about compensation rates that the current state scheme gives rise to, are legally possessions of which individuals cannot be deprived.

In the explanatory notes, the Government declare the Bill’s compatibility with the Human Rights Act 1998 because payments under the civil service compensation scheme cannot be considered to be a possession. In any case, they say, even if they were to be considered possessions, since the cap on compensation rates does not apply until a redundancy notice is issued or a voluntary departure is agreed—that is, after the Bill has come into force—it does not therefore amount to the deprivation of an existing possession. That is all very elegantly argued, and no doubt the Government have had the benefit of legal advice, but if the Bill is enacted and subsequently challenged in the courts, the consequences could be extremely significant. Even if the challenge were not successful, if it went to the European Court of Human Rights for a determination, the delay and dislocation would be considerable. How sure is the Minister that the rights generated by the legitimate expectation of civil servants about their terms and conditions with regard to redundancy payments will not be regarded as possessions?

I understand that there is case law in the ECHR suggesting that mere claims to possessions are capable of being interpreted as property rights when there is sufficient basis in national law, for example when there is settled case law in the domestic courts confirming that. Precisely that confirmation was provided in the case that was adjudicated in May. Is the Minister confident that, even if the accrued rights are considered possessions, the Government are justified in interfering with those rights in the wider public interest, and therefore lawfully able to do so? In short, is he satisfied that the unions will not have a claim against him for not exercising his discretion in a fair and proper manner in failing to recognise existing entitlements?

That is an important matter, not some arcane point. A legal challenge could run for a very long time in Strasbourg, perhaps for years, and if the Government lost having gone ahead with job reductions on the terms set out in the Bill, it would potentially saddle the public purse with a huge liability at some future date, to say nothing of the subsequent complications in trying to repay individuals long after the event. I point out that Governments of both parties have a long history of wishful thinking when it comes to such cases. I speculate that it appears that the easier course in the short term is often to risk defeat in the courts sometime in the distant future rather than to confront the legal realities and their implications immediately. That is not conducive to better governance and decision making, and if it continues to happen under this new Administration there will perhaps be a case for the Public Administration Committee to launch an inquiry into why the Government’s legal advice has so often proved deficient in such cases. I place the Government on notice about that.

Subject to those qualifications, I support the Bill and will vote for it. What Ministers do will be taken as a reflection of the regard in which the civil service is held, and that will have an effect on the morale of the public service at a time of great uncertainty and change, and therefore on this Government’s relationship with civil servants. Nobody listening to this debate can be under any illusion about the seriousness of the measures that we are discussing and the impact that they will have on people’s lives. I commend many of those who have spoken from both sides of the House for alerting us to those concerns.

19:32

[Jack Dromey (Birmingham, Erdington) (Lab)]

May I declare an interest? For 15 years I was chairman of the Ministry of Defence joint industrial Whitley council, which at its height covered 120,000 industrial civil servants. It was the only body in British industrial relations that survived the 18 years of a Conservative Government with a Minister in the chair, such was the emphasis on good industrial relations in a very sensitive Department. I know from my own experience that the armed forces value greatly the outstanding service given by defence civilians in the Army, Air Force and Navy. A colonel in charge of one of the biggest army bases in Europe once said to me, “Jack, we pay them poorly, but at least they can look forward to a decent pension and, if they lose their job, a good redundancy payment.” That historic assumption is now being torn up.

Who are the civil servants about whom we are talking? Reference has been made to those who work in customs, in the UK Border Agency, in the issuing of driving licences and in air traffic control, and I will give two additional examples. First, only two weeks ago I was in the Jobcentre Plus office in Erdington High street, which covers the area with the highest unemployment in Birmingham but is the highest performer. There were excellent young men and women there working with a passion to help the most underprivileged in a deprived community back into work. The other example is people I know very well from my own experience, the defence civilians at RAF St Athan who, right now, are working hard to support our troops in Afghanistan. They are typical of those who have historically worked in the Ministry of Defence—loyal, long-serving employees, many of them ex-service personnel.

There are 35,000 civil servants in the west midlands, and I want to dispel the myth that they are well paid and have gold-plated pensions and secure jobs. They are mostly low-paid people whose wages have fallen behind inflation. Their average pension is £4,200 a year, and 100,000 civil servants have lost their jobs. Can we have a debate based upon the facts, not the myths?

On the myth that civil servants are well paid, 40% earn less than £20,000 a year and 63% earn less than £25,000 a year. In the Department for Work and Pensions, the lowest-paid get but £13,000 a year. Yes, there was the IT director on £249,000 a year, and that was absolutely wrong, but can we stop using the exception to have a go at civil servants as a whole? On the myth that civil servants enjoy gold-plated pensions, I have already said that if we exclude the highest-paid, the average pension is £4,200 a year, and 100,000 retired civil servants have a pension of less than £2,000 a year. On the myth that they are in secure employment, 20,000 jobs have gone in HMRC, 30,000 in the DWP and 25,000 in the Ministry of Defence, and many more now face losing their jobs, particularly as we look towards the comprehensive spending review.

Reform the current arrangements? Yes. Negotiation to that end? Without hesitation. But it is fundamentally wrong, and a very dangerous precedent, for Government to impose unilaterally on any group of employees changes that are detrimental to their terms and conditions of employment. It is wrong to compare what is now on offer with what was on offer from the Labour Government. Somebody on the median salary of £22,500 a year who has been employed for 20 years and is made compulsorily redundant will suffer a cut of £37,500 in what they would otherwise have expected. That is a broken promise to people who had accrued rights on which they depended, which the Bill is taking away from them at a stroke.

It is wrong that there is no protection in the Bill for the lowest-paid. I heard the Minister’s Delphic statements earlier about his hope and expectation, but there is nothing to support them in the Bill. It is wrong and bizarre that somebody who is made compulsorily redundant will now receive less compensation. I know, from my years negotiating in the industrial civil service, about what used to be called public interest terms, which were associated precisely with compulsory redundancy. The Minister said earlier that he knew of no other such examples, but it is common in the private sector that there are enhanced terms for redundancy but yet further enhanced terms for compulsory redundancy.

It is also wrong that, without negotiation or pre-legislative scrutiny, the vehicle of a money Bill is being used in this way, and it is a dangerous precedent. If yesterday we saw a constitutional outrage—a gerrymander—today we see a contractual outrage, the unilateral dashing of the hopes and expectations of hundreds of thousands of civil servants.

I return in conclusion to RAF St Athan, because the workers there working day and night in support of our armed forces in Afghanistan are themselves facing redundancy. I know many of the individuals concerned, and they are trying to plan their future. Now, at a stroke, what they had hoped for will be taken from them in this Bill. They are not responsible for the misdeeds of bankers, and they resent the peddling of myths about civil servants, as they will resent, in the words that the Minister used today, the use of a “blunt instrument” against good men and women who have served this country well and deserve dignity and respect, but who are being treated with contempt.

19:39

[Harriett Baldwin (West Worcestershire) (Con)]

I wish to add to the comments of Members on both sides of the House my recognition of the work that our civil servants do throughout the country. I have spent my working life so far in the private sector. Until I read about this legislation and the background negotiations that brought us to this point, I had not realised that there were still jobs in this land in which people could expect at redundancy to receive a payment of several years’ pay. As we heard, in rare cases people can receive up to six years’ pay. Most of my constituents would be astonished to learn that some who are faced with redundancy—it is inevitably shocking and stressful—are cushioned by a payment of several years’ salary.

I thought I might share with the House some observations from the labour market in the private sector. Redundancy is always a very difficult decision for an employer to take. In my experience, most employers will try very hard to help employees to move within the organisation or reduce their hours. There are many examples in the current downturn of people accepting less work and remaining employed. We acknowledge that redundancy is very expensive, not only financially but in human terms, and that all good employers will go out of their way to try to avoid it. However, we can also see that in a flexible, modern and changing economy, redundancies will occur. Therefore, the provisions are significantly more generous than one would see in private sector employment today.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I can think of many privatised companies, as I am sure many colleagues can—I am thinking of British Energy and others—that have generous, multi-year severance packages, so it is wrong to say that we find them nowhere in the private sector.

[Harriett Baldwin]

I thank the hon. Gentleman for his intervention. I have obviously been in completely the wrong line of work, given that I was unaware of such significant redundancy packages.

We all recognise that people are reluctant to make employees redundant, and that they would make every effort to move people to new jobs. However, the Minister made an important point when he said that when redundancies need to happen, people want to avoid the situation in which the most recently hired and lowest paid are let go because decision making is distorted by the packages that must be offered to more highly paid people who have been with a company for a long time.

We can also acknowledge that when redundancies are made in the civil service—I gather that in the three years from 2005, there were 16,500 redundancies, which cost the public purse about £1 billion at an average of about £60,000 per redundancy—the money must be found from the taxpayer. I differ from my colleagues who said that the decision to introduce the Bill was made because of the deficit. I submit that even if we did not have a deficit, the sums of money being paid out in redundancy would seem no less huge.

We have talked a lot about fairness in today’s debate. Is it fair that some of the taxes paid by an individual who finds work after being made redundant in the private sector—the average redundancy payment in the private sector is approximately £9,000—go to pay significant redundancy payments in the civil service? We all agree that something must be done, and as the right hon. Member for Dulwich and West Norwood (Tessa Jowell) said, the CSCS is simply not appropriate for a modern civil service.

It would be right to do something about the situation in good times, just as it is right to do something in tough times, but it would clearly be better, as everyone agrees, if the unions and the Government successfully negotiated a change. It would be more attractive if the redundancies that are being discussed were voluntary. It is often the case that managing a redundancy process that has a significantly more generous voluntary element makes the process much less painful for the work force. In addition, it would be better if we negotiated a change so that the public sector is more vigorous and stronger when new jobs are created. It is one of the counter-intuitive laws of economics that companies that have very generous severance terms tend to hire fewer people than companies that are more flexible. It is also counter-intuitive that the mobility of staff within organisations that have more flexible employment terms is improved. That can often help with morale and job satisfaction.

We have spoken today about protecting the lowest-paid, but perhaps we should talk less about protecting them and recognise that the more junior staff are often able to move up. In other words, instead of talking about protecting junior staff, let us talk about promoting and creating more opportunity for mobility for them within the organisation.

It is also been observed that similar counter-intuitive laws of economics apply to countries. Countries that have more flexible employment laws have much stronger periods of job creation when they move into economic recovery.

I agree with colleagues on both sides of the House that it is a shame that we have to discuss the Bill and that it would be much better if we came to a successfully negotiated conclusion. Let us hope that while the Bill goes through Parliament, the negotiations bring about a more reasonable scheme that is both affordable for the public purse and fair to the very many valuable public servants who are covered by the current scheme.

19:47

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

Like other hon. Members who have spoken in the debate, I have been contacted by a number of my constituents who work as civil servants. The people who contacted me are not serial complainers and campaigners who write to me or to other politicians about everything, but people who do valuable work in a number of different departments within the civil service and other bodies locally, and who are genuinely concerned about their futures. They do important work in places such as the Identity and Passport Service, the Housing Investment Division of the Scottish Government, the Criminal Injuries Compensation Authority, the Child Support Agency and Registers of Scotland. Although those jobs are not based in my constituency, they are based in the travel-to-work area. They are important for an area such as mine, which has seen a downturn in the manufacturing sector and is still reeling from the announcement that Diageo is pulling out of the Johnnie Walker plant.

I have come to the Chamber today to put on record my constituents’ concerns and, like others, to take the opportunity to praise dedicated public sector workers, including civil servants, who have given their lives and careers to work on our behalf. However, it is no good speaking such warm words in the Chamber if we do not take action to back them up. We heard the Minister in his opening statement take a softly, softly approach, saying, “We can sort this. It’ll be all right on the night,” but that does not match up with the measures in the Bill.

[Richard Graham]

Does the hon. Lady agree in retrospect that it was a tragedy that two years ago the PCS did not agree to the previous Government’s proposals?

[Cathy Jamieson]

We heard today that the people whom the Public and Commercial Services Union represents—the majority of people who work in the civil service—did not agree that the previous Government’s approach was the right one at that stage. Whether or not the hon. Gentleman agrees with the union, it had the right to go to court and did so, and secured a ruling in its favour. We must recognise and accept that. I was surprised to hear other hon. Members suggest that the ruling by the court was something that we should simply dismiss, and I would hope that that is not in fact what they are saying.

Given the need for brevity, I will focus on one particular point and that is the device that is being used to push this Bill through. I am very concerned that the Bill has been laid as a money Bill. I am a new Member and I stand to be corrected if I am wrong or if I have misunderstood what a money Bill has traditionally been used to do, but my understanding is that the Parliament Act 1911 defines a money Bill and charges the Speaker with certifying whether a Bill is a money Bill. Previously, money Bills have been used to protect revenue and to raise tax, but never before has a money Bill been used in a situation like this. I agree with my hon. Friend the Member for Hayes and Harlington (John McDonnell) who suggested that the use of a money Bill in these circumstances could be seen as an abuse of parliamentary procedure, and certainly many of the people who have spoken to me about this feel that is indeed the case. It is an abuse of that procedure to try to speed a Bill through Parliament without the proper scrutiny and, as the Minister has already accepted, to use a blunt instrument to try to force something on to the negotiating table.

If we look at the detail of the Bill, although it is very short we see that the degree to which it is unworkable in the long term is implicit in its provisions. The sunset clause, which means that the Bill will expire after 12 months, can be repealed at any time and can only be extended for a further period of six months by secondary legislation, and that is a real cause for concern. On the one hand, the Minister said that we have to negotiate but we cannot negotiate in public. However, at the same time, he is very publicly using this blunt instrument to try to force the unions into a particular position without providing any of the detail that Members on both sides of the House have sought today—

[Michael Connarty]

My hon. Friend is, as usual, shy about telling people that she is a former Minister in the Scottish Parliament and probably knows more about this than most Back Benchers. She also points out that the Bill has a sunset clause, but it is more like a sunrise clause. It is a blunt instrument fashioned to be picked up again and again when the Government do not have the capacity to negotiate and to be used to attack people in the public sector whenever they wish to do so. All that will be required is a statutory instrument off the Floor of the House, without anyone seeing what they are up to.

[Cathy Jamieson]

I am grateful for my hon. Friend’s complimentary remarks. In fact, I am a former Justice Minister. Far be it from me as a former Minister to suggest that people should be suspicious about very short pieces of primary legislation that give greater powers to secondary legislation that can then be picked up and laid without proper parliamentary scrutiny. Having had to work on legislation in another Parliament, I recognise that the concerns expressed by hon. Members are well made in this case.

The Bill puts the Speaker in a difficult and unfair position, because he has to decide whether it should be certified as a money Bill when in fact it is about industrial relations and people should be redoubling their efforts to put the previous deal back on the table and to ensure that all the trade unions are involved in the negotiation. Parliamentary procedures should not be abused in this way.

Given that brevity is required, I shall not seek to rehearse points that other hon. Members have made. However, when we are talking about the low-paid and given all the warm words that we heard earlier about the desire to protect the lowest grades in the civil service, I do not think it is good enough that Ministers cannot identify what “low paid” means in those terms and how many people will be affected. It is incumbent on the Minister who winds up the debate to give us more information on that point.

19:54

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

The Minister will know that I wrote to the Minister for the Cabinet Office on 21 July to set out the reasons why I cannot support this Bill. I have to say that I have not changed my mind in the intervening weeks or during the course of this debate. However, notwithstanding the fact that I will not be supporting the Bill, I appreciated the way in which the Minister presented it and the moderation of his tone in some remarks. Given that we are short of time, I shall cut straight to the chase and set out the reasons why I cannot support the Bill. The debate about private and public is the wrong debate. It is not even comparing apples and pears: it is more like trying to compare bananas with Brazil nuts. There is no comparison. I have been in the private sector all my life. I have never had a pension or redundancy terms, and I have always managed to earn a considerable amount of money. I knew what I was getting into. When I signed on for this place, I knew that I would experience a severe reduction in my pay, but that I would get a pension and redundancy terms, although of course the latter are not now so good—[Laughter.] Hey, we will keep working on that.

The point is that people take into account what they will receive in certain situations when they take a job. There may not be a legal contract, but I believe that there is a moral contract between the state and its employees. To put it in human terms, I have people in my constituency who work in the Forestry Commission, for the Department for Work and Pensions—although sadly that office was closed by the last Government despite being one of the most productive and absence-free in the country—and for HM Revenue and Customs in an office scheduled for closure in 2013. The one thing that all those people have been able to count on is that when the Gershon axe fell, they had a cushion between them and penury. In particular, I think of one employee who said to me, “Well, I took out my mortgage based on the fact that if I lost my job I could pay off the mortgage. If this Bill goes through the way it is written, I will have to sell my house.” That is the human reality of this.

Many of the people who have gone into the public sector have considerable qualities, had a vocational desire to be in the public service and have forgone the ability to earn more money in the private sector. Part of their consideration for doing that was the terms and conditions available.

Companies are different because they have a top line, and that can be driven to make more profit and expand further. The last thing that any of us wants to see is an ever-expanding public service. We would like to control it and keep it as cost efficient as possible while delivering the service. It is therefore a wholly different model to driving a top line and delivering a profit. It is right that the famous six times salary provisions—I suspect that those are few in number—and those at the higher-paid end should be reformed, but I am concerned that in fact the low paid in my constituency will bear the brunt, as will those who are coming to the end of their career and have no chance or ability to find another job. I want a scheme that will genuinely offer some help and succour to those at the bottom end of the scale.

I have a final suggestion for the Minister. He probably will not reply to it, but he can take it away for the negotiations to come. If the Government want a cap of £50,000, fine, but they should keep the current terms. That is a progressive way to do it, because the people at the bottom would be very generously looked after and the people at the top would pay most. Let us try that for a change.

19:59

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I think that there is agreement on both sides of the House that the scheme needs to be reformed on grounds of economy and fairness, but the questions are what constitutes fairness and how one gets there. My view is that the Bill is arbitrary and unfair, and therefore likely to increase further the suspicions with which low-paid civil servants view this Government. It is arbitrary because it is a coercive measure seeking to impose new terms and conditions on public servants, even as the Government claim to desire a negotiated settlement, and it is unfair because, as we have heard, it does nothing to address the reasonable expectations of the employees concerned, especially, I reiterate, the half of all civil servants who earn less than £21,000 a year.

The people we are talking about are decent people, many of whom do vital and complex work for modest rewards. In my constituency, Her Majesty’s Revenue and Customs is an especially large employer. Most people from Cumbernauld—myself included—have a friend who works, or has worked, in HMRC. Members of the House who are blessed enough to receive official correspondence from HMRC are likely to have done so from Cumbernauld, and the men and women who work there do so to ensure that taxes are paid, tax credits properly administered and the Government’s revenue maximised. Few can doubt the importance of this work, especially in times such as these.

The Minister insists that the Government are working on a package to protect the men and women who do such vital work, but I hope that they will understand that those men and women are not prepared to take that on trust. The Government’s good intentions do not to a policy amount. This is especially the case when a fairer package already exists—the one devised by the previous Labour Government and now accepted as a basis for negotiation by all six trade unions. Alas, the new Government are uninterested and intend to force through changes to the law that override their obligation to consult and reach agreement with civil service unions under the terms of the Superannuation Act 1972. In the long term, therefore, this Bill has implications for the legal right of all civil service unions to consultation and negotiated agreements. In the short term, it means the removal of protection for the low paid.

The Government’s failure to build on Labour’s work in this area will, I believe, have dangerous consequences. All parties are agreed that the times call for more efficient government, but, as has been mentioned, particularly from the Liberal Democrat Benches, efficiency is not just about laying off staff more cheaply; good training, organisation and management are essential if those workers are to do the important job of closing the tax gap—a tax gap that appears to cost us all up to £40 billion a year. My view is that addressing tax evasion and avoidance is the only true, fair way to deal with the deficit. If individuals and businesses paid what they owed, closing the tax gap would become simpler. Successive Governments, including Labour Governments, have failed to do so because they have not resourced enforcement appropriately. It will be so much more difficult to do so in the context of a demoralised, dispirited work force fearful about their jobs and the terms under which they could be made surplus to requirements—a point powerfully made by the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) and his colleague the hon. Member for Southport (Dr Pugh).

The Government claim that they are about getting more for less, but they have to recognise that this ambition is a complex and demanding one, and that it cannot be imposed arbitrarily from the centre. A Government genuinely interested in efficiency would look to promote bottom-up programmes and work force empowerment, and should not force through primary legislation that dramatically undermines job security. The legislation, I repeat, makes an arbitrary change without consultation or warning. This is slap-dash policy making—the Minister will not even offer an estimate of the potential savings. No wonder that civil servants in my constituency and elsewhere are sceptical and worried. This is not fair, it is not progressive, and it gives the lie to the claim that we are all in this together.

Ministers’ response to criticisms of their changes to the CSCS parallel the Government’s defence of the fairness of their policies more generally—“Do not judge us by what we have said and done. Judge us by what we might do in the future.” My constituents are not prepared to take the Government’s word for it. The gap between rhetoric and reality has already been observed in a number of areas in Government policy. This Bill will produce agonising uncertainty among modestly paid civil servants, will undermine their productivity in the service of the public, is damaging to industrial relations and exposes a divisive and confrontational attitude on the part of the Government. Most damagingly of all, however, it ignores progress made by the pervious Government.

I will finish on this point. My constituents are generally sceptical of the bona fides of the Government, so I ask the Minister and the Government to do something concrete to assuage their fears about their intentions in this area of policy.

20:07

[Gavin Williamson (South Staffordshire) (Con)]

Given that, in this Chamber, we often talk about cuts, you will be pleased to hear, Madam Deputy Speaker, that I have cut my speech substantially, in the interests of time.

It is interesting that so far in this debate there has been a general acceptance, on both sides of the Chamber, that change is needed in the civil service compensation scheme. That acceptance is welcome. I appreciate that both sides of the House cannot agree on how those changes should be made, but this Chamber and this nation are faced with some difficult and hard truths—we cannot afford the situation that the country finds itself in or the deficit that the Government have inherited. While I, like, I am sure, virtually every Government Member, want to see compromise and agreement between the Government and civil servants and civil service unions, we cannot wait for, or be held ransom by, one union that has decided that it does not wish to seek a compromise.

The simple truth is that there is a massive disparity between the private sector and the civil service when it comes to redundancy. Figures from the Chartered Institute of Personnel and Development estimate that, in autumn 2008, the average cost of a redundancy in the private sector was £8,981. Yet, according to comparative figures for 2005-08, 10,000 compulsory early severance packages were served on civil servants, costing an average of £42,000 each. All Members would accept that that is a substantive difference. Governments, like businesses, need flexibility in what they do and how they work, but the current scheme does not offer that flexibility. We can argue about three years, six years or two thirds, and we can talk about trying to achieve efficiency savings, but the simple reality is that we are facing a payback of between three and six years in order to realise the benefit of those efficiency savings. Unfortunately, that it is not going to be enough in the difficult times that we have inherited from the previous Labour Government.

I very much welcome the words spoken by my right hon. Friend the Minister at the Dispatch Box, along with his obviously heartfelt wish to seek compromise and reach agreement with the unions, for the benefit of everyone in this nation and of the civil servants who work so diligently for this Government. That should be welcomed on both sides of the House. I also hope that, with the passage of the Bill, the civil service unions will realise how important it is to reach that compromise swiftly, for the benefit of all.

20:11

[Ms Margaret Ritchie (South Down) (SDLP)]

Like other hon. Members, I have received representations from constituents, many of whom are civil servants. Very few would disagree that the civil service compensation scheme should be reformed; in fact, there are good, compelling arguments for public sector reform. However, we need to ensure that the compensation scheme affords protection for some of the lowest-paid and longest-serving public sector workers. Lower-paid staff should not be the victims of departmental cuts or of what is proposed in this Bill.

I represent a constituency in Northern Ireland whose economy is heavily dependent on the public sector. I am conscious that public sector reform is needed, that the economy needs to be rebalanced and that the private sector needs to grow and be stimulated, but there is still an urgent need to sustain jobs in the public sector and to make provision for new entrants into the civil service. Reform must always be tempered by the principles of social justice and fairness and by what is in the best interest of the public. We must not undermine the basis of the existing economy.

I speak as a former Minister in Northern Ireland who had responsibility for the benefits system for some three years. During that time, I had responsibility for some of the lowest-paid civil and public servants in Northern Ireland. Many of them were women, many worked part time and many were vulnerable. Why should such people be held responsible for the present situation? Why should they be the victims of this legislation? Why should they be susceptible to the loss of their jobs? We must also recognise that, although we are in the midst of an economic downturn and facing severe budgetary cuts, there is still a need to protect front-line services, and the vulnerable and disadvantaged. Many civil servants, particularly those in the lower grades, feel that their jobs are under threat. That is their perception, and I have heard nothing today from the Government Benches to assuage those fears.

Notwithstanding all these factors, it is important that Parliament defends the roles and rights of civil and public servants, particularly those in the lower-paid grades. The proposals in the Bill will slash redundancy compensation, especially for older and longer-serving staff. It is important that proper agreements should be reached with the civil service staff and that those agreements recognise the accrued statutory rights held by many of them. The agreements should also be fair to new entrants to the service. The Bill must not be used as a blunt bargaining tool to influence the negotiating process. Efforts must be made to protect staff and the delivery of front-line services, as well as to develop our economy at this difficult time.

I suppose, after this long Second Reading debate, that the best maxim would be that we should follow the road of proper negotiation, rather than that of unilateral imposition. I have learned over the past few weeks that some people believe that the coalition Government are less interested in listening to the views of those who represent the stakeholders. Perhaps that can be seen in their reactions and efforts in relation to the Bill. My hon. Friend the Member for Foyle (Mark Durkan) asked what agreements had been reached with the trade unions in preparing this Bill. Obviously, there has been little agreement.

The Government seem anxious to depart from negotiation, even though it has always been the standard bearer for industrial relations, and to move to imposition. In fact, the Minister for the Cabinet Office could not even provide the right hon. Member for Belfast North (Mr Dodds) with a definition of a lower-paid civil servant. My colleagues in the Social Democratic and Labour party and I are firmly of the opinion that the Bill should be withdrawn, as it is not in the best interests of junior and lower-paid civil servants.

20:16

[Matthew Hancock (West Suffolk) (Con)]

It is a great pleasure to speak in this debate under your speakership, Madam Deputy Speaker. I shall concentrate on the issue of fairness, which has come up again and again today. It is central to the Bill, and an extremely important factor. We are debating a sobering situation, and the Bill is a response in part to the enormous fiscal deficit that we need to tackle. It is clear that the negotiations and the Bill will have an impact on many thousands of civil servants who have worked extremely hard for the good of their country. Like many other Members, I pay tribute to the excellent work of the British civil service, and I echo the view of the Minister that it is the jewel in the crown of our constitution.

That is why it is so important that we consider the consequence for fairness as the negotiations go forward and the Bill goes through. That view has been reflected in speeches from both sides of the House today. I shall address the issue of fairness in three different ways. First, we must consider the fairness of these measures, given what else is going to have to happen if we are to tackle the deficit. Secondly, we must consider fairness across society and the economy. Thirdly, we must take into account fairness within the civil service in terms of working practices, and the consequences of the current system for some of those working practices.

The enormous fiscal deficit has overshadowed many of the debates in the Chamber since the election. We on the Government Benches argue that dealing with the deficit is a fair and progressive thing to do. In the short term, failure to do so would lead to higher mortgage rates and interest rates as well as create the risk of a catastrophic economic failure, which we do not want to do. It would also be unfair to burden our children and grandchildren with levels of debt that we had failed to deal with. It is therefore fair and progressive to deal with the deficit. It is important, when considering all the different aspects of that process, to think about the Bill in that context.

How can it be fair to defend a system, as Labour Members have done, in which payments of more than £500,000 have been made to certain individuals at a time when we are having to take other measures—as Labour Members would have had to do, were they still in office—to deal with the deficit? How can it be fair that the average redundancy package in some Departments has been more than £100,000 for the past three years? In an earlier intervention, I gave the example of the Department of Health, in which the average redundancy package last year was £122,000.

When this country is tackling its deficit, it is difficult to say that it is fair to make such enormous redundancy pay-offs. The argument has been put by Labour Members that there are only a few of them so it does not really matter. However, we as a country are going through a difficult process, and having extremely unfair examples of public spending like that only makes it even more difficult. We cannot argue that simply because there is not an enormous quantity of such payouts, they do not matter. They do matter and reforming the system is crucial, as the Opposition Front Benchers seem to recognise, but Labour Back Benchers too often do not.

[Michael Connarty]

I am amazed that the hon. Gentleman is still quoting the figure of £100,000 when one of his hon. Friends who spoke earlier provided him with the true average of £60,000. He ignores reality again and again. Some people get huge payouts, and some Labour Members have argued against them for the last 10 years but we could not convince our own Government to deal with these people. If the hon. Gentleman’s logic had been applied after the second world war, the huge deficit this country would have had to carry would have meant no rebuilding and our people living in poverty for the next 50 years. The hon. Gentleman may be lucid, but he is certainly wrong.

[Matthew Hancock]

The hon. Gentleman answers his own question when he says that the previous Government did nothing about the problem over the last 10 years. As for this new argument I am hearing expressed by Labour Members, that we had a large deficit in 1945—yes, we did, but we also had large cuts in 1945 and not least to the military because we had just won a war. There are no such easy reductions now because of the mess left by the Labour party—[Interruption.] I will take no lessons from what the hon. Gentleman shouts out from a sedentary position. At one point in the last three years, £8 billion was spent on redundancy payouts. I do not know whether the hon. Gentleman is willing to defend very high payouts, but we seem to be getting a reaction on the Labour side against any change to anything. It is a great pity that Labour Members do not engage in the process of trying to deal with the deficit as we Conservative Members do.

[Claire Perry (Devizes) (Con)]

I would like to focus on the average rather than the outliers, as that seems to elicit cries of outrage from the Opposition. It is an incontrovertible fact that if we look at the average redundancy payout and average compensation, we find that the average cost in the private sector in autumn 2008 was £8,981, while it was £17,926 in the public sector—almost twice as much. That demonstrates that we have reached a position where, on average, people are being paid twice as much to retire from the civil service as they are to retire from the private sector. There is nothing fair about that.

[Matthew Hancock]

It is always dangerous to give way to my hon. Friend, because she usually puts the point far more lucidly than one could oneself.

I was going to come on precisely to that point—my second point about fairness. Not only is it fair to deal with the deficit and, I think, unfair to give enormous payouts when we have to achieve other very difficult things, but fairness across the economy and across society is also important. The maximum payout in the mandatory private sector compensation scheme, for which this House legislated, is £11,400, yet the proposal is nowhere near that figure within the public sector.

It was interesting to note that when the shadow Minister, the right hon. Member for Dulwich and West Norwood (Tessa Jowell), responded to an intervention about whether it was fair to have a similar sort of payoff scheme in the private sector as in the public sector, she effectively said that she was not in favour of equality. I thought that Labour Members were in favour of equality, but obviously not when it does not suit.

[Tessa Jowell]

I am not quite sure what point the hon. Gentleman is trying to make. If the question is whether I agree the case for parity between the public and the private sector on these matters, the answer is that parity cannot be willed. We are not going to peg the public sector to the private sector other than in an indicative way. There are different incentive structures in the remuneration packages of people who work in the two sectors and they are in different ways reflected in aspects such as the compensation for redundancy that we are discussing this evening.

[Matthew Hancock]

I thank the right hon. Lady for her intervention. In some cases, it seems, one can talk about parity, and in other cases about equality. If one is favour of it, one might use one word, but if one is against it, use the other. The important point here is that we need to look at overall compensation packages and overall pay, including pensions and other terms and conditions of work.

That brings me back to the issue of fairness across the sectors. If we are to have a modern civil service and a modern flexible economy that work in the future, we also need to allow transfer between the two sectors. Bringing into line the working practices in the two is no bad thing; nor is bringing into line the redundancy payoffs as the Bill does—and, indeed, as the right hon. Lady’s former proposals did. The hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann) raised an interesting point when he argued that we should put the members of the unions ahead of the rest of our constituents. I think that the most important thing for a new MP to do is to represent all of their constituents, not just those who are members of a union.

My final point is about fairness in employment practices. I asked the House of Commons Library about the concept of priority posting pools, which are groups of civil servants who are given nothing to do, but cannot be let go because of the cost of the redundancy package. The Library determined that there were a total of 1,946 such civil servants. When people working for their country have completed their jobs and their projects, it cannot be fair to tell them, “We would like to pay you to do nothing. We cannot find anything useful for you to do. We do not think you would be any good at doing anything else, but we cannot afford to get rid of you, so we are going to carry on paying you.” As of January 2010, there were 1,946 such people in the civil service. I believe it is unfair to them not to have a flexible employment system so that we can have a grown-up and modern civil service working for the future.

Such is my argument. We are here to look at the fairness of this Bill as well as other aspects of it. If we want to spend public money fairly, rebalance our economy fairly and try to improve the fairness of working practices in civil service employment, we should support the Bill. The alternative is defending £500,000 payouts, an unbalanced economy and out-of-date working practices. I do not want to defend those things, so I will support the Bill this evening.

20:28

[Sheila Gilmore (Edinburgh East) (Lab)]

Notwithstanding the warm, or perhaps lukewarm, words from the Minister about our civil servants, I see the Bill as part of a concerted attack on the public sector and those who work in it. The war on the public sector is being waged by some parts of the media without contradiction from the Government, and, indeed, by large parts of the Government.

Creating a straw man or woman simply to knock it down is lazy politics, but that has been done this evening by speaker after speaker. It is a case of picking up an extreme example partly in order to divert public opinion from the reality. The aim is to win over public opinion—to make the public think, “Oh, that is dreadful! How can people receive payouts, or salaries like that? We must do something about it”, rather than see the reality.

We cannot get away from the economic argument. Earlier, one of my hon. Friends feared that, if he drifted on to the subject of the wider economy he might be accused of irrelevancy, but that subject is not irrelevant. We see a clear divide between the two sides of the House, not because Labour Members are not concerned about the deficit but because we have a different view of the economy, how it should be built, and how we should emerge from recessions. Members on the other side of the House obviously see the public sector as a drag on the economy and something that must be shrunk, and they tell us that lo and behold, the private sector will leap up to pick up the pieces.

[Richard Graham]

Does the hon. Lady accept that those of us on the Government Benches who have worked in the public sector find that very disappointing to hear?

[Sheila Gilmore]

Members on those Benches may find it disappointing to hear, but it is what many of my constituents who work in the public sector are hearing. They are witnessing a concerted attack on the sector and on public service. I am sure that many Members on the other side of the House genuinely believe that the public sector is pulling the economy down, but we do not believe it. We believe that we must not at this stage cut the public sector in such a way that the economy is put at risk, but that is what will happen if the Bill is passed.

Public sector cuts will increase unemployment, and my constituents are asking me where the other jobs are. Over the past few weeks redundancies have been announced by Standard Life, which is a big employer in my city, and by the Royal Bank of Scotland, which has also been a big employer there. My constituents are seeing such developments all around them. The construction industry has an administrative side, and people might otherwise have thought of working in that, but the sector has been decimated, and they know that there are no jobs.

We could all throw in such terrible examples. Members have spoken of low redundancy payments in the private sector, but we could cite the amount of money that Fred Goodwin received when his employment was terminated. Is it right for us to “equalise down”? We talk of equality, but why is it assumed that we should look to the least good employment conditions, and try to reduce the conditions of our public servants to that level? Some workers in the private sector do not receive sick pay. Where will it stop? Are we going to say, “That is a good idea—perhaps we should equalise downwards”? Such thinking constitutes a slippery slope, and in my view it is quite wrong. I am not surprised that my constituents are anxious.

Like some of my colleagues, I visited the local Jobcentre Plus during the summer break, and in many ways I found it an inspiring experience. It is a far cry from the old days when the staff sat behind glass barriers, frightened to come out, and people on the other side sat on chairs that were fastened to the ground—presumably in case they lifted them up and threw them—to arrange to sign on. A real effort has been made to do something that every party in the House considers important—to get people back to work—but how can that be done if the morale of the people who should be doing the job has been lowered?

