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Mr Speaker
I remind the House that two minutes’ silence will be observed in the Chamber at 11 o’clock this morning.
Oral Answers to Questions
Charlie Elphicke (Dover) (Con)
1. What plans he has for the future of feed-in tariffs for small-scale renewables; and if he will make a statement.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
Before answering that question, I should like to offer the apologies of the Secretary of State to you, Mr Speaker, and to the House. He is unable to attend today’s departmental questions, as he is still travelling back from China at the conclusion of the Prime Minister’s highly successful visit. However, the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry), and I will do our best to field questions from the House. We would both like to welcome the new team to their places on the Opposition Front Bench.
In respect of question 1, as confirmed in last month’s spending review, the coalition is fully committed to feed-in tariffs for small-scale renewables. We want an ambitious roll-out of a range of decentralised domestic and community-scale technologies, and to maximise the scheme’s value for money, particularly in the current fiscal climate.
Specifically, we have said that when we review the scheme in 2012, we will reduce projected costs by 2014-15 by at least £40 million. Only in the event of deployment running ahead of published projections would we bring forward that review. But, to reassure the industry further, we will announce the trigger for such an early review shortly.
Charlie Elphicke
Many businesses say that too few people know how feed-in tariffs can help them save money and the planet at the same time. What steps can Ministers take to build feed-in tariffs up to a substantial market scale?
Gregory Barker
We are very keen to encourage businesses, communities and, of course, home owners to engage in the decentralised energy revolution, and to that end I am very pleased to tell my hon. Friend that we will shortly publish a new online initiative, giving a whole lot of detail to communities and businesses in order to allow them to access financial incentives and to cut through regulation.
Albert Owen (Ynys Môn) (Lab)
Many peripheral areas such as my constituency cannot benefit from feed-in tariffs because they simply have the wrong transmission lines and infrastructure. Can the Minister assure me that, in the future, when there is a universal roll-out of feed-in tariffs, areas such as mine will not be hit by disproportionate costs because the infrastructure is lacking?
Gregory Barker
Absolutely. I am sorry to hear that the hon. Gentleman thinks that his constituency is behind, and I shall be very happy to look into the specific case in his area. If he would like to write to me with specific issues, I shall ensure that my officials look into them, because we are committed to a national roll-out of this exciting technology.
Malcolm Bruce (Gordon) (LD)
What discussions is the Department having with financial institutions to ensure not only that access to feed-in tariffs is available to people on low incomes, who cannot borrow money at competitive rates in order to benefit, but that, if it really is a national programme, low-income people will fully benefit from it?
Gregory Barker
Feed-in tariffs are available to everybody, regardless of income, and there are some innovative market solutions and offers that allow people to access those technologies without needing any up-front capital. However, it is up to the market to bring forward such solutions, and for Government to create the environment in which the market can do so.
Huw Irranca-Davies (Ogmore) (Lab)
The influence of the Secretary of State’s visit to China has already been evidenced this week, as the Department for Energy and Climate Change announced its five-year plan to coincide with the fourth five-year plan of the People’s Republic of China. We are all state planners now.
In respect of small-scale renewables and feed-in tariffs, I note that solar power did not receive a single mention—not a single word—in DECC’s five-year plan, so will the Minister now admit that, on his watch, feed-in tariffs will be withdrawn from photovoltaics? What does he say to the pioneers and early adopters of that technology now that the sun is going down on photovoltaics?
Gregory Barker
I am very sorry that the hon. Gentleman should commence his career on the Opposition Front Bench shadowing this Department with a completely false scare story. It is completely untrue. We are absolutely committed to solar PV and to the widest range of domestic and community-scale renewables, but the fact is that we inherited a system that simply failed to anticipate industrial-scale, stand-alone, greenfield solar, and, although we will not act retrospectively, large field-based developments should not be allowed to distort the available funding for roof-based PV, other PV and other types of renewables.
Caroline Lucas (Brighton, Pavilion) (Green)
2. What changes he proposes to make to the Warm Front scheme to ensure that it meets the needs of vulnerable fuel-poor households.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
As announced in the spending review, DECC will fund a smaller, more targeted Warm Front scheme over the next two years as we transition to the full roll-out of the green deal, with its energy company obligation. We will shortly be consulting on the proposed changes to Warm Front to ensure that the eligibility criteria reflect the coalition’s determination to focus on the most vulnerable households.
Caroline Lucas
Warm Front funding is to be reduced from £345 million to £110 million by next year—that is a 68% cut. The Government’s plans to try to bridge the gap are likely to be funded through a levy on consumer bills, but that does not take into account the fact that this perversely hits the fuel poor hardest. What account has the Secretary of State taken of the Government’s own figures, which estimate that although options such as an extension of CERT—the carbon emissions reduction target—might take between 21,000 and 31,000 households out of fuel poverty, the impact via increased fuel bills is that it results in 70,000 to 150,000 households being put into fuel poverty?
Gregory Barker
The coalition is very mindful of the impact of all levies on domestic fuel bills. That is why, in the comprehensive spending review, we decided, for example, not to go forward with plans to fund RHI—the renewable heat incentive—on the basis of a levy, but to fund it out of general taxation. However, I can assure the hon. Lady that we look overall at the benefits for the fuel poor that will accrue from access to the green deal, feed-in tariffs and social price support, as well as continuing support for Warm Front for the next two years. Taken together, this holistic approach will ensure that we continue to make progress against fuel poverty.
Andrew Bridgen (North West Leicestershire) (Con)
Considering the previous Government’s abject failure to tackle rural fuel poverty, will my hon. Friend tell me what we are going to do differently?
Gregory Barker
We are looking very carefully to ensure that our proposals for the RHI and social price support particularly take into account the needs of off-grid customers and the fuel poor. The green deal will take particular account of those in hard-to-treat homes, which are often older houses in rural areas.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Age UK estimates that more than 3.5 million older people across the UK live in fuel poverty, and every year more than 30,000 older people die from preventable causes over the winter months—a tragedy that we should do all we can to prevent. I have spoken to Age UK about the Government’s plan to phase out the Warm Front scheme and replace it with the green deal. Warm Front has so far brought 21st-century heating to more than 2 million households. Age UK is concerned that key components of the Warm Front scheme, including boiler replacements, will not be covered under the green deal. As another cold winter takes hold, has the Minister spoken to Age UK about its concerns, and can he guarantee that the green deal will be fair and will not leave millions of elderly people abandoned in their own homes, living in fuel poverty?
Gregory Barker
I can certainly guarantee, regarding the green deal, that fairness will be at the very heart of this exciting new proposition. In fact, the hon. Lady underestimates the number of fuel poor. Our departmental figures show that there are probably more than 4 million households living in fuel poverty, and that is a direct legacy of the Government whom she supported. Fuel poverty has been rising, year on year, and it did so right the way through the previous Parliament. It is a scandal that despite setting the target for 2016, the trajectory was going the wrong way. We need a game changer; we have to start again. We have to really attack fuel poverty, but we need new ambition, and we are bringing forward radical reforms to ensure that the delivery matches the rhetoric.
Richard Ottaway (Croydon South) (Con)
3. What assessment he has made of the potential effects of the outcomes of the comprehensive spending review on the ability of the Government to meet its carbon budgets; and if he will make a statement.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
According to our initial analysis, we are still very much on track to meet our first three carbon budgets. However, the details of the carbon impacts of the spending review will be subject to change until all Departments have decided how to allocate their new financial budgets.
Richard Ottaway
May I congratulate the Minister on achieving a 21% increase in environmental spending right across the Government under the CSR? Will he use this resource to unlock the private sector, which will have the benefit of reducing carbon dioxide emissions while at the same time helping the economy?
Gregory Barker
My hon. Friend is absolutely right. That was an excellent settlement for the green agenda and we now have the resources to fund our core mission of moving towards a low-carbon economy. Ultimately, however, it will be the private sector and private capital, taking advantage of the opportunities that those resources afford, that will allow us to achieve that big transformation. All our initiatives and market reforms are aimed at crowding in private sector capital and making the private sector an exciting place to invest for entrepreneurs and investors.
Alison McGovern (Wirral South) (Lab)
Part of the private sector in my constituency, Stiebel Eltron, has come together with training provider, Scientiam, to open a new green energy training centre in Bromborough. That is the sort of action that could really help carbon budgets. Will the Minister join me in congratulating all involved?
Gregory Barker
I certainly will. It sounds like an excellent initiative, and the hon. Lady will know that despite the catastrophic deficit that we inherited, early on we made £150 million extra available for skills. She is absolutely right that skills and retraining are vital, and I would be delighted to learn more about that institution. Perhaps one day I might be able to visit.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
Given that the Government’s own impact assessment of the feed-in tariffs to which the Minister referred earlier shows that the costs exceed the benefits by a factor of 20, wasting £8 billion of taxpayers’ money, how does that fit in with the comprehensive spending review? Have green policies been exempted from it and become a form of financial self-flagellation?
Gregory Barker
Not when I last checked.
I am afraid there is a fundamental difference of approach between the coalition and my right hon. colleague. [Hon. Members: “Colleague?”] My right hon. Friend. I beg his pardon. The feed-in tariffs have to be seen as a key element of our policies to drive a decentralised energy revolution. If we decentralise energy production, it will have a large number of knock-on effects. It will engage communities and householders, who will become more responsible in the energy economy and take up opportunities that are currently not available to them in an old, 20th-century style of energy provision.
Huw Irranca-Davies (Ogmore) (Lab)
To realise the carbon budgets, I make an appeal to the hon. Gentleman. He is a reasonable and intelligent man, I will give him that, and, despite the mixed messages, he understands the importance of new nuclear energy to the UK’s carbon reduction strategy. Will he go back to his Treasury colleagues and argue the case again for Sheffield Forgemasters, if only for the carbon reductions, for making the UK a world leader in nuclear build and the export of green jobs and technology, and for the sake of the right hon. Member for Sheffield, Hallam (Mr Clegg)? Just do it.
Gregory Barker
Really, is he still banging on with the first half-year’s crib sheet? I thought the hon. Gentleman had come with some fresh material.
We are absolutely committed to a thriving nuclear industry, not just for the domestic sector but for export opportunities. Participants in the industry to whom I talk are very confident about the outlook for the British nuclear industry.
Duncan Hames (Chippenham) (LD)
4. What discussions he has had on climate change financing in the UN Secretary-General’s high-level advisory group on climate change financing.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
Over the past year, my right hon. Friend the Secretary of State has had wide-ranging discussions on potential sources of climate change financing as part of his involvement in the high-level advisory group on climate change financing. The discussions have focused on how developed countries can meet their Copenhagen accord commitment to mobilising $100 billion a year of public and private finance by 2020, to assist poorer countries with the climate challenge.
Duncan Hames
I thank the Minister for that reply, which I am sure we will be able to explore further in my Westminster Hall debate on Cancun next week. Last week’s report should be welcomed for presenting several innovative sources of climate finance, including a tax on aviation and shipping. When can we expect the Government to set out concrete proposals for taking forward any of those options?
Gregory Barker
They were of course options for the international community, not just for the UK, and we need to do a lot more work collectively to put the flesh on the bones of detailed and radical proposals so that the UK can consider each of them on their merits. I fear that there is still some time to go before we are in a position to do that, but the UK is very much committed to the process and to doing so sooner rather than later.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
The Minister will know that some people are already writing down the prospects of a successful agreement at Cancun and talking about Johannesburg next year as the place at which an agreement might be reached. Will the Minister reassure the House that the Government will do everything possible to ensure that an agreement is reached at Cancun? Will he therefore show Britain’s role in that process by providing information about how we will commit climate finance as soon as possible?
Gregory Barker
I am glad to say that there is strong cross-party commitment to a legally binding global deal, but I do not think that we are being unduly pessimistic in saying that we do not expect a globally binding deal to be reached at Cancun. That seems to be the expectation of most of the key participants. However, I can assure the hon. Gentleman that the UK is committed to making good progress at Cancun across a range of issues, including finance. We have committed in the CSR to a strong role for fast-start finance, details of which we have already announced.
Karl Turner (Kingston upon Hull East) (Lab)
5. Whether he has assessed the effect of the outcomes of the comprehensive spending review on households in fuel poverty.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The spending review committed significant resources to tackling fuel poverty. Warm Front will continue to install measures for around 160,000 households in the next two years. In addition, we are actively working on the green deal and its new energy company obligation, which will have a particular focus on vulnerable households, for the end of 2012. We have confirmed an increase to cold weather payments at £25 a week. We have also confirmed that, from April 2011, energy suppliers will provide new help with energy bills, particularly for the most vulnerable fuel-poor households, through social price support. I will make a more detailed announcement on SPS shortly.
Mr Speaker
We are grateful. A blue pencil is needed to some of these initial answers. They are simply too long.
Karl Turner
I am grateful to the Minister for his reply, but, with respect, talk is cheap. Can he explain how massively cutting budgets to Warm Front, which does a fantastic job in my constituency, will help to eradicate fuel poverty by 2016, as per the previous Government’s target?
Gregory Barker
As the hon. Gentleman will know, fuel poverty grew year on year on year under the previous Government. It is simply a fact that 4 million households are now in fuel poverty; five years ago, 2 million households were in fuel poverty. If we had carried on with Warm Front business as usual, the fact of the matter is that it would have taken more than 20 years to achieve the 2016 target. We need a fresh approach, we need to bring in private investment and we need to create new markets. Only then, with the ambition that we have in the new coalition, will we really stand a chance of tackling fuel poverty.
Mr Speaker
Answers really must be shorter from now on. The Minister has been too long, and that is the end of it.
Mr David Amess (Southend West) (Con)
6. How many households he expects to have participated in his Department's energy efficiency programmes by 2015.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The green deal will create a completely new market mechanism, incorporating an entirely new obligation on energy suppliers. It will drive up energy efficiency on an unprecedented scale, potentially reaching up to 26 million homes. Green deal plus and other initiatives should lead to around 10 million homes being treated by 2015.
Mr Amess
That is good news, but as a promoter of the Warms Homes and Energy Conservation Act 2000, may I ask my hon. Friend whether he shares my disappointment at the relatively poor take-up of the scheme? What initiatives are the Government taking to ensure that vulnerable people are not cold in their homes this winter?
Gregory Barker
First, may I pay tribute to my hon. Friend’s long record of campaigning on this issue? I assure him that Warm Front remains open. We will be treating tens of thousands of new homes this winter. However, it must be the right long-term approach to look for new ways to crowd in private sector investment.
Barry Gardiner (Brent North) (Lab)
The Secretary of State has announced his intention significantly to advance the 2020 target for the roll-out of smart meters. The industry, however, is saying that, for each year in advance, there may be trade-offs in efficiency, the interoperability of the kit and the overall functioning of the scheme. Will the Minister ask his officials to investigate that trade-off between efficiency and the acceleration of the scheme, and report back to Parliament?
Gregory Barker
The hon. Gentleman is right. There is a new sense of ambition on the roll-out of smart meters because they offer huge potential. He is also right that that is complex. There is a trade-off to be made, and we are alive to that. My hon. Friend the Minister and our officials are working on the matter collaboratively with the industry, and I can assure the hon. Gentleman that we are making good progress.
Mr Philip Hollobone (Kettering) (Con)
7. Whether he plans to amend the safety regime for offshore oil drilling following the publication of the analysis of the causes of the oil spill in the gulf of Mexico.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
I am delighted to take part in the Greg Barker show, Mr Speaker.
Although DECC regulates environmental aspects of the oil and gas sector, the Health and Safety Executive is responsible for safety. We have taken further steps to strengthen our regulatory regime by doubling the number of environmental inspections, and we are satisfied that the regime is one of the most robust in the world. We have been looking closely at information from the Macondo incident and will continue to do so. When those investigations are complete, we will determine what more, if anything, needs to be done to reinforce our regulatory approach.
Mr Hollobone
My constituents in Kettering would like to know whether an incident such as happened in the gulf of Mexico could happen on the UK continental shelf, and if so, what the Government would be able to do about it.
Charles Hendry
One of the most immediate actions taken was to ensure that we have capping and containment devices—two containment devices that could deal very quickly with such an emergency are now based in the UK. We are also working with the industry on capping devices that would provide early, permanent solutions.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
Will the Minister ensure not only that we will rightly learn any lessons from the inquiries into the gulf of Mexico incident, but that nothing is done to lose the leading-edge safety case regime that has been so well established since the Piper Alpha disaster?
Charles Hendry
My hon. Friend is absolutely right. We are keen to see international standards and work on that basis. However, that means bringing other countries up to the standard that already operates in the North sea, rather than lowering our standards to other international levels.
Miss Anne Begg (Aberdeen South) (Lab)
What is the Government’s role in the Oil Spill Prevention and Response Advisory Group, which was set up by the industry in the UK in the light of the disaster in the gulf of Mexico?
Charles Hendry
OSPRAG is rightly an industry-led initiative. We are working very closely with it, especially on identifying areas where Government involvement in crucial. We are particularly supportive of its work on developing immediate capping devices to ensure that should a disaster occur, it can be dealt with very quickly indeed.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
8. When he expects to announce his plans for a consultation on electricity market reform.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
The Secretary of State announced his plan for a consultation on electricity market reform in the annual energy statement in July. In accordance with the DECC business plan, the consultation will be launched in December.
Eric Ollerenshaw
What reassurance can the Minister give the House that that consultation will end up not like the endless consultations of the previous Government, but with a clarity of purpose on our energy policy?
Charles Hendry
My hon. Friend is absolutely right. We must put a stop to Green Papers, reviews and consultations. We must draw a line in the sand and say, “This is the time to make decisions, this is the structure and this is basis for getting on with it.” We simply must get on with the investment.
Dr Alan Whitehead (Southampton, Test) (Lab)
Will the Minister consult on the question of capacity payments for energy plant investment and on low and high-carbon markets? Alternatively, does he consider, as is suggested in the coalition document, that simply having a floor price for carbon will be enough to sort the market out for the future?
Charles Hendry
The hon. Gentleman knows a huge amount about these issues. We are consulting on a floor price for carbon, which we believe is essential, and also on other mechanisms that might be necessary to secure investment in low-carbon technologies. We will consult on capacity payments in terms of back-up generation capacity and on other ways of managing demand, which we think is a more efficient way to deal with that problem.
Ian Swales (Redcar) (LD)
9. If he will take steps to ensure that the renewable heat incentive does not make UK energy-intensive industries internationally uncompetitive.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
As announced in the spending review, the RHI will now be funded from Government spending and not from a levy on bills, so we do not believe that there will be any negative impact on the competitiveness of UK energy-intensive industries. On the contrary, the RHI will offer a great opportunity for energy-intensive industries to gain financially.
Ian Swales
The deal for Sahaviriya Steel Industries, a Thai company, to buy Redcar steelworks is likely to be completed within a few weeks. Will the Minister meet representatives of that company to reassure them about the future carbon and energy policy for their industry?
Gregory Barker
I know that my hon. Friend is working extremely hard on this issue. I would be delighted to meet him and the potential purchasers to see what we can do to help to secure those important jobs.
Mr Speaker
Order. I am grateful to the Minister because he has heeded the advice that I have given to him. The exchange that has just taken place between the hon. Member for Redcar (Ian Swales) and the Minister is a good illustration of how these matters should be conducted. I feel confident that the Minister will want to build on the great advance he has made in recent minutes, and I hope that the House will also feel that this is beneficial to the way in which we do our business. We can always do better, each and every one of us, and there will be further opportunities.
The House will now stand and observe two minutes’ silence.
Mr Speaker
Thank you.
There was interest in Mr Swales’s question and I hope that there still is.
Mr Denis MacShane (Rotherham) (Lab)
On this subject, will the Minister meet the UK Energy-Intensive Users Group, because its report, published this week and entitled “The Cumulative Impact of Climate Change Policies on UK Energy Intensive Industries”, suggests that without a change of course, electricity prices for the steel industry—which is very important for south Yorkshire—could rise by as much as 141% by 2020? We are all climate-changers and carbon-reducers, but not at the price of eliminating our steel industry.
Gregory Barker
The right hon. Gentleman makes a serious point and last week I had a very good visit to Stoke and the constituencies of several of his hon. Friends to look at how this problem affects the ceramic industry. I would be happy to talk to him about how we can ensure that we do not unduly undermine the competitiveness of the steel industry.
Sarah Newton (Truro and Falmouth) (Con)
I welcome the Government’s commitment to the renewable heat incentive. What representations has the Minister had to include deep geothermal energy in the RHI?
Gregory Barker
There is a lot of interest in geothermal, which is a very exciting technology with much potential. I have had several representations, not least from my hon. Friend, who is a great champion of this new technology. I am working with my officials to see how we can ensure that geothermal is fully exploited in the UK.
Mr Ben Bradshaw (Exeter) (Lab)
11. What assessment he has made of the effects on local employment levels of his decision not to pursue tidal technologies in the Severn estuary.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
A Severn tidal power scheme could create jobs in Wales and south-west England during construction and operation. However, it could also cause job losses in the Severn estuary’s ports, fishing and aggregate extraction industries. We are talking to interested private sector developers and remain absolutely committed to supporting the growth of a successful UK tidal energy sector.
Mr Bradshaw
Is it not extraordinary that the Energy and Climate Change Secretary can go from being anti to pro-nuclear in a matter of days, yet abandon tidal power for Britain? The Severn estuary has the potential to create 5% of our energy needs and create 100,000 jobs. How does that square with the Prime Minister’s promise to put tidal energy at the top of his so-called green agenda?
Charles Hendry
The right hon. Gentleman put it correctly in his own blog, when he said:
“In an ideal world, we would all like to see the scheme that has the potential to provide the maximum amount of renewable energy and the least environmental impact in other ways”.
But that might not be possible. We have looked at the costs, the environmental consequences, the benefits it would bring, the alternative schemes and the resulting diversion of capital, and we have decided that other tidal mechanisms would be better.
Miss Anne McIntosh (Thirsk and Malton) (Con)
What role did the environmental impact assessment have in the final decision not to proceed, and what lessons can be learned from this process?
Charles Hendry
It was part of the process, but it was not the whole process. We have also looked very carefully at the costs: the main barrage would cost more than £30 billion. We looked at the amount of subsidy that would require now, and believed that it was not the right way forward.
Alex Cunningham (Stockton North) (Lab)
12. What proportion of his Department’s funding for low-carbon technologies is likely to be allocated to port infrastructure for offshore wind industries in the next four years.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
The spending review announcement included about £200 million to support the development of energy technologies, as well as up to £1 billion for carbon capture and storage. We will commit up to £60 million to support offshore wind manufacturing infrastructure at port sites, to meet the needs of offshore wind manufacturers.
Alex Cunningham
I am grateful for that answer, and I am pleased that the Government are following through on this Labour party initiative. The Minister will know that north-east England, including the north bank of the river Tees in my constituency, is well placed to create thousands of jobs through the development of offshore wind farms. Can the Minister assure me that our north-east regional ports will get a share of this investment?
Charles Hendry
These are some of the best opportunities anywhere in the country. We know there are good opportunities across the country, and they will be particularly focused on assisted areas, which will certainly include parts of the north-east. There is great potential there that we hope will be developed.
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
Given the developments in this sector generally, will the Minister comment on the £70 million wind energy fund, which has just been unveiled by the First Minister for Scotland, and which the First Minister claims is open for business immediately and will lead to the creation of 28,000 jobs? We all hope he is right. Has the Minister’s Department been involved with the Scottish Government? How does he see this rolling forward?
Charles Hendry
The First Minister’s announcement was based on his own decision, and we are still waiting for more details about what it will involve. However, when we put together £70 million for Scotland and £60 million for England, we have a significant contribution to the development of this industry in the United Kingdom.
Clive Efford (Eltham) (Lab)
13. What discussions he has had with the Secretary of State for Business, Innovation and Skills on the lending practices to be adopted by the proposed green investment bank.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The Secretary of State and I are in regular and close contact with colleagues in the Department for Business, Innovation and Skills and other ministerial colleagues. Following the spending review announcement, the Government aim to complete the design and testing work for the function and form of the GIB by spring 2011.
Clive Efford
How does the Minister intend to advise the bank on its functions when investing in essential green industry development? In particular, if we are looking for winners when investing in new innovation, we might miss the opportunity to provide seedcorn investment, which might then be taken up by other countries. It is essential that we look into investment in new technologies and that we do not miss these opportunities.
Gregory Barker
There are obviously other ways of investing in new technologies, including through the energy strategy board, and the coalition has made an absolute commitment to push forward a range of technologies. The GIB is about crowding in private sector investment into a viable green economy.
Christopher Pincher (Tamworth) (Con)
Does the Minister agree with me, with the chief executive of Greenpeace, John Sauven, and, for that matter, with Andy Atkins of Friends of the Earth, that if the GIB is to be truly successful it must be independent and operate as a proper bank? It must not be seen as a fund or a quango.
Gregory Barker
My hon. Friend makes a good point. It is vital that the new institution, which will be the first of its kind in a modern economy, has the maximum capacity to crowd in private sector capital. As a result, it will need to have many of the functions that he lists.
Mr Mike Weir (Angus) (SNP)
In Scotland, some of the money for lending by the GIB will have been accumulated through the fossil fuel levy. This is money that came from Scottish consumers, and which the Secretary of State’s party promised to release unconditionally to the Scottish Government. Will the Minister press for the immediate release of the money to enable investment in renewable energy now, rather than waiting perhaps years for the setting up of the GIB?
Gregory Barker
There already is dialogue with the Scottish Government on this important issue. The way in which we administer those funds must ensure that they are used to help to drive forward green growth and green jobs.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It is a shame that the Secretary of State cannot be here today, but I appreciate that his private office let me know in good time. I suspect that, even stuck in an airport in Hong Kong, he must be finding it a challenge not to gloat about the settlement that his Department received from the Treasury. We have heard the Prime Minister talk about the “greenest Government ever” and the Secretary of State talk about a “third industrial revolution”. The Minister today has talked about the private sector playing a key role, and yet, as we have just heard, we have no detail about the green investment bank. Is it just a crowd-pleasing gimmick, designed for the Secretary of State to please his friends in Birmingham next September, or is it going to be something real?
Gregory Barker
That is a bit rich coming from the party that produced a crowd-pleasing gimmick after we had published our proposals for the green investment bank last year. Unfortunately, absolutely no work was done in the Treasury before May on any such proposal, so we are starting with a clean sheet of paper. As I have said to the hon. Lady, and as the Chancellor has said, we are working hard on an ambitious proposal, and we hope to make our proposals before the spring. This is very real, and it will play a huge role in driving the green economy.
Meg Hillier
But we still have a distinct lack of detail. We are very aware that “spring” in civil service language can extend for a long period. While the Secretary of State and his team are polishing their green halos—indeed, the Minister is wearing his green tie today—will they tell us whether the green investment bank will have any capital? We are already seeing signs that capital that could have gone into it is going straight to the Treasury. Will the green investment bank be profit making? Will it invest in proven technology or safe bets? The simple question is: when will we know what the green investment bank will be capable of doing and whether it will fuel the private sector investment in green technologies that the Minister has talked about today?
Gregory Barker
If the hon. Lady had been at the comprehensive spending review, she would know that the Chancellor has already committed £1 billion as a backstop. Indeed, he told the Treasury Select Committee last Thursday that that would be just a backstop and that significant further funds would come from asset sales. I appreciate the hon. Lady’s eagerness to support a Conservative and Lib Dem proposal, but I have to say that we are going to get this right, and we will come forward with a robust proposal by next spring as a matter of urgency.
Greg Mulholland (Leeds North West) (LD)
14. What plans he has for the future of feed-in tariffs for small-scale renewables; and if he will make a statement.
Stephen Hammond (Wimbledon) (Con)
16. What plans he has for feed-in tariffs for small-scale renewables; and if he will make a statement.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
As indicated to my hon. Friend the Member for Dover (Charlie Elphicke) earlier, I confirmed in last month’s spending review that the coalition is fully committed to feed-in tariffs for small-scale renewables.
Greg Mulholland
I thank the Minister for that answer. Local councils have a crucial role to play, so what will the Government do to encourage them to take advantage of feed-in tariffs—especially small-scale feed-in tariffs—so that they can make money for local services as well as cut carbon emissions?
Gregory Barker
The hon. Gentleman makes an excellent point. One of the first things that my right hon. Friend the Secretary of State did was to abolish the previous ban on local authorities selling electricity to the grid. That will now help to create a new, exciting market. We are also making more information available to advise local authorities and communities on how they can access financial incentives.
Stephen Hammond
I listened carefully to my hon. Friend’s earlier answer, and I was pleased to hear his remarks about solar power. I met a manufacturer of solar power technology on Monday, and he was concerned not about the finance opportunities but about the lack of educational opportunities, in that some people do not seem to appreciate the benefits of feed-in tariffs. What are the Government doing to increase education?
Gregory Barker
It is about dissemination of information, for which our new web-based initiative will be an important tool. Obviously, unlike the previous Government, we will not be spending lots of money on pamphlets and advertising. We have to be cautious about that, but we are doing our best to get the message out there, and ensure that communities and local councils have the information they need.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does the Minister agree that the third sector plays an important part in small-scale renewables and much else that we have been discussing in Question Time today? On this, the six-month anniversary of this Government, does he realise that the third sector is being destroyed because of the uncertainty of funding, and that it will not last much longer in the environmental area?
Gregory Barker
I have to say that I simply do not share the hon. Gentleman’s gloomy outlook for the third sector. We are engaging with some excellent social enterprises, and we certainly intend to ensure that the third sector is able to play as big a part as possible in both the green deal and the roll-out of renewable technologies at a micro level, in what is a very exciting agenda.
Mr Dominic Raab (Esher and Walton) (Con)
15. What plans he has to introduce a floor price for carbon.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
The Chancellor announced in the Budget that the Treasury and Her Majesty’s Revenue and Customs would publish proposals in the autumn to reform the climate change levy to provide more certainty and support for the carbon price, and to encourage investment in low-carbon electricity generation. DECC officials have been supporting the Treasury and Her Majesty’s Revenue and Customs in developing these proposals, which will be published shortly.
Mr Raab
I thank the Minister for that answer, and I welcome his Department’s consultation on a floor price for carbon. I hope that that will take the place of the tapestry of tariffs and subsidies that distort the market for clean energy. How will he ensure that the price is set at a level that ensures a level playing field and encourages long-term investment, including in nuclear power?
Charles Hendry
My hon. Friend puts his finger on the most crucial issue in the area. This is one of the most important areas where we will be consulting and taking forward policy in the whole of this Parliament. We have to set it at a level that will stimulate investment, without penalising consumers or reducing the commercial advantage of British companies. That is a priority in our work.
John Cryer (Leyton and Wanstead) (Lab)
Does the Minister realise that a floor price for carbon that is significantly above the market rate will be seen as a subsidy for the nuclear industry, and how does he justify that?
Charles Hendry
This is a mechanism to support investment in all low-carbon technologies. We were left with a mountain to climb—£200 billion of new investment—as a result of the failure to secure enough investment in the past. These are part of the crucial measures required to make sure that international investors see the attraction of investing in Britain.
Andrew Stephenson (Pendle) (Con)
17. What steps he is taking to facilitate the construction of new nuclear power stations without public subsidy.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
I am on a roll now. The coalition agreement makes it clear that nuclear power without subsidy has a role to play in our future energy mix. The Government are committed to removing obstacles to investment in new nuclear. These include designation of a nuclear national policy statement, completion of the required regulatory justification process, completion of a generic design assessment, and putting in place a robust regulatory framework for waste and decommissioning.
Andrew Stephenson
I thank my hon. Friend for his reply. Nuclear must be part of a diverse energy mix, but does he agree that it is now too late for new nuclear to come on line before the old capacity shuts down?
Charles Hendry
My hon. Friend emphasises absolutely the right point. We have a challenge coming in 2016 when one third of our coal plant will close. Another large chunk of coal will go towards the end of the decade, and most of our nuclear plant will close during this decade. Had it not been for the five-year moratorium on nuclear under the previous Government, we would have been five years ahead, and the energy security of this country would have been greatly enhanced.
Angela Smith (Penistone and Stocksbridge) (Lab)
As was mentioned earlier, it is critical to advance manufacturing that the new generation of power stations goes ahead. Companies such as Forgemasters are looking for certainty. Will the Minister guarantee that the building of new stations will go ahead, even if it proves necessary to provide some public subsidy?
Charles Hendry
We have said that we want international companies to look at the opportunities in Britain, and we are encouraged that it is increasingly becoming one of the most attractive places in the world for investment in new nuclear. We will remove barriers to investment, but there will not be public subsidy for such work, and companies are not asking for that. We are creating the right framework for investment to take place.
Priti Patel (Witham) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
Since our last departmental questions, we have launched a consultation on the revised draft national policy statement on energy calling for a surge in investment in new energy. We have worked with colleagues in the Treasury to secure a spending review settlement that allows us to deliver on our key policy objectives, and we have published our departmental business plan setting out how we will honour our commitments in the coalition agreement.
Priti Patel
In the past few years, bonuses and other allowances paid to the Minister’s Department and its four quangos have totalled more than £30 million. What action is being taken to reduce these spiralling costs?
Charles Hendry
My hon. Friend raises an important issue. Targeting payment to specific staff, rather than building it into a general salary, is a more efficient use of public spending. For example, it does not increase long-term costs such as pension entitlement. We are, however, looking closely at such issues. We have already taken measures to tighten controls in areas such as travel, and we have implemented a pay freeze this year and next year for all staff other than those earning less than £21,000. The use of bonuses has been significantly reduced.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Moving from housekeeping to international issues, I note that next week there will be a debate on the Cancun climate change conference, thanks to the hon. Member for Chippenham (Duncan Hames). That debate is very welcome, but until we heard some snippets from the Minister today, it underlined the fact that there has been a deafening silence from the Government in the House about what they want to achieve. We all want a good outcome, and we recognise the challenges, as the Minister said, about legally binding international agreements. Will he tell the House clearly what the Government hope to achieve in the UK, and whether they are planning to make a statement in Government time?
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
We hope that there will be good progress at Cancun. In contrast to the sentiments expressed earlier, however, I think it is unlikely that we will get a legal agreement. We are certainly one of the most progressive nations, and we are following the example of the previous Government, to whose work on the international climate stage I pay tribute. It is tough but, as the Secretary of State said, there are grounds for optimism that we can make progress on measurement, reporting and verification, on finance architecture and on clarifying the next steps for the United Nations framework convention on climate change to make further progress towards a legally binding agreement. I would be happy to meet the hon. Lady and her team to talk this through in more detail.
Andrew Stephenson (Pendle) (Con)
T2. I represent a constituency in the Pennines, where it already feels significantly colder than it does here in London. May I ask the Minister to explain what he is doing to ensure that we have adequate gas supplies at times of peak demand?
Charles Hendry
My hon. Friend raises a critical issue. We have already started to take action. I have licensed the Saltfleetby facility, which will give us a 15% increase in our gas storage, and the Deborah facility, which, if it gets the final investment decision, will double gas storage in this country. We shall also take steps in the Energy Security and Green Economy Bill this autumn to require greater security of supply from the energy companies.
Malcolm Wicks (Croydon North) (Lab)
Following this week’s publication of the “World Energy Outlook” by the International Energy Agency, have the Minister and his Department made any assessment to see whether they agree with the view that we are facing a global glut of gas? Has he also analysed the connect, or disconnect, between that fact and the rising gas prices that our householders and businesses in the UK are facing?
Charles Hendry
I am grateful to the right hon. Gentleman, who was two of the best of the last batch of Energy Ministers. I had a meeting with the executive director of the International Energy Agency this week to talk about its work and about the energy outlook. We broadly share the analysis that we are moving into a period of widely available and relatively affordable gas, but the danger of that is that it could put off investment in gas development internationally, which could create shortages further down the line.
David Mowat (Warrington South) (Con)
T3. Over the past couple of years, work has commenced in countries other than the UK on about 60 nuclear power stations, which will provide cheap, economically sustainable energy across the world. Does the Minister agree that this represents an opportunity for our own office for nuclear development, and will his Department support it in its endeavours to secure exports?
Charles Hendry
One of the advantages that we have is that, because we do not have a national champion, we have an independent regulator who is robust and understood to be very forceful and effective. We can encourage other countries to look at that as well. The work we are doing across the piece on nuclear decommissioning and development is also critical.
Paul Blomfield (Sheffield Central) (Lab)
T8. The Minister has acknowledged the importance of private sector investment in the green investment bank. Will he outline to the House what practical steps are being taken to obtain such investment, and does he recognise that the delay in making a detailed statement about the bank’s function and structure is causing uncertainty in the sector, which will frustrate that investment?
Gregory Barker
We are not rushing to get this right in a matter of weeks. We are talking at length and in great detail with all the major participants in the City of London, and we have great support—as witnessed by a letter to the Prime Minister from the chairman of the green investment bank commission this week—from the major institutions and investors who know that the important thing is that we get this right. Compared with the speed of the previous Government, we are moving like lightning.
Philip Davies (Shipley) (Con)
T4. When the previous Government introduced the Climate Change Act 2008, they estimated the costs at £200 billion, which they revised a few months later to £400 billion, or £20,000 per household. What is the latest estimate of fully implementing the Act? Is there any advance on £400 billion?
Gregory Barker
These are big figures and it is difficult to get one’s head around them. No new data are available, but I remind my hon. Friend that the cost of not acting is far greater than the cost of prudent early action. Lord Stern estimated that the cost would be between 5% and 10% of GDP. Moreover, this is a huge opportunity for UK plc.
Mr Dennis Skinner (Bolsover) (Lab)
Does the Minister recall that a couple of months ago I raised with him the question of planning applications for the installing of wind turbines close to villages? I asked him if the Department had decided whether the turbines should be 5 km or 2 km away, and I had the impression that he would have a look at it. Has he made his mind up yet?
Charles Hendry
The hon. Gentleman has raised an important point on which there is strong feeling on both sides of the House. We do not believe that that sort of distance restriction is appropriate, although we know that a different approach is taken in Scotland. We think it important for local communities to own the decisions, which is why we have a localism agenda. We want such developments to have the active buy-in and support of local communities, and we are determined to deliver that.
John Glen (Salisbury) (Con)
T5. Can the Minister assure me that he is working closely with his ministerial colleagues in the Department for Communities and Local Government to ensure that their approach to localism in the context of planning does not unreasonably restrict the diversification of farm businesses as they enthusiastically embrace small-scale renewable energy incentives?
Gregory Barker
Yes, I can assure my hon. Friend that there is a great deal of cross-departmental working in the coalition. There are plenty of opportunities for farmers, particularly in the sphere of anaerobic digestion, which we consider to be capable of huge expansion.
Mark Durkan (Foyle) (SDLP)
As scoping work continues in relation to the green investment bank, can Ministers assure us that the bank will be geared to support projects in Northern Ireland? Can they assure us that the mistake involving the renewable obligation certificates regime will not be repeated, and that worthwhile projects will not be precluded because of their cross-border character when that is what makes the most economic and environmental sense?
Gregory Barker
The hon. Gentleman makes some very good points. I am pleased to tell him that the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry), had an excellent meeting with members of the Northern Irish Government yesterday. We are determined that the whole United Kingdom should be able to share the benefits and the investment involved in the transition to a green, low-carbon economy.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
T7. Smart meters have a great potential to benefit both consumers and the national interest in reducing our carbon emissions. What discussions are the Government having with industry and regulators to ensure that the vital spectrum is still available to ensure that the roll-out of smart metering extends to the whole United Kingdom, including difficult-to-reach rural areas?
Charles Hendry
My hon. Friend has put his finger on an important point. A number of communication technologies may be appropriate in the context of smart metering. In July my Department, together with Ofgem, published proposals for the establishment of a national smart meter communications organisation. Ofcom is also directly involved, and we are working closely with it to deliver exactly the sort of solution that my hon. Friend wants.
Kerry McCarthy (Bristol East) (Lab)
As Ministers are no doubt aware, the Sustainable Livestock Bill will be before the House tomorrow. I appreciate that it is led by the Department for Environment, Food and Rural Affairs at the domestic level, but what is the Minister doing to ensure that the issue is on the agenda at the international climate change talks?
Gregory Barker
It is a DEFRA issue, and obviously we will be asking our DEFRA colleagues how they think we, when representing the United Kingdom at Cancun, can best present the wider green agenda. However, I will talk to my colleagues in DEFRA, and if the hon. Lady wishes to make particular representations to me, I shall be glad to receive them.
Julian Sturdy (York Outer) (Con)
T10. Does the Minister believe that sourcing energy from waste is sustainable in the long term?
Gregory Barker
Absolutely. Recovering energy from waste can play a very important part in tackling climate change, improving energy security and creating green jobs. However, given the waste hierarchy, before we use waste for energy we must reduce it, and recover it in ways that have less damaging environmental impacts.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
In a number of his earlier, longer answers, the Minister referred to the green deal and the holistic approach that is to be taken. May I ask what discussion he or his officials have had, or plan to have, with the Scottish Executive about how the regimes in Scotland will marry with the green deal?
Gregory Barker
My officials have had such meetings, and I hope to have meetings myself as we develop the detail of the green deal. It is important that such opportunities are available throughout the country.
Andrew George (St Ives) (LD)
What can Ministers say to reassure the House that Government policy will result in the building up of UK industries in renewables and energy efficiency rather than simply our sucking in imports?
Gregory Barker
That is where skills come in. It is vital that we have the skills, and investment is therefore also vital. That is why the Government are investing in skills, science and innovation and the green investment bank. All three of them received substantial funding in the comprehensive spending review, and they are a key part of the mix. It is vital that we secure green jobs here in the UK and that we build up the supply chain not only for the green economy, but to help rebalance the UK’s manufacturing industry
Thomas Docherty (Dunfermline and West Fife) (Lab)
Given that Longannet power station is now the only bidder left in the carbon capture competition, will the Minister move quickly to make a decision on that, and will he come to my constituency and see the work first hand?
Charles Hendry
I should be delighted to come to the hon. Gentleman’s constituency. This is potentially one of the most important projects in the country, and I am delighted that the spending review was able to give £1 billion to taking forward carbon capture. That is the greatest single contribution any Government anywhere in the world has made to a single plant, and I very much hope we can make the Longannet project work. I should be very pleased to visit it with the hon. Gentleman.
Mr Peter Bone (Wellingborough) (Con)
This country has a liberalised energy market, but the previous Administration failed to persuade some of our European Union colleagues to liberalise their energy markets. What progress is this Government making?
Charles Hendry
Progress is indeed being made, such as in unbundling and separating the vertical integration of some of the larger European countries. They are also making particular progress in energy security, in terms of the development of gas and electricity connections. That will play a very useful role by greatly enhancing our security in times of international stress and pressure.
Mr Iain Wright (Hartlepool) (Lab)
In response to a question from my hon. Friend the Member for Stockton North (Alex Cunningham), the Minister acknowledged the huge potential of Teesside and the north-east in the manufacture of renewable energy. That requires Government support, yet business support is being cut, particularly in the regions. Given the enormous potential of Hartlepool, Teesside and the north-east, what can the Minister do to make sure we realise that potential?
Charles Hendry
It is a tradition of these exchanges that I discuss when I will visit the hon. Gentleman’s constituency, and I shall do so before the next exchange. I will be there in early December, so that I can better understand the massive contribution businesses in his constituency and thereabouts can make in respect of our energy security and the development of low-carbon technologies in this country.
Jo Swinson (East Dunbartonshire) (LD)
The Government’s current target is for 15% of energy to be produced from renewable sources by 2020. If the measures we are taking to encourage renewables prove successful, will the Government consider being more ambitious and revise that target upwards?
Charles Hendry
We have asked the Committee on Climate Change to look at whether that level of ambition should be raised. We are also examining whether we can do more through international co-operation: have some areas of renewable energy been locked out because they cannot be used for other countries’ domestic markets, so can we go further by looking at a “whole islands” approach around the British isles to maximise the resources that are available?
Ian Lavery (Wansbeck) (Lab)
Will the Minister update the House on the progress, or otherwise, being made in the development of the carbon capture and storage projects involving clean coal technology here in the UK?
Charles Hendry
As I have said, the spending review settlement allocated £1 billion to project 1. We will then take forward three further projects, and we have now announced that that could be open to gas as well. We are looking at three further projects because we believe Britain should be leading the world in this technology, and we are absolutely determined that it will.
Rehman Chishti (Gillingham and Rainham) (Con)
The generation tariff payment is not the consideration of any supplier and is therefore outside the scope of VAT. If a commercial company wishes to assign its income to a third party in exchange for the supply and installation of solar panels, will the funder of the panels be able to claim back the input VAT?
Gregory Barker
I apologise to my hon. Friend for not quite catching all of his question, but I think it relates to solar panels and VAT. I should be very happy to look at the issue, and if he writes to me, I will examine it in detail.
Business of the House
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Hilary Benn (Leeds Central) (Lab)
May I ask the Leader of the House to give us the forthcoming business?
The Leader of the House of Commons (Sir George Young)
The business for the week commencing 15 November will include:
Monday 15 November—Second Reading of the Terrorist Asset-Freezing Etc. Bill [Lords], followed by a motion to approve a money resolution on the Sports Grounds Safety Authority Bill. In addition, my right hon. Friend the Prime Minister plans to make a statement on the G20.
Tuesday 16 November—Consideration in Committee of the Fixed-term Parliaments Bill (Day 1).
Wednesday 17 November—Opposition Day [6th Allotted Day]. In the first part there will be a debate on health, followed by a debate on education. The precise titles are to be confirmed. Both debates will arise on an Opposition motion. That will be followed by a motion to approve the draft Local Elections (Northern Ireland) Order 2010 and the draft Northern Ireland Assembly (Elections) (Amendment) Order 2010.
Thursday 18 November—A debate on immigration. The subject for this debate was nominated by the Backbench Business Committee.
Friday 19 November—Private Members’ Bills.
The provisional business for the week commencing 22 November will include:
Monday 22 November—Remaining stages of the Savings Accounts and Health in Pregnancy Grant Bill.
Tuesday 23 November—Second Reading of the National Insurance Contributions Bill.
Wednesday 24 November—Consideration in Committee of the Fixed-term Parliaments Bill (Day 2), followed by a motion to approve a statutory instrument relating to the draft Scottish Parliament (Elections etc.) Order 2010.
Thursday 25 November—Remaining stages of the Local Government Bill [Lords].
I should also like to inform the House that the business in Westminster Hall for 25 November will be: impact of the comprehensive spending review on the Department for Transport.
Hilary Benn
I thank the Leader of the House for his statement.
As we have just observed the 11th hour of the 11th day of the 11th month, I am sure all of us present would wish to honour and remember those, including former Members and staff of this House, who have given their lives in the service of our country.
Next Tuesday we will consider the Fixed-term Parliaments Bill in Committee on the Floor of the House. Can the Leader of the House confirm that there will be injury time if there are any urgent questions or statements ? Also next week, we understand that the Deputy Prime Minister will make a speech about constitutional reform. Can we have a statement on whether this will cover restoring trust in politics, given the enormous sense of betrayal felt by many people who voted Lib Dem last May?
Before the election the Lib Dems made everything of their pledge to vote against the lifting of the cap on tuition fees, but after the election they could not dump it fast enough. This morning, we hear that the Deputy Prime Minister has said that he
“should have been more careful”
about signing the pledge. Anyone hearing that would think that some dodgy bloke had come up to him in the street and badgered him into signing it, whereas in fact the Deputy Prime Minister invented the pledge, was photographed holding the pledge, and even produced a video of himself making the pledge. He knew exactly what he was doing. Can the Leader of the House give us an assurance that there will be no vote on any orders to lift the cap on fees before the promised White Paper has been published?
On the cuts in funding for higher education, I asked the Leader of the House last week whether the statement made by the Minister for Further Education, Skills and Lifelong Learning that the Government
“will continue to support the arts through the subsidy for teaching in universities”—[Official Report, 3 November 2010; Vol. 517, c. 315WH.]
was accurate or not, given that it did not square with what his boss had said. Yesterday, when asked specifically about this, the Deputy Prime Minister said:
“The statement we made was very clear.”—[Official Report, 10 November 2010; Vol. 518, c. 285.]
That did not really help the House, because our problem is that two different statements of policy have been given by two different Ministers in the same Department. I am sure the Leader of the House has looked carefully into this since last week, so can we now have a definitive statement to clear up this mess?
On school sport, 20 years ago the previous Conservative Government, of whom the Leader of the House was a member, took great pride in selling off school playing fields. Under the Labour Government, by contrast, there was an increase in the time devoted to sport in schools. Given the importance that those on both sides of the House place on the Olympics and their legacy, can we have a statement on how the Government plan to increase participation in sport by young people when they are getting rid of the grant to the Youth Sport Trust?
I come now to the talk of cuts, the need for everyone to tighten their belts and the civil service recruitment freeze—in other words, the big picture. Following the Leader of the House’s answer last week on the Prime Minister’s personal photographer, who it turns out did not make the trip to China—it is true; he has been left behind, with the Foreign Secretary—it is reported that among those who have now also been put on the civil service payroll by the Prime Minister are a former Conservative candidate, a former fashion PR, and the former head of brand communications, whatever that is, at the Tory party. May we have a statement on whether the reports of those appointments are true?
Finally, we have all admired the painfully honest admission by the Children’s Minister, the Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton), that
“most people don’t know what the Big Society really means, least of all the unfortunate ministers who have to articulate it.”
In complete contrast, is the Leader of the House aware that the jargon-ridden statement made by the unfortunate Minister of State, Cabinet Office on Monday caused great consternation on both sides of the House? I know that the Leader of the House is a compassionate man, so can he put us all out of our misery, stand up at the Dispatch Box and—keeping an absolutely straight face—explain to the House: what on earth is a horizon shift?
Sir George Young
May I begin by endorsing what the right hon. Gentleman just said? You, Mr Speaker, and many Members were in the House at 11 o’clock, when we remembered those who had died. In the forefront of our minds were the recent casualties who sacrificed their lives for the security of our nation. We must remember them, their friends and their families. Over the weekend many of us will attend Remembrance day services in our constituencies, showing our solidarity with our armed forces and our sympathy for those who have lost their lives and been injured.
Now let me turn to the issue of trust in politics. I gently remind the right hon. Gentleman that his party said that it would not introduce tuition fees or top-up fees. It then proceeded to do both, so I am not sure that he is in a very strong moral position to lecture other people on what their policies should be. As he said, we are planning a debate on the Browne report before we vote on the order. I shall make inquiries about the timing of the White Paper to which he referred and get back to him.
There will be an opportunity the next time Business, Innovation and Skills questions come round for the right hon. Gentleman and his right hon. and hon. Friends to pursue the separate issues that he raised about the STEM subjects—science, technology, engineering and maths—and support for the arts.
On the question of selling off sports grounds and time spent on sport, I am not sure that the right hon. Gentleman was comparing like with like. If he thinks about it, those are not totally comparable activities. I know that my hon. Friend the Minister for Sport and the Olympics is very anxious that we should capitalise on the 2012 Olympics in order to engage young people in sport, and I am sure that at the next Culture, Media and Sport questions there will be an opportunity to press him on that topic.
Finally, on the subject of the photographer, the right hon. Gentleman may have seen what the hon. Member for Great Grimsby (Austin Mitchell) said in his blog:
“It’s not only petty to attack Dave for putting his personal photographer on the payroll. It’s daft…We need not only a PM photographer but an opposition photographer, a Downing Street photographer and a Parliamentary Photographer.”
The previous Government spent more than half a billion pounds on communications and PR, and we are cutting that by two thirds. The people to whom the right hon. Member for Leeds Central (Hilary Benn) referred are brought in to do specific tasks, when it would be more expensive to hire them on a freelance basis day by day.
The big society means volunteers and their local community complementing what is done by central Government.
Mr Speaker
Order. As usual, a very large number of hon. and right hon. Members are seeking to catch my eye. We have two further important statements to follow, and a Backbench Business Committee debate that is heavily subscribed, so if I am to accommodate as many people as possible, brevity from those on the Back Benches and the Front Bench alike is required.
Nadine Dorries (Mid Bedfordshire) (Con)
This House needs an emergency debate. What we saw happen yesterday was deplorable. We saw National Union of Students officials egging the crowd on, although today Aaron Porter, the president of the NUS, is attempting to remove himself from the situation. We need to know whether the police were incompetent or badly briefed. Yesterday somebody could very easily have died. The behaviour of the NUS officials and stewards on the ground was deplorable, and we need a debate in the Chamber to discuss that matter.
Sir George Young
I entirely share the views that my hon. Friend has just expressed. She will know that after the business statement there will be an oral statement by the Minister for Policing and Criminal Justice, who will be in a better position than I am to respond to the points that she has just made.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Has the right hon. Gentleman seen early-day motion 967 in my name and those of several other hon. Members, entitled “Inspector Damian O'Reilly, Community Police Officer of the Year 2010”?
[That this House congratulates Inspector Damian O'Reilly of Greater Manchester Police on his award as nationwide winner of Community Police Officer of the Year; and believes that this richly-deserved recognition is a tribute not only to the dedicated service of Inspector O'Reilly in providing effective policing and preserving law and order but also to the work of many other members of Greater Manchester Police in serving the community.]
Will he join me and other hon. Members in congratulating Inspector O’Reilly on the superb work he does in policing, together with those who work with him in my constituency? Will he also join me in congratulating all other Greater Manchester police officers who work for their community?
Sir George Young
I congratulate the right hon. Gentleman on his early-day motion. I have no hesitation whatever in supporting it, and in embracing within it the additional officers to whom he referred.
Mr Speaker, I forgot to reply to the earlier question about the Fixed-term Parliaments Bill and injury time. The Government do not intend to add injury time should there be a statement on that day.
Mr Greg Knight (East Yorkshire) (Con)
May we have a debate on food labelling? Is my right hon. Friend aware that imported meat packaged here can be labelled and sold as British, and that chicken injected with salt, water and, of all things, beef protein can still be marketed as “chicken”? Should we not seek to achieve more honesty in food labelling?
Sir George Young
I entirely agree with my right hon. Friend. It should be made absolutely clear which food is genuinely produced in the UK and which is processed in the UK having been reared somewhere else. I shall pursue his concerns with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs to see what action the Government are taking to secure the ambitions that my right hon. Friend the Member for East Yorkshire (Mr Knight) and I share.
Mr Kevin Barron (Rother Valley) (Lab)
The Leader of the House has added his name to two motions on the Order Paper laid by members of the Select Committee on Standards and Privileges regarding two recently published reports. When will those motions be debated on the Floor of the House, thereby allowing us to take a decision on them?
Sir George Young
I am grateful to the right hon. Gentleman and his Committee for producing those two reports. I envisage that those motions will be on the operative part of the Order Paper next week. The House can then decide whether to let them through on the nod or to debate them.
Bob Russell (Colchester) (LD)
Last month the shadow Leader of the House asked for a debate on the Independent Parliamentary Standards Authority, and was told that the Opposition could table it as the subject of an Opposition day debate. IPSA is of concern to MPs throughout the House: it is obstructing MPs in their duties, and the equivalent of 100 full-time jobs are now dedicated simply to MPs and their staff completing forms. Is it not time that the Government initiated a debate on this subject? The Leader of the House is fully aware of what is going on.
Sir George Young
I am grateful to the hon. Gentleman for articulating concerns that are shared by hon. Members on both sides of the House. The Government have no plans to allocate a day to debating IPSA, but it is open to him to go along at 4 o’clock and put his case for a debate on IPSA, as I think one of my hon. Friends has already done. I shall see the interim chief executive of IPSA later today, and I shall pass on the hon. Gentleman’s concerns to him. It is the objective of IPSA to support Members of Parliament in the performance—[Interruption.]. It is the duty of IPSA to support Members of Parliament in the performance of their duties, and not to obstruct them.
Valerie Vaz (Walsall South) (Lab)
My virtual constituent Richard Prescott, a lecturer in Italy, has made a claim against the university of Bergamo that started in 1994. The university is appealing the case, although the European Court of Justice has said that Italy violated the law seven times. Will the Leader of the House make urgent representations to the Minister for Europe to ensure that recognition of the rights of British citizens is speeded up?
Sir George Young
I am sorry to hear what has happened to the hon. Lady’s constituent. I shall pass on her concerns to the Minister for Europe, but it strikes me that she might usefully apply for an Adjournment debate so that her concerns can be developed at greater length.
Robert Halfon (Harlow) (Con)
Has my right hon. Friend seen early-day motion 971, congratulating Harlow British Legion and Harlow council on the special memorial that they have built as a tribute to fallen soldiers who have died in action since the second world war?
[That this House notes the recent memorial service at the Netteswell Memorial Garden in School Lane, Harlow, to mark the building of the new memorial to fallen soldiers who have died in action since the Second World War; believes that it is a tribute to Harlow British Legion and Harlow Council that they ensured the memorial was built; concludes that for too long at remembrance services only the names of those in action before or in the Second World War have been read out; welcomes the fact that in future, all those who have passed away since 1945 will be remembered, including those who died serving recently in Iraq and Afghanistan; and therefore commemorates the day of remembrance for the UK's brave armed forces, which is also a day of dignity for Harlow.]
Will he join me in congratulating Harlow British Legion and Harlow council and find time for a debate to commemorate servicemen and women who have died since 1945, particularly in Iraq and Afghanistan?
Sir George Young
I am grateful to my hon. Friend, and of course I congratulate Harlow British Legion and Harlow council on building a special memorial to the fallen. It is particularly appropriate that my hon. Friend should have raised that particular subject today. There will be opportunities in the future—certainly between now and Christmas—to debate issues concerning our armed forces, when I hope my hon. Friend will have an opportunity to develop his case.
Mr Tom Watson (West Bromwich East) (Lab)
A debate on the Freedom of Information Act 2000 would allow me to return to the subject of the ministerial wine cellar. Foreign Office Ministers, in refusing my freedom of information appeal, have asked the deputy director of protocol and assistant marshal of the diplomatic corps to write to me to say that she considers that
“the public interest is best served by withholding the details of the stock list”.
May I ask the Leader of the House: what is he hiding in the cellar?
Sir George Young
Neither myself nor my hon. Friend the Deputy Leader of the House has had an opportunity to taste the products of the Government’s wine cellar. I have to say that the hon. Gentleman and his hon. Friends are probably better placed than we are to know exactly how much was invested in wine, what the vintages were—and, indeed, how much wine was consumed.
David Tredinnick (Bosworth) (Con)
Further to his answer to me on 14 October, will the Leader of the House update the House on his discussions with the Home Secretary about sorting out the problem in Parliament square? Will specific provision be made in the forthcoming Home Office Bill to ban tents there?
Sir George Young
I admire my hon. Friend for his persistence. He may know that there was an exchange in the House of Lords earlier this week when this very issue was touched on. The Government’s view is clear: it is not acceptable for people permanently to take over a site of national interest. We support the action taken by the Mayor to evict the democracy village from the Parliament square garden. We are working closely with Westminster city council, the Greater London authority and the police to ensure that the law supports the right to peaceful protest, but we also support the rights of others to enjoy our public spaces. As my hon. Friend said, we are considering introducing legislation to address this issue; if we do not get it spot-on first time, I am sure that we will be interested to consider any amendments that he might table.
Mr Dave Watts (St Helens North) (Lab)
Given that this week’s “Dispatches” programme highlighted the fact that workers were being paid £2.50 an hour and that health and safety as well as immigration rules were being flouted by dozens of companies, may we have an urgent debate on what action the Government are going to take to deal with that national scandal?
Sir George Young
Of course the health and safety regulations should be observed, as should those on the national minimum wage. May I suggest that the hon. Gentleman provide detailed examples to Ministers in the Department for Work and Pensions, who would be more than happy to pursue them?
Mark Lancaster (Milton Keynes North) (Con)
May we have a debate on support for our veterans? At 11 am this morning I joined many fellow veterans in attending the Field of Remembrance service in Westminster abbey. Unfortunately, despite the best efforts of the Royal British Legion, it is clear that this service is now so popular that we simply could not accommodate several hundred veterans who had travelled many miles to attend it. Will the Government work with the Royal British Legion and endeavour to make sure that in future years they can attend?
Sir George Young
I am sorry to hear that some who travelled to Westminster abbey were unable to attend the service. Of course I will be more than happy to take this up with the Church authorities, the Royal British Legion and others to make sure that we do not have a similar problem next year.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
Can the Leader of the House arrange for the Deputy Prime Minister to come before the House to explain why he is holding a referendum on the alternative vote system on the same day as elections for the Scottish Parliament? I say that in the light of today’s news that the Electoral Commission in Scotland is expressing deep concern about lack of staff and resources on that day. We do not want those serious elections to be hijacked.
Sir George Young
This House has just spent five days in Committee and two days on Report on the Parliamentary Voting System and Constituencies Bill. The House has had adequate opportunities to debate all those issues. If the hon. Gentleman has any friends in the other place—where the Bill is now—he might be able to pursue his concerns through them there.
Greg Mulholland (Leeds North West) (LD)
I commend Government Whips for allowing me to serve on the Joint Committee on Statutory Instruments next week when it considers making changes to legislation on houses in multiple occupation, knowing that I will vote against the Government. When will all the MPs representing seats like mine have the chance to debate this very important issue?
Sir George Young
I must tell my hon. Friend that that may be the last time the Whips put him on such a Committee—but I understand his point. Perhaps he could either put in for an Adjournment debate or approach the Backbench Business Committee in order to have a serious debate on HMOs.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
Can the Leader of the House advise us whether he has had any indication from his right hon. and hon. Friends in the Department for Environment, Food and Rural Affairs about when they will bring forward their conclusions and recommendations following the consultation on dangerous dogs that we launched in March this year? Are those recommendations likely to include compulsory micro-chipping of puppies?
Sir George Young
I am afraid that I do not have at my fingertips the date of that response, but I will raise the issue with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs and see whether we can provide an answer on when the Government’s position will be made clear.
Julian Smith (Skipton and Ripon) (Con)
Businesses in the market town of Masham in my constituency are suffering from the removal by the Highways Agency of all six signs directing travellers off the upgraded A1. Can we have a debate about Highways Agency guidance on signs, and how it must take greater account of the need to promote Britain’s stunning market towns?
Sir George Young
I will raise that particular issue with the Secretary of State for Transport. I know from my own constituency that many market towns depend on such signs to advertise their attractions, and that there can be a marked fall-off in visitor traffic if they disappear. I will pursue the matter with my right hon. Friend and ask him to write to my hon. Friend.
Thomas Docherty (Dunfermline and West Fife) (Lab)
On 21 October I raised with the Leader of the House the issue of children having shotgun licences. I mentioned that statistics showed that 26 10-year-olds and 74 11-year-olds had such licences. The right hon. Gentleman promised that this would be fed into the forthcoming debate on shotgun licences and the report on the Cumbrian shootings. Can the Leader of the House tell us when we will have an opportunity to discuss this issue?
Sir George Young
I am grateful to the hon. Gentleman for pursuing that issue. We have some of the toughest firearms laws in the world, but we are prepared to review and change them if necessary. What I said last time was that we need to await the report of the Home Affairs Select Committee, which is looking at firearms legislation. When we have that report, we will honour the commitment I gave before the summer recess and find Government time in which to debate our gun laws.
Adam Afriyie (Windsor) (Con)
The comprehensive spending review has cut costs right across Government Departments, and it seems to me that Parliament should not be immune from cost cutting. Does my right hon. Friend agree that we need a debate on reducing the cost of administration by IPSA? If so, should the debate be in Government time or in Backbench Business Committee time?
Sir George Young
The second half of the question is easy: it should be in Backbench Business Committee time. On the first part, the House of Commons Commission has made it clear that over the period of the spending review we should reduce our costs by at least 17.5%. The House will have seen a document circulated by the Clerk of the House, outlining some possible economies—although that does not cover the IPSA budget, which comes under a separate heading.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
The Leader of the House will be aware that yesterday in the High Court the Secretary of State for Communities and Local Government was found to have acted unlawfully in revoking regional spatial strategies. Rather than come to this House to apologise for his unlawful actions, for the damage he has caused to the housing industry, for confusing local authorities and for the cost to the public purse, the Secretary of State simply slipped out a written statement, misleadingly claiming that nothing much had changed. In reality, everything has changed: regional spatial strategies are back in force and, as the judgment makes clear, they might play a decisive role in determining any planning application, as local authorities must have regard to them. Can we have an urgent debate in Government time so that the Secretary of State can account for his actions and the restored force of regional spatial strategies can be affirmed?
Sir George Young
The right hon. Gentleman will have seen the written ministerial statement, which said:
“While respecting the court’s decision, this ruling changes very little”.
It went on to say that the chief planner had written to all the local planning authorities, confirming that they should
“have regard to this material consideration in any decisions they are currently taking”.—[Official Report, 10 November 2010; Vol. 518, c. 16WS.]
The right hon. Gentleman will also know that later this month we will introduce the localism Bill, which will abolish regional strategies.
Jo Swinson (East Dunbartonshire) (LD)
Tomorrow, the House will consider the excellent Sustainable Livestock Bill, but many MPs will be forced to choose between doing constituency work such as school visits, that can be done only on Fridays, and coming to the House to avoid the frustration of seeing a good Bill talked out by one or two MPs who happen to oppose it. On 15 June the Leader of the House said:
“The Procedure Committee ought to consider it”—
the issue of private Members’ Bills—
“in one of its first inquiries”—[Official Report, 15 June 2010; Vol. 511, c. 785.]
but nothing has happened. Is there anything that he can do to help the House to make progress on that reform?
Sir George Young
I understand the hon. Lady’s dilemma. She will know that the Procedure Committee has announced that it will conduct an inquiry into the calendar, and it is within the remit of that inquiry to look at Fridays, private Members’ Bills and whether they might be relocated to another part of the week. I therefore suggest that she pursue her case with my right hon. Friend the Member for East Yorkshire (Mr Knight), who heard what she said. It can be subsumed within the inquiry into sitting hours.
Ian Lucas (Wrexham) (Lab)
Could we have an urgent debate about the future of police community support officers? Those widely respected individuals work throughout the country to support policing in their local communities, but we now hear stories of police authorities considering making their entire staff of PCSOs redundant. The Government have decided to cut police spending, so what will they do to allow us time to discuss that very important matter?
Sir George Young
Such decisions are essentially taken by local chief constables, but it is open to the hon. Gentleman to apply for a debate in Westminster Hall, where he can share with others his concern about the future of PCSOs. The Government’s position is clear: we believe that economies can be made without affecting front-line policing.
Mr Speaker
Order. The Leader of the House’s brevity now needs to be matched by that of Back Benchers.
Mr David Nuttall (Bury North) (Con)
Will the Leader of the House consider instituting an annual debate on the military covenant, which, may I suggest, could be held as near as possible to Remembrance day each year?
Sir George Young
I am grateful to my hon. Friend. He will have seen the coalition’s programme for government document, which has a long paragraph about the military covenant. We are considering how best to rebuild and rewrite the covenant, and my hon. Friend has made an interesting suggestion.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Leader of the House will know that the whole concept of the big society is supposed to be based on volunteers, voluntarism, the third sector and charitable intervention. Could we have an early debate about the fact that, only six months into this new Government, the sources of funding for the third sector right across the piece have either been frozen or disappeared? Such activity is essential to any society. What is he going to do about it?
Sir George Young
I understand the hon. Gentleman’s point; voluntary organisations face the same pressures as many other organisations in accessing funds, but not all voluntary work involves expenditure. Many people give their time for nothing, and I hope that the voluntary sector can respond to the challenges in the same way as everyone else is having to respond.
Peter Bottomley (Worthing West) (Con)
Just after 1 o’clock on Millbank yesterday, I saw how some student leaders and some students reacted to the winding-up of people at the front of the tuition fees demonstration. It brought to mind watching 14 people crushed to death in El Salvador, and seeing 39 dead bodies at the Heysel stadium when I was out there. Can we have a debate about the responsibilities of the leaders of demonstrations, so that they know that, if large numbers of people are pushed together, with the people at the back pushing forward and with riots at the front, there will be fatalities?
Sir George Young
My hon. Friend makes a good point, and fortunately there were no really serious injuries yesterday, but there could have been. May I suggest that he raises his concern in a few moments’ time with the Minister for Policing and Criminal Justice who is to make a statement about what happened yesterday?
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
Cumbernauld house is a magnificent piece of 18th century William Adam architecture situated in the heart of Cumbernauld new town, and the active local citizenry wishes to purchase it for the community and the long term. Can we have a debate about how the big society can help with such asset transfers?
Sir George Young
If there is a role for any Minister to play in agreeing to that transfer, I shall draw it to the attention of whichever hon. Friend it might be, but I suggest that the hon. Gentleman write to the appropriate Minister in order to pursue his case.
Andrew George (St Ives) (LD)
Mrs Dalia Nield, an experienced and respected surgeon, has apparently been threatened by Rodial Ltd with a libel suit because she told a daily newspaper that Rodial’s £125 “boob job in a bottle” cream was “highly unlikely” to work, “potentially dangerous” and might even harm the skin and the breast. Will the Leader of the House commit to libel reform in this Session? Libel threats against scientists and doctors, such as Mrs Nield, Simon Singh and Dr Peter Wilmshurst, have the effect of suppressing the advice of experts and doctors.
Sir George Young
I am grateful to my hon. Friend, who has raised a really serious issue. The coalition Government intend to introduce a defamation Bill during this Session.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Can we have a debate about the House’s attitude to the barbaric policy of ritual stoning to death in Iran, and can we use that debate to hear the Leader of the House’s response to the call by Birmingham Conservative councillor, Gareth Compton, for the stoning to death of the journalist Yasmin Alibhai-Brown? Will such disgraceful behaviour be tolerated?
Sir George Young
Stoning to death is a barbarous form of punishment, which the Government and I am sure all Members deplore. I hope that no elected person will threaten any member of our society with that sort of punishment.
Philip Davies (Shipley) (Con)
Warming to the theme of the question on food labelling from my right hon. Friend the Member for East Yorkshire (Mr Knight), I wonder whether the Leader of the House is aware that many retailers sell halal food to their customers without telling them. Further to the request by my right hon. Friend for a debate about food labelling, will the Leader of the House add that issue to any such discussion?
Sir George Young
Any debate that we have about food labelling will be broad enough to encompass the specific issue that my hon. Friend has just raised. It strikes me as a suitable subject for a debate in Westminster Hall.
Kevin Brennan (Cardiff West) (Lab)
We still need a debate about civil service recruitment. I have received a reply from the Cabinet Secretary, after raising that issue with the Leader of the House a couple of weeks ago, and the response makes it clear that the coalition Government have been trumpeting the fact that they have recruited fewer special advisers, while recruiting their cronies on two-year civil service contracts and sacking permanent civil servants. Is that not just immoral?
Sir George Young
No, what we are doing is exactly what the previous Government did. There are some 90 people employed on short-term contracts in the Cabinet Office, and more than 50 of those were put in place by the previous Government. What we are not doing, which the previous Government also did, is putting civil servants under the line management of special advisers such as Jonathan Powell and Alastair Campbell—something that is now outlawed under the Constitutional Reform and Governance Act 2010.
Mr Peter Bone (Wellingborough) (Con)
Over the next five years our contributions to the European Union will increase by a staggering £17.5 billion. At the same time, we will be building aircraft carriers with no planes because of defence cuts. Can we have a debate entitled, “Subsidising Belgium, Luxembourg, Malta, Spain and Portugal at a time when we are making defence cuts is bonkers”?
Sir George Young
My hon. Friend will see that the next business is the presentation of the European Union Bill. When we reach its Second Reading, he may be able to make his contribution and get a robust response from one of my right hon. Friends.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
Can we have an urgent statement from the Government following their decision yesterday to overrule the advice of Ofcom and fail to grant STV independent production status? It flies in the face of the advice that they were given, and it represents the Secretary of State for Scotland’s abject failure either to stand up for or to represent the interests of an iconic and well-regarded broadcaster in Scotland, whose very future is now in doubt.
Sir George Young
Of course I understand the hon. Gentleman’s concern. I shall raise with my right hon. Friend the Secretary of State for Scotland the point that he has just made and ensure that my right hon. Friend writes to him very soon.
Andrew Stephenson (Pendle) (Con)
Following the news in the past 48 hours from China that the Prime Minister’s trade mission has helped to secure a £750 million deal between Rolls-Royce, the biggest employer in my constituency, and China Eastern Airlines, can the Leader of the House tell us whether there will be an oral statement on the success of that trade mission?
Sir George Young
My right hon. Friend the Prime Minister will make a statement on the G20 on Monday and of course will be available on Wednesday for Prime Minister’s questions. He did take the biggest ever UK ministerial delegation to China, and I am delighted to hear of the order that has been secured, which will provide employment for my hon. Friend’s constituents.
Ian Lavery (Wansbeck) (Lab)
Another young life was tragically lost in my constituency last week owing to knife crime. Can the Leader of the House tell me what his Government are doing to tackle such heinous crime, and will he make a statement?
Sir George Young
The Ministry of Justice will shortly publish a paper on sentencing policy, and that may be the right forum for the hon. Gentleman to pursue his concerns about victims of knife crime.
Mr Philip Hollobone (Kettering) (Con)
The European Union Bill will be presented after business questions. Despite the fact that, for some strange reason, its name has been changed from the “Sovereignty Bill”, will my right hon. Friend ensure that there is time for the European Scrutiny Committee to give the Bill its necessary pre-legislative scrutiny, and that there is no timetable motion for the Bill’s proceedings on the Floor of the House?
Sir George Young
This is an important constitutional Bill that I would anticipate being taken on the Floor of the House. My hon. Friend the Member for Stone (Mr Cash), who chairs the European Scrutiny Committee, has just handed me a letter asking for more time before we reach Second Reading so that his Committee can conduct an inquiry. I will of course reflect on that letter, which has only just reached me, and respond in due course.
Mr Gerry Sutcliffe (Bradford South) (Lab)
Will the Leader of the House have a word with the Home Secretary and tell her that it is unacceptable that she has not answered the questions put to her by my right hon. Friend the shadow Home Secretary during her statement on aviation security on 1 November? She said that she would write to him, but she has not done so, and the answers to some of those questions are now out there in the media. Is that not disrespectful to the House?
Sir George Young
I understand that that matter was raised on a point of order yesterday, and I know that inquiries were being made of the Home Office in order to make progress. I will pursue those inquiries with added urgency today.
Mr William Cash (Stone) (Con)
The European Union Bill, about which I wrote to the Leader of the House earlier today, is a Bill of immense constitutional importance. We need to have adequate time to consider it, not least because the Minister for Europe has said that he will give one month’s notice, which is wholly inadequate. We will be taking evidence, on an even-handed basis, from those on all sides of the argument and from the public. I think that the public would be extremely concerned if they knew that adequate time for such consideration was not given, particularly in view of what my right hon. Friend has just said about the Bill’s consideration on the Floor of the House, which means that it will be the only opportunity for people to have a proper examination of this vital issue.
Sir George Young
As I said a moment ago, my hon. Friend has just handed me a letter that makes the case for more time so that his Committee can examine the Bill. I will of course reflect on the contents of what he has said. I need to consult my colleagues, and I will write to him as soon as we have reached a decision.
John Cryer (Leyton and Wanstead) (Lab)
Has the Leader of the House seen early-day motion 976?
[That this House notes with concern the removal of a fire engine from Leyton Fire Station by the London Fire and Emergency Planning Authority (LFEPA) during the recent industrial dispute; further notes that the pump has not been returned to Leyton and remains in the hands of AssetCo; and calls on the LFEPA to return the pump to Leyton immediately.]
The EDM refers to Brian Coleman, the spectacularly charmless leader of the London fire authority, who has nicked 27 fire engines from across London and stuck them somewhere near Ruislip. I am not making this up. That is not only wrong but probably illegal. Can the Home Secretary come to the House and make a statement about this, because at least she is probably in a position to find out what the hell is going on?
Sir George Young
I understand the hon. Gentleman’s point, and I have seen the early-day motion. I think that we would expect him to urge the Fire Brigades Union to call off its strike so that that sort of precautionary action was no longer necessary.
Albert Owen (Ynys Môn) (Lab)
Now that the Deputy Prime Minister should be regretting turning his back on making the pledge on tuition fees, is it not appropriate to have a debate on the recall mechanism for MPs, on which he was very keen? That would allow students and communities across the United Kingdom to pass judgment on the Deputy Prime Minister.
Sir George Young
The Government will be bringing forward a Bill to permit the recall of Members of Parliament for serious wrongdoing, but I do not envisage that it will cover the activities that the hon. Gentleman touched on. There is a coalition commitment to having legislation on the recall of MPs.
Mr Iain Wright (Hartlepool) (Lab)
Fishing remains an important part of this country’s economy, yet the operators of some under-10 metre boats in my constituency are struggling financially. It is traditional, around this time of year, to have the annual fishing debate on the Floor of the House prior to the setting of quotas. Can the Leader of the House confirm that that will happen this year?
Sir George Young
The hon. Gentleman will know that under the recommendations of the Wright—no relation—Committee, responsibility for finding time for those sorts of debates has been transferred to the Backbench Business Committee. If he wants the annual debate on fishing and fisheries, he needs to make his case to the Chair of that Committee, the hon. Member for North East Derbyshire (Natascha Engel), who is sitting two places away from him, because responsibility for finding the time now rests with her.
Huw Irranca-Davies (Ogmore) (Lab)
The House was expecting today a statement on rail electrification to south Wales. Can the Leader of the House tell us what has happened to that statement and when we will we see it? Is there any truth in the allegation that the delay in the statement is because rail electrification to Swansea is now going to stop at Bristol?
Sir George Young
I do not think that there is any substance whatsoever in that allegation. My right hon. Friend the Secretary of State for Transport made a statement on roads a few weeks ago in which he said that there would be a statement on rail investment, and there will be such a statement shortly.
Natascha Engel (North East Derbyshire) (Lab)
Will the Leader of the House be in his place at the beginning of Back-Bench business today in order to hear, for the very first time, the launch of the Select Committee Chair’s report by my right hon. Friend the Member for Barking (Margaret Hodge), the Chair of the Public Accounts Committee? Furthermore, will he join the Backbench Business Committee in helping us to develop a procedure whereby we can ensure that whenever Select Committee Chairs want to launch a report, they do so in the Chamber as a regular feature?
Sir George Young
I am delighted to see this item on the Order Paper. When I was in opposition, I advocated breaking the monopoly that Ministers have on making statements and allowing Select Committee Chairmen to present their reports on the Floor of the House. I am delighted to see that that recommendation is being carried forward and that there will be such a launch of a report later today. I am writing to the hon. Lady to ensure that we get the template and the Standing Orders right so that this exciting experiment can go from strength to strength.
Mr Speaker
I am grateful to the Leader of the House and to colleagues for their succinctness, which enabled everyone who wanted to contribute to have the chance to do so.
Welfare Reform
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
With permission, Mr Speaker, I should like to make a statement on welfare reform. Let me say in advance of that that I have tried to give the shadow Secretary of State, the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), as much time on this as possible, and I am open to more questions. I thank him for his co-operation in that.
In this House in October, I set out our resolve to secure a welfare system that I said should be fit for the 21st century, where work always pays and is seen to pay by those who are engaged in it. Following consultation since then, a broad positive consensus has—I think—emerged. That consultation ranged very widely, from Citizens Advice to the Institute for Fiscal Studies, and across the political divide as far as we could go.
The White Paper that we are publishing today therefore sets out reforms that will, I hope, ensure that people will be consistently and transparently better off for each hour they work and for every pound they earn. We will cut through complexity to make it easier for people to access benefits. The intention is to cut costs, reduce error and do better at tackling fraud. The detail is published today, and the White Paper should be available in the Library. Let me take this opportunity to thank all those in the Department and beyond who have helped to build and write it, working very long hours to make sure that we could get it out today.
Perhaps I could take this opportunity to remind the House of exactly what problem we are trying to solve. It does not relate to any sort of party political point; we are dealing with a structural issue that has grown throughout successive Governments. Five million people of working age are on out-of-work benefits; 1.4 million people have been on out-of-work benefits for nine of the past 10 years; 2.6 million working-age people are claiming incapacity benefits, of whom about 1 million have been claiming for a decade; and almost 2 million children are growing up in workless households—one of the worst rates in Europe.
Some have said recently that it is not reform that is necessary or important, but jobs. Well, this is a long-standing problem in our country. We have a group of people who have been left behind, even in periods of high growth. That is the issue. Even as 4 million jobs were created over 63 quarters of consecutive growth from one Government to the next, millions of people in Britain remained detached from the labour market. Some 4.5 million people were on out-of-work benefits before this recession even started, notwithstanding the growth in jobs that I referred to. These reforms are about bringing them back in. I want them to be supported and ready to take up the 450,000 vacancies that even today, as we begin to emerge from recession, are available in the economy. It is also worth reminding the House that of all the jobs that were created, the vast majority, in terms of net take-up, were taken by people coming in from overseas, because businesses could not get people in this country to do the work and therefore had to seek people elsewhere.
The key to solving this problem is to solve the wider social problems associated with worklessness. The measures in the White Paper to get this process under way are the first key strand of our welfare reforms. By creating a simpler benefits system, we will make sure that work always pays more than being on benefits. By reducing complexity, we will reduce the opportunities for fraud and error, which currently cost the taxpayer approximately £5 billion a year.
I think that everybody in the House would accept that work is ultimately the best route out of poverty. At present, some of the poorest people who take modestly paid jobs can risk losing £9 or more out of every £10 extra they earn. The universal credit must put an end to some of the perverse disincentives that make it so risky for the poorest to move into work.
The highest marginal deduction rates for in-work households will fall from 95.8% to an absolute limit of 76.2%—that is with the conjunction of tax and the withdrawal—and there will be a single taper rate of about 65% before tax. That means that about 1.3 million households facing the choice of whether to move into work for 10 hours a week should see a virtual elimination of participation tax rates of over 70%. With single tapers and higher disregards, the system will be simpler and easier and people should be able to keep far more cash in their pockets when they move into work.
The guarantee will—I hope—be crystal clear: if people take a job, they will receive more income. Some 2.5 million households should get higher entitlements as a result of the move to the universal credit, and the new transparency in the system will produce a substantial increase in the take-up of benefits and tax credits. Taken together, we estimate that those effects will help lift as many as 350,000 children and 500,000 adults out of poverty. That is just our analysis of the static effects of reform. Analysing the dynamic effects is not always easy, and it is often best done in retrospect, but we estimate that the reforms could reduce the number of workless households by around 300,000.
Let me also provide assurances about the transition. We will financially protect those who move across to the universal credit system. There will be no losers.
Mr Duncan Smith
For ever.
A far simpler system, which operates on the basis of real-time earnings, will also reduce the scope for underpayments or overpayments. We all know from our experience as constituency MPs that that can create anxiety and disruption, and can prove very difficult to correct. Our simplification and reform will help to end that particular problem. As well as reducing official error, these changes will also make life far more difficult for those who set out to defraud the system. They are a very small group of people, but they are there none the less.
The system will be simpler, safer, more secure, fairer and more effective, but it will require investment. Some £2.1 billion has been set aside to fund the implementation of the universal credit over this spending review period, and I have been assisted in that work by my right hon. Friend the Chancellor, who has agreed to and guaranteed the investment programme.
This is not just expenditure; it is also investment. We are investing in breaking a cycle of welfare dependency, which I believe is a price worth paying. The universal credit will provide a huge boost to individuals who are stuck in the benefit trap, reducing the risk involved in taking work and lifting 850,000 people out of poverty in the process. That investment will produce a flow of savings, as a simpler system will help to drive out more than £1 billion of losses due to fraud, error and overpayments each year. On the wider economic considerations, dynamic labour supply effects will produce net benefits to this country, as greater flexibility helps businesses and fuels growth, particularly in the high street. We will invest the £2.1 billion provided in the spending review 2010, seeking a multi-billion pound return.
That is how we will make work pay, but as I said earlier, and as our document states, it simply will not be enough. We also have to support people as they make their move back to work, and the two issues cannot be separated. That is why we are moving ahead with our new Work programme, which will provide integrated back-to-work support. It will pick up and bring together many of the programmes that were in place before, and add to them to create a comprehensive system of support. That is why we have already started a three-year programme to reassess the 1.5 million people who have been abandoned for years on incapacity benefit. The Opposition started that process before the election for the flow of new claims, and we are now trialling it in two cities.
Essentially, this is our contract: we will make work pay and support people to find a job through the Work programme, but in return we expect co-operation from those who are seeking work. That is why we are developing a regime of sanctions for those who refuse to play by the rules, as well as targeted work activity for those who need to get used to the habits of work. That will be a selective process, targeted at those who need to do it, not at everybody. It will be targeted as required, using the understanding and knowledge of those based in jobcentres.
Furthermore, evidence from the already existing work capability assessment, which the last Government started, shows that 36% of people withdrew their applications before reaching the stage of being assessed. The knowledge that they are likely to be assessed has a stark effect on those who may be trying to defraud the system. That underlines the effect that the system could have on those who are currently working while claiming benefits.
This new contract, in which we do our best to help people find work, to make them work-ready, to make work pay and to say that they will always be better off in work than on benefits, is a fair deal for the taxpayer and a fair deal for those who need our help. I commend the reforms in the White Paper to the House.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)
I thank the Secretary of State for his statement, for advance sight of it and for his personal helpfulness and co-operation preceding it.
I will deal directly with the principles underlying the universal credit. Both our parties want a simplified benefit system in which less money is clawed back as people move into work. That is why I have been very clear since I started in my position that if the Government get the approach right, we will support them. Pension reform was the subject of significant cross-party working in the last Parliament, and I sincerely hope that welfare reform can be in this Parliament. The right hon. Gentleman can count on Labour’s support when he is pursuing laudable aims, even when it appears that he cannot count on the support of his own Chancellor.
In office, we introduced the working tax credit, which substantially reduced the marginal deduction rates. It halved the number of people facing marginal deduction rates of 90% or more. The Secretary of State has just mentioned that matter. From reading his work in opposition, one cannot fail to see some of his ideas as welcome steps. His dynamic welfare paper promised a 55% taper rate, lower marginal deduction rates for every family, £2 billion a year more going into the pockets of families and £500 million a year less being spent on administration.
The Secretary of State now appears to want to set a taper rate for the universal credit of 65%, 10 percentage points less generous than he advocated in his previous paper. The impact of that was described by his own Centre for Social Justice thus:
“Setting it higher than 55% would increase MTRs”—
marginal tax rates—
“for those working households in receipt of benefits other than Housing Benefit (even if their net income was higher than today). As a result, there would be a negative impact on earnings, and on the number of second earners in employment.”
From an initial inspection of what we have been offered today, it seems that in this Parliament we will get a higher taper rate, higher marginal deduction rates for some families, no additional money overall going into the pockets of families and a £2 billion increase in administration and start-up costs. Is that proof that there is no plan so worth while that the current Chancellor of the Exchequer cannot delay or damage it?