I do not think that the Bill is the right way to deal with the situation. If we were serious about the outliers, the Bill would be about them. If the problem is people on very high payouts—we have heard about that from several Members today—why is the Bill not about that? If that is the problem, the Government should deal with it, rather than introducing a Bill which will hurt all civil servants including the low-paid, and which is being used as a bargaining tool to force people to agree to even worse terms than those proposed by the Government. What is clearly being said is, “If you do not agree to much worse terms than you have at present”—although perhaps slightly better terms than those in the Bill—“the terms in the Bill will be what you have.” That is really what the legislation is about.

20:33

[Martin Horwood (Cheltenham) (LD)]

I declare a strong constituency interest in the Bill. Like many other Members, I have my fair share of constituents who work in local offices of central Government Departments such as the Department for Work and Pensions and Her Majesty’s Revenue and Customs. For the moment, I also have constituents who do important work involving the environment and the countryside at Natural England and the Commission for Rural Communities. But, of course, most of those in Cheltenham who describe themselves inconspicuously as civil servants work at GCHQ. They form the largest part of what the Prime Minister has rightly described as

“the finest intelligence services in the world.”—[Official Report, 6 July 2010; Vol. 513, c. 175.]

GCHQ traces its roots directly to the wartime Government Code and Cypher School at Bletchley Park, which, as we now know, made a huge contribution to victory in the second world war. That contribution, however, remained largely unknown and unrecognised for decades because of the absolute discretion and loyalty of those anonymous civil servants—people like my own parents, who worked at Bletchley and, later, at GCHQ. When the history books are written 60 years from now, who knows what silent victories we will learn were being achieved as we spoke here today, and which will remain secret for decades to come because of that same brand of loyalty? I must say that, on the face of it, this Bill is a pretty poor reward for the loyalty of my constituents in GCHQ and of all the other civil servants in Cheltenham.

It has been suggested that, on average, public sector pay has caught up with private sector pay. I will not invite a repetition of the earlier altercation across the Chamber about which is higher, but neither of the sets of figures cited were based on directly comparable jobs and careers, and that is what really matters. A constituent who wrote to me put it very well:

“I’ve had a long career in the public sector and watched my university friends prosper in the private sector. They have had company cars, private health care and almost without exception greater earnings. In compensation I had more flexible working, a good pension (although not as good as friends in the insurance industry) and the knowledge that I wasn’t in a hire and fire culture. Yet now, all the benefits are under attack but I can never make up for all those years of lower pay.”

The mathematicians, linguists and IT experts at GCHQ are some of the finest minds in the country and had they chosen to work for Vodafone or Hewlett-Packard they would have undoubtedly earned more—perhaps much more—but they chose to serve us instead. As one of my friends who worked at GCHQ once wryly told me, “It does inhibit you a bit in job interviews when you’re asked to describe your work over the last few years and you have to say, ‘I’m not allowed to.’”

GCHQ may be a rather extreme example, but it is true that many civil service careers do not translate easily into private sector job opportunities, especially if they have been very long careers in the civil service. The key point has been made by the hon. Member for Hayes and Harlington (John McDonnell), my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) and others: our civil servants make life choices based on the promises we make to them. They make decisions about their homes, where they live, the schools their children attend, and above all they make career choices and financial decisions. They expect that if the day comes when it really matters we will keep our side of the bargain and repay their loyalty as promised. Well, that day has obviously come.

There is no question but that the Government are right to take drastic action to prevent further damage to our economy. I regret it deeply, but there is no question but that many civil and public servants will inevitably have to lose their jobs. The last Labour Government knew that too. The Cheltenham offices of Her Majesty’s Revenue and Customs, Natural England and the Commission for Rural Communities are all closing, with inevitable redundancies. As overall departmental cuts bite there will doubtless be more, although I truly hope that an organisation as vital to the national interest as GCHQ will be looked at with the most extreme care.

There is also no question but that the Government are right to look at the civil service compensation scheme, which may now be more—possibly much more—generous, especially to top earners, than we can afford. That was certainly the conclusion of the Labour Government when they too tried to curtail the scheme to control costs. As the hon. Member for West Suffolk (Matthew Hancock) said, it is true that, if we do not economise enough here, we will have to economise somewhere else.

For all those reasons I understand why Ministers had to look closely at the scheme. Labour tried and failed to curtail the scheme by compulsion, but, of course, this Bill does not simply repeat that attempt at compulsion. It reduces the limit on redundancy compensation to one year’s pay, which is even more drastic than Labour proposed. Incidentally, it is also more drastic than the terms that apply in other areas of public service such as the NHS or local government.

Another constituent wrote to me that as a civil servant she felt “victimised” by the new Government, and she was a Lib Dem supporter. If there is even a perception of that level of unexpected unfairness from our own supporters, we should hesitate before going ahead with this Bill. It is unexpected because these proposals were in neither coalition party manifesto. In the coalition programme for government there was a promise to reform the scheme and to bring it into line with the private sector. Reform can be very good. It could, for instance, have given civil servants some more of the security of the contractual guarantee of compensation enjoyed by many in the private sector, protecting them somewhat from the whims of Governments. The Bill, it seems to me, deviates radically from good practice and from the principles of the 1972 Act. It contains a compulsory and substantial reduction in the agreed rights of civil servants and, arguably, the legally accrued rights of civil servants to compensation, and will be enacted just when they may need them most and while negotiations are under way. I must agree with other hon. Members that using legislation as a negotiating tool is unworthy of this Government.

If it is intended that the negotiations should lead to a more generous settlement, especially for the lower-paid, which is what the Minister for the Cabinet Office suggested, and that we can therefore expect the repeal of clause 1 by Ministers in due course, that prompts the question of why it is needed in the Bill in the first place. Why not place a more generous cap, perhaps along the lines of the earlier proposals, in the Bill? Why do Ministers need a weapon that they have no intention of using?

My father could not tell me very much about his work at GCHQ, but he once shared with me the news that he had successfully concluded quite tough negotiations about terms and conditions with the GCHQ trade unions on behalf of GCHQ management. They bought him a drink afterwards and he, I hope, retained the respect and loyalty of his colleagues. I am not sure whether PCS will be buying Ministers drinks after all this is over, but as a Government we should, at the very least, aim to retain the loyalty and respect of our civil servants. In Cheltenham, our national security might depend on it.

Those GCHQ trade unions were subsequently banned by a less enlightened Government than this one—something that was mercifully reversed some years later. I am confident that such union bashing lies firmly in the past and that this Government are committed to policies that are transparently fair. I hope that Ministers will, on reflection, agree that this Bill in its current form does not pass that test. They will have guessed by now that I plan to vote against it tonight.

20:42

[Lindsay Roy (Glenrothes) (Lab)]

Thank you, Madam Deputy Speaker, for calling me to make a short contribution to this vital debate on civil service superannuation. My comments will be brief and they are intended as constructive reinforcement rather than unnecessary duplication, but it will be a test for Members to see whether they can distinguish the difference.

Let me say at the outset that few in the civil service in my community—and there are many of them—would deny that the civil service pension scheme needs reform. Given that position, there is all the more reason why the reform should focus on renegotiation rather than, as is patently obvious here, on a Government planning to proceed unilaterally with a devastating agenda. I appreciated the Minister’s comments about the virtues and values of the civil service, but the contents of the Bill do not match that unqualified support. Significantly, the Bill tells us much about the nature and culture of this Government who, at the same time as focusing on negotiation, are using a blunt stick to bulldoze through change. They are taking measures forward in legislation that, if enacted, would have a damaging effect on a cohort of modestly paid people who give outstanding service to our community. Indeed, I dispute the fact that they are not profit-making. They make profit, although not in financial terms, through the dividends and benefits that they give to our community, which are much appreciated.

Surely in the aftermath of the judicial review, the opportunity should have been taken to engage in a steep learning curve jointly through further negotiation. A bullish, insensitive and punitive approach destroys trust between Government and a loyal and dependable civil service work force who believe that they are being treated shabbily, to say the least. They believe that they are being marginalised and that they are bystanders in the whole process. It ill behoves a Government who claimed that they would be champions of fairness to act in such a draconian way, trying to push through an unacceptable change without proper scrutiny. The vast majority of civil servants are modestly paid, yet they play vital roles in our society, as we have heard. They keep our borders safe, support our armed services and help the unemployed.

In essence, the Bill does not strike a fair balance between the interests of taxpayers and the legitimate expectations of civil servants, many of whose livelihoods are being threatened. Governments do have to make hard decisions, but they must underpin those with the values of justice, fairness and respect. Those values seem sadly lacking in the approach that has been taken—or at least that is the perception, as the lowest paid appear to be being treated in a reckless and cavalier manner. Let us make no mistake: this Bill is potentially part of a slash-and-burn approach, a highly insensitive attack on modestly paid public servants who, in an economic downturn, are facing real challenges economically.

So where do I see us going? My focus would be on renegotiations that will succeed and make the Bill redundant. So I urge the Cabinet Office Minister to reaffirm his commitment to go that extra mile—to adopt the principles of the February scheme as an initial basis for discussion; to review his definition of reasonableness, particularly in protecting the lowest-paid; and to balance the needs of the taxpayer and the legitimate expectations of civil servants.

The civil servants of this country deserve to be treated with dignity—with fairness, justice and respect. The citizens of this country expect nothing less, and I hope that common sense will prevail in resolving this dispute, and that the Minister will be persuaded to reconsider his strategy and tactical approach in addressing this dispute, and withdraw the Bill.

20:46

[Mr David Ward (Bradford East) (LD)]

We have heard many speeches about unfairness and the lack of comparability between the schemes in the public and the private sectors, yet those speeches were unnecessary because, as far as I am aware, absolutely no one—not even the hon. Marxist Member for Hayes and Harlington (John McDonnell)—disagrees that we need more comparability and that the scheme that we are discussing tonight is over-generous and unaffordable.

Quite a few speakers have prefaced their speeches with glowing compliments to members of the civil service but have shown little sensitivity to the position that they would find themselves in if the Bill were passed. There may be a very good argument for changing the terms and conditions, but many members of the unions will have made life decisions based on their existing contracts, and they would be facing pretty severe circumstances, which they could not have planned for in many cases.

I was a trade unionist for 30-odd years and it was a general principle to consult before changing terms and conditions of service; that is a basic rule in industrial relations. It was not good practice to change terms and conditions while consultation was taking place.

The whole of the Government’s strategy is built on a plan to rebalance the economy, and I support that strategy. The rebalancing includes a real determination to increase the nation’s economic capability by increasing the scale of private sector employment to soak up the increased unemployment that will inevitably follow from the reductions in public spending required as part of the plan to reduce the national deficit. As a matter of principle, is it right to add to the sense of uncertainty, and no doubt in many cases the fear of redundancy, currently felt by many public sector workers by seeking seriously and unilaterally to reduce their entitlements to redundancy payments? This is not an emergency measure—unless, of course, it is intended for that purpose.

I say to my friends on the coalition Benches that I believe we are actually entering into a pact, not with each other but with the British public, and that pact is one in which judgment on the coalition is still deferred. The pact has to do with the strategy that I just outlined for rebalancing the economy. The Chancellor said many months ago that the Budget would be “tough but fair”. The public know that it will be tough, but they are watching closely to see just how fair things will be.

Since the judicial review, all the unions have indicated a willingness to engage in further negotiations. That offer should be accepted with good will before we are asked to deliberate. What on earth are we doing getting involved in the nitty-gritty of discussions, consultations and deliberations on terms and conditions of service? That is not our role.

The Bill is important, not just because of the savings to the public purse, which we recognise are necessary, but because of the message that we are sending to those who work in the public sector, and to their representatives. People are committing an act of faith in thinking that we are working in the best interests of the national economy to put things right, but they are watching how we do that.

The degree to which the private sector can rise to the challenge of job creation is uncertain. The degree to which the public sector may be asked to contribute to balancing the nation’s books is less uncertain. Efficiencies can and must be found to minimise the impact of budget reductions on front-line services, but no amount of natural wastage and vacancy freezes will remove the need for some redundancies. What message are we sending out if we pass the Bill?

At this most difficult time in the public sector, just when we require the support and good will of the trade unions, we in the heart of Government seek to jab them with a stick—to show them what? That we are tough? In the case of the PCS, possibly it is to teach it a lesson for daring to take us to court. There seems to be resentment against the PCS for stopping Parliament doing something unlawful.

It is the responsibility of all of us who support the public sector to root out and remove inefficient and ineffective public expenditure, because by doing so we defend the sector from those who are ideologically opposed to it. I cannot defend over-generous and unaffordable terms and conditions of service in the public sector, and I have told people who have written to me on the subject that I cannot possibly support them on keeping the current scheme, but I believe that it is wrong, especially at present, when public sector jobs are expected to be lost, to use this House as a means of conducting negotiations with the unions.

I chased my Labour opponent for 20 years and stood against him five times before I managed to get into this House, and one of the slogans that we ran with towards the end of that time was “He never voted against his Government in the interests of his constituents”. Well, I am not about to make that mistake this early in my time as an MP.

20:54

[Chris Williamson (Derby North) (Lab)]

This is a mean-spirited, parsimonious Bill that borders on abuse of parliamentary procedures. We heard very plausible, warm words from the Minister for the Cabinet Office; it was almost as though he was in some way sympathetic to the civil servants who will feel the full brunt of this mean-spirited Bill, if it gets through its parliamentary stages. But make no mistake—and I am sure that the civil servants who are following our debate closely will not do so—the Minister for the Cabinet Office has cloaked his iron fist in a velvet glove.

The contributions from Conservative Members left me cold. It is clear that the Conservatives have not changed one iota—they are still the same old nasty Tory party, attacking the most vulnerable and lowest paid people in this country, just as they did in the 1980s and 1990s. We heard some rather sympathetic contributions from Liberal Democrat Members. One or two even said that they will join Labour Members in the Division Lobby. Let us hope that all Liberal Democrat Members have the courage of their convictions and join us in helping to defeat this terrible piece of legislation.

The Finance Bill introduced by the Con-Dem coalition is likely to lead to a double-dip recession. It received Royal Assent on 27 July, and inevitably it will lead to an increase in unemployment. It is against that background that the Superannuation Bill has been introduced, at a time when people are looking for work and finding it difficult to obtain employment. However, the Minister for the Cabinet Office and Conservative Members want to throw people on the dole, leaving them in a vulnerable situation by undermining the terms and conditions that have been built up over many years.

We heard one Member—it may even have been more than one—claim that the measure was fair in some way. The hon. Member for West Suffolk (Matthew Hancock), who regrettably is not in the Chamber, said that the Con-Dem coalition was all about fairness and was progressive as well. The Conservatives ought to look up the meaning of “fairness” and “progressive” in the Oxford English Dictionary, because the legislation that they have introduced is the very antithesis of fairness and of progressive politics. The Deputy Prime Minister himself said in the general election campaign that he wanted to “hardwire fairness into…society”. The Bill, however, is yet another example of how hollow his words really are.

The Bill is the direct opposite of fairness, and it does not strike a fair balance between taxpayers’ interests and civil servants’ legitimate expectations. It provides inadequate protection for some of the country’s lowest paid public sector workers. I wonder whether it is the thin end of the wedge. Many people in the public sector enjoy better severance packages than what is proposed in the Bill—in the national health service, in education, and in local government, the ceiling is two years—but time will tell whether they are next on the Con-Dem Government’s coalition hit list.

The Minister for the Cabinet Office told the House that he would introduce the Bill:

“I will bring legislation to the House as soon as parliamentary time allows in a Bill to limit the costs of future compensation payments for both compulsory and voluntary civil service exits.”

He went on to say that

“I hope that the Government’s invitation to the Council of Civil Service Unions will be received in the spirit it is offered and that they will engage speedily and constructively with a view to reaching an agreed, fair and sustainable long-term civil service compensation scheme.”—[Official Report, 6 July 2010; Vol. 513, c. 3WS.]

What a way to conduct negotiations—introducing legislation in the House, leaving the Parliamentary Secretary, Cabinet Office, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd), to wield the sword of Damocles over the heads of the civil service unions and people working in the civil service. It simply is not the right way to conduct negotiations.

The Minister for the Cabinet Office has said that he is concerned about low-paid workers, and he repeated that today. Where, however, in the Bill is there a proposal to help those workers? It is non-existent. If he was genuinely concerned about assisting low-paid workers, he would include a provision to deal with the very point to which he referred in July, and again tonight. Once again, words from the Ministers of the Con-Dem coalition are meaningless and utterly hollow.

The Con-Dem coalition seems to be abusing the negotiating protocols by manipulating parliamentary procedures to get its own way, and that will not do. That is not the way to conduct negotiations. It is a sad day for democracy in this country when we see such a Bill before us. The Minister acknowledged that it was an extremely blunt instrument. Then why bother enacting it? Why not take a more sophisticated approach in the 21st century to industrial relations?

To conclude, in the short time that I have, what I find so objectionable about the process is the attempt by the Con-Dem coalition to get the Bill defined as a money Bill to prevent proper scrutiny in the other place. My hon. Friends the Members for Kilmarnock and Loudoun (Cathy Jamieson), for Hayes and Harlington (John McDonnell) and for Birmingham, Erdington (Jack Dromey) have all made that point. The gerrymandering tendencies of the Con-Dem coalition that were so blatantly exposed in the Parliamentary Voting System and Constituencies Bill are permeating other areas of policy making.

The Bill has been drawn up without consulting the work force. The Minister admitted that. Although he tried to wriggle and say, “Of course I’ve had discussions but, you know, the previous Government had negotiations,” he was clearly nailed when that was put to him. There have been no negotiations. The Bill has not been subject to sufficient pre-legislative scrutiny, but that is not particularly surprising, given the experience of the past few months.

This is a bad Bill, which will lead to a bad law. That is why I will vote against it tonight and support the reasoned amendment moved by my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell). I call on all Liberal Democrats to have the courage of their convictions and join Labour Members in the Lobby this evening.

21:02

[Jeremy Lefroy (Stafford) (Con)]

I shall be brief, as I have been instructed and as I wish to be. The Bill aims to do something that is necessary—to reform the civil service compensation scheme. I support the aim. It should have been done many years ago. The scheme is not affordable in its current format. But I have a problem with what I have heard in the debate about the Bill being some kind of negotiating tactic. We have been elected to the House as legislators, not as negotiators. It is for Government to negotiate and for Parliament to legislate. I would value the comments of colleagues on that.

The previous Government put a great deal of work into reforming the compensation scheme, which I acknowledge, but it would have been better had they started the process a lot earlier. The work that they put together with the unions was eventually frustrated. The history is known to us all, and I will not repeat it.

I support the statement made by my right hon. Friend the Minister for the Cabinet Office on 6 July—a date that I cannot forget as it was the date of my silver wedding anniversary—that a settlement was required which

“will need to be fair, and in particular to provide a higher level of protection for lower-paid workers.”—[Official Report, 6 July 2010; Vol. 513, c. 4WS.]

In saying that, the Minister was echoing the comments of the right hon. Member for Dulwich and West Norwood (Tessa Jowell), when she said last year that the changes proposed at the time were aimed at

“protecting the lowest paid civil servants”.

It is clear that there is agreement across parties that lower paid civil servants should receive protection. That is only right. I ask the Minister to consider how he can best reflect that through the Bill which we, as legislators, have before us. As it stands, civil servants on all salaries are treated in the same way, with no particular consideration being given to those on the lowest pay. I know that he will have given careful thought to how the sentiments of his words on 6 July can best be reflected. They are the same sentiments that informed the Chancellor’s action in the June Budget, when he protected the lowest paid workers from the general pay freeze, as was mentioned earlier.

I, like many colleagues from all parts of the House, want to underline the importance that I place on the work of those concerned. When we speak about people being made redundant in the public sector, we certainly do not want to send out the message that, somehow, it is their fault. If someone is in a job that is no longer necessary or even affordable, we should look at who created that job and why. Governments of all colours have been guilty of being far too quick to take on staff for a new scheme without thinking about the long-term future. People are not playthings to be shuffled around on a whim. That is not to say that I oppose flexibility; I welcome it. But flexibility cuts both ways.

My second point concerns civil servants who have been in the public service for many years. A constituent of mine, working for the Ministry of Defence, pointed out that under the Bill he will, with a reasonable length of service, be entitled to the same payout as colleagues who have worked two or three times as long. He had no self-interest in raising that point; he simply wanted to speak up for his colleagues. I am a great respecter of length of service. Dedication and loyalty, whether in the public service, a private company or, indeed, a relationship is almost always something that we should celebrate. I therefore ask the Minister to look at how that can best be reflected in the Bill.

I shall support the Bill, because I know from what the Minister said today that he understands the points that I have made, but I urge all who are involved in negotiating the new settlement to arrive as soon as possible at a sustainable, practical and affordable long-term scheme.

21:06

[Caroline Lucas (Brighton, Pavilion) (Green)]

I too shall be brief, because I know that time is short, and one way in which I can be brief is by associating myself with the eloquent remarks of the hon. Member for Hayes and Harlington (John McDonnell), who is no longer in his place.

I am glad to have the opportunity to speak, as more constituents have written to me to express concern about changes to the civil service compensation scheme than have written to me about any other issue since I was elected in May, so I am very keen to ensure that they are properly represented here today. There is a palpable sense of anger and disillusionment among public servants, and a real feeling that they are being made to pay for an economic crisis that was not of their making.

My constituency in Brighton is home to a large number of civil servants. Under their current compensation scheme, they have accrued rights that will simply be scrapped—torn up and thrown away—by the Government’s proposals, despite the court ruling that a failure to recognise accrued rights is unlawful, and that any amendments to the civil service compensation scheme must be made on the basis of agreement by all the relevant unions.

Morale in the civil service is at an all-time low. One Brighton Pavilion resident who came to see me in my constituency a few weeks ago put it like this:

“Many civil servants will, like me, have planned their finances on the basis that their jobs were reasonably secure and that if they did become surplus to requirements they could rely on a particular level of compensation. I have not, for example, taken out any insurance against not being able to continue to pay my mortgage through loss of employment. The government’s plans for deficit reduction mean that civil service job security is now very questionable, whilst the Bill puts paid to the second part of my planning assumption. I feel unsettled and vulnerable at this unilateral change in what I had thought was the deal with my employer.”

From his words we get a clear sense of a bargain being broken, of a contract being unilaterally torn up and of people being treated as if they were expendable, which is particularly hurtful to many civil servants who have given many years of loyal service. His words also highlight the anxiety and uncertainty that permeates the civil service, particularly those who face a future in which they might not be able to work again.

As many have said in today’s debate, the lowest paid will suffer most, and there are many of them. The Minister for the Cabinet Office himself acknowledged that

“large numbers of civil servants are not very well paid—half of them earn £21,000 a year or less”.—[Official Report, 14 July 2010; Vol. 513, c. 932.]

Yet the scheme before us offers them no protection, and that is the key problem. Its proposals are fundamentally unfair and unjustifiable.

I should like to discuss the context of these changes, because the public sector already faces unprecedented uncertainty in the form of cuts and redundancies under the coalition’s policy of deepening and accelerating the previous Government’s cuts programme. Surely the very least that the public sector can expect is to be given a proper voice in negotiations and the chance to agree a fair settlement.

As with so many of the swingeing cuts on the table, there is a perception that the planned changes to the civil service compensation scheme are not just about saving money; they are also seen by many as an attack designed to weaken the public sector—the same public sector that, for now at any rate, is the backbone of our education system and health service. It also includes civil servants who keep up and running services such as Brighton county court family centre, the Brighton and Hove learning partnership and the city’s benefits service.

I end by pondering the irony of the fact that so many of the civil servants who will be adversely affected by the planned changes to the compensation scheme and to jobs, and by the service cuts, actually work for Her Majesty’s Revenue and Customs. Surely it would be much fairer to help reduce the national deficit by keeping those HMRC workers in their jobs and enabling them to collect and crack down on the £100 billion a year in unpaid and dodged taxes—tax evasion and tax avoidance. That would save public sector jobs and protect working conditions in the process.

In the meantime, it is clear tonight that many of us are not prepared to stand by and see the vast majority of the civil service pay disproportionately for the economic crisis. That is why I shall vote against the Bill.

21:11

[John Hemming (Birmingham, Yardley) (LD)]

I am 50 years old and have employed people for about half my life. My company was quite lucky relatively recently; we consulted with staff and were able to agree a deal under which there were no redundancies. However, I had to make redundancies in the early 2000s, and it is not a nice thing to go through, although obviously it is a lot worse to be made redundant.

We need to be aware that at the end of this process some people will lose their jobs. The challenge in politics is the national cake, and to some extent the political process can affect how that is divided. Our difficulty now is that we have to get a time machine and borrow from our children some slices that will be baked in future so that we can put them towards the national cake today. The real challenge is how we get, over a period of time, to the stage at which the amount of cake baked every year is the amount consumed every year.

How do we do that in a just manner? The Opposition have argued that our attempt unilaterally to challenge the contract with the civil service is unfair, whereas their attempt unilaterally to challenge the contract with the civil service was fair. They have argued with our proposals, but those are far more generous than the conditions for the staff of Members of Parliament, for instance. Those staff are all hard-working, but they are subject to the statutory redundancy scheme. Birmingham city council also operates the scheme. My wife works for British Waterways, a public body that also operates that scheme.

Basically, the Bill creates a negotiating position that means that the trade unions cannot veto any agreement. That is the normal situation for employers. Employers can present their staff with a new contract, and the staff have either to take it or leave it. That is what has happened in all the pay and grading reviews in local government across the country. Pretty well all local government employees have gone through the process of being presented with a new contract. What is happening now is that a new contract is being presented. We have said that we are aiming to protect the lower-paid. The most important thing to try to do is protect people against unnecessary redundancies. That is the critical thing.

If six years’ redundancy has to be paid to somebody, how can things be reorganised in a cost-effective manner? They cannot. Even paying three years’ redundancy creates a major problem because it costs more that year to make somebody redundant than to continue to employ them. That means that those not covered by the redundancy schemes are the ones to whom people go to find the savings. That does not seem fair.

[Chris Williamson]

The hon. Gentleman is arguing that we should indulge in a race to the bottom—it is about the lowest common denominator.

[John Hemming]

I do not think we should indulge in a race to the bottom. It needs to be recognised that this is the Government’s opening position. People who argue that we should propose the final solution here in Parliament are obviously no good at playing poker; one does not reveal one’s hand. We cannot expect the Minister to say, “We’ll settle for X.” The Government need to have a negotiating position, and the trade unions cannot be in a position whereby they can veto it—that would be absurd.

We need to think about our employees. I have always been concerned about the people whom I employ personally, and in the same way we should be concerned about those whom we employ collectively through UK plc. Options that may not cost the Government much money could be looked at to improve the situation. For example, constituents of mine who are civil servants have raised the issue of two civil servants living in the same household who are both under the threat of redundancy. I ask the Minister to consider whether it would be possible for one such civil servant to nominate the other, so that if one of them were made redundant the other would be protected against redundancy. Then at least the household would not lose both incomes, but only one. That would be an example of flexibility. It would not necessarily cost the Government any money, but it would protect people from the worst aspects of this process.

Similarly, in certain circumstances people might like to move towards a job share if the Government were willing to pay them a sum of money for that reorganisation, which might cost less than voluntary or compulsory redundancy. That would reduce the wages bill and the deficit without necessarily putting people in a very difficult personal position. We need to work with employees to try to minimise the effect on people.

[Mrs Mary Glindon (North Tyneside) (Lab)]

As a former PCS worker and someone who until April this year was earning £15,300—I worked in the Child Support Agency for 18 months—I find some of the things you are saying quite offensive. Every worker has a right to work—surely you do not make decisions about whether a husband or wife, or a partner in the household, has that right.

Furthermore, if the Bill is rejected tonight, proper consultation might be re-entered into. I took industrial action against our former Government. I voted for that action having been consulted by the union and following the procedure that the Government started with us in 2009. I e-mailed the then Minister and went through all that process. What you are saying is contradictory. You are saying that people should be consulted, but only after a decision has been made. Do you not think—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Address the Chair, and briefly, please.

[John Hemming]

I am suggesting that the Government could try to ensure that there are not two redundancies in the same household, whatever circumstances we are in. We all accept that redundancies are going to occur in the public sector, so why cannot we try to minimise the effect on households by ensuring that both partners need not be made redundant?

Similarly, there are opportunities whereby people can transfer to the private sector. Obviously the objective is to help people to find jobs in the private sector. A severance fee, equivalent to voluntary redundancy in some senses, paid when people find a job in the private sector could be a way of reducing costs to the public sector but doing so in a way that does not make public servants suffer. At the end of the day, we should be thinking about the effect on the public servants who work hard for this country. We need to recognise that and work in partnership with them.

There are all sorts of opportunities within my own company. I have had people take sabbaticals in the past. In certain circumstances the employer will say, “We can plan for that person to go away for a year and then come back.” It suits them to do that, it has reduced the cost to the public purse, and it is in the interests of the employee. Possibilities can be considered, in partnership with the work force, that improve the situation so that everybody wins.

As a consequence of the reduction in the national cake—gross domestic product or however one wishes to see it—we face a very difficult situation that has to be dealt with. The Labour party has proposed its own version of a unilateral contract change and we have a different version, but something needs to happen. I will support the Government tonight, because I agree with the exact proposals put forward in the Bill. We need a negotiating position so that the trade unions cannot veto any changes, and I have responded clearly to my constituents by saying that I do not think the trade unions should have a veto on contractual changes. The time has hit 20 minutes past, so I shall finish by saying that I shall support Second Reading.

21:20

[Katy Clark (North Ayrshire and Arran) (Lab)]

Thank you, Madam Deputy Speaker, for giving me the opportunity to make the last Back-Bench contribution to the debate. Some of the contributions that we have heard from the Government side of the House have been quite astonishing, and many of the civil servants who will be directly affected by what we are debating must have been amazed by some of the things that they have heard.

As always since the general election, coalition Members are trying to blame the economic policies of the previous Government for the economic crisis that the whole world has been in. I sometimes had different views from some of my Front-Bench colleagues about the economic strategies that I wanted the Labour Government to pursue, and in particular I would have liked them to intervene to regulate the banks earlier and deal with issues such as bankers’ bonuses and the financial sector. However, low-paid civil servants were not to blame for the economic downturn, nor indeed were the economic policies of the Labour Government.

We are here today debating not how to deal with the high pay of those in the banks, which have had huge public investment, or bankers’ bonuses or bank regulation, but issues associated with the estimated 600,000 public sector workers who will lose their jobs if the Government carry out the policy that they have outlined. Today we are talking about civil servants, but I believe that in a few weeks or months we will be back here talking about how the Government want to erode the terms and conditions of workers in other parts of the public sector as well. That is shameful, and it is particularly appalling that those on the lowest salaries in the public sector should have their terms and conditions eroded because of the difficult situation that we are in. It is also appalling economic policy, because in many parts of the country where civil servants and other public sector workers are going to lose their jobs, there are no other jobs available.

The Minister said that half of all civil servants affected by the scheme earned £21,000 or less, and the Government also seem to accept that the provisions in the Bill for those workers are not fair. They themselves say that they want to offer something better, although we have heard no detail today and have been asked simply to trust that the Minister will do what he can to get a better deal for those people.

We have to deal with the realities in the Bill as presented, and the reality is that the amount of money that many people get now if they are made compulsorily redundant or take voluntary redundancy in the public sector is not sufficient to take them through to the time when they can get another job. If the provisions in the Bill go through, they will lead to a lot of people living in poverty. People will lose their homes, as at least one Member described in outlining the circumstances of an individual civil servant, and they simply will not be able to cope. Those who will be in the most difficulties may well be those who would currently be entitled to three years’ compensation—older workers who have worked in the public sector for a very long time. In the world we live in, they will not be able to get another job. We all know the difficulties in which older workers find themselves when they seek alternative employment.

It may be that the current provisions are good for some individuals on the highest terms, conditions and pay, but if we compare jobs like for like, we will see that graduates who have worked hard for many years in the civil service probably would have received a better remuneration package had they worked in the private sector. At the same time, many of those on the lowest incomes, such as women cleaners and women who look after young children in nurseries, probably have a more attractive package in the public sector, because they earn more than the minimum wage, and have sick pay, pensions and protection provisions of the kind addressed in the Bill. Those are the people whom we should defend. We should not tell them that if they worked for the minimum wage for the worst private employer, they would have a worse deal than they have in the public sector. We should drive standards up, not use the current economic difficulties as an excuse to implement such policies. Some in the Conservative party who set the agenda wanted those policies irrespective of the economic conditions. I am therefore pleased to hear that some Liberal Democrat Members will take a stand on this matter. We are considering the Bill today only because many Conservative Members would impose such terms and conditions irrespective of the economic conditions.

The Bill will be fast-tracked through Parliament as a money Bill, which we should discuss, because it is just one of many measures that will erode the terms and conditions of some of the lowest paid in the public sector. In many of the communities that we represent, there will be devastation if the proposed cuts in public services happen. Facilities for which individuals and communities have fought for generations, including community centres and libraries, will close. There will be no alternative jobs for jobcentre workers who lose their jobs as a result of the Bill. I suspect that, if we do not pay for people to do jobs, it will cost the state a great deal more in benefits and other support that it must provide.

The Bill is wrong morally in that it effectively unilaterally changes contracts of employment, but it also bodes ill for the future. If that is how the Government intend to conduct industrial relations in the public sector, we have a very bumpy ride ahead. The comprehensive spending review is coming up, and civil servants know that many of their heads are on the block. They are distraught at the proposals. I hope that they go out after this debate and tell their representatives, particularly those on the Government Benches, how they feel about their policies. The Bill is not good for the public sector or the private sector, because it says that we need to take everybody down to the lowest standards and that it is okay to rip up contracts. People who have worked for an employer for 20 or 30 years may have done so on the understanding that they have a contractual entitlement to a particular package if they lose their job, but the Government believe that it is completely acceptable to come along, rip that up and say, “We’re going to give you a lot less.”

I hope the Government are defeated tonight. Even if they are not, they have a struggle ahead, and I hope that they are defeated when we debate the Bill again.

21:29

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

We have had a good and thorough debate, with some thoughtful and powerful contributions from Members on both sides of the House, including my hon. Friends the Members for Edinburgh East (Sheila Gilmore), for Glenrothes (Lindsay Roy), for Derby North (Chris Williamson) and for North Ayrshire and Arran (Katy Clark), as well as the hon. Member for Brighton, Pavilion (Caroline Lucas).

The difficulty that we face as we prepare to vote on this issue is that the words we have heard from the Dispatch Box are very different from those that are written in the Bill. On 14 July, the Minister for the Cabinet Office set out his approach to the reform of the civil service compensation scheme. He said:

“I want to engage with the unions quickly to develop a scheme that protects the lowest paid…we need to negotiate”.

When I pressed the Minister to take the previous Government’s reform package as the starting point for those negotiations, he accepted, as he did again at the Dispatch Box this afternoon, that had

“that scheme been in existence when the coalition Government came into office, a pressing case would have been made to leave it as it was and work on that basis.”—[Official Report, 14 July 2010; Vol. 513, c. 932.]

It was a good beginning, with an acknowledgement of the merits of the previous Government’s reform package, set out in February, and a clear undertaking to protect the lowest-paid.

Unfortunately, our hopes were dimmed when this draconian Bill was published just 24 hours later, with no prior consultation with staff or the trade unions. The Minister was open and transparent about the purpose of the Bill. He said that it is not the final word. Indeed, in a phrase echoed by my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), the Minister described the Bill as a “blunt instrument”. It contains a sunset clause and powers to repeal at any stage. In no sense is it a reformed scheme: it simply places a cap on the existing unreformed scheme. It means, typically, that a civil servant earning £21,000 a year who is made compulsorily redundant and who would get £63,000 under the existing scheme—and would have got £60,000 under the February 2010 scheme—will get just £21,000. Someone earning £18,000 who would have got £54,000 under the existing scheme or the February 2010 scheme, will get just £18,000.