There is real concern that some of the measures imposed on the Secretary of State in return for allowing the universal credit to proceed are contradicting the policy aims that he has set out today. On the Government’s own figures, because of the June Budget 20,000 more people next year will face marginal tax rates of 90% and 30,000 more will face rates of over 70%. That is because of the Government’s plans to increase taper rates for tax credits. We must remember that phase 1 of the implementation plan for his dynamic benefits plan was to reduce tax credit taper rates from 38% to 32%. From this March, the Government are increasing the taper from 38% to 41%.
The small print of the Green Paper published in the summer read:
“The changes in the June 2010 Budget will increase the maximum Marginal Deduction Rate to 95.95 per cent.”
That is before even taking into account changes in the spending review, such as real-terms cuts in working tax credit and top-up low wages. Can the Secretary of State explain the approach that his Chancellor is adopting, and can he guarantee that as a result of these changes no one will have a higher marginal deduction rate? Will he tell the House whether anyone—for example, people who currently receive tax credits but not housing benefit—will face higher marginal deduction rates under his approach?
According to the IFS, of which the Secretary of State spoke approvingly in his statement, the tax credit and benefit changes announced in the June Budget mean that the poorest two deciles of the population will lose about 2% of their incomes over the coming Parliament, more proportionately than the rest of the population. Can he therefore inform the House whether all the analysis being bandied around today about out-of-work households moving into work and children being lifted out of poverty is relative to the position today, or only to the position after the substantial losses that people will face because of the Government’s already-announced cuts to benefits in this Parliament? Can the right hon. Gentleman simply provide the figures for this Parliament? Do the Government expect child poverty to have fallen or risen by the end of this Parliament? The Office for Budget Responsibility predicts that an extra £700 million will be spent on unemployment benefits because a longer dole queue following the June Budget has consequences for the welfare bill.
The right hon. Gentleman has allowed all this to happen in return for the Treasury allowing him to spend £2 billion on the new system. Can he give us today the breakdown of the £2 billion secured for the implementation of the universal credit—the IT breakdowns and the transitional costs for affected families? Can he pledge that he will not raid any other part of his departmental budget in this spending review for this purpose if it turns out that that money is insufficient? How does the right hon. Gentleman respond to reports in The Times today that he will need to secure another £2 billion on top of the £2.1 billion that he referred to in his statement to guarantee his pledge, which he repeated to the House today, that
“There will be no losers”?
Is the Treasury underwriting the promise that he has just given the House?
To conclude, securing headlines—I have to admit that my colleagues and I came to understand this over 13 years—is a lot easier than securing reforms. This morning, the Secretary of State said in an interview on the radio:
“This is about saying to people: if you try, if you co-operate, if we work with you and work pays and you still can’t get a job then our duty is to support you.”
How can he possibly reconcile those words with the plans his Government have announced to cut 10% of the housing benefit of anyone who cannot find work within a year, even if the jobcentre thinks that they are taking all the correct measures? When he gets to his feet, the Secretary of State can perhaps explain to the House how he justifies that measure, whether it is set to continue permanently within the planned universal credit and, frankly, how it fits with the principles that he set out on the radio this morning.
Mr Duncan Smith
I am glad that the right hon. Gentleman spent so much time saying how much he supported this measure—that is really helpful. He then dwelt on a lot of things that were not necessarily relevant to it, but I will come to those none the less.
I am sorry that the right hon. Gentleman seems to be less than positive. I had hoped that he would consider this to be a major change, which would benefit the very people he says he is in favour of supporting. There is absolutely no question but that this measure will support and improve the quality of life of those who are likely to be affected. When he gets to the White Paper, I would draw his attention to a chart on page 53, which shows that the bottom deciles—this is from the moment that he left office right the way to the moment set out in the chart—will actually improve their life quality dramatically, taking all matters into consideration and sweeping all the way up to the moment we implement this. The poorer will be better off, and I wish the right hon. Gentleman could have taken the opportunity to welcome that. That is the reality for him and his party, and if I were in his position, I would have been a little more positive.
We believe that child poverty will fall. Let me just deal with the story in The Times about the money, which the right hon. Gentleman mentioned. The fact is that the £2.1 billion is a full envelope for spending review 10; it is absolutely enough to get us to that point. I said to the right hon. Gentleman privately, and I say again publicly, that as we implement these measures over three years of this Parliament and a further two years of the next Parliament, more money will, of course, be required, and that is guaranteed, but we will come to that in the spending review for the next spending review period. [Interruption.] Yes, it will be guaranteed, because we have to implement this programme.
Within that £2.1 billion, we will also invest in setting up essential IT systems. The right hon. Gentleman knows, because we have spoken about this, that these are medium-level IT systems. Even in his time, the Department for Work and Pensions handled these systems very well, and there were no problems with them at all. The money will also be used to support the running of the new system and the migration of current benefit and tax credit recipients from today’s system. Within that, we will also guarantee, as I said, that nobody loses out.
On the IT challenge that we dealt with, I remind the right hon. Gentleman that, even in his time, we managed to implement some very similar projects and to operate them very well. This is by no means a monolithic system like the Rural Payments Agency or the National Offender Management Service. During his time, the DWP had a strong record of successful IT delivery on systems such as the employment support allowance system, which was roughly on the same scale, and the pension reform system. Both were similar IT systems and both were managed without any particular problems. We are determined that the IT situation will be managed very well, and that we will be able to complete the process.
The support that, as the right hon. Gentleman says, we will give to those who are transiting is covered in the £2.1 billion. I repeat that we will protect those people who, for particular reasons, find themselves on slightly lesser moneys for as long as they stay in that situation. As they move up, they will gain dramatically. Even if they were to fall back, relative to where they were, they will gain dramatically. The reality, I hope, for the Opposition, as they think this over carefully, is that even if they were to return to power, this system would benefit those people.
The right hon. Gentleman asked me about the taper rate. The taper rate that we talked about when I was at the Centre for Social Justice was an optimum taper rate with everything taken into consideration. The taper rate itself involves a decision, which a Government of any hue would take, about how to set the balance between what we can afford and how much we will be able to give people as they go back into work. The real issue here is not that the taper is 65%. Even with 65%, all those who go back into work will be better off as they work through the hours. If the right hon. Gentleman is saying to me that he would prefer a 55% rate if he were in power, that is fine. He just has to tell me where he intends to get the money from, and that is the issue I have not heard him or his colleagues say anything about since they left us with the worst budget deficit in living memory. I only ask the right hon. Gentleman and his colleagues to think of this as a positive measure. Even if they were in power right now, it would help the poorest in society absolutely dramatically.
Mr Speaker
Order. There is much interest in this statement, but great pressure on parliamentary time, so brevity from Back-Bench and Front-Bench Members alike is essential.
Mr Roger Gale (North Thanet) (Con)
The introduction of workfare is about 25 years overdue. I congratulate my right hon. Friend on grasping that nettle and I hope that he will not let go of it. One aspect that he did not touch on was the operation of the jobcentres. Jobcentres are no longer jobcentres, but benefit-processing centres. Will he say just a little about how he intends to address that issue?
Mr Duncan Smith
I understand the point that my hon. Friend is making. The reality is that we will reform the whole jobcentre process to make sure that it dovetails with what we are trying to do. Yes, of course, there are areas where some of the advice that is given is not always necessarily of the highest quality, but most jobcentres, and most of the people who work in them, are determined to help the individuals they meet, to advise them properly and to get them back into work. Of course, the Work programme will include private and voluntary sector organisations, so we will tap into the very best qualities and skills that lie outside the jobcentres. My hon. Friend should rest assured that this will only get better.
Miss Anne Begg (Aberdeen South) (Lab)
The creation of a single working-age benefit is the holy grail of welfare reform, and the Government will need to be congratulated if they can pull this off, especially if they fulfil their promise that there will be no losers. I am sure that the Work and Pensions Committee, which I chair, will watch the issue carefully. However, I am still not clear as to where the tax credit system fits into the universal credit. The Secretary of State did not answer the questions from the shadow Secretary of State about where they will fit. Will there, for instance, be a single application form to cover the Treasury-delivered benefits and the DWP benefits?
Mr Duncan Smith
The problem right now is that when people make applications, they have to make at least two completely separate applications at the same time if they are going back to work. There is literally no communication between HMRC and the DWP about what they are sitting on and what they are making their calculations about. That is why the reconciliation at the end of the year is so gross and why we so often have major overpayments and then try to claw money back. The purpose of these proposals is to bring everything together so that we have one single point from which to take information. Therefore, the tax credit system and the DWP system will come together to create this single taper withdrawal. In future, as people’s circumstances change as they go into work—in the past, if they did not inform HMRC or the DWP, they might have been overpaid because they did fewer hours—the information will automatically cascade back to the centre, and we will know what people are doing, so they will be paid exactly what they are meant to be paid. There will be no chase for the money at the end of the year, which, as the hon. Lady and many others know, causes fear and worry among far too many constituents who find that they have been overpaid and have to pay the money back.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
May I congratulate my right hon. Friend on his ambitious programme of welfare reform? Among the most important components in it are the steps that he is taking to overcome one of the greatest problems in the system, which makes people reluctant to take work when it is available. Not only might people not earn much more in work than on benefits, but they fear that the job they take might be short-lived and that they might then find it difficult to get back on to benefits if they become unemployed again. Will my right hon. Friend spell out what that involves and, in particular, how he will tackle the problem of people fearing that they might lose housing benefit?
Mr Duncan Smith
My right hon. Friend is absolutely right. One of the great fears that people have, particularly in respect of housing benefit, is that it can take a month or so before they get their benefit back as they come out of work. Because that will be included at the point at which they make the application and because that is tapered into the benefit, there will be a seamless change or transfer. As they come out of work, they will do so with their gross amount exactly as it should be—the thing that will change is the level at which they taper. In other words, the amount will be what they are necessarily paid in benefits. They will not suddenly have to make a reapplication—there will be a seamless process—which should get rid of exactly the fear that my right hon. Friend talks about.
Kate Green (Stretford and Urmston) (Lab)
Like my hon. Friend the Member for Aberdeen South (Miss Begg), I congratulate the Government on their intentions to make work pay and simplify the system. I very much wish that project well.
The Secretary of State will be well aware of Labour Members’ concerns that spending announcements to date have hit women twice as hard as men. Will the universal credit be assessed on a household basis? If so, what assessment has he made of the impact of moving money from purse to wallet within that model and of the impact on women?
Mr Duncan Smith
The system will assess at household level, but of course, the beauty of that is that we will understand better what household needs are. Two things that will hugely benefit women will flow from that. First, in knowing what that household should have, we will have a much higher take-up rate. Therefore, the in-work poverty that has been terrible until now will hugely be resolved. The second aspect that is really good for women is that, as the hon. Lady knows, many women who have caring responsibilities do short-hours work. The proposal will hugely benefit them because they will retain more of their income as they go into work. They will be beneficiaries, which I hope helps her.
Jenny Willott (Cardiff Central) (LD)
I, too, welcome today’s announcement, particularly the expected effect on poverty and especially child poverty. This is a critical reform—as the hon. Member for Aberdeen South (Miss Begg) said, some of us on the Work and Pensions Committee have been pressing for it for a number of years.
Who will run the mandatory Work programme? Will that involve third sector partners? How will the Secretary of State ensure that the programme remains distinct from the community sentence programme?
Mr Duncan Smith
The Work programme will start well in advance of today’s proposal—we anticipate that it will start next summer. There will be a set of contracts on a regional scale that will involve the private and voluntary sectors. Organisations will run programmes against a set of outcomes, for which we will pay them, so that as they deliver and get more people back to work, they will be paid for those results. That will be carefully balanced so that we do not pay them for dead-weight costs that might otherwise have been in the system, but it will certainly be clear.
Malcolm Wicks (Croydon North) (Lab)
I welcome very strongly the strategic direction of the Secretary of State’s statement, but comparisons will inevitably be drawn with the 1940s. That should remind us of the importance of the work ethic and the fact that citizens have both rights and duties when it comes to benefits and work. It also reminds us of the importance of employment policy. I say that not in a partisan spirit, but because I think there is a real difficulty. Churchill’s coalition Government and Attlee’s Labour Government took measures to move towards full employment—with great success. When a Government take 1 million jobs out of the economy, both public and private sector, does the Secretary of State understand my concern about the chances of success of the good strategy announced today?
Mr Duncan Smith
I am grateful for the right hon. Gentleman’s words of welcome—I particularly value them because I am a huge admirer of his, as he knows. He is right to draw the parallel with the 1940s, not for anything to do with Beveridge, but simply because high withdrawal rates were possible in the system that was set up at that time because the people involved were mostly men who were either in work or out of work—there was very little part-time work in that sense, so withdrawal rates had no effect. Today, because of the nature of part-time work, withdrawal rates cause real problems for people, particularly as they go back to work.
On jobs, I simply say this: yes, as the economy grows, those jobs will be created, but let us not forget that in the past three months, over 1 million jobs went through my jobcentres, and 450,000 jobs rotate through them every week.
Tracey Crouch (Chatham and Aylesford) (Con)
Unfortunately, there has been much scaremongering about the impact of welfare reform on those who are disabled or who have mental health conditions. Will the Secretary of State assure the House that the most vulnerable members of society will still get the support that they need?
Mr Duncan Smith
Yes, I can give such an assurance to my hon. Friend. We have for some time needed to simplify and streamline the current disability payments and to target the support obviously and particularly on the most severely disabled people through the universal credit, which will happen, and through reform to disability living allowance. DLA will not be incorporated into the universal credit—it will continue as a separate allowance because it is non-work related. I can promise her that that is uppermost in our minds in the design of the system.
Glenda Jackson (Hampstead and Kilburn) (Lab)
The Government and employer organisations have confidently asserted that the expected huge rise in unemployment owing to job losses in the public sector can and will be ameliorated by the creation of jobs within the private sector, albeit neither can put a time scale or numbers on that assertion. Will the Secretary of State guarantee that the changes will not be used by employers in the private sector to drive down wage levels to at or below the national minimum wage?
Mr Duncan Smith
May I first of all say that I hope Labour Members do not simply continue to hope for the worst and preach? The reality is that even in the past few weeks and months, there have been more than 300,000 new private sector jobs. As I said, more than 1 million jobs went through the jobcentres in the last three months and were found for people. Today’s statement is about making people better off. If I were sitting where the hon. Lady is sitting, I would say, “How wonderful if the bottom three deciles improve their incomes.” The hon. Member for Bishop Auckland (Helen Goodman) may laugh, but in her time in the Government, they spent money and failed and left us with a deficit. Labour Members should apologise for that.
Robert Halfon (Harlow) (Con)
I congratulate my right hon. Friend on his statement, particularly as the previous Government’s approach to welfare reform was more Ethelred the Unready than Nixon in China. Is he aware that more than 8,000 people in my constituency are on out-of-work benefits? That is one in 10 people. Will the Minister assure them that the universal credit will protect the most vulnerable and give others a real incentive—more money, not less—as they find jobs?
Mr Duncan Smith
The universal credit is about what happens to people as they seek and go back to work. Benefit levels for disabled people—whatever their condition—will continue and be maintained. Those who need support will receive it, but the most beneficial thing for people in my hon. Friend’s constituency is simply this: we are at last going to try to get to that group who have been left behind. More than 5 million people were left behind without jobs in workless households during the high years, with children in poverty. That is what we hope to break. I hope that that is seen as a positive message.
Mr Speaker
Order. Let me remind colleagues of the need for economy if we are to accommodate as many people as possible.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I applaud the Secretary of State for his announcements today and for his efforts to incentivise work, but I still have an arithmetical problem despite his answers to previous questions. I am struggling to see how 450,000 job vacancies divide into the 5 million people that the reforms aim to help. I am hoping that he can explain.
Mr Duncan Smith
This universal credit comes in over a period of four or five years. In the time over which it is implemented, even under the hon. Lady’s most pessimistic forecasts, the British economy will grow and create more jobs. The Office for Budget Responsibility, which is independent, forecasts growth of some 2.5%, which will lead to much higher numbers of private sector jobs. The reality is that we must prepare the ground. The important thing is that people are better off as they go to work and take those jobs. The point of the proposals is to break the cycle of people saying, “It’s not worth me going to work and it is worth me staying on benefits, because work does not pay.” The proposal is about work paying.
Mark Lancaster (Milton Keynes North) (Con)
What specific measures will the Government introduce to help disabled people to get into work?
Mr Duncan Smith
As my hon. Friend knows, there is a slightly complex group of benefits and supplements with respect to disability. DLA is non-work related, but there are disability supplements for jobseeker’s allowance. Many of the disability organisations that we consulted said that the one thing they hoped for from the reforms is that the Government value disabled people, which we believe we do, and give them a chance to go back to work. Apart from the fact that we are creating work choice, the key thing is that the taper rate comes with a disregard. If we give disabled people on the universal credit a larger disregard on their income, we give them more money, which allows them a beneficial position as they go back to work.
Mr Kevan Jones (North Durham) (Lab)
The Secretary of State knows that work is good for people’s mental health, but he will also recognise that many people who have severe, long-term mental health problems find it difficult to keep permanent employment. What reassurance can he give that such people will not be discriminated against by the benefits system or by employers?
Mr Duncan Smith
I completely agree that such discrimination is unforgivable, and we have to change such attitudes if they exist. The real beauty of our proposals is that we will be able to adjust rates according to people’s incapacities. So individuals with particular problems or disabilities will be much more valuable in the workplace than they are now. That is the one thing that the organisations said to us—that those people want to be in the mainstream and in work like everyone else. Our proposals will help that more than anything we are doing at the moment.
Mr Philip Hollobone (Kettering) (Con)
May I congratulate my right hon. Friend on his statement? My constituents in Kettering will be right behind him. Often the difference between making more money in work and lounging around on benefits at home is the travel costs to and from work. How will they be taken into account in the calculations?
Mr Duncan Smith
My hon. Friend is right about travel costs. The key point is that if someone going to work retains significantly more money, their travel-to-work costs become much more affordable. Therefore they are able, as other people in work do, to make decisions about travelling to a job over a slightly longer distance. That will be wholly beneficial to those who are out of work.
Sheila Gilmore (Edinburgh East) (Lab)
In his statement, the Secretary of State used the fact that 37% of ESA claimants did not proceed to full assessment to insinuate that people were withdrawing their claims because they were trying to cheat the system. Current ESA claimants are people who have newly fallen sick, and they are not long-term claimants. Most of them recover from their illnesses during the assessment period and get back into work, so I ask the Secretary of State to withdraw that assertion.
Mr Duncan Smith
I made no such assertion. What I was demonstrating was that if you put a check in place and ask people to demonstrate their situation, those who are bent on a different purpose will naturally fall out. I used the last Government’s work capability assessment programme to illustrate how that affects new entrants. I was by no means casting aspersions on anybody who is going through the programme, because they deserve what they get.
Tony Baldry (Banbury) (Con)
Many of those who are out of work will need to update existing skills or acquire new skills to help them get back into the world of work. What is my right hon. Friend’s Department doing to try to ensure that people who are out of work can access skills through the further education sector and other means?
Mr Duncan Smith
This comes back to the Work programme, because it will be about drawing in mentors from the private sector to advise people on setting up businesses and to give other support and advice. The mentoring programme will allow us not only to get people into work, but to mentor them until they get the work habit. That is the critical point. Once they get the work habit, they will be capable of looking after themselves.
Mr David Crausby (Bolton North East) (Lab)
The minimum wage plays an essential part in making work pay. Has the Secretary of State forgotten that he was completely opposed to the minimum wage and did all that he could to prevent its introduction? Will he ensure that he makes work pay not only by reducing benefits?
Mr Duncan Smith
There are several ways to make work pay beyond what I am doing. Making work pay by leaving people with more of their own money in the first instance will be a major step forward. The minimum wage is a good indication of how to set the base below which people should not fall. Another area in which the Government have also made a start is lifting the tax threshold for the poorest people. As we have said, we intend to move that all the way up to £10,000, and I hope that the hon. Gentleman will welcome that.
Andrew George (St Ives) (LD)
Will this targeted work activity effectively be a stick—a humiliating sanction—which will not work, or will it be a carrot and a golden opportunity that will build a bridge between joblessness and the workplace, which would be welcomed by unemployed people and the voluntary sector?
Mr Duncan Smith
I think that the hon. Gentleman is referring to the mandatory work placement. May I explain to him that there has been some over-excited commentary on this proposal? It will be available to jobcentre staff who will be able to use it for two categories of people. First, if someone has been out of work for a long time and comes in, clearly demoralised and with very little self worth, and does not feel that they can get up in the morning—as normal people do when they go to work—they can be put on one of these placements, which will give them a start time and a place of work to go to. All the interviews we have done with people on this scheme have said that they benefited hugely from it because it got them up and out. They will still be brought back in to the jobcentre to look for jobs.
The second group is those people who, we suspect, may actually be already working. Placing them on such a programme does something quite neat: it means that they cannot go off and do the work that they are doing and claim benefit. Instead, they have to make a choice.
Mark Durkan (Foyle) (SDLP)
I am sure that we all want to be assured by the Secretary of State’s best attempts at a “Somewhere Over the Rainbow” version of his reforms, but we have to test them for the people in the places we know where low employment is an enduring problem. Do the projections for the universal credit include Northern Ireland? In answer to the Chair of the Select Committee, the Secretary of State mentioned bringing the tax credit systems and the DWP systems together. Has he factored in the Social Security Agency in Northern Ireland and discussed the implications with the Minister responsible?
Mr Duncan Smith
As the hon. Gentleman knows, I have been over there and discussed these matters with my opposite number. I want the reforms to apply to Northern Ireland, and they will. The area has particular problems, as he knows, and we need other devices to overcome those. However, people are unemployed and without work for much the same reason as over here, and I therefore look forward to being able to implement these reforms in Northern Ireland.
Mr Rob Wilson (Reading East) (Con)
I welcome my right hon. Friend’s statement this afternoon. It will do an enormous amount to help people to get back into work. Does he agree that it is important that we have a well-informed debate about this and will he join me in rejecting the ill-informed comments by the Archbishop of Canterbury? Perhaps my right hon. Friend could invite the Archbishop on one of his frequent visits to an area where he could see first hand some of the problems that these communities face, so that he may be better informed in future.
Mr Duncan Smith
I am always happy to seek to inform people so that higher authorities may be informed in their turn.
Mr Chuka Umunna (Streatham) (Lab)
I have not had a chance to read the White Paper this morning, but my understanding is that the universal credit will be introduced from October 2013. The Secretary of State mentioned IT issues, and HMRC’s business plan says that the update of the PAYE system, which will be integral to the transition to the universal credit, will not be complete until April 2014. How will the Department reconcile the date for the introduction of the universal credit with the delayed completion of the update of the PAYE system the year after?
Mr Duncan Smith
I am grateful for that question because it allows me to get rid of a slight misunderstanding. HMRC’s programme is about upgrading the whole of the PAYE system. What we are dealing with comes before that and we do not need all that. We need two important things. As employers collect and collate the information about circumstances anyway, they will download it to the Department each month, instead of waiting until the end of the year. We need two data streams, one sending data through, the other sending data across. That needs a software programme, but it is well below what is being done to PAYE. We will be able to do that on a real-time basis and it will happen before the PAYE changes.
Charlie Elphicke (Dover) (Con)
Child poverty rose by 300,000 in the dying years of the previous Government. Can the Secretary of State tell the House more about how his radical reforms will undo that damage and lift more children out of poverty?
Mr Duncan Smith
The last Government spent more than £35 billion on child poverty, and they are to be applauded for making some changes and lifting 100,000 children out of poverty. We should be conscious of that and I will not say anything other than that that was the right direction of travel. However, that was a lot of money to spend to get what was quite a narrow effect, and child poverty rose relatively speaking after 2004. The best approach, we think, is the universal credit, because take-up rates will improve, allowing families who do not know what they are eligible for to take the money. That will automatically improve the quality of life for those families and have a huge effect on child poverty.
Helen Goodman (Bishop Auckland) (Lab)
As I understand it, the new contract that the Secretary of State will introduce will begin from day one of a person’s unemployment, so he will be tearing up the old contract and the entitlement to benefit of people who have paid national insurance. Furthermore—as the hon. Member for St Ives (Andrew George) pointed out—the sanctions regime will also be introduced at that very early stage. Does not the Secretary of State realise that it is an extremely inefficient way to run an economy to force people with high skills into jobs for which they are not suited? We do not want physics graduates on the checkout till.
Mr Duncan Smith
I am saddened by the hon. Lady’s question. She is wrong. First, the contributory principle still exists. The contributory benefits will run in parallel; we are not getting rid of those. Secondly, she said that we should only ever get people into jobs that their top qualification allows them to get. I think that getting people into work is the most important starting point, and from there they can move on. [Interruption.] Oh, quite the contrary! I have been unemployed, and I would have done anything to get a job.
Julian Smith (Skipton and Ripon) (Con)
My local jobcentre told me last week that many well-paid caring jobs are not being taken up by jobseekers. As well as addressing the disincentives in the current benefits system, do we not need to encourage jobseekers to be less picky about the jobs they go after? Every job is of value.
Mr Duncan Smith
I agree that all jobs have a value, and that we want people to get jobs, to move on and to be assisted in getting better and better pay and circumstances. Carers will benefit from this system because it allows them to balance their work and caring responsibilities by picking the hours that suit them. Carers organisations have told us that the critical point is that often carers are locked into one set of hours that do not suit them. This system will allow them to take the relevant hours while fulfilling their caring responsibilities.
Clive Efford (Eltham) (Lab)
The Secretary of State will be aware that jobcentre staff already have sanctions they can take out against people who they believe are avoiding going back to work. This morning, on the “Today” programme, as my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) pointed out, the Secretary of State suggested that, where people are working with jobcentre staff and searching for work in earnest, the Government’s duty is to work with those people to find them jobs. Does that mean that, where someone has been unemployed for a year, jobcentre staff will have some discretion in deciding whether they should continue to receive benefits, if they have been earnestly searching for work?
Mr Duncan Smith
The hon. Gentleman makes a legitimate point, which is that jobcentre staff still retain some discretion when they believe that somebody is making every effort. As he knows, the key is to deal with people who are simply making no effort to find work. The previous sanctions regime existed on that simple basis—in other words, if somebody is not trying, they will be sanctioned, but if they are trying, they will not be.
Julian Sturdy (York Outer) (Con)
I congratulate the Secretary of State on grasping the nettle on this difficult issue. May I ask him about part-time and seasonal workers? Will he outline in more detail the support that will be available to allow them to take jobs and help them back into work, while saving the taxpayer money?
Mr Duncan Smith
There is an important feature to the new system that will help people taking seasonal work. In the past, as they shifted their work patterns, the system took a while to catch up, and often overpaid them and caused them difficulties when it tried to withdraw the money. This will benefit them greatly.
Julie Hilling (Bolton West) (Lab)
I very much welcome any support for people to get back into work, but I am a little concerned. As always, the devil is in the detail. The document states that nobody will lose out under the reforms, but it also mentions capping housing benefit after 12 months and so on. Will the Secretary of State assure me that nobody will lose out under the reforms?
Mr Duncan Smith
They will not. We have given that commitment, and it can be found within the £2.1 billion.
Mr Peter Bone (Wellingborough) (Con)
It is a sad fact that in Wellingborough there is a subculture of young people who have never known a family where anyone has ever worked, and who have always lived off benefits and in social housing. They come to my surgery to try to get a bigger house. How do we break that cultural trend? It is not just about incentives; we have to break the culture.
Mr Duncan Smith
Alone, this would not be enough, but my point is that it will run in parallel with the Work programme, which will get to unemployed people, such as the young people going to my hon. Friend’s surgery, early and wrap around them a process that gets them away from that culture. Often they come from homes where there is no work. This programme will get them to see and work through the fact that being in work is the best and most important thing if they want to take control of their lives.
Anas Sarwar (Glasgow Central) (Lab)
Can the Secretary of State explain why areas of highest unemployment will suffer most in the transition to the new Work programme? In Glasgow, there will be a six-month gap between the current programme ending and the new Work programme starting. What will fill that gap? This transition will affect thousands of people in the city of Glasgow alone.
Mr Duncan Smith
We are introducing the Work programme as fast as we can, and the summer target for that is critical. It will make a huge difference. However, I must tell the hon. Gentleman that the biggest gap is the one left to us by the last Government, as a result of the major deficit and their failure to fund any of the programmes that they said they would.
Matthew Hancock (West Suffolk) (Con)
I warmly welcome today’s announcement, like Members on both sides of the House. I also welcome the rhetorical conversion of the Labour party to the importance of incentives and marginal withdrawal rates. It is a pity that they have not been a part of the discussion over the past decade. Once the programme is fully implemented, how many people will benefit from lower marginal withdrawal rates?
Mr Duncan Smith
I can give my hon. Friend the exact figures later. I can tell him now, however, that there will be a huge uptake, because the marginal withdrawal rates will be so much better for those going back to work. I hope he will forgive me if I cannot give the figures on the spot. However, they will be significant, and people going back to work will benefit enormously. That will be a real incentive for those going back to work. He talked about how the Labour party has been converted. Sometimes, listening to Labour Members’ questions, I wonder whether they have been converted or just hate the idea that somebody is doing something they should have done 10 years ago.
Ian Mearns (Gateshead) (Lab)
The Secretary of State has said that getting people into work is the most important thing, and I agree with him. He has also given an undertaking to continue to help people with disabilities to gain employment. However, his Department has cut access to work grants to assist employers in adapting work places to facilitate the employment of people with disabilities. These are particularly important for small and medium-sized enterprises, where jobs will be created. Does he think it is time to rectify that mistake?
Mr Duncan Smith
Actually, we are not cutting the access to work grants—[Interruption.] No, they are being refocused on larger employers. More people will get back to work as a result of what we are doing, so it will be of more benefit than the previous system.
Bob Russell (Colchester) (LD)
Let us be clear. I do not want a higher welfare bill, and I do not support those who cheat the benefit system, but I do encourage the Government to take equal measures against those who cheat on their tax. The statement of about 1,200 words mentioned children only twice, in acknowledging that more than 3.5 million children will still be left living below the official poverty line. Where does the statement:
“We are developing…sanctions for those who refuse to play by the rules”
place households with babies, infants and children of school age?
Mr Duncan Smith
A variety of programmes affect some of those groups, and the hon. Gentleman will know that extra money has been refocused on early years. The hon. Member for Nottingham North (Mr Allen) and the right hon. Member for Birkenhead (Mr Field) are producing reports on this. We are looking at dealing with those areas separately. If the take-up improves, which it will because it will be automatic, it will directly affect a significant number of people. We genuinely believe that even in a static state about 350,000 children will be lifted out of poverty. That has to be a pretty good start compared with what happened before.
Mr Virendra Sharma (Ealing, Southall) (Lab)
The Secretary of State said that carers will be able to adjust their working patterns according to their own time scales and choose their own flexible hours. How will he ensure that employers agree to that according to the carers’ needs, rather than the employers’ needs?
Mr Duncan Smith
The point about this system is that because it does not say that people can work for 16 hours—or whatever it is—they can go back into work. Because work pays in every hour they take, they will be able to look at 10 or 15-hour jobs—or whatever—that may be available. For each one, they can make an adjustment and say, “Well, that would suit me. I’d be able to take that,” whereas before—[Interruption.] Employers will have to advertise those jobs, because they will be available now and people can do the work. The point that I am making is that people can take those jobs now because they pay, whereas before it would not have paid them to work those hours.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Does the Secretary of State agree that one of the best ways to make work pay is to ensure that it pays not simply a minimum wage, but a living wage? What does he intend to do about that? Can he also give me an assurance that there will be some joined-up thinking and that those who are genuinely seeking work, even if they are out of work for more than a year, will not have their housing benefit cut?
Mr Duncan Smith
The policies on housing benefit stand as they are. On the hon. Lady’s point about a living wage, I genuinely believe that the reality is that what we are doing is the best way to ensure that households end up with a living wage. In the past, because the system was so difficult and complicated, the first person into work in a household would often not be able to earn enough money to support the household. Because it will pay more to be in work, the process that we are introducing will give the first person in a household who goes into work a greater opportunity to earn enough money to support the household, allowing the option for the second earner to be just that: an option, rather than an absolute must.
Mr David Winnick (Walsall North) (Lab)
In the real world, is it not the case that 18 unemployed people are chasing every vacancy and that two thirds of our unemployed people have each applied unsuccessfully for 11 positions? Let me also tell the Secretary of State that the sum of his recent utterances about the unemployed reminds one of his constituency predecessor, who at a time of mass unemployment in the 1980s told the unemployed to get on their bikes. Now, apparently, it is buses.
Mr Duncan Smith
The reality is that the hon. Gentleman should welcome the programme that I am introducing today, because it will improve the lives of the poorest in society. I am sorry that he chooses to cavil about this. My comment on buses was simply this: people on low incomes in London and many other cities recognise that it is sometimes necessary to travel to their places of work. That is the key point. Frankly, I do not need any lectures from him, and if he and his party—[Interruption.] No, they should be prepared to accept that the recession that he refers to is the recession that they left us.
Fiona Mactaggart (Slough) (Lab)
I am proud to represent a town that exists because it has work, and I am proud to have been part of a Government who, for the first time in nearly 20 years, reversed the increase in child poverty. However, I am concerned that the Secretary of State’s announcement will not achieve what I believe he intends to achieve. We know that the best way to tackle child poverty is to increase women’s income. In Slough, the average bus fare is about £3.50. His taper says that people will keep 35p in every £1 that they earn. If a woman is doing a job that she can get to while her children are at school—for four hours a day, say—she will have to work the whole time just to pay her bus fares, ending up with £4 more. Will he not take the advice of his hon. Friend the hon. Member for Kettering (Mr Hollobone) and do something about the cost of travel to work?
Mr Duncan Smith
The hon. Lady has to admit that the one group that will be hugely affected in a positive way will be women going into work, because so many are engaged in caring and work and in having to balance the two. They will be paid more for the hours that they work, because they will retain more of their money. Of course there might be disputes and debates about whether we need to support people with travel costs, but it is a bit rich for the Opposition to give us lectures about travel costs after they left us without having done anything about them at all.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
A few moments ago the Secretary of State said that if an unemployed person is trying to get a job, they will not have sanctions placed on them. Can he please explain how he reconciles that with the 10% cut in housing benefit for those who have been unemployed for more than a year?
Mr Duncan Smith
Very simply, that is a disincentive for people to go to work. The policy stands as it is, as I announced in the debate on Tuesday, and if the hon. Gentleman had any issues to raise, he should have raised them then.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
My hon. Friend the Member for Glasgow Central (Anas Sarwar) asked a reasonable question about the gap between the end of the current programmes and the start of the new programme. I am afraid that the Secretary of State departed from his general tone by giving him a fairly party political response. Will he take the point seriously? A gap of three to six months will be extremely significant, so if the new schemes are not ready, why can we not consider extending the current schemes in the meantime, to ensure that we do not leave people without the support that they need?
Mr Duncan Smith
I believe that the programme that we have set out and the timings that we have set for it—it starts next year in the summer—will help all those who need support to get back into work. We can debate or argue about the gap, but my general view is that as employment rises and as we start that process, we will see more people going back to work, and we will be able to support them in a better way than through the previous programmes, which we believe actually cost more money than they returned.
Mr Deputy Speaker (Mr Nigel Evans)
Before we move on to the next statement, it might be convenient to remind the House that only those who are here for the statement can ask questions about it, and, just as before, I ask for single questions and pithy answers please.
Public Disorder (NUS Rally)
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Policing and Criminal Justice (Nick Herbert)
With permission, Mr Deputy Speaker, I would like to make a statement on yesterday’s public disorder at the National Union of Students rally. The House will be aware that yesterday, following a peaceful demonstration organised by the NUS, a violent faction directed a series of criminal acts against offices on Millbank. This Government have been clear that we are committed to supporting peaceful protest. Indeed, we included the restoration of the right to peaceful protest in our coalition agreement. However, as the Prime Minister said this morning, we are equally clear that when people are bent on violence and the destruction of property, that is completely unacceptable.
The operational response to the violence is quite rightly a matter for the Metropolitan police, but I want to give the House an early indication of what happened yesterday, the action taken by the police and the follow-up action that will now be necessary. This information was provided at 9 o’clock this morning by the Metropolitan Police Service. The NUS initially predicted that yesterday’s protest would attract around 5,000 demonstrators. On Tuesday, that estimate was revised upwards, to 15,000. The police had planned to deploy around 225 officers to the protest. It is now clear that that deployment was inadequate. As the situation developed during the day, an additional 225 officers were deployed.
In the initial stages, the march passed the Palace of Westminster in an orderly manner. However, that meant that vehicle access to the Palace was not possible for around two and a half hours. At about 1.10 pm, the front of the march reached the rally point at Millbank. At the same time, a group of protesters ran towards the Millbank office complex, which houses Conservative campaign headquarters. Protesters from the main march then seemed to be encouraged by a number of individuals to storm the building and throw missiles. Windows were broken and significant damage to the property was caused. Some protesters also managed to gain entry to the building, and some got on to the roof.
At the height of the disturbance, it is estimated that about 2,000 people were around Millbank. Many appeared not to be directly involved in violence, but it is now clear that a small hard core within this group were intent on violence. Additional officers were then deployed in public order protective equipment. The Department for Business, Innovation and Skills was also attacked by a small number of protesters. At about 3 pm, the police were informed that members of staff in the Millbank complex were concerned for their safety. They advised them to stay in the building. Officers were deployed to make contact with the staff and secure their safety. That took some time to achieve. By 4 pm, police officers had located the staff members and, over time, arrangements were put in place to escort them from the building. The police then undertook a search of the office complex and made 47 arrests for criminal damage and aggravated trespass. The British Transport police have also made three arrests. Around 250 individuals were also searched, photographed and then released pending further investigation. Forty-one police officers received injuries. A small number were taken to hospital for treatment and were subsequently released.
The police are committed to bringing the criminals who carried out that violence before a court. The whole House will join me in condemning the minority who carried out those violent and criminal acts. There is no place for such behaviour in Britain's democracy. I thank the police officers who were deployed to the scene, and who helped to protect innocent bystanders. They acted with great courage, particularly those who were holding the line until reinforcements arrived.
Yesterday, during the incident, the Home Secretary was in contact with the Metropolitan Police Commissioner, Sir Paul Stephenson. She also spoke to the Mayor of London, and I spoke to Kit Malthouse, chair of the Metropolitan Police Authority, which has responsibility for governance of policing in London. I commend Sir Paul for his swift and candid statement yesterday. I spoke to Kit Malthouse and Sir Paul this morning. The commissioner confirmed that the Metropolitan police will undertake an immediate and thorough review of its operational response to the incident. That will include an examination of why numbers and violence on this scale were not anticipated. The police have to strike a balance between dealing promptly and robustly with violent and unlawful activity on one hand, and allowing the right to protest on the other. Clearly, in this case the balance was wrong, but the decisions are difficult and are not taken lightly.
Let me finish by saying this: yesterday’s protest and the policing clearly did not go to plan. The police will learn the lessons, but the blame and responsibility for yesterday’s appalling scenes of violence lie squarely and solely with those who carried it out.
Ed Balls (Morley and Outwood) (Lab/Co-op)
I am grateful to the Minister for Policing and Criminal Justice for coming to the House and for giving me an advance copy of his statement. Let me start by agreeing that the right to peaceful protest is a fundamental part of our democracy, which is supported on both sides of the House. Tens of thousands of students and lecturers came to London from across the country yesterday in coaches and with banners, placards and whistles to exercise that right and to make their voices heard about the Government's controversial plan to triple tuition fees.
However, the Minister is right to say, as the Prime Minister said in Seoul last night, that the vandalism and violence that we saw yesterday are completely unacceptable. It was perpetrated by a small minority of thugs who hijacked what was planned to be a legitimate and peaceful demonstration, and in so doing denied tens of thousands of students and lecturers the right to have their voices properly heard.
The Metropolitan police has told me that the National Union of Students worked closely and co-operatively with it before and during yesterday’s events, as it has in the past. The president of the NUS was right yesterday to describe the actions of that small minority as “despicable” and designed to “hijack a peaceful protest.” As the Minister said, there have been 50 arrests so far. Labour Members are clear, as he is, that there is no excuse for such criminal behaviour, and that those responsible must be brought to justice.
It is the job of the police not only to tackle crime, and to protect to the safety of our communities, but to keep public order as they ensure that the law-abiding majority can exercise their democratic right to protest and make their voices heard. The police ensure that thousands of major events and demonstrations pass off peacefully every year, often in difficult circumstances. I am sure that all hon. Members will want to join me in commending, as the Minister has done, the hundreds of officers involved in yesterday’s events, and particularly the small number outside 30 Millbank and Millbank Tower early yesterday afternoon, for their bravery and dedication.
When things go wrong, it is vital to ask questions, to find out what happened, and to learn lessons for the future. We welcome the urgent investigation that the Metropolitan Police Commissioner, Sir Paul Stephenson, ordered late yesterday, and his straightforward and responsible admission that those events were “an embarrassment for London” and that there are lessons to be learned. The Met has acknowledged that there was an operational failure, and it seems sensible and appropriate in this instance that it conducts the investigation and reports to the independent Metropolitan Police Authority.
I am sure that that investigation will look at a number of issues, including whether sufficient officers were on duty to police what was expected to be a peaceful demonstration, when estimates of the size of the demonstration were revised upwards from 5,000 to 15,000 and then to 25,000 demonstrators; why the Metropolitan police made the judgment that the demonstration would be peaceful; whether there was any intelligence to suggest preplanning of violent action; whether sufficient back-up was available, and how quickly it was available and able to be deployed; and how operational decisions were made about which buildings to protect.
Wider questions were raised by yesterday’s events that go beyond the direct operational responsibilities of the commissioner and the Metropolitan police, and are rightly matters for the Home Secretary and the Government. Let me ask the Minister whether, given the clear failure of intelligence in this case, the Home Secretary will assess whether the gathering of intelligence by the police and wider security services was sufficient, and sufficiently well co-ordinated. Will the Home Secretary be discussing the procedures for assessing risk and intelligence in advance of such protests to ensure that in future the full risks are understood in advance?
Given that yesterday and on previous occasions, mobile phones and social networking have been used during demonstrations to co-ordinate actions and build momentum during demonstrations, is work under way by the Home Secretary and her Department to support the police in responding to this new challenge and to consider what wider public order issues are raised?
Given that the demonstration was against a controversial aspect of Government policy and that police officers were deployed outside the headquarters of the Conservative and Liberal Democrat parties, did the Home Secretary or her advisers have any advance discussions about possible risks with the Metropolitan police and lead party officials? Was there any pre-warning or planning for staff in those political offices, and are there wider lessons to be learned?
Will the Minister tell us at what time he and the Home Secretary were alerted to the fact that elements in the demonstration were at risk of becoming violent, that they had become violent, and that a serious public order incident was under way? Will the Minister also tell us what plans the Home Secretary has to update the House following the conclusion of both the Metropolitan police investigation and the wider investigations that I hope she has started?
Finally, as the Minister said, the root of yesterday’s events was the fault of no one but a small minority of violent demonstrators whom we all roundly condemn. They are a timely reminder of how we are all reliant on the police to maintain public order and to ensure legitimate and peaceful protest. Let me ask the Minister and the Home Secretary whether they are confident that the police will have the resources that they need in the coming years to deal with threats to our national security, to tackle organised crime, to ensure safe and successful Olympics and Paralympics, to continue visible neighbourhood policing in all our communities, and to ensure public order at major events without—
Mr Deputy Speaker (Mr Nigel Evans)
Order. The shadow Home Secretary will be heard.
Ed Balls
I will repeat the question, because some hon. Members did not want to hear it. I am asking for assurance from the Minister for Policing and Criminal Justice and the Home Secretary that they are confident that the police will have the resources they need in the coming year to deal with threats to our national security, to tackle organised crime, to ensure safe and successful Olympic and Paralympic games, to continue to provide neighbourhood police visible in all our communities, and to ensure public order at major events without stretching the thin blue line to breaking point.
Nick Herbert
The right hon. Gentleman rightly draws attention to the importance of peaceful protest, as did I. We should reflect on the fact that the Metropolitan police must deal with around 4,500 demonstrations every year. It has always had to deal with demonstrations, and it will continue to have to do so. He asked about intelligence, and it is clear there are questions about that, but my response is to his wider point about the role of the Home Secretary. These are operational matters for the police, and it is right that the commissioner should investigate them properly and review the failures that have clearly occurred.
On the right hon. Gentleman’s final point about resources, we are of course confident that sufficient resources have been provided to the police over four years as a result of the spending review to ensure that the public can be kept safe. We believe that savings can be made by police forces while protecting front-line policing services. I would counsel him against seeking to make political capital by trying to link the action that we have had to take to secure savings with this incident. So far as I am aware, no one is suggesting that inadequate resources were available to the Metropolitan police. There is, however, a question about how and when they were deployed. The Metropolitan police now has a record number of police officers and a budget of more than £3.6 billion. It has sufficient resources to deal with such incidents at the front line, and that will continue to be the case. He is very unwise to suggest otherwise and to make political capital out of the incident that has just taken place.
Michael Fallon (Sevenoaks) (Con)
Will the Minister join me in paying tribute to the staff at Conservative headquarters, led by Baroness Warsi, who continued working in a frightening situation yesterday, as did others in surrounding offices? Surely those enjoying higher education are the one group who should be pursuing their point of view by argument and debate, rather than by violence.
Nick Herbert
I agree with my hon. Friend. Of course it was worrying for the staff at Conservative campaign headquarters in Millbank and for other members of the public. My right hon. Friend the Home Secretary spoke to Baroness Warsi during the day about that experience. I also agree with my hon. Friend that this is the place where democratic debate takes place over issues of public policy. No one questions the right of those students to march yesterday and to make their case, and 40,000 of them did so peacefully. There is plenty of opportunity to debate policy, but there is neither a need nor any excuse for a minority to resort to violence.
Keith Vaz (Leicester East) (Lab)
May I join those on both Front Benches in congratulating the Metropolitan Police Commissioner on admitting what went wrong yesterday and holding a thorough investigation? I am sure that members of the Home Affairs Select Committee will be keen to look at those findings, especially in view of the criticism that the police received following the G20 protests, to find out whether they might have felt the need to adopt a different approach. Everyone has rightly condemned the violence. Has the Minister received any information that lecturers were also involved in organising this protest? If that is the case, and it is more than just anecdotal information, will he speak to Ministers at the Department for Education to ensure that their establishments look carefully at the way in which their employees have behaved?
Nick Herbert
I have received no such information. I repeat that the vast majority of the 40,000 who were demonstrating yesterday did so peacefully, and the Government have no issue with that, or with their right to protest. The right hon. Gentleman also mentioned the response to the Tomlinson incident. I discussed this with the commissioner of the Met this morning. He was clear that there had been a failure on the part of the police force to assess the risk properly, and he is reviewing that. He did not seek to attribute the blame to any deliberate change in policing tactics as a consequence of the Tomlinson incident. It is worth reflecting, however, that Her Majesty’s inspectorate of constabulary stated in a formal report following the Tomlinson incident that the British model of policing
“can be easily eroded by premature displays of formidable public order protective uniform and equipment which give the perception—inadvertent or otherwise—of a hardening of the character of British policing.”
That was a criticism directed towards the police by the inspectorate, and it shows that they have difficult balancing judgments to make.
Conor Burns (Bournemouth West) (Con)
Yesterday afternoon I agreed to give an interview outside St Stephen’s entrance to some students from Nottingham university. After that interview we were joined by a bearded, slovenly man in his 40s wearing an “End capitalism now” badge—[Hon. Members: “A Lib Dem”.] I was wearing a yellow tie, so perhaps he mistook me for one. This man sought to wind up the students. In my judgment, he was an old-fashioned agent provocateur who had infiltrated the group. What assurances can the Minister give the House about future intelligence gathering, so that those who come here to make legitimate protests do not get infiltrated and have their legitimate causes hijacked?
Nick Herbert
Neither I nor the Government have anything against bearded people—or even against anti-capitalists, although we may disagree with them. We do, however, take issue with those who resort to violence, criminal damage and intimidation. It is clear that a small minority came along to yesterday’s demonstration intent on pursuing those acts. They have been disowned by the president of the National Union of Students, as the right hon. Member for Morley and Outwood (Ed Balls) pointed out, and it is only fair not to characterise the rest of the demonstration by association with the actions of that thuggish minority.
Mr Deputy Speaker (Mr Nigel Evans)
I think that Mr Efford will be reassured by that response.
Clive Efford (Eltham) (Lab)
Speaking as a hirsute Member of Parliament, I am pleased that the Policing Minister is not going to discriminate against my minority. It is important that we all condemn the violence that took place and commend the officers who acted very bravely in difficult circumstances, but we need to remember that more than 50,000 students and lecturers protested peacefully yesterday, as is their right. There was just a tiny minority whom the Prime Minister described as
“a bunch of people who were intent on violence and destruction”.
Perhaps he was recalling his Bullingdon club days. Given the intelligence gathering done by the police, why were they taken by surprise when so many people travelled quite a long way to get to London in order to protest? Surely they should have been aware of the numbers of people likely to be there. There is a history of this, as I know from my previous profession, having been caught up in a previous demonstration when students blocked some of the bridges in London. Why were the police not prepared?
Nick Herbert
I repeat that the review of the deployment of the police is being conducted by the commissioner of the Metropolitan police, and it is right that we should await its outcome rather than speculating on why there was an intelligence failure.
Robert Halfon (Harlow) (Con)
Does my hon. Friend agree that yesterday’s mob fires of placards and papers had echoes of 1930s book burning? Does he agree that mob rule is no substitute for democratic rule? Will he also pay tribute to the thousands of students who were not in Westminster yesterday, but were continuing their studies up and down the country?
Nick Herbert
We are committed to supporting the right of peaceful protest. Everyone in this country is entitled to make their views known by peaceful and democratic means. It was open to students yesterday to hold a lobby of Parliament and contact their MPs, who I am sure, whatever their views, would have listened to their concerns. It is neither necessary nor justifiable for a small minority to resort to any kind of violence, intimidation or criminal damage.
Steve McCabe (Birmingham, Selly Oak) (Lab)
I welcome the Minister’s commitment to peaceful protests and demonstrations. Does he share my view that the appropriate sentence for many of these professional thugs and agitators is an exemplary prison sentence? Can he assure me that cost will not be a factor when the courts make their decisions?
Nick Herbert
I think that the hon. Gentleman, too, is close to trying to make a political point on the back of these events. My right hon. Friend the Justice Secretary has made it absolutely clear that prison will continue to be reserved as the appropriate place for serious, violent and repeat offenders. We have no plans to fetter the power of magistrates or sentencers in that respect. The Government want the full force of the law to be brought to bear on those who committed acts of violence yesterday: they should be brought to justice.
Mr David Nuttall (Bury North) (Con)
In view of the decision made yesterday by a small minority of those involved in the demonstration to resort to violence and the destruction of property, does the Minister not agree that we should consider again whether the current sentences for such criminal behaviour are a sufficient deterrent?
Nick Herbert
We are conducting a review of sentencing, which will be published later this year. Of course there was no justification for the acts that took place, but I am not aware of any inadequacy in the sentencing powers available to courts. What is necessary is for the authorities to be able to collect the evidence and properly bring these individuals to justice.
Mr David Lammy (Tottenham) (Lab)
At 1.10 pm I was at the front of the march with my hon. Friend the Member for Bolton West (Julie Hilling), and I saw no surge on Millbank at that time. May I refer the Minister to the website london.indymedia.org? He will learn from that website that anarchist groups, both in this country and abroad, had been planning to join the march for quite some time, and there is a fair amount of evidence that they were caught up in the criminal damage. It is surprising that the police were not aware of that activity. Can we ensure that we do not curtail the activities of students who march in London in the coming weeks, which some intend to do?
Nick Herbert
I can reassure the right hon. Gentleman that the Government wish to protect the right of peaceful protest. He mentioned websites. I am sure that this debate is being noted by the Metropolitan police, and I shall make certain that his comments are drawn to the attention of the commissioner. He is, of course, free to write to the commissioner, and if he wishes to copy me in, I shall ensure that his comments are noted.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Please may we have no more statements, just questions? Otherwise a great many Members will be disappointed.
Tom Brake (Carshalton and Wallington) (LD)
When the Minister reviews the way in which the event was policed, will he confirm that Her Majesty’s inspectorate of constabulary’s recommendations on adapting to protests were followed by the Met in this case?
Nick Herbert
That point will, of course, be covered by the review that the Metropolitan police are undertaking. The Association of Chief Police Officers reviewed its policy on protests as a consequence of the HMIC recommendations, and a number of steps were taken. We shall keep all those matters under review, as is proper, but the essential point is that we must not take precipitate action in a way that would undermine the importance that the House and the country attach to peaceful protest. Equally, we must ensure that we are taking every possible step to prevent violence and violent disorder.
Anas Sarwar (Glasgow Central) (Lab)
I wholeheartedly agree with the Minister’s condemnation of yesterday’s violent actions, and with his tribute to the police. The NUS was quick to condemn those actions, and is frustrated—as anyone else would be—that its genuine protest was hijacked by militants and extremists. Will the Minister take this opportunity to distance himself from the comments of the hon. Member for Mid Bedfordshire (Nadine Dorries), who said during the business statement that the NUS was “egging on” the protesters? I do not think that yesterday’s events should be used as a way of defaming the name of the NUS.
Nick Herbert
I understand that the president of the NUS has condemned the actions of this minority in the clearest possible terms. There was obviously a failure on the part of the NUS to assess properly the number of people who would be taking part in its march. That is one of the matters that needs to be reviewed by the Metropolitan police, who have previously had very good relations with the NUS on issues of this kind.
Angie Bray (Ealing Central and Acton) (Con)
Does the Minister agree that certain remarks “twittered” to the wider world about the fact that the violent rioting might be due to Government policy are not only unacceptable but highly irresponsible?
Nick Herbert
I do agree with my hon. Friend. There is no justification for resorting to violence, intimidation or criminal damage. Whatever the disagreements with policy, there are proper democratic means of expressing that disagreement, including peaceful protest.
Kevin Brennan (Cardiff West) (Lab)
Further to the point about the National Union of Students and the accusations made by the hon. Member for Mid Bedfordshire (Nadine Dorries)—who I note is attempting to catch your eye, Mr Deputy Speaker—may I ask whether, when the Minister was briefed by the Metropolitan police or during any of the discussions that he has had about this matter, any evidence has been presented to him of any involvement of the leadership of the National Union of Students in organising, perpetrating or encouraging violence?
Nick Herbert
No evidence has been put before me other than the facts, which I have sought to give the House. The review is being conducted by the Metropolitan police themselves. It is an operational matter. Let us await the outcome of the review, which will be presented to the Metropolitan Police Authority, as it should be.
Nadine Dorries (Mid Bedfordshire) (Con)
In response to the comments of the hon. Member for Cardiff West (Kevin Brennan), let me say that there is photographic, film and eye-witness evidence that NUS stewards whipped up the crowd yesterday. It is not good enough.
The Minister has said that the estimate of the number of protesters was upgraded from 5,000 to 15,000 yesterday. Can he tell us at what time the NUS informed the police that the estimate had risen by that amount? Did the police have time to “man up” to deal with that number of protesters?
Nick Herbert
I said in my statement that the police were informed on Tuesday evening that the NUS had upgraded its estimate of the number of protesters. Of course anyone who organises a demonstration or march has a responsibility to ensure that it is conducted properly, and a responsibility for the way in which that is done. In my view this is a matter for the Metropolitan police to investigate. If there is any evidence of incitement by any individual, I hope that it will be brought before the courts.
Mark Durkan (Foyle) (SDLP)
Obviously we all offer our sympathy to the police officers who were caught up in coping with circumstances that they did not expect, to workers in the offices that were targeted and affected, and to the many students who are disappointed and frustrated by the hijacking of their impressive demonstration. However, will the Minister and others examine the intelligence issues surrounding yesterday’s events, and ask whether anyone should have picked up a clue from what happened in Dublin during the past couple of weeks? A demonstration by the Union of Students in Ireland was hijacked and used as an excuse for targeted and deliberate agitation by exactly the same tendencies as were involved in yesterday’s events in London.
Nick Herbert
The hon. Gentleman has made his point forcefully. It is precisely the sort of point to which I am sure the Metropolitan Police Commissioner will pay attention when he looks into whether there was a proper intelligence assessment, and what the failure was.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
My right hon. Friend may be interested to know that I spoke to several police constables this morning. They believe that it is a miracle that no death or serious injury resulted from yesterday’s events, particularly if the story of an incident involving a fire extinguisher being thrown off a roof is true. They told me that serious questions must be asked and an inquiry must be carried out quickly, so that different actions can be taken if a similar event occurs again.
Nick Herbert
I strongly agree with my hon. Friend on both counts. First, serious violence did take place, and it is very fortunate that no one was more seriously hurt—especially given that many of us saw on the television screens someone apparently throwing a fire extinguisher from the roof of the building, which could have really hurt, and possibly even killed, people standing below. That underlines the importance of proper policing, and of a proper review of how the incident was dealt with. I agree with my hon. Friend that it is important for the review to be conducted speedily.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I am sure the House will wish to congratulate the Serjeant at Arms and her staff on the speedy decisions they took yesterday afternoon. Given that this was a peaceful demonstration that was hijacked by a small number of Trotskyites, Socialist Workers and anarchists, does the Minister agree that it is beholden on Members not to make up lies and accusations to tell to the media or put in their blogs, even when those blogs are 70% fiction?
Nick Herbert
Well, anybody in this House is free to make whatever comment they wish about the conduct of this demonstration and those who sought to disrupt it, but the Government’s view is that there were 40,000 people most of whom were marching peacefully, and that the demonstration was disrupted by a minority intent on violence.
Mr Tobias Ellwood (Bournemouth East) (Con)
I must declare an interest: I have led a few demonstrations myself as president of the Loughborough student union—around this building, in fact, and against the poll tax, although I will keep that information to myself. In those days, we did not feel the need to throw fire extinguishers off roofs, to set fires or to try to put police officers in hospital. It is interesting that neither I nor my constituency neighbour, my hon. Friend the Member for Bournemouth West (Conor Burns), received a single request to be lobbied here in Parliament. In my day Twitter and Facebook did not exist, so students can mobilise themselves much more quickly nowadays. What are the police doing to understand intelligence from such sources and act more quickly?
Nick Herbert
It is my understanding that the police do monitor the various forms of social media, but such questions will form part of the intelligence review that the commissioner is undertaking as part of his wider review of what went wrong yesterday.
I would like to apologise to the House: I said in my statement that my right hon. Friend the Home Secretary had spoken to the Mayor yesterday, but my right hon. Friend tells me that that was not the case. I spoke to the deputy Mayor yesterday and again this morning.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Short questions and short answers, please.
Julie Hilling (Bolton West) (Lab)
Yesterday’s demonstration was organised jointly by the University and College Union and the National Union of Students, and 50,000 people came and were well behaved. However, witnesses have said that when the assaults on the building took place, that was organised by telephone and people pulled up their hoods: it was an organised event. Why was there a failure in the intelligence, therefore? Why was the building not—
Nick Herbert
The hon. Lady is, quite properly, asking the questions that need to be the subject of the Metropolitan police’s own review.
David Tredinnick (Bosworth) (Con)
Will my right hon. Friend re-evaluate the sense of allowing large demonstrations around Parliament square when they could be held in other parts of London? Is this a sensible measure, and why was the House closed for so long yesterday?
Nick Herbert
It was an additional concern yesterday that vehicle access to the Houses of Parliament was denied for two and a half hours. It has always been the position that it is important that Members of Parliament should be able to get to and from this place so that we can take part in debates and vote. We are reviewing this matter in the context of protecting peaceful demonstrations while also ensuring the special nature of Parliament square, and access to the House of Commons and the House of Lords.
Ian Mearns (Gateshead) (Lab)
The issues involved in yesterday’s events raised by Members here today clearly go beyond what the Metropolitan police can resolve within the terms of their remit. Why has the Home Secretary not made a statement about yesterday’s events?
Nick Herbert
I am afraid I disagree with the hon. Gentleman. This is a matter for the Metropolitan police, who, quite properly, are reviewing it. This is an operational matter for them. There is a principle, which is often advanced to us by Opposition Members, that the operational independence of the police should be protected. We strongly agree. The police are, however, accountable—including in this case—to the Metropolitan Police Authority and the Mayor, and that is why the report will go to the MPA. I am sure that it will question the Met about these matters.
Nicky Morgan (Loughborough) (Con)
Yesterday, I spoke to both the NUS president and the Loughborough students who were present, and I am glad to be able to say that none of them was involved in any of the violence. However, my non-student constituents ask what obligations those organising protests have to work with the police—such as whether they should undertake to report any intelligence as soon as they become aware of it. We will see more protests, so what can we do to stop them being hijacked?
Nick Herbert
There are statutory obligations on the organisers of marches to notify the police of any relevant intelligence, and that happened in this case. It is important for there then to be a proper dialogue between the police and the organisers. As I have said, those who organise marches and demonstrations have a responsibility to ensure proper conduct. When incidents such as the disturbance at yesterday’s NUS demo take place the cause is undermined, and I believe that happened yesterday.
Mr Rob Wilson (Reading East) (Con)
Students from Reading university demonstrated in a peaceful and appropriate way and were very upset by the criminal damage. However, did my right hon. Friend see the “Newsnight” interview with the president of the university of London student union? Is he concerned that militants in unions and political parties might be preparing to hijack future protests for their own political purposes, and against the wishes of the decent majority?
Nick Herbert
I repeat that there is no excuse for resorting to violence, intimidation or attacks on property. There are plenty of means—including through access to this place, lobbying Members of Parliament—for people to make their views known.
Mr Philip Hollobone (Kettering) (Con)
As well as criminal prosecutions, will my right hon. Friend encourage universities, colleges of higher education and, in some cases, employers, to take appropriate disciplinary measures?
Nick Herbert
I think we need to draw a distinction between those who were marching peacefully and the small minority who were clearly engaged in criminal acts. They must be brought before the courts in the proper manner, after which action can be taken by the relevant academic authorities.
Charlie Elphicke (Dover) (Con)
It would be all too convenient to write this off as just the work of professional agitators, but serious allegations have been made about NUS stewards, on-air TV confessions by student union leaders and the handing out of “What to do if you’re arrested” leaflets, which would not need to be brought along to a peaceful demonstration, but I understand were handed out by the NUS. Will the Minister ensure that these allegations are properly investigated?
Nick Herbert
I am sure the Metropolitan Police Commissioner will have noted my hon. Friend’s views in respect of any allegations of criminal behaviour. Not only will the commissioner be reviewing the deployment of police officers in such circumstances, but, as he repeated to me this morning, he is determined to ensure that the perpetrators of the violence, wherever they came from, are brought to justice.
Richard Graham (Gloucester) (Con)
Does the Minister agree that the remarks made on television yesterday by the university of London union president were irresponsible and tarnished the reputation of responsible trade unions, and that Opposition Members who signed a coalition of resistance with ULU about direct occupation of buildings should withdraw from that association?
Nick Herbert
I did not see the remarks to which my hon. Friend refers, and I would be grateful if he would send them to me. Anybody who incites a criminal act in any way should expect to face the consequences, and the police cannot, and must not, tolerate the actions of anybody who either was directly involved in violence, intimidation or criminal damage yesterday, or incited that behaviour.
Matthew Hancock (West Suffolk) (Con)
Will the Minister reassure the House that the investigation into that incitement to violence will cover the NUS president, who is reported to have called for demolition not only on “the streets of London” but
“inside the rooms where the deals will be made”?
Nick Herbert
I am not aware of the remarks that my hon. Friend attributes to the president of the NUS, but I repeat that if any individual has, through spoken or written words, incited criminal acts, that is a matter for the police, who should gather the evidence and act accordingly.
Michael Ellis (Northampton North) (Con)
Does the Minister agree that the limited number of Metropolitan police officers at the scene in Millbank in the early stages of the incident showed outstanding bravery and professionalism, and should be thanked from the Treasury Bench for that exceptional conduct, which they showed in the face of vastly greater numbers?
Nick Herbert
I agree with my hon. Friend. I have already expressed the Government’s thanks to police officers, who did a very difficult job yesterday, particularly those who were manning the line when it was clear that more resources were needed. Last week I attended the Metropolitan police annual service of remembrance for fallen officers at Hendon. It was a sober reminder that police officers—those in the Metropolitan police and across the country—daily do their duty and sometimes lay their lives on the line for us, the public. At a time of change and police reform, it is important that we remember the great job that police officers do for us.
Points of Order
Mr David Lammy (Tottenham) (Lab)
On a point of order, Mr Deputy Speaker. Can you advise the House of the rules on parliamentary privilege? Certain Conservative Members have used the opportunity of the statement to slander NUS presidents and other members of the NUS, and it is clearly unacceptable.
Mr Deputy Speaker (Mr Nigel Evans)
Mr Lammy, you have made your point in your way. You will know—
Mr Deputy Speaker
You will know the rules of the House, Mr Lammy, and what privilege entails. You have made your point in your usual way.
Kevin Brennan
On a point of order, Mr Deputy Speaker. Can you investigate whether there is currently any obstruction to accessing the House, because no comments or contributions were made by Liberal Democrat Members during the previous statement?
Mr Deputy Speaker
I certainly called Tom Brake; he had no problem getting in, and I understand that he has had no problem getting out.
Ian Mearns (Gateshead) (Lab)
On a point of order, Mr Deputy Speaker. The answer given by the Secretary of State to a point that I made about access to work grants contradicted one that I had been given by his own Department in a response to a constituent’s inquiry. May I ask that the Secretary of State come back to clarify the position?
Mr Deputy Speaker
Both the Secretary of State and those on the Treasury Bench will have heard the point made, but I do not want an extension of the recent debate.
Bill presented
European Union Bill
Presentation and First Reading (Standing Order No. 57)
Secretary William Hague, supported by the Prime Minister, the Deputy Prime Minister, Danny Alexander, Mr Patrick McLoughlin, Mr Oliver Letwin, Mr David Lidington, Mr Jeremy Browne, Mr Alistair Carmichael, Mr Henry Bellingham and Alistair Burt, presented a Bill to make provision about treaties relating to the European Union and decisions made under them, including provision implementing the Protocol signed at Brussels on 23 June 2010 amending the Protocol (No. 36) on transitional provisions annexed to the Treaty on European Union, to the Treaty on the Functioning of the European Union and to the Treaty establishing the European Atomic Energy Community; and to make provision about the means by which directly applicable or directly effective European Union law has effect in the United Kingdom.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 106) with explanatory notes (Bill 106-EN).
Mr William Cash (Stone) (Con)
On a point of order, Mr Deputy Speaker. I raised earlier with the Leader of the House my Committee’s concerns at the extremely short time between the presentation of the European Union Bill and its Second Reading. The Bill deals with matters of enormous constitutional importance and it would be appropriate, within the terms of reference of my Committee, to guarantee that we are given adequate time to consider it. I would be grateful, Mr Deputy Speaker, if you would be kind enough to take that point on board for the purposes of ensuring that, within the Standing Orders, my Committee has appropriate time to deal with the Bill.
Mr Deputy Speaker (Mr Nigel Evans)
I have listened to what you have had to say, Mr Cash, and you have made the point that you wished to make.
We now move on to the main business of the day, but before I call Margaret Hodge to move the motion on her Committee’s report, I should remind the House that the Backbench Business Committee has recommended that this item take no longer than 15 minutes. We will then move on to the main debate on policy for growth.
Backbench Business
Public Accounts Committee Report (CAFCASS)
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Margaret Hodge (Barking) (Lab)
I beg to move,
That this House notes the publication of the Sixth Report from the Committee of Public Accounts, on Cafcass’s response to increased demand for its services, HC 439.
This is a new procedure for the House and I am grateful to the Backbench Business Committee for giving my Committee the first opportunity to present a Select Committee report to the House. I wish to highlight key points in our report, but I am conscious that the House wants to move on to the debate on growth so this should not take longer than 15 minutes. I will be most happy to take interventions from those on both sides of the House, to which I shall try to respond. The Backbench Business Committee does not envisage that Members will seek to speak after I sit down and the intention is that the Deputy Speaker will put the question right away before we move on to the main Back-Bench debate.
The role that the Children and Family Court Advisory and Support Service—CAFCASS—plays is crucial for the most vulnerable children in our society at the most vulnerable point in their lives, when their future is being decided by the courts. CAFCASS advises the courts on behalf of the children—it advises what is in the child’s best interest—so ensuring an effective, efficient and timely service is essential if we are to serve our children well.
Mr Peter Bone (Wellingborough) (Con)
In the discussion about the response of CAFCASS, was there any discussion about children who have been trafficked? They seem to be falling through the system at the moment.
Margaret Hodge
I agree entirely with the point made by the hon. Gentleman, but our Committee focused more on the service that CAFCASS was able to give to children whose future was being determined by the courts and therefore on whether CAFCASS officials were writing reports that the judiciary could take.
Our Select Committee undertook its inquiry on the basis of a National Audit Office report into the way in which CAFCASS had responded to a substantial and sustained increased demand for its service in the wake of the tragic death of baby Peter. We were particularly grateful to Sir Nicholas Wall, president of the family division, and Sir Mark Hedley for giving us important insights into how they, as the customers of CAFCASS, experienced the service. It was welcome and important that they both felt that the quality of the reports they received from guardians in public law cases was good. However, we have grave concerns as to the whether the organisation itself is fit for its purpose.
Tracey Crouch (Chatham and Aylesford) (Con)
I read the Select Committee’s report with interest this morning, especially given that CAFCASS told me in response to a constituent complaint that it was
“unable to revisit the contents of its reports to courts.”
Does the right hon. Lady agree that it is impossible for an organisation to identify and rectify any errors if it refuses to examine its previous work?
Margaret Hodge
I am extremely puzzled by the allegation that has been made by the hon. Lady’s constituent about the veracity or otherwise of reports that are considered by the courts. I think that it would be inappropriate for me to comment on that, but I urge her to take it up through the appropriate mechanisms, because it is clearly an area of concern.
The Committee had grave concerns as to whether CAFCASS was fit for purpose. We all accept that it was hugely difficult for CAFCASS when it was faced with a 34% increase in the number of care cases, but in our view it was ill-prepared to respond appropriately and the reasons for that failure go beyond the crisis created by the sudden influx of new cases. The facts established by the NAO, and accepted by the permanent secretary in signing off the NAO report, cause us grave concern. At the height of the crisis, it was taking 40 days on average to allocate fully a care case to a family court adviser. I understand that it currently takes 27 days—nearly a month in a child’s life—just to start the work that will lead to a decision for that child’s future. The goal that CAFCASS has set for itself is to allocate cases within two days, but two years after the end of the baby Peter case in the courts, CAFCASS is still not meeting its own standard.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
The report and what the right hon. Lady is now saying are depressingly similar to what we in the then Select Committee on Constitutional Affairs said in 2003, which led to the removal of the entire board of CAFCASS. Does she think that what she is now describing can be resolved by changes at the top, either at board level or in senior management, or do we also have to look at whether the remit and work of CAFCASS can be refocused as part of the family law review?
Margaret Hodge
As the right hon. Gentleman will know, I was the Children’s Minister when his Committee considered that report. We had hoped that putting in a new chief executive and a new board would enable the organisation to manage the transition to the new arrangements and provide an effective service for children. It is particularly depressing in coming back to this issue a few years later to find that that has not taken place. I agree with the implication of his assertion—the time has probably therefore come to review the arrangements that were put in place and to see whether they are appropriate to ensure the proper care of children. I take that point seriously.
CAFCASS’s ability to respond to private law cases, where demand is still increasing, was also woefully inadequate. One third of the section 7 reports required by the courts are more than 10 days late and CAFCASS also faces the ongoing challenge of an ever-increasing number of open care cases remaining on its books. At the end of September, CAFCASS had nearly 12,000 open care cases—over 2,500 more than a year before.
During 2009-10, CAFCASS reached an agreement with the judiciary which enabled it to prioritise new and delayed cases, to introduce a duty system to support the courts in care cases and to write fewer reports in private law cases. All sides agree that, although those temporary changes were necessary, they were not desirable and the duty system for public law cases did not serve the needs of children well. The guidance underpinning those practices has now been amended to minimise the use of duty guardians, but that simply adds to my Committee’s concerns about the capacity of CAFCASS as an organisation to respond to the demands placed on it.
Matthew Hancock (West Suffolk) (Con)
It is a pleasure to serve under the right hon. Lady on the Public Accounts Committee. Will she take this opportunity also to note the evidence that we heard that, despite all the problems, the hard work and commitment of the case workers and of social workers were commended by everybody from whom we took evidence?
Margaret Hodge
I agree entirely. We changed the way in which my Committee normally operates in that we deliberately took evidence from members of the judiciary. It was heartening to hear that they found the quality of the reports presented to them to be good; there was no criticism at all of the quality. We found it rather more disturbing that both the permanent secretary in the Department and the chief executive of CAFCASS thought that they were running a world-class organisation, whereas the evidence suggested that the quality of the organisation was far from world class.
Mr Richard Bacon (South Norfolk) (Con)
On that point, was not one of the most shocking aspects of our Committee’s inquiry the discovery that CAFCASS had not previously collected all the information that it required? However difficult it is, CAFCASS must undertake the data collection that it needs to manage its business.
Margaret Hodge
Yes, there was unanimous agreement in Committee that the failure to collect adequate data to be able both to predict future case load and to manage current peaks and troughs in case loads was extremely worrying. I do not think that we were given any proper undertakings or comfort that CAFCASS was on top of the data and information requirements that would allow it to improve its performance.
Joseph Johnson (Orpington) (Con)
One way in which CAFCASS was world class was in the amount of pay that the chief executive received: £168,000. Given how long he had been in the role—since 2004—and the litany of failure against key performance indicators that the report exposed, did the right hon. Lady feel that the Department was sufficiently engaged with the possibility of management change at the top of CAFCASS?
Margaret Hodge
That is a matter for Ministers. I hope that the Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton), who is in his place, will note this point: we were all a bit taken aback by the fact that the permanent secretary appeared, from the evidence that he was giving, to believe that the organisation was world class, as all the data in front of us suggested otherwise.
Mr Philip Hollobone (Kettering) (Con)
What is the Committee’s recommendation on the future of the permanent secretary and the chief executive?
Margaret Hodge
We did not put forward recommendations on either of those two individuals. However, we have made recommendations on our beliefs about the capability or otherwise of CAFCASS.
The evidence that we had before us suggested that CAFCASS is an unhappy organisation with underlying problems and challenges. Let me draw the House’s attention to two of the facts in our report. First, Ofsted carried out inspections of 10 CAFCASS areas in 2009 and failed eight of them. That is a terrible indictment of the organisation. Secondly, the NAO found that sickness rates among family court advisers averaged 16.1 days per annum—double the average for the public sector as a whole and indicative of low morale in an organisation that is not being properly managed by its senior executive.
CAFCASS was established in 2001 and brought together the work previously carried out by more than 100 organisations based in the Court Service and in local government. I know from my time as Children’s Minister that there have been continuing challenges and problems with the organisation, and it is particularly disheartening for me to return to considering the organisation after the reviews in 2003.
I welcome the fact that a family justice review is taking place and although that might impact in the short term on the already low morale in the organisation, I hope that it makes proposals that will ensure that the most vulnerable children in our society are properly served. I hope that in determining the future of the service the Government will have regard to the conclusions in our report.
Margaret Hodge
I urge the Government, as they are considering financial cuts to services across the board, not to place at risk the response we should collectively make to the needs of the most vulnerable young people in our society.
Question put and agreed to.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
On a point of order, Mr Deputy Speaker. We are all grateful to the Backbench Business Committee for enabling the Select Committee report to be presented, but I hope you will encourage the various parties involved, including the Backbench Business Committee, to review the procedure. Perhaps a little longer is required—such as a half-hour slot—in order that the Chairman may present the whole case and then take questions, including from the Minister. I saw that he tried to intervene. On behalf of Committee Chairs in general, I would like to encourage further consideration of the exact procedure to be followed for this excellent innovation.
Mr Deputy Speaker (Mr Nigel Evans)
I thank the right hon. Gentleman for that point of order. I have been an MP for 18 years and we seem constantly to be modernising the House. This procedure is embryonic—this is the first time we have followed it—and I am sure that the Backbench Business Committee will reconsider it and consider what changes need to be made to make it more effective. I agree with his comments about the first running of the procedure; it was very useful.
Policy for Growth
Mr John Redwood (Wokingham) (Con)
I beg to move,
That this House has considered the matter of policy for growth.
It gives me great pleasure to move the motion and I know that I speak for many others in this House when I say that we welcome the Backbench Business Committee’s decision to hold a debate on this crucial subject. I also remind the House that in the Register of Members’ Financial Interests I have pointed out that I am a business adviser to a couple of companies.
This is a crucial subject because the Government’s whole economic strategy rests on the assumption of above-trend growth starting next year and continuing for the rest of the Parliament. I am sure that every Member would like to see faster and sustained economic growth from this point after the trials, tribulations and difficulties that the economy has been through in recent years.
Knowing how popular this debate is and that about 50 Members would like to catch your eye, Mr Deputy Speaker, I shall not exercise the right of the mover of a motion to speak at great length. The House will be delighted to know that I shall not be giving my analyses of where the world and British economies are or of monetary and growth trends, as that would take a little longer. All those who are desperate to know my analysis can read it on johnredwood.com—a not-for-profit site that is full of wise advice and good analysis with a great deal of modesty. I am sure that colleagues will be delighted to know that. I shall stick to the headlines, based on my analyses, and the conclusions that I should like to put to the Minister and others.
The strategy over the five years in the Red Book, as amended in the Green Book, says that by the fifth year of the Parliament the Government hope to be spending £92 billion a year more on current public services than in the last Labour year, and that they wish at the same time to reduce the deficit. To do that, they assume that there will be an increase in tax revenue of £176 billion a year by that fifth year. We believe that it is assumed that most of that increase in tax revenue will come from increases in current tax rates through growth in the economy. So the Government have a great deal invested in the idea that growth is going to speed up and be sustained—we all do.
My first point is that the one thing we cannot afford over the next five years is rapid inflation. Currently, inflation is too high. The Bank of England, I am afraid, was disastrous in the era of the exchange rate mechanism when it lurched from boom to bust and advised the Government to take that course. It was again extremely bad over the past five years when the conduct of monetary policy also lurched from boom to bust. The Bank and the banking regulators allowed far too much credit up to 2007 and then starved the markets of money and kept rates too high in 2007-08 and into 2009, and we lurched from boom to bust. That was not a global crisis: those events were not happening in India, Australia, Canada or China, but they were Atlantic events—America did something similar. Britain did that and we must not do it again.
My policy recommendation to the Treasury is that I hope that the Chancellor will make it very clear in the next couple of weeks that we do not need any more money printing or quantitative easing in the current circumstances. The economy is growing, jobs are being created and inflation is still running at somewhere between 3% and 4.5%, depending on which index one relies. When we talk to business, we hear that there is a lot of inflation out there in the pipeline thanks to commodity price increases and increases in the world supply line prices now. Those increases are largely fuelled by the enormous quantitative easing under way in the United States of America and we do not need Britain to fuel them further with more quantitative easing.
Kelvin Hopkins (Luton North) (Lab)
Is not what is happening now simply the lagged effects of the Labour Government’s reflations out of the recession?
Mr Redwood
No, I do not think that is true at all. The reason we are now beginning to come off the bottom is that monetary policy lurched from being too tight to being too loose. Labour always said that that matter was decided by the Bank of England rather than by it, but we now need to think ahead. Monetary policy has been loosened somewhat and there is a bit more money around—indeed, there is a lot of money in the world as a whole—and it would be a disaster to fuel great inflation from here. If we can hold public sector pay and prices down—
Mr Redwood
I shall not give way, because many colleagues want to join in. The hon. Gentleman knows that I normally give way generously, but too many people want to join in.
If we allow public sector inflation to take off, that £92 billion extra will be needed to pay for the extra costs and wages and will not be available for real increases in programmes that most colleagues would like.
Mr Redwood
I shall not because we have to make progress. The £92 billion will go further if we can avoid high inflation. The Government should tell the Bank of England that the single objective is to get prices down, as it was asked to do, and to keep them down. More quantitative easing is not compatible with that aim.
My second point, which many colleagues will probably wish to address from their own, personal constituency experiences, concerns the lack of credit for business. Those two points are not contradictory, because while there has been a lot of money creation from which the public sector has benefited greatly by borrowing huge sums at very low prices, there has been a strict rationing of credit, particularly to smaller businesses, and a huge restriction on the balance sheets of the leading banks. One figure with which the House can never grapple is that the Royal Bank of Scotland—the state nationalised bank in all but name; we own most of the shares—has been on a drastic slimming course. It had a balance sheet of £2.2 trillion when it came into the public sector and by the end of this year, according to its plan, that figure will be down by £1 trillion—£1 trillion will have disappeared from the balance sheet. It is a global bank but quite a bit of that has an impact on the British economy.
It is not surprising in that climate that it is difficult for small businesses to get the money they want. So my second piece of policy advice to the Government is that they should tell the banking regulator that enough is enough. The bank balance sheets, which were trashed in 2007 by very lax regulation, are now in danger of being strangled by very tight regulation. The tier 1 capital ratios for example, which in some cases reached a scandalously low 4% in 2007 on Labour’s watch when it did not seem to care about these things, are now at about 10%. That is job done for the time being. We could, by all means, come back to it if we have rapid growth and if there are incipient signs that there is too much credit, but that is not the current situation. We should take the brakes off a bit, particularly for the small business sector.
My third point is that we need to get some of that credit into the big projects that the country needs. I hope that Ministers will make urgent moves to clear the ground on planning, regulation and general background so that the country can again get on with building power stations, transport links and the broadband links it needs to fuel growth. While I hope that all or most of those projects will be privately financed—another reason why we need to fix the banks more quickly—I hope that Ministers in this Government, unlike in the previous Government, will make rapid decisions so that the private sector can get on with that job.
Let me address two final issues. First, in order to collect £176 billion extra in tax in year five, from year zero in the plan, the Government need to optimise their tax rates. They accepted in their Budget statement that to go above 28% on capital gains tax would lead to a reduction in revenue. I welcome the development of wisdom in the Treasury on this important point, but I have bad news—28% is not the optimising rate for capital gains tax and 50% is not the optimising rate for income tax. I would like to tax the rich more—that will surprise colleagues and delight the Opposition—but the way to do that is to cut the rates. We need to do that to attract them here, keep them here and make them honest here, and we need to have rates that maximise the revenue from the rich—the sooner the better—to hit those targets.
Colleagues will be delighted to hear that I have come to my final point. We were promised deregulation and were told that there was going to be a mighty freedom Bill. The Deputy Prime Minister was supposedly toiling away in his enormous room in the Cabinet Office that was inherited from the Lord Mandelson regime and no expense was to be spared in making sure that we had a really big deregulation Bill. I now hear rumours that it is going to be a civil liberties Bill from the Home Office. Will the Minister, who has responsibility for small businesses, champion a proper deregulation Bill? Deregulation is the tax cut for business that does not cost the Treasury a penny. Indeed, it could be the tax cut for business that saved the Government money as well.
There is too much needless regulation and too much regulation that does not do the job. Labour introduced extremely complicated mortgage regulation and more of it is out there. It obviously failed. As soon as we had all the regulation, the mortgage banks went down—something that they had never done before—because the wrong thing was being regulated. I want to regulate the cash, capital and solvency of those banks, but to make it easier for people to borrow money. Does the Minister know that the mortgage market is seizing up through too much of the wrong kind of regulation? Will he get on and fix it? I hope colleagues have a great debate.
Mr Deputy Speaker (Mr Nigel Evans)
Order. As colleagues will see, this is a very popular and important debate, and a number of colleagues wish to participate in it. A five-minute limit has therefore been introduced.
Mr Virendra Sharma (Ealing, Southall) (Lab)
I am grateful for the opportunity to speak in this important debate. Economic growth in the UK in the months and years ahead is extremely uncertain for two reasons. First, the Government’s reckless gamble to eliminate the structural deficit in four years by reducing public spending by £81 billion is resulting in 500,000 public sector job losses and a further 500,000 private sector job losses are likely. This will impact on growth, causing a double-dip recession at worst and stagnation in the UK economy at best.
Mr Sharma
Let me make some progress and the hon. Gentleman can try again.
Secondly, having been caused by international factors, the current economic uncertainty and any prospects of growth are still going to be greatly determined by what happens in the international economic arena. Let me begin, then, with the international dimension.
Only yesterday, the Governor of the Bank of England warned:
“The outlook for growth is highly uncertain”,
explaining:
“The contribution of net trade to growth has so far been weaker than the Bank of England Monetary Committee had expected, and it is unclear how persistent that weakness will prove to be.”
In other words, Britain’s exports and trade with the world are not boosting our hopes for economic growth, despite a 25% reduction in sterling over the last three years.
Joseph Johnson (Orpington) (Con)
On a point of fact, the Governor of the Bank of England did not say that the growth outlook was tremendously uncertain, but that the inflation outlook was very uncertain. He said that, in his estimation, the UK’s economic recovery was likely to continue.
Mr Sharma
I have the facts here and we must agree to differ on their interpretation.
The Governor of the Bank of England added that unless the G20 nations at the current summit in South Korea work together on trade and tackle imbalances between creditor and debtor nations, the world economy is likely to be damaged. He said:
“What is most important at present, given the difficult and dangerous times that the world economy faces, is that the world leaders at the G20 have a constructive approach… We are in a position where the world economy can be a win-win outcome, but I’m afraid we’re also in a position where it can be a lose-lose.”
These are indeed difficult and dangerous times for the world economy and for UK growth prospects. Britain is particularly vulnerable to economic shocks in the eurozone. UK banks are exposed, with many loans to Ireland, Greece and Spain. Rumours of an EU bail-out of Ireland were rife in the financial markets only this week.
Equally, in the wider international economy, China, Brazil and India have all seen economic growth reducing. This all means more uncertainty as Britain tries to rebalance its economy away from being reliant on financial services and consumer spending on domestic service industries and more towards export-driven sales of our manufactured goods. My right hon. Friend the shadow Chancellor is right to say that the previous Government became over-reliant on tax receipts from the financial services sector, so it is right that, as we go forward, we try to build our manufacturing base back up and sell more of our goods in the world market, but it will not be easy.
I shall now deal with the domestic economy and growth—or, given the Chancellor’s reckless plans as laid out in the spending review, perhaps I should say the lack of prospects for such growth. The growth figures of 1.2% and 0.8% for the last two quarters have indeed been welcome news, but have nothing to do with the Government’s decisions since coming into office. The truth is, in fact, quite the opposite. Those two growth figures show the positive effects of the previous Government’s fiscal stimulus. When carefully analysed, the figures also show that much of the growth was due to a temporary and seasonal upturn in the construction industry.