The truth, which has been freely acknowledged by Ministers, is that the Bill is a negotiating device to ensure drastic cuts in the civil service compensation scheme. But as legislators we have to ask what will happen if those negotiations do not succeed. The Chair of the Public Administration Committee, in a thoughtful speech, warned about the dangers that might lie ahead in terms of legal challenge and delay. It is good to know that he and his Committee will keep a watchful eye on this legislation and other matters.

My hon. Friend the Member for Hayes and Harlington (John McDonnell), who chairs the PCS parliamentary group, has described this Bill as a landmine Bill, and he set out his definition of that. Whether that is true or not, there are real dangers if this Bill passes through Parliament while parallel negotiations go on outside that remain uncertain and, if unsuccessful, could create real resentment among those whom they affect.

There is no argument from my party about the need for reform. Indeed, we engaged in considerable detail in those reforms before the election. The focus of our reform was the vast majority of civil servants who do vital work on the front line of our public services. They include those who work in jobcentres trying to reconnect unemployed people with work; those who work in our prisons dealing with difficult and dangerous offenders and ensuring that our communities are safe places to live; and those who deal with tax credit claimants, ensuring that families have at least a decent minimum income on which to live. Most of those people, as we have heard from many hon. Members, work for modest rewards. Indeed, the Minister has said on several occasions that half of all civil servants earn £21,000 a year or less.

I genuinely want to give the right hon. Gentleman the benefit of the doubt—that is my starting point. I want it to be true when he keeps repeating the claim he makes in the Chamber and the media that he wants to protect the lowest-paid, but at some point those words have to turn into action, and he has to put flesh on the bones. My real concern this afternoon is that his comments have raised expectations above anything that his Government are likely or willing to deliver.

In particular, I urge the right hon. Gentleman and his ministerial colleague, the Parliamentary Secretary, Cabinet Office, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd), to look again at the proposal that the previous Government agreed with five of the six trade unions, and which even now could provide a realistic, practical starting point for negotiation with all six of the unions—namely, that any civil servant on a salary of less than £20,000 a year who is made redundant would be entitled not to 12 months’ or 15 months’ salary, but to three years’ salary. Labour Members will be tabling an amendment to that effect in Committee, and I encourage the Minister to indicate this evening that he and his colleagues will, when that moment comes, show that they mean what they say when they talk about protecting the low-paid and support that amendment. At the very least, that would be a clear indication, in their discussions and negotiations with the trade unions, that they are acting in good faith and mean it when they say that they want to protect the lowest-paid.

My hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann) was among a number of Members on both sides of the House who reminded us that this debate and these proposals come before us in the context of deficit reduction, so it is important to remind the House, as my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell) made clear, that our reform package would have saved £500 million over three years. The Government have pledged that, however tough life becomes as a result of the cuts that they introduce, fairness will be the watchword. How many times have we heard that from the Government Front-Bench team? But what is fair about the regressive provisions in the Bill that mean that maximum redundancy payments mirror exactly what an individual earns? If someone earns £100,000 a year, under the terms of the Bill their payment would be £100,000. If someone earns £50,000, the payment would be £50,000. And if someone earns £20,000, it would be £20,000, not the £60,000 promised in the reform package that we negotiated and set out in February.

What is fair about a set of negotiations carried out against the backdrop of a Bill that threatens severe cuts if the trade unions do not agree to a new scheme that dramatically reduces the provisions in the civil service compensation scheme? And what can be fair, as the hon. Member for Southport (Dr Pugh) asked pointedly, about unilaterally rewriting a contract with staff, either from a moral or even perhaps a legal standpoint?

[Mr Reid]

I agree with much of what the right hon. Gentleman is saying, but surely the Labour party believes in reforming the present system, so should it not be supporting the Bill on Second Reading, moving its amendment and then voting against it on Third Reading only if that amendment fails?

[Paul Goggins]

Absolutely not. Our starting point is, and the Government’s starting point should be, the February 2010 proposals agreed by the then Government with five of the six trade unions, not this miserable backstop provision in the Bill.

[Martin Horwood]

rose—

[Paul Goggins]

I will take one more intervention, but the Minister wants to wind up and we have to reflect the debate, which has been a good debate. However, I will happily give way.

[Martin Horwood]

Is the right hon. Gentleman seriously suggesting that the starting point for this process should be something that has already been declared illegal?

[Paul Goggins]

The reasons it was declared illegal relate to the standing of the original legislation—the Superannuation Act 1972—and there is nothing preventing the Minister for the Cabinet Office and his colleague the hon. Member for Ruislip, Northwood and Pinner from sitting down tomorrow with the six trade unions and taking our February 2010 proposals as the starting point for negotiations. I urge the right hon. Gentleman to do that—he is in his place now. I was just reminding the House that he accepted that had the proposals gone through before the election, there would have been a pressing case for leaving it well alone. We are where we are, but it is fair to suggest that that could be the starting point for negotiation.

I ask again: what is fair about sending a message to loyal, dedicated, hard-working staff that they would be better off if they decided to go voluntarily, rather than staying in the job that they are committed to and running the risk of being made redundant compulsorily, resulting in a 20% reduction in the payment that they would receive? My hon. Friend the Member for South Down (Ms Ritchie) asked what was fair about deep cuts in the conditions of staff who run the very services on which those with the least in our society depend, including jobcentre staff and those who deal with tax credit claims.

I shall turn now to what I regard as the misuse of a Bill in the pursuit of these draconian changes to the civil service compensation scheme. I particularly commend the pertinent comments made by my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson), who has considerable experience as a Minister in Scotland. Mr Speaker, you will be pleased to know that I shall not comment on whether or not this should be a money Bill. I am sure that you will take advice on that and make your decision when the Bill finishes its proceedings in this place. I am sure that you will not need advice from me; you will get it from others.

Having heard the promise of so many reforms and changes, it was bizarre, so early in this Parliament, to hear Ministers openly saying that they hoped they would never need to use the Bill. How bizarre is that, so early in the Parliament? Government Bills should be about putting policy into legislation, not about providing negotiators with a backstop bargaining chip, especially when so much about the Bill remains unclear and uncertain. The 12-month and 15-month caps are entirely arbitrary; they have been plucked out of the air. No rational explanation has been given, and no evidence brought forward, to explain why those time periods have been chosen. The equality impact assessment does not even acknowledge the potential impact on older and longer-serving civil servants, who stand to lose huge sums of money and who might very well be those who find it the most difficult to find alternative employment.

Ministers cannot tell the House how much money would be saved as a result of the Bill, because they do not yet know how many civil servants will be made redundant as a result of their cuts. Perhaps the Minister could say a little more in his winding-up speech about the negotiations. I recognise the constraints involved, and I do not expect him to carry out negotiations across the Dispatch Box this evening, but even an indication about the mood of the negotiations would assist hon. Members. Are Ministers close to agreement? Does the Minister believe that the Bill will actually be needed? When are the next meetings scheduled to take place? Does he expect to be able to come back after the conference recess and tell us on Report that substantial progress has been made, and that we might not need the Bill after all? If he is not going to table amendments when the Bill goes into Committee—the Minister for the Cabinet Office indicated that it was not his intention to do so—will he heed the advice of the hon. Member for Vale of Glamorgan (Alun Cairns) that he should go as far as he can to indicate the kind of measures that he and his colleagues are considering?

My hon. Friend the Member for Hayes and Harlington is right: it is unacceptable to expect hon. Members to vote for a Bill that is so far-reaching in its impact without knowing the detail of the provisions that sit beside it. If the Minister cannot go a little further in providing that detail, I believe that any sensible Member will be forced to conclude that words about fairness are just that, and that the only way to vote tonight is in favour of the reasoned amendment and against the Bill.

21:44

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

This has been a serious debate. It has been very sober in tone, and that is entirely right because we all know that there is tremendous anxiety out there about job losses and potential changes to the compensation scheme. Many Members have received representations on this matter, and many came to the House today to express strong constituency interests. They included my hon. Friends the Members for Cheltenham (Martin Horwood), for Stafford (Jeremy Lefroy) and for Vale of Glamorgan (Alun Cairns), and they represented those interests very strongly.

What was striking as I listened to the debate was the consensus about the need for reform. That was not seriously questioned. The issue before us, then, is how, in seeking to reform the compensation scheme, we strike the right balance in treating fairly civil servants who lose their jobs or give them up voluntarily. As was stressed consistently throughout the debate, particularly by my hon. Friend the Member for Gloucester (Richard Graham), the issue is especially important to the large number of civil servants who are not well paid. How do we strike the right balance between being fair to them and discharging our responsibility to the taxpayer at a time when there is tremendous pressure on the Government to get public spending under control, as my hon. Friend the Member for South Staffordshire (Gavin Williamson) emphasised? My hon. Friend the Member for West Suffolk (Matthew Hancock) was entirely right to introduce the concept of fairness to future generations when talking about the need to get the deficit under control and tackle it with vigour.

As for the case for change, my right hon. Friend the Minister for the Cabinet Office made the Government’s starting position very clear. This legislation is not an attack on the civil service. Many Members have placed on the record their appreciation of the crucial work undertaken by civil and public servants every day and across all Government Departments, and no one recognises that more than a young, new Minister with no experience of Government who relies on civil servants and the dedication and support that they give.

We simply believe that the current arrangements for compensating civil servants are unaffordable and unsustainable. My hon. Friends the Members for West Worcestershire (Harriett Baldwin) and for Vale of Glamorgan were right to express the surprise that their constituents would feel on understanding that in this day and age public servants are eligible to receive payment of up to three times their annual salary or, for older workers, enhancements to pensions and lump sum payments costing more than five times their salaries. That seems disconnected from constituents’ experience of the real world, disconnected from statutory terms—a point well made by the hon. Member for Birmingham, Yardley (John Hemming)—and clearly out of kilter with terms in the private sector, as my hon. Friend the Member for Devizes (Claire Perry) argued.

The view of the coalition Government is that the status quo is unacceptable. As we made clear in the coalition programme, we want to bring this scheme more closely into line with that of the private sector. Critically, that view was shared by the previous Government, who tried to reform the scheme honestly, but ultimately without success. That view was apparently shared by five of the six unions involved in the negotiations, as they agreed to the package on offer. The case for change seems to have been accepted by the majority of speakers.

On affordability grounds alone, a responsible Government dealt the hand that we have been dealt on the public finances would have had to take action. As my hon. Friend the Member for West Worcestershire pointed out, there is also a risk of the current situation distorting decisions and creating unfairness. We do not want to take decisions on people’s future based on how easy or cheap it is to make them redundant. The effect of the current scheme is to make it particularly expensive to make the highest-paid public servants redundant. We do not want uncertainty to drag on, as it is bad for everyone and will breed only more insecurity. We want the uncertainty to end decisively.

As I said, I heard no serious arguments against reform. The debate on the Opposition side, honest as it was, was mostly about process and how the Government are going about this business. Strong reservations were made about the possible certification of the legislation as a money Bill, but that is clearly a matter and a judgment for you, Mr Speaker, at the end of the Bill’s passage.

My hon. Friend the Member for Harwich and North Essex (Mr Jenkin), the Chairman of the Public Administration Committee, raised concerns about the risk of a legal challenge to the Government’s approach and wanted comfort on the robustness of our legal advice. He will be aware that trade union members and some hon. Members have placed on record the risk of a legal challenge, so he will not expect me to go into the details of the legal advice. I can confirm, however, that it is robust.

The main argument from Labour Members was, “Why not go back to the deal that was almost struck? Why not amend the legislation so as to impose the terms agreed with the five unions earlier this year?” The truth is that the previously agreed terms were struck down by the courts and were not accepted by the Council of Civil Service Unions. Although those terms had much to recommend them, we would prefer not to see some aspects in the new scheme—for example, compulsory terms more generous than those on voluntary departure. Rather than embedding the scheme in primary legislation, we have sought to limit the costs of the current scheme while discussing the contents of a new scheme.

While I understand the concerns expressed by many Members about process, I believe that there is a danger of missing the central point. Reform is necessary—the status quo is not an option—and we want to achieve reform through negotiation. The Minister for the Cabinet Office has informed the House of his meetings with the Council of Civil Service Unions on 13 July, and of an imminent meeting. There are ongoing discussions almost daily, which he has described as genuine and sustained. We have sent a clear signal of flexibility on terms for voluntary redundancy, and have expressed a clear determination—this will be important to the House, given the concerns that have been expressed—to agree on terms that are fair to the lower paid. The model that we are exploring seeks to taper the protection given to the very lowest paid, but the limits and thresholds of such protection are clearly a matter for detailed negotiation, and should not be the subject of speculation in the House.

Why is the Bill necessary? It is necessary until we can reach an agreement with all the unions, because the current position enables them to veto any meaningful reform—a point grasped by the hon. Member for Birmingham, Yardley and many others—and they have demonstrated a willingness to use that power. Until we have secured agreement, we would be failing in our duty to the taxpayer if we retained the status quo and did not address the excesses.

The Bill does not itself introduce a new scheme, but merely limits the amounts that can be paid out under the terms of the current scheme. We have made it clear that those limited amounts represent the absolute minimum that the Government are prepared to offer staff. My hon. Friend the Member for Harwich and North Essex described that as an austere statutory base, but what was not mentioned was that the Bill makes it possible to adjust the amounts in one direction only, namely upwards. The Government seek to provide an example for other employees on good practice in relation to staff issues, and therefore have no desire to limit payments to the statutory minimum. The Bill caps the amounts to be received by staff departing on voluntary terms to payments calculated under the current terms, but limited to a maximum of 15 months’ pay. For those who are formally dismissed, the limit will be 12 months’ pay.

The Bill contains a sunset clause, and its effect can be brought to an early end if we are able to agree on a new scheme. We genuinely hope that that will happen. My hon. Friend the Member for Harwich and North Essex asked about the need for a sunrise clause as well as the sunset clause. I think it is impossible for us to be sure of every circumstance that could lead to a need to revive the Bill. The Government are therefore keen to maximise their negotiating flexibility. If we are unable to agree on a new scheme with the unions, the Minister for the Cabinet Office will have to renew the caps every six months by affirmative resolution.

The tone of the debate was extremely serious and consensual when it came to the need for reform, but I took exception to the suggestion by some Labour Members that the Government had no sensitivity in relation to the human consequences that might be forced on them. Labour Members chortle, but that suggestion is offensive to any Member on this side of the House. I do not think that anyone goes into politics to make other people redundant, except their direct political opponents. It is deeply offensive to ascribe the wrong motives to the Government. The coalition’s priority is to reach a long-term agreement on a new scheme with all the unions involved: an agreement that is fair to the civil service and fair to the taxpayer. The Bill is needed in case we are unable to reach such an agreement. It introduces caps so that we can limit the costs of the current scheme while we discuss the content of the new scheme.

[John McDonnell]

I do not intend to embark on any party-political knockabout during the last few minutes of the debate. A key issue raised was process, which is important because it can demonstrate fairness. One of the failures of the House in the past has been the way in which it has rushed through legislation. A lack of scrutiny, both here and in the other Chamber, undermines the potential for good legislation.

The Speaker will determine whether this is a money Bill, but the Government have designated it thus, and I should be grateful if the Minister would clarify the reason for that. Given the definition in “Erskine May” of a money Bill, I see no reason why a Superannuation Bill can be so designated. I think it would be useful to rehearse the arguments in front of the Speaker, so that a wise decision can be made.

[Mr Hurd]

I understand the argument. It is based on the fact that this is about money and public expenditure, but as the hon. Gentleman knows the main point is that my view is irrelevant because it is the judgment of the Speaker that counts and the Speaker will make his judgment before the Bill completes its passage through Parliament. It is ultimately a matter for the Speaker to decide.

[Matthew Hancock]

Whatever the result of the vote on the amendment, the Minister is right to say that the tone of the debate all day has been in favour of reform of some kind, so is he as surprised as I am that we have just heard from the Opposition Front Bench that they will vote against the whole Bill, which means they will be voting in favour of £500,000 payouts to some at a time of such economic difficulty?

[Mr Hurd]

My hon. Friend makes an important point about the lack of coherence in the Opposition’s position. They have set out clearly, and confirmed today, that they recognise the need for reform—and we have paid full tribute to the very honest effort they made when in government to reach an agreement. They recognise the reality of the situation, which is that effectively one union is holding the situation and the process hostage, and in all responsibility to the taxpayer we cannot let that continue. We have to break the deadlock, and that is the purpose of this Bill. It is needed in case we are unable to reach an agreement with the unions. It introduces caps so that we can limit the costs of the current scheme and we can go about the very serious business of reducing public expenditure while we discuss the contents of the new scheme. The critical point is that the Government’s aim is to reach an agreement that is sustainable through negotiation. Those negotiations are ongoing and vigorous, and they are being held in good faith.

[Mr Jenkin]

Will my hon. Friend take this opportunity to correct the Opposition on one other point, which is that it would not in fact be possible to return to the February settlement because that has, effectively, been nullified by the courts? Even if all the unions now agreed to the February settlement, that settlement has been kyboshed by the courts, and even if they had agreed to it at the time, had there been a challenge in the courts and it had been successful—and it would have been—that would have nullified the settlement. This Bill is therefore indispensible.

[Mr Hurd]

My hon. Friend makes an extremely good point and he states a fact that I have placed on the record before: that the previously agreed terms were struck down by the courts and were not accepted by the Council of Civil Service Unions. The deal failed, and there is no guarantee that it would succeed in future.

[Paul Goggins]

It is important to be clear about this. The ruling was not about the content of what was proposed by the previous Government and agreed by five of the unions; it was about the fact that the legislation did not allow the Government to compel the solution. It is important that Members are clear about that before they vote tonight.

[Mr Hurd]

And our intention is to negotiate an agreement. This Bill is not the endgame. It is an interim measure which we hope to repeal as soon as possible, and it is on that basis that I commend the Bill to the House.

Question put, That the amendment be made.

21:59

Division 54

Ayes: 240

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Labour: 226
Democratic Unionist Party: 6
Social Democratic & Labour Party: 3
Scottish National Party: 3
Plaid Cymru: 2
Independent: 1
Green Party: 1

Noes: 329

---

Conservative: 282
Liberal Democrat: 47

Question put forthwith (Standing Order No. 62(2)), That the Bill be now read a Second time.

22:14

Division 55

Ayes: 326

---

Conservative: 284
Liberal Democrat: 42

Noes: 244

---

Labour: 225
Democratic Unionist Party: 6
Liberal Democrat: 4
Scottish National Party: 4
Social Democratic & Labour Party: 3
Plaid Cymru: 2
Independent: 1
Green Party: 1

Bill read a Second time.

Superannuation Bill (Programme)

Tuesday 7th September 2010 Commons Chamber

Motion made, and Question put forthwith, (Standing Order No. 83A(7)),

That the following provisions shall apply to the Superannuation Bill:

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 16 September 2010.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of those proceedings.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion four hours after the commencement of proceedings on consideration.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading. —(Jeremy Wright.)

22:28

Division 56

Ayes: 307

---

Conservative: 277
Liberal Democrat: 40

Noes: 244

---

Labour: 220
Liberal Democrat: 7
Democratic Unionist Party: 6
Scottish National Party: 4
Social Democratic & Labour Party: 3
Conservative: 2
Plaid Cymru: 2
Independent: 1
Green Party: 1

Crayford Station (Access)

Tuesday 7th September 2010 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Jeremy Wright.)

22:43

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

I welcome the opportunity to raise my concerns and those of my constituents about the decision taken by Southeastern not to proceed with plans to create step-free access at Crayford station in my constituency.

Southeastern was presented with a simple, cost-effective scheme that could have been implemented quickly and would have made a real difference to commuters and others. Its decision not to proceed, motivated purely by money and fare revenue, will cause continued inconvenience to rail travellers with mobility problems, particularly the elderly and families with pushchairs. I am really disappointed that Southeastern is letting down so many vulnerable customers.

By way of background, I shall explain that Crayford station is one of four stations located in my constituency, the others being Bexleyheath, Barnehurst and Slade Green. There are eight others located around the borough that Bexley residents also use. Each of those stations is operated by Southeastern as part of the integrated Kent franchise.

Crayford is a zone 6 station used for about 1.3 million journeys every year, serving London Charing Cross and London Cannon Street. Although 40,000 fewer people used Crayford station last year due to the recession, many more people—some 300,000—are using the station than did so in 2003-04. That is partly due to new developments and investment in Crayford town, which has been transformed over the past 20 years. With new housing developments such as Braeburn Park and regeneration projects such as the retail park and the greyhound stadium, more people are living and working in the town. There are further developments under way, such as those at the back of Crayford town hall, the plans for the former Samas Roneo factory site in Maiden lane, and the new Crayford academy, which is currently under construction in Iron Mill lane. That will increase the number of people who live in the area and who have the opportunity to commute or travel from Crayford station, and it is great news for the town, which is a historic and distinct town that is growing and improving. As part of the London borough of Bexley, it is a desirable place to live and work.

To be fair, the station has been partially upgraded, but with a relatively small further improvement, it could transform the opportunities for, and the ability of, those with mobility difficulties to use public transport. The Minister will know that following a successful campaign to have step-free access installed at Barnehurst station, I was contacted by many of my constituents, particularly Mrs Barbara Gray, as well as by local councillors Melvin Seymour, Howard Marriner and Eileen Pallen, who like me are concerned about the lack of step-free access at Crayford station.

The London-bound platform at Crayford is step free, but the Kent-bound platform 2 is accessible only via a footbridge back to platform 1 over the railway line. With Crayford growing and attracting new firms and residents, the existing provisions are not satisfactory. At peak times, there is a vast queue to get over the bridge, which causes further problems, and means that those with mobility problems must wait still longer.

Crayford line commuters are therefore undoubtedly at a disadvantage when it comes to step-free access. Of the stations in and around Bexley that trains on that line call at, Crayford is not fully step free, nor is Bexley, which is the next station up, and nor is Albany Park. The first step-free station towards London is Sidcup. On the Bexleyheath line, however, Barnehurst, Bexleyheath and Welling stations are all step free, and only Falconwood is not. There is therefore a great disadvantage for vulnerable travellers on the Crayford line, many of whom are my constituents, although some are resident in the constituency of my hon. Friend the Member for Dartford (Gareth Johnson), who is indeed my long-time and good friend, and who I am pleased to see in the Chamber this evening.

[Gareth Johnson (Dartford) (Con)]

My hon. Friend feels particularly strongly about this issue and is a passionate supporter of transport links into Crayford, and I congratulate him on securing this debate. Does he agree that the priority for Southeastern must be to ensure that passengers are able properly to use the facilities at Crayford station, and that in particular, we need Southeastern to show respect to those passengers who have mobility difficulties?

[Mr Evennett]

My hon. Friend is absolutely right, and he has taken the opportunity tonight to make that point, as I have, and I hope the Minister will be sympathetic. Southeastern must address those issues for the benefit of those who are less mobile, so that they can use public transport, which we want.

Government funding is, I understand, available for step-free access. The Department for Transport website states:

“The Access for All Programme is part of the Railways for All Strategy, launched in 2006 to address the issues faced by disabled passengers using railway stations in Great Britain. Central to the Strategy is the ring-fencing of”

a certain amount of money

“until 2015, for provision of an obstacle free, accessible route to and between platforms at priority stations.”

As you would expect me to say, Mr Speaker, I think that Crayford is a priority station. I also understand that Access for All small schemes funding is available for smaller work programmes such as the one that I propose for Crayford. That is worth up to £250,000 a project, and is a contribution of 50% towards the total cost of the works.

[Mark Reckless (Rochester and Strood) (Con)]

On funding, our constituents who use the Southeastern trains service have particularly high expectations, and investment in the service is quite justified, because for reasons that I do not fully understand, Southeastern was singled out by the previous Government for RPI plus three rather than RPI plus one increases.

[Mr Evennett]

My hon. Friend makes a good point, on which I will elaborate later in my speech.

I contacted Southeastern about the issue of step-free access at Crayford in May 2009. I was told that Crayford was not included in its works programme for step-free access. Instead, I was offered a telephone number for constituents to call if they wanted help at the station or to get a taxi from the nearest fully accessible station. Helping commuters off the train with a ramp is obviously a good thing, but I do not know whether someone would actually carry a wheelchair over the footbridge to get it to the other side. That is a considerable number of steps, and certainly I have not had any experience of my constituents being offered that service. This means that rail users with mobility problems travelling in Kent would have to go to Dartford station to catch or get off a train. That is not always convenient as it is two miles away from Crayford station.

I was also concerned that I had not seen advertised the telephone number that Southeastern gave me for people with mobility problems to use. So I vigorously pursued the matter, met Mark Gibson of Southeastern at the station and highlighted the problem in person, so that he could see it first hand. I also showed him that there was already step-free access at the side of platform 2, because there was a footpath and a gate that had been used in the past. This gate had been locked to commuters for some time and, regrettably, the footpath had been allowed to deteriorate into a state of disrepair. In my opinion, unlocking the gate and resurfacing the footpath could solve the issue of step-free access quickly, effectively and cheaply. As we all know, money is tight these days and public expenditure tough, but very little money would be needed to open up that opportunity.

It came to light through subsequent correspondence in June and July 2009 with Bexley council that the land that this access point would be on was now owned by Sainsbury’s, whose store is near the station, and that the council was exploring options to achieve access over the land. I met a representative of Sainsbury’s later in the year, Ben Littman, who was very positive about the scheme. I was advised that the land over which access was necessary would be transferred to Bexley council’s ownership as part of an agreement relating to Sainsbury’s planning application to extend its store, subject to the necessary surveys and permission. I also learned from the council, not the train company, that £55,000 had been allocated to Southeastern from the national station improvement programme for the scheme, so at this stage—as the Minister will appreciate—things looked positive.

Southeastern had been provided with a simple, cost-effective proposal, supported by me, Sainsbury’s, constituents and local councillors; permission for access over the land required for the scheme; a gate already in place; the basis of a footpath; and funding from Network Rail to deliver step-free access. It should have been so simple. Unfortunately, I heard nothing further from Southeastern about the project for some time. What I discovered later was that due to its concerns about lost revenue, it had already decided not to proceed with the scheme. Despite having been allocated £55,000, it was concerned that it would have to spend money on automatic barriers and an Oyster reader system, which would have cost more than the £55,000 allocated, and employ an additional member of staff. But not to worry, it provided me with the same telephone number for constituents that it had given me more than a year before. I am appalled by the lack of concern for passengers that this attitude displays.

The justification offered by Southeastern for its decision not to proceed does not stand up to scrutiny, and that is why I am grateful for the opportunity to raise these issues in this Adjournment debate. I believe that the continued lack of step-free access at Crayford station, which Southeastern had the opportunity to rectify and failed to do so, is a disgrace of which it should be ashamed.

Southeastern claims that automated barriers are required in order to protect fare revenue. It has not provided any estimates as to how much this lost fare revenue is worth and alludes only to its studies. However, I pointed out that when it installed step-free access at Barnehurst station a couple of miles up the road on a different line, following my successful campaign, it did not put in automatic barriers. I also noted that an uncontrolled access gate to Crayford station’s platform 1 was routinely left open for people to walk in and out. So it was all right on one side, but not on the other side of the station, which I thought was very strange. It could not justify to me why the situations were different. I have learned that, since I have been commenting on this issue, it has now quite cynically stopped leaving open the uncontrolled access to platform 1—it has now been locked as well. That is very strange, is it not?

Fare revenue is obviously important to Southeastern, and it claims that the cost of installing automatic barriers would have been prohibitive. I asked how much it would cost over and above the £55,000 it has already been allocated, but I did not get a direct answer other than, “It would probably cost about £12,000”. It could not provide an accurate estimate of the cost of installing an automatic barrier with the appropriate cabling, although it thought it would be up to about £100,000. I do not believe the barrier is necessary. In my opinion, it is another red herring. Last year, the Southeastern parent group took over about £1.5 billion in rail revenues, and its operating profit is quite considerable as well. Given the public subsidy, the consistent growth in fare revenue—I note that passenger revenues rose considerably in 2008 and 2009—and the fact that it is making an operating profit in a difficult economic climate, I find it hard to believe that it could not find the small amount of money that would allow it to transform the opportunities for people with disabilities to travel on its trains.

Another reason Southeastern highlighted was that the barriers were necessary to prevent antisocial behaviour and vandalism at the station, but that did not apply in Barnehurst station, where it said that it did not matter at all. I think its reasoning is inconsistent and that it is holding a negative view of Crayford residents—one that I totally disagree with and think is an insult to the people of Crayford. That said, of course, communication is definitely not Southeastern’s strong point. I found out about the funding—or the lack of it—and its cancellation from Bexley council, not from Southeastern.

Why would Southeastern not tell me that it was cancelling the project, unless it was afraid of being held to account for its decision? I am advised that the money that Southeastern was given for step-free access is to be delivered to other stations, but it would not tell me which ones. Bromley has been mentioned as a possibility, but a quick look on the Access for All website shows that it was due to get money for that project anyway, so I am still at a loss to know what has happened to the money originally promised to Crayford. I also understand that Crayford was awarded £51,000 in 2007, under the Access for All small grant scheme, to provide level access from the road to the downside platform by resurfacing the disused station approach and installing lighting. So the money was there, but Southeastern chose not to use it, which again is disappointing.

I must mention as a sideline that Southeastern has shown a similarly poor attitude to helping vulnerable commuters at Slade Green station, which is also in my constituency. That is a different station with a different problem. It has step-free access to each platform, but because of the layout of the surrounding area, it is difficult to make the journey from one side of the platform via the road to the other platform. Earlier this year, I met the representatives of the Bexley association for disabled people, who are concerned about access for the disabled at this station. Some of the things there are also simple to resolve. There are no ramps on to the pavement from the set-down area, and there are steps from the bus stop to the set-down area meaning that those with mobility problems have a difficult problem as well. The footbridge is also a problem because it is sloped like a ramp, and it is quite difficult for disabled people to go up and down it.

Again, the response from Southeastern was not encouraging. I was given information that I already knew and was advised that there was an Access for All scheme, but again larger stations got priority. I got the same information about the telephone numbers, so I now have it printed indelibly in my memory. I appreciate that money is an issue for Southeastern, but I think that investment in passengers and the benefit of passengers should be its top priority.

I would like to briefly mention the comment by my hon. Friend the Member for Rochester and Strood (Mark Reckless) about how fares have gone up dramatically and how it was under the last Labour Government that Southeastern was given a derogation to increase fares considerably above the rate of inflation, which has meant that commuters from Crayford and Slade Green have paid considerably more for the same journey. Yet they have not been accommodated when it comes to step-free access or helping people with disabilities to use the station facilities. Now that we know the July rate of the retail prices index, I am naturally concerned as to what the rate increase will be in January for commuters travelling from my constituency. I want to put on record that the Labour Government’s allowing huge rises on top of inflation was totally unacceptable and unfair to people in my area.

As I have highlighted at some length, this is an important issue for me and for the people who live in Crayford. I cannot understand why we have been unable to get such a simple improvement, which would transform the opportunities for those with mobility problems. They should not have to have extra help, or travel to another station. They should be able to get on and off the trains at their own station, and to commute up to London or out into Kent as they wish. Step-free access would transform the situation, especially at a time when we are encouraging more people to use public transport. It is essential that we give people the opportunity to get on and off the platforms, so that they can use public transport. I urge Southeastern to look again at its decision. Others—the council, businesses and other organisations—are investing in the future of Crayford, and I believe that Southeastern should do the same. I very much hope that my hon. Friend the Minister will agree with me, and that he will use his considerable influence to help us to get step-free access for my constituents at Crayford station.

23:01

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I congratulate my hon. Friend the Member for Bexleyheath and Crayford (Mr Evennett) on securing this debate on this important issue for his constituents. I also welcome the supportive comments made by the hon. Members for Dartford (Gareth Johnson) and for Rochester and Strood (Mark Reckless). In response, I would like to set out the measures that the Government are putting in place to improve access to rail travel for people with reduced mobility. While I have this opportunity, I also want to explain the particular circumstances which, unfortunately, have so far prevented enhancement plans for Crayford from being achieved.

The provision of a modern, accessible public transport system in which disabled people have the same opportunities to travel as other members of society is key to improving the life chances of disabled people, promoting social inclusion and making it easier for older people to work or volunteer. We are fully aware that, without accessible transport, disabled people are limited in their ability to access work, to visit friends and family, to participate in leisure activities or to use essential services such as health care and education facilities. That is why successive Governments have taken strong action to ensure that public transport services are increasingly accessible to the large population of disabled people who live in Great Britain, and I believe that the UK’s record in this area speaks for itself. I might also add that these issues affect not only disabled people: when I first became a father, the need to carry the buggy brought home to me just how many steps there were in railway stations.

When the railways first arrived in Crayford in the 1860s, they symbolised the future of transport. They were fast, reasonably comfortable and cheap to use. Unfortunately, 19th century railways were not built with the needs of 21st century travellers in mind, and it is only in recent years that serious attention has been paid to making stations more accessible. As my hon. Friend mentioned, the previous Government published the Railways for All strategy in 2006, which set out what the rail industry as a whole was doing to improve access to rail services, particularly for disabled people.

The coalition Government understand the importance of rail stations to passengers’ overall journeys and place the highest value on promoting equality and fairness. We realise that accessible stations make a huge difference to people’s journey experience, and we remain committed to making further improvements. To date, 148 stations across England, Wales and Scotland have been targeted to receive main scheme funding for an accessible route to and between their platforms. I am pleased to report that the Access for All programme described in the strategy is rolling out across the network, with accessible routes already installed at 42 stations, which are now complete, and good progress being made on the programme nationally. By the end of the current financial year, we expect a total of 65 stations to have been completed.

The busiest stations have been prioritised, as improving these will benefit the largest number of people. The stations have been chosen on the basis of Office of Rail Regulation station usage statistics, weighted by the incidence of disability in the local area based on the 2001 census. As a result, the investment is being targeted at the busier stations in areas with a higher proportion of disabled people. A proportion of the stations were also selected to ensure a fair geographical spread across the country.

As my hon. Friend will know, however, Crayford station was not selected in the main scheme programme. However, since 2006, small schemes funding has also been made available, for which local authorities, train operating companies and other interested groups can bid, to make smaller scale or locally focused access improvements to stations. In total, the small schemes programme has provided almost £25 million of match funding towards investment of almost £100 million supporting improvements to meet local needs at more than 1,000 stations.

As my hon. Friend says, Crayford station already has a level access route to the upside platform. We believe, as he does, that a step-free route could be provided relatively easily to the downside platform as well by resurfacing and making good the disused station approach road. As he knows, in 2007 Southeastern successfully applied for £51,000 of departmental funding towards a project estimated at £102,000 to make this a reality. I am very sorry to say that in March 2008 Southeastern withdrew the application, citing land ownership issues, particularly the fact that the disused right of way belonged to J Sainsbury plc.

We understand, however—my hon. Friend touched on this in his introduction—that an agreement has been reached between Bexley council and Sainsbury’s to transfer the ownership of the land to the council and that this will be finalised shortly. This will remove Southeastern’s original reason for dropping the scheme and I am therefore disappointed that it is now citing the need to install revenue protection gates as the reason for not providing the required access.

I should add, of course, that the Government support gating as a means to protect revenue and increase security at stations, and the entrance to the London-bound platform at Crayford is already gated, but this should not be at the expense of providing access. The Department has recently commissioned research showing that providing level access to platforms can deliver increased journeys and therefore increased revenues for train operators, so I would like to encourage Southeastern seriously to look at this issue again and to give full consideration to the operational arrangements that would be required to enable access via gates to a new entrance on the other platform. Even if gates are not staffed, there are other examples, such as at Luton, of remote control of gates to entrances where passengers with tickets that cannot operate the gates place their ticket on a screen which is viewed by the operator before the gates are opened.