If Members care to look at the predictions for the UK construction industry going forward into 2011, they will find talk of recession. This is not surprising, given the Government’s decisions in the emergency Budget and the spending review. If the housing capital budget is slashed by more than 50%, it does not take an economic genius to work out that the construction industry is going to take a hit. Equally, the cancellation of the Building Schools for the Future scheme, and the 60% reduction in the capital budget for schools, will also have a severe recessionary impact on the construction industry.
Let me illustrate that point with examples from my constituency and local borough. Ealing was due to have 18 schools either completely rebuilt or significantly rebuilt or refurbished. Some £305 million was to have been spent on those projects, representing a substantial boost to the local and regional economy, in addition to meeting the need for extra school building due to a rising demand for school places in the borough. Those plans were brutally cut in the emergency Budget, and in the end we managed to rescue projects for two sample schools, one of which is Dormers Wells high school in my constituency. However, we still face the withdrawal of almost £250 million of public money—
Mr Sam Gyimah (East Surrey) (Con)
Thank you, Mr Deputy Speaker, for allowing me to speak in this important debate. In the short time that I have available, I shall focus on small businesses. Many Government Members agree that to get the economy back on track, we need small businesses and the private sector in general to begin to employ people again. We also believe that only when the private sector begins to employ people will we lift the country up and get it back on its feet. I want to tackle three elements that affect small business: first, the funding environment in general; secondly, the regulatory regime; and thirdly, the access to talent.
On the funding environment, much has been said in the House over the past few weeks and months about the need for banks to lend to small businesses, but we need to consider how banks treat small businesses in general. There is an institutional bias against small businesses in terms of lending money to them. Many banks would rather not do so, because the revenue profile of small businesses is too volatile, and banks tend to see that as equity-style risk, so they stay away from it. There is also an institutional bias in terms of the absolutely critical bank charges that small businesses have to endure.
Ms Louise Bagshawe (Corby) (Con)
Is my hon. Friend aware of the invidious practice, so prevalent in my constituency, whereby banks ask the directors of small businesses to give personal guarantees, despite the healthy shape of their balance sheets? Such practice discourages entrepreneurs from developing small businesses.
Mr Gyimah
I agree 100%. For many small business men or women, the only way in which they can get the banks to give them credit to grow their businesses is to put their own assets on the line, and that is unacceptable because those people often take on a lot of risk to keep their business going. In looking at the funding environment, we need to get banks not just to lend, but to consider everything else, including credit.
It is great to see new small businesses trying to step into the breach, however. I came across a business called Funding Circle, which encourages lending by private individuals to small businesses, but that is nowhere near enough compared with what the big banks can do.
Mr Gyimah
Sorry, I do not have much time.
Another thing that the Government can do, in particular, is look at cash flow. One of the biggest things that determines the fate of a small and growing business is the amount of cash flow, and national insurance and VAT are the key drivers of that. The Government have made the right decision by giving certain businesses national insurance holidays, but it would be great if we could extend that to more businesses.
Mr Gyimah
Sorry, I have to push on.
We need to look at not only national insurance, but the VAT threshold. Ideally, it would be helpful to small businesses if we raised the threshold, but that is not going to be easy in the current environment, so perhaps we should ensure that Her Majesty’s Revenue and Customs, with its “Time To Pay” policy, does not clamp down too hard on small businesses that are trying to keep their business going, keep people employed and do the right thing. That is absolutely essential.
Let me turn to research and development grants. The representatives of a thriving business in my constituency came to my advice surgery and told me that, to get any R and D grant from the Government, they would have to move to Cornwall. They are willing to put a significant amount of personal capital into their business, but because R and D grants are organised regionally and targeted at certain regions, and they are in the south-east, they lose out. We should have a flexible system in which the money follows innovation and ideas and is not just targeted at certain regions.
My right hon. Friend the Member for Wokingham (Mr Redwood) mentioned the regulatory regime. A big challenge for small businesses is employment legislation. If every time an employer uses an agency worker they have to calculate after 12 weeks whether they can take on the cost of employing them, we end up with perverse incentives whereby businesses try to make their employees self-employed when they are in fact full employees. The employer is trying to avoid either getting sued if something goes wrong on the employment side or paying national insurance. That does not help the business, nor does it help the Exchequer. I strongly encourage the Government to consider using the freedom Bill to deal with the “one in, one out” policy in relation to legislation for small businesses.
Another factor is access to visas for highly talented people. Many internet and technology businesses who employ computer scientists and require people from all over the world are struggling because of the current visa regime. The Government must consider that, especially as last week the Prime Minister said that we want to create a silicon valley in the east end of London. However, for many of these businesses it is not just about having a cluster in that location, but about whether they can get the talent they need to grow their business. Their revenue profile is such that it takes them a very long time to start gaining revenues. They have a long period where they are investing and testing their technology, and then, if they are successful, they start getting in revenue. If our regulatory regime is such that they are incurring huge costs, whether in national insurance, VAT or statutory employment costs, before they are a viable business, we are not giving them the chance to succeed in this country.
I thank my right hon. Friend the Member for Wokingham for pushing for this debate. If we really want to be pro-business, we should put our money where our mouths are, take away all this legislation, and make the funding regime better for small businesses.
Michael Dugher (Barnsley East) (Lab)
Thank you, Mr Deputy Speaker, for the opportunity to speak briefly in this debate.
For the past six months, Labour Members have had to endure speeches from Government Members based on the Andy Coulson script. I am allowed to criticise the No. 10 scripts because I used to write them, which is probably just one of the reasons we lost the election. The script basically says that the deficit is the only thing that matters, and that the deficit was caused entirely by the profligacy, over a decade, of the Labour Government. [Hon. Members: “Hear, hear!”] My version was beautifully delivered, one might say.
Let me trouble the House with a couple of facts that run slightly counter to that script. Figures from the Institute for Fiscal Studies show that in the period from 1997 to 2007, public sector net debt fell from 42.5% of national income to 36.5%. That was caused—I know that this will come as a tremendous shock and disappointment to Government Members—by the economy growing and revenues increasing. Before the financial crisis hit this country—the biggest economic shock that we have had for nearly a century—our debt was down to the second lowest in the G7, despite our increasing public spending by the second largest amount among all the OECD countries. The size of the budget deficit was caused by the decisions that Labour Members took in response to that global financial crisis. I know that Government Members will disagree, but the truth is that there are people in my constituency who are in work, have managed to keep their home, and still have world-class public services because of the decisions that we took. We should not apologise for that.
The deficit does need to be reduced, but one of the ways of doing that is through economic growth—the subject of this debate. When I watched the Budget several months ago, I found it perverse when the Chancellor said in effect, almost as a matter of pride, “Because of the decisions we are taking as a Government, growth will be less than it was going to be, unemployment will be higher, tax revenues will be lower, and the payments we will make in benefits will be higher.” About 490,000 public sector jobs will go over the spending review period according to the Chancellor, and PricewaterhouseCoopers estimates that another 500,000 jobs are at risk in the private sector because of the measures that the Government are taking.
Michael Dugher
I will not; Yorkshire men are normally very generous, as the hon. Gentleman knows, but we are short of time today.
Even the director general of the CBI has voiced concerns about where the jobs will come from. Next week, Professor Steve Fothergill of the centre for regional economic and social research at Sheffield Hallam university will launch a report, which I urge all right hon. and hon. Members to read, called “Tackling worklessness in Britain’s weaker local economies”. It has an important foreword by the leader of Barnsley council, Steve Houghton, and makes it absolutely clear that, under the Government’s current framework, job demand in Britain’s weaker local economies, particularly in post-industrial areas such as Barnsley, is low and unlikely to grow significantly in the coming period.
The situation is made worse by the cuts that the Government are making to local authorities, which will be particularly bad in areas such as my own, where the council tax receipts are lower and there is greater reliance on central Government funding. In such areas, the local authority is critical not just as a direct provider of employment but in generating private sector economic activity and employment. The “public sector bad, private sector good” view that Conservative Members put forward completely fails to understand that there is often a greatly complementary relationship between the two. Government support for a strong public sector is critical.
I ask Members also to examine the coalfields review produced by the former Member for Barnsley, West and Penistone, Michael Clapham. It made it clear that areas such as my own are more isolated than others and have a higher mortality rate, greater health difficulties, greater overall deprivation, fewer businesses per head of population and 25% fewer jobs per resident, and there are more young people not in education, work or training. Such areas are very different from others, and because of the Government’s proposals, I, like other hon. Members, am very worried about their future.
Ian Swales (Redcar) (LD)
I should like to speak about growth through green technology, on which the Government have clear policies. I was very pleased to hear their announcements about the regional growth fund, carbon capture and storage, technology centres and investments in ports for wind technology.
I know that some people will be cynical about whether green growth and manufacturing is possible, but I shall speak about what is happening in Teesside to fill the House with a bit of enthusiasm for the future. Many companies there are already operating in the area of green technology or are about to start doing so, and I shall name a few.
Many people think that wind technology is the only area of green technology, and indeed there are companies in Teesside involved in it. Tata Steel, TAG Energy Solutions and Heerema Fabrication are all making wind turbine structures, and MPI Offshore, which runs turbine installation vessels, recently managed to put up 100 offshore turbines in under 100 days at Thanet.
There are also wave technology companies. Three companies—JDR Cables, CTC Marine and Brown Ltd—recently joined together to put in the new wave hub off Cornwall. In the area of fuel and energy, we have Ensus, which has the largest bioethanol plant in Europe; Harvest Energy, the UK’s largest biodiesel manufacturer; SITA, which has the largest energy from waste facility in the UK and has recently announced an extension of it; INEOS Bio, which has Europe’s first advanced bioethanol from waste plant; and Sembcorp, with the first large-scale wood biomass power station.
MGT has announced that it will spend £500 million on a new biomass power station, and Northumbrian Water has an anaerobic digestion facility that processes waste from an equivalent population of 1.9 million people. This week, a company called DRD Power has announced technology that should see an end to cooling towers in this country, because it will generate electricity from lower-temperature hot water.
There are many other companies involved. Greenstar makes recycled food-grade plastic packaging that is used by Marks and Spencer. The world’s largest tyre reclamation plant is also about to start. I could go on, and I make no apology for going through that list, because those are exciting developments.
There is a tremendous cluster of expertise in Teesside, and the Government should encourage it as much as possible. Teesside has been an industrial powerhouse for more than a century. Traditional industries, such as ship and bridge building, bulk chemicals and steel have declined, but we are now seeing exciting developments, which follow growth in offshore technology.
Local expertise can be built around such clusters, and that is obviously already happening. As we have just heard, joint bids can be made for projects. Local education establishments are focusing on the skills that are needed and are creating a system of apprenticeships to develop those skills.
Projects can also be implemented more quickly on Teesside. SITA’s UK technical manager recently said that major projects can be achieved on Teesside in less than half the time it takes in many other places.
As a result of the clustering that I mentioned, Teesside is also a great place for carbon capture and storage, and I urge the Government to consider industrial areas such as Teesside for carbon capture and storage grids and not to look just at coal-fired power stations.
Given those outstanding opportunities, the Government need to continue to help. They should carry on the seed funding provided by One North East for things such as the Tees valley industrial programme. I welcome the establishment of the Tees Valley local enterprise partnership and the regional growth fund.
The Government urgently need to clarify the long-term banding policy for renewable energy, especially biomass, and quickly to establish the green investment bank. Given all the expertise on Teesside, I recommend that the bank is put there.
I emphasise that all the projects mentioned are private sector projects. Government involvement could bring enormous leverage. In the end, many investors are ready to finance this new green technology. I recently met an investor who said, “Come to me with projects of a minimum of £20 million”—that was a minimum, not a maximum.
I am sure that the House would like to join me in congratulating those involved in the progress on green technology on Teesside—
Ian Mearns (Gateshead) (Lab)
We need to put into context the debate on economic growth, or as I might, surprisingly, put it, the new deal programme proposed by the right hon. Member for Wokingham (Mr Redwood), who seemed to be talking about a public sector growth package at the end of his speech, which was very welcome.
The consensus on the Government Benches is that it was a waste of money to use the regional development agencies to put public investment into the regions to stimulate economic growth, revitalise our northern cities and increase wealth, prosperity, enterprise, quality of life and opportunities. It is clear that many Government Members, including many Liberal Democrat Members, think that 13 years of sustained public investment were a complete waste of effort and resources.
Clearly, that must be the coalition’s position, and the position that all Government Members adhere to. Why else would they have abolished the RDAs within days of taking office and replaced them, down the line, with local enterprise partnerships, which have no resources to establish themselves and no fixed agreement as yet on their boundaries, and which, despite the Government mantra that decisions are best made locally, cannot be established without the Secretary of State’s say-so. Once established, they will have little in the way of resources and will have to bid for money from the £1.4 billion regional growth fund, which runs over three years. That is substantially less than the predecessor RDAs had from the previous Government’s coffers to regenerate our regions.
For the many Government Members who have probably never been north of Watford, or who hold the view that regional development agencies were wasteful and ineffective, let me say just a few words about my region, the north-east, and about the regional development agency, One North East.
Thanks to the work of One North East and the efforts of local authorities and other partners in the north-east, we were able to secure a major turnaround in our region’s economic fortunes. The region is still heavily dependent on the public sector, but in the period immediately before the 2007 financial crisis and recession, private sector growth in the region was significant. During that period, the rate of economic growth in the north-east exceeded that of London and the south-east, and was substantially higher than the national average. The proportion of new business survival was higher than it had been for decades, and our business failure rate, in very tough circumstances, was no worse than the national average. The north-east saw year-on-year reductions in unemployment from 2000. Between 2000 and 2005, unemployment in the region fell from 108,000 to 64,000.
The north-east is now recognised across Europe as one of the regions that put science and technology at the very heart of its economic strategy. Science parks such as Knowledge Campus in my constituency and NETpark in the constituency of my hon. Friend the Member for Sedgefield (Phil Wilson) have helped to support that high-tech industry growth as a major investment into the region’s key sectors. Innovative industries such as health science, new and renewable energy and process industries, and creative industries such as content-based businesses, including computer games and video production companies, grew faster in the north-east than in the vast majority of the rest of the country. There are now more than 2,800 creative businesses operating in the north-east, employing 26,000 people.
The RDA, One North East, was pivotal in rejuvenating those industries in the region, and incredibly importantly, our tourism industry. Its highly acclaimed and award-winning “Passionate People, Passionate Places” advertising campaign has brought significant growth and coherence to the region’s tourist industry. In Newcastle and Gateshead alone, 20,000 are employed in the hospitality industry. However, the campaign’s success has gone far beyond the region’s core conurbation of Gateshead-Newcastle—it has brought new life into rural Northumberland, County Durham and Tees valley.
That is not exactly a picture of failure. In fact, it is a great success story, but this Government, because of their blind addiction to a particular economic ideology, now want to jeopardise that success to the point of extinction. That is tragic.
Julian Smith (Skipton and Ripon) (Con)
As a small business owner, dealing with employment law took more hours of my time than any other management responsibility. Since 1997, employment laws and regulations have been piled on to British business from both Labour and Brussels, but for the employer, particularly the many small businesses in my constituency, that has meant a major cost in time and money. The intense focus on employee rights has ended up with the employer spending a huge amount of time ensuring that he or she is abiding by the law, and wary of the consequences of even the most innocent error.
Under the previous Government, the cumulative effect of employment law fundamentally changed the playing field and left employers feeling defensive, rather than confidently hiring new staff. The other day I saw a friend of mine who is setting up a new business. She told me that she had been advised to take her staff on short-term contracts rather than hiring them as permanent staff to avoid all the pitfalls. Therefore, at the key moment when we need more jobs—in fact, hundreds of thousands of jobs—the advice to a budding entrepreneur is to avoid permanent staff if possible.
According to the World Bank’s “Doing Business” report, employing workers in the UK has become harder every year since 2007. We have slipped from No. 17 to No. 35.
Julian Smith
I am sorry, but I will not.
Statistics do not take into account the effect on small businesses of the sheer worry of all those burdens, nor the reality of a world where Britain will be under increasing pressure to attract internationally mobile jobs.
Julian Smith
I am sorry but I will not, because then I would be biased.
As a headhunter working with some of the biggest companies in the world, I saw just how easy it was to put a senior employee in an international location rather than the UK. I have long list of examples of when London came last in the choice between London, New York and Asia. That will happen without fanfare or fuss, which is why our employment policies must be ruthlessly competitive, as must our tax and immigration policies.
Over the next few years, we desperately need people to take the risk and set up businesses, invest in existing ones and create jobs here in Britain. Labour accelerated its depressing legacy of employment law in its dying days. We have been left with the agency workers directive, the Equality Act 2010 and additional paternity leave. Each will have a major effect on British business, and the Brussels juggernaut has been relentless too. The pregnant workers directive will add £2 billion of cost to British business if it gets through. The coalition is trying to address these issues through a set of attractive policies to create the best conditions for growth—scrapping the job tax, the national insurance holiday for businesses outside the south-east and cutting corporation tax.
I pay tribute to the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk) who is doing a phenomenal job for British business. We need to let business focus on growth, and the coalition is pushing forward with additional legislation, including removal of the default retirement age, the shared maternity and paternity rights, and the right to request training. Those are key measures that will be introduced next year.
Last week, I had an Adjournment debate, in which I urged the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), to have a holiday on employment law for 2011, the year when we need more jobs than ever to be created in this country. I also urged the Minister to show British business a light at the end of the tunnel and do a full and thorough review of employment law, staying true to the coalition agreement of “one in, one out” and applying that to employment law as to every other regulation. If we are able to achieve both an employment law holiday and a full review, the coalition will have grasped the employment law nettle and begun yet another good initiative for growth in this country.
Rachel Reeves (Leeds West) (Lab)
I thank the Backbench Business Committee and the right hon. Member for Wokingham (Mr Redwood) for organising the debate. On the eve of the G20 summit in Seoul, it is especially timely, because growth is the missing plank in the Government’s policy. Yes, we need to bring down the budget deficit, but if we deny the need to grow the economy, we will fail to create the jobs that we need, and a rising dole queue means a bigger welfare bill with less tax coming in, as the shadow Chancellor has put it.
History has taught us that economic recovery following a large-scale financial crisis is tough and that the wrong economic policies from the Government can make things worse. The USA saw signs of positive growth in the 1930s, and fiscal stimulus was withdrawn. The result was the great depression. In the UK during the 1980s, the Government maintained that there was no alternative and raised interest rates to tackle inflation. The result was recession, massive social disruption, huge unemployment, rising public spending and communities that have only recently begun to recover.
Mel Stride
Will the hon. Lady tell the House what the lesson was of 1976, when a former Labour Chancellor had to go cap in hand to the International Monetary Fund, because once again a Labour Government had spent the economy out into the long grass?
Rachel Reeves
When the hon. Gentleman makes his speech, perhaps he will explain the exchange rate mechanism crisis.
In 1990 Japan had a debt to GDP ratio of 50%. The Government failed to take the swift action necessary to help the economy recover from recession and the result is that, 20 years later, debt in Japan stands at 190% of GDP. Those are the facts. Concentrate too much on one economic variable and we have an unbalanced economy that fails to achieve our economic objectives.
Despite these facts, the Government say again that there is no alternative. Let me offer an alternative programme for growth in which the Government act strategically on the side of business and industry. What would that mean in practice? First, there is a real and pressing need for the UK to be at the forefront of businesses for the future, especially low-carbon industries. To make the most of Britain’s potential requires a Government who support businesses. Instead, we had the tragedy of the cancellation of the loan to Sheffield Forgemasters. That company is a UK success story. It is British-owned, high tech and high skill. The owners built the company up from scratch and it has become a leader in its field. The loan—I emphasise that it was a loan and not a grant—was signed off by civil servants in the Treasury and was a product of two years of careful negotiation. Lord Digby Jones said that the loan would have been paid back 100 times over in benefits to the economy. Before the election, the Deputy Prime Minister described the loan as
“just the sort of thing”
we should be doing, and I have to admit that, on this occasion, I agree with Nick. The loan would have created jobs in the low-carbon industry of the future and added greatly to Britain’s export capability. However, as we all know, the loan has been cancelled, so instead of exporting civil nuclear components, we are exporting jobs to Japan and South Korea. That is not a strategy for growth, but a strategy for undermining it.
The second part of a strategy for growth must include promoting bank lending. The Prime Minister met business people in Watford last week who talked to him about the reluctance of banks to lend and how it was stifling job creation, and the Prime Minister admitted that it was difficult to know which levers to pull to get banks to lend more. His confusion does not surprise me, because I have read the Government’s Green Paper on bank lending. I read it once and assumed that I had missed the section on the action the Government plan to take, so I read it again. But it was not me; it was the Green Paper—a very green paper indeed. There was nothing there! The Government are not taking action. The review of the structure of the banking sector is still a year away, and in the meantime businesses are being denied the chance to grow.
The third component of a growth strategy is investment in the skills of the future. As the Prime Minister has just led a delegation to China, it is timely to reflect that in China and India last year 8 million people graduated from university. In contrast, on investment in higher education, the Government have reduced the university teaching grant by 80% and are making students bear the full cost of a university education. This is no way to grow the British economy.
The fourth component in a strategy for growth must be investment in our regional economies. In my region of Yorkshire, we take huge pride in our industrial heritage, and we want to build a future we are proud of as well. However, while the Leeds local enterprise partnership has been given the chance to go ahead, I have not found a single business leader in Leeds who would not prefer to continue with our successful regional development agency, Yorkshire Forward. A quarter of Yorkshire will not even be covered by a local enterprise partnership, and in the north-east that rises to more than 70%. Support for RDAs is strong not just in Yorkshire. John Cridland, the policy director at the CBI, likened the Government’s regional and economic strategy to throwing the baby out with the bathwater.
Where does this leave us? Investment in Sheffield Forgemasters will not go ahead, the banks continue to rein in lending, university funding is cut to the bone, and powers are being taken away from our regions to determine their own economic future. We all agree that the budget deficit needs to be cut, but the Government must match their ambitions for cuts with an ambition for growth that British businesses and workers can be proud of. Britain could be a world leader in the jobs and technologies of the future, but only if the Government put in the policies to make this a reality.
Mike Weatherley (Hove) (Con)
Many Members will now be aware that the expertise I bring to the House includes music-related issues. The banks do not have a good record of lending to this industry, so let me set some background. Since the 1960s and the first so-called British invasion, the UK’s musical talent has dominated the world stage. Last year, one in 10 artist albums sold in the US and Canada were made by UK artists, and Britain is one of only three net exporters of musical repertoire in the world. The 2008 report by the PRS for Music showed that British artists earned £139.6 million overseas, up 15% on 2007. International royalties have more than doubled since 1999.
The top-five touring PRS music acts in 2008 were, in order: first, the Police; second, Iron Maiden; third, Coldplay; fourth, the Spice Girls; and fifth, Elton John. For the UK, music is an enduring worldwide success story. It is vital that our music entrepreneurs, like any other small businesses, can gain access to the sort of finance that will ensure our creative talent keeps blooming. Unfortunately, however, evidence suggests that this simply is not happening right now. Early in 2009, the UK Government, with EU support, provided UK banks with €1 billion to invest in British small businesses. The scheme to enable the distribution of this money was called, as I am sure many hon. Members know, the enterprise finance guarantee. On 1 March 2009, legislation specifically sought to identify suitable music, composers and own-account artists—in other words, those artists looking for financial support outside the ever-shrinking record label investment—for EFG money.
The enterprise finance guarantee has failed the music sector. Research by UK Music and the Music Managers Forum has yet to identify a single example of a musical entrepreneur who has benefited from the scheme as originally intended. I hope that I am not alone in finding that attitude hugely disheartening. The previous Government talked about developing initiatives to support the creative industries, and especially music. In a report called “Banking on a Hit”, published as long ago as 2001, they concluded:
“Whilst small music businesses are similar in many respects to other small creative businesses, there are important differences which give rise to unique problems in raising finance, and contribute towards a ‘funding dilemma’ for Britain’s music businesses. Difficulties in raising finance are affecting the ability of the music business to grow and prosper.”
Mike Weatherley
I agree entirely. UK Music has identified situations where banks will not lend to music businesses, even though they will guarantee the other 25%, because they consider them too risky and because they intend to lend to businesses to which they would perhaps already be lending.
I am delighted that the Department for Business, Innovation and Skills has announced that it will work to make the EFG more transparent and accessible. I am also delighted that a further £2 billion is to be provided to UK banks, and that the scheme has been extended. Specifically, I would like the Government to apply pressure to the banks to reverse their prejudice and apply EFG funding to British artist and music businesses, together with the £25 million of EFG credit set aside specifically for investment in music, and especially in young British artist talent. The figure of £25 million is what music industry leaders have advised is the lending required to ensure that we remain a net exporter of music and continue to be internationally competitive.
Music is not merely entertainment; it is a national and economic asset. With the right support, our artists, musicians and entrepreneurs will continue to dominate the world and do this country proud, but the Government need to work with the banks to ensure that development capital is available.
Mr William Bain (Glasgow North East) (Lab)
Thank you for giving me the opportunity to contribute to this timely debate, Mr Deputy Speaker. It is a pleasure to follow the hon. Member for Hove (Mike Weatherley).
Recent studies raise real concerns about the likely path of economic growth in the coming years, given the Government’s over-hasty proposals for fiscal consolidation and the lack of sufficient measures on innovation and research and development to amount to a genuine strategy for growth. This morning, the Fraser of Allander institute, the respected Scottish economic forecaster, published its latest economic outlook. Although it points to an upswing in growth in the second quarter of this year, largely caused by improved performance in construction, growth in the Scottish economy is expected to be an anaemic 1.1% next year and only 1.9% in 2012. The report also warns that wider public sector cuts could have a disproportionately greater impact on the Scottish economy when compared with the UK economy as a whole. The institute predicts that the expected reduction of around 11% in the Scottish Government’s budget by 2014-15 could result in the loss of between 49,000 and 113,000 jobs over the next five years. That could mean as many as 60 jobs being lost in Scotland every day for the next five years. It is likely that unemployment in Scotland will continue to increase relative to the UK in the next year, with construction and business services being the hardest hit.
Across the UK, although the National Institute of Economic and Social Research predicts that a renewed recession may be avoided, with a weaker recovery and dampened growth, the public finances are likely to recover far more slowly than the Office for Budget Responsibility and the Government have predicted. The next decade for our economy may turn out to be more like the 1990s were for Japan than they were for Canada. The grave danger is that, far from promoting private investment, the Government’s plans for fiscal consolidation run the risk of crowding out growth. There has not been the surge in exports that the Chancellor predicted, in spite of an exchange rate that is favourable to exporting businesses. The Bank of England’s inflation report this week says that UK exports continue to lose global market share relative to our competitors. With other EU countries also cutting their deficits, the possibility of a strong export-led recovery is far removed from that which Canada experienced from a fast-growing US market in the 1990s.
PricewaterhouseCoopers has produced a sectoral analysis of the likely impact throughout the UK on jobs and businesses of the Government’s fiscal policy, which suggests a 4% loss in output and more than 180,000 job cuts due to reduced public sector demand, and larger relative cuts in the construction sector, with an output loss of around 5% leading to around 100,000 job losses. Scotland, Wales, Northern Ireland and the north-east of England will suffer the biggest relative job losses. For the UK as a whole, total job losses could amount to 3.4% of total employment, or 943,000 jobs in absolute terms by 2014-15.
PricewaterhouseCoopers also questions whether the regional growth fund, and equivalent measures in Scotland, Wales and Northern Ireland, will provide a large enough incentive or access to funds to make a material difference, and whether local authorities or the newly created local enterprise partnerships will have the resources, financial powers and capacity to mitigate the impact of cuts and promote local growth.
The Government are simply not doing enough to invest in the new industries of the future and capital projects. There is a reduction in the number of grants for electric-powered and hybrid-powered vehicles, a lack of detail on the proposals for the green investment bank, and a reduction in capital and investment allowances to help small businesses. Keynes once said that when circumstances change, he changes his mind. We are seeing a change in circumstances for the worse in manufacturing, construction and business services. It is time for the Government to change their mind on their damaging economic policy.
Mr Brian Binley (Northampton South) (Con)
I congratulate the hon. Member for Glasgow North East (Mr Bain) on his speech, and I refer him to the same speech that was made in this place in 1990. He can look at the record thereafter, because the Thatcher Government did exactly what he said this Government will not do, so there are some examples of that.
I thank my right hon. Friend the Member for Wokingham (Mr Redwood) for initiating the debate. It was good to work with him on obtaining it. The number of people who are speaking in it are clearly a vital part of the process—[Interruption.] I am sorry that I got the year wrong, but if the hon. Gentleman goes back a further 10 years, it will be about right.
I welcome the Minister to the debate. I am delighted to say that Conservative Members have confidence in the work that he will do, simply because he knows business. The previous Government’s failing was that they did not. That simple difference must be taken into account.
The truth of the matter is that the Budget strategy is dependent on growth, and that small and medium-sized enterprises are vital to the success of that strategy. It is that simple. The Government are saying the right things, and have had some success, but money is not getting through to SMEs, and we must ensure that it does. I urge the Minister to give us some answers on how that might happen.
There is no doubt that the Government’s approach has been successful to date. Our international credit rating is much more secure than it ever was, and that is vital. The third quarter growth in gross domestic product was 0.8%, and in the previous quarter it was 1.2%. Bearing in mind that the average over the past 25 years has been 2.5%, that is pretty startling, and a good start for the Government.
Owen Smith (Pontypridd) (Lab)
Does the hon. Gentleman agree that the principal component of that growth figure of 0.8% was in the construction industry, and was entirely driven by the stimulus that the Labour Government put in place? We have already heard that it is drying up.
Mr Binley
That is absolutely incorrect. Construction has played its part, but not house building. If the hon. Gentleman looks at the size of growth in the manufacturing sector, he will see that it has been a major element of our growth.
I had intended to talk about manufacturing exports, but time forbids that now. I will say, however, that all of that is good, but the sector is not getting the money it needs, and we must pay attention to that. The banks say that lending to business is increasing, and that it rose by 0.9% this August, compared with the previous August. That sounds pretty good, but when we look beneath the surface, we find that most of that money was lent in foreign currency to foreign businesses outside this country. The truth is that lending to British businesses dropped by £400 million.
Mr Umunna
I recognise the hon. Gentleman’s comments about lending and about the struggles of small businesses and businesses in general. Was he disappointed, as I was, to see very little on lending in the comprehensive spending review Green Book? On page 30, we see mention of the £1.5 billion business growth fund, which was put in place by the British Bankers Association, but does he agree that that is woefully inadequate, given the difficulties that businesses are facing in getting access to finance?
Mr Binley
I want to see more, but we must also recognise that the mess that the last Government got the banks into is one of the reasons that they are not lending money now. That is why we need to encourage them to find more creative ways of lending.
Small and medium-sized enterprises are concerned about how the banks are dealing with them. Thousands are talking about the breakdown in relations with the banks. The number of complaints to the banking ombudsman is up by 119% this year alone, and 14% of all SMEs are now using credit cards to pay for their business expenses. That is an horrific figure. According to the Federation of Small Businesses survey, 31% of SMEs—that is 1.4 million small businesses in this country—say that bank lending is the most important way of improving growth prospects in the sector. When are we going to get the message? Those figures underline the great importance of this matter.
The reasons that growth is important, and that small businesses will not be able to play their part unless they get the money to finance their growth, are very simple. Most of the money they need to finance growth is short-term money for extra labour, extra materials and extra resources. Those are all short-term requirements, and businesses must have them in place before they can grow. The truth is that the payback time is relatively long term. Businesses often go bust more in an upturn than in a downturn because there is no other way of paying back that cash flow drag than through retained profit. They go bust because they try to over-trade but without having the finances to complete the process. Those businesses need our understanding. What are the Government going to do about this? They need to take action for the short term very soon. I know that my hon. Friend the Minister is sympathetic to that view, so this is not a criticism in every sense.
Basel III allows banks to lend money to the Government while still classifying that money as capital reserve. It is a complicated business and I am sure that it needs quite a lot of thought to decide how we use that opportunity to help to finance SME growth. The Minister is a very clever chap, as is the Chancellor, and they have some very clever people in the Treasury. I am sure that it is not beyond the wit of that group of people to give us answers today on how we might release that money to help the small businesses that are in such great need. I repeat that we need to provide money for small businesses in order to make the strategy work. That is the important factor in this debate.
We also need to look into providing businesses with a greater choice of banks in the high street. That is longer-term work, but it still needs to be done as soon as possible. We need an extension of the enterprise guarantee scheme, and we need to know how the Government are going to implement it. We also need the Government to get tough with the banks, and to point out that there is a real need for them to be more interactive with small and medium-sized businesses, because that is not happening. But fine words butter no parsnips, as my grandmother would have said. I want to hear what action the Minister is going to take to ensure that small businesses get the money they need.
Mr Jamie Reed (Copeland) (Lab)
It is, as usual, an absolute pleasure to follow the hon. Member for Northampton South (Mr Binley). I did not come into the Chamber expecting to agree with so much of a Government Member’s analysis of what we need to do, but he is absolutely right: the banks do need to lend more, the Government do need to make the banks lend more, and in matters of economic policy we do need to take a long-term view. Those are fundamental principles with which I agree.
Whichever side of the House we may be on, we all know the basic Clinton mantra about what secures electoral success and that is an article of faith in which we must all believe in the modern economy: “It’s the economy, stupid.” Those words were not reserved specifically for the Chancellor of the Exchequer, but we know that the economy is fundamentally a moral issue as much as anything else. The effects of economic policy are primarily seen and felt not on a balance sheet, but in our communities up and down the country. I believe that an effective economic policy redistributes wealth and opportunity fairly: it underpins cohesive communities, enables individual ambitions to be fulfilled, and allows families and businesses to flourish.
I commend the right hon. Member for Wokingham (Mr Redwood) on securing the debate, because we need to discuss this subject more. Given that we are experiencing a period of economic transition in this country and, indeed, across the globe, our debates in the House are sometimes mystifying. We need to discuss this subject much, much more.
I sincerely hope that the Government’s economic policies work, because this is our shared interest and, surely, our shared goal, but I have to admit that I doubt that they will. It is undeniable that one of the worst aspects of the manufactured narrative surrounding the Government’s economic policy is the polarisation of the so-called private and public economies. The Conservative and, now, Liberal Democrat mantra is “Private is good, public is bad.” We should reject that flawed view. I say “Public is good, private is good.”
Mr Gyimah
I think that what the Government are trying to say is that the state is not the same thing as the economy, and that pumping more money into the state is not the same as driving the economy. If we want the economy to grow, we need to enable the private sector to thrive. That is what the Government’s policy is about.
Mr Reed
I entirely agree. This is not just about the state. However, economic policy should not be used in an ideological agenda to try to destroy the state, and we know that that is happening in this instance.
The “public good, private good” mantra is the one that we should adopt. Our national economy is one economy. “Public” and “private” are not segregated in our towns, villages and cities. As an analysis by PricewaterhouseCoopers has shown, it is not possible to cut the public sector without hitting the private sector hard as well.
Elizabeth Truss (South West Norfolk) (Con)
Is it not the case that between 1998 and 2009, under the last Government, productivity increased by 20% in the private sector and fell by 4% in the public sector? It is the Government’s management of the public sector that caused the two sectors to diverge during that period.
Mr Reed
I do not disagree with those facts, but I do not think that they are germane to the “Public bad, private good” mantra that we are hearing; quite the opposite, in fact.
The findings of the PricewaterhouseCoopers analysis are self-evident. The Chancellor has confirmed that as a result of his choices, the public sector will lose 500,000 jobs. PricewaterhouseCoopers has estimated that that will cost at least a further 500,000 private sector jobs, and the Chartered Institute of Personnel and Development has said that the Government’s plans will cost 1.6 million jobs over the course of this Parliament. All the while, in the face of the facts, the Prime Minister and the Chancellor persist with their economic medicine irrespective of the condition of the patient, like Elizabethan physicians with an absolute belief in the benefits of leeches.
As was mentioned by my hon. Friend the Member for Barnsley East (Michael Dugher), for communities like ours what matters is where the pain is felt. Of course we want to see growth in all sectors throughout the country.
Andrew Bridgen (North West Leicestershire) (Con)
Will the hon. Gentleman give way?
Mr Reed
If the hon. Gentleman will forgive me, I will not give way again. I have already done so twice.
At present, however, the Government have no growth policy at all for areas such as mine which depend heavily on the public sector.
There are only 650 parliamentary constituencies. It would not be difficult to undertake an impact analysis of the effects of these economic policies and spending cuts on each constituency. That could be done in short order, but it clearly has not been done. Why not? Is it because the analysis would demonstrate the pain and misery these economic policies will cause in areas and communities such as mine? In the absence of such analysis, policy is demonstrably being both produced and prosecuted in ignorance of its likely effects. What kind of policy is that?
The International Monetary Fund has told the Government to develop a plan B. The Government must produce a plan B, and, in the interests and spirit of the new politics, it should be brought before the House and debated so Members of this House can express their views on it.
The likely consequence of Government economic policy is that areas such as mine will suffer more than other parts of the country. Future Labour Governments will have to reverse that decline, but we will never be able to turn the clock back for those whose aspirations went unfulfilled, for those whose dreams were destroyed and for those whose lives were blighted as a result of this Government’s current economic policies. My constituents and this country deserve better, and I ask the Government to think again.
Margot James (Stourbridge) (Con)
It is clear to me that the private sector’s unleashing of enterprise and entrepreneurialism is what will produce the real and sustainable growth that is the subject of this debate. If the Government are taking almost 60% of GDP and spending it in ways that do not generate growth, and incurring massive debt in the process, the private sector will be trampled underfoot by the high taxes that automatically follow. The damage done to Britain’s economic prospects in the last 13 years has been great. As a country, we are overspent, over-borrowed, overtaxed and over-regulated.
There are 11,000 small businesses in my metropolitan borough of Dudley, and I want to make a few points about Government policies that I believe in but with which I hope we can go further and faster to help those businesses. They have told me how much they welcome the reduction of the small company rate of corporation tax to 20%, the revitalised support for apprenticeships, and the exemption of start-ups from national insurance on the first 10 employees.
The Government have also announced a one-in, one-out rule for introducing any new regulations. I ask the Minister to remember that we are competing with economies like South Korea and China, not Italy and Greece, and we simply cannot afford the massive burden of regulation that encroaches on business every day. One in, one out just keeps us standing still, and that is not good enough. We must be more ambitious in our desire to deregulate.
Another area in my sights for reform is the loving care with which Whitehall implements European Union directives. We should follow the example set by France, and followed out of economic necessity by the newer economies of the former eastern bloc. This week the Business, Innovation and Skills Committee investigated the operation of the enterprise finance guarantee scheme, which I am delighted that the Government have extended. I ask Members to imagine our surprise, however, when we learned that companies could not access this scheme if they were exporters. Under questioning from our Chairman, my fellow black country MP the hon. Member for West Bromwich West (Mr Bailey), the BIS officials before us confirmed that exporting companies were exempt from this excellent policy because of the EU rules regarding state aid to exporters and the potential for distorting trade between member states. Can Members imagine other countries, such as France and Poland, being so deferential to such directives?
As many Members have said, we also need a “big bang” in credit for the small business sector. Since the banking crisis, there has been much talk about the difficulties small businesses have had in accessing capital. That is nothing new. My business experience dates back to the mid-1980s and what I learned from my father’s business career dates back even further, to the ’60s, and I can tell this House that the banks never wanted to lend small businesses money when we needed it, and always demanded the shirt off our back if they were ever persuaded to do so. So I am not sure quite when those halcyon days of bank lending to small business existed.
What is needed is a greater diversity of loan and equity finance. Last week the Black Country Reinvestment Society issued a report arguing for more finance to be channelled through mutual and co-operative societies. I was pleased to be informed by officials in the Department for Business, Innovation and Skills that such bodies are to be allowed to bid for funding from the regional growth fund. In addition, the enterprise capital fund programme will leverage equity financing. We must also find a way of incentivising high net-worth individuals to invest in start-ups and small and medium-sized enterprises.
Not only must we increase the number of small businesses, but we must get the existing ones into a position where they can grow their business, because only about 20% of small businesses really achieve great growth. The policies that this Government are pursuing now—at last—and many of the ideas we have heard this afternoon, including some in my contribution, will double the number of small businesses that can grow themselves, and in turn provide the growth that this economy needs from the private sector.
Mr Pat McFadden (Wolverhampton South East) (Lab)
This is a timely debate. We have learned that my hon. Friend the Member for Glasgow North East (Mr Bain) was making speeches about growth when he was but eight years old, so we know that there has been significant interest in this matter across the House for some time.
We meet here today at the same time as the G20 meets in Seoul, and I wish to contrast the role that Britain played when the G20 met in London with what is happening at the current meeting. At the London meeting, the then Prime Minister, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), led the debate, shaped the debate and helped to pull the leading economies of the world together on an agenda that helped to prevent recession from turning into depression. What is happening at this meeting? Britain is playing no leading role, and the leading economies of the world are gathering together in an atmosphere of tension over exchange rates and trade imbalances. What a contrast between the London meeting and the one currently taking place.
Of course we all want to see economic growth, but it is also crucial for growth to be evenly spread throughout the country. We enjoyed many years of economic growth before the recession, and Labour put in place a determined and active sub-national policy to ensure that that happened.
Mr McFadden
If the hon. Gentleman wants to talk about outcomes, I would remind him that the action that the Labour Government took helped to ensure that the level of repossessions, business failures and unemployment during the recession that we are just coming out of was about half that in the recessions when his party was in power.
As I said, growth has to be spread evenly throughout the country. This is not just an economic question; it is a social and political one too, because if parts of the country are left out of the country’s economic future, there is a profound disaffection that affects all of us. So what policies might we look to so as to ensure that such growth occurs? Of course, finance for industry is essential. We have reached a point where there is a dialogue of the deaf between banks and businesses. Businesses say that banks will not lend to them or will do so only on usurious terms, whereas banks say, “There’s a lack of demand, and look at all the billions we’re lending.” The present Government say that the banks ran rings around the Labour Government, but the more they ramp up the rhetoric the more they expose their own weakness, and their impotence to do anything about the situation. After six months of this Government, we have heard nothing that will increase bank lending to business.
I suggest that we should have a proper contract in place that goes something like this: the taxpayer rescued the banks from financial collapse, so we need a new consensus on the role of banking, which is that, as that rescue had to take place, the banks must play their proper role in putting forward finance for businesses to invest and grow. The truth is that we can have all the debates that we like about growth in this House, but unless the banks play their proper role we will not see the economic growth that we need.
Secondly, we need proper financial support for industry. We have been too hidebound by a fear of talking about picking winners. This has inhabited Governments—I include my Government in this—from playing their proper role in the economy. Of course that has to be done with care and with discerning judgment, but if we want to take advantage of the economic opportunities of the future—the transition to low carbon, the opportunities presented by the digital economy and other such matters—Government must play their role. As my hon. Friend the Member for Leeds West (Rachel Reeves) said, what happened at Sheffield Forgemasters was not just a lost opportunity for one company but a lost opportunity for the country, because it could have made us a world leader in civil nuclear supply.
Let me say one more word about that project. The Government, having run out of excuses, now say, “It is a good project, but it’s unaffordable,” while in the same breath boasting about having a regional growth fund of £1.4 billion. If they really have that regional growth fund, why was its first decision not to reverse that mistake and grant the loan to Sheffield Forgemasters? I approve of the action taken on AgustaWestland, but I do not see the difference between the two proposals.
Thirdly, we must do better on sub-national economic growth and development. The Government have abolished eight regional development agencies and we now have what the director general of the CBI calls “a shambles” coming to replace them. The process appears to be being run not by the Department for Business, Innovation and Skills but by the Department for Communities and Local Government. It has to be rescued, or it will do real economic damage.
More points could be made in the debate, but they will have to be made by others given the time limits. There is a profound difference in our view: the Government are engaged in faith-based economics, stepping out of the way, whereas we believe in an active role for Government in securing economic growth.
David Mowat (Warrington South) (Con)
One of the great pleasures of speaking in this place is occasionally hearing Members of the Opposition saying something that I agree with. I agree with both the hon. Member for Copeland (Mr Reed) and the right hon. Member for Wolverhampton South East (Mr McFadden) that we must ensure that growth is spread evenly across the country as the economy grows. Perhaps they should pause for thought, however, and consider the legacy that we have been left. The gross value added per person for the English regions that we have inherited is about half that for London and 20% less than that in the south-east. The fact that GVA in the regions is half that for the capital is staggering, and it is a situation that does not exist in any other OECD economy. We must fix that, and it behoves the Government to put into effect the policies that will stop that happening again.
I shall say it again: we have inherited a situation in which London has double the GVA per employee of the English regions, and that is not sustainable. The hon. Member for Copeland is right: it is a moral issue. Why has that happened? First, it has not happened simply because London is the capital. If that were the case, the same would happen in other countries, but it does not happen in the United States, in Germany or in Italy. In France, where Paris is dominant in the same way as London is dominant here, the disparity is not the same; it is not double. One small cause of the gap in the past few years has been the boom in financial services, which was unrestrained and went on for a couple of years. I should add that the widening of the gap accelerated during the last few years of the Labour Government.
That all happened here because we have a country that is very London and south-east focused. I spent 30 years in business constantly fighting initiatives to move functions to London, and fighting the idea, “This is important; we’ll have to do it in London.” That is a very tough thing to have to do, and it is like pushing water uphill all the time. Worse still, that attitude also exists in our civil service, in which London tends to be seen as the centre of everything. Another statistic that Opposition Members might like to consider is that capital spend per head under their Government was 50% higher in London than in the north-west. That is a terrible statistic, because capital spending at that level creates private sector jobs and all the good stuff that we need, and thereby creates affluence and prosperity.
We need growth in the regions, and as I have not heard a great deal from the Opposition about how to create that growth, other than by spending money on the regional development agencies, I shall make a number of suggestions. First, infrastructure matters more in the regions than in the south-east.
Alison McGovern (Wirral South) (Lab)
Like the hon. Gentleman, I am finding a lot of cross-party agreement and I agree with much of what he says. Will he pause to congratulate the Labour Government on driving forward the west coast main line upgrade, and will he back the rail infrastructure campaign for the north-west that could do so much to build the infrastructure that he says we need?
David Mowat
I am about to address infrastructure. We need High Speed 2 to link the north-west as quickly as possible, as we need our rail infrastructure to be linked through to the channel. Yes, I will give credit to the Labour Government for getting the west coast main line done. While I am at it, I shall give them credit for getting the BBC to move outside the M25 and up to the north-west, but that has not been enough, because of the massive disparity in value added per employee that is their legacy.
Like infrastructure, energy matters. I have not heard it mentioned in the debate yet, but energy is a very important component of growth. Broadly speaking, a unit of gross domestic product generated in an English region is more energy-intensive than a unit of GDP generated in London or the south-east, because we have more manufacturing and industry that uses energy. It is therefore very important to our prosperity in the regions for energy to remain competitive. A particular problem that we have inherited is the price of our electricity, which is 30% more expensive than in France. That is a tough issue to start with, but I am concerned that some of the initiatives we are taking will make the problem worse. We need to build more nuclear power more quickly.
Mr Reed
The hon. Gentleman is making some terrific points, and I agree with many of his comments so far. He will know that the energy sector is responsible for approximately half of our manufacturing sector, and that we need to get quicker investment in UK manufacturing and industry on stream right now, facilitated by the Government and the private sector, including the global private sector, to meet our energy needs. Does he share my fear that the constant re-evaluation, reinterpretation and reformulation of planning policy is inhibiting that, and will cost the country financially?
David Mowat
There is a risk of that, but the nuclear power industry needs to press ahead quickly, which it did not do under the previous Government. I think that the steps being taken by this Government will help in that regard.
Energy is important. The magnificent technical achievement that is the wind farm in Thanet has just come on line, but it will require a subsidy of £1 billion over its life. That subsidy will be paid by industry and in jobs, so we have to be very circumspect about how we do that.
My third point about building the economy in the regions and what we need to do differently concerns skills. The industries that we need to generate the jobs that will make the household names of the next 30 years will be in fields such as advanced manufacturing and biomedical engineering. We need more applied scientists, more engineering graduates and, yes, more apprentices.
One damning statistic relating to the last few decades—not only under the last Government—is the fact that we produced more engineering graduates 30 years ago, when there were only a quarter of the number of people graduating, than we do now. That is not sustainable. We have not yet been punished economically for that, because of the success of the City and, to a large extent, because of the success of North sea oil in bailing out our economy. We will not get away with that again in the next decade or so.
On the regional development agencies, it is true that they did some good things. If we give someone £4 billion a year to spend, some of it will be spent well, but it was not cost-effective. We need to make certain that what replaces the RDAs works well.
Finally, if the coalition Government, too, leave a legacy of such disparity behind them, they should hang their heads in shame—in a way that I hope the Opposition Front-Bench team will think of doing now.
Caroline Lucas (Brighton, Pavilion) (Green)
Many hon. Members have talked about the need for more and more economic growth to get us out of the current economic crisis, yet there has been very little discussion of what kind of growth that should be or of how to ensure that it is genuinely sustainable. It is clear that if we return to the kind of high-street credit boom that was instrumental in causing the crisis in the first place, it is unlikely to offer sound foundations for a genuinely sustainable recovery. The priority now should be for the Government to invest in the green infrastructure that we so urgently need in order to make a transition to a zero-carbon economy as quickly as possible.
One million green jobs could be created through a real commitment to investing in renewable energy, energy efficiency and sustainable transport. In my constituency, the potential for green jobs is very high. I warmly commend the report “One Million Climate Jobs Now”, which was produced by a number of unions and the Campaign against Climate Change. It points out that there is an environmental crisis as well as an economic crisis, although from the look of some of the media coverage in recent months, it seems as if that has been forgotten. There are ways of tackling the economic crisis and the environmental crisis at the same time through a real investment in green technology and green energies. That is a way not only to get our emissions to come down, but to create literally hundreds of thousands of jobs as quickly as possible.
From listening to previous speakers, I am reminded of the debates in recent years about targets. Our policy on growth is no more or less than a policy to increase gross domestic product by a certain percentage each year. Like any policy based around a specific target, it brings with it huge risks of distortion, unforeseen consequences and irrational outcomes. It is a familiar story across the public services. In health, we have had patients receiving the wrong care just so that an arbitrary target can be met. In education, we have had schools encouraging their students to take easier exams in order to try to make their record look better. Across the public sector we have had civil servants throwing money at wasteful projects as they come to the end of the financial year, rather than see it handed back to the Treasury.
When it comes to the economy, the distortion that comes from the pursuit of a single target is magnified tenfold. Gross domestic product does not differentiate the social values of different forms of economic activity, so a bank dabbling in stock-market speculation is on a par with a pharmaceutical company developing life-saving drugs. GDP has arbitrary divisions of what counts as economic activity. If someone helps out a neighbour by looking after their children, that is not economic activity; but if money is charged for doing so, it is.
GDP does not differentiate between revenue and capital. That is not just a technical distinction; it is a fundamental distinction, which is proper to the management of any business. If someone uses up capital, treating it in the accounts as revenue, the business is heading towards bankruptcy and the person is probably heading towards prison. Yet a Government who use up their capital—the country’s natural resources—and treat it as national income can boast of delivering economic growth and increased GDP. We have seen that on a vast scale with oil and gas from the North sea: billions of pounds treated as revenue with no thought for the fact that it is just a one-off boost to the economy. For 30 years, that has made the UK economy look far stronger than it actually is. Instead of those proceeds being invested wisely in the future—in renewable energy or other ways to keep the lights on when the oil and the gas run out—they have been used to fund consumer booms that have led to the inevitable busts.
Perhaps worst of all, GDP does not count the full cost of production. None of the impact on our natural world and people’s quality of life is covered by GDP. We have added coal, gas and oil to the credit side of the ledger and ignored their far greater negative impact on our climate, landscape and wildlife, on coastal communities and, above all, on those facing drought, flood and famine throughout the world.
The disastrous impact of the obsession of successive Governments with GDP growth affects every part of our policy making, yet there are alternatives. I commend to the House the work by organisations such as the New Economics Foundation and others, which produce measurements of our overall well-being that are far more meaningful than simple measures of GDP growth. In this debate, we need to move away from thinking that more and more GDP growth automatically means that we are better off, because there is plenty of evidence that it does not mean that. I hope very much that as the debate continues we will be more discriminatory in our definition of green growth.
Adam Afriyie (Windsor) (Con)
The hon. Lady makes the very powerful point that money and economic well-being are not everything in life. Greater happiness provides for greater contentment, and it is good when people make judgments not solely based on money, so I very much welcome her contribution to the debate.
Andrea Leadsom (South Northamptonshire) (Con)
I, too, commend the hon. Lady’s very powerful points. Does she agree that there is an opportunity to combine our strength in banking with our interest in a new low-carbon economy by ensuring that the green investment bank is as good as it possibly can be?
Caroline Lucas
Absolutely. The green investment bank will be critical to the transition that we need, but it absolutely has to be a real bank, not just a fund in the Treasury with “bank” attached to it. It has to be a genuine bank that can lend money, raise money, raise bonds and so forth.
Dropping the GDP target is not anti-jobs; it would allow us as a country to develop the measures and targets that reflect the immense complexity of our economy and society and put people’s well-being at the heart of policy making. Many people talk of “sustainable growth”, but we should unpack that phrase, because it is clear that on a planet with finite resources, the infinite production and consumption of natural resources simply is not possible. Efficiency gains will help, and technology will need to play a vital role, but there is a very real risk that with a rising population and understandably rising expectations from a growing middle class throughout the world, those efficiency and technology gains will be undermined by overall growth.
Behaviour change will therefore have to be a part of truly sustainable development, but that does not mean a less fulfilling quality of life. On the contrary, it is far more likely to lead to a better quality of life. There is plenty of evidence to suggest that although GDP growth has more than doubled in the past 30 years, our well-being and happiness have not. They have either stayed the same or, according to some indicators, even declined.
Finally, I commend to the House the report from the Sustainable Development Commission, called “Prosperity without growth?”, by Professor Tim Jackson, which explores those issues clearly and makes the case that countries such as France, and even President Sarkozy, are beginning to look at those issues carefully. I am grateful to the Backbench Business Committee for raising this important question, and I hope that we can deal more critically with the idea of green growth.
Richard Harrington (Watford) (Con)
I join my hon. Friends the Members for Windsor (Adam Afriyie) and for South Northamptonshire (Andrea Leadsom) in commending the very good points that the hon. Member for Brighton, Pavilion (Caroline Lucas) made. I never thought that I would hear in this House a member—indeed, a leader—of a party such as the hon. Lady’s commending the pharmaceutical industry, but I am sure that the sector will be very pleased to hear it.
It is easy to talk of growth in terms of numbers—another point on which I agree with the hon. Lady—but growth is about the production of goods and services and employing more people. It is easy for people who are in employment and wealthy to say, “It is not all about money,” but we should not fall into that trap, because for most people the difference between growth and no growth is represented not by quarterly figures, but by the companies that are expanding, hiring more people and creating more jobs or by the people in the economy who are deciding to start a business themselves. The fundamental point is that growth in this country will occur only when more people decide that what they want to do with their lives is set up a business and employ people.
Unfortunately, over the past couple of generations it has become very unfashionable—I cannot say “uncool” because my teenage son would criticise a middle-aged person like me for using such a word—for young, bright people to have an ambition in life to set up a business, partly because of the lure of the professions, such as accountancy, law and the media. I know that from visiting very good schools in Watford, where very intelligent young people are well educated by the state. When they are asked who is interested in setting up a business, very few put up their hands.
We have to try to recreate the conditions where people who set up businesses are heroes in life—where people who employ other people are regarded as doing something that is very worth while. Government alone cannot do that, although they can try by setting up schemes, providing training, and so on. There needs to be a feeling of why people are going into business—to create money and profit for themselves and their families, and for the community by paying taxes. Until we change and improve the philosophy, growth will be just something that one hears about at the top level.
The hon. Member for Leeds West (Rachel Reeves), who is unfortunately no longer here—she always speaks well and knowledgeably; I believe that she was at the Bank of England before she became a Member of Parliament—mentioned the recent visit to Watford by my right hon. Friend the Prime Minister. I was there with him, and it is true that the 10 small business people to whom we spoke in a round-table discussion raised the point about bank funding that has been mentioned to the Minister time after time. However, far more of the discussion—unlike me, the hon. Lady was not at the meeting, so she was not in a position to mention this—was about those business people feeling that their businesses were being held up by bureaucracy, ridiculous employment laws now applying to temporary staff, and health and safety regulations. One small business man showed me a 20-page document that he had to fill out to offer work experience to people from local schools. That is completely absurd. The Government must get to grips with the situation. I am pleased to find that various things, including Lord Young’s report, are entirely commensurate with that.
Watford, as I am sure the Prime Minister would agree, is the hub of the universe. The Government—and the previous Government—have tried hard to encourage the film industry, which is very strong in Watford. Warner Bros has just announced an investment of £125 million in Leavesden studios. That will create many skilled, high-paid jobs that we need in the area. One of the reasons Warner Bros chose this country, and chose Watford and Leavesden, was the film tax credit that is given to people in the business. My right hon. Friend the Member for Wokingham (Mr Redwood) would say, with his experience and credibility, that that is a good example of how low taxation makes companies invest. That is very true. The film industry is picked out as a special case—
Ian Murray (Edinburgh South) (Lab)
Let me start by congratulating the right hon. Member for Wokingham (Mr Redwood) on securing this important debate. I must confess that I could listen to him all day, for two reasons: first, he is one of the most engaging speakers in the Chamber; and secondly, if he were to speak all day, I am sure he would eventually say something that I might agree with.
The international financial crisis has affected every Government the world over, and getting back to sustained economic growth is the only real way to reduce the deficit and clear the financial crisis for good. The problem with this Government is that their Budget and comprehensive spending review have resulted in a set of conditions that harm growth. I would like to mention a few aspects of that which I am seeing locally in my constituency. As someone who runs his own small business—I have done so since I left university—I should say that many of the points that I will make concern things that I have experienced myself.
The first aspect is business confidence, particularly the small business confidence which, as many Members have said, is so important to economic growth. Many small business owners in my constituency currently see a quadruple whammy coming from the Government, which is not just stopping potential growth but risks causing contraction in the economy, with a real danger of pushing us back into recession.
First, there is a greater degree of nervousness among small businesses’ customers, who are concerned for their jobs and those of their families. They are therefore spending less and see no light at the end of that particular tunnel. In fact, the Government’s own figures, published by the Office for Budget Responsibility, show that 500,000 public sector jobs will go as a result of decisions made by the Government, and of course PricewaterhouseCoopers has projected another 500,000 job losses in the private sector. Many commentators are saying that that may be slightly on the low side.
Ian Murray
I will make some progress, if I may.
The instability of the job market is causing customers great uncertainty. All in all, they do not see the Government doing anything to assist in the job sector.
Secondly, such problems are always compounded by personal finance, which undoubtedly affects confidence in the small business sector. Products and services will be hit hard by any increase in VAT in January. I am disappointed that the hon. Member for East Surrey (Mr Gyimah) is no longer in his place, because he mentioned cash flow for small businesses, which is a critical factor in how they operate. Many of them go under not because they are not profitable but because of cash-flow issues. One of the main effects on cash flow of what this Government have put in place will come from the increase in VAT in January.
Many people have forgotten the other hidden increase that the Government have imposed on people, which will hit confidence even further. They say that they are not introducing a jobs tax, but they are keeping the national insurance increase for employees, which will compound the problem of confidence in personal finances even further. Individual families see job insecurity, significant job cuts, increasing VAT and less pay in their pay packets, so bottom-up growth through the small business sector, and particularly the service sector, will be sluggish at best.
Thirdly, despite the warm words of the senior bankers whom we have all spoken to over the past few months, businesses and particularly small businesses are not able to borrow to enable growth. Not even in Edinburgh, which is at the forefront of financial services in Scotland and one of the biggest financial services centres in Europe, can small businesses access financial services.
To be slightly fair to the banks—I never thought I would say that in the Chamber—that may be partly a matter of perception. They tell Members that they have adequate funds to lend, but small businesses are not coming forward and creating demand. The Government and all Members have to do more to get rid of the perception that banks will not lend. While it still hangs around, small businesses will not approach banks and their business managers to access finance. Let us call the banks’ bluff. If they are telling us that the funding is there, let us all encourage small business to go and see their banks as soon as possible to have conversations about how they can borrow and therefore enable growth.
Fourthly, many businesses in my constituency rely on the public sector for contracts. If the public sector shrinks at the rate the Government wish, even though they want the private sector to take over, growth will be severely damaged by businesses not being able to access many billions of pounds of public sector contracts.
Mr Deputy Speaker
Order. I am trying to see who is standing. I was going to take Andrew Bridgen, but I cannot see him. Ah, he is there at the back. Thank you.
Andrew Bridgen (North West Leicestershire) (Con)
I was standing up, Mr Deputy Speaker. [Laughter.] Thank you for the opportunity to speak in this most important debate, which has been overdue for some months. We certainly need to up our agenda for growth.
Those who know me—and love me—will know that I am not a great interventionist. I believe that the most significant influence the Government can have over business and growth is through mood music. We need to do more to create the right mood and give confidence to the private sector, on which we will rely to provide the growth needed to repair the immense financial damage and the hole left behind by the Labour Government.
Thomas Docherty (Dunfermline and West Fife) (Lab)
Will the hon. Gentleman give way?
Thomas Docherty
I can see why so many people love the hon. Gentleman. Does he not accept that if the last Government had not stepped in to save the financial services and the banks, there would be no private sector for him to want a growth strategy for?
Andrew Bridgen
I thank the hon. Gentleman for his comments. When the previous Prime Minister stepped in, the economy was at a precipice, and there is no doubt that we took a great step forward. [Laughter.] There you go.
We need all Departments to look at their role and at the mood music they create. As Arthur Laffer says:
“You can’t love jobs and hate the job creators.”
The question is what we do about that. We cannot love jobs and hate the people who create them. That must be at the forefront of the thinking and agendas at the Treasury and the Department for Business, Innovation and Skills. I believe that our Ministers do love the job creators, but it would do no one in the Chamber any harm if we wore our hearts on our sleeves a little more openly.
The Government’s role is to set the conditions for business growth. The state of the public finances reduces our scope somewhat, but, to pick up a point raised by my right hon. Friend the Member for Wokingham (Mr Redwood), there is a method of cutting costs to business that will not reduce the Treasury’s take by a penny: reducing and minimising regulation. Over the first 10 years of the previous Labour Government, the increase in the regulatory burden saw the UK fall from fourth to 13th in world competitiveness rankings, a trend that has, unfortunately, continued.
As anyone who runs their own business will know—I am afraid that there are more business people on the Government side of the Chamber than on the Opposition side, and I ran a business for 22 years myself—business owners have spent ever-increasing amounts of time ensuring that their businesses comply with all the latest rules and regulations emanating from an ever-increasing number of Government agencies and quangos at home and in Europe. That is an unwelcome diversion from working and developing the business, and I welcome the measures being taken to reduce the number of quangos. We must, however, ensure that those quangos that remain do not unnecessarily hold back businesses, because time always costs money in the business world.
It was Adam Smith who said that vexation is the equivalent of taxation. I believe that regulation on business is vexation, so regulation is the equivalent of taxation. The business of business is business, and the business of government should be creating an economic and regulatory environment conducive to business growth and development.
Susan Elan Jones (Clwyd South) (Lab)
Would the hon. Gentleman support more efforts to increase access to broadband, given that the lack of broadband is one reason why businesses cannot properly develop, particularly in many rural areas?
Andrew Bridgen
I would, and I have asked questions about that of the Minister in this very Chamber. It is important to prevent rural isolation following the disastrous closing of the post office network in rural areas under the previous Government.
Only through a strong and vibrant private sector can our nation’s long-term prosperity be assured. With that in mind, it is vital that we undertake measures to deregulate as soon as possible. I urge the Government to consult a document that my right hon. Friend the Member for Wokingham produced on this issue. His economic policy review in 2007 presented 33 specific areas where it was thought that the repeal of, and amendments to, regulations could cut costs and improve business efficiency.
I sit on the Regulatory Reform Committee, and I have severe concerns that it is simply not busy enough. I want the Committee to be one of the most active and busy in the House, which is why I support calls for the Government to bring forward a deregulation Bill as soon as possible and as a matter of urgency. Measures such as the scrapping of the home information packs produced no ill effects and got rid of regulations that did nothing but increase the burden of costs on consumers and business. We must continue that work.
We must also do more to tackle the gold-plating that we are so famous for in this country. EU regulations are signed up to by many countries, some of which do not have the will to implement them, some of which do not have the administrative ability to implement them and some of which, unfortunately, have neither the will nor the administrative ability to implement them. We have both, and we are very good at implementing regulations. That is unsustainable and it puts a tremendous burden on our businesses. We need to look around Europe to see how countries deal with their regulations in a lighter way. If possible, we should adopt those approaches to make the UK more competitive.
The answer to bad government and bad regulation is good government and good regulation. Regulations almost curtailed the growth of my business 15 years ago, when they caused a seven-year delay on a factory relocation. Fortunately, we managed to find a way through that.
Thomas Docherty
On the relocation of factories, does the hon. Gentleman accept that the localism plans of the Secretary of State for Communities and Local Government will slow down planning applications and lead to more nimbyism? Will that not actually harm growth?
Andrew Bridgen
As so often, the hon. Gentleman is completely wrong. By incentivising local government by offering—potentially—10 years of business rates, the localism Bill will make local government considerably more business facing and business friendly than it was under the previous regime. Over-regulation is sending many businesses to the wall and dissuading many potential entrepreneurs from going into business.
We need an adult debate about taxation. Do we have taxation to provide the revenue for the essential public services that we need and deserve, or is taxation merely a tool for redistribution and a way to punish hard-working and entrepreneurial people, which is how I believe the previous Government often used it?
Kelvin Hopkins (Luton North) (Lab)
It is a pleasure to follow the hon. Member for North West Leicestershire (Andrew Bridgen), although I think we have very little in common politically. My politics are almost identical to those of his predecessor, the great David Taylor, a fine parliamentarian and a true socialist.
This debate is essentially about growth, but the Government cuts strategy will have the opposite effect. It is acknowledged that the cuts will drive up unemployment by something like 1 million, but there is speculation that that could go up to 1.5 million, which would mean a total unemployment level of something like 4 million. That will mean a massive loss of confidence for consumers, lenders and corporations as we plunge into depression, and years—possibly decades—of deflation. That has been described as the Japanisation of the economy, which is defined as the
“deflationary trap of collapsed demand that occurs when consumers refuse to consume, corporations hold back on investments and banks sit on cash.”
That is what we face.
My views are perhaps best expressed by Paul Krugman, the Nobel prize-winning economist, who said that the Government’s plan for the economy
“boldly goes in exactly the wrong direction”
and that it
“appears to come straight from the desk of Andrew Mellon, the US Treasury secretary who told President Hoover to fight the Great Depression by liquidating the farmers, liquidating the workers, and driving down wages.”
Krugman further observes that
“the Government is using the financial crisis of 2008 as cover for advancing an ideological programme for downsizing the welfare state and that its plan has been sold to the public with an unprecedented and unwarranted degree of fear-mongering”.
I absolutely agree with that. He might not be to the taste of Government Members, but a Conservative Member of the upper House, Lord Skidelsky, says that the Chancellor of the Exchequer’s fiscal contraction will lead to a fall in growth. I will leave that with them.
There are historical precedents. In the 1920s, we had the Geddes axe, a massive programme of cuts that saw the economy shrink in 1920-21 and slow growth throughout the 1920s. Government debt actually increased during that time from 135% of GDP in 1919 to 180% of GDP in 1923. By 1929, Government debt was still higher than in 1919, immediately after the first world war.
Subsequently in 1931, we had the Snowden cuts, a shameful period when our former Labour leaders brought about a split in the party. I am pleased to say that today’s Labour party grew out of the opposition to those cuts. The national Government—a coalition Government that was essentially Tory—took us off the gold standard. Snowden said afterwards said that no one told us we could do that. They recovered only by devaluing, which has happened time and again. Even then, there was relatively feeble growth through the 1930s. Not until the massive expansion in public expenditure during the war did the economy begin to recover. After 1945, there was a period of full employment for at least 25 years—unemployment was half a million or less—and Government debt fell from about 250% of GDP to 50% of GDP. That was a period of high Government spending, and it saw the development of the welfare state and the national health service, among other things.
I commend the hon. Member for Brighton, Pavilion (Caroline Lucas), who is no longer in the Chamber, for what she said about growth. There are enormous areas in which we could invest additional spending now to reduce unemployment and, in effect, the deficit. I suggest that we have an enormous programme of green growth and targeted investment in construction. We could build energy-efficient buildings, insulate every building in the land, and put local energy generation into every site. We could have heavy investment in infrastructure, especially railways and rail freight, and in areas that are labour intensive. Of course, one of the most labour-intensive areas is the public services, which the Government propose to cut. I suggest that we should invest more in the public services and soak up unemployment, which would have beneficial effects in every way, including bringing down the deficit. The environment needs enormous amounts of investment to improve it, and we could also invest in energy—solar, geothermal, wind, wave and tidal.
Andrew Bridgen
Where would the money come from? Which bit of “There’s no money left” is the hon. Gentleman failing to understand?
Kelvin Hopkins
Indeed, in the short term, we would borrow it. Another factor that the Government constantly ignore is the tax gap of £120 billion a year in tax that is not collected. It is evaded, avoided or simply not collected. If we collected a fraction of that £120 billion, we would have plenty to spend.
In the short term, we should spend more and invest in labour-intensive areas to bring down unemployment, which would bring down the deficit and make life better for everybody. If we want growth, we have to spend more in the short term, not less, and that money can come initially from closing the tax gap. If we have to raise taxes on the better off, so be it, but we have to spend more, not less. The suggestion that Labour spent more than other countries is nonsense. For example, 10 years ago, public spending in Scandinavian countries was more than 50%, or 10% to 15% of GDP more than ours. We were not over-spenders. Indeed, I argued for a long time that we should follow the Scandinavians’ example. I was somewhat critical of the Labour Government in that respect, although they did infinitely better than this Government will do. I really fear for the future of this country, if the Government press ahead with this cuts programme. We face a period of mass unemployment and deflation, which is much harder to eradicate than inflation. Deflation—
Chris White (Warwick and Leamington) (Con)
I wish to approach this debate from a slightly different angle. According to the National Council for Voluntary Organisation’s “Almanac 2010”, the UK is home to around 900,000 civil society organisations with a total income of £157 billion, accounting for around 10% of our GDP and holding £244 billion worth of assets. More than 1.5 million people are employed by civil society organisations. So when we are talking about growth and plans for growth, we need to ensure that we include civil society within that and do not merely focus on the traditional divisions of private sector and public sector.
Whether we wish to recognise it or not, civil society has an important role to play in the growth of our economy. First, these organisations are at the forefront of the reskilling and upskilling of our economy. Organisations such as the Smallpiece Trust in my constituency are in the vanguard of providing courses and raising the profile of science, technology, engineering and maths. It is the Smallpiece Trust, and entities like it, that will help to provide the skills base that our country will need if we are to see a boom in the green economy, manufacturing and other sectors that will generate the growth and create the jobs that we need for the future. We all know that we face a skills challenge in the years ahead, and if we are to meet that challenge, we really need to galvanise voluntary organisations, educational charities and social enterprises.
Secondly, the UK is a very service-hungry nation and, although we are facing a difficult economic time ahead, that is unlikely to change. The public sector already spends nearly £200 billion a year on procuring services and demand is likely to rise. As a recent report by the think-tank ResPublica stated, there is a growing “customisation culture” where people want individualised services specifically created to meet their needs. Given this and given the advantages that civil society has in delivering the services that people need in a way that is individualised and customised with high quality, there is great potential for growth in this sector if the Government are willing to engage with civil society and look to the voluntary, third and social enterprise models to provide, rather than just continuing with the traditional monolithic state model of the past.
Moreover, civil society organisations use the service contracts and income they receive from private and public sources as a base for other activities. In doing so, they reduce the demand for services from the state, saving the country countless billions of pounds every year. If we engage civil society more in helping to provide the services that people want, we can free up funding, which can be used to stimulate other areas of our economy, while—more importantly—meeting people’s expectations. This is something I hope to put forward in my private Member’s Bill, which hon. Members might like to join me for next Friday.
Thirdly, we should recognise the potential for exporting civil society around the world. Countless UK civil society organisations are truly worldclass. These bodies not only provide help across the world to those who need it, but bring in highly skilled jobs and income. As the world continues to develop rapidly in the decades ahead, the work of civil society globally is likely to increase, and countries across the world will be looking towards countries such as ours to make progress. They are likely to want to work with our civil society, and will want to learn the skills and access the institutional knowledge stored in our organisations. The UK has a clear comparative advantage in that area, and we should not be ashamed to make the most of that.
There is no good reason why the skills and capacity generated by UK civil society cannot be exported across the world, and why organisations from this country cannot gain access to funding and generate employment at home while helping others. We have an excellent opportunity not only to help to produce a better global future, but to generate employment at home in a way that is also socially rewarding.
Austin Mitchell (Great Grimsby) (Lab)
I warmly welcome this important debate—the first of its kind I can remember in my long years of service in Parliament—because it is a vital issue. Unfortunately, however, we have to compress our wit and wisdom into five minutes, and to do that I will concentrate on four basic points crucial to growth. The first is that the Government seem to see the public and private sectors as competing—if we cut back the public sector, the private sector with flourish and grow, or, as one Conservative Member put it, will be unleashed. That is just not true. The two are complementary. If we cut back the public sector in the way that is now being done, we will damage growth, jobs and demand for the products of British business. The two must march together in a complementary process.
Secondly, growth depends on a competitive exchange rate of a kind we have never had in this country. A competitive exchange rate reduces the price of our exports, increases the price of imports in this market and cuts our cost level in foreign currency terms, which we have to do because our cost levels have been too high. Every growing and developing country has started out with a low exchange rate and built a powerful exporting base from that. We have never done that, because of fear of inflation and the power of the City, which likes a high and stable exchange rate to serve its own interests. We now have the opportunity presented by the 25% devaluation. We have to seize that and keep the exchange rate down, so as to benefit manufacturing industry and encourage exports. Otherwise, manufacturing industry has to cut costs, and throw overboard research, design, development, the labour force and everything that makes for improvement, just to survive. A competitive exchange rate is vital.
Thirdly, we need an industrial policy. The Government do not seem likely to evolve one, but it is essential, to decide priorities, to help channel investment and to remove bottlenecks, whether in transport, ports or, indeed, in planning. It sometimes seems that in planning arrangements on the south bank of the Humber, the birds are more important than jobs. We need a national development strategy, because the market and banks are not capable of doing the job.
Fourthly, we need to shift the balance from the City and finance to industry, production and investment in our industrial base. We should look at the contrast between Britain and Germany. Germany has continuously improved and invested in its powerful manufacturing sector. It has maintained and defended a powerful Mittelstand, which has vanished in this country, which means that we cannot compete. The result is that Germany can now export powerfully, whereas our position is different.
What has been important to British companies is shareholder value. There has been an obsession with shareholder value and creative accounting, where the auditors are in collusion with the executives, and an obsession with executive rewards, which have been helped by creative accounting and bonuses for irresponsible gambling. The City makes a better living from fees for takeovers and dismembering British industry than it does from supporting it. Indeed, the City has never supported British industry and investment in this country on the scale that has been necessary. We have been badly let down in this country by our banks and by the City, and by their investment strategies. They have failed the country.
Government management of the economy and giving some definition to our industrial policy is crucial in all this. We shall not get the growth that we need if their policy is simply to cut, cut, cut and to wait for growth to spring fully armed from the head of a Chancellor who has no higher wisdom than to cut.
Jane Ellison (Battersea) (Con)
I would like to touch on a couple of specific points and, if there is time, to make a more general point.
I very much welcome the Prime Minister’s recent announcement about entrepreneur visas, when he spoke about laying out the red carpet for business people who come here to create wealth and jobs. Had that approach been in operation in recent years, it might have helped two constituents of mine. They are New Zealand nationals who run a multi-million pound technology business, which is now based in the UK. They came to this country following a meeting with Lord Digby Jones in 2008, when he visited New Zealand as part of a Government trade delegation seeking to attract investors and businesses to the UK. Following that meeting, they decided to relocate to the UK, and subsequently applied for leave to remain in May 2010, having set up their board in this country and secured more than £1 million of orders.
The UK Border Agency has yet to consider my constituents’ applications, and it is over six months since they were first submitted. My constituents run a company that creates products sold internationally, and they are often required to go overseas to secure further orders for their company, and, by extension, for the UK. Clearly they cannot do so while their passports are held for indefinite periods by the UKBA, and are available only for identification purposes, not for travel. If those business women want to use their passports, they go to the back of the queue. My constituents have told me that they are already considering relocating their business to Singapore or Hong Kong, as there are fewer barriers to setting up and relocating businesses there. However, they do not want to do that; they want to be based here in the UK. It would be a great loss to our economy if they relocated, and their case is indicative of a wider problem. I hope that Business Ministers can address the matter urgently with Home Office colleagues.
Tax increment financing schemes allow local authorities to fund major regeneration projects by borrowing against the future increase in local business rate income. We have talked a lot about the conflict between public and private regeneration, but TIFs bring the two together, allowing borrowing against the income of companies set up in the regenerated areas. TIFs have been successful in the US, and there have been some pilots in this country. TIFs are of particular interest to my constituency and people across London, and probably to people across the country, as it is hoped that they will help to fund the extension of the Northern line into the Nine Elms area, close to this place, and put Battersea power station on the underground map.
Members on both sides of the House may be interested to know that a detailed regeneration plan for that iconic building is finally going to the local planning authority this evening, with a recommendation for approval. If the plan gets the go-ahead, the funding for the tube extension, via a TIF, will be vital for securing thousands of new jobs and homes. I welcome the consultation outlined in October’s local growth paper, but I am given to understand that Business Ministers envisage TIFs being available only from 2013. I realise that they will require legislation, but I hope—this is also a plea—that Ministers can accelerate that timetable, to make possible their introduction much earlier.
I want to make a more general and perhaps slightly unfashionable point. It is time to stop talking down the financial services sector. We know about the huge problems in banking, which have been well covered in the debate, and many of the criticisms were correct. Nevertheless, financial services is a world-leading British industry. It is essential to economic growth, and a major export success for the UK.
The UK has global leadership in the provision of a number of financial services. For example, the UK insurance industry is the largest in Europe, and London is the world’s largest international insurance market.
Andrew Bridgen
Does my hon. Friend agree that so-called banker-bashing is extremely unhelpful?
Jane Ellison
It is unhelpful. The banking sector’s mistakes and the problems with lending are well documented. They have been covered, rightly, in this debate, but they should not obscure the wider interest that we all have in a thriving financial services industry. More than 1 million people are employed in that industry, two thirds of whom are outside London.
Alison McGovern
Will the hon. Lady acknowledge that our leading role in the financial services industry was one reason why the global crash in that very industry meant that Britain was exposed to that crash in ways that some other countries were not, and that it affected us more for that reason?
Jane Ellison
I am happy to take the hon. Lady’s point, and I have acknowledged it. I am trying to get across the point that we must see the wider picture. In most large banks and large City insurance and law firms, 40% of the staff are not professional; they are support staff. The wealth generated by those businesses supports many other businesses. It is essential to put some balance back into the debate.
I am a London MP, but I hail from north of Watford. I am not a banker, and never have been; I was a retailer for 23 years before coming to the House. Nevertheless, on behalf of the shopkeepers, restaurateurs, support staff, myriad small businesses, and the many thousands of people who work in the financial services industries at levels far below the super-rich, I call on all hon. Members to bear it in mind that a thriving City is good for the UK and for a great many people beyond those we hear about in the headlines. Let us not allow our frustration about bonuses and bank lending to blind us to that fact.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I welcome this debate. The Office for Budget Responsibility’s projections make it clear that if the private sector is to mop up the unemployment that will be created as a result of the Government’s policies in the public sector, we must have a rate of exports that has been matched in only one of the past 40 years, and similarly for private investment. That will have to happen year on year. That is a huge ask, and we must look at the world context to see whether it will help.
The economy in Europe is slowing down, and the G20 conference will consider the problems that are impacting on and threatening world trade. The international context is difficult, and added to that are, domestically, the VAT increase, depressed public demand and public expenditure cuts. The prospects are grim indeed. The Government have rightly highlighted the role of small and medium-sized enterprises in growing us out of recession. Indeed, around 65% of all new jobs are created by SMEs. But how will they do that in the context of the Government’s macro-economic policies, and without any coherent industrial strategy to deal with the consequences?
The strategy is predicated on the mythical assumption that somehow public sector investment was squeezing out private sector investment. That is not so. In areas of the country where traditional industries have declined, the public sector has generated private sector investment, and removing public sector investment will impact on private sector investment. I refer hon. Members to R3, the insolvency practitioners, which carried out its own survey. It pointed out that the loss of public sector contracts could result in 148,000 SMEs going to the wall. That might be a big exaggeration, but even if its projection is only half right, that would still be three times as many as went to the wall last year. That hardly suggests that the Government’s policies are going to enable us to grow out of recession.
The area that is particularly affected is the construction industry. It is highly dependent on public sector contracts in some parts of the country, and I am very worried about the withdrawal of public investment in that sector. May I make a request to the Minister? I would like him to look at the report produced by the predecessor to the Business, Innovation and Skills Committee under the chairmanship of the hon. Member for Mid Worcestershire (Peter Luff), which pointed out that a large number of insolvencies among SMEs in the construction industry could be avoided by using public procurement to promote project bank accounts to prevent cash-flow problems.
On manufacturing in general, I cannot understand the logic of a Government policy that reduces corporation tax, which will benefit the financial services industry, at the same time as introducing a tax to take money out of it, and paying for that by slashing the investment allowances to manufacturing industries that are a proven way of improving productivity, output and export performance. That has no coherence or logic whatever.
The Minister has commented, in a leaked letter, on the sub-regional reorganisation involving the replacement of regional development agencies with local enterprise partnerships, saying that RDAs were not delivering for small and medium-sized enterprises. I know a number of businesses in my constituency that have postponed investment decisions because they see the grants disappearing. They know that the regional growth fund represented only a third of the backing that they had in the past, and that it has a £1 million threshold. That is not going to help many SMEs. I could go on, but my central point is that there is no—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. There are 16 speakers trying to catch my eye, so I am going to reduce the time limit on speeches to four minutes. Can we please try to keep it very tight? Fewer interventions might help everyone to get in.
George Freeman (Mid Norfolk) (Con)
As a shareholder in UK plc, I am delighted that at this year’s emergency general meeting, the shareholders threw out the last management team and voted in a new one. They face a chronic challenge, and a chronic crisis in our finances. We have the largest deficit in the G20, with a £155 billion deficit this year and a total debt of £700 billion. Debt interest would have risen to £76 billion a year if the situation had not been tackled as robustly as it has.
We have come out of a decade of profligacy under the former management team. Its chief executive officer was too often away on overseas adventures; its finance director went on a spending spree with the company’s credit card, chasing support for his ultimate takeover bid in all too obvious a fashion; and its board members were too busy rubbing shoulders with the rich and famous to do their jobs. This led to a series of profit warnings, and ultimately to the collapse of market confidence. That is why we need a growth strategy, and why a reduction in public spending must be intrinsic to it. If we had not tackled the situation, interest rates would have risen and we would have triggered a true double dip with a crisis in our housing market.
I support the coalition’s programme for cutting the deficit and restoring this country’s culture of enterprise. I support the regional national insurance exemptions, the lower tax for small businesses, the regional growth fund, the green investment bank and the protection outlined in the comprehensive spending review for infrastructure, especially for the A11 in my area. I also support the ring-fencing of spending on science and research. Those are the policies of a Government committed to innovation and new business growth, and, as someone who has worked in new business venture capital for 14 years, I know how widely supported they are.
I believe, however, that as we seek to unlock a new age of enterprise, we might need to go further in exploring ways of unlocking new growth without increasing public spending. As with a business in a cash crisis, we need to shore up the profit and loss account by reducing waste, as the Government have so quickly done. Equally, as with real business growth, we need to look creatively at our balance sheet and think about our assets and our competitive advantage. Everyone in government, in every Department at every level, should be asking themselves, “What can we sell to the rest of the world, in order to repair our damaged public finances?”
In the few second that I have left, I want to summarise two or three matters that may be worth considering. The first is infrastructure. We should ask Network Rail what its plans are for the massive land estate on which its tracks are sitting. I agree with what others have said about tax increment financing and ways in which to unlock private sector funding of infrastructure. The second is public services. Let us have a bold programme to empower our best public servants, who are often entrepreneurial in delivering services, and to liberate them from the confines of the public sector. The third is the national health service. I know from my own experience that we are sitting on billions of pounds-worth of patient data. Let us think about how we can unlock the value of those data around the world. We also need to look at new sectors of growth, such as agriculture. Why do we not look around the world and think about collaborating with countries with rising populations, such as India, where there is a long history of scientific research and food science and a prosperous and productive agricultural sector? Those are things that we could be doing to unlock growth without spending new money.
Businesses throughout time have shown us inspiring examples of turnaround. I think particularly of what Tesco has achieved in my lifetime: a turnaround from being a moribund monolith to being one of our best businesses. Now it is time for the Government to do the same.
Stella Creasy (Walthamstow) (Lab/Co-op)
It is with some trepidation that Labour Members listen to the economic forecasters who speak of their uncertainty about the future of our economy. That is because for us growth has always been a priority. We know that it is both the foundation of economic prosperity and the motor for social change. For us, growth should be a central objective of Government, because without that determination, aspiration—as we see with the present Government—is just that, rather than achievement.
Economic growth depends on both supply and demand: supply of goods and services that people want to buy, and demand for those products. At times of economic upturn as well as downturn, Government, alongside the private sector, can be a key player in ensuring the flow of demand. It was no accident that the last Government decided to invest in capital projects to help to keep the economy moving in the midst of the global recession. It was not a case of money down the drain or a short-term fix; that investment provided real schools, real roads, real hospitals and real services to serve generations of people to come. It was a savvy outlay, as we saw in the earlier part of the year, because the growth that it brought back to our economy is helping to reduce the cost of the investment.
We know that the present Government take a very different view. Just as we are tipping back into a growing economy they wish to pull the plug, taking investment out and looking to the private sector to keep the bath filling up. That may make sense in monetarist theory books, but history has shown us that pulling investment out of an economy in the fragile stages of recovery is damaging to that recovery, especially in an economy in which the public and private sectors are so intertwined. Anyone who doubts that the public sector can generate private sector investment should go to Newport and see what the Office for National Statistics has done for the area, or go to Salford and see what the BBC has done there.