Small schemes funding was made available again later in 2008 for work taking place during the 2009-10 financial year. I have to report to the House that the Department received no further applications for work at Crayford. Following this debate, I will ask my officials to ensure that my comments as well as my hon. Friend’s are drawn to the attention of Southeastern’s managing director, Charles Horton.

I should make it clear that the Access for All programme is in addition to commitments made in franchises and other programmed major station improvements. It also builds on the raising of standards over recent years, including the requirement on train operating companies to take account of accessibility standards in the code of practice on train and station standards for disabled people. For example, the accessibility of booking facilities and the provision of assistance for disabled passengers have also significantly improved.

We have also recently updated the code of practice setting out the access standards for infrastructure work at stations to align it with new European standards, and these have complemented significant advances in rail vehicle accessibility over the past decade. In addition, we are working with the industry to update the way in which disabled people’s protection policies, which set out how the train operators will meet the needs of their disabled customers, are written.

There is no room for complacency, however. I do not think that anyone in this Chamber would underestimate the scale of the challenge or believe that the Railways for All strategy represents the end of our task. We recognise that progress in improving the accessibility of stations and stops must be accompanied by improvements to the accessibility of rail vehicles.

Under the Rail Vehicle Accessibility Regulations 1998—more commonly known as RVAR—introduced under the Disability Discrimination Act 1995, all new rail vehicles introduced since 31 December 1998 have had features making them significantly more accessible to disabled people, such as larger and easier access to priority seats for disabled passengers; the use of tonal contrast in liveries and finishes; a minimum number of spaces for wheelchair users; boarding devices to facilitate wheelchair access; provision of handrails and handholds; and provision of audible and visual passenger information. More than 6,200 accessible rail vehicles are already in service and all rail vehicles must be accessible by no later than 1 January 2020. Together with the code of practice, these provisions will deliver consistent access standards for vehicles and stations across the whole rail network for the first time.

My hon. Friend might say that there is not much point in making train vehicles accessible if the stations to access them are not accessible as well. That is also a point that I hope Southeastern might take on board. The 2020 “end date” dovetails with similar provisions for buses and coaches, ensuring the existence of an accessible transport chain and giving disabled people certainty that they will be able to access all public transport vehicles in future.

We should bear it in mind that, although they may not have been built to modern accessibility standards, many thousands of older rail vehicles have already been made more accessible by refurbishment. That includes fleets of older trains such as those serving my hon. Friend’s constituency, which, as he will know, have recently received accessibility improvements.

However, the need to improve access to the railway does not stop with stations and vehicles. On occasion, barriers such as a lack of confidence, poor travel information and the attitudes of staff may affect disabled people’s ability, confidence and desire to use public transport. That is why we have supported the production by the Association of Train Operating Companies of a staff disability awareness training DVD through the Access for All small schemes fund and its full access audits of every station in the country, which will allow a better focus in the targeting of future improvements.

As rail vehicles and stations are made accessible to disabled people, the facilities that they offer greatly benefit other passengers such as pregnant women, parents with pushchairs and those carrying heavy luggage. Indeed, all of us at one time or another in our lives will be grateful that those provisions have been put in place. A great deal has been achieved, but the railway industry is far from complacent, and will continue to work with the organisations representing disabled people—and, most important, with disabled people themselves—to improve services further. It is clearly regrettable that the access at Crayford station remains below modern acceptable standards, and I share my hon. Friend’s concern about that.

Services on rail are covered by the provisions of the Disability Discrimination Act 1995, which is soon to be replaced by the Equality Act 2010. It is the duty of Southeastern to make reasonable adjustments to the way it provides its services so that disabled customers do not find them impossible or unreasonably difficult to use. It might make physical adjustments, or it might make the service available by an alternative means such as the provision of an accessible taxi to the next level access station; but that is a much less satisfactory—

23:12

House adjourned without Question put (Standing Order No. 9(7)).

Westminster Hall

Tuesday 7th September 2010 Westminster Hall

Tuesday 7 September 2010

[Mr Philip Hollobone in the Chair]

West Midlands

Tuesday 7th September 2010 Westminster Hall

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

09:30

[Richard Burden (Birmingham, Northfield) (Lab)]

I welcome you to the Chair, Mr Hollobone, and express my gratitude for being able to debate Government policy on the west midlands. I am pleased to be joined this morning by a number of colleagues from the region.

I have represented Birmingham, Northfield for the past 18 years. During the last Parliament, I chaired the West Midlands Regional Committee. The Committee was a genuine attempt by Parliament to provide a focus for addressing matters of concern to the people in the region. The Committee’s agenda was set not by the Government or by Ministers but by MPs from the region. I am pleased to be joined today by two members of that Committee—my hon. Friends the Member for West Bromwich West (Mr Bailey) and for Stoke-on-Trent North (Joan Walley).

The Committee, however, was scrapped by the diktat of the new Government; but in its short life at the height of the recession we were able to give voice to regional concerns about the impact of the economic downturn on communities across the region, on west midlands businesses and on the options for the future of housing and planning in the region. I hope that the Committee was also able to contribute to the accountability of regional institutions, the most obvious one being Advantage West Midlands—the regional development agency. It was also able to contribute to the operation of government in the region. Indeed, I welcome to the debate the former Minister for the West Midlands, my hon. Friend the Member for Dudley North (Ian Austin), and thank him for his approach to dealing with our Committee. It was one of engagement with MPs for the region. We did not always agree, but we agreed on a number of things. The key point, however, was that the Government and the Minister engaged.

The west midlands is a diverse and vibrant region. Its heritage as the workshop of the world means that innovation is in our blood. However, the region is in transition. Massive upheavals were already taking place in the economic base of the west midlands—from Staffordshire in the north and east to the traditional industrial heartlands of Birmingham, Coventry and the black country—and dramatic changes took place in the late 20th century in the economies of areas such as Warwickshire, Shropshire, Herefordshire and Worcestershire.

The region was hit hard by the economic downturn. For while, it had the worst unemployment rate in the country. However, action by people in the region, backed by the previous Government, helped to turn things around, and unemployment is down by 2.4% on last year. Nevertheless, the recovery is fragile. The danger of a double-dip recession is real for our region. I was at a breakfast meeting this morning organised by the Society of Motor Manufacturers and Traders, just across the road. The message from those in the automotive industry and from a number of academics was clear: that Britain still needs to address persistent under-investment in research and development.

The Department for Business, Innovation and Skills has a target for 2.5% of GDP to be invested in research and development. Projections that I heard earlier today suggest that the likely shortfall will be between £9.6 billion and £12.1 billion. Given that the automotive industry accounts for about 8% of our country’s research and development, and that the industry is key to the future of the west midlands regional economy, we can see why the west midlands is worried indeed about the consequences of precipitate and untargeted tightening, as it will affect the development of our industrial base and its recovery.

We know that the Government’s policies are leading to a downgrading of growth forecasts and are likely to result in higher unemployment, so the implications for our region are serious. As I said, they are serious not only for the economic base of the region but for our people. The Institute for Fiscal Studies confirmed only a few weeks ago that the coalition Government’s Budget will hit the poorest households hardest. Despite claims that the rich will bear most of the pain, it is those on the lowest incomes who will gain least from the increase in the income tax personal allowance and suffer most from cuts in public spending. That will be the case also for pensioners, who will be hit by the rise in VAT. It will be families, particularly those on low incomes, who will be hit by cuts in the value of support for families. From next year, it is estimated that more than 80,000 people in the west midlands could lose an average of £520 a year through cuts in housing benefit.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I thank my hon. Friend for giving way. I apologise, but I shall have to leave fairly shortly as I have to chair my Select Committee at 10 o’clock.

In the context of what my hon. Friend said about the motor industry, does he agree that the latest figures for new car registrations—they showed a dip last month following a dip in the previous month—underline the fragility of the west midlands economy, and that that will have a particular impact on the Birmingham and black country region?

[Richard Burden]

My hon. Friend is right. I fully accept his apology. Indeed, I congratulate him, a fellow west midlands MP, on being elected as Chair of the Select Committee on Business, Innovation and Skills. I also welcome my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), who is a member of that Select Committee, and my right hon. Friend the Member for Warley (Mr Spellar), who takes a keen interest in automotive affairs.

My hon. Friend the Member for West Bromwich West is absolutely right: if one industry sums up the fragility of the recovery, it has to be the automotive industry. It was one of the hardest-hit sectors, but it came through strongly. However, that did not happen by accident, but because people in the industry—whether the management or the work force—willed it to happen and because the Government were prepared to stand behind them. I do not say that the car scrappage scheme turned the automotive industry around, but it was part of the jigsaw of things that allowed that to happen. I do not say that the creation of a taskforce in the west midlands allowed the industry to come through, but it was part of that jigsaw.

[Jack Dromey (Birmingham, Erdington) (Lab)]

I give the same apology, Mr Hollobone, as that given earlier. As a member of the Select Committee I have to be at its 10 am sitting.

Advantage West Midlands has evidence that for every £1 of public money invested, £8.14 is generated in wealth for the local economy. It was rated by the National Audit Office as the top-performing regional development agency, and it was praised for its management of the shock of what happened to Rover between 2000 and 2005, and for consolidating an automotive cluster that employs 150,000 people in the midlands and which is vital to the regional economy. Does my hon. Friend agree with the clear voice of business in the west midlands, which supports Advantage West Midlands and argues for the retention of a strong regional economic structure?

[Richard Burden]

My hon. Friend makes a good point, and I will shortly say a little more about Advantage West Midlands and the haziness that seems to surround some of the present Government’s proposals for change. The responses from businesses and from people outside the political sphere are clear. Sometimes, one gets the impression that the future of effective regional co-ordination—I am talking about the type of co-ordination that Advantage West Midlands has been involved with—has been a matter for debate just among politicians, but it has not. It is an issue for the people affected by the decisions of organisations such as AWM, and for every business that has applied for and may have received assistance from the Advantage Transition Bridge Fund. It is a matter of economic health for many businesses in our region, and an issue of importance for the third sector in the region that engages with AWM.

The Regional Committee had a seminar in the west midlands that brought together different organisations, institutions and players to assess the future of governance in the region. Again, the message was clear that what we need is strong regional co-ordination and a strong regional tier that is accountable. It is easy to come up with the slogan, “Scrap the quangos”, and then look for a quango in the west midlands and say, “There’s AWM, let’s get rid of it.” People know that that is the easy bit; the difficult bit is to get away from the headlines and work out and put into effect the policies that will enable our region to win through. My hon. Friend the Member for Birmingham, Erdington was absolutely right about the matter.

I have referred to businesses, but often the impact of Government policy in the west midlands is felt not just by them but by the people whom we represent. The National Housing Federation recently highlighted that Birmingham is one of the places likely to be most badly hit. Its chief executive, David Orr, said:

“The changes could see hundreds of thousands of vulnerable people fall into debt, forced out of their homes and neighbourhoods and crammed into overcrowded ghettos. Many others will simply become homeless.”

He was referring to the coming changes to housing benefit. All this comes at a time when Birmingham city council itself is proposing to cut no less—and it could be more—than £7 million that was allocated by the previous Government to tackle worklessness through the working neighbourhoods fund. It is not going to reallocate or redistribute that money to enable it to be spent more effectively; it is just cutting it and removing that level of support in tackling worklessness. As my hon. Friends know, the council is proposing to cut back on community day nurseries for some of the most vulnerable people in our city, even though such a proposal runs counter to the idea of stimulating and taking forward the principles of early intervention to which every single political party in this place signs up.

I turn to Longbridge in my constituency. I welcome the fact that, in Shanghai Automotive, there is still an important car presence there. There are plans to introduce new models for the coming year and it is the major technical centre for the whole of Europe, which is good news. However, Longbridge can never again be simply a car plant, no matter how important that plant is. Regeneration and the creation of a diverse economy in Longbridge and the surrounding areas are vital to the future. It is important for the regeneration not just of my constituency but of the south of Birmingham and the regional economy as a whole.

A bulletin produced in August by Birmingham city council, Bromsgrove district council and Worcestershire county council, all of which are either Conservative or coalition led councils, said:

“The new government’s intended changes to planning policy and significant budget cuts continue to have a detrimental consequence on the development programme for Longbridge. Certainty of funding for the MyPlace programme, Regional Infrastructure Fund and the future of HCA funding continues to be at risk”

I am pleased that around £4 million of the Homes and Communities Agency’s money, which was earmarked by the previous Government for Longbridge, has now been confirmed by the present Government, but the message of that update remains a chilling one for many of us. The report on housing and economic development in the west midlands by the former regional Committee said:

“Substantial public funding will remain necessary to increase the supply of affordable housing in the region to the extent required.”

That conclusion was not just dreamt up; it was based on the evidence that we received. It is difficult to relate it to the cuts that are now taking place in housing: cuts of £100 million from the National Affordable Housing Programme, of £50 million from the Kickstart programme and of £50 million from the Housing Market Renewal scheme. I have described the likely impact of that on regeneration programmes such as Longbridge. No doubt other hon. Members can give examples from their own constituencies.

Such cuts affect real people in real communities in our region. For example they feel the impact of the scrapping of 64 school rebuilding projects that had been in the pipeline under the Building Schools for the Future programme, not to mention the scores of other schools, including all but one in my constituency, that never even got to the starting grid of the programme.

Hon. Members, particularly those on the Government Benches, may say that difficult decisions have to be made and they are right. They may say that capital spending would have been squeezed by whoever won the general election and there is force in that argument. Difficult decisions were going to have to be made, but difficult decisions are about making choices. It is a question not just of what choices to make but who makes those choices, who one listens to and what one takes into account when making such choices. That is why it is so important in this climate to listen to the people who are most likely to be affected by the decisions. If they are to have their voices heard, they must have institutions through which they can speak. In Birmingham, in my own home town, we now hear that the city council is proposing radically to scale back the very mechanisms through which local people can have a say in council decisions. So much for all the talk about a big society in Birmingham.

What about the voice for our region? The final report of the West Midlands Regional Select Committee before the general election looked at how institutions can engage more effectively with the public and how that engagement can be used to help the region to become more responsive to the needs of the people who live there. We also recognised that Westminster needs to look at regional issues in a more coherent way. Normally when Select Committee reports are published, the convention is that the Government respond not only within a reasonable time scale but in a considered way. The Government will produce a report that will be discussed by the Select Committee. The Select Committee will consider whether the Government have tackled the issues that were proposed in its report and it will be its decision whether to publish the Government’s response. Occasionally, when there are some holes in the response, the Select Committee has the right to send it back to the Government and say, “Have another think about it before we publish this.” In that way, we can ensure that Parliament can consider properly not only what the Select Committee has said but the Government’s response. My hon. Friend the Member for Dudley North, who is a former Minister, will know that that is precisely what happened over the last year. We produced reports, and they were responded to. There was one instance—I am sure he will not think that I am breaking any confidences here—when we felt that the initial Government response was not good enough. We sent it back and the Government had a rethink and came forward with another response, which was then published. It was done in a considered way that respected the region and the issues that it was raising.

The report, “Making the Voice of the West Midlands Heard”, came out before the general election, but it was dismissed by the current Government in just two sentences in a written statement. Our report on housing and planning in the west midlands, which also came out just before the general election, was dismissed in just four paragraphs in the same written statement. Now Ministers are proposing to scrap the regional development agency, Advantage West Midlands. That is despite the fact that, as my hon. Friend the Member for Birmingham, Erdington said earlier, a National Audit Office report judged the RDA’s performance as “strong” and gave it the maximum possible rating across most areas of the assessment, repeating the findings of the NAO’s report of 2007. As my hon. Friend also said, the most recent independent evaluation suggested that for every £1 invested by Advantage West Midlands, a return of £8.14 is generated for the west midlands region.

Advantage West Midlands is not perfect. My Committee—the West Midlands Regional Committee—suggested changes, including changes to the accountability arrangements for AWM. However, the evidence that was given to us was that AWM’s role in co-ordinating effort among regional players, in securing investment and in putting that investment—hard cash—to use in the areas where it was needed was and is absolutely vital. So, when the Government talk about cutting quangos and then relate that talk to AWM, they are not just talking about cutting institutions; they are talking about jeopardising the programmes and the real investment on which our region depends. And it is really not good enough to say that the new bodies that the Government are talking about—the so-called “local economic partnerships”—will pick up where the RDAs are just leaving off.

Partners around the west midlands, including in my own sub-region of Birmingham and Solihull, want to be as constructive as possible and they are putting ideas together about how they could put in place a local economic partnership. However, I ask the Minister today to be as clear as he can be in the information that he gives and if he cannot give information today I ask him to set out some key points in written form for hon. Members from the region.

In my opening remarks, I talked about the importance of research and development for the west midlands and about the importance of having the mechanisms for stimulating R and D in businesses up and down the region. If AWM is going to be scrapped and if local economic partnerships, which are undefined as yet, are going to replace AWM, it is important that we know which programmes will continue and which will not. Furthermore, of those programmes that are going to continue, it is important that we know which ones will be administered entirely centrally by Government and which will be controlled and administered by local economic partnerships in the future.

I ask the Minister to say clearly what actually is the difference between the budget that will be made available in the west midlands to do the type of things that I have been referring to in my speech and the budget for AWM, because I think that people in the region deserve to know what the difference is. If we are talking about AWM, we are talking about a budget of about £1.5 billion a year. However, when we look at the budget that is likely to be available for local economic partnerships, we are talking about £1 billion, which is not per year but spread over two years.

If I am right about that budget difference—the Minister represents the Government, so he will know the figures better than I do—what is it that will go? What is it that is going to be cut? Perhaps he will say, “Well, it will just be the bureaucracy that is going to go. That is what is going to be the difference—just the bureaucracy. The programmes will be maintained.” However, if that is the case, I must ask, “Who is going to pick up and administer those things? Who will do the work?” Is it the Government’s view that local authorities will simply pick up the slack? Is it the Government’s view that local authority and local authority staff will do that work?

[Robert Flello (Stoke-on-Trent South) (Lab)]

I am grateful to my hon. Friend for giving way. He is making an extremely good and impassioned speech, which I am listening to with great interest.

I think that we are already seeing some evidence of where these cuts will fall. In my own constituency, I was approached by a company that wanted to establish a brand new mug-making business, which is something that we have not seen in the Potteries area for far too long. That company was promised a grant of £250,000 from AWM, but that grant has now been cut. The whole project is now in jeopardy; the nine-month order book that the company had already managed to accumulate is now in jeopardy, as are the 50-plus jobs that were planned. I think that we are already seeing the evidence of the cuts.

[Richard Burden]

I welcome my hon. Friend to today’s debate. He makes a very important point. I think that the point that he is making is twofold, and both aspects are important.

The first aspect is the type of thing that I was talking about earlier. All the indications are that there are going to be cuts, which will be real and substantial. Those cuts will not simply be in services but in the very things that will be able to generate the wealth that will keep unemployment down, create jobs and enable regional recovery. So there will be substantive cuts.

However, the second and more insidious thing that is going on at the moment is that because of the policies that the Government have come out with and because they have said that AWM will go, to be replaced by these local economic partnerships that are as yet undefined but will take up the strain, the Government have bred uncertainty and unpredictability at the very time that we need certainty and predictability in order to invest and innovate for the future. That is the story that my hon. Friend is talking about in his area and I think that it applies elsewhere.

[Karen Lumley (Redditch) (Con)]

Obviously, AWM has done some good work. However, I visited many companies in Redditch before the election and I have obviously visited a lot since the election. So let me just say to the hon. Gentleman that AWM does not benefit the companies in Redditch, because they do not fall within the category of companies that AWM helps. There is a lot of deprivation in Redditch; it has actually got the highest unemployment in Worcestershire. So a lot of the companies in Redditch are actually looking forward to the local economic partnerships and hopefully Worcestershire will get its own partnership, so that we can see some of the money for those schemes coming into Redditch.

[Richard Burden]

I applaud the hon. Lady’s optimism and I am very happy to sit down if she would like to intervene again. However, what is the budget that she is anticipating for her local economic partnership?

[Karen Lumley]

I am looking forward very much to hearing the Minister’s response to the debate and I am also looking forward to seeing what we get. Actually, for those of us in Redditch something is better than nothing.

[Richard Burden]

I am also looking forward to the Minister’s response. I simply say to the hon. Lady what I said before, that AWM was not perfect and that choices had to be made, as choices always have to be made. However, to make the choice, there must be the institution that people can debate with; to make the choice, there must be the engagement, and to make the choice we need to have the discussion. That is the point. At the moment, it is unclear what the institution will be in the future, what its budget will be and who will have a say.

[Robert Flello]

I am very grateful to my hon. Friend for giving way; he is being very generous in allowing interventions. If I may respond to his point about the perfectness or otherwise of AWM, I will say that I have been one of its critics in the past. Historically, however, the problem lay very much with Stoke-on-Trent city council not being able to use the resources, the funding and the talents that were being provided. So I think that quite often AWM got the criticism, when it really should have been levelled more locally.

[Richard Burden]

My hon. Friend makes an important point. I just have an inkling that, perhaps a little later on, my hon. Friend the Member for Stoke-on-Trent North may well have some particular things to say, not only about Stoke-on-Trent itself but about north Staffordshire. Earlier I said that our region is one that is in transition and that is diverse. However, the particular problems affecting north Staffordshire are very large and very acute, and targeted help, support and attention are required to tackle them.

Talking about north Staffordshire raises another point. If regional institutions such as AWM are going to be scrapped and if there are going to be these local economic partnerships springing up all over the place, it is understandable—absolutely understandable—that different local economic partnerships in different areas are likely to come up with different priorities and different solutions that affect their own particular area. It is absolutely understandable that they will reflect local aspirations and local circumstances. However, the question will arise in the future—who will be the arbiter of those competing aspirations? In the future, will it actually be the case that, for all the talk about decentralisation, central Government will be the arbiter of those competing priorities, rather than partnership bodies in the region itself? Those regional bodies were too unaccountable, but it is not a case of making them more accountable. It is actually a case of taking that power from the region altogether and giving it to central Government.

[Lorely Burt (Solihull) (LD)]

I congratulate the hon. Gentleman on securing this important debate. He says that the fact that we have lost our regional development agency will make Government more accountable. The whole purpose of the local enterprise partnerships is to prevent Government from dictating the programmes for each region. The region’s businesses and its elected representatives will make the decisions that affect them directly. I believe that the situation is the opposite of what he is suggesting.

[Richard Burden]

I very much hope that the hon. Lady is right, but I do not see the evidence for it. Perhaps the Minister will enlighten us about whether she is right.

If different local economic partnerships come up with different priorities and aspirations, who will decide who gets what? Central Government. If I am wrong about that, what body will decide? If another body is created—perhaps it will bring together regional stakeholders and players from the different sub-regions—it will need a staff and some presence in the region if it is to work, will it not? It will need the ability and the reach to work out what needs to happen in the region. I guess that we could give a body like that a name, could we not? Because it would be involved in developing the region, we could call it a regional development agency.

The RDAs were not wrong; the problem was that they were not sufficiently accountable. However, my difference with the present Government—I look forward to the Minister’s speech, because I may have this wrong—is that they appear not to be improving accountability. All the accountability mechanisms are as vague as ever—arguably more so. The Government are undermining the institutions that need to be held accountable, their budgets, their reach and their strategic relevance to the region. That is the problem.

These matters are not of academic importance; they involve how the west midlands can address the big challenges that it faces in the coming months and years. Inevitably, there will be and are political differences in this place about what economic strategies we think are right for the country or for our region. Understandably, views will differ about the scale, pace and timing of deficit reduction. We will differ politically about when, in order to prevent double-dip decisions and secure recovery, we may need to maintain spending and, in some cases, even expand it. Those differences are absolutely understandable.

However, the point of this debate is not just to touch on those issues; it is to return to the issue of choice. Who will decide? Who will be the voice of people, businesses, the third sector and communities in the west midlands? Will it be local councils? As I said, Birmingham city council is scaling back devolution internally. Will regional players make strategic decisions for different businesses and industries? Who will decide, and by what mechanisms?

It is time for the Government to come clean, not because I as a Labour MP from the west midlands say so, not because I have taken umbrage because they scrapped the Select Committee that I chaired but because this is the voice of the west midlands. They should look at what business organisations and the third sector in the west midlands are saying, and what local authorities themselves are saying in their more reflective moments, and act on it. We need more clarity so that we can meet the challenges in the west midlands and secure for our people the recovery and the future that the region deserves.

10:04

[Lorely Burt (Solihull) (LD)]

I congratulate the hon. Member for Birmingham, Northfield (Richard Burden) on his passionate speech. I know how much he loves and cares for the west midlands; so do I, and we have worked together positively in the past. We may have slightly different views about how to do things, but we always want the same end result: the success and prosperity of our region.

I will concentrate on one or two issues. Like the hon. Gentleman, who spoke about this at some length, I am particularly worried about the impact of the cuts expected in our region. On 22 October there is the comprehensive spending review, which we know will have a big impact on our public sector jobs. We are all bracing ourselves with concern for any job cuts that might be coming our way. My constituency has the UK Border Agency, so the cuts are of concern to everyone there.

The region as a whole has 636,900 public sector jobs. They represent 27% of the region’s total, which is high. The west midlands is the only region in Britain to have suffered a net loss in private sector jobs since 1988, according to a Financial Times investigation done 18 months ago. It is a concern, and we need support from Government. We know that we are going to lose public sector jobs, so we need help diverting resources into ensuring that we achieve growth in the private sector.

The regional growth fund announced by the coalition Government is extremely welcome. I want to learn as much as possible about how it will affect the west midlands, what it will do and how it will work. I do not know whether the Minister can enlighten us to any great degree this morning, but information as early as possible would be extremely welcome.

The Government have issued various types of support to business generally by waiving some employment taxes on new businesses’ first 10 jobs and cutting the main rate of corporation tax from 28p to 24p for larger companies and from 21p to 20p for small ones. Another £200 million has been announced for the enterprise finance guarantee scheme, and so on. The Government are not unaware that business needs support. Sometimes that support comes in the form of tax reductions, but it also comes in other forms.

The hon. Member for Birmingham, Northfield spoke at some length about the importance of infrastructure to our region. He spoke amusingly about how we might manage regional challenges such as infrastructure and sectors that span more than one local enterprise partnership in the region. It is important that we tackle that issue. There is no reason why different local enterprise partnerships cannot work in harmony. My area, Solihull, is going in with Birmingham, but we have a lot of sectoral interest with Coventry and Warwick. There is no reason why we cannot work with those areas on joint projects to help each other in local enterprise partnerships.

I want to bring to the Minister’s attention three projects that will make a big difference. The Government have already agreed that the Birmingham New Street station development will definitely go ahead, but two other projects are absolutely vital to the prosperity of the region. One such project is the runway extension at Birmingham International airport, for which the small matter of £25 million needs to be dealt with. Although the vast majority of the ownership relates to private and local authority areas, we need an injection of £25 million to square the circle and make that project viable again.

We also need High Speed 2, which I am delighted the Government have backed. Centro has estimated that High Speed 2 will provide 22,000 jobs and £1.5 billion per annum for the region. The project will also free up the west coast main line for local traffic, which is important because we cannot get any more trains on the tracks at peak time. In addition, the development of Curzon street—the regeneration of that area and the creation of retail opportunities there—is very important. The west midlands, particularly Birmingham, is the hub of the project. We should be viewed as an international destination for visitors and for businesses that want to invest. Once we have High Speed 2, it will take a short time to get to London, and that will make our region a very desirable destination indeed for inward investment. I urge the Government to get on with that project—I know it cannot not happen tomorrow—because it will make a very big difference to our region.

The hon. Member for Birmingham, Northfield talked with some passion about Advantage West Midlands and the Government’s replacing it with local enterprise partnerships. I agree with him that Advantage West Midlands has done a good job with the remit the Government gave it; however, that remit was determined by Whitehall. There is some local representation on the board of Advantage West Midlands, but the piper calling the tune has definitely been central Government. The introduction of local enterprise partnerships has led the Government to ask local authorities and local businesses to work together in partnership. They have been given a blank sheet of paper and asked, “What do you want? We want you please to think for yourselves. Don’t just expect to be told what you need. You know what you need, so you should put forward a proposal for endorsement by the Government.” That is how things are going to happen. There will be a lot more localism, and local companies and locally elected representatives will be able to determine what should happen.

In the Birmingham Post, Jon Walker refers to local councils throwing off the shackles of Whitehall and states:

“residents will elect people who actually make decisions for a change.”

I am looking forward to that happening, but there is no question but that the process is scary. The hon. Member for Redditch (Karen Lumley) talked about Worcestershire developing an LEP on its own. I am worried about some of the proposals being made. It is unfathomable why Herefordshire, Shropshire and Telford should be together and Worcestershire should be missed out—unless the old traditional political ties make such partnerships feel more comfortable. It is more important that any LEP have geographical centres of economic common interest, and I want to ensure that that happens.

The deadline for LEP proposals was yesterday, and whatever has landed on the Minister’s desk will doubtless prove varied, interesting and challenging, to say the least. It will be fascinating to see the Government’s response to all the new ideas that are being brought forward. I suspect that they will take the best of them and help the areas where proposals are not quite hitting the mark. In the end, local areas should have a say, because the people who are involved locally know about their area and what it needs. We should have true democracy and business involvement in future decisions.

I have some concerns about Advantage West Midlands and the interim period, which could turn out to be a hiatus unless some careful work is done. Advantage West Midlands is making cuts to programmes, and it has said to me that some of its decisions about which programmes to cut are based more on the cost of getting out of the programme in question than on its value. I have asked Advantage West Midlands to produce a list of those programmes. I raise the matter with the Minister because the last thing the Government want is for good programmes to go down the drain for the wrong reasons. The days of making any organisation jump through hoops because of a centralising view should be over. That must not happen to some of the good programmes that Advantage West Midlands is rolling out.

I look forward to hearing the Minister’s response to the comments of the hon. Member for Birmingham, Northfield.

10:17

[Joan Walley (Stoke-on-Trent North) (Lab)]

It is always a pleasure to take part in Westminster Hall debates. I am particularly pleased to do so under your chairmanship, Mr Hollobone, because I know you understand the role of Back-Bench MPs and the importance of getting constituency issues on the agenda. I congratulate my hon. Friend the Member for Birmingham, Northfield (Richard Burden) on initiating the debate. I agree with the hon. Member for Solihull (Lorely Burt): it has been a passionate debate, but it has also been very measured.

My hon. Friend’s well informed contribution was based on some of the many debates that took place when we had the West Midlands Regional Committee. I welcome the Minister to his post. I understand that no longer having regional development agencies means there is no need to have Regional Select Committees to scrutinise what is being done. However, if the Minister would like some bedtime reading, I urge him to have a look at the work we did and the evidence we collected. He should also consider the reports of the public evidence sessions. If he wants to get a grounding in the real concerns of the whole of the west midlands—from Staffordshire in the north to wherever the area ends in the south—those evidence sessions should be his bible.

The West Midlands Regional Committee covered much ground in understanding a unique part of the UK that is dependent on manufacturing and has found the world has changed. The real issue is how to deal with the global economic changes we have had and bring together all the skills that are needed to deal with those changes, including the political skills and the area’s institutional needs. As hon. Members have said, things rarely happen by accident in this world; they happen by design. Taking political decisions is about ensuring that the things that need to happen are understood and do happen. I question how we can get the end results that we need without having the relevant institutions in place.

The debate is timely, not least because whatever will replace the RDAs are now in their formative stage; they are going through, if not a regional process, a process at Whitehall. When I came down to Westminster yesterday, I was concerned to read an article in the Financial Times on the future role of LEPs. It speculated on what LEPs might be set up and gave an overview of what might be in place in the south, the south-east, the south-west and so on. For the west midlands, the article stated with great authority that there would be one LEP for Birmingham, one for the black country and possibly one for some of the other marginal areas—I use the word marginal authoritatively, because there was no mention of an LEP for Staffordshire.

Therefore, today I want to argue that the Minister, whatever he does in this brave new world, must understand the needs of Stoke-on-Trent and Staffordshire. I prefaced every meeting that my colleagues from Stoke-on-Trent and I had with the RDA, and with my hon. Friend the Member for Dudley North (Ian Austin) when he was a Minister—he is now representing us on the Opposition Front Bench—by stating that the RDA would only deliver for the Government if it delivered what Staffordshire, and particularly Stoke-on-Trent, needed.

The west midlands has one of the most fragile economies in the UK, and the breakdown of the figures shows that Stoke-on-Trent’s needs are higher than most. That might be a ghastly situation to face, but it means that we all must understand it and be informed. The Government must not adopt party political positions just because there are no coalition Government Members in Stoke-on-Trent. They must recognise that need none the less and do what is necessary.

[Lorely Burt]

The hon. Lady makes a powerful point on behalf of her constituency, but I suggest that that is whole point of the LEPs. The hon. Member for Redditch said that she felt that her constituency had been ignored by Advantage West Midlands. Will it not now be helpful for Stoke-on-Trent and its economically viable areas to have their own say? Its business people and local representatives could make their points, put their business plan together and have ownership of it themselves so that they could say to the Government, “This is what we want. Let’s have it please.”

[Joan Walley]

That all sounds very good and plausible, but one needs the necessary recourses, skills, expertise, professionalism and governance to make that happen. One also needs people who know what they are doing and understand their role in delivering that. As my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) mentioned earlier, and as was well documented in the report on Stoke-on-Trent produced by the local government democracy commission, there are particular issues there that cannot be dealt with simply by stating that if local businesses and representatives have a say in what happens it will all be all right, and everyone recognises that. I am afraid that the problems are much more deep seated than such a view suggests.

In traditional manufacturing areas education and skills are often seen as the way out of the problems, and I belief that the key challenge we face is to ensure that our young people get the education they need and that there are the jobs available for them locally so that they can stay in the area and be part of its local governance arrangements. That way, they will become the leaders who will be able, along with the whole area, to make the case for what we need.

Sadly, Stoke-on-Trent was behind other areas in getting its act together and understanding the changing needs of the global economy. However, as was well charted in the meeting MPs had with the North Staffordshire chamber of commerce in June, we now understand that and have started to see an improvement in the local economy, as a result of the measures that the previous Government put in place to get us through the recession. We have started to see further improvements in trading conditions and in levels of job creation, and home market sales and orders for the manufacturing and service sectors have risen significantly, and that has all been charted by the North Staffordshire chamber of commerce. We now have the necessary expertise and know what we need, but just as we start to see those improvements, we find that we are in a period of limbo in which we genuinely do not know what will replace the RDAs, what money will be available and how those scarce resources will be allocated.

[Robert Flello]

My hon. Friend is making an extremely impassioned speech on behalf of an area that I, like her, love and feel strongly for. Does she recognise that, just as things are starting to turn the page in North Staffordshire, and in Stoke-on-Trent in particular, the rug is being pulled from under us, not only in terms of not knowing what the future holds, but in terms of the concrete help, such as the funding for new homes and for businesses, which has been pulled? All those things that we were starting to get to grips with are gone. The other issue, which she might like to comment on, is that there is now a danger that the LEPs will be in competition with each other and that Stoke-on-Trent and North Staffordshire might lose out to the big conglomerate of Birmingham and its immediate neighbours. When it comes to the distribution of funding to the LEPs, there is a danger that Stoke-on-Trent will yet again be hidden away at the bottom of the pile and will have to make do with the crumbs.

[Joan Walley]

There was no intention on my part for Stoke-on-Trent to be hidden away at the bottom of the pile. That is why I am speaking in this debate with my colleagues and saying to the Minister that we look forward to our further meetings in the coming weeks. In one meeting later this week we will discuss the ceramics sector with the Secretary of State, which will give us an opportunity to explain to the Government that ceramics is a creative industry and to educate them on what our local industry is doing. I could talk at great length, had I sufficient time, about how firms, such as Steelite in my constituency, are shortly to launch a major campaign to show the world the tableware that is being manufactured in Stoke-on-Trent and explain that there is a piece of Stoke-on-Trent just about everywhere around the world. We want the Government to recognise that the ceramics industry needs that support and assistance if it is to flourish, particularly in relation to energy issues, a cross-governmental concern.

We have further meetings arranged with the Government to focus on our further education college, so I am pleased that we will have the opportunity to put the case for the investment that is needed. If we can secure that investment, we will secure the skills, education and training for our young people so that they can grasp those opportunities, as my hon. Friend the Member for Stoke-on-Trent South has just said. We are in no way allowing that freefall or the limbo land that we are in to prevent us from making the case for what we need in Stoke-on-Trent.

Having said that, I am worried that we are already starting to see people leave, from the NHS and from key professions. Many professionals are moving to other jobs elsewhere in advance of the redundancies that will be made. My main concern is that people will not stay because there will be no jobs and that we will not have the people in the positions or the institutional framework to secure that funding. Some of that money will come from Europe. European innovative funding has already been dedicated to Stoke-on-Trent and we need to ensure that it is kept there.

I am conscious of the time and the debate being short. In summary, the local economic partnership plan being submitted is not what I would prefer, but it has to be supported by the Government to the fullest extent when the application arrives on their desk.

We have an issue about the uncompleted funding in the university quarter. The money needed for the further education colleges has to be there. Money is also needed to complete the bus station that serves Stoke-on-Trent in Hanley. Never mind Birmingham runway extensions or anything like that—we do not have a basic bus station to keep our essential infrastructure going which, again, will not help us get the regeneration that we need. Having said that, money must not come at the expense of the European and other funding that is taking place in the six towns of Stoke-on-Trent, such as Burslem. Those issues need to be thrashed out.

I have major concerns about how the demise not just of Advantage West Midlands but of the regional government office will leave us with no planning strategy. We could well end up being left with no solution for the brownfield sites, on which we should be concentrating, in the urban area of Stoke-on-Trent. We could get investment decisions whereby people will take their plans elsewhere and develop on green belt sites. In the absence of a coherent environmental strategy, it is difficult to see how all that will take place.

I am anxious to hear in good time about the Minister’s plans. Unless we know those plans, we cannot ensure that what we are having to salvage can be taken forward. Our fragile economic improvement is too precious—we must not see a double dip recession. I look forward to what the Minister will say and to the many ministerial letters saying that he has understood the needs of Stoke-on-Trent and north Staffordshire.

10:31

[Ian Austin (Dudley North) (Lab)]

I congratulate you on your appointment or election—I do not know how such things work—to the Panel of Chairs, Mr Hollobone.

I congratulate all the Members who have taken part in an important debate. I congratulate my hon. Friend the Member for Birmingham, Northfield (Richard Burden) on securing the debate and for the work he has done over the past 20 years as a Birmingham MP and, more recently, as Chair of the Regional Select Committee, highlighting regional issues and campaigning for more help and support for the west midlands.

As has been said, we have many great strengths in the region: hard work, ingenuity, adaptability and innovation. Those are the attributes on which we launched the industrial revolution and changed not just the west midlands and Britain but the whole of the world. We have some world-beating companies too, just not enough of them. The truth is that our region has been hit harder than any other region during the recession and the recovery in the west midlands is more fragile.

Not as a result of mistakes made over the past few years, our region has lagged behind the national average, in terms of output and productivity, since 1976—more than 30 years in which our region has been falling further behind. Secondly, as pointed out by the hon. Member for Solihull (Lorely Burt), ours is the only region in which private sector investment has declined over the past 20 years.

I want to discuss some of the structural challenges that our economy faces, some of the opportunities ahead and how we should be preparing to exploit them, so that we can bring new industries and jobs to the west midlands.

We face major challenges in the region on transport and trade, innovation, reputation and skills. The region was beginning to get its act together, but we cannot say that we have worked together to present our case to Whitehall as effectively as other regions have for decades. We have some brilliant universities, but the links between them and business are less effective in the west midlands than elsewhere.

The organisation tasked with strengthening our economy and tackling such underlying structural weaknesses was, of course, Advantage West Midlands. I want to pay tribute to Mick Laverty, his predecessor John Edwards and their colleagues, and to Sir Roy McNulty and his predecessor Nick Paul, and to thank them for their hard work, their contribution and everything they have achieved in the west midlands so far.

Let us look at the organisation’s record: 87,000 jobs, 7,500 new businesses and 127,000 people helped to get better skills. It drove forward the regeneration of the south side of Birmingham city centre and led the Rover taskforce—to which my hon. Friend the Member for Birmingham, Northfield made such an important contribution—which enabled more than nine out of 10 of the former Rover workers to get back into work. AWM also led the regional taskforce, which got the whole of the region working together and helped thousands of people and hundreds of businesses to weather the storm of the past few years. It sorted out major projects, such as Fort Dunlop, the Edgar Street Grid in Hereford and New Street station in Birmingham.

Look at Fort Dunlop, which was the largest single regeneration project in Europe. They are massively complex projects. The New Street station project had to bring together Network Rail, train operating companies, the private sector, shops, businesses, the local authority and the Government. That could never have happened without an organisation, such as AWM, with the necessary expertise, strength and knowledge.

Look at the airport project, which involved two local authorities, businesses, the owners of the airport and the Government, who had to contribute. There is no way a local economic partnership in Solihull would have the authority and clout to bring all of them to the table and to find a way through the complex legal arrangements or to get the airport the necessary investment.

[Lorely Burt]

I have to disagree with the hon. Gentleman. Birmingham Solihull does have the ability, skill and expertise for a project such as the extension of the runway. However, he is making an important point about regional infrastructure and the skills needed for such big projects. A small local economic partnership might need to bring in particular expertise.

I guess I am arguing against myself for a moment, and agreeing with the hon. Member for Birmingham, Northfield. There will be times when we need a much more structural regional overview to ensure that we are working together as a region. The Government are mindful of that.

[Ian Austin]

I am not sure I know what the hon. Lady is arguing. I am not sure that she knows what she is arguing. She does not seem to know what the Government are arguing on the issue.

The blunt truth, which the local authorities in Birmingham and Solihull would accept, is that if it were not for AWM, the government office and the other regional organisations, they would not have been able to make progress on the plans to extend the runway. They would not have got to where they are today without such support. For the hon. Lady to pretend otherwise is fanciful, frankly.

Do not take my word only for AWM’s success over the past few years. Independent evaluations, as we heard, show that AWM generated £8.14 in economic benefit for every £1 it invested. Only last week, the National Audit Office ranked AWM among the top two regional development authorities in the country, said it was performing strongly and commended its

“lean and efficient good practices”.

First, I want the Minister to tell us how much funding will be allocated to local economic partnerships in the region compared with AWM’s existing budget. Secondly, how confident is he that decisions on which LEP projects will be funded will be as well informed as decisions taken by AWM in the past? That question deals with the totally spurious and ridiculous point made about localism today. Decisions used to be taken in the region, by local councillors and businesses in the region.

What happened before was that local authorities and local regeneration companies, run by local people and local councillors, presented their case for funds to the RDA. Local councillors and business leaders sitting on the RDA decided which projects to fund in the region. Look at how the regional funding allocation process worked, and the joint strategy and investment board of the RDA achieved a phenomenal degree of cross-regional co-operation. People set aside vested interests and parochial demands to come up with 20 priorities to deal with the underlying structural weaknesses in the regional economy.

What will happen now is that local economic partnerships, presumably made up of those same people who sit on local councils or in local regeneration companies and all the rest, will put their case to remote officials in Whitehall, who will make decisions previously made locally and regionally. Let us hear no more nonsense about the new LEP arrangements being evidence of some sort of localist agenda.

We have also heard today that there will be less money to spend. I am not sure that we can rely on the Minister to admit to the cuts in those budgets, but I am happy to confirm what my hon. Friend the Member for Birmingham, Northfield sought from him. My hon. Friend is absolutely right. Under the previous Government, RDAs nationally had a budget of £1.5 billion a year. The new regional growth fund will amount to £1 billion over two years, which is less than one third of what is currently spent in the area and less than one quarter of what was spent just a few years ago. It does not take a genius to work out that more organisations will be chasing less funding.

As my hon. Friend the Member for Stoke-on-Trent North (Joan Walley) said just a moment ago, the fear of many of us in the region is that the new LEPs representing smaller areas or individual counties will find themselves massively outgunned by strong LEPs such as those based in Birmingham and Solihull. The idea that an LEP in Worcestershire will be able to compete with the expertise, knowledge and so on that are available to the Birmingham LEP strikes me as utterly ludicrous. The truth is that AWM’s work is needed now more than ever.

The blunt truth is that our region was hit harder by the recession than any other, so I would like the Minister to tell us why the region that he represents—London, which all the evidence and research tells us will recover more quickly and more strongly than any other region in the country—is able to keep its RDA but the RDA for the region where recovery will be toughest has been abolished.

The west midlands was hit harder because of underlying long-term structural weaknesses in the regional economy, the most serious of which is skills, our region’s number one priority. We have too many people with poor literacy and numeracy skills and no qualifications, and too few people with level 2 qualifications. We have fewer people with high-level skills than other regions, and the second lowest proportion of managerial and professional jobs in England. The region has 70,000 fewer graduates working in its economy than other regions do. Can the Minister tell us how much money will be invested in skills in the west midlands, as compared with the past?

The central reason why the west midlands suffers from a skills problem is that its regional economy has a higher proportion of small and medium-sized enterprises than elsewhere. The owner-manager of a small business who is desperately trying to keep his head above water and worrying about how he will pay his staff at the end of this week or the next is much less likely to be thinking about innovation, new skills, building links with universities, employing graduates next year, or new apprenticeship programmes. That is why we have fewer graduates working in the region.

The AWM instituted several programmes to bring universities and businesses closer together to tackle underlying structural weaknesses in the regional economy. I would like the Minister to tell us what plans he has to get the region’s brilliant universities and fantastic businesses working together to strengthen our economy for the future. Can he tell us what will happen to the multi-area agreement? For the first time, businesses and universities and eight local authorities in the region are working together.

It is crucial that the west midlands has the skills that are needed to exploit the opportunities presented by new industries, and by new jobs in the growth areas of the future. We will face massive growth in low-carbon technologies, advanced manufacturing, digital media and health care and biomedical technologies. We must make absolutely no mistake about this over the next few years. Our region is at a turning point, and the decisions that we make now about investment in skills and innovation in such areas will determine how many of the high-wage, high-productivity jobs of the future we will get in the west midlands. If we get the decisions wrong, we will face decades more of decline. Look what happened with the computer revolution and the massive investment in pharmaceuticals over the past few decades in Britain: all the jobs went to regions that had the necessary skills.

Can the Minister update us on plans for the manufacturing technology centre at Ansty, which was designed to increase investment in high-technology manufacturing? Can he tell us how the region will continue to exploit the new green industries and lead the way on low-carbon vehicle technologies, which were such important strands of AWM's work? That cannot be done by an individual LEP in Coventry, Birmingham or Solihull, because the work happens across the region, from Stoke-on-Trent to Lichfield, Coventry, Birmingham and the black country, and a regional organisation is needed to pull it together. Who will ensure that the region is able to co-ordinate its activities as it has in the past and profit from those opportunities?

Can the Minister tell us how, without an RDA co-ordinating the work, he plans to get better links between centres of excellence and business so that the region can become more entrepreneurial? Can he give an update on plans to extend the runway at Birmingham, which is crucial for developing more long-haul flights and direct links with emerging and growing economies? Can he tell us what is happening with High Speed 2, which has the potential to turn parts of our region into a new Thames valley?

Who does the Minister think will lead on the region’s approach to the relocation of civil service and public sector jobs in the future, or does he envisage a long list of LEPs, all of which will jump on trains and hammer down to Euston to put competing cases to Departments about where jobs should be located?

[Joan Walley]

I hope that my hon. Friend will ask the Minister to discuss the follow-up to the Smith review. There was a meeting in the west midlands on 11 June, and it is important to know how it is being followed up.

[Ian Austin]

I am sure the Minister will deal with that when he replies.

What are the Minister’s plans for inward investment? Instead of one regional co-ordinating body—the RDA—does he now want every local authority and LEP to charge off to other countries to compete for investment and to put competing arguments about where new companies should locate? All that supports the argument that we need to get the Government, businesses and local authorities working together, which was the central purpose behind RDAs.

The truth about the west midlands is that it faces the brunt of huge economic changes that are taking place faster than ever before. Jobs, businesses and whole industries can move around the world, and our poorest communities have paid the highest price for the benefits of globalisation. We are working in Stoke to tackle the decline of the pits and the Potteries, and in the black country to deal with changes in manufacturing. Faced with massive restructuring, we have a choice. We can blame the Government and say that communities would be free to transform themselves if only we could get government out of the way, or we can say that while communities still struggle with poverty, and while the economy in the west midlands lags behind the rest of the UK, there is a role for an organisation that can get the Government, business, the third sector, educational institutes and local authorities working together to help businesses exploit new opportunities with better skills and more innovation, and to ensure that, as we overcome the recession and as our economy grows again, we will build a stronger economy without leaving any community behind.

10:47

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

I join the other hon. Members who have welcomed you to the Chair, Mr Hollobone. It is a pleasure to see you there for the first time. I am sure that it will not be the last time, and we look forward to serving under your chairmanship in the future.

This has been a useful debate, and I warmly congratulate the hon. Member for Birmingham, Northfield (Richard Burden) on initiating it and on making informed and passionate arguments. I may not agree with everything that he said, but no one doubts his commitment to the region. I accept the genuineness of the concerns raised by hon. Members on both sides of the House about issues that affect their area.

I accept, too, the commitment of hon. Members to the former regional Select Committees. We disagree on the appropriateness of that route, but I want to make it clear that that does not diminish my respect for the work that hon. Members, including the hon. Gentleman, put in at the time.

Several important points were raised, and I shall do my best to deal with them in the time available. I have made notes, and, if I am unable to touch on everything, I will do my level best in due course to get back to hon. Members. I am conscious of the important opportunity provided by these debates.

I do not wish to start with semantics, but it is interesting that the debate is on Government policy on the west midlands. I would prefer to rephrase that to “Government policy for the west midlands”. It is, perhaps, a question of how we see things being delivered. Policy is not an end in itself. It does not exist in a vacuum but is actually a means to an end of improving people’s lives, be that through fiscal stimuli, transport infrastructure, education—all the things about which we have spoken. I believe that that is where we are on common ground. But the Government are saying clearly that they have policies for—not on—various parts of the country. That is important, because I suspect that we differ on the importance of decentralisation to the Government’s agenda. That is clear in the coalition agreement and in the manifestos on which both coalition parties fought the election. I am a little bit disappointed by some comments by Opposition Members, because, with respect, some of their arguments—although not those regarding specifics, which were useful—were deeply old fashioned and harked back to failed solutions. I genuinely do not believe that the way forward is to rehash failed solutions.

It is not always about having a plethora of interventions, programmes and agencies to take things forward and help. As my hon. Friend the Member for Solihull (Lorely Burt) said, it is often as much about what the Government do not do and about their giving people freedom and opportunity to seize the initiative.

[Ian Austin]

Which businesses in the west midlands have told the Minister that the RDA should be scrapped?

[Robert Neill]

I will mention the RDA in a moment. I am sorry that the hon. Gentleman continues to live in the past. His speech, as Opposition spokesman, was simply a defence of all that went before. It was a Bourbon speech, with respect, pretending that nothing had changed. But things have changed. Whatever the good intentions behind some interventions, the sad fact is that, in many respects, they were not delivering.

We have touched briefly on housing. The fact is that the top-down regional strategies were not delivering the housing that people in the west midlands and other parts of the country need. As a consequence, at the end of the previous Government’s period in office there were fewer housing starts than in any peacetime period since 1926.

[Ian Austin]

There was a recession.

[Robert Neill]

The hon. Gentleman cannot go on blaming the recession. That is a fantasy land. The Opposition like to think that a recession walked in and destroyed everything. No. They mucked up on their watch. The people of this country, including those in the west midlands, are paying the price for the previous Government’s incompetence.

[Robert Flello]

I invite the hon. Gentleman to Stoke-on-Trent South—specifically, to what used to be known as Coalville and is now known as Weston Heights—where he will see a fantastic housing success story that ground to a halt because the investment also ground to a halt.

[Robert Neill]

That is why the coalition has made it clear that getting the economy back on a safe track has to be central to what we do. There is a risk that, unless one gets to grips with the deficit of £156 billion, we will not have an economic base enabling us to take forward the initiatives that we all wish to see and which unite people from all parties. We disagree about the remedies, but the need to make some reductions in spending programmes, which have been mentioned, goes back directly—I am sorry to have to say it—to the previous Government’s failure to tackle the deficit. I cannot accept the proposition advanced by some people, however sincerely, that the solution is to carry on spending when the country is already mired in debt. I do not believe that that would serve anyone.

Let me return to specific points raised in this debate. Against the context that I have mentioned, the answer is to unlock initiative, partnership and co-operation. The point was well made by my hon. Friend the Member for Solihull that there is no reason to assume that a one-size-fits-all approach will automatically meet all the needs and requirements of such a diverse area as the west midlands. We take the view, as we always have done, that Government office regions frequently do not represent the natural economic units, which may be a much better basis for economic collaboration. That is why we have said that we will not rigidly use those regions as the basis for regional development agencies or Government office interventions, but will instead let the people on the ground, who know their area best, come forward with ideas about the way forward.

I am pleased that some nine proposals have been submitted for local economic partnerships from local authorities and business in the west midlands, in a number of configurations. I can say to the hon. Member for Stoke-on-Trent North (Joan Walley), who mentioned that, as well as other matters, that a Stoke and Staffordshire LEP has been proposed. Those proposals will be evaluated by my right hon. and hon. Friends who are responsible for such matters and they will consider the best way to go forward, as my hon. Friend the Member for Solihull said.

There has been a positive and rich response from business and local authorities in the west midlands. I am not as disdainful as the hon. Member for Dudley North (Ian Austin) is of local initiative. The answer does not always lie in sneering at the little people and in the big battalions. Often, local initiative is likely to get more focused results. That is why we have confirmed the abolition of the regional development agencies, along with a plethora of top-down machinery of which they were a part. Although I, too, recognise good work done in individual cases by such agencies, that does not justify the highly centralised remit of which they were part. I want to make some other points, but I shall give way one last time to the hon. Gentleman.

[Ian Austin]

At no time did I argue that local initiative does not matter. The RDAs were based on local people putting proposals to them, just as local people will now put proposals to Whitehall. But let us set that to one side for a moment. If the RDAs were such a failure, as the hon. Gentleman suggests, achieved nothing and need to be abolished, why is he retaining the one that serves his constituency here in London and getting rid of the ones that are much more needed and necessary in the west midlands?

[Robert Neill]

If the hon. Gentleman is going to make a bad point, he should at least make an accurate bad point. The fact is that that is not happening. First, the power is being given for the London Development Agency to be merged into the Greater London Authority, so it does not exist as an RDA. Secondly, it has democratic accountability to a directly elected Mayor of London, which is not the case elsewhere. We are, of course, extending to major cities such as Birmingham and Coventry the ability to have a democratically elected mayor. If the hon. Gentleman will forgive me for saying so, I will not take any lectures from him on that issue.

[Richard Burden]

I realise that the Minister is short of time. If he is not able to cover my points now, will he please write to hon. Members present? First, will he confirm the figures that I gave on the budgets for the RDAs compared with those for the LEPs? Secondly, do the budgets for LEPs include staffing or are local authorities meant to compete for a staffing budget in respect of other front-line services? Thirdly, will he list the programmes run by the RDA and say what will happen to them, whether decisions on them will be made by central Government and LEPs and whether they will be scrapped?

[Robert Neill]

I will do my best. A number of those matters, as the hon. Gentleman will appreciate, are under review in the spending round. Once we are in a position to do so, I will ensure that that information is made available.

It is important to stress that this Government are committed to assisting areas such as the west midlands, where private sector employment and growth declined seriously, with the regional growth fund. We have made a clear commitment to proceeding with Birmingham New Street station, which is a key piece of transport infrastructure, and we have made the key commitment to High Speed 2. Those major investments will make a real difference to the economy of that area. Local authorities and airport operators are discussing funding arrangements in relation to the extension of Birmingham airport. Those positive commitments to infrastructure are likely to have a far greater long-term effect on the people of the west midlands than a plethora of institutional initiatives. That is important.

I am conscious of the need for local authorities to work together constructively, because their co-operating is important. We will consider that matter when evaluating the various bids together. The key thing is that there should be a bottom-up process based on local knowledge and incentives, rather than the other way round.

The city of Birmingham was represented in the past by Joseph Chamberlain. He would be sad that there is not greater faith—at least, not in the Opposition Front-Bench spokesman—in the ability of the people of Birmingham and its neighbours to come together and find a way forward to deal with their own challenges and to find their own solutions. We have faith in the people of the west midlands. Joseph Chamberlain would have thoroughly approved of the stance and the philosophy underpinning the Government’s approach.

Given that time is short, I will deal with the specifics that hon. Members have raised in correspondence, as is increasingly the normal practice in such time-limited debates.

Small Businesses

Tuesday 7th September 2010 Westminster Hall

11:00

[Jeremy Lefroy (Stafford) (Con)]

It is a great pleasure, Mr. Hollobone, to speak under your chairmanship during my first debate in Westminster Hall, and I welcome you to the Chair.

The Government clearly have a great interest in the subject of this debate. The excellent Green Paper, “Financing a Private Sector Recovery”, which was published in July, states that

“the ability of business to access finance will play a key part in determining the shape and sustainability of the recovery.”

The recovery depends on the two issues that are of most concern in the economy—reducing unemployment and improving Government finances—so it is clear that businesses’ access to finance is of the utmost importance. Such access is vital for all businesses, so I shall explain why I am concentrating on small businesses in this debate. I am speaking broadly of those to which the Green Paper refers as small and medium-sized enterprises with a turnover of below £25 million a year.

The first reason is that although most businesses experience difficulty in raising finance at some stage, SMEs, as the Green Paper states,

“may face more of a challenge given their reliance on bank lending, and the fact that they have historically faced greater challenges accessing external finance.”

The Green Paper also points out that the question of whether existing Government schemes are

“sufficient to ensure that finance is available to SMEs as confidence recovers and demand revives is of central importance.”

The second reason is the importance of SMEs to our economy. There are 4.8 million of them, and they account for more than 50% of private sector employment and turnover. Those statistics alone show that SMEs are likely to have the most impact on creating jobs and restoring public finances.

The third reason is that SMEs and especially new businesses are likely to produce the best return in the number of jobs created for the available finance. Estimates of the capital cost of job creation are difficult to come by, and clearly they vary from sector to sector, but there are examples of funds making loans to small businesses that have shown over many years that they can create a job with a loan—not a grant—of as little as £4,000 in fixed and working capital. The cost to the state of one person out of work is, at a conservative estimate, at least £5,000 a year. That money serves only to increase our burgeoning national debt and gives nothing in return to the recipient or the state. I am sure that any Government, especially one who have shown in the Green Paper such welcome clarity in their analysis, would be keen to ensure that such funds, which provide such an excellent rate of return to society, are given every encouragement and incentive to flourish. I shall return to that.

I must establish some facts, and I shall start with the banks. I have obtained figures from four major high street banks and the following points emerge. First, utilisation of existing bank facilities is as low as 44% in one major high street bank, and a total of £45 billion of unused capacity in another.

[Mr Brian Binley (Northampton South) (Con)]

I congratulate my hon. Friend on obtaining this important debate. He rightly said that the matter is vital to budget strategy. My concern emanates from access to capital becoming more difficult. All the facts tell us that that has become more difficult over the past 12 months, and that is not helpful. At the same time, Government bodies, particularly G20, are piling desire on banks to build up their capital asset base—by £130 billion in the case of G20—and that affects their ability to lend. Would it be right to ease that pressure at this time, and is it not more important to ensure that small businesses have working capital to enable the number of jobs to increase?

[Jeremy Lefroy]

My hon. Friend makes some important points. He is one of the most expert Members in this subject, and I agree with him. It is important to increase capital and the banks are doing so. Their total profit in the past year was £15 billion, so they are gradually increasing capital, particularly as some are not paying dividends. But financing the recovery is of greater long-term interest, not only to the nation, but to the banks, and I entirely support what my hon. Friend said.

Another point arising from the survey of banks is that businesses are currently repaying debt rather than borrowing more. One bank made a net repayment of £1.4 billion during the last quarter, so money is coming out of the small business sector rather than going into it. Banks have also increased their lending to all sizes of company, including SMEs, and one reported that lending to SMEs was up by 38% during the past eight months, albeit to only £1.4 billion. Another lent £10.9 billion to SMEs during the 12 months to March 2010, and approved 80% of applicants.

That is the story from the banks’ perspective. The picture is of some increase in lending to SMEs, combined with a cautious approach by businesses to borrowing, with many reducing borrowing rather seeking an increase. From their point of view, there does not seem to be a major problem with capacity. However, a survey in February by the Institute of Directors—I declare an interest as I am a member—paints a somewhat different picture, because 57% of directors said that their application for finance had been rejected by their bank and 83% of those who were declined for bank finance were not offered information on the Government’s enterprise finance guarantee scheme. That worries me.

Tellingly, one in five businesses which said that they needed additional capital did not investigate bank loans or overdrafts because they believed that they would be declined, saddled with disproportionately high costs or required to comply with requests for security that they did not have.

[Lorely Burt (Solihull) (LD)]

The hon. Gentleman is making some powerful points. Does he agree that one reason why companies are reticent about approaching banks is the exorbitantly high rates that they are charging in interest and administration fees? The five biggest banks made £15 billion in the first half of this year. Are not the rates that they are charging part of the problem? Many companies are repaying loans because they cannot afford to hang on to them.

[Jeremy Lefroy]

My hon. Friend makes a powerful point, and I am sure that she has received many representations from her constituents about the matter. I totally agree with her. The problem is perhaps not so much interest rates, some of which have come down to reasonably low levels, although not all, but the charges. I have heard of charges being trebled. I raised the point with the Minister in the House, and he said in his powerful reply that he would not put up with that and would speak to banks if hon. Members contacted him with representations. I have done so, and I am sure that other hon. Members would like to do so. It is not acceptable for banks to use a shortage of credit as an opportunity to hike up charges, as some have done.

The picture is of some increase in bank lending, but the survey from the Institute of Directors paints a rather different one. Comparing data with a survey in 2001 shows that the number of those surveyed who were financing their businesses through bank loans or overdrafts had declined from 85% to 64%, with 20% now financing their business to some extent through credit cards, which is unsustainable.

The annual survey by the Federation of Small Businesses —again, I must declare an interest because a company of which I am a director is a member—is even starker. Of more than 10,000 who were surveyed, 31% said that fairer bank lending would be key to improving their prospects. The FSB concludes that

“SMEs have lost confidence in the banking sector.”

It pushes for greater competition, including the creation of a post bank, which I have long supported.

[Karen Bradley (Staffordshire Moorlands) (Con)]

I congratulate my hon. Friend on securing the debate. I want to add to the anecdotal evidence something about businesses in Staffordshire Moorlands. A number of businesses have contacted me and two cases in particular are pertinent to the debate. One concerns a builder of affordable housing that is unable to obtain bank finance to build the affordable housing that we need so desperately in north Staffordshire. Another case is a small retailer that stocks stoves and Agas. It cannot expand to take on more staff because it desperately needs new premises but is unable to obtain them due to lack of bank finance. I hope that the Minister will address that point when responding to the debate.

[Jeremy Lefroy]

I am grateful to my hon. Friend for that contribution; I have come across the same problems in my constituency and I will later provide some suggestions about how things can be improved. Hon. Members from all parties have an important role to play because there seems to be a disconnect between businesses and the banks. Sometimes, businesses find that their only source of redress is to go to their Member of Parliament and ask them to talk with the banks on their behalf. I heard of one case—I can hardly believe it—where a bank said that it would be more likely to lend to a business if there were a letter from the local MP. I do not think that MPs are in the business of guaranteeing bank loans of behalf of their constituents. I cannot remember the name of the hon. Member who mentioned that case to me yesterday, but perhaps he or she is in the Chamber and can elucidate further.

The Green Paper quotes evidence that in 2009, 78% of small and medium-sized enterprises managed to obtain some finance from the first source that they approached, which in most cases was the bank. However, that may have been through the use of credit cards or consumer overdrafts. The picture is somewhat confused, but after considering the facts, I believe that credit is beginning to flow to established companies, including SMEs with a reasonable track record. Young businesses often find it difficult to access the finance that they need in order to grow, unless they persevere or can offer reasonable security. As my hon. Friend the Member for Solihull (Lorely Burt) said, such businesses often find that the costs rise through hiked-up charges.

[Anne Marie Morris (Newton Abbot) (Con)]

I agree with my hon. Friend; he makes some good points. In my constituency, there are a number of individuals who would like to start up a business, and I am not sure that we have really looked at that issue. Such people find it even more difficult to get access to funding. Some of the high street banks—Barclays is a case in point—have come up with new ideas and will lend money even to those who have been bankrupt in the past. However, that does not seem to be making a difference to new businesses, and I would be grateful if the Minister addressed that problem as it is a key issue.

[Jeremy Lefroy]

My hon. Friend makes a powerful point that I will address in a moment. I entirely agree with her point about access to finance for new businesses. I conclude that in general, new businesses do not consider approaching a bank because they believe that it will be a waste of time or that they have only a small chance of success.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on securing this important debate. Does he agree that one thing that would help small businesses is the removal of bureaucracy and red tape? Small businesses are hands-on businesses and do not have the time to deal with paperwork. I believe that such a move would assist the small business sector.

All hon. Members present in the Chamber will have received letters from different constituents and companies. It is one thing for banks to be prudent in lending, but they are being draconian and that makes it impossible for small businesses to start up. We live in the real world, but the banks do not seem to, and I do not believe that the Government have any influence over them.

[Jeremy Lefroy]

The hon. Gentleman makes two powerful points. The second point is true; as someone involved in small business for many years, I have been on the receiving end of that kind of draconian attitude many times—although not every time, I hasten to add. I am sure that the Minister will want to say something about red tape. I, too, have spent many late hours going through the red tape for my business, after having spent the rest of the day trying to make some money. Whatever the truth—it probably lies somewhere in between all the figures provided—it is clear that a substantial number of SMEs approach banks but do not obtain the funding that they need to maintain or expand their business.

In my constituency, I have seen the difficulty that farmers are finding in business diversification. Money is pouring in to help farmers buy land or get involved in agricultural activities, but they receive a limited response from the banks for the laudable process of rural diversification, which will create more jobs in that area.

It is likely that there are some people not yet in business who wish to start up on their own. However, as my hon. Friend the Member for Newton Abbot (Anne Marie Morris) mentioned, they might find it even harder to obtain that funding, perhaps because they have been made redundant. There might be good reasons for banks to refuse applications, and they must be confident that they will receive their money back. However, anecdotal evidence from my constituents—as, I am sure, from those of all hon. Members in the Chamber—suggests that banks are unwilling to take even the smallest risk if they find it difficult to assess viability, which is often the case with new and young businesses.

[Fiona Bruce (Congleton) (Con)]

My hon. Friend makes an excellent point, and I declare an interest in this debate as someone who has run a small business for over 20 years. A linked issue is the shortage of skilled employees across a range of businesses, which hampers their development. For example, I know from my own business that it is difficult to recruit legal secretaries. Businesses in my constituency claim that they cannot recruit engineering staff or that they need scientific staff. There is a small, green technology business in my constituency, based in Middlewich. It has about 30 staff who convert used cooking oils to diesel but it cannot recruit people with those skills. It is proud that it is training up young men who were stacking shelves at the local supermarket but are now becoming lab technicians. Nevertheless, the cost of training skilled staff is a disproportionate burden on small businesses. That is a funding challenge because finance for that training cannot be obtained from banks. It is not like the purchase of property where some form of collateral can be offered, but the country desperately needs such investment. If we are to recover economic health and well-being, we need an increased skilled work force and at the moment we are not providing the funding for that. I ask the Minister to look urgently at that matter because it is not easy for a small business to obtain funding from a bank for that purpose.

[Jeremy Lefroy]

I am grateful to my hon. Friend for her contribution. I had the pleasure of working with her on a training course in Rwanda one month ago, so I know how expert she is on the subject of training, and how much she knows about it. Her words must be taken extremely seriously.

The Government must step in on the issue of small business finance—indeed, they have already intervened. Since 1981, there has been a small loans guarantee scheme. The previous Government set up the enterprise finance guarantee in January 2009, and the current Government committed an additional £200 million in the June Budget. The public often demand evidence of cross-party consensus in the national interest, and this issue provides a fine example of that.

In his response, I would be grateful if the Minister answered questions on the enterprise finance guarantee, and told us how he assesses its performance to date. He is no doubt aware that the Institute of Chartered Accountants in England and Wales—of which I am a member—has called for the scheme to become more like the former small loans guarantee scheme in its design and operation. I would be interested to hear his views on that.

If a loan guarantee scheme proves successful and pays its way, it needs to be expanded further and rapidly at this critical time, so that as many SMEs as possible can be assisted. I would be grateful for the Minister’s views on that. Finally, on bank lending, what progress are the Government making to bring together banks and small business representatives to ensure that instead of the stand-off that we appear to have at the moment, we have genuine co-operation in our country’s most vital interests?

[Andrew Griffiths (Burton) (Con)]

I thank my hon. Friend for organising the debate. It is testament to his hard work and diligence that we are all here, and I think that we are getting to the crux of the matter. May I raise the flag for engineering, as someone who comes from a small engineering family business? There are a lot of concerns in my constituency in relation to manufacturing. I am lucky enough to have in my constituency a couple of large manufacturing businesses. They tell me that they see the green shoots—they see business slowly improving—and they want to place orders with local businesses. They want to buy British and they want to use local suppliers, but they are finding that there is a major problem with the supply chain. Companies that they have used in the past or new companies just are not able or are unwilling to take the risk in order to meet the potential orders. They are saying that those businesses have either downscaled—they have cut shifts and lost staff—or they just are not prepared to take the risk, or the banks, more importantly, are not prepared to take the risk, that the order that might be there tomorrow or next month will be there in six months’ time. That problem is having a major impact. It is slowing things down; there is a drag effect on manufacturing in particular. If we could get that supply of finance to small manufacturing businesses, that would make a massive impact.

[Jeremy Lefroy]

My hon. Friend makes extremely important points; he has great experience in this field. I feel disappointed at the situation. We are a trading nation; our history is as a trading nation. That is how Britain became wealthy over the centuries. Only by taking risks, particularly through the merchant banking of the 19th and 20th centuries, were we able to finance it, but I do not see that spirit alive in our banking sector as much I would like to. I long to see the formation of some new British merchant banks. All our old ones were largely taken over and are now part of massive conglomerates. I would like to see young entrepreneurs come into the City—indeed, I would like to see this not just in the City of London but all over—set up merchant banks and really take some risks and make a difference to the country, because I believe that they can do that and it might help firms such as the ones to which my hon. Friend referred.

The other major potential source of funding—apart from grants, where organisations such as the Prince’s Trust in particular have done fine work over many years—is of equal importance. I am referring to equity. That is where SMEs miss out. Only 2% have access to equity finance. The Green Paper gives several reasons why that is the case: a reluctance to cede ownership, unsuitable business models, poor corporate governance and businesses that are in themselves not ready for investment. I would add further reasons. First, there is the work involved in making an investment compared with the actual amount invested. Looking at a proposal for £20,000 can require as much work as looking at one for £200,000 or even £2 million. I ask the Minister to consider how to make it easier and less costly for small businesses to raise equity capital.

Secondly, there is a lack of suitable investment vehicles. I hope that the Government will give serious attention to that. Thirdly, the overall tax treatment of investment in new and young businesses puts them at somewhat of a disadvantage in attracting funds compared with larger companies. It is ironic that the companies that least need funds from investors are those that receive the most favourable tax treatment through being eligible for inclusion in pension portfolios. There are tax incentives for funds investing in smaller non-quoted companies—in particular, venture capital trusts—but they are usually available only to the wealthy investor, and the funds themselves will tend to invest in reasonably well established companies.