It is hard for economies to grow when businesses see contracts abandoned, workers see redundancy looming, and families see spending as dangerous. Rather than freeing the private sector to blossom, that approach to growth could cause both sectors to shrivel.
The legal judgment against the Secretary of State for Communities and Local Government is not a simple matter of procedure. Construction companies in the private sector are losing building contracts, which is affecting their balance sheets, their businesses and their ability to borrow. Will a construction company be able to go to its financiers and honestly say that it believes that Government contracts are a safe investment? It also makes little sense for those who seek to use the private sector to encourage growth to cut investment in the infrastructure that it needs in order to thrive. This is not just about new schools or university places; it is also about investment in becoming the world leader in new jobs and new economies such as our creative industries or the green industries. It is also about the human investment that an economy needs in order to grow.
The work of Professor Paul Gregg of the university of Bristol shows that unemployment at an early age is not just a waste of resource in our economy, but permanently scars the life chances of people who, in later life, experience much lower wages as a result of that early setback. The last Government understood that very well. They understood that the cost of unemployment was not only the spiralling price of the dole queue, but the long-term waste of potential. That is why they established the future jobs fund. The decision to cancel the fund—along with the falling opportunities for young people in universities, the lack of support enabling young people to benefit from training and education, and the cuts in education maintenance allowance—represents more than a passing shortage of funds. It increases the prospect that we shall have a generation of young people who find themselves less experienced, less skilled, and therefore less attractive to potential employers, sandwiched between their younger and older peers. Even if the economy picks up they will always be damaged goods, destined to earn less and do less as a result.
Let me be clear. The country needs a strategy for economic growth that sees public investment as just one tool for fiscal stimulus. There is no doubt that getting the tempo of spending right is the most difficult challenge that we face. If we spend too much, inflation will rocket; if we spend too little, our economy will shrink into recession. We Labour Members also know this, however: take away the support that our economy has had—to proven effect—too quickly and both the public and private sectors will fail. We can pay down the public debt and achieve fiscal consolidation through cutting spending, raising taxes and, above all, concentrating on growth. Each of those must take the strain, but without growth, cutting spending becomes its own driver of deficit.
Richard Fuller (Bedford) (Con)
I am fortunate enough to have studied at a business school to get an MBA. I do not know whether that qualifies or disqualifies me from—[Interruption.] I thank hon. Members for that comment, but I will nevertheless persevere, because I shall be relying not on what I learned at business school but on advice from my barber—the man who cuts my hair. I may not be—[Interruption.] Thank you very much. I may not be a good advert for his skills, but Sugaz on Lime street in Bedford is an excellent establishment.
My barber mentions a couple of things to me every time I go for a haircut. The first is the importance of getting people off benefits and into work, and I know he will be absolutely delighted at the statement earlier today by the Secretary of State for Work and Pensions. The second thing my barber tells me about—he often waves bits of paper in front of me to make this point—is the terrible impact regulation has on his business. I must say to the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), that the small businesses that I talk to are delighted that he is in his post and they are pleased with many of the initiatives he has already taken, but he needs to do more on the issue of regulation. He needs to acquire the reputation of being the Minister who will not rest until he has got the regulatory burden off our small businesses.
I want to make a few suggestions to my hon. Friend the Minister. The first follows on from points made by other Members. The hon. Member for Brighton, Pavilion (Caroline Lucas) said that there is now a wider understanding of well-being and what it means for growth, and my hon. Friend the Member for Warwick and Leamington (Chris White) pointed out that entrepreneurs are driven by various different motivations, not just profit making. When the Minister thinks about how we understand growth, he should be dextrous on the issue of motivation.
The Minister should be dextrous about something else, too. I want this Government to take away the fear of failure from people who start businesses. If we can accomplish that, we will achieve growth. I also urge the Minister not to listen too much to Opposition Members’ comments on how to achieve growth. In my town of Bedford, the average wage in 2002 was £24,899, but in 2009 it had fallen by £1,458 to £23,431, and unemployment is 28% above the national average. I therefore suggest that the Minister keeps his own counsel, and that he should not listen to the counsel of Opposition Members.
Thirdly, I ask the Minister to cut taxes on business. That is not only a priority; it is a necessity if we are to have long-term growth. Fourthly, as my hon. Friend the Member for Battersea (Jane Ellison) said, let us not hear any more bashing of financial services. They create millions of jobs and they pay billions of pounds in taxes. They are our part of the global economy, and we should be nurturing and considerably strengthening them.
May I also make two practical points? In respect of the Minister’s proposals for enterprise capital funds and angel investors, I ask him to consider dispersal across the country. There are currently nine such funds, but six of them are based in London. Will he consider promoting community funds that are dispersed more widely around the country and relaxing the investment track record criteria for setting up funds? Finally, I ask the Minister to consider the ways in which ECFs will work with regional growth funds, as we must not repeat the regional issue we had with the national insurance holiday. Bedford’s growth is in the south-east; we need this benefit from the regional growth fund. Please make sure we get it.
Lisa Nandy (Wigan) (Lab)
I begin by congratulating the Backbench Business Committee on securing this debate. Unemployment in my Wigan constituency currently stands at just short of 7%, and the human cost of that is evident in my surgeries every week. The families and individuals in Wigan who are suffering from the effects of high unemployment are also suffering deeply from the savage and unnecessary public spending and welfare cuts that have been visited upon them by this Government, and they are at a loss to understand why this is happening to them while at the same time the average pay of the FTSE 100 top chief executives rose by 55% last year.
The fact that that is happening is an insult to those people in Wigan; it is also economic madness. I am not a big fan of the over-simplified household economics practised by the Deputy Prime Minister, but it does not take a genius to work out that a family earning £10,000, £15,000 or £20,000 a year will put every pound that they earn back into the local economy—into businesses and services—whereas a banker earning millions in bonuses will not do the same. As my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) said, it is bankers, not families, who should be paying for this economic crisis.
I wish to dwell briefly on the situation of my constituency, as a former coalfield area. My hon. Friend the Member for Barnsley East (Michael Dugher) talked about this subject compellingly and convincingly, so I shall simply say that the Coalfields Regeneration Trust and the regeneration programme was not just another well-thought-out initiative; it was a covenant between the Government and a series of communities who had suffered deep injustice at the hands of their own Government—injustice that is only now beginning to be put right. I urge the Minister, in his response to the report by the former Member for Barnsley, West and Penistone, which we expect shortly, to take that very seriously and to protect that investment, which is so badly needed.
I also wish to echo some comments made by many of my hon. Friends. In Wigan one third of people are, rightly, employed by the public sector, doing very important work, but most people work in small and medium-sized businesses. Those businesses rely deeply on public sector contracts and services; the two are interdependent, and if we damage one, we damage the other.
I wish to say a few words about the construction industry. When the Building Schools for the Future programme was axed, the children of Wigan did not just lose a badly needed new school; I heard compellingly from Union of Construction, Allied Trades and Technicians members what it meant for them in terms of the cost to jobs. It is exactly at times like this that we should be investing in those projects, not cutting them. I urge Ministers to think again, not only about that but about the regional development agencies; our RDA was the economic engine of the north-west. When the banks stopped lending, it was the RDAs that stepped in and supported small businesses. Small businesses in my constituency are going to the wall because of the Government’s decision to axe the RDAs and freeze their spending, and I urge the Minister to think again.
I read with interest the comments of Adam Posen, a member of the Bank of England’s Monetary Policy Committee, who said that rather than privatise the state-owned banks, we should use our stake in them to increase productive lending. I hope that the Government will consider that idea.
I end by stating that it is my strong contention that this Government have got it wrong—and that contention is not mine alone. As Joseph Stiglitz has said:
“Britain is embarking on a highly risky experiment…If Britain were wealthier, or if the prospects of success were greater, it might be a risk worth taking. But it is a gamble with almost no potential upside. Austerity is a gamble which Britain can ill afford.”
Neil Carmichael (Stroud) (Con)
In the spirit of general agreement with some of the other speakers, I wish to say, first, that the hon. Member for Brighton, Pavilion (Caroline Lucas) was right to point out that there are more important things than just thinking about profit and so forth. We do think about the quality of life, and that is really important. I thank my right hon. Friend the Member for Workington—
Neil Carmichael
All right, calm down. I thank my right hon. Friend for securing this excellent debate, because he is right about quantitative easing. Three hours ago he rightly reminded us that that could stimulate inflation. It is a form of inverted monetarism, and we should be mindful of that. He is also right about funding for smaller businesses. Crucially, as my hon. Friend the Member for Stourbridge (Margot James) said, we have to think about more than just overdrafts; it is a question of putting equity into smaller businesses as well. We need to construct a taxation regime that allows that to happen, and the Departments should be working really hard on that.
I have three or four points to canter through briefly. First, Airbus is a very important business in my region, and has a huge number of supply companies in my constituency. It is also important because it is an international firm, so I want to make it clear right now that we must ensure that international trade is free trade. I am referring to the cloud over the aviation industry in general: what Boeing thinks of Airbus, and what Airbus thinks of Boeing. I think Airbus is right, and we need to promote that.
The other day, somebody was telling me that they thought that France was merciless in its pursuit of commercial advantage. It probably is, and so should we be. It is high time we understood that, stopped complaining about other countries and got on with it ourselves. Let me take a case in point: Poland, a country that has not stopped growing for the past 15 years. Right now it is growing at about 2.5%—although I might be out of date, because I thought of this three hours ago. It is a country that is worth investing in, but where are we when it comes to investing in Poland? Fifth. France, Italy, Germany and America are all above us. We ought to be getting there, and getting going in that field.
My next point concerns the provision of security for investment, in the sense that public policy matters. The green investment bank is a good thing, so too is the green deal, and so is our focus on ensuring that we get high-technology investment in these sectors. The sort of security that we can provide by effective public policy will encourage growth in due course. This country must have that, to solve our problems.
Finally, we all talk about regulation. It is absolutely right to say that there is far too much of it, but I think that it is time we focused on exactly what it is that we should start deregulating. We must set small businesses free, and they need to get the sense that their contribution to this country’s future and their own is something that we want to see. It is a question of growth, and we must supply that growth. That is imperative for our long-term planning and our attitude and strategy for the deficit. Let us pave the way for it with the four recommendations that I have made.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
Like others, I congratulate the right hon. Member for Wokingham (Mr Redwood) on securing the debate. Like my hon. Friend the Member for Edinburgh South (Ian Murray), I enjoy listening to the right hon. Gentleman’s contributions and—I have to admit—occasionally reading them on his website. I do not often agree with him, but they are enlightening none the less.
What has been good about today’s debate is that, with a couple of exceptions, speeches have been made and issues have been raised that do not necessarily follow the scripts that people get from time to time. People have discussed some real and serious matters and there has been agreement across the Chamber on a number of issues. In particular, I was struck by the speech of the hon. Member for Northampton South (Mr Binley), who I know has a strong interest in manufacturing. In the couple of minutes I have available, I want to make a few points about manufacturing and that part of industry.
The Government frequently talk about rebalancing the economy and they are right to do so. It is crucial that we learn some of the lessons of the past. One of the lessons, frankly, despite the amount of wealth that the financial services sector might create, is that being over-exposed in one sector causes immense damage. We need to rebalance the economy and we need to do that by looking for export markets. That is why I am quite pleased that the Government have taken the initiative in going to India and China to develop those markets. I hope that they will go to other places, too.
Crucially, we are not the only country trying to do that. Every developed economy is looking to the developing economies and BRIC economies—those of Brazil, Russia, India and China—to develop export markets. We need investment in the technology to get the products that people want and to develop the skills that we need and the technology that people want to buy. That is crucial and brings us to the points made in this debate about levels of investment in particular.
Anyone who was in the Chamber during Energy and Climate Change questions earlier will have heard Ministers waxing lyrical about the huge potential of the green economy. That potential can be realised only with the right investment, including from banks. The green investment bank should be up and running as quickly as possible and should be running as a bank, not as some grant-giving body. I hope that the relevant bits of the Government—whether that is the Treasury, the Department of Energy and Climate Change or the Department for Business, Innovation and Skills—get on with that as quickly as possibly because it is crucial. It is particularly crucial in constituencies such as mine, which has had a proud manufacturing past and deserves to have a future. Economic growth and our growth in manufacturing cannot be driven towards just one part of the country. As others have said, it needs to take place across the whole country and that is why it is very important that we get the green investment bank up and running.
Ian Murray
I know we are tight for time, but this is a crucial point. Is it not strange that no Members from the Scottish National party have been in the Chamber for the entirety of this wonderful debate on growth and how the UK economy should grow?
Tom Greatrex
I thank my hon. Friend for his intervention. Given the amount of time left, I shall say only that I am disappointed but not surprised by that.
Other Members have referred to the recent PricewaterhouseCoopers report. I am sure that the Minister has read it a number of times, but I draw his attention to a specific part of it, which calls on the Government to tackle the “financing gaps” by focusing investment
“in areas where it will have a catalytic role in growth.”
As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) has said, there is a place for the Government, as well as banks and other sources of investment, in getting that investment right, developing industries and getting the skills and jobs that will save the public purse money in terms of benefits and other payments, so that communities and constituencies across the UK have a stake in the future of the economy. We should not be tied to any particular sector; we should be looking across the whole country and getting people into skilled jobs and into export markets that will benefit us all in the long run.
Mel Stride (Central Devon) (Con)
I welcome the opportunity to speak in this debate about growth. As my hon. Friend the Member for Mid Norfolk (George Freeman) pointed out, if the Government had not taken such prompt action on the deficit, kept our triple A credit rating status and ensured that our interest rates remained low so that our businesses could expand and consumer expenditure could be protected, there would be little point in talking about any form of growth.
I want to speak briefly about our fiscal consolidation. I am pleased that the Government have struck a balance between expenditure reductions and tax increases, with a weighting more towards the former. As my hon. Friend the Member for Bedford (Richard Fuller), who is sporting a splendid haircut, has pointed out, the importance of getting taxation on business down is absolutely key. I welcome the fact that tax will fall from 28% to 24% for larger corporates and to 20% for small businesses. That is important not only for growing our companies here but for attracting inward investment. In the Republic of Ireland, for example, the headline rate is just 12.5% and it has secured inward investment of about 2.5 times the EU average given the size of its economy.
The hon. Member for Copeland (Mr Reed) suggested that we on the Government Benches are anti-public sector. We are not, but we do recognise that productivity rates in the private sector are considerably greater than in the public sector. As the public sector slims down and the private sector expands, we can expect growth to come through that route.
Monetary policy and the dangers of quantitative easing formed a major part of the speech of my right hon. Friend the Member for Wokingham (Mr Redwood), and I fully subscribe to his concerns. Questions must be asked about injecting the economy in that way—by printing money, using electronic money to buy gilts, bonds and to some degree commercial paper—and the first of which is whether it works. We can look at the experience in Japan, where interest rates hit 0% in 2000-01 and a lot of quantitative easing was put into the system over the following six years. Although growth occurred, there was consensus among many economists that it was due to the approach of recapitalising the banks and getting them lending rather than to the money that had been put in and the creation of dishonest money in the system. When quantitative easing is being considered, almost by definition the economy is slowing down and there are deflationary and recessionary pressures on it. It is at such a moment that the banks are least likely to start lending the money that is being put into the system.
We need to be very careful about where we are in the cycle with inflation when we talk about quantitative easing. In the past two years, inflation has gone above 5% and down as low as 1.1%. It is now above 3% and, according to the Bank of England, is heading further north. We need to be absolutely certain that some of the temporary effects of low sterling and the costs of energy and oil coming through are not mistaken for a considerable rise in inflation going forward in the longer term. Other issues, such as the level of capacity in the economy and the low wage rate increases of about 2% that we have had recently, are equally important.
My final point on quantitative easing is that it would not be advisable to take away the authority of the Monetary Policy Committee to make such decisions. It should be exactly as it is with interest rate policy: the MPC should have the final say. I know that I differ from my right hon. Friend the Member for Wokingham on that, but I firmly believe it.
Yasmin Qureshi (Bolton South East) (Lab)
I wanted to contribute to the debate initially by talking about growth policy, but we have heard Conservative Members suggest that the economic situation we are in is due entirely to the Labour party’s activities, so it might be worth taking a trip down memory lane to see what it was like in 1997 when the Labour Government came to power. We had 3 million people unemployed; interest rates and inflation were at record highs; there were so many problems to be dealt with. What did we do? We invested. We invested in building more hospitals and more schools and in refurbishing our hospitals and schools. We invested in refurbishing 1.5 million substandard accommodations and homes that had been left neglected by the Tories for years and years. As a result of that investment, we created many jobs and flourishing sectors.
At the same time, we worked with the City and helped the financial sector. It is interesting to note that Conservative Members believe that we had something against bankers and those involved in the financial sector; of course we recognise that the financial sector is very important. It was the Labour Government who, when faced with various problems, invested billions to steady our financial sector so that it could grow. That prevented the loss of about 500,000 jobs. We have no need to hear Conservative Members telling us that we have done nothing to help people in the banking sector, that we are somehow their enemies or that we do not care about them.
As a result of that investment, economic growth has recently been restored. I heard the Prime Minister say from the Dispatch Box a few weeks ago that Labour Members would be unhappy to hear about economic growth in our country. Why would we be unhappy about that, particularly given that our policies underpinned that growth? If we had stuck to the Conservative or Lib Dem policy of doing nothing, we would have been in a worse situation. The truth is that we are delighted about economic growth and we take credit for regenerating the economy and saving the country from the banking crisis.
The Con-Dem Government want a massive reduction in spending. The cuts are ideologically driven and are not being made in the best interests of the country. We know not only that 500,000 people will lose their jobs in the public sector, but that 1.5 million people are likely to lose their jobs in the private sector. I urge the Government to reconsider what they are doing; they should not be driven ideologically to do so.
Jeremy Lefroy (Stafford) (Con)
I will confine my remarks to two areas: exports, about which the hon. Members for Rutherglen and Hamilton West (Tom Greatrex) and for Glasgow North East (Mr Bain) have already spoken; and access to finance, about which a number of hon. Members have spoken.
It is salutary to look at export performance over the past decade. Since 2000, Germany’s share of world trade has risen by 17.9%, that of France and Italy has remained roughly the same, but the UK’s share has fallen by 20%. That is partly due to the depreciation of the pound, but that is not the only reason. To put it bluntly, we have been falling behind our European neighbours and competitors. It is hardly a coincidence that the country that has concentrated most on its export markets—Germany—is the one currently experiencing the strongest growth.
Jeremy Lefroy
I am afraid that I will not, because other Members wish to speak.
A recent report by the Institute of Chartered Accountants, of which I am a member, showed that businesses that are globally engaged are more optimistic about their prospects than those that are not. Some 70% of companies, including half of all micro-businesses, are involved in business overseas, and what is of real significance, as Members have pointed out, is that much of the growth in exports has been in exports to emerging economies rather than to the developed world. Indeed, in the first four months of this year, exports to emerging economies from the UK grew at more than 30%. While attention is naturally and rightly on China and India, we should not forget the growing markets of central and south America, much of Asia and, not least, Africa. Sub-Saharan Africa is growing at 5%, and many countries look to the UK as a natural trading partner. The door is wide open, but many of our companies are simply not walking through it.
What do we need to do? First, we need to overcome a fear of excessive risk. The past two years have shown us that nowhere is risk-free, and the ratio of reward to risk in many developing countries is high. Secondly, there are concerns about payment, and we could do more through the export credit guarantee scheme. We should look at the schemes of some of our European competitors, which are better on short-term finance. Thirdly, on support for businesses, Britain has a real advantage in its superb embassies and high commissions throughout the world, and I welcome the Government’s commitment to ensuring that they increasingly support British trade.
We should also mention the advantages that our international development programme brings. Where we work with a country to overcome its poverty, we also help to create the conditions in which business—British business—can flourish. In Kenya, for instance, UK overseas development assistance in 2008 was £77 million, but our exports there were almost £200 million in goods alone. Fourthly, we need constantly to encourage people to learn the languages that make doing business with Britain throughout the globe easier, and we need to restore our pre-eminence in export finance. British banks once financed much of global trade, and I should like a new breed of enterprising British merchant banks to spring up and do that.
That brings me, briefly, to the second driver of growth: finance. There has been a lot of argument about how much banks are lending to businesses, especially small and medium-sized enterprises. I welcome the expansion of the export finance guarantee scheme, but it would be even more helpful if some of the £45 billion of unused capacity in existing bank facilities, which even one bank says it has, could be loaned to viable businesses. Businesses are crying out for it.
I welcome, too, the Government’s recognition of the importance of equity investment, with the expansion of the enterprise capital fund. Better still, they are exploring options to relax EU regulations on promoting the activity of business angels, but again I look to banks to show their true mettle and innate generosity of spirit. The British Bankers Association has announced a £1.5 billion business growth equity fund, but I urge the association to go much further, as we need it.
Owen Smith (Pontypridd) (Lab)
I, too, thank the right hon. Member for Wokingham (Mr Redwood) for securing today’s debate. I always admire the ingenuity with which he manages to weave into most of his speeches his perennial faith in the fallacy of the Laffer curve and his plea that we go easy on the banks. Today, he did so in respect of the capital holding legislation that is meant to protect us from the next recession that the banks might cause, as they caused the last one.
I should like, however, to make a plea for more evidence than Laffer uses in order to support our economic policy, because we do not have one that is based on evidence. We have a hit-and-hope policy that is based on faith. We know—the Government have told us endlessly—that the deficit was too high; investor confidence was diving; we could not afford to pay back our debt; we looked very much like Greece; the only answer was to cut 8% or thereabouts of GDP, which would restore confidence and we would see heroic growth, such as we had never seen, of 2.5% per year and an enormous explosion in the private jobs market.
The trouble is that neither economic theory nor the evidence supports that argument. I cannot really address the economic theory in too much detail given the time, but history and most economists would agree that when we contract growth by about 1%, that leads to a 0.5% contraction in GDP. That is what history has shown, and that could leave us with a 4% contraction in GDP due to the 8% effective reduction in spending over the next four to five years.
Instead, I shall consider the current evidence that we have to support the Government’s theory, because that is all it is—a theory. In order to have growth, we must have investor confidence, and we must, as the hon. Member for Stafford (Jeremy Lefroy) said, have an export-led recovery. Investor confidence is not present in the economy: that much is clear to us. The private sector is holding surpluses, not investing. I worked as a director of a biotech company for a long while before I came here, and I know that the biotech and pharmaceutical industries are not investing—they are laying people off, not taking them on.
Next, we need confidence that we are going to see some growth in the economy. Much has been made of the fact that we had 0.8% growth in the last quarter and 1.2% previously. As I said, the construction industry is what has driven much of that, but last week’s purchasing managers index for construction managers shows that the order book is drying up; they are looking at 1% growth in the last month. The construction industry is laying people off, not taking them on.
The markets are telling the Government that they do not have confidence in the economy. The yield on five-year bonds is down at -0.44%, which differs from the 3.5% rates that we were seeing in 2008. That is the market giving its view, in pricing terms, that there will be no or low growth in the economy. Merrill Lynch said this week:
“There are worries over the health of the economy and the danger that the government’s austerity measures are going too far.”
HSBC said:
“The market…is sceptical about growth prospects”.
That is the reality of the situation that we face right now.
The International Monetary Fund has said that the Government need to develop a plan B. Olivier Blanchard, its chief economist, has said that he fears that the way in which the contraction is being front-loaded is going to damage our economy. It is places such as Wales, and my constituency of Pontypridd, that will see the worst impact of a further recession. The Government must come up with a plan B, and quickly.
James Morris (Halesowen and Rowley Regis) (Con)
I welcome the debate introduced by the right hon. Member for Wokingham (Mr Redwood). It comes at a crucial time for the area that I represent in the west midlands and the wider black country. I want to speak briefly about the growth challenge in the black country and the wider west midlands.
We have inherited some deep underlying problems after a period where we have had very low levels of private sector jobs growth, where unemployment is much higher than in other regions, and where growth has been lower than the UK average. Annual growth in gross value-added between 2002 and 2007 was the lowest of all regions in the United Kingdom. Rates of innovation have been poor, and productivity has been low. Labour Members talk about the effectiveness of the regional development agencies, but that is the reality of the economic situation that we face in the wider west midlands.
We have big, long-term challenges to address in the black country, so how do we do it? We need to promote enterprise, as many hon. Members have noted. We need to concentrate on stimulating the small and medium-sized enterprise sector. Organisations such as the Black Country chamber of commerce and the Federation of Small Businesses have been putting a great deal of effort into ensuring that we build on our SME base. We also need to build on the existing capabilities in the black country, where we still have a vibrant SME-based manufacturing industry. We also have companies involved in metal recycling, which does not sound very glamorous but is an innovative and important business in the black country.
We need to focus with laser precision on the generation of private sector jobs in the black country, and we need to drive innovation and raise skill levels. I strongly believe that a focused black country local enterprise partnership, working with those local authorities and with businesses, can deliver much more than was delivered by the one-size-fits-all regional development agency. I urge the Minister to sign off on that black country LEP if possible, once certain issues have been addressed, so that we can get on with the job of dealing with the long-term problems that we have inherited.
We need to build on the great industrial and enterprise heritage of the black country, with its long history of industrial innovation. We need to promote manufacturing, champion enterprise and develop the skill base in the black country economy, and we need to drive the private sector job growth that will be critical to the future of that economy.
Joan Walley (Stoke-on-Trent North) (Lab)
In the four minutes that I have, I wish to say to the House that a Backbench Business Committee-led debate of this kind shows that there is huge consensus. The debate is about what Parliament can do to impress upon Ministers the importance of addressing the growth agenda.
I have agreed with many contributors about investment in transport. We need the Government to reconsider extended trains along the west coast main line to deal with overcrowding. We also need to consider national infrastructure and be ready for the digital age, ensuring that right across the country, we have state-of-the-art technology such as the broadband that is needed to inspire growth.
In line with what the hon. Member for Brighton, Pavilion (Caroline Lucas) said about the green economy, it is vital that we link the issue of growth with sustainability. Having chaired a conference led by the Aldersgate group in the City on Tuesday night, may I tell the Minister that the importance of the green investment bank cannot be overestimated? It is vital that he and his colleagues in Government apply the principles of the green investment bank in a cross-cutting way, so that people across the UK can take part in providing the £3 trillion or so of investment that is needed. That will create jobs in energy efficiency and enable us to provide insulation in homes. Those jobs will allow us to meet our carbon reduction targets, which is vital.
I would not be me if I did not make a parochial case for Stoke-on-Trent and north Staffordshire, just like the hon. Member for Halesowen and Rowley Regis (James Morris) did for the west midlands. I say to the Minister that this debate is not taking place in isolation. It has to be followed up in a cross-cutting way, and the Government must look favourably at the local enterprise partnership bid that is currently being drawn up across Staffordshire, including in Stoke-on-Trent. We need to consider the ceramics industry, and consider the problems with intensive users of energy, about which he knows, so that we can get the advantages of the green investment bank into Stoke-on-Trent.
We need to deal with the legacy of the coalfield communities, where further investment is needed, like that at Chatterley Whitfield. We need a cross-cutting agenda, working with various organisations such as the Prince’s Regeneration Trust, so that, with the voluntary sector, we can make enterprise happen. That matter needs to be addressed right across education provision, and we need extra investment in the further education college in Stoke-on-Trent.
Above all, we need a step change in sustainability. I say to the Minister that if we are to get people back into jobs and off benefits, those jobs need to be private sector-led. We urgently need Government recognition that an area such as Stoke-on-Trent, which was identified by the BBC as the third least resilient area in attempting to fight the recession, needs special attention. If the Minister cares to, he can visit my constituency as many times as he would like so that we can get that message across.
Alison McGovern (Wirral South) (Lab)
I never thought that I would stand in a Back-Bench debate on growth—the debate is most welcome—and quote Lord Lamont, but I am going to. Speaking of the 1992 exchange rate mechanism crisis, he said:
“I think it is worth emphasising that the ERM crisis was an international one…I am always surprised at the extent to which people see it as a purely British crisis. In that week in September 1992, eight countries either devalued or floated.”
The lesson that I take from that quote is that we forget the global picture at our peril. I have been pleased to listen to other Members reference the circumstances in which we find ourselves. We are trying to drive forward growth at a time when the world faces very difficult circumstances. We are not alone in our pursuit of growth, and we all need to heed that important point.
I want to make three extremely swift points in response to that global challenge. I can make the first very swiftly, because it has already been made this afternoon. On regional development agencies and growth policy in the regions, the Government appear to have wiped the slate clean. We have seen success with the regional development agencies, but there is a lack of understanding of the good practice that went on in them. In developing local economic partnerships, the Government might ask, in areas such as mine in the north-west, where the regional development agencies had success, what needs to be carried forward into the local economic partnerships to make sure that the RDAs’ practice of development—what one business I spoke to in the Wirral called their ability “to roll their sleeves up and help us out”—is not lost.
My second point, which has also been mentioned, relates to the importance of rebalancing. Like other hon. Members this afternoon, when I look at the global economy I wonder how we might provide and sell things that are needed around the world. I know from my constituency that science-led business is important in that. With the investment in superfast broadband and the other things that we hope to see in the Wirral, I hope that we will continue to be champions of science-led business, just as we have been historically, with Unilever at the heart of our borough. Through our expertise, we can lead the way.
Finally, we have real opportunities for export, given our historic links with India and China. I leave the Minister with one thought. The local economic partnerships need to be able to stand on the world stage and argue for those trade relationships. We all need to think what powers those local economic partnerships need so that they can stand on the global stage and argue for investment in Britain.
Sheila Gilmore (Edinburgh East) (Lab)
It is always interesting to listen to such Back-Bench debates because there is a high degree of consensus, but we also sometimes hear some of the things that people really think. My colleagues and I were berated from those on the Government Front Bench for our apparent failure to do more to tackle inequality, but we then heard an interesting speech suggesting that the only reason we raised taxes was to redistribute income. Government Members perhaps have to decide what line they want to propagate.
What I really want to do, however, is to tell a story about a city. In the 1980s, it was a bit of a backwater. It was notorious for its holes in the ground in very prominent areas. It was run by a council that called itself progressive; its members were Conservatives, but they called themselves progressives—we have had that again more recently. They took a hands-off view of how to run a city and saw themselves purely as some sort of administrators.
After that, the council changed political hands and was controlled by a Labour majority administration for the first time in its history. A great deal of effort was put into building up the economy. Those holes in the ground were filled. Infrastructure was put into a whole development on the west side of the city. That allowed the financial services industry in the city of Edinburgh to flourish, and the city became an important financial centre. However, it was the council—the public sector—that put the land deals together and made it possible for places to expand and to create the private sector jobs that have been so important to our city.
The holes in the ground were filled. We built a conference centre. There was some criticism of that at the time, and people asked, “Why is the council doing that?” but the criticism since has been that we were not ambitious enough—that the conference centre was not big enough to put on the kinds of exhibitions that go with conferences nowadays.
I regret to say that in the past few years, even in advance of the change of national Government, there has been some real contraction. The arm’s length company that we set up that got financial services off the ground in Edinburgh has been almost wound up. There is a reluctance to fund a transport project in Edinburgh that would make a big difference to our economy—the trams, which I was challenged to mention by my hon. Friend the Member for Edinburgh South (Ian Murray). The hon. Member for Battersea (Jane Ellison) spoke of her hope that the Government would fund a tube extension to Battersea. That is an acknowledgment that such transport spending is hugely important as an economic generator.
Contraction has already begun. School building has almost ceased, and construction workers have consequently been put out of work. It is important to recognise the role that the public sector plays in growth.
Chris Williamson (Derby North) (Lab)
I will be brief. I want to talk about the importance of construction to the growth agenda in this country.
I have been very disappointed by the staggering economic amnesia displayed by the Government in the past six months. Labour had a proud record in the previous 13 years. The previous Government left a good economic legacy. Record levels of employment were achieved under Labour, inflation was kept low, and we ensured that interest rates were at record lows for a considerable period of our time in government. We also prevented the recession from turning into a depression. We have Labour policies to thank for those things.
My fear is that the policies pursued by this Government are likely to result, at best, in a very low level of economic recovery and, potentially, in a double-dip recession. The Government talk of a private sector-led recovery in this country, but construction is key to that. Some 92p in every £1 spent on construction is retained; 300,000 private sector companies work in the industry, employing 3 million workers, or 8% of our work force; and every £1 spent in public sector investment achieves a return of 56p to the Exchequer and results in £2.84p worth of economic activity.
I am concerned that the Government’s talk of a private sector-led recovery is just rhetoric, because their measures are undermining the construction industry in this country. My hon. Friend the Member for Pontypridd (Owen Smith) made the point that the construction industry is struggling. I spoke recently with representatives from the UK Contractors Group, who said that talk of growth in the building and construction sector was unbelievable. Their members are saying that they have poor order books and that at best there is likely to be a flat level of activity. Many will shed workers and go into decline.
One of the biggest factors, of course, is the election of this Government and their decision to scrap Building Schools for the Future. BSF was not only a fantastic educational investment, but a massive investment in construction. The construction sector has been undermined by that—the rug has been pulled from under it. That massive building programme would have sustained many construction companies.
Housing targets and the abolition of the regional spatial strategy by the Government will mean that far fewer houses will be built. Not only will people not be housed adequately, but there will be another negative impact on our construction industry. I therefore urge the Government to think again about their strategy for construction in the UK.
Chris Leslie (Nottingham East) (Lab/Co-op)
There have been some excellent and increasingly succinct contributions to this welcome debate on growth. It is a fantastic initiative and a tribute to the reforms led by the Backbench Business Committee. Important aspects of economic policy have been covered. My hon. Friends the Members for Glasgow North East (Mr Bain) and for Edinburgh East (Sheila Gilmore) talked about the Scottish economy and the importance of investment in their cities. My hon. Friend the Member for Stoke-on-Trent North (Joan Walley), and the hon. Members for Redcar (Ian Swales) and for Brighton, Pavilion (Caroline Lucas), talked about environmental jobs and new eco-technologies. The hon. Member for Hove (Mike Weatherley) talked about the music industry, the hon. Member for Warrington South (David Mowat) talked about energy pricing and the hon. Member for Watford (Richard Harrington) talked about the film industry. The hon. Member for Warwick and Leamington (Chris White) talked about the role of the voluntary sector in the economy and the hon. Member for Battersea (Jane Ellison) talked about tax increment financing in an important contribution.
As my hon. Friends the Members for Wirral South (Alison McGovern) and for Derby North (Chris Williamson) both pointed out, Labour did a great deal to support our economy and, until the general election, we had seen growth return and borrowing begin to fall and we were emerging from one of the gravest worldwide economic crises in generations. Clearly action is needed now more than ever to boost growth and jobs.
The Bank of England’s inflation report yesterday pointed out that nobody could predict the course of the economic environment in the years ahead, and some dangerous clouds are gathering. Yesterday’s report from the National Institute of Economic and Social Research calculated that growth was slowing further in the three months to October and claimed that it was 0.5% weaker than the official third quarter figure. Today’s G20 gathering in Seoul has to grip the serious imbalances facing the world economy, but, as my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said in a very powerful speech, the Prime Minister and the Chancellor seem yet again on the margins of the debate rather than in a leadership position. We should be wary, of course, of a return to protectionism, but also of a slowdown in the eurozone, and we should therefore be doing more to encourage exports, jobs and growth here at home.
The doctrinaire approach by the Chancellor threatens the return to strong economic growth. He is ignoring those who say that the Government should proceed with caution and is instead rushing full speed ahead, risking the fragile recovery with his ideological zeal for cuts in public investment, as my hon. Friend the Member for Copeland (Mr Reed) said. Even Ministers have to accept that public sector spending cuts will undermine the return to growth. My hon. Friends the Members for Barnsley East (Michael Dugher) and for Pontypridd (Owen Smith) pointed out that we know from the analysis by the Office for Budget Responsibility that the Government’s budget and spending review shows that the choices they are making will cut our growth prospects rather than enhance them. Growth is essential to rebuilding our fiscal position and if we are to fund vital improvements in public services—as my hon. Friend the Member for Ealing, Southall (Mr Sharma) pointed out, with particular reference to infrastructure, and as did my hon. Friend the Member for Bolton South East (Yasmin Qureshi)—with no strategy for growth, the Chancellor has no viable strategy for investment in schools, hospitals or our future prosperity as a nation.
The spending review will hit the economy hard just at the wrong time, and the Government admit, as my hon. Friend the Member for Luton North (Kelvin Hopkins) pointed out, that they intend to slash half a million jobs in the public sector. We know that PricewaterhouseCoopers has predicted that the same number of jobs will also be lost in the private sector. The hon. Member for North West Leicestershire (Andrew Bridgen) talked about the mood music playing, and we can see that consumer spending is already shaken and confidence is being battered by the tune played by the Chancellor. My hon. Friend the Member for Edinburgh South (Ian Murray) mentioned that other factors will affect that confidence, including the impact of the VAT rise on businesses and consumers.
We have to boost employment, not pull the rug from beneath our own economic prospects. As my hon. Friend the Member for Walthamstow (Stella Creasy) pointed out, the abandonment of the future jobs fund was a major mistake. As my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) said, every 100,000 people out of work costs the taxpayer £0.5 billion in benefit payments alone.
We heard today from the Department for Work and Pensions that it is winding down all its current welfare-to-work projects ahead of its new scheme, which will not be ready until next summer at the earliest, yet new referrals to the current programme are to be halted from December in half of the country and stopped completely from March. That is complete madness at a time when we need to be working our hardest to get people into employment.
As we have heard time and again from all sorts of hon. Members, business investment is a key driver of growth, but that is at risk, I would contend, from the Government’s approach. I have bad news for the hon. Members for East Surrey (Mr Gyimah) and for Northampton South (Mr Binley) when it comes to the net lending targets that should be placed on the banks, as was promised in the coalition agreement. I am talking, of course, about those banks that are state owned and should be encouraged to lend more readily to businesses. Not only was any reference to those net lending targets in last week’s Green Paper conspicuous by its absence; the Prime Minister himself said in his speech in Hertfordshire last week that net lending targets are difficult to achieve. The Minister, who has responsibility for small businesses, has also seemed to row back from those net lending target commitments in the coalition agreement. I would be grateful if he could clarify where the Government stand on those targets.
The Government have taken an axe to some of the key foundations that have been supporting business investment in recent years. For example, they have cut back the capital allowances that have supported reinvestment in new plant and technology for industry. My hon. Friend the Member for Leeds West (Rachel Reeves) highlighted the cancellation of the loan to Sheffield Forgemasters. We heard this week about the scrapping of the grants for the business investment programme that have helped to create 50,000 jobs since 2004. That decision was criticised this week by Nissan, which saw that help as an essential and crucial factor in its decision to invest and in the rebalancing of the UK economy to help manufacturing.
As my hon. Friends the Members for Gateshead (Ian Mearns) and for Wigan (Lisa Nandy) said, the abolition of the regional development agencies, and more importantly the budgets they had to invest in the regional industrial economy, is a tragedy. This is compounded by any number of small changes that the Government are making that are not necessarily being noticed by our constituents, although gradually they will be. One such change that will be noticed now is the 80% cut in the undergraduate teaching budgets, which sends a clear signal that Ministers are failing to invest in the long term. The pace of private sector expansion will need to be record breaking, as my hon. Friend the Member for West Bromwich West (Mr Bailey) said, if they are genuinely going to take up the slack left by the Government’s austerity. Yet there are already signs, as in today’s Financial Times, that the business investment to GDP ratio is starting to fall short of the trend, compared with previous recoveries.
My hon. Friend the Member for Great Grimsby (Austin Mitchell) and the hon. Member for Stafford (Jeremy Lefroy) mentioned exports, which are essential to this picture. Unfortunately, they look like they will weaken because of the economic climate, and the Governor of the Bank of England said yesterday that with more than 60% of UK exports going to the eurozone—for example, 7% to Ireland alone—there are big risks to growth if our trading partners contract. The Treasury states clearly that it needs growth in exports at a rate only last achieved in 1974. Achieving that rate is a tall order.
As we see it, Ministers have very little strategy for growth, and are relying too much on monetary policy coming to the rescue. That is a dangerous approach. We say that jobs and growth need to come first, and the Government need to wake up and end their recklessness.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
May I congratulate my right hon. Friend the Member for Wokingham (Mr Redwood) not only on securing the debate, but on being generous enough to be concise in his remarks? I can see that I will have to join the fan club for those who enjoy his website. I shall try to have a look at it later this evening. We have heard from more than 30 speakers today, and despite the absence of our friends in the media, it has shown that the House is alive and well, and very keen to ensure that there is a cross-party debate on this crucial subject. Indeed, not only did we get the views of 30 Members, but I also appear to have got the detailed views of a barber in Bedford. I suspect I will not be going there for the weekend for that particular support and advice.
I shall now move to the centre of the debate. Hon. Members will appreciate that in order to allow my right hon. Friend to deliver the last few words, I will be unable to address all the issues raised by my 30 colleagues.
Returning the UK economy to balanced and sustainable growth is the overriding ambition of the coalition Government, but to achieve this we need a different model of economic growth—one that leaves behind the old reliance on spiralling Government spending, a handful of economic sectors and debt-fuelled consumption. In its place, we must ensure that we build an economy that is rooted in higher levels of business investment, more exports and a strong manufacturing base. As a number of hon. Members have said—including my hon. Friends the Members for Watford (Richard Harrington), for Battersea (Jane Ellison) and for Stafford (Jeremy Lefroy)—economic growth will be led by the private sector and entrepreneurs, not by the Government. However, the way in which the Government tax, spend and regulate has an impact on businesses and their ability to compete at home and abroad. We therefore have a responsibility to ensure that we create the best possible environment in which they can grow and flourish.
When this Government took office, the most urgent task that we faced was to restore macro-economic stability to the UK economy. A decade-long credit binge had left us with a record public sector deficit, leaving households and businesses perilously exposed, so that when the credit crunch came, Britain was especially vulnerable. The previous Government let people think that there were no consequences to unsustainable borrowing. Their attitude to the deficit led the way, so that by the end of the last financial year, £1 in every £4 that the Government spent was borrowed money. Thus, if we had done nothing about the problem and followed the advice of the previous Government, by the end of this Parliament we would be paying £70 billion in debt interest. That is more than we spend on either schools or defence. Without stability, the economy simply cannot function properly, let alone grow.
Let me turn to some of the issues that hon. Members have raised in this debate, and in particular those concerning small and medium-sized businesses, the tax system and the pressures and problems of regulation. The first point, which was raised by a number of Members, including my hon. Friend the Member for North West Leicestershire (Andrew Bridgen), was the fact that the tax regime is strangling innovation. The UK tax regime has become increasingly complex and burdensome. After 13 years of a Labour Government, we now have the world’s longest tax code. That is why we have put reforming the tax system, making it simpler and more predictable, at the forefront of our plans.
The issue of improving access to finance has been raised by many Members in this debate, including my hon. Friends the Members for Northampton South (Mr Binley) and for East Surrey (Mr Gyimah), and the hon. Member for Copeland (Mr Reed). We recognise that some viable businesses—especially small businesses—are struggling to finance investment and expansion. Unblocking the flow of credit and increasing the availability of debt and equity finance, as mentioned by a number of hon. Members, is a priority. Let me make it clear that the industry’s recent commitments to finance the economic recovery—commitments made through the British Bankers Association—are welcome. The proposals include a new and revised lending code for small businesses, and a new appeals process when finance is declined. Both are welcome. The BBA has also proposed creating a £1.5 billion business growth fund to provide flexible equity finance for established businesses with good growth prospects.