I am not saying that there is an enormous amount of money out there just waiting for a home in new businesses or SMEs, but we do not need an enormous amount. Let me take an example from my own county of Staffordshire. The Michelin Development fund estimates that it has helped to create 1,400 jobs over the years through a revolving fund of just £3 million—a revolving fund, not grants. That is just over £2,000 a job. The North Staffordshire Risk Capital Fund and the Black Country Reinvestment Society, both of which operate in my constituency, also help to preserve or generate jobs cheaply. Those funds are not equity funds. They mainly use loans, but they do have some characteristics of equity. They are unsecured and, in some cases, they may ask for a premium return based on performance. Those funds overcome the obstacle of the ratio of time taken to assess proposals to the investment amount by using local experts, who provide their time voluntarily or whose cost is covered by grants or the return on the investment. I would like many more such funds to be set up around the country. Indeed, I believe that the new local enterprise partnerships could make supporting them a priority. Local companies and individuals can use them to invest directly in the future of their area, just as the funds in Staffordshire and elsewhere have done.

It may be argued that such a model is not sustainable because it depends on goodwill or some financial support from the private sector or Government, but those who are quick to challenge explicit assistance are sometimes reluctant to acknowledge implicit assistance—in particular, the substantial amount of pension tax relief that continues to be granted annually to higher rate taxpayers, despite recent restrictions, and which is invested very largely in companies comprising just 30% of the private sector, in property or in gilts.

I respectfully ask the Minister to examine ways to unlock equity funding from pension funds for small businesses, which most need the capital. That could result in dozens of locally based funds springing up around the country, allowing people to contribute their time and expertise to the future of their communities. That would be yet another example of the big society at work in a very practical way.

[Andrew Griffiths]

My hon. Friend touches on the big society, and one of the things that people in my constituency are quite excited about is the prospect of the green bank. We have not heard much about that today, but perhaps my hon. Friend the Minister will touch on it a bit more. There is a business in Burton called Regenerco, which is working with businesses across the country to install solar panels free of charge on those businesses in return for a share of the profit from the energy produced. That is a brilliant business. It is low carbon. It is doing its bit for the environment and for the economy. However, like many other businesses, it is keen to get access to further finance. Many people are waiting with bated breath to see how the green bank will operate and how it can unlock some of the potential in those new green businesses. Perhaps we shall hear more from the Minister about how the green bank will work, but I am sure that my hon. Friend the Member for Stafford (Jeremy Lefroy) will agree with me that it has the potential to help some of those fledgling businesses.

[Jeremy Lefroy]

I am most grateful to my hon. Friend for that intervention. I look forward to hearing from the Minister as well, because I, too, am excited by the concept of the green bank and would like to see it in operation as soon as possible.

Will the Minister also consider whether there is a need to increase the sums invested in Capital for Enterprise? The last figures that I have seen indicate that the total invested by the various funds in UK equity is £566 million, while total SME financing was £1.1 billion, including loans. Those figures may be a little out of date, but in contrast, the total invested in equity in developing countries by the Government-owned Commonwealth Development Corporation is £2.7 billion—well over twice as much. What is right for developing countries is surely right for the UK.

There is also a very important role for the banks to play. Just as the major clearing banks established in 1945 the Industrial and Commercial Finance Corporation —later known as Investors in Industry and finally 3i—is it perhaps not time for them to come together again and form an ICFC mark 2 to invest equity in the smallest businesses, if not directly, for reasons of cost, then through local funds? The major banks have the ability, working together through an ICFC mark 2, to transform the availability of equity funding for small businesses. As the taxpayer is a major shareholder in two of them, I ask the Minister to discuss that with them.

I have been able to give only the briefest of surveys of the current situation regarding the finance of small businesses. I am sure that hon. Members following me will help to fill out the picture with the benefit of their experience. I am no expert in this matter, but what I do have is a conviction that unless we get this right, we will not be able to tackle the twin evils of unemployment and the excessive budget deficit.

The quality of the Green Paper is clear evidence of the thought being given to this subject, but as with many of my colleagues who entered Parliament this year, my background in business makes me rather impatient about words that are not followed up with appropriate action. The Government have already shown themselves willing and able to take difficult but necessary decisions, and I have no doubt that they will do the same to ensure that small business will indeed have access to finance so that our economic recovery is strong and sustained.

[Several hon. Members]

rose—

[Mr Philip Hollobone (in the Chair)]

Four people are seeking to catch my eye, two of whom have written to Mr Speaker. I will ask those who have written to speak first. No member of the Opposition has stood up to indicate that they want to speak, so those contributing to the debate will come purely from the Government side. I propose to call the winding-up speeches at 12.10 pm, and the debate is due to finish at 12.30 pm, so Members can work out what would be a good time to speak for to allow colleagues to get in.

11:30

[Mr Marcus Jones (Nuneaton) (Con)]

I thank you, Mr Hollobone, for allowing me to speak in this vital debate. I also thank my hon. Friend the Member for Stafford (Jeremy Lefroy) for securing it and I congratulate him on doing so. He gave a comprehensive speech and made some powerful and pertinent points, which I hope the Minister will take on board. We should not underestimate the importance of the debate. This is one of the most important issues facing our economy. It is imperative that we look for ways to achieve sustainable growth to enable us to rebalance our economy, reduce the budget deficit and pay off the huge debt that we inherited after 13 years of Labour Government.

To achieve that fundamental goal, we must ensure that small businesses grow and prosper and that new jobs are created. New jobs are vital to constituencies such as mine. Indeed, new employment prospects are desperately needed across the whole of the west midlands, which has suffered particularly badly during the recession. Small and medium-sized enterprises are vital to rebalancing our economy. We need to remind ourselves that they make up more than 59% of the private sector and 50% of private sector turnover. They also employ an estimated 13.7 million people, which is obviously a huge amount.

Two of the main drivers behind SMEs’ need for finance are cash flow and investment, and the two issues are very much linked. Good cash flow makes business more sustainable; it makes it easier for firms to plan ahead and it gives them greater confidence to invest, thereby driving the creation of new jobs. Bad cash flow has the opposite effect, which is very negative. We often associate overcoming cash-flow problems with accessing credit. Before I mention the very pertinent issue of credit, however, let me turn to the other main impediments to good cash flow—payment terms and conditions of business.

The cash-flow issues faced by our small firms often have as much to do with the payment terms and conditions that they have to work with when dealing with big businesses and Government organisations as they do with banks. As a council leader in particularly difficult times, I was extremely pleased to be able to reduce payment terms to small businesses to 10 days in the depths of the recession. Even in these difficult times, when we must reduce public sector spending, the Government could consider supporting such an initiative, and I would like to know the Minister’s thoughts on that.

In my constituency, we have second and third-tier manufacturers, which come under pressure to hold stocks over longer periods when dealing with large businesses. They also have problems because large businesses expect them to extend their terms of credit during tough times, which drastically reduces their cash flows.

[Andrew Griffiths]

I draw my hon. Friend’s attention to a recent case in my constituency, where a large brewing firm unilaterally decided—with no negotiation or discussion—to extend its terms of credit from 30 to 90 days, which had a massive impact on some very small businesses. We talk a lot about corporate responsibility, and although larger businesses need to operate in a tough economic climate, they also have a responsibility to smaller supply businesses, which often rely on tight terms of credit to survive.

[Mr Jones]

I thank my hon. Friend for his comments. He is absolutely right. The same comments are coming from small businesses in my constituency.

[Karen Bradley]

I apologise for intervening so soon after the last intervention, but I wanted want to say something about Her Majesty’s Revenue and Customs, which is another area of Government intervention that could very much help small businesses with their cash flows. I have many letters in my postbag from small businesses that are struggling to meet HMRC’s demands to pay very large bills, particularly for VAT. If HMRC could in some way help such businesses over this difficult period in the recession, I am sure that that would be much appreciated.

[Mr Jones]

I thank my hon. Friend for her comments, and I will be interested to hear the Minister’s views about HMRC. I, too, have heard of small firms in my constituency struggling to balance their cash flow when they have large VAT bills to honour.

We must acknowledge that we perhaps need to exert some influence on larger businesses over terms of credit and, as my hon. Friend the Member for Burton (Andrew Griffiths) put it, showing some social responsibility. However, we also need to acknowledge that the Government are limited in how far they can interfere with the way in which businesses are run. In addition, we need to be mindful of the global competitiveness of larger businesses in the modern day.

Will the Minister consider what the Government can do to encourage better payment terms for our small businesses? The extension of the credit terms and conditions of small businesses has inevitable consequences. It is vital that many firms be able immediately to access a bank overdraft when faced with the measures used by larger businesses. However, evidence from my constituency suggests that banks can be unwilling to give such credit facilities, even to long-standing businesses with strong trading records, without demanding security in the form of the business owner’s home, which is often quite an issue.

I have obtained information from the Forum of Private Business suggesting that interest rates on loans that are not secured against the business owner’s property can often be double those on loans secured against commercial or residential property, and one of my colleagues alluded to that. The problem is that many business owners, and particularly long-standing ones, do not necessarily want to put their homes on the line, particularly if they are reaching retirement age and do not consider it worth taking the risk.

That is what happened in the case of a manufacturing business in my constituency that I heard from during the general election campaign. The firm has not been afforded the credit that it needs, even though it has a strong order book. It has been trading for 50 years and employs about six people, but it is on the verge of ceasing to trade. It will close the doors and sell its commercial property because that is a better proposition for the business’s owner than keeping trading and employing people.

If such things keep happening, they will have an extremely negative effect, particularly in the engineering sector, where many small business owners are probably of a reasonable age, given the deteriorating uptake of new people into the industry. Many people will be in their late 50s or early 60s and might consider it better to close their firms than to keep going. That would have a very negative impact on what we are trying to achieve.

[David Rutley (Macclesfield) (Con)]

My hon. Friend makes some excellent points about the way in which banks are treating small businesses, and we have heard other examples from my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley). Things are getting quite out of hand, and we are seeing similar examples in Macclesfield. Does my hon. Friend the Member for Nuneaton (Mr Jones) agree that we should perhaps work more closely with the Federation of Small Businesses and other industry groups to gather data so that we can put extra pressure on the banks and use an evidence-based approach to demonstrate to the Government what is actually going on? There are a lot of ad hoc data flying around, and we need to get them into a more user-friendly form so that we can use evidenced-based approaches to show what banks are doing. When we have the data, we will be better able to put further pressure on the Government and the banks to provide greater support to small businesses. I do not know whether my hon. Friend agrees with that sentiment.

[Mr Jones]

I thank my hon. Friend for that intervention and agree with his sentiments. Later I shall talk about what I think is progress in that direction. I am sure that the Minister, who has had a lot to do, will be heartened by the quite positive comments I want to make.

As to firms in my constituency that have had problems with credit, I have been made aware of firms around the country whose credit facilities have been reviewed by banks at very short notice. Banks often vary overdraft terms without warning and dramatically increase loan rates at short notice, which makes it difficult for small businesses to respond. I have received figures from the Engineering Employers Federation that quantify those concerns. During the first quarter of this year the cost of finance increased for almost 35% of companies, whereas it decreased for only 3%. That is obviously difficult in the current economic climate. I fully understand that the banks are trying to repair their balance sheets, but at a time when we have the lowest interest rates in living memory, that seems counterproductive. It is no wonder that the number of complaints about banks by SMEs has risen in the past year by 119%. I am therefore heartened to see that, in their Green Paper “Financing a private sector recovery”, the Government have started to make the banks reconsider their position slightly. That is after much talk from the previous Government about making banks lend to small business, all of which seems to have had little effect.

[Justin Tomlinson (North Swindon) (Con)]

My hon. Friend has been making some excellent points, and I am sure that all of us will relate the various issues he has raised to our constituencies and businesses. The holy grail for the banks seems to be to provide customer relationship managers. Does my hon. Friend feel that they will really be given the flexibility and authority to make decisions about lending money? Do they have applied business experience to enable them to make the right decisions?

[Lorely Burt]

The computer says no.

[Mr Jones]

I thank my hon. Friend—and I hear the comment by my hon. Friend the Member for Solihull (Lorely Burt), making that very point. Many business people, particularly those who have been in business a long time, feel that 20 or 30 years ago they could pop in to see the bank manager if they had a problem, and discuss their concerns and try to get over issues. Now it seems that a customer adviser or someone who is purportedly a bank manager taps a few figures into the computer and comes up with the right result—if the computer thinks that is right. That is a dangerous situation. It is difficult for our small businesses to survive.

[Gavin Williamson (South Staffordshire) (Con)]

Does my hon. Friend agree that banks take far too short-term a view of their investment in and support for businesses? What my hon. Friend the Member for Stafford (Jeremy Lefroy) said about banks investing in businesses—in equity—is relevant; it is about having a long-term vision of their future and supporting them so they can grow, much as banks do in Germany.

[Mr Jones]

I tend to agree; that is particularly the case for manufacturing, about which banks are taking a very short-term view.

It is positive that progress is happening, and a taskforce is being created by the six largest banks in the country. Until now that has been headed by Stephen Green. I understand that from today he has other responsibilities and I wish him well with those. The move is a positive one and I hope that the work of Mr Green and his colleagues will continue. I would like the Minister to explain how he will work with the taskforce and feed into it. There seem to be some positive noises about banks wanting to engage with Government and business to get over the problems.

[Lorely Burt]

Does my hon. Friend agree that a taskforce set up by banks to see why they are not lending is a tiny bit self-serving?

[Mr Jones]

That is obviously a risk if the banks are marking their own exam papers, but I have asked the Minister how the Government will interact with the taskforce, and I think that if we do that in the right, positive way and involve business organisations, we can end up with some positive outcomes. I am mindful that there have been many interventions in my speech and that other hon. Members will want to speak, so I shall try to cut my remarks a little short.

We and the Government are here to facilitate and improve the environment in which small businesses can flourish and employ people. That is what we all want, and I hope that the Government’s new local enterprise partnerships will be more focused on doing that. My hon. Friend the Member for Stafford has alluded to schemes that the Government have been or could be involved with, and that is positive. I hope that the local enterprise partnerships will get involved with such schemes and that they will be a positive way to bring about solutions locally. Often such solutions work, in time, but businesses get frustrated by the fact that it takes so long to bring about schemes and to provide the relevant types of finance and help with financing; that has been a problem with the regional development agencies. Businesses often do not have that sort of time, for the reasons I have mentioned.

The Government are moving in the right direction, but hon. Members need to keep putting pressure on them to continue. I am sure that if the Government can motivate the banks and bring them together to work for the common good—although they obviously have their own commercial reasons to be in business—we shall have gone some way towards creating the enterprise culture that this country has so badly missed for so long, and which will reinvigorate our economy.

[Several hon. Members]

rose—

[Mr Philip Hollobone (in the Chair)]

We have 25 minutes until the winding-up speeches and three Back Benchers want to speak.

11:46

[Lorely Burt (Solihull) (LD)]

I shall be brief because I know that colleagues want to contribute.

I was going to talk about Government schemes, but that area has been well covered by other hon. Members, so I shall confine my comments to privately run, independent schemes, to which I should like the Government to give some form of backing. I also want to talk about the banks.

The Funding Circle was launched on 13 August and it will be an interesting way for private investors to borrow, and to undercut the banks by several percentage points—by up to a quarter. That is a similar enterprise to Zopa, which has lent more than £90 million in the past five years. There is an element of risk, but it can be spread by investing in a number of different organisations, so I should like the Government to give that some blessing.

I also want to mention 3i. The point has already been made about investigating how we could support a similar type of organisation—a private equity group—to provide equity and debt finance to business, particularly small businesses.

My third suggestion was in the Liberal Democrat manifesto but does not seem to have made it into the coalition agreement: regional stock exchanges. Local investors want to invest in businesses that are local to them and to put money back into the prosperity of their region.

[Gavin Williamson]

The hon. Lady made a valuable point about private equity and perhaps regional stock exchanges, but the fundamental issue is that although private equity is one of the longest-term investors in the country, in that it has a five or six-year plan—that is going through the stock exchange—we want to consider modes of investment with a turnaround of not five or six years but 20 to 30 years, so that people invest for a sustained, long period and the small business can become a medium-sized business and grow. I encourage the Minister to look at ways to do it. I do not quite have the answer, but obviously that is why I am not a Minister. I am sure that he has all the answers.

[Lorely Burt]

The hon. Gentleman makes a valid point. I, too, look forward to the Minister’s response to that plea.

In August, the Bank of England reported that loans to small and medium-sized businesses had contracted by 2% year on year. Credit conditions are tighter for small business. Larger businesses can get out of that by refinancing on the bond market, but there are few places for small businesses to go. I referred earlier to the exorbitant rates that small businesses are being charged. I have come to the conclusion that there is a sort of cartel. I do not know whether that statement is libellous, but at least I said it in the House.

There are four main banks, and 90% of small businesses bank with the big four. The Federation of Small Businesses says that it wants to see more competition among the banks. Various attempts were made by Labour to get the banks to lend; they threatened them and said, “We are going to do some bank bashing if you don’t comply,” but none of that resulted in anything worth while. However, I do not believe it was through a lack of trying.

I have a solution for the Minister to consider. I call it the Lil-lets solution after a recent visit to the Lil-lets head office in my constituency. I have been visiting businesses to see how they are faring with the recession and to ask what the Government can do to release that stranglehold and create a better business environment for them. They said that banks are not lending more, and that even those with only half a brain would not borrow from banks if they could possibly avoid it because of the exorbitant rates, arrangement fees and other charges made by the banks.

The two directors of Lil-lets have a solution. We own 84% of the Royal Bank of Scotland. We also own a substantial proportion of Lloyds. Why not make RBS bring its rates down? The cartel agreement would thus not be valid. If one bank went to a lower rate, all the others would have to follow or they would become uncompetitive. General competition would improve, which would break the stranglehold agreement that seems to have evolved between the big four banks. It would create the sort of competitive environment needed particularly by small businesses, which need not only to borrow money but to borrow at a sustainable rate. That is the most important thing.

11:53

[George Freeman (Mid Norfolk) (Con)]

I shall try to be brief. I welcome this debate and I thank my hon. Friend the Member for Stafford (Jeremy Lefroy) for initiating it. I welcome my hon. Friend the Minister; I know that the small business community will be delighted that we have a Front-Bench spokesman with experience of building a small business. I also welcome the Government’s commitment to this vital area, both in the Chancellor’s statement and in the centrality of their open-for-business commitment. I welcome the role of the Foreign and Commonwealth Office in driving trade around the world and the excellent July paper, and I support the comments of colleagues about microfinance.

Like a number of Members I came to the House after a career in small business. In my case, it was a rather specialist field. I spent 14 years in biotechnology venture capital, so rather than echo the excellent comments of others about general small business finance, I shall concentrate on the particular needs of technology companies, and the technology sector. Before doing so, I declare an interest in my business, 4D Biomedical, and in directorships of the Iceni fund at the Norwich research park and Elsoms seeds.

I shall make three principal comments. The first is about the potential of the UK technology and science sectors to drive SME growth, national economic growth and international competitiveness. There are three key exploding markets around the world. Some may wonder where growth in the UK economy might come from, but I suggest that we do not have far to look. They are food, biomedicine and the technologies that drive sustainable living. Given the world population and the rate of growth, those three markets are all set to explode over the next 10, 20 or 30 years.

We have the science and research base to lead in the technical solutions required to make that population growth sustainable. In my area of Cambridge and Norwich, but sadly not yet in my constituency, we have genuinely global world-class centres of excellence in biomedicine and food science and clean tech, of which the Minister is aware. My plea is that when considering the financing of small businesses in those sectors we do not overlook the importance of core research. We must ensure, in the forthcoming review of departmental spending, that we do what we can to protect the core research spending of our excellent world-class centres of science research, such as the John Innes centre at the Institute of Food Research.

My second point is about how the Government can encourage those important technology sectors. I know that the Minister has given a lot of thought to the subject. To their credit, the previous Government recognised the importance of the sector, but their approach was essentially flawed. It was that the Government know best; we had one initiative after another and we had the regional development agencies, and they created well-intentioned pots of money and schemes suggesting that everyone had it in them to be a biotech entrepreneur and that every region had potential, but we wasted a lot of money. I know that the Minister, when in Opposition, considered the matter closely. I suggest that our approach should be based on incentives, not initiatives. If we create the incentives that allow centres of excellence to grow and flourish, in which companies can invest, we will not need initiatives.

My third point—I accelerate rapidly to leave my hon. Friend the Member for Bedford (Richard Fuller) some time—is about specific financing difficulties. A number of colleagues have spoken of the banks, and I echo those comments. We clearly have a problem with bank regulation, the banks anticipating regulatory pressures to repair their balance sheets to the cost of small businesses. The latest figures show that bank lending to small businesses this year is again down by 6%. The big companies, of course, are fine, as they play in the international bond markets and have other options open to them.

We have a huge problem with the banks. My plea is that, as with the green investment bank, we consider all sorts of ways of promoting direct credit unions and smaller new banks. I am aware of an initiative in Cambridge—I believe it is known as the boring bank of Cambridge. It is not intended to be an investment bank but will do straightforward borrowing and lending for good local businesses. There is a huge appetite locally, and many people would put their money into a local bank that supported local businesses. It could be a fiscal element to the big society.

I come now to the financing of the food chain in the technology sector. In my 14 years’ experience, the banks are largely irrelevant to the financing of high-technology companies. It tends to be a cycle, with entrepreneurs taking a risk and putting their personal and family assets on the line, then high-risk angel investors putting in their expertise and often their money, and then specialist venture capital, corporate venture funds and sovereign wealth funds becoming involved. My plea is that we should recognise the importance of reinvesting personal and corporate wealth. I wonder whether we can do something through the tax regime to encourage such reinvestment. I was interested to note that the latest FSB survey of its members showed that only 28% of those who were borrowing rely on bank loans; 31% use their own savings and credit cards, and 24% retain profits, the latter two being the bigger element.

My last comment, which is for the Minister, is about the global potential of the Foreign and Commonwealth Office mission to unlock some strategic national partnerships. I cannot help but wonder about the potential of this country, in partnership with India, to drive a great innovation in agricultural productivity in India, using our historic strengths in agriculture and our links, not least the English language, with the Indian Government. Although my party believes principally in incentives rather than big government initiatives, there are some instances when only the Government can act. The Government could help to facilitate some interesting partnerships between British research institutes, British companies and overseas markets.

With that I shall close, leaving my hon. Friend the Member for Bedford and the Minister time to reply.

11:59

[Richard Fuller (Bedford) (Con)]

I am indebted to my hon. Friends the Members for Solihull (Lorely Burt) and for Mid Norfolk (George Freeman) for being brief in their remarks because it means that I can avoid talking about financing for small businesses in the manner of “Just a Minute”. I shall try to avoid deviation, repetition and whatever else I am supposed to avoid. I must declare an interest; I am chairman of a number of small businesses and a participant in a venture capital fund, all of which are in the Register of Members’ Financial Interests. I must also declare an ailment; I have a very sore throat and so may cough at inappropriate moments. Although I do not want to make too much of a partisan point, I am intrigued by the absence of Opposition Members in the Chamber today. The debate is important to the well-being of constituents and to the future of our country. As many hon. Members have said, we welcome having a Minister in office who is such an extraordinarily good and knowledgeable friend of small businesses, and we hope that he will be a strong friend during his time in office.

To encourage the Minister in his endeavour to be a strong friend, may I make a couple of high-minded points? First, starting up a small business, whether it is for profit or it is a social enterprise, is one of the noblest endeavours that one can undertake. A person does not go into small business just because they want to get rich; often, they do not want to be rich at all. If one is running a social enterprise, being rich is not even on their map. People do it because there is something inside them. It may be creativity, drive and the sense of trying to create something for themselves, their family and their community. It is a noble endeavour, and it is an important endeavour to promote. The motivations of people who start up small businesses are important.

Secondly, it is a vital endeavour for our country. When it comes to employing the next generation of Britons, “there is no alternative”—to quote a former Prime Minister—to strengthening the small and medium-sized enterprises in our country. That is something that we sitting in this Chamber have a responsibility to do as we face the difficulties of the great recession and the responsibility of dragging our economy and country out of it. It is also the source of our long-run national opportunity. I want us to sell into those international markets and to take advantage of technological innovation, which is what my hon. Friend the Member for Mid Norfolk has been talking about. That will only come with those sparks of ingenuity or insights and with supporting our entrepreneurs and small-business people. I say to the Minister, please be brave, strong and radical.

Given that many comments today have been about how we can encourage and strengthen the banks to lend to small businesses, let me say this: “Don’t bother.” The banks are failing small businesses; they are not structured to understand the problems and they are not ready to provide the capital. Be bold and radical and find alternatives. Challenge the banks on that turf. Do not rely on them because it will be a waste of time and of another generation. When we seek finance, the banks often stand in our way. They are poor both in terms of availability and of the cost of finance. The administrative burden of securing even the smallest overdraft does not make any sense and that burden is increasing. The terms and conditions for small businesses to get started and then for when they get into trouble are just too much bother. Why try and ask the banks at all? Just gravitate a bit and improve their little bits over here and there, but look for alternatives. Hon. Members have encouraged the Minister to consider reviving the 3i model, which is an exceptionally good idea. We have talked about trying to find ways in which we can create community funds that tap into local people who want to support local businesses and tying that to the changes in local enterprise partnerships. In Bedford, we are ready to do that. Give us the encouragement to do it; we will stand up and do it in our local community. By providing competition to the banks that have failed our local businesses, we will find ways in which we can achieve the support that is needed to help our next generation of entrepreneurs and the creation of jobs in our economy.

12:04

[Ian Lucas (Wrexham) (Lab)]

It is a great pleasure to appear before you, Mrs Main. It has been a very interesting debate, so let me congratulate the hon. Member for Stafford (Jeremy Lefroy) on securing it and on provoking such reflective comments.

The Minister and I discussed this difficult matter when I was in government, but the whole subject has now moved on. In the context of the international banking crisis, it was clear that one of the most traumatic problems for businesses of all types was securing lending or investment on a consistent basis. Over the past two to three years, we have heard massive exhortations about the banks from all parties. The former Chancellor, the present Chancellor and the Secretary of State for Business, Innovation and Skills have all made it clear that they are dissatisfied with the investment decisions that the banks have made. In our own constituencies, we are seeing businesses that are having great difficulties. If anything, the problem of securing investment from banks may be getting even worse. In the past, the Government have taken steps to address the issues. The enterprise finance guarantee scheme has been relatively successful, and I am pleased that the Government took the decision to extend it in the Budget. I do not know what has happened to the major loan guarantee scheme that was referred to in the coalition agreement. Perhaps it morphed into the enterprise finance guarantee extension. I am pleased to see the extension of a scheme that has helped many businesses in my own constituency.

An important concession that was made by the previous Government concerned VAT and payments to Her Majesty’s Revenue and Customs. It was a massive extension of support by Government, and it cost money. Part of the reason behind the size of the deficit is that the Government decided to support business to ensure that unemployment was lower than it was in the 1980s and 1990s. That was the correct decision at that time. It is interesting to note that some of the suggestions today from the Government Benches involve Government investment to support small businesses. We still have massive problems with the banks.

[Dr William McCrea (South Antrim) (DUP)]

Does the hon. Gentleman not agree that many of these small and medium-sized businesses are viable? They are facing challenges that are not of their own making. Many were encouraged to take loans by the very banks that pulled the rug from under them when they got the first sign of the recession. Surely it is criminal to destroy viable businesses at a time of such crisis?

[Ian Lucas]

The hon. Gentleman is absolutely right. What is vexing is when businesses that have had a long-term relationship with a bank suddenly discover that the terms and conditions that are being applied by that bank are completely changed to their detriment. There is not the local relationship that there should be. When I ran my own small business—yes, it does happen on the Labour Benches sometimes—I had a long-term relationship with the bank that helped finance my business, and that was very important.

What has been interesting about this debate is that rather than just banging the banks—we have done that to a certain extent—we have begun to move on and to talk about alternative methods of finance. I do not think that we have done that sufficiently in the past. I hope that in a different governmental environment, in which the present Government are seeing just how difficult it is to find a solution to this problem, we look at alternative ways of financing businesses. I think that we have heard some interesting observations today on that issue in what, as I have said already, has been a genuinely positive and reflective debate.

One of the important lessons that we need to learn from the economic crisis of the past few years is that certain businesses actually prospered during it. We need to look at why they did so. When I was in government, I met, for example, representatives of the John Lewis Partnership and of the Co-operative. They are organisations that did very well in the past few years, because they had business models that were apart from the norm and that functioned on a different basis. It seemed to me that they functioned on a more stable basis and, to use a phrase that I have heard a number of times in this debate, on a longer-term basis. I think that we could learn from those organisations.

I also think that we need to reflect on the experience of those organisations and be much more aware of the possibility of businesses being run in a different way from how they have perhaps been run in the past. They could have a different model, a different form of ownership and a longer-term approach. I think that those businesses would be much less susceptible to the bad decisions that we are so often seeing from banks, decisions that are detrimentally affecting the finances of small businesses.

My perception is that banks do not have any idea about alternative business models. Earlier in my life, I was a solicitor and when I was taught about business, the two models were, first, partnerships or sole traders and, secondly, companies. There was very little discussion of alternative business models, which I think is a great failing for perhaps the legal profession, the accountancy profession and, I strongly suspect, the banking profession. We need to explore alternative business models as part of a process of looking at financing business in a different way.

Another interesting point that has been made today is that, within that long-term context, we should look at how pension funds, for example, can support business on a very long-term basis. All of us have pensions and have funds that are built up during many years within those pension funds. However, it seems to me that most of us have very little knowledge of how that money is invested and that most of us do not take as much interest in that investment as we perhaps ought to. As individuals or working with others within our communities, we ourselves could take steps to invest in the types of business that will really provide the bedrock support for our community.

[Stephen McPartland (Stevenage) (Con)]

Does the hon. Gentleman agree that, as my hon. Friend the Member for Bedford (Richard Fuller) stated earlier, part of the problem with the banks at the moment is the complexity of their organisation? What has happened during the last decade is that the banks have become so large and so complex that their focus has moved away from lending to small businesses, and their profits are focused in a different manner. The real crux of the problem now is that they are not lending to small businesses. All small businesses want is access to credit, reasonable terms and conditions for access to that credit and prompt payment of invoices. So I do not think that we should encourage small businesses to change how they operate. It is more about encouraging the banks to focus more on small businesses, in terms of their core lending to those organisations.

[Ian Lucas]

I am not sure that I agree with that observation, because the thrust of what I am saying is that perhaps we ought to move away from the banks when it comes to financing businesses. Of course, it is true that there will always be a role for banks, but we should be aware of the possibility of alternative models, because it seems to me that the banking sector is not that interested in small business. It certainly does not seem to be providing the support locally to small business and if the big banks are not interested in small business, small business should perhaps look for investment from someone who is interested. We need to provide structures that will support the development of business over a long term and I hope that those structures could be provided by some alternative sources of finance, which have been referred to in this debate.

Of course, one of the major problems in the banking sector is the lack of effective competition between the big banks, which seems to be one of these problems that is very difficult to solve. I would be interested to know about the time scale that is going to be applied to the commission that is looking into these subjects, including when the commission is likely to report.

We have a finance system that needs to change. I think that there is a willingness among people to make longer-term investments, provided of course that the security is there for the investments that are made. In the longer term, it may be that the Government will have a more important role, in ensuring that, if we are using alternative models for investment, there is a guarantee mechanism provided by the Government, so that they support—with their hand in their pocket—those who make the publicly-spirited investments in the businesses that will provide jobs and prosperity for the UK in the future.

Clearly, we have had a seismic shock to the financial system in the past three years. It has been a shock in historic terms and not only in the UK, of course, but right across the world. The banking system and the regulatory system were found gravely wanting during that period. Now that we have gone through a period in which we have held the banks very much responsible for what has happened and we are seeing that they are not able to respond to the necessary moves towards growth that are being made, we need to think in a different way—I think that many Members have done so in this debate already—about how we take forward investment in businesses that will grow the economy in the UK in the years to come, providing the jobs that we all want for our constituents. I think that many of the ideas that we have heard today are an interesting initial step and I hope that we will continue to take more steps in the months and years to come.

12:17

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

I begin by congratulating my hon. Friend the Member for Stafford (Jeremy Lefroy) not only on securing this debate but on providing an informed and informative contribution that ranged over the wider issues—from debt through to equity—showing how we can help small businesses, which is vital given their crucial role in the economy.

I also want to say how refreshing it has been to take part in a debate in which nearly every Member has had to declare an interest. That is often seen as a negative thing, but I regard it as wholly positive when Members bring to the Chamber and this House their own experience. As several Members have alluded to, I myself started my own business at the bottom of the last recession and I was able to run it for 10 years. I value that experience, and I hope it has informed what I have been able to do as a Member and that it will inform what I can do as a Minister. How refreshing it has been that almost everyone who has contributed to this debate—including my opposite number, the hon. Member for Wrexham (Ian Lucas)—has been able to do so on the basis of real-world experience. I only wish that that was the case in more of the debates we have in this place.

A wide range of topics has been raised and I have a relatively short time in which to refer to them. On the cash-flow issue, which several Members have mentioned, I encourage hon. Members to take the cudgels up with the relevant Government agency and to copy the relevant Ministers in on any correspondence. The relevant Ministers will probably not thank me for saying that, but it is important to ensure that hon. Members play that role, because often there will be a miscommunication or an error will be made, and hon. Members can help to tackle such problems. That is an important point to make first.

A number of other issues were raised. In due course, I hope that I may have the opportunity to discuss the “Lil-lets solution”, although I must confess that I feared where the hon. Member for Solihull (Lorely Burt) was heading when she discussed that. However, I will focus on other issues: debt, particularly the enterprise finance guarantee, about which a number of questions have been asked; the finance Green Paper and the role of equity, which underpins that document; and, of course, the vexed issue of bank lending.

As we emerge from the deepest and longest recession since the second world war, the continuing constraints on finance for SMEs are a prime concern for the coalition Government. The coalition agreement made it clear that one of our core priorities is to increase the availability of both debt and equity finance to businesses that are fundamentally sound. As several Members have rightly pointed out, that is crucial to the future growth and structure of the economy. I entirely applaud the remarks made by my hon. Friend the Member for Bedford (Richard Fuller) about what a noble calling it is to begin a business. How right he is, and how well he put it.

The Government also want to ensure that the banking system and financial markets meet the economy’s long-term needs and support sustained growth. My hon. Friend the Member for Northampton South (Mr Binley), who, sadly, is not in his place at the moment, raised the issue of the balance between lending and capital reserves. We must be careful, for we do not want to repeat the instability and over-exuberance—to put it nicely—in the banking system that led to many of the problems we are discussing. Balance is important.

In the few weeks since taking office, we have introduced a number of measures to tackle the immediate challenges that small businesses face when accessing credit. We are also considering the longer term. However, as my hon. Friend the Member for Stafford rightly said, it is action that counts, not words, so I will refer to three specific matters before I consider the Green Paper.

We have increased the enterprise finance guarantee by £200 million to support £700 million in additional lending until March next year. The additional money will support up to 2,000 SMEs. In addition, having listened to small businesses’ concerns, we have set a target of 20 working days for lenders to inform businesses of their decision. Time and again, SME owners have said to me, “The worst part of the process is not knowing. If I know that I’m going to have a clear decision in 15 days, 20 days or whenever, I can plan and work forward.” We felt that it was important to introduce an element of predictability into decision making as well as providing the additional £200 million.

[Mr William Cash (Stone) (Con)]

Will my hon. Friend give way?

[Mr Prisk]

I will, although my hon. Friend has not contributed to the debate.

[Mr Cash]

I wanted to draw attention to the fact that among this distinguished company are five Staffordshire MPs. My hon. Friend the Member for Stafford (Jeremy Lefroy) has carried forward the initiatives of Stafford Enterprise, which was formed in the 1980s and to which the document from the Department for Business, Innovation and Skills refers. In the 1980s, we established the culture that my hon. Friend the Member for Nuneaton (Mr Jones) mentioned, which enabled us to create enterprise and employment. I know that my hon. Friend the Minister agrees with all that, but it is worth putting on record. It was a huge incentive to such a culture, and it needs to be related for the sake of historical continuity. In the 1980s, we achieved it.

[Mr Prisk]

I strongly commend that achievement and totally endorse what my hon. Friend suggests. Staffordshire Members are well represented here, which indicates their commitment to their constituencies. That is to be applauded.

My hon. Friend the Member for Stafford raised several issues involving the enterprise finance guarantee. On its own, it cannot be a remedy for the broader problems that SMEs face. It exists to underpin additional bank lending; it is not an alternative loan product. However, it is important to bear it in mind that the EFG is there to ensure that viable businesses that can pay back the money but are struggling to secure a commercial loan—often because their track record is insufficiently long or they do not have security—can obtain finance. At this point in the economic cycle, especially given several hon. Members’ comments about start-ups and fresh new businesses, such underpinning is crucial as businesses develop a track record. They need an opportunity to get going.

My hon. Friend asked some specific questions, some of which I will answer. I have information for the period from January to October last year; I hope shortly to have information for the period thereafter. The sum lent during the first nine-year period was £580 million. The cost to the taxpayer—principally in administration—was £21 million. The number of jobs created or saved, according to the information we have received, was 31,600. Therefore, the cost per job is expected to be £665. Hon. Members will realise that that is an encouraging set of statistics. A note of caution: most of those loans are three or five-year arrangements, so absolute clarity about how successful the scheme has been would be a little premature at this stage. However, the statistics are encouraging, which is why I did not hesitate to take on the work.

The hon. Member for Wrexham, my predecessor in the former Government, worked hard on these matters. I thought it important that we should say, “Fine, this seems to be working. Let’s move on and use it, not just change it for the sake of change.” That is an important part of what we are doing. I pay tribute to the hon. Gentleman, whom I no doubt annoyed and challenged in my role as shadow Minister. He was diligent in trying to ensure that the scheme worked.

In addition, we are considering equity issues, which my hon. Friend the Member for Stafford mentioned. A growth capital fund is being created to fill a gap for SMEs that need to finance growth. We will provide more detail in the next couple of weeks. A further enterprise capital fund of £37.5 million is being set up to provide early-stage risk capital—to get the phraseology correct—to innovative small businesses with high growth potential. Several hon. Members asked about that. It is part of a £1 billion series of programmes. There are 10 ECFs, run by Capital for Enterprise Ltd. Like the market, they seek to invest in key high-technology areas. In that sense, there is an element of small pots, about which I have been critical on the record, but I think that hon. Members will realise that targeting key technologies and capabilities requires expert investors and not politicians to make the decisions. That is an important part of what we are doing.

On the green investment bank, I am pleased to say that my hon. Friend the Member for Stafford will have the full details when the Chancellor announces them during the next couple of months. I would love to be able to pre-empt the Chancellor, but that might be the end of my career, so my hon. Friend must be a little patient. He is keen, which is encouraging, but it is important to wait. Crucially, the green investment bank is meant to enable the transition to a low-carbon economy. Several hon. Members have pointed to the important role of high-technology businesses in the low-carbon field. It is important to recognise that and to make a targeted effort using the green investment bank. Details will be forthcoming in the next few weeks.

I am aware of the time, so I will move on to the vexed issue of bank lending. We should be clear that, as Members have suggested, most small businesses seeking funds at the moment are getting the money they require, but I am well aware of the problems. Although it is true that international regulators have tightened banks’ capital and reserve requirements, it is nevertheless clear to me and this Government that banks can and should be doing more to support the financing needs of viable SMEs. The Secretary of State and I have stressed that in our conversations. I will put it clearly on the record again: where unreasonable terms or behaviour are brought to our attention, we will challenge the bank concerned and make absolutely sure that it understands the issue’s importance to both the Government and the economy as a whole.

Hon. Members raised several other topics. I am aware that time is short, but I will return to the question of competition asked by my hon. Friend the Member for Bedford. We will challenge the banks. I want to ensure that if they are not doing their job, we hold their feet to the fire. However, in the end, competition will be the answer. That is why I have great faith in the role of community development finance institutions for micro-businesses wishing to secure microfinance. Again, the last Government took a role in that, which is to be applauded. I want to consider how we can extend and develop that.

It is crucial to remember that small businesses are short not of finances but of time. We must ensure that debt and equity finance is simple and clear and that it works. That is my ambition and the ambition of this Government, and I hope that it will secure the House’s support when we introduce our measures.

PC Yvonne Fletcher

Tuesday 7th September 2010 Westminster Hall

12:30

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

Thank you, Mrs Main, for calling me to initiate this debate on PC Yvonne Fletcher. I am seeking help from the Foreign and Commonwealth Office to resolve this longstanding and tragic case. Who can forget that British police officer—a beautiful young woman—being shot in the back so many years ago while she was policing a peaceful demonstration? She had a glittering career ahead of her, had worked hard to get into the police service and was recently engaged. She had her whole life ahead of her, and it was tragically cut short on that fateful day. I will never forget the image of her lying on the ground dying. I saw it on the television as a relatively young child and that image is still indelibly imprinted on my mind.

The one message we should try to get across as a nation is that if someone kills a British police officer, we will track them down—no matter where such a person goes or how they try to flee, Great Britain will always go to the nth degree to track down killers of British police officers. That must be the message we send out as a country. I give as an example the case of Sharon Beshenivsky, another British police officer who was shot. Her killer escaped to, I believe, Somalia. We sent operatives out there to drag him across the border to Ethiopia and he was subsequently extradited from there to face British justice. I want the Government to take such action and to send out a strong message to any person who dares inflict harm on our police officers that we will seek justice.

We talk a great deal about our armed forces, who are very important, but our police officers put their lives on the line every single day, too. We must never forget the extraordinary sacrifices that they make and the courage that they display. In Shrewsbury, in my constituency, we have recently had the tragedy of a police officer being shot dead. I cannot begin to explain the overwhelming sense of grief and tragedy that permeated the whole of my community because that police officer was shot. I have become involved in this case because I have written a book about Colonel Gaddafi. I am not sure whether I have presented the Minister with a copy of that book, but if I have not, I shall give him a copy at the end of the debate.

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

Signed by the author.

[Daniel Kawczynski]

Signed. The book is a biography of Colonel Gaddafi and it was published in February. Of course, one cannot write a book about Colonel Gaddafi without talking about this huge, outstanding issue. One chapter of the book is called “Death in the square”, which relates specifically to what happened to PC Yvonne Fletcher. In writing the book, I obviously interviewed PC Yvonne Fletcher’s parents who, despite their cynicism towards politicians—they feel badly let down and I will come on to that point later—kindly agreed to meet me and be interviewed for the book.

I would like the Minister to note that the previous Administration were appallingly bad to the Fletcher family. The former Foreign Secretary was frankly as useful as a cat-flap on a submarine when it came to dealing with the issue—his behaviour was absolutely appalling. I worry about the prospect of him being leader of the Labour party when I think about how he treated PC Yvonne Fletcher’s family. The family’s letters were assiduously ignored for many years. No response was sent to the relatives of PC Yvonne Fletcher, despite their numerous attempts to get some form of communication out of the Foreign and Commonwealth Office. I wrote an open letter on a website demanding that the Foreign Secretary meet with the family of PC Yvonne Fletcher. I thank the media, particularly the Telegraph, for promoting that letter, as that is what it took finally to force the then Foreign Secretary to meet the Fletcher family. I know that the current Minister, whom I know very well as being assiduous, courteous and professional, will do a much better job at keeping the family informed of what is happening than the previous Foreign Secretary and his officials. I urge the Minister to keep the family informed through writing and at any opportunity he has to meet with them directly.

I would like to pay tribute to Mr John Murray, who is a retired police officer and is in my opinion decency personified. I have had the great privilege of meeting him on a number of occasions and I would like the Minister to make a note of his name: John Murray. I took him around the House of Commons this morning and, so well known, revered and respected is he among the constabulary, many police officers came up to say “Hello” and pay their respects and compliments to him. Mr Murray, who is from Chingford, was standing next to PC Yvonne Fletcher when she was shot dead. He accompanied her in the ambulance en route to hospital, and held her hand. In the ambulance, he promised her that he would fight to bring the person who had done such a thing to justice. He carried her coffin at her funeral and, for the past 25 years, he has campaigned on the issue. He has started petitions, raised the matter with Ministers, tried to get publicity for the issue and written to Members of Parliament. In his own way, he has never forgotten the pledge and commitment he made on that fateful day to his colleague PC Yvonne Fletcher. I pay tribute to him and I would like the Minister to know about Mr John Murray from Chingford, the respect that police officers have for him and how important it is to keep him posted and informed of progress.

Together with Paul McKeever, chairman of the Police Federation, I took Mr Murray to meet the Libyan chargé d’affaires in November last year. Mr Jelban informed us that this was a Government to Government matter and I should not get too preoccupied with it. He said that all was in hand between the Governments of the United Kingdom and Libya. However, because I had so little confidence in the former Foreign Secretary, I did not want to leave it to those bilateral discussions. I took Mr Murray to see the Libyan chargé d’affaires because he would like to go to Libya—in fact, a national newspaper is prepared to pay for him to fly out there and for his accommodation.

We are trying to get a visa for Mr Murray to enable him to go out to Libya and campaign on the issue directly with the Libyans. Neither Mr Murray nor I are getting any younger, so it is important I raise the matter with the Minister to establish whether he can do anything to assist Mr Murray to get a visa. It would be a wonderful thing if Mr Murray were given a visa because he would be able to meet Libyan officials personally in Tripoli and talk to them directly about the campaign he has so faithfully pursued over the past quarter of a century. He would be able see if he is better able to get those officials to comply than the politicians who have tried to do so.

I pay tribute also to Scotland Yard for its work. I have been to Scotland Yard and received briefings on its work, and I believe that it has done an excellent job so far. Of course, it has been frustrated in the past, primarily by not being given visas to re-enter Libya to pursue its inquiries. Interestingly, its officers have just been allowed back into Libya for the first time in three years, as the Minister will know. I have been led to believe that that is a direct result of the new coalition Government’s attitude to and handling of the case, which has finally put pressure on the Libyans to grant those visas and allow Scotland Yard to re-enter the country. I pay tribute to the Minister and the new Government for that significant breakthrough, which had eluded the previous Administration, although I have doubts about the previous Administration’s commitment to pursuing the matter.

At the time of the release of Mr al-Megrahi, the convicted Lockerbie bomber, who was found culpable of the worst atrocity to take place in the UK since the second world war, I tried to use the release unashamedly as a bargaining chip in exchange for Libyan co-operation in the case of PC Yvonne Fletcher. I was told that that was highly improper and that I was behaving inappropriately, but I do not flinch from my decision to do so; politics is sometimes a dirty game.

I was appalled, shocked, dismayed and deeply embarrassed that at the time of the release of the Lockerbie bomber there was total silence from the previous Government on the case of PC Yvonne Fletcher. They did not use the occasion to challenge the Libyan authorities publicly over that critical outstanding issue. Why was that? It is simply unacceptable, and it makes us look so weak in the eyes of the Arab world: we cannot even get a country such as Libya to co-operate so that our security services can pursue their investigations.

At the time, I pleaded with Mr MacAskill, the Scottish Justice Secretary, and with the First Minister. I wrote to the Foreign Secretary and the Prime Minister, pleading with them to use the occasion to challenge the Libyans publicly. It all fell on deaf ears and there was a totally mute response from the Government. I want the UK never again to be in the iniquitous position of bending over backwards to accommodate Libya by affording it the release of a convicted bomber, terrorist and killer and yet doing nothing, publicly at least, to pursue co-operation on investigations into the killing of a police officer.

I want to raise briefly the protocol, signed under the previous Government, whereby the chief suspect would be put on trial in Libya. That is deeply regrettable and highly unacceptable. I would like the following phrase, which I have used when speaking to The Daily Telegraph, to ring in the Minister’s mind: you cannot face British justice in a Libyan court. It is simply impossible to face British justice in a court under Libyan jurisdiction in Tripoli. The only way to face British justice is in a British court under British jurisdiction.

For that protocol to have been signed under the previous Government was highly inappropriate for our country. For a major power in the world to acquiesce in such a shoddy, back-room deal is highly regrettable. What was going through the minds of the people who signed the protocol? I urge, beg and plead with the Minister to see what he can do to renegotiate the protocol. If we cannot get the suspect into a British court in the UK, can we at least, as the worst option, hold the trial in a third country under some form of British jurisdiction, as happened for the trial of the Lockerbie bomber, which took place in the Netherlands?

I set up the all-party group on Libya in the last Parliament because I am passionate about that country and its people. There are huge opportunities for trade between Libya and the UK. Libya sits on top of one of the largest gas and oil reserves in the world, and it is strategically placed just a short distance from some Mediterranean countries. It is a hugely important partner for us, and there are massive opportunities for British firms. However, I will help British companies to work in Libya only after the case of PC Yvonne Fletcher is resolved. If we want a genuine relationship with Libya and if we are really serious about a long-term strategic partnership, and if it is serious about it too, the outstanding issue of the murder of a British police officer must be resolved. Otherwise, that relationship will be built on sand—pardon the pun—and in a flimsy way that will not withstand the test of time.

I will continue to write parliamentary questions to the Minister on the matter. I would like to thank the media, particularly The Daily Telegraph and Mr Christopher Hope, for continually raising the story. Sometimes I feel like a lone voice in this place when I speak on the matter. I have flown to Scotland to interview Tam Dalyell for my book, and he is a great campaigner for PC Yvonne Fletcher, so I pay tribute to the former Father of the House for his work on that. I will continue, with the help of The Daily Telegraph and others, to raise the matter repeatedly. I ask the Minister to help and support John Murray in his campaign.

My last point is on the Vienna convention. Mr Murray and I have discussed what happened on the fateful day when Leon Brittan decided, following the Vienna convention, that those killers would have to be released under diplomatic nicety, which I think was extraordinary. The Vienna convention was intended to protect diplomats from intrusion and inappropriate levels of investigation. Yes, it allows them to park illegally on London streets and to do all sorts of things with protection in their diplomatic bags, but it must not give them protection when they are directly culpable for or implicated in the murder of a British police officer. If we do only one thing as a result of the case, it must be to see whether there are any ways in which we can modernise the Vienna convention, at least as a tribute to PC Yvonne Fletcher, to ensure that if such a murder happens on UK soil we are never again left in the same position.

12:49

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

It is a pleasure to serve under your chairmanship at the start of a new term, Mrs Main. I congratulate my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) on securing the debate and thank him for his kind remarks, which I am happy to reciprocate. The passion and commitment with which he has taken on the case is typical of the way he works generally, which is noticed and appreciated. I note also Mr Murray’s commitment to the case. I listened carefully to my hon. Friend’s suggestions about assistance for Mr Murray, and my officials will certainly be in touch with him to see how we might be able to help.

My hon. Friend’s focus is the Foreign and Commonwealth Office support for the investigation into the killing of WPC Yvonne Fletcher. First and foremost, I offer heartfelt condolences to the Fletcher family on behalf of myself and the Government for their continuing grief over their loss. It is now more than 26 years since her death, 26 years in which her family have sought answers for their loss. They are still looking for the truth of what happened that day. A resolution to the sad issue is a key objective in our relations with Libya.

The killing of the unarmed woman constable on 17 April 1984 was a wicked, unwarranted and undeserved murder. No political or cultural circumstances justified such a cowardly attack on a woman police officer, and it will for ever be a mark of shame on those involved.

Following the severing of diplomatic relations on 23 April 1984, and the expulsion of all those involved in the bureau siege, the possibility of pursuing any inquiry into the shooting that involved Libya was not practicable, until time passed and events began to change the relationship between our two countries.

Libya’s dark past and its involvement with international terrorism in the 1970s and 1980s caused grief and suffering for countless people. That is not, and cannot, be forgotten. However, through a series of actions in the late 1990s and early 2000s, including the decisions to hand over the two suspects accused of the Lockerbie bombing in 1999, and to renounce terrorism and give up weapons of mass destruction in 2003, Libya turned a corner. If I have time, I will return to the wider consequences of that policy later, but at this stage let me indicate the impact that that change of circumstances had on the WPC Fletcher investigation.

On 7 July 1999 the Libyan Government accepted “general responsibility” for the shooting of WPC Fletcher and paid compensation to her family. On 8 July 1999 Scotland Yard announced its intention to reopen the investigation into her death. On 24 May 2002 Scotland Yard officers made their first visit to Libya but returned with no real leads to follow. On 24 June 2002 a meeting between the Metropolitan police and the Libyan Government was held in London to discuss the investigation. On 25 March 2004 the then Foreign Secretary, the right hon. Member for Blackburn (Mr Straw), announced that Metropolitan police officers would fly to Libya in a fresh attempt to find WPC Fletcher’s murderer. After March 2004 the investigation stalled and there was no further progress. In 2006 letters were exchanged in an attempt to move the investigation forward—I will return to that later.

I would like to reassure my hon. Friend that the Government are committed to progressing the police investigation into WPC Fletcher’s death—that remains one of our key objectives. The FCO keeps in close contact with the family of WPC Fletcher and with the Metropolitan police. In a statement released in response to last week’s ITV documentary, the family themselves made clear that they are content with the support provided by the FCO and by the Metropolitan police. I listened carefully to what my hon. Friend said about such comments. The Foreign Secretary has also offered to meet WPC Fletcher’s family, at a time and date that is convenient to them. I will ensure that that invitation is renewed.

We raise the case with the Libyan Government at every possible opportunity. The Foreign Secretary raised the Libyan refusal to co-operate when he first spoke to the Libyan Foreign Minister, when we became the Government. The Foreign Secretary raised the issue again in a letter to the Foreign Minister just last month. I have raised the issue in meetings in July with the Libyan Europe and Interior Ministers. The Prime Minister also raised the case of WPC Fletcher when he wrote to Colonel Gaddafi in July.

Since the Government came to office, we have made it clear to the Libyans that the issue will continue to cast a shadow over the bilateral relationship between our two countries, and continue to do serious damage to the image of Libya among the UK media and public. My hon. Friend was absolutely right to indicate that that was the case.

I would like to make it clear that responsibility for the decision to suspend the investigation, and the ability to restart it, rests with the Libyan Government. Their decision to suspend the investigation is unacceptable. They made a commitment to us in 1999, and breaking it is not acceptable. That commitment must be honoured. We will not let the issue go away.

The stalled investigation is one of the last remaining issues to affect our relationship with Libya seriously. As my hon. Friend noticed, I am pleased that following intensive representations by Her Majesty’s Government, including by the Prime Minister and the Foreign Secretary, last month a joint FCO and Metropolitan police delegation visited Tripoli. That was at the invitation of the Libyan Government and was the first time since May 2007 that Metropolitan police investigators have been allowed to return to Libya to discuss the case. That meeting, on 5 August, discussed ways of moving the investigation forward to the satisfaction of both countries, and will, I hope, be the start of a new stage of co-operation.

The visit was a welcome step, but much more needs to be done to ensure that the family get the answers that they need. Securing full Libyan co-operation with the Metropolitan Police Service investigation, which would lead to a resumption of the witness interviews, therefore continues to be a key objective in our relations with Libya.

We thus come to the exchange of letters in 2006. As a direct result of the exchange of letters, between the British ambassador and Libyan Foreign Minister, which was aimed specifically at re-launching the investigation, the Metropolitan police visited Libya for witness interviews in December 2006 and in May 2007. That was an important step forward for the investigation, and a step that would likely not have occurred without the exchange. My hon. Friend rightly referred to the balance in such a case being difficult to get right.

The exchange of letters reflects the view of the Government at the time on how to enable the inquiry by the Met to progress. Establishing precisely what happened is crucial to the pursuit of justice. There is nothing unless that is done. The engagement of the Libyan authorities is, therefore, essential. The letters also reflect the reality that the Libyan authorities retain the right to decide where any suspect might be tried under their rules of extradition. In the event of a successful investigation, which is the most important issue, a joint decision will be reached about any trial. However, we should be realistic that a trial is more likely if it takes place in Libya rather than anywhere else.

Before I conclude, let me spend a few moments setting out our overall relationship with Libya. Since 1999 the UK and Libya have shared a number of diplomatic successes which have helped to normalise relations. Key among those successes were the agreement to pay compensation to the families of the victims of the Lockerbie bombing and, as I mentioned earlier, the decision to give up weapons of mass destruction and to renounce terrorism. Those were difficult issues, but their resolution has brought benefits to both countries and to the world in general. Libya is now a partner of the UK in our joint efforts to counter international terrorism and to combat illegal migration into Europe.

The normalisation of relations has, of course, also brought about the development of trade with Libya, which has helped to create jobs for British citizens here and in Libya. However, commercial considerations have, and will, not play any part when pursuing the investigation into the killing of WPC Fletcher or the tackling of human rights abuses. Libya’s actions in the past few years also show to other countries the benefits of choosing the route that Libya has followed in abandoning weapons of mass destruction and renouncing terrorism. That route delivers more than the terrorist route, which is an important lesson for other nations and for the world.

In conclusion, it is undeniable that Libya’s past is a dark one, as I said. However, its actions since then indicate its determination to follow a different future. We recognise its willingness to co-operate on such matters as counter-terrorism activity against al-Qaeda in the Maghreb, energy security and combating illegal migration, but difficult issues remain. Libya needs to continue to demonstrate that it has turned its back on its murderous past by addressing issues that still haunt our relations, in particular the case raised by my hon. Friend today.

We can only imagine the pain felt by the Fletcher family, at losing a loved one in such devastating circumstances, and by Yvonne Fletcher’s colleagues. To have received no answers for more than 26 years can only add to the sadness and frustration felt by the family. It is important to the Foreign Secretary and the Government that the Fletcher family are given the answers and the closure that they seek, and that depends on finding out the truth of what happened.

We will relentlessly pursue the resolution of that issue and of other human rights abuses in Libya, regardless of our current good relationship. We will continue to push the Libyans and to work hard to convince them to take the moral approach and to allow the Metropolitan police to complete the investigation.

I do not pretend for a moment that the case is not among the most difficult and emotive of issues—impossible to quantify or to calculate on some sort of scale in a returning relationship with a country recovering from its past. The FCO and I will do our level best to secure the information leading to a just resolution. I will do all I can to ensure the continuing assistance of the Libyan authorities, so that we may find out exactly what happened. That needs to be the basis for any conclusion about what might happen afterwards.

My hon. Friend is to be congratulated on and commended for his work on the issue. We will continue to work closely. Resolution matters greatly to the Government, in terms of securing justice for WPC Fletcher and her family.

Education Expenditure (Coventry)

Tuesday 7th September 2010 Westminster Hall

13:00

[Mr Jim Cunningham (Coventry South) (Lab)]

I look forward to serving under your chairmanship, Mrs Main. I know that you will be fair; in fact, you may be lenient with us. I thank Mr Speaker for granting my hon. Friend the Member for Coventry North West (Mr Robinson) and me the opportunity to raise concerns about education in Coventry, and the effects on Coventry’s economy.

Coventry has been widely identified as one of the areas hardest hit by the Government’s recent spending cuts. In fact, the BBC described it as the first big victim of the cuts. So far, cuts applied to Coventry have resulted in a £5.2 million loss of funding in several different areas. That translates into a cut per person of approximately £11.17, which is higher than the national average of £8.97. The recent recession has also hurt the broader region to a great extent.

Coventry had already suffered devastating blows to its economy. During the 1980s and 1990s, manufacturing declined sharply. The city has worked hard and is working hard to rebuild its economy and create jobs, many of which are now based in the public sector, but that is being undermined by the Government’s programme of arbitrary spending cuts. The leader of Coventry city council estimated that there is a possibility of losing between 1,000 and 10,000 jobs in the region, some of which obviously could be lost in the south of Coventry.

The largest proportion of the cuts is a 24% reduction in our annual allocation from the Department for Education. Today I want to focus on cuts made by the Department in Coventry which will have extremely adverse effects on the city. The Department announced recently that the British Educational and Communications Technology Agency and the Qualifications and Curriculum Development Agency are to be abolished, but so far we have received no clear rationale from Ministers as to why.

BECTA works to obtain the most cost-effective information technology equipment for schools and colleges. Between 2002 and 2010, it saved schools and colleges £275 million on the costs of computer equipment. It employs nearly 240 people in Coventry.

An important part of BECTA’s work is its home access programme, which is part of a Labour Government initiative that seeks to provide children from low-income and disadvantaged backgrounds, and those with special needs, with computer equipment and internet access at home. As of July 2010, BECTA had provided equipment to children from more than 200,000 low-income families. However, the funding for that programme is secure only until March 2011, and the Government have given no assurances as to what will happen after that date.

The decision to close BECTA could result in increased costs to the taxpayer over the longer term. For example, a BECTA agreement with Microsoft which greatly reduced IT costs to schools will not be renewed in December 2010 when it runs out. How will the Government be able to create such large economies of scale after that central agency is closed? It will be more difficult for schools acting individually to achieve the same high standard of information and communications technology provision that is currently provided through BECTA.

The QCDA employs more than 500 people in Coventry, having recently relocated there from Piccadilly, London. The Department announced that it, too, would be abolished, but no date has yet been set. The QCDA develops and maintains the curriculum, improves and delivers assessments such as standard assessment tests and reviews qualifications. Its work is of vital importance to the wider education sector. The Government themselves admit that some functions will need to continue after the agency is abolished; for example, work supporting SATs. There is total uncertainty about which functions and, more importantly, which staff will be retained, and which will be absorbed into the Department.

A parliamentary question that I tabled on the subject received an unsatisfactory and vague answer from the Government. There is no clear strategy as to how the functions the agency carries out will be continued, which suggests that the decision to scrap it has been rushed. That is entirely unfair to staff. There is no clarity from the Government on what their future jobs may be.

The cuts are clearly arbitrary and, I suspect, ideologically driven. There has been no consultation with hard-working staff on the matter. As a result of the cuts, nearly 1,000 public sector jobs in Coventry related to education could be, or will be, lost. That will have knock-on effects on the regional as well as the city economy, yet the city desperately needs growth following the recession.

Aimhigher may also come under fire from the Government. This Government-funded service, which provides support for individuals from under-represented groups to enter higher education, makes, on average, 1 million interventions each year. Evidence shows that its work creates more motivated and committed learners. Learners are 70% more likely to look forward to going to school. However, its funding of approximately £83 million is guaranteed from 2010 to 2011 only. Approximately £10.4 million of that is allocated to Aimhigher partnerships in the west midlands, including Coventry. There has been no indication from the Government that the funding will continue.

In answer to a parliamentary question that I tabled on the subject, the Government stated that the need to attract more students from disadvantaged backgrounds into higher education is written into the coalition agreement. So why are the Government not supporting such bodies?

Cuts to the biggest Government investment in improving schools for more than 50 years have had devastating impacts for many communities up and down the country. Coventry has been particularly unfairly treated, as every one of its 20 school projects—it had been earmarked to receive £325 million for new buildings and £30 million for ICT—has been cancelled, despite the fact that its bids were just weeks away from the close of dialogue stage, which is the stage at which projects in many other local authorities have been allowed to proceed. We are one of only two wave 4 and 5 local authorities that have had our whole programme stopped.

The sample schools in Coventry—President Kennedy and Westwood—have also been stopped, whereas sample schools in some other areas have been allowed to continue. Coventry city council had already spent millions on getting bids to the closing stages, but that money has been wasted. In addition, there is uncertainty among faith schools such as Blue Coat and St Thomas More in Coventry. They do not know what will happen to their capital programmes and are expressing extreme concern.

Coventry’s projects also included progressive plans for special school provision in the area. Three special schools were to be combined into two new broad spectrum schools, which were to be co-sited with the secondary schools President Kennedy and Ernesford Grange. The current special school buildings are not suitable for the wide range of educational needs of the children who attend them. Therefore, cancellation of the project is detrimental to their education.

Coventry city council has obtained independent advice that many of the school buildings across the city are uneconomic to maintain and therefore in desperate need of refurbishment. Many of those schools are located in disadvantaged areas. Pupils in Coventry deserve a first-class education in first-class facilities, but that has been put at risk by the Government.

The Government claim, as part of their cost-saving measures, that the BSF programme was too bureaucratic and took too long to produce results. However, in 2007 the Conservative party committed itself to cutting £4.5 billion from the Labour Government’s school building programme to fund the capital costs of their proposed new free schools. Could the improvement of educational facilities for the majority be being sacrificed for the benefit of the few? This is grossly unfair. There are many unanswered questions about the axing of the BSF programme. Why was such a one-size-fits-all approach used to stop a phased scheme? Will an exception be made for special school provision in Coventry during the capital allocation review? How soon will a decision be made on capital allocation? Parents, pupils and teachers need to know.

The Secretary of State for Education met a delegation from Coventry to discuss this issue, including representatives from the council and all three city Members of Parliament. The Government undertook to review the capital allocation and send a review team to Coventry. I understand that that team has visited, but we do not know the outcome yet and we are looking forward to hearing it. Perhaps the Minister will enlighten us.

The decision to scrap the BSF scheme in Coventry will also have negative consequences for the construction industry in Coventry, the recovery of which would have been hugely helped by these projects, following the recession. It also has a knock-on effect for job creation and apprenticeship opportunities in the area. It is important to note that BSF has cross-party support in Coventry, indicating how much it is needed.

I want to say a word or two about possible future cuts. The Government have already cut 10,000 extra university places, but made no impact equality assessment before doing so. Future cuts to university funding are being discussed, notwithstanding the outcome of the tuition fee review, which may mean that universities in Coventry—Warwick and Coventry universities—will have to manage 25% funding cuts. These institutions are major employers in the city and are of great economic importance to the regional and national economy. Cuts in funding will therefore have a negative effect on not only on the city’s economy but the regional economy.

In conclusion, I hope the Minister will consider seriously my submissions and those that my hon. Friend the Member for Coventry North West will make in a minute or two, because the Government’s policy will have a major impact on jobs, training, education and, importantly, the construction industry in Coventry. I hope the Minister will at least give us some encouragement.

13:12

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Main. I am pleased to see the Minister here today. I have a few questions to put to him, following the comprehensive account of the situation in Coventry given by my hon. Friend the Member for Coventry South (Mr Cunningham), whom I congratulate on securing the debate.

The Minister is a decent man whom I had the pleasure of getting to know during three Budgets in the early days of the Labour Government a few years ago. The problem is not just that BECTA and the QCDA have been closed—that is the right of the Government, if they mistakenly think that that expenditure on those organisations is unnecessary—it is the manner of their closure. If the Minister cares to turn it up, he will see that the letter from the Secretary of State, whose signature I was surprised to see on it, was disgraceful in its tone and terms. It was written in haste and the decision had been taken in haste. There was no consultation, which is, to some extent, understandable, but no thought was given to what would be transferred and what would be done in the Department and how some of the work, which the Government recognised that it was important to continue with, would be continued. Having looked at that letter, the Minister will see how not to proceed in a difficult situation. It really was a great pity that it was done in that way. The Government are in danger of losing a lot of good will among people whose help they will need in due course.

I endorse the criticisms made by my hon. Friend and I should like to focus on the Government’s tone and the manner in which the policy is being carried out in specific cases, particularly in respect of the QCDA. Many of the 900 QCDA staff had just moved up to Coventry, taken on mortgages and committed themselves to the city, only to receive a letter out of the blue. I do not think that the Department or Ministers can be proud of that.

Turning to the BSF programme, we spoke to the Secretary of State after he met the delegation in the House. At that meeting last week, he undertook—he was as good as his word on this occasion—to send a delegation to Coventry, but nothing really came from that. We still are none the wiser about whether the schools will go ahead, when that will happen or to what extent that will happen. I shall mention certain schools in a moment. A further meeting is intended, from which I hope that we get something. I hope at least that the matter is settled by 20 October, when the comprehensive spending review will be completed. This situation cannot go on indefinitely, leaving people, buildings and children in limbo in the way that they have been left at the moment.

I shall mention three schools, two of which are in my constituency: President Kennedy, a sample school for total rebuild, and Woodlands, which is a sample for refurbishment. In respect of Woodlands, we have worked hard—the Minister will probably be aware of the file—to get English Heritage agreement to deal with certain Hills buildings, which were the original concrete system buildings and are most unsatisfactory. Most have been pulled down now. There is also the CLASP system— consortium of local authorities special programme—to which, for some particular reason that escapes me, English Heritage attaches particular architectural significance. We have reached agreement there. I do not know why it was so difficult, but it was. The Minister may also know that we are having a terrible fight with English Heritage about Coventry market. Once agreement is reached with English Heritage, gosh, it feels like one has gone through the mangle and the last thing that anyone wants to do is reopen the matter, have it deferred or see it lapse.

The specific point, which is worth underlining, is that we have English Heritage agreement and all the planning consents that we need. In the case of Woodlands, those have been available for two years. [Interruption.] I see that the Minister is making a note of this. Woodlands was ready to go ahead, because rebuilding its central part is essential. Imagine trying to attract children there, even under the academy programme, which Woodlands has applied for, when the central building is covered in scaffolding to keep it up and has been covered for the past 18 months. What sort of message does that send out to parents? That school has improved its standards for the past three years, despite the buildings, not because of them, and is keen to be known as a good school in the area. Indeed, it is. It is a great sporting academy and has a long list of outstanding rugby players, some of whom, as you probably know, Mrs Main, have played for England. I think that Woodlands specialises in producing particularly tough forwards. The school has a dynamic head who is keen to push it forward. Questions need to be answered. Will the Minister please ensure that the permissions are not allowed to lapse or will be renewed and that any ministerial action that needs to be taken in that respect will be taken? We would be grateful for that.

There was to have been a total rebuild of President Kennedy, which is a Hills system building put up 56 years ago in the 1950s and 60s, a generation ago. Fortunately, as coincidence would have it—I do not want to say “luck”—the delegation from the Department visited that school when it was pouring with rain and they saw the water dripping into the classrooms and saw just how unfit the school was for purpose. I believe that that school was within weeks of closure. I had thought that that was so near that, although the signatures were not fully secured, it would have been agreed to. However, it was turned down, as was Ernesford Grange, which is not in my constituency, but is one of three schools in Coventry that urgently need proceeding with.

Will the Minister please get behind the new delegation coming up to Coventry—the second delegation—and ensure that, whatever the dates are and however much money will be released, we get those things finally pinned down, so that the insecurity is removed?

It may interest some hon. Members listening to the debate today to know that the word we had from the meeting was that, under the Government target, BSF is to be cut by 50%. That is a terrible blow to young children who are looking forward to going to school in a new building with all the motivation and encouragement that that may bring. They will be disappointed indefinitely if only half of the buildings are proceeded with, and there will probably not be many more if cuts are made to the programmes involved.

I am aware that the Minister wants to reply and that we are under tight time pressure, so I shall confine myself to those comments, and look forward to hearing his response.

13:20

[The Minister of State, Department for Education (Mr Nick Gibb)]

It is always a sign of age when the Chairman is younger than oneself. Having celebrated a significant birthday last week, that has been brought home to me in stark terms, but it is a pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this debate. On behalf of his constituents, he is an assiduous advocate on these issues in written questions, on the Floor of the House and in the debate.

The Government’s ambition is to raise academic standards in our schools and to ensure high-quality education for all children, particularly those from poorer backgrounds. Education is the key to social mobility and the Government's key objective is to close the attainment gap between those from the wealthiest and poorest backgrounds, so we put the Academies Act 2010 on to the statute book to enable us to expand the academies programme. During the past two weeks, 100 new academies have opened, one of which is the Sidney Stringer academy in Coventry, which is where the former Education Secretary, Lady Morris, was once deputy head.

The Academies Act 2010 enables primary and special schools, for the first time, to become academies and to enjoy the greater freedoms that academy status brings. We are considering the national curriculum with the intention of restoring it to its intended purpose—a minimum core entitlement built around subject disciplines. We are enabling parents, teachers and other education providers to set up free schools so that parents have a real choice for their children.

School buildings, of course, need continuing investment, but it is vital that future spending represents the best possible value for money. The Building Schools for the Future programme was a flagship programme of the previous Government, of which the hon. Member for Coventry North West (Mr Robinson) was a prominent and distinguished member. The programme aimed to rebuild or to refurbish every secondary school in the country by 2023. Where it has delivered, some impressive new buildings have been built, and no one would deny that a good working environment can only aid achievement and help to improve behaviour. But the BSF programme was not the most effective way to deliver new school buildings.

Rebuilding a school under BSF is three times more expensive than constructing a commercial building and twice as expensive as building a school in Ireland. During the five years of the BSF programme, a scheme that was intended to improve the entire stock of the nation's 3,500 secondary schools benefited just a 175 schools.

[Mr Cunningham]

The important point for my hon. Friend the Member for Coventry North West (Mr. Robinson) and for me is what will replace BSF, because we badly need those schools.

[Mr Gibb]

The hon. Gentleman raises a good point. If he will be patient for a few minutes I will come to exactly that point.

Just 103 schools have been completely rebuilt under BSF. The budget bulged from £45 billion to £55 billion for a variety of reasons, some of which were legitimate, but the projected time scale rose from 10 years to 18. Of the £250 million spent before building began, £60 million was spent on consultants or advisory costs. In short, because of its structure and the way in which it was put together, BSF became a vast and confusing edifice of process within process and cost upon cost. It represented poor value for money. No one comes into politics to cut public spending, but the Government were faced with a £156 billion deficit, and it is our responsibility, difficult and painful as it may be, to tackle that problem lest we delay our economic recovery and cause further economic problems. We announced that the BSF programme is ending, but that does not mean the end of capital spending on schools.

I come now to the concern expressed by the hon. Member for Coventry South. When determining which projects would go ahead and which would cease, the Government developed a single set of criteria and applied them nationally. Those school projects that were part of the initial BSF schemes and had reached financial close would go ahead. Of the so-called sample projects that were part of an area’s initial BSF schemes and where financial close had not been reached—the sample schools to which the hon. Gentleman referred—only those with a selected bidder after close of competitive dialogue in the relevant local authority went ahead. Coventry had not reached close of dialogue in those sample schools. Some planned school projects, in addition to a local authority's initial scheme, were all allowed to continue. Unfortunately, the BSF projects in the hon. Gentleman’s constituency, and in Coventry as a whole, were not additional projects, had not appointed a preferred bidder, and had not reached financial close. As none of the criteria applied, the projects in question could not go ahead, with the exception of the Sidney Stringer academy.

In a meeting during the summer with the hon. Gentleman and his colleagues, the Secretary of State indicated that he is keen for the Department to learn from Coventry's experience with BSF, and capital spending outside that review. The Secretary of State has made it clear that the end of BSF does not mean the end of capital spending on schools. Money will, of course, be invested in school buildings in the future, particularly with a rising birth rate and increasing demand for school places, but it is imperative that money is spent on buildings and not on process. To that end, a group headed by Sebastian James, and with other professionals, began a comprehensive review of all capital investment in schools—early years, colleges and sixth forms—and will consider how best to meet parental demand, to make design and procurement cost-effective and efficient, and to overhaul the allocation and targeting of capital.

The hon. Gentleman will know that officials working for the review team visited Coventry on 26 August and explored in depth the capital needs of the city's schools and the plans for tackling those needs. A further visit is planned for later this month when the capital review team will meet councillors, representatives of schools and city council officers to discuss the needs of the city’s schools including, in particular, the requirements of the city's special schools. I have taken on board the comments of the hon. Gentleman and his hon. Friend the Member for Coventry North West about the state of those schools, particularly issues such as scaffolding holding up a building’s roof. Such issues will be taken into account by the capital review team, and I assure both hon. Members that the Department will continue to make capital allocations on the basis of need, particularly based on dilapidations and levels of deprivation. However, I am sure that both hon. Gentlemen will understand that I am unable to make any commitments today about how much money will be allocated, or exactly when. That will depend on the outcome of the spending review and the capital review.

[Mr Robinson]

I understand that the Minister cannot give a commitment, but will he at least say that by the comprehensive spending review on 20 October we will have a decision about those projects that have priority and can proceed, and to what extent?

[Mr Gibb]

The capital review will report by the end of December, so it will not coincide exactly with the end of the spending review. The hon. Gentleman will have to be a little more patient. There will be an interim review before that, but the answers to his specific question will not be available by that specific date.

[Mr Cunningham]

When the capital review has been completed, and when the Minister has met the councils and so on, will he meet the MPs again to discuss the outcome?

[Mr Gibb]

The capital review team will be delighted to hear from the hon. Gentleman—now is the opportunity to raise specific issues regarding the fabric of school buildings in his constituency and in Coventry—but it will not be able to report in public until it reports finally at the end of December.

In the time remaining, I want so speak briefly about the planned closure of the Qualifications and Curriculum Development Agency, which employs some 446 staff in Coventry, with another 43 staff working from home. The QCDA's remit is inconsistent with our vision for school improvement driven by school leaders and teachers, with as much of the education budget as possible going to schools. That is why many of the QCDA's centralising functions will be stopped, and others will be made more clearly accountable to Ministers. We are considering how vital work such as the national curriculum tests can best continue when the QCDA has been abolished. It is too early to assess the scale of any job losses, but we are working with QCDA carefully to plan the winding down of its functions, and the proper and sensitive handling of the implications of those changes for QCDA's staff.

Public Libraries

Tuesday 7th September 2010 Westminster Hall

13:30

[Justin Tomlinson (North Swindon) (Con)]

Thank you, Mrs Main, for presiding over my first Westminster Hall debate. I am delighted to have secured this crucial debate on the future of library provision, and I am grateful to the Minister for his time. He knows of my interest in this area from his various visits to Swindon. I am pleased that the Government have recently launched a support programme for public libraries—that prompted me to request this debate.

It is vital that libraries are preserved for future generations. They provide a unique environment in which anyone is welcome to read, learn or access the internet in their area. They are places where one can relax and reflect in a quiet and open setting, and where children can be entertained by stories and encouraged to explore their imaginations while learning. Libraries are a focal point for communities and provide an important source of information, as well as bringing people from all generations together.

It is concerning to see that libraries are in steady decline in the UK, and that there are a number of further potential library closures across the country. Having spent four years as a council cabinet member responsible for libraries in Swindon, I saw first hand how much local residents supported the new libraries that we built, including the award-winning, £10 million, central library. There was real concern and anger when local community libraries were threatened—something I am sure that all MPs can relate to.

[Esther McVey (Wirral West) (Con)]

I would like to add my voice to my hon. Friend’s concerns; I have first-hand knowledge of such matters because 60,000 people across Wirral came out and protested when their libraries were threatened with closure. However, does my hon. Friend agree that we must modernise libraries and make them an amenity for the whole community and everybody within it?

[Justin Tomlinson]

My hon. Friend makes two points in her helpful intervention, and I will come on to speak about revamping and modernising the library service. The campaigns that my hon. Friend was involved in highlighted how important community libraries are to local councils. I attended lots of meetings, and I remember one attended by more people than there were active users of the library service. I told them that they should take a few more books out.

The trend in library closures needs to change because with each closure, a community is deprived of a key service. However, as with all areas of the public sector, it is important to recognise that savings to the public budget are necessary and that difficult decisions must be made by local authorities. In that context, libraries have the challenge of improving customer services while reducing costs. The Minister will be pleased to know that I am not calling for an increase in spending on public libraries, but rather for a revamp of the way that libraries are run so as to ensure that they are viable and fit for purpose for future generations.

Changes must be made to the way that library services are delivered so as to encourage customers to use them. Public use of libraries is in decline, which was shown in the 2010 Taking Part report, commissioned by the Department for Culture, Media and Sport and published last month. The report shows that since 2005-06, there has been an overall downward trend in the number of adults visiting public libraries in England across all adult age categories and socio-demographic groups. Only 39.4% of adults surveyed said they had visited a public library over the past year, compared with over 48% of adults five years ago.

Reading figures, however, are not declining, and the same report shows an increase in the number of people who read for pleasure. Over 65% of adults surveyed read for pleasure and of those, 80% had done so over the past week. In addition, book sales have grown. With the popularity of books such as “Harry Potter” and the “Twilight” series, annual figures from Nielsen BookScan show that children’s book sales in 2009 increased by nearly 5% on the previous year.

Such figures suggest that the problem lies in the services offered by libraries. Numerous surveys have shown that the public want good choice, convenient opening hours and a pleasant environment from their local library. However, many libraries do not provide a service that attracts a significant proportion of the reading population. There is a market for libraries, but they must improve their ability to attract readers. Libraries should provide a useful professional service and an environment in which people want to be. They must do their job properly and adapt to what the public want and need, in order to ensure that they remain and are embraced by communities.

[Andrew Stephenson (Pendle) (Con)]

I congratulate my hon. Friend on securing this important debate. Is he aware of the excellent work currently being undertaken by Lancashire county council to increase the use of local libraries? Colne library in my constituency was reopened last January following a complete refurbishment that transformed it. While continuing to deliver a traditional range of services, the library is also able to help people of all ages attain their full potential by providing services such as courses in information and communications technology, adult education and writing courses, and musical activities. There are new meeting rooms for a range of community groups, one of which I use for my local surgeries.

[Justin Tomlinson]

I thank my hon. Friend for his intervention which highlighted how local libraries can adapt to the needs of individual communities. That is a good example showing how the future of that community library has been secured.

[Andrew Percy (Brigg and Goole) (Con)]

I also congratulate my hon. Friend on securing the debate—I know that he is a passionate advocate of libraries. My hon. Friend the Member for Pendle (Andrew Stephenson) spoke in support of what has been happening in his area, but in my area, our experience of the local council has been a little different. We currently have a Labour council that is proposing the possible closure of a library in Haxey on the Isle of Axholme. It has not been at all innovative in its approach but has simply offered residents the options of the closure of the library and replacement with a mobile service, or staffing by volunteers. Although it is important to transform libraries, the challenge is for local councils to be innovative and not simply present the public with bland options. It is hit or miss around the country.

[Justin Tomlinson]

That is why I requested this debate, which I hope will highlight that although councils have difficult decisions to make, there are options that can transform the service that is offered, as my hon. Friend the Member for Pendle (Andrew Stephenson) highlighted.

I am pleased that the Minister has announced that the future libraries programme, led by the Museums, Libraries and Archives Council and the Local Government Association group, will work with and support councils to deliver key services for communities while driving costs down. I welcome a rethink of the way that library services are delivered, and I endorse the introduction of shared services, merging functions, staffing across authorities and greater connection with other local services, where appropriate for the community. Councils need to deliver fresh initiatives to achieve cost savings and new partnerships, and they must make the most of digital advancements because further opportunities will arise through the medium of digital books.

We must ensure that libraries deliver the services that communities want and need, and that they can adapt and be shaped by the local people who use them. That is why library services should be run at a local level. Local authorities are important for the delivery of library services, but the responsibility of the day-to-day running of libraries must lie with library managers.

The person running the library and their relationship with the community is what matters. Flexibility and efficiencies can be enabled by cutting out bureaucracy and upper management. If libraries are run from the bottom up, front-line staff are given the freedom to provide a service that caters for the public who want to use them. Managers are often too heavily controlled from above, and each individual library should be released so that it can have a relationship with the community. The most important person should be the manager who must know their library, their customers and the needs of their community. By cutting corporate structure and giving management back to individual libraries, services can be tailored to—and led by—the community.

Where possible, back offices should be reduced, and activities that are not part of the libraries should be removed. Public library statistics state that only 7.5% of library expenditure for 2008-09 was spent on book stock, which is staggering. There should be a reduction in bureaucracy through the use of universal categorising and cataloguing, and labelling should be standardised. Costs saved by cutting through red tape can be spent on improving stock, opening hours and the environment of the libraries—areas that have been shown to be important to the public but which have all too often been neglected. National library campaigner, Tim Coates, is passionate about that issue, and rightly so as it is exactly how Hillingdon local authority helped to transform its library service.

If services are released from a corporate structure that undermines managers, decisions can be made about vital areas such as stock. Such decisions can be made directly in response to requests and local demand without additional bureaucracy or delay. When we opened our new central library, we allowed local residents to pick and choose—within legal boundaries—any item or book that they wanted to have in the library. That is important, as people will not use libraries if they do not have the books that they want or the stock is not up to date with new releases or trends. Big-name bookstores such as Waterstones often provide a wide variety and an up-to-date collection, and a pleasant coffee culture environment in which to enjoy a book. Libraries must be able to compete and go further by also providing additional services that are unique and appropriate to the local area. Again, I refer to the excellent example given by my hon. Friend the Member for Pendle.

Local communities need to be able to access services or be offered a service that they want. The library manager can be responsible for successfully offering and delivering services appropriate for the area—as they know it best—working in conjunction with volunteers. For example, delivery services to the elderly in local care homes or reading time for children after nurseries or schools finish, with the use of volunteer groups, can help to take the library directly to the community and drive up usage. I recently experienced that when I took part in the launch of the Swindon summer reading challenge for children, acting as an elephant in the support cast for author Neil Griffiths’ excellent live story time. Thankfully, my red-faced performance, which has not featured on YouTube, did not put off the children, with an amazing 2,598 children signing up—a just reward for the staff and volunteers who went that extra mile to make the library exciting for the children.

Local solutions can be developed to increase opening times. In Swindon, we saw the Old Town community library facing closure. I know that the Minister is well aware of it. There were concerns about limited opening times, fears of falling usage following the opening of the new Central library and concerns about an unsuitable and cramped building. That was typical of so many closures across the country. However, local campaigns were organised, led by local activist and passionate library supporter Shirley Burnham, and thankfully a practical solution was found by moving the library into the arts centre just around the corner. Incidentally, that move is happening as we speak. The move started today, and knowing Councillor Fionuala Foley and head of libraries Allyson Jordan, there will not be any delay in the library opening later this week.

[Duncan Hames (Chippenham) (LD)]

I congratulate the hon. Gentleman on securing the debate. We could certainly use his experience elsewhere in Wiltshire. My local council is proposing to close Melksham library and replace it with bookshelves in the foyer of an out-of-town swimming pool and leisure centre. Does the hon. Gentleman agree that the arts centre that features in the innovative solution that he has outlined is a much better bedfellow for a library than the rather damp suggestions that people have been experiencing in my part of the county?

[Justin Tomlinson]

I thank my hon. Friend for that intervention. I am not familiar with that area in particular. There are opportunities to extend the library service in places such as leisure centres, with self-service machines, but I question their replacing the library service and I suggest that the council thinks a little more and comes up with more innovative ideas and consults the local community a little more widely to find a solution that will work.

The move to the arts centre will not only provide a modern, improved environment. In addition to transferring the existing 18 hours of staffed opening, those hours will be extended, through the use of self-service machines, to the 40 hours for which the arts centre is open during the daytime, plus any evening performances—crucially, at no extra cost to the taxpayer. With the additional footfall driven by the library, the arts centre will surely see increased sales for its performances and the café will be made more viable—a real win-win situation, thanks to the willingness to adapt and change. That highlights the thrust of my proactive case.

[Mr Robert Buckland (South Swindon) (Con)]

I am very grateful to my hon. Friend for mentioning the Old Town library, which is in my constituency. I can tell you, Mrs Main, that as an instinctive bookworm and a user of the library service in South Swindon who gave an involuntary shudder when he learnt that the third edition of “The Oxford English Dictionary” is not to be put into print, I am somewhat of a traditionalist when it comes to libraries. However, I was delighted to hear my hon. Friend’s reference to the need for a place of quiet reflection. Does he agree that in any move to new premises, such as the welcome arts centre development in Old Town, we must remember that at the back of it all libraries should remain places where there can be quiet reflection for those who use them?

[Justin Tomlinson]

I thank my hon. Friend. I am delighted that he shares my passion for libraries. I know that Wroughton library benefits from his family’s exhaustive use of the book stock. He is right to say that there should be provision for quiet study time, but also sometimes we need to make libraries more welcoming, so it is a question of achieving that balance.

For libraries to attract more readers, they need to improve the library experience. The environment must be welcoming for all ages, and clean. Staff should be smart and well presented, as well as friendly, knowledgeable and helpful. Opening times can be synchronised to the opening hours of local shops or footfall for the area—for example, if there is late-night shopping or Sunday trading. Innovative ideas need to be encouraged to provide new solutions that fit the local area and demand.

More must be done to ensure that libraries, particularly our small community libraries, can survive the current financial climate and are providing a service that is fit for purpose and the community that it serves, not a one-size-fits-all approach. Libraries need to adapt to changing times and be led by local demand. Services must deliver choice, convenience and quality customer care. Responsibility for management should be based at local level, so that the people who use and cherish libraries can have a say and are involved in the future of their community libraries.

My fear is that although many people agree with the sentiments expressed in my speech, a failure to act will see the steady and continual decline of our much-loved community facilities. I therefore urge the Minster, in his most determined and enthusiastic style, to do all he can to encourage local authorities to ensure that libraries are viable and fit for purpose for future generations.

13:45

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

I am grateful to my hon. Friend the Member for North Swindon (Justin Tomlinson) and I will attempt to rise to the challenge. First, I welcome you, Mrs Main, to the Chair. This is the first time that I have had the opportunity to debate under your chairmanship. You and I came into the House together, and it is always a little depressing when one sees a colleague rise in advance of oneself, as you have, but in your case I can say that it is thoroughly deserved, and you have chaired this debate in a consummately professional manner.

I am grateful to my hon. Friend for initiating the debate and for the many excellent points that he made. What characterised his speech, which perhaps does not characterise many of the contributions on libraries that one reads on blogs or in newspapers, was that it was relentlessly positive. He saw the opportunities that exist in the library service up and down the country, and by and large I can say that that was the case for the many excellent contributions that we heard this afternoon, including from my hon. Friend the Member for Wirral West (Esther McVey), who talked about the need to modernise, and from my hon. Friend the Member for Pendle (Andrew Stephenson), who illustrated the fact that his libraries are being innovative. The concerns of my hon. Friend the Member for Brigg and Goole (Andrew Percy) and the hon. Member for Chippenham (Duncan Hames) were valid and illustrated their awareness that libraries are a force for good in their communities. They were simply encouraging their local authorities to think again about how to be more innovative.

My hon. Friend the Member for South Swindon (Mr Buckland)—a man I have known for many years—reminded us that traditionalism and modernisation can co-exist and create a whole that is greater than the sum of the parts, as it has indeed done in the person of my hon. Friend.

Although I want to make a relentlessly positive and enthusiastic speech, I will just pause for about 30 seconds to make a cheap party political point. It is interesting to note that the coalition Government have fielded no fewer than seven Members of the House, whereas the Opposition, who presided over the decline in library usage that we have learned about over the past five years from the statistics produced by the Chartered Institute of Public Finance and Accountancy, have not fielded a single Member of the House to talk about their own thoughts and plans for libraries. When I was in opposition, I found extremely frustrating the lack of action from the Government in providing a leadership role.

I said earlier that one thing that I find depressing about the libraries debate is that so much of it is couched in negativity and quite a lot of it is based on a lack of knowledge and a huge degree of ignorance. It was interesting for me that in opposition, when we discussed the library closures in the Wirral—in the constituency now represented by my hon. Friend the Member for Wirral West—and in Swindon, I was, I think, the only Member of Parliament who bothered to visit both places and at least felt that I knew something of what I was talking about. Most people were happy to get on their hobby-horse and talk about the closures, never having got into the detail of the debate.

Much of the debate is conservative with a small c and somewhat negative. I myself see a huge opportunity and an optimistic future for libraries. I am an enthusiastic champion of libraries and will do all I can, in the time that I have as a Minister, to encourage local authorities to cherish and value their libraries, but also to innovate and modernise in their libraries.

In opposition, before I had been sent to the coalition Government’s re-education camp, I did want to set up a library development agency. I learnt in government that first, we have no money, and secondly we are not particularly pro setting up quangos. It may therefore appear somewhat confusing that one of my first acts as a Minister was to abolish the quango responsible for libraries—the Museums, Libraries and Archives Council—so I had better square the circle regarding how that decision came about.

That gives me an opportunity, first, to say how grateful I am to the council’s chairman, Sir Andrew Motion, its chief executive, Roy Clare, and all the team who so ably support them. The MLA has come to the table and understood the political necessity of saving overhead costs and delivering as much money as possible to the front line. We are working hand in hand with it to ensure that we have a smooth transition and that its functions continue to be carried out at the same time as we achieve a cost saving. As my hon. Friend the Member for North Swindon said, that is the kind of thinking that should be going through the heads of library authorities up and down the land.

I am confident that we will have a smooth transition. The specific detail of what will happen has not yet been decided exactly, but we are working closely with the Arts Council, for example, to look at the future. The Arts Council already supports important reading and literature initiatives—notably, the Reading Agency, which is behind the summer challenge, in which my hon. Friend realised his vocation as an elephant. That gives me an opportunity to praise Miranda McKearney and all those who work for the agency, because they do an enormously valuable job in encouraging children to read.

In the meantime, I am delighted to say that I have had the opportunity to put in place the library support programme. What is exciting about it, albeit that my press release was couched in slightly bureaucratic language, is that it brings the Local Government Association to the table. It explicitly recognises that local government has a huge role to play in library organisation and that diktats from Whitehall should not dictate the pace of change in local authority libraries, which should be local authority-driven. I am absolutely delighted that Liberal Democrat councillor Chris White, who is in charge of the programme, has worked so well with us to realise its aims. More than 100 local authorities expressed interest in getting on board, and more than 30 are now part of the initial stages. It is important to stress that libraries are a local service and that it is not for the Government to tell local authorities how to run their local library service—we exist to encourage and support. In particular, I hope that the library support programme will bring together different views about innovation and modernisation and enable best practice to be shared.

It is not all doom and gloom in the library service. We absolutely acknowledge the passionate support among the local community for the Old Town library, but one of the frustrations about the Old Town library campaign, as my hon. Friend will acknowledge, was that Swindon was somehow seen as withdrawing from the library service, when, in fact, a new £10 million library had been built literally half a mile down the road. The same is true up and down the country. If one goes to Norwich, one will see the Millennium library, which is the most visited library in the country, with 1.5 million visitors. In Newcastle, Her Majesty the Queen opened a new central library with a great new civics facility, which already has a podcast from me on its website, just to enhance the service. Manchester has blazed a trail, with the first public library to be successfully co-located with a further education college. It has also announced a full-blown strategy to develop its central library and a network of community libraries. York saw the first private sector sponsorship of a library service in the country, with £300,000 from Aviva. Luton and Wigan are examples of the successful operation of library services within charitable trusts. I could also talk about Essex and Leicester, and Hillingdon has already been mentioned. The library service in Kent is now seen as integral to delivering local authority services. Tower Hamlets has re-engineered its libraries and attracted a whole new group of people in to use them. There is therefore a massive amount of innovation.

The trouble with the library debate is that the minute one mentions an example of innovation, people throw up their hands in horror and say that everything is going to hell in a hand basket. If someone happens to mention that Hillingdon has put coffee shops in its libraries, people throw up their hands and say, “The Government want to turn libraries into coffee shops.” No, we do not; we just think that there is nothing wrong with being able to buy a cup of coffee and then read the paper, borrow a book or access the internet. I tried to make a speech that I recently gave about libraries slightly more interesting by mentioning that there is a library in a pub in North Yorkshire. It was immediately said that the Government want all libraries to be closed down and put in pubs. No, we do not. As my hon. Friend so eloquently said, this is about putting library managers and the people who run the library service in charge. If they think that their local community would find it easier to visit a library in a pub, they should be entitled to try that out.

There are some key principles behind the library support programme and the Government’s support for libraries. Local authorities should ask themselves what their library is for. Of course it is about books, borrowing and reading, but it is also about digital access, inclusion, access to the computer network and information. As my hon. Friend the Member for South Swindon said, the library is a place to have thinking time and to be quietly contemplative. Libraries are also great community centres for people who are new to an area, and refugees, in particular, find them a fantastically useful resource that can help them begin integrating into the local community. Libraries are also a massive resource for helping local councils to put services in front of local residents.

As my hon. Friend the Member for North Swindon said, however, library authorities also have to look at where they can cut costs. I have gone on record again and again as saying that it is a matter of intense frustration that there are 151 library authorities. Before I risk contradicting myself, let me say that I will not impose change or force library authorities to merge, but it is absolutely sensible that library authorities should find ways to work together. I was delighted that Hammersmith and Fulham and Kensington and Chelsea, each of which has six libraries, will now work together. Even so, Hillingdon has 18 libraries, which is three times more than Hammersmith and Fulham. Rutland has five libraries, and I am delighted that it is working with Lincolnshire, which has 61. Library authorities therefore cover a huge range of sizes, ranging from 80 or 81 libraries in Kent down to five in Rutland, and it makes sense for people to work together to try to save on bureaucracy.

Instead of thinking of a library as a cost—as somewhere where savings have to be made—local authorities should think of it as a resource, where innovation can happen. We are moving into the digital age, and people will be reading e-books, so they will want a place to go where they can be introduced to and try out new technology. In the same way, libraries in the 19th century were set up to introduce people to books, when books were an expensive resource and not available in every household.

Training is also incredibly important. If we are to put library managers in charge, we must also ensure that we concentrate on training them and librarians so that they can provide a service for different kinds of users.

[Andrew Percy]

One issue that we have not talked about is post offices. My area has lost a number of post offices in the past few years, and along with the post office we also lose the village shop. Will there be discussions between Ministers about how we can get the Post Office to work more closely with library authorities on possibly co-locating?

[Mr Vaizey]

What concerns me about that intervention is that my hon. Friend has clearly bugged the Department for Business, Innovation and Skills. About 45 minutes ago, I was having a discussion with the Minister responsible for post offices. I said that there is a clear correlation between libraries and post offices as community resources. I would be delighted to have discussions with my hon. Friend, because he, I and the Minister responsible for post offices are clearly on exactly the same wavelength.

The location of a library—location, location, location—is incredibly important. I have talked about libraries co-locating with GP surgeries, health centres or, indeed, supermarkets. Again, the headlines said that the Government planned to close down libraries and put them in supermarkets or, indeed, leisure centres. However, the key point, as my hon. Friend the Member for North Swindon said, is ease of use for users and residents. If co-locating means that libraries can stay open longer without additional costs to the taxpayer, or that they can increase their footfall and the number of people passing by who say, “Oh, there’s the library. I must just pop in,” that must be a good thing.

I will bang the drum for libraries and campaign for them. I will make the point again and again that I am not abdicating my responsibility when I emphasise the fact that local authorities are responsible for libraries. Libraries are a massive resource, and I am happy to stand shoulder to shoulder with local authorities in encouraging them to innovate, cut costs and move forward into the future.

14:00

Sitting adjourned without Question put (Standing Order No. 10(11)).

“Making it Easier for Charities to Sell Land”

Tuesday 7th September 2010 Written Statements

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

I have today published the Government’s response to the consultation “Making it easier for charities to sell and make other disposals of land”. Copies are available in the Libraries of both Houses and on the Cabinet Office website at: www.cabinetoffice.gov.uk.

Schools: The Single Level Test Pilot

Tuesday 7th September 2010 Written Statements

[The Minister of State, Department for Education (Mr Nick Gibb)]

Schools involved in piloting single level tests will today be informed of Ministers’ decision to end the pilot on completion of the June 2010 test round. The pilot has now provided sufficient evidence on single level tests to be considered as we review how key stage 2 tests operate in the future.

Sewer Overflows (River Thames)

Tuesday 7th September 2010 Written Statements

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

In the 19th century Sir Joseph Bazalgette built a sewerage network for London with the capacity that he believed would meet all foreseeable needs. It has been updated and modernised but for some years has been coming under increased strain to the point that combined sewer overflows discharge raw sewage into the River Thames on around 50 occasions a year.

This figure is expected to increase. Recent Thames Water work has shown that the system is operating closer to its maximum capacity than previously recognised and, with population growth, increasing urbanisation and climate change, it is estimated that in 10 to 20 years time sewage will be overflowing into the Thames even when there is little rain.

Complete eradication of some spills of sewage into the Thames during periods of heavy rainfall is not feasible: this is the legacy of a sewerage system which carries both foul water and rainwater. But the frequency and volume of spills we face in future is unacceptable and should be reduced to ensure that environmental standards in the Thames continue to meet the standards set by the Urban Waste Water Treatment (England and Wales) Regulations 1994.

Since the 22nd March 2007 statement by the then Minister for Climate Change and the Environment and Member for Dudley, South (Ian Pearson), on the need to improve the water quality in the Thames by upgrading the sewerage infrastructure, Thames Water have started work on building a tunnel (known as the Lee tunnel) from Abbey Mills pumping station to an upgraded Beckton sewage treatment works at a total cost of around £0.8 billion. When complete these works should reduce the total volume of sewage overflows into the tidal Thames by around two thirds. However significant volumes of raw sewage will still continue to enter the Thames at times of heavy rainfall particularly in the higher reaches of the tidal Thames from Hammersmith through central London which will get less benefit from the Lee tunnel.

Mr Pearson’s statement supported the construction of a second “Thames Tunnel” to address unsatisfactory overflows from Hammersmith to Beckton. Since 2007 Thames Water, the Environment Agency, and Ofwat have worked together to improve the evidence base, to take forward the design process including costings, and explore possible commercial arrangements. The then Government announced their intention to go forward with the scheme. Despite that the European Commission has continued to pursue infractions proceedings against us claiming we are failing to meet our obligations under the urban waste water treatment directive in the London area, and in Whitburn in the North East of England.

In 2007 the then Government judged the cost of the scheme to be at least £2 billion, with a peak annual increase in bills for Thames Water customers of £37. Since then greater analysis and study by Thames Water have led to a revised estimate of £3.6 billion, including contingency costs but excluding the Lee tunnel and other elements of the scheme which have already been contracted for. This could result in future peak annual bill increases of around £60-65 (£80-90 including the Lee tunnel and other elements).

I recognise that in the current economic context this represents a significant cost to Thames Water customers and, while we judge this to be a robust cost estimate for this stage of the process we cannot rule out further changes to the estimates as work progresses. However a Thames Tunnel continues to offer (by far) the lowest cost solution to the problem and I believe Thames Water should continue to press forward with this project working with Ofwat, the Environment Agency and DEFRA on the regulatory, commercial and planning processes. Thames Water intend to consult on options for the route of the tunnel shortly. We with Ofwat will continue to ensure that the costs are scrutinised and reviewed so that I can be assured before Thames Water sign a construction contract that the final proposal represents proper value for money. As we go through this process, I intend to update the 2007 impact assessment for the tunnel and place it on the DEFRA website.

I am also minded that development consent for the project should be dealt with under the regime for nationally significant infrastructure projects established by the Planning Act 2008. I consider that this project, with its unique scale and complexity, is of national significance, and therefore appropriate for this regime.

I will be considering the appropriate mechanism under the 2008 Act to ensure the Thames tunnel project is considered under this national level regime and intend to include consideration of the Thames tunnel in the draft national policy statement for waste water. I plan to lay this before both Houses of Parliament later this autumn.

Adult Autism Strategy (Statutory Guidance)

Tuesday 7th September 2010 Written Statements

[The Minister of State, Department of Health (Mr Paul Burstow)]

A national public consultation on statutory guidance for health and social care bodies to support the delivery of “Rewarding and fulfilling lives: The strategy for adults with autism in England (2010)”, under section 7 of the Local Authority Social Services Act 1970 was launched on 29 July 2010. A copy has been placed in the Library and copies are available to hon. Members in the Vote Office.

The landmark Autism Act 2009 (introduced as a Private Members Bill by the now Secretary of State for Wales) marks a milestone in the drive to transform support and services for adults with autism in England. This Government have already made clear the commitment to drive forward work to tackle the disadvantage which people with autism and their families sadly so often face and to deliver the autism strategy published earlier this year by the previous Government.

This consultation on draft guidance for health and social services bodies to support the implementation of the autism strategy is a marker of that commitment. The draft guidance focuses on the seven areas highlighted in the Autism Act 2009 and is focused on achieving two key outcomes:

improving the way health and social care services identify the needs of adults with autism; and

ensuring identified needs are met more effectively to improve the health and well-being of adults with autism and their families.

Throughout, the draft guidance underlines the importance of using existing processes and resources to achieve these outcomes.

The aims of the consultation are to:

hear the views of service commissioners and providers, people with autism and family carers and use those views to inform the development of the statutory guidance;

further understand the expectations of adults with autism and their family carers in relation to health and social care services;

seek views on the issues around the provision of health and social care services for adults with autism; and

gather more information about health and care services currently provided for adults with autism and family carers.

The consultation will run to 18 October 2010, and we will publish final guidance, informed by the responses we receive, in December.

This consultation on statutory guidance for health and social care bodies is part of an ongoing programme of activity to ensure adults with autism will be able to enjoy the same rights and freedoms as the rest of society. This Government are committed to supporting people with autism to live independently as equal and included citizens. This means ensuring that programmes across the voluntary and public sectors that are aimed at improving care and transforming services address the needs of people with autism; and that mainstream public services especially become more inclusive of people with autism.

Equality Act 2010

Tuesday 7th September 2010 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

The Equality Act 2010 includes an integrated public sector Equality Duty. This will replace the existing race, disability and gender equality duties and is extended to cover age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment in full.

Schedule 19 to the Act lists certain bodies which will be subject to the duty. The Act contains a power allowing a Minister of the Crown to add bodies to this list and it also contains a power for a Minister of the Crown to impose specific duties on listed public bodies to help them in better performance of the duty.

On 19 August 2010 the Government published a consultation document setting out draft regulations for the new specific duties and proposing which bodies should be added to schedule 19 and subject to the specific duties.

The consultation period will run until 10 November 2010.

I am placing copies of the consultation document in the Libraries of both Houses. Copies are also available on the Government Equalities Office website at: www.equalities.gov.uk.

Parliamentary Written Answer (Correction)

Tuesday 7th September 2010 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I regret to inform the House that there was an inaccuracy in the answer I gave to parliamentary question UIN 11900 on 27 July 2010, Official Report, columns 1000-01. The accurate table is detailed below:

(ii) Separate training is also provided for staff working remotely on laptops. Formalised external training began in October 2009.

Heathrow Operations

Tuesday 7th September 2010 Written Statements

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

In January 2009, the previous Government announced their decisions relating to the future of Heathrow Airport. In addition to supporting the construction of a third runway, a number of additional decisions were taken relating to operations at the airport.

This Government have already made their position clear in rejecting the case for a third runway, and opposing new runways at London’s other main airports—Gatwick and Stansted. I now wish to outline the Government’s position in relation to those additional operational decisions.

I can confirm that we remain firmly committed to retaining runway alternation and will not approve the introduction of mixed mode operations at Heathrow. This Government believe that any potential benefits mixed mode might bring to the airport are outweighed by the negative impact such operations would have on local communities.

Operating procedures known as westerly preference, early morning runway alternation and night-time rotation of easterly/westerly preference have also all brought noise mitigation benefits to local communities. This Government do not intend to revisit previous decisions taken in relation to these procedures and they will continue to operate as they do now.

The previous Government’s decisions in 2009 also included a commitment to end the Cranford agreement. This decision was based on the desire to distribute noise more fairly around the airport and extend the benefits of runway alternation to communities under the flight paths during periods of easterly winds. We support that objective and do not intend to re-open the decision. A number of infrastructure and operational changes by BAA and NATS are needed to implement this decision. The airport operator, BAA, is currently developing proposals for ending the Cranford agreement with a view to confirming the necessary works by the end of this year. I will look to BAA to ensure that proper consideration is given to appropriate mitigation and compensation measures for those likely to be affected by the proposals.