However, let me say this to hon. Members—and, therefore, to the businesses in their constituencies and the banks that should be working for them. Where unreasonable behaviour is shown we will challenge those banks, and we will do so vigorously. It is extremely important to ensure that we do that. However, a key part of the solution lies also in finding more diverse sources of finance, and greater competition. My hon. Friend the Member for Stourbridge (Margot James) rightly pointed out that if we ensure a wider range of choices for small businesses, that will be important in the medium and longer term. The Independent Commission on Banking is looking at those issues, and it will report next spring.
In the meantime, the Government are taking action. We are extending the enterprise finance guarantee scheme until 2015, unlocking up to £2 billion of additional lending over the next four years. I note the remarks of my hon. Friend the Member for Hove (Mike Weatherley), and I ask him to keep me closely informed if there is any evidence that a sector is being deliberately discriminated against.
We are also increasing the enterprise capital funds by £200 million over the next four years, potentially enabling more than £300 million of venture capital investment. That will help to fill the existing gap in equity provision for fledgling SMEs with strong growth potential—a gap that many Members have referred to. As my hon. Friend the Member for Stafford pointed out, business angels are a crucial part of the equation. We are keen to see an expansion in business angels, so we are looking into how to create a more investment-friendly climate for them. That may include reforming the rules governing the enterprise investment scheme.
In the few minutes remaining to me, I want to turn to the big matter that many hon. Members, including my right hon. Friend the Member for Wokingham, and my hon. Friends the Members for Stourbridge and for Skipton and Ripon (Julian Smith) raised—red tape. In recent years there has been an increasing rush to regulate. Under the previous Administration, we saw that peak at the equivalent of 14 new regulations every working day.
As a new Government, we are trying not just to tinker with and change a few regulations, but to deal with Whitehall’s prevailing culture. It is time for a different approach, so we have adopted a one-in, one-out system of control for new regulations. That means that before a Minister can introduce a new regulation, they must first examine the cost to business and identify a corresponding cut in existing regulations, so we will be able first to cap and then to cut the burden of regulation. I hope that that answers hon. Members’ questions about whether the system would merely retain the problem, or improve it.
We want to do a lot more. We have inherited a significant number of regulations that cause real problems for existing businesses. That is why the Department for Communities and Local Government is already examining building regulations to improve, simplify and overhaul them for the construction industry. It is also why the Government have already adopted the proposals in Lord Young’s excellent report on reforming and improving health and safety legislation. It is why the Prime Minister asked Lord Young to go further, and to review the whole burden of regulations throughout Whitehall, and how they impinge on the bottom line of small and medium-sized enterprises.
Together, those measures will begin the process of changing not just a few regulations—not just 20, 30 or 40 regulations—but the culture of Whitehall. I am not naive enough to believe that the task will be completed in a year, or a couple of years. It will be difficult, but let me tell the House in no uncertain terms that we are determined to ensure that we get it right, because that is crucial for our economic competitiveness.
I shall conclude by saying that the Government believe that private sector enterprise, innovation and investment are the keys to future growth. We believe that the Government’s job is not to tinker and meddle, but instead to create a stable macro-economic framework within which businesses have the confidence to invest. That means not picking winners, but ensuring that we have the right business environment in which the best will flourish. It means a simple, more predictable tax system that rewards endeavour. It means better access to both debt and equity finance. It means less red tape and fewer regulators, a skilled work force and more apprenticeships. It means sustainable investment in our infrastructure and support for exports to markets around the globe. In each case the Government have a role to play, and we intend to be an effective partner for business.
Mr Redwood
I thank all who participated in this debate. It is a sign of the success of the Backbench Business Committee’s choice of topic that I do not have enough time to respond in detail to colleagues in the way that I would like, having sat here patiently listening to some good contributions. I hope that the Minister recognises that my hon. Friends and I, as well as Opposition Members, are extremely worried about the position on bank credit. The hon. Member for Leeds West (Rachel Reeves), my hon. Friends the Members for Hove (Mike Weatherley) and for Northampton South (Mr Binley), the right hon. Member for Wolverhampton South East (Mr McFadden), the hon. Member for Edinburgh South (Ian Murray) and I made a number of points.
Although I am grateful for the measures that the Minister sketched for an economy of a few billion pounds, we are talking about a £1.5 trillion economy. A few billions will not make a big difference, and I urge him and his hon. Friends in the Treasury to look again at why the Bank of England is depressing the accelerator—printing money and telling people that the water is lovely—and the banking regulator is depressing the brake and saying that money cannot be lent to industries that need it, or for the big projects that are much needed throughout the country.
A Labour Member became excited when he thought he heard me say that we want a big public works programme paid for by the public sector. I clearly said that we need a big public works programme—paid for wholly or mainly by the private sector. That is what we need to release banking credit for longer-term projects. We need the power stations, the transport links and the broadband. Those are the things that could bring the House together.
This has been a well-tempered debate, and hon. Members have expressed their fears and worries for their constituencies, but all have come together to say, “Yes, growth is what we need; bring on the growth; all we love is growth, and we must do more to achieve it.” The Government must control their deficit, but they must also do rather more on infrastructure, regulation, taxation and a number of issues to get that growth assured faster. They must persevere throughout the whole four years that remain of this Parliament and the Government’s budget strategy, so that we get those jobs and the big increases in tax revenue that are much needed to deliver their plans.
A large number of Labour Members—too many to read out in the few seconds remaining—were very concerned that public spending cuts would have a depressing effect on the economy.
RAF Marham
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Elizabeth Truss (South West Norfolk) (Con)
I am delighted to have secured this Adjournment debate today on an issue that is critical not only for my constituents but for Norfolk as a whole and, more broadly, for East Anglia. There has been a lot of talk over the past few weeks about the future basing of the Tornado aircraft. These discussions have involved high politics, not least because we are in the run-up to the Scottish elections. I want to talk today about how the decision ought to be based on military and economic criteria, taking into account issues such as employment and deprivation. We cannot allow this debate to be dominated by politics. On this day of all days, as we pay tribute to our brave service personnel, it is important that their needs should be taken into account.
RAF Marham was established in 1916 to defend us against the German zeppelins. Its personnel fought in the first world war, the second world war and, more recently, in Iraq and Afghanistan. There is a great deal of anxiety about their future among the personnel at the base, some of whom have recently returned from Afghanistan.
Andrew Griffiths (Burton) (Con)
I had the privilege of visiting RAF Marham recently as part of the all-party parliamentary armed forces scheme, and of meeting members of the Tornado squadron there. That squadron has been in combat for almost six years solid, and it makes a big contribution to our activities in Afghanistan. Does the hon. Lady agree that it is up to us to support it by giving it some stability?
Elizabeth Truss
That is exactly how I feel. The 2 Squadron recently returned to a heroes welcome in Swaffham, and I know how important it is for the local community and for those people who are based at RAF Marham that this decision be taken properly and rationally. We cannot play politics with people’s jobs and with our nation’s defences.
Among the key features of RAF Marham are the engineering and maintenance facilities based there. There is a high level of expertise, on the industry side and on the military side, which has taken years to develop. Indeed, there were previously eight separate locations for the maintenance and engineering facilities, but they have been consolidated at RAF Marham. I understand that those facilities are one third more efficient than their US counterparts in manpower terms. Over the years, they have saved billions of pounds for the Exchequer. To move those facilities elsewhere would cost at least £50 million, simply because of the levels of hardware and personnel involved.
Mr Richard Bacon (South Norfolk) (Con)
My hon. Friend visited RAF Marham with me earlier this year. Will she reflect on what we were told by BAE Systems and Rolls-Royce engineers about the specialist layout for depth maintenance at Marham, which cannot be replicated elsewhere because of the size of the facilities?
Elizabeth Truss
My hon. Friend has made a good point about the facilities, but I am thinking not only about the facilities but about the staff. I fear that, at a time when we are involved in a conflict in Afghanistan, moving the skills base—as well as the physical presence to which my hon. Friend has referred—would be dangerous and costly, and I do not think that we can afford to do it.
RAF Marham has built up a tremendous skills base locally. Unfortunately, the area suffers from relatively high unemployment and deprivation, and the skills and jobs at RAF Marham are very important to local people. I recently visited Hamond’s high school, where many young people told me of their aspirations to join the Royal Air Force and become engineers. It would be disastrous to remove such a source of aspiration for young people from that area at this time. Many young people take up apprenticeships at RAF Marham, and it has built up tremendous support in the community.
I am very pleased that so many of my hon. Friends from Norfolk, East Anglia and elsewhere are in the Chamber. All nine Norfolk Members of Parliament—and let me point out to the Minister that they are all flying the coalition colours—have backed RAF Marham, because they know how important it is to the Norfolk economy. All eight councils in Norfolk, controlled by all three major parties, have also come out in support of RAF Marham as part of our “Make it Marham” campaign. I believe that in due course a petition will be presented to the Secretary of State and at No. 10 Downing street. That is not to mention the town mayors and the local businesses, which will be affected by any change.
There is a huge degree of local support for RAF Marham, and a huge amount of local pride has been invested in it. However, it is not just a question of the support that it commands locally. There is also the military presence that it affords, and the location that it provides for the conflict in which we are engaged in Afghanistan. It is possible to fly from RAF Marham to our forward operating base in Cyprus without the need for in-flight refuelling. That does not apply to other air force bases, and I think it is an important factor. RAF Marham is also well located for our United States allies in Lakenheath and Mildenhall.
RAF Marham has the RAPTOR—Reconnaissance Airborne Pod for Tornado—system, which my hon. Friend the Member for South Norfolk (Mr Bacon) and I saw during our visit, and also a tactical imagery intelligence wing, which produces high-quality images that are used not only by our service personnel but by our key allies. A large amount of important equipment and military intelligence is collected there. During the current conflict, we hear a great deal about the ground forces but slightly less about the role of the Tornado, because it is rather more secret and not open to public view in the same way. As was said earlier by my hon. Friend the Member for Burton (Andrew Griffiths), we ought to support what those people are doing.
Mr Keith Simpson (Broadland) (Con)
I congratulate my hon. Friend on her hard work in support of RAF Marham, which affects a number of our hon. Friends. If RAF Marham were to close completely, only one Ministry of Defence base would remain in Norfolk—at Swanton Morley, a former RAF base that is now the base of the Light Dragoons. There is a lot of concern in Norfolk. RAF Coltishall, part of which is in my constituency, closed six years ago, but 80% of the base—now owned by the Ministry of Justice—has still not been taken over. The fear has always been that RAF Marham would be left on its own. Perhaps the Minister will tell us whether, if either RAF Lossiemouth or RAF Marham lost the RAF operational element, any of the military units from the United Kingdom support division would go into whichever base was closed.
Elizabeth Truss
I entirely agree with my hon. Friend about the detrimental effect of the closures that we have already seen in Norfolk and East Anglia. I should like the Minister to consider the future of RAF Marham when the Tornado is retired. My understanding of the 2005 report on the joint strike fighter is that RAF Marham was considered a suitable option for the JSF. As the equipment is modified and—I am given to understand—the noise levels would be lower, it might be a potential future location, so we could continue building on our excellent engineering and maintenance facilities.
Mr Bacon
On my hon. Friend’s point about the JSF, because Marham has an extra-long runway it could be used by a wide variety of aircraft, not just the JSF. Also, when we were there, we saw an enormous amount of expensive work, paid for with taxpayers’ money, being done to refurbish the runway.
Elizabeth Truss
That is right, and my hon. Friend makes a very good point about the amount of taxpayers’ money that has already been invested. I agree that that would be wasted if we were to give up on even an alternative Ministry of Defence use for Marham, which is so specialist in the RAF. That is an extremely important point.
We have had a long discussion about the economic and military value of RAF Marham, and I thank my colleagues for their interventions, but I also want to talk about its economic value locally and the key factors for west Norfolk, about which I know my hon. Friend the Member for North West Norfolk (Mr Bellingham), who is present today, is also well aware.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I congratulate the hon. Lady on securing the debate on this of all days. I have absolutely no axe to grind as I live some distance from Norfolk and represent a constituency that is a great distance away. I also congratulate the hon. Lady on her delicate approach to this issue, but does she agree that it is crucial in the review that community is not set against community and that the MOD makes decisions on their merits? It is important that all communities behave in as dignified a way as the hon. Lady has this evening.
Elizabeth Truss
I thank the hon. Gentleman for his comments, and I think that is absolutely right. No MP wants to see the source of much local employment and pride in their constituency closed down. I fully appreciate that, and I know that Opposition Members are genuine in the case they might make for the base in their constituency. However, I want to make the case today that RAF Marham is located in an area with particularly high unemployment and deprivation, and I will draw the comparison with Lossiemouth. The unemployment rate in the west Norfolk borough is 7.4%, whereas in Moray in Scotland it is 4.8%, so west Norfolk has significantly higher deprivation. We should also look at the skills levels: 15% of the population in west Norfolk do not have any qualifications, compared with 9.6% in Moray.
Elizabeth Truss
I am sorry, but I will not give way again, as I have already taken a number of interventions.
There is also a higher proportion of children on free school meals in west Norfolk. I say that not to denigrate other bases, because I accept that no MP wants bases closing in their area, but to make the point to the Minister that west Norfolk has relatively high unemployment and deprivation, and that ought to be taken into account. I should also point out that more people are employed at RAF Marham than at Lossiemouth and Kinloss combined. More than 5,000 people are employed at RAF Marham, as against 2,300 at Lossiemouth and 1,800 at Kinloss. Those statistics also need to be taken into account when the decision is made.
I understand the hon. Gentleman’s point that all areas are suffering from their own difficulties, but it would be wrong for those very high levels of unemployment and deprivation not to be taken into account in the national debate just because some parts of the country shout louder than others. That is a concern to me, because it is very important that this decision is made on proper grounds—military grounds, economic grounds and the grounds of the public purse. This should not be about politics trumping economics; it should be about a secure skills base for communities—in my case, in west Norfolk—and a secure military future for our country, and in this instance not just for the Tornado force, but for the JSF moving into the future.
The Minister for the Armed Forces (Nick Harvey)
I commend my hon. Friend the Member for South West Norfolk (Elizabeth Truss) on initiating this debate on the future of RAF Marham which, as the House will understand, is of great importance to her constituency. I thank her for her words of praise for the men and women of our armed forces and the Ministry of Defence civilians who support them. This is a special day for our armed forces. It is a day when the whole nation joins together to remember their sacrifices, and I paid my respects at the national memorial arboretum this morning. The armed forces memorial is sobering, as engraved upon it are the names of more than 15,000 of those who made the ultimate sacrifice for this country, and more names are being added each year. I cannot pay high enough tribute to our armed forces, to what they have done in the past, to what they are doing in the present and to the remarkable professionalism, courage and resolve that I know they will continue to show in the future.
Given the subject of this debate, I should like to pay particular tribute to all those who work at RAF Marham and to the local community, who have, over the years, given such strong support to the station, the RAF and the nation. As my hon. Friend said, RAF Marham has a long and honourable history. During the second world war, it operated as a bomber station and in the post-war period it has also acted as a base for air-to-air refuelling aircraft. Today, it is the RAF’s largest fast-jet station and it is home to a significant element of the RAF’s offensive air capability, operating four Tornado GR4 squadrons, which carry out attack and reconnaissance roles. Other force elements based at RAF Marham include the Tactical Imagery Intelligence Wing, 3 Force Protection Wing Headquarters and 93 Expeditionary Armament Squadron. RAF Marham is also a centre of engineering excellence, providing engineering support to the Tornado GR4 fleet. All together, RAF Marham is one of the largest employers in Norfolk, with a total of more than 4,000 service personnel, MOD civilians, and contractors working there.
Last month, we published the strategic defence and security review, which was based on two clear priorities: protecting our mission in Afghanistan; and setting the path to a coherent and affordable defence capability in 2020 and beyond. The Government have made clear our determination to address the unprecedented fiscal deficit we inherited. Every Department has had to make its own contribution and the MOD is playing its part. Because of the priority we place on security, the defence budget is making a more modest contribution to deficit reduction relative to many other Departments, but even so, regrettably, this has meant tough decisions. The SDSR process aims to bring defence plans, commitments and resources into balance. It is painful, but we have to make sacrifices to get the economy and the defence programme back on track.
Our fleet of Harrier and Tornado air defence and ground attack aircraft have performed magnificently over the past 30 years, but those aircraft risk becoming outdated as threats continue to become more varied and sophisticated, and maintenance of the fleets will become an increasing challenge. So, RAF plans to make a transition to a fast-jet force comprising just the Typhoon and the joint strike fighter by 2021 make operational and economic sense. The decisions to retire our Harriers and to reduce the number of Tornados involved very difficult choices, which we had to make to focus resources where they are most needed: in support of current operations. The Tornado GR4 force, even at its reduced size, will be significantly larger than the current Harrier force. So retaining the more capable Tornado allows continuous fast-jet support to forces in Afghanistan and the ability to support concurrent operations. That would not be possible if Harrier were retained and Tornado retired.
We know from our work on the SDSR that RAF Kinloss and two other bases will no longer be required by the RAF. I can understand that that will be cause for some concern at Marham, as it is elsewhere in the country with ties to the Air Force. Of course, this is not just about fast jets—nor is it even just about the RAF. The decision on Tornado basing will have to take into account wider RAF and defence requirements. For example, the Prime Minister announced our intention to accelerate the re-basing of the Army from Germany, which also needs to be taken into account.
The Ministry of Defence will need to determine what makes the most sense for the structure of our armed forces, including where they are based, where they need to train and operate from and ensuring value for money for the British taxpayer. However, no decisions have been taken on our future basing requirements beyond those that I have just outlined. It will take time to work out which of the bases we retain and the uses to which they are put. In that work, we will also look beyond those bases directly affected by the SDSR decisions.
My hon. Friend has reminded us of the importance of RAF Marham as the Tornado force headquarters and of the wider economic and social position of RAF Marham in the south-west Norfolk community. We have also had similar representations from my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) regarding RAF Leuchars and from the hon. Member for Moray (Angus Robertson) regarding RAF Lossiemouth. The MOD has also received submissions from the Moray taskforce. The thousands of people who marched in Lossiemouth on Sunday reminded us, if we needed reminding, of the strength of feeling these decisions generate in local communities.
So we know that these are important decisions and that we must get them right. I know—and regret—that this means uncertainty for the people and communities concerned. My hon. Friend the Member for South West Norfolk made that point powerfully, and it is understood, but I emphasise to her again that there is no proposal to close RAF Marham. The issue has to be seen in the context that I have just described.
We will not rush to a conclusion without proper analysis. It will take time for us to reach the right decision. As the SDSR states, we will aim to do so in a way that is sensitive to economic and social pressures and the needs of our people and their families. We also want to make sure that any decisions fully consider the implications for Tornado personnel operating in Afghanistan over the coming year as well as their families. It is therefore unlikely that any decisions on Tornado basing will be taken before next spring at the earliest. We will of course listen to any representation from local communities as we work through our decision. As and when it proves necessary, we will work with all the relevant agencies and the local communities to manage the local impact of our decisions.
The SDSR announcement marked the beginning, not the end, of a process that will transform our armed forces to meet the challenges of the future. That includes decisions on all military estates, such as RAF Marham. Further work is now needed to establish how we will deliver the SDSR’s findings.
Thomas Docherty
The hon. Gentleman is a decent Minister. Will he assure all the communities affected that the Ministry will work quickly and that when the decision is made, the communities will be the first to know, so that the media do not—through whatever process—discover before the three or four affected communities?
Nick Harvey
I certainly give the hon. Gentleman a commitment that we will try to make sure that that happens in an orderly fashion, as he describes. I must stress, however, that as this process involves an estate review across defence, more than three or four communities will have an interest. It is a very big piece of work. Of course we will endeavour to do things quickly but, as I have stressed, there will be a detailed and comprehensive study across not only the whole of the RAF but defence as a whole. It will consider the issues I have discussed, including where units that come back from Germany might be based. We will do it as quickly as we can, but I do not want to mislead him into thinking that that means he will get an outcome any time soon.
We need to do further work to establish the detail of how to progress, but I am determined that at the end of the process, the United Kingdom will have the capabilities it needs to keep our people safe, to meet our responsibilities to our allies and friends and to secure our national interests. As they were in the SDSR, our decisions have to be objective, unsentimental and based on the military advice we receive. We need to focus finite resources where they are most needed. We know that the armed forces will be smaller and that, as the RAF reduces its number of fast jets, it will inevitably need fewer flying stations. Although the RAF might become leaner, we can maximise investment in new aircraft, as well as assuring full support to current and contingent operations. The transition to the combined fast-jet fleet of joint strike fighters and Typhoon will certainly provide the RAF with world-class capability for the future. My hon. Friend has called on the Government to base their decisions on military necessity, the realities of the public purse and the socio-economic impact on the areas affected and I assure her that that is precisely what we intend to do.
Question put and agreed to.
Ministerial Correction
(14 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text
Work and Pensions
(14 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We are at a critical point, with 5 million people on out-of-work benefits, 2 million working-age people claiming incapacity benefit, of whom 900,000—just under 1 million—have been claiming for an entire decade, and a system that has left Britain with the highest rate of jobless households in Europe.
[Official Report, 11 October 2010, Vol. 516, c. 34.]
Letter of correction from Mr Duncan Smith:
An error has been identified in the first sentence of the fifth paragraph of the oral statement of 11 October.
The correct sentence should have been:
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We are at a critical point, with 5 million people on out-of-work benefits, 2 million working-age people claiming incapacity benefit, of whom 900,000—just under 1 million—have been claiming for an entire decade, and a system that has left Britain with one of the highest rates of jobless households in Europe's major economies.
Traveller Sites on Green Belt Land (South Staffordshire)
Westminster Hall
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backbench business
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Health (CSR)
(14 years ago)
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Grahame M. Morris (Easington) (Lab)
It is a pleasure to serve under your chairmanship for the first time, Mr Gale.
I thank the Backbench Business Committee for allocating this slot. I sought the debate to allow right hon. and hon. Members the opportunity to examine the real impact of the Chancellor’s comprehensive spending review on the Department of Health, the national health service and, indeed, public health.
The coalition Government have set out a 0.4% real-terms budget increase over the spending review period. Although the numbers suggest that the Government are providing the NHS with a modest increase in its budget, the decisions they are making will mean cuts to services, staffing, capital spend, medicines and care. In truth, it is the worst settlement for the NHS in its 62-year history.
During the course of the debate, I want to challenge the Government’s claim that they have met their coalition agreement pledge to guarantee that health spending increases in real terms in each year of the Parliament. Right hon. and hon. Members should note that £1 billion a year is being taken from the existing NHS budget to meet some of the growing costs of social care.
Not only is the coalition failing to rise to the task of dealing with the growing crisis in social care but, by transferring responsibility for social care to local government, it is trying to rob Peter to pay Paul, and then pretending that Peter still has money. Both the Nuffield Trust and the House of Commons Library have confirmed that due to the transfer of money from the health budget to social care, there will actually be a cut in the health budget. The latest House of Commons Library research report confirms:
“Including the (social care) funding is critical to the description of the settlement as a ‘real terms increase’; without it, funding for the NHS falls by £500 million—0.54% in real terms.”
For social care, there are storm clouds on the horizon. Even with the additional money taken from the health budget, there will be a shortfall of at least £2 billion—as set out by the Local Government Association—to maintain current standards by the end of the spending review period. It seems like another broken promise to say that the coalition will provide sufficient resources to maintain current levels of social care.
On top of that, the Government are removing the ring fence from the personal social services grant and merging the social care budget into the local government formula grant. The NHS Confederation has noted that with councils facing a 26% cut in their funding from central Government, money for social care might not get to those who need it. In short, this means that there is no guarantee that the money will be used as intended, thus creating a postcode lottery in care and a Government who are washing their hands of their responsibility to provide dignity to the most vulnerable in our society.
The Minister of State, Department of Health (Mr Simon Burns)
Just to put the hon. Gentleman out of his misery, as he has prayed in aid the King’s Fund, would he care to comment on—and does he agree with—its briefing for the debate? It says:
“In the context of significant cuts to other Whitehall budgets, the settlements for health and social care are generous. The government has met its pledge to protect the NHS budget and has prioritised additional funding for social care.”
Grahame M. Morris
We have crossed swords before over an interpretation of figures. Later in my speech—
Grahame M. Morris
I intend to come to the King’s Fund in a moment. I suspect that the Minister is quoting rather selectively from its brief.
Mr Burns
To help the hon. Gentleman, and because I would like an answer to the question, may I say that I am not quoting selectively? I suspect that he, too, has the briefing. The quotation is at the top of page 4. It is the first and only paragraph of the conclusions, so it cannot be out of context.
Grahame M. Morris
I will answer in a moment, if the hon. Gentleman gives me the opportunity.
I am also quoting figures from a recent House of Commons Library note—perhaps the Minister has a copy as well. It seems quite clear to me that, in terms of departmental expenditure limits and certainly in terms of capital, we are looking at a 17.9% reduction over the lifetime of the Parliament. Indeed, the Minister and I, and other colleagues from the north-east, have raised issues about NHS capital funding in the past—I want to mention those later in my speech. I am conscious that other hon. Members want to make contributions, so I shall press on for the moment and hopefully I can respond to the Minister in a little more detail in a moment or two.
To highlight some of the anecdotal evidence, at a recent meeting of the Community Practitioners and Health Visitors Association, which is part of the union Unite, front-line workers gave their feedback on the impact of cuts already in the pipeline. They expressed concern that a reduction in the number of practitioners was eroding the service to the public, that specialist staff were already being made redundant, that vacancies were being frozen, that case loads were getting bigger and that patients had to wait longer. They further pointed to a reduction in vital health promotion work, which has been highlighted before, and the fact that health visitors were now working significantly over their paid hours in chaotic circumstances.
Alex Cunningham (Stockton North) (Lab)
I congratulate my hon. Friend on securing this important debate. Is he aware that, contrary to the Government’s claims that they will protect the NHS, many jobs have already been axed in our health service, including nearly 200 on Teesside alone in recent weeks? Is he also aware that, just this week, school nurses in that area are being targeted and asked to volunteer for redundancy due to the very real cuts being imposed?
Grahame M. Morris
I have a whole series of examples of hospitals and services that are threatened with closure or reductions in services from right across the length and breadth of the country, which was highlighted in a recent report in The Sunday Telegraph. I have the whole list, so I agree with the valid point that my hon. Friend makes forcefully.
After only six months in power, the coalition is putting the proud record of the previous Labour Government on the NHS in jeopardy. On top of this, feedback from the front line shows that the Government are removing the safeguards and patient guarantees that drove down waiting times and assured the same quality of care irrespective of where a patient lived. This is not a Government protecting the NHS. It seems as if this is round 2 of what the Tories never managed to accomplish in the 1980s: to break up and privatise the service.
Ian Lavery (Wansbeck) (Lab)
On 20 July, in evidence to the Health Committee, the Secretary of State said that he wanted to
“entrench the sense of greater ownership on the part of patients”—
that is ownership of the NHS. Is it not the case that the reforms will give ownership of the NHS to the private sector, and that only the NHS logo will be left behind?
Grahame M. Morris
My hon. Friend makes a valid point. The White Paper “Equity and Excellence: Liberating the NHS” certainly seems to be setting out in that direction.
Certain projects, and particularly one in my area, have suffered as a result of the departmental expenditure limits that I mentioned earlier, which will result in a decrease of 17.9% over the four-year life of the Parliament. A new hospital in the north-east of England at Wynyard was to have served the southern part of my constituency of Easington, as well as the constituents of Stockton North and Stockton South, and those in parts of Sedgefield and Hartlepool, but it was an early casualty of the cuts.
In the longer term, the coalition partners seem to want not a capital budget, but to pursue a roll-out of private finance initiative hospitals. They want to place every privately built hospital into competition in the private sector so that they can be commissioned by GPs controlling the entire health budget in the private sector. The direction of travel for the health policies of the present Government is clear, but it is my belief that the duty of the Government should be to protect essential public services such as the NHS from the distorting effects of the market.
We need to learn lessons from recent history. It is ironic that my party’s efforts in government to incorporate market conditions in health showed that that could drive costs up rather than bring about efficiencies. Such an example was recently cited in the media. The Coventry University hospital was built under a PFI scheme. As we all know, PFI allows private companies to build public sector infrastructure, but although it gives the benefit of delayed costs to the public purse, those companies are entitled to levy huge interest rates, fees and services charges in the longer term. Treasury figures show that when the contract for Coventry University hospital is paid off in 2041, the estimated cost to the taxpayer will be £3.3 billion. If the state had built the hospital, the cost would have been a fraction of that sum. Indeed, the hospital at Wynyard was costed at £464 million—that is an incredible difference. Market discipline and privatisation do not automatically produce value for the public purse.
Mr Simon Burns
Will the hon. Gentleman confirm that that PFI scheme took place under a Labour Government and was approved by a Labour Treasury?
Grahame M. Morris
The Minister is right, but I was making the point that important lessons from history need to be learned. We are reacting to evidence that PFI does not necessarily provide value for money. Each case has to be considered on its merits.
Given the real-terms cut to health spending, an agenda of wholesale management reorganisation and the effective privatisation of the NHS budget, the impact of the comprehensive spending review and the Department of Health White Paper will not only alter the principles on which the NHS was founded, but squeeze health provision, increase costs, allow hospitals to go bust if they are failed by the markets, and create a postcode lottery of health services. There is widespread opposition to elements in the White Paper among health care professionals, including from the British Medical Association, which is not noted as radical left-wing organisation. The BMA states that it has
“opposed the increased commercialisation and competition imposed on the NHS in recent years and there is little evidence of any benefits to patients. It brings with it additional costs as well as disincentives for collaboration and co-operation.”
Staff costs account for more than half of NHS expenditure. Future decisions on pay will have a great impact on the health budget. The Royal College of Nursing has already highlighted short-sighted cuts by NHS trusts to their work force and services. The RCN is aware that about 10,000 nursing posts have been earmarked for removal in anticipation of cuts to front-line services. What consideration has the Minister given to the pressure to increase staff pay in coming years? By 2013-14, GPs will have had their pay frozen for four years; consultants for three years; and NHS staff earning more than £21,000 for two years.
Ian Lavery
Is my hon. Friend aware that despite the two-year pay freeze on public sector pay for those earning above £21,000 a year, which was announced by the coalition in the emergency Budget, the King’s Fund notes that the NHS payroll bill is likely to increase by up to £900 million a year due to the increments that are built into most NHS contracts? Does he agree that that reinforces the inadequacy of the NHS settlement for patient care?
Grahame M. Morris
I do indeed. My hon. Friend makes an important point. Another is the impact on the NHS budget of the VAT increase that is to be implemented on 1 January 2011.
Kieran Walshe, professor of health policy and management at Manchester business school, has criticised the coalition Government’s approach of making change without evidence. The implementation of the massive reorganisation that is set out in the White Paper will need at least another £3 billion in addition to the sums already identified, such as for wage costs, inflation, and the increase in VAT. That is at least another £3 billion from the NHS coffers, and the plans were still being altered after the coalition agreement was published. The decision to abolish primary care trusts seems more like a last-minute whim of the Secretary of State than a well-thought, evidence-based approach to health service reorganisation.
Professor Walshe said:
“the transitional costs of large scale NHS reorganisations are huge…projected savings from abolishing or downsizing organisations are rarely realised.”
Those of us who have been involved with local government will appreciate how true that is. He continued:
“Closing down or merging organisations produces a round of expensive redundancies, early retirements, and redeployment, while new organisations find new premises and appoint lots of new staff.”
I echo the concerns of Mencap—I am grateful for its briefing—which states
“As the government have still been unclear about the transitional and ongoing costs for moving to the new commissioning arrangements, this settlement may not be sufficient to deliver against needs.”
In contrast, the Secretary of State still believes that he can save money by carrying out the biggest reorganisation in the history of the NHS. Indeed, on 2 November, he said:
“We are cutting management costs in the NHS by 45%. We will cut total administrative costs as well, and in total that will save £1.9 billion a year by 2015.”—[Official Report, 2 November 2010; Vol. 517, c. 759.]
Will the Minister tell us what account has been taken of the unknown costs of the reorganisation?
Professor Chris Ham is the chief executive of the King’s Fund—the Minister’s favourite organisation. He questions why the Government would
“embark upon such a fundamental reorganisation as the NHS faces up to the biggest financial challenge in its history.”
Is it not the case that Ministers should be honest with the public? The impact of the spending review will mean deep cuts to vital services in the NHS. When the Health Secretary delivered his White Paper to the House, he said:
“The dismantling of this bureaucracy will help the NHS realise up to £20 billion of efficiency savings by 2014, all of which will be reinvested in patient care.-—[Official Report, 12 July 2010; Vol. 513, c. 663.]
Coalition Minsters are trying to give the impression that health provision has somehow been protected by a real-terms increase in the health budget, but that myth is starting to unravel. The coalition Government have admitted that current levels of health care will not be maintained. They are undertaking a massive reorganisation and all the evidence suggests that the projected savings will not be realised.
Edward Macalister-Smith, the chief executive of NHS Buckinghamshire, said:
“the amount of money that is available from administrative savings, management savings and the financial back office, is a very small proportion. Most of the money is spent on clinical care. If you want to reduce your spending, make your spending more efficient, that is, I am afraid, where you have to concentrate.”
It is simply not possible to achieve the sort of savings that the Government have outlined. The settlement for the NHS will come no way near maintaining current health care levels. Some £1 billion is being taken to plug the hole in social care. Many more billions are being wasted on a wholesale reorganisation, and the coalition seems to have agreed to take a gamble with the £80 billion NHS commissioning budget.
According to research carried out by the King’s Fund, the VAT rise to 20% from January next year will cost the NHS an additional £250 million a year. Furthermore, additional pressures will be placed on the NHS, thanks to the massive cuts that are being levied on local government budgets. There are also serious concerns that cuts to local government will lead to a shortage of hospital beds as the elderly and vulnerable are left without local care, thus placing even greater pressures on the NHS. The 26% cut in central Government funding for local authorities will pile on the pressure for the NHS. Nigel Edwards, the head of the NHS Confederation, has warned that the pressure on beds could mean that hospitals will be unable to admit patients “who badly need care”.
It is wrong for Ministers to pretend that their reorganisation will improve service delivery or that it is possible to save £20 billion through efficiencies alone. They should be honest about what they are doing to our national health service. The Government are not keeping the promises that they made to patients and staff to protect NHS health care funding.
Mr Simon Burns
I would hate the hon. Gentleman to escape from his earlier promise. He said that he would comment on the quote I cited, which, I repeat, has not been taken out of context. Let me remind him what it:
“In the context of significant cuts to other Whitehall budgets, the settlements for health and social care are generous. The government has met its pledge to protect the NHS budget and has prioritised funding for social care.”
Does not the hon. Gentleman agree with that element of the King’s Fund briefing; he seems to agree with anything that suits his argument?
Grahame M. Morris
Yet again, the Minister is quoting one specific element of the evidence. The King’s Fund evidence is quite extensive. It is logged on the Health Committee’s website and is open for the public to see. Many commentators and respected organisations take a view that runs counter to that expressed by the Minister.
I shall conclude because I know that other hon. Members wish to speak. Political and NHS leaders need to be realistic about the implications of the financial situation for patients, the public and staff. There are no pain-free options for the NHS. It is time that Ministers were honest about the future of the NHS. There is no doubt that over the spending review period, the NHS will have its spending power reduced. It is time for the Government to be honest with the public about the decisions they have made.
Mr Kevin Barron (Rother Valley) (Lab)
It is good to be here this afternoon under your chairmanship, Mr Gale.
First, let me congratulate my hon. Friend the Member for Easington (Grahame M. Morris) on having the foresight to table this subject for debate. The Minister and the rest of those present will be pleased to know that I shall not be quoting from the King’s Fund during this debate—yes, I see that he is quite pleased about that. Instead, I have a brief from the Nuffield Trust about the likely effect of the comprehensive spending review on health, on top of what we have just been discussing. My hon. Friend talked about a 0.5% increase over four years, or something like that, but the Nuffield Trust argues at one level that there might be a bit more to it. Let me go into the brief it published last month, although it is not related to this particular debate:
“The 2010 Spending Review announced that the NHS will receive 0.4 per cent… growth over the next four years—0.1 per cent a year. This compares to an average real-terms increase of 5.7 per cent per year from 1997/98 to 2009/10. This is the lowest four years’ increase for the NHS since 1951-56. The Spending Review also allocates £1 billion a year from NHS funding to social care. The real-terms change in NHS funding, net of the social care support, is therefore a reduction of 0.5 per cent over the next four years.”
[Interruption.] The Minister says that that is rubbish. Perhaps he can stand up and tell us whether he disagrees with it. I want to continue with this brief and ask him about something that is directly related to this. The next paragraph states:
“The Spending Review also announced important changes to the treatment of past underspends.”
Many of us will know from talking to the NHS locally over the past few years that, because of the generous funding over the past decade, there are such things as underspends. The brief continues:
“Health has accumulated underspends of £5.5 billion, of which £3.7 billion is classified as ‘resource’ (ongoing expenditure on staff, medicines, equipment and the like) and £1.8 billion as capital. There is also a planned underspend for 2010/11 of £1 billion. According to the Spending Review, these accumulated stocks—known as end-year flexibility (EYF)—have been abolished. This means that any previous underspend that is honoured by the Department of Health will have to be made within the settlement outlined in the Spending Review.”
Will the Minister tell us whether the current underspends that our primary care trusts, or perhaps hospitals, hold at the moment—I hope they will be spent on expanding services, as they have been over the past decade—will be clawed out?
The other issue that I would like to raise relates to the changes in commissioning. I am in a peculiar position on this. Some Members will know that I chaired the Health Committee in the previous Parliament. In March, we brought out a report on commissioning. The Government responded some time in July. When the Secretary of State was on the Floor of the House making his statement on the White Paper, he talked about the Health Committee and said:
“Before the election, when it had a majority of Labour Members, the Select Committee on Health said that PCT commissioning was weak and that it was not delivering what was intended. He set up a programme called world class commissioning—it never worked.”
He was replying to the then shadow Secretary of State for Health. The Secretary of State went on:
“Central to delivering better commissioning in the health service is ensuring that those people who incur the expenditure—the general practitioners, on behalf of their patients—and who decide about the referral of patients are the same people who”
blah, blah, blah, blah. In reply to a comment from the current Chair of the Health Committee, the right hon. Member for Charnwood (Mr Dorrell), the Secretary of State said:
“In his capacity as Chair of the Select Committee on Health, we will be responding to him very shortly regarding the Select Committee’s report from before the election on commissioning... What he has just said is absolutely right; we have been able—this is a central task in commissioning—to bring together the responsibility for management of patient care with the responsibility for the commissioning of services.”—[Official Report, 12 July 2010; Vol. 513, c. 665-66.]
I have mentioned that because he has used my name on at least two occasions on the Floor of the House, basically to say that the report on commissioning that we published supports GP commissioning. I want to put it on record that, in my view—it was obviously my draft report and it was not challenged at the time—it does not support GP commissioning in the way that the Government are bringing forward the changes in commissioning.
We looked at four areas in that report, in relation to commissioning: whether to abolish PCTs and reintroduce health authorities; retain PCTs but introduce more integrated care; retain PCTs but introduce local clinical partnerships, under which GPs would directly control commissioning; and retain PCTs but commission services from hospitals. There was also the option to retain and strengthen PCTs. We did not come to a hard conclusion on any of that. I will not bore this gathering with the conclusions we did come to, but it is a gross misrepresentation to say that we were arguing for GP commissioning.
Maybe the nearest scenario that we looked at was the one in relation to local clinical partnerships. The Nuffield Trust informed us:
“There are key changes to the policy environment that are required if commissioning is to stand a chance of becoming effective.”
That was one option, but local clinical partnerships, as we quoted in the report, look very much like the system of GP fund-holding, which had failed to improve commissioning, in our view and that of many other people. We also said that it might be expected to have the advantages and disadvantages of that system.
Mr Virendra Sharma (Ealing, Southall) (Lab)
My right hon. Friend is talking about the GP’s role. Does he agree that GPs are not trained for many of the roles asked of them, and not qualified to play those roles? There are no extra resources made available in order to gain the skills.
Mr Barron
That is absolutely true. There are fewer resources, because more is being taken out of administration than was planned before the spending review came along.
I am intrigued by the idea of giving clinicians power or giving GPs power. The British Medical Association is not saying no to the idea of GP commissioning. That is good—I have some quotations from it in front of me—but it would want to look at having a real local clinical partnership that included clinicians who worked in the local provider—the local hospitals. It believes that if we are going to do this, that ought to be looked at. I am interested to see whether the Minister agrees. One reason I say that is because, when we took evidence from his favourite organisation, the King’s Fund, the Royal College of Physicians and others thought that PCTs should be retained, but that hospital clinicians and GPs should work more closely together. Professor Ham, who is obviously one of the Minister’s favourite authors in these matters, said:
“There should be progressive migration towards clinically integrated systems, building on the most promising aspects of current reforms and drawing on evidence that shows the benefits of integration and the challenges of making a commissioner/provider split system function effectively.”
He was arguing for real integrated care, but my understanding is that that is not what the White Paper is proposing. It is proposing that only GPs will have the power to spend 70 or 80% of the NHS budget, not other local clinicians as well. I would like the Minister to reply on that specific point.
Grahame M. Morris
I thank my right hon. Friend for giving way on the point about GP commissioning. That is an issue that the Minister might address. If streamlining in commissioning bodies saves money—I think the previous Labour Government demonstrated that by reducing the number of PCTs from 350 to 150, which was acknowledged by Sir David Nicholson—how can it save money to be creating a plethora of GP consortiums that will be responsible for commissioning? Creating such a plethora of bodies must add to administrative costs.
Mr Barron
I am grateful to my hon. Friend for his intervention. I have to say to the Minister that at no time when members of the Health Committee in the previous Parliament were looking at commissioning did we ever think that the Government would hand it over to GPs in the way being proposed in the White Paper. It has huge implications, not just for the NHS, but for GPs themselves. The only evidence we saw was that GP fund-holding has struggled for nearly 20 years to be a good, proper and efficient way to commission services. Frankly, nobody submitted any evidence to my knowledge for the leap into the dark of handing commissioning to GPs in such a quick period of time. Nobody gave that evidence whatever. There were some arguments about keeping the PCT and adding GPs to it, so that they could get the experience. Frankly, there should be more medical leadership in our national health service; I have no doubts about that. This leap in the dark with GP commissioning is something that, I fear, is unlikely to work. The professionals who work in the health service appear to have that same fear.
Ian Lavery
The coalition agreement states quite clearly:
“We will stop the top-down re-organisations of the NHS that have got in the way of patient care. We are committed to reducing duplication and the resources spent on administration, and diverting these resources back to front-line care.”
Now we are seeing the largest ever reorganisation in the NHS. We are seeing the PCTs abolished and GP consortiums looking to take their place, which will inevitably create duplication and require more finance and more resources to be spent on administration. What does my right hon. Friend think about that?
Mr Roger Gale (in the Chair)
Order. As hon. Members know, I am the most tolerant of Chairmen, but I cannot help noticing that we are having a significant number of scripted interventions that are rather long. I am not entirely certain that they are in order, but what I am certain of is that the subject of the debate is the impact of the comprehensive spending review on the Department of Health. We appear to be embarking on a debate around the structuring of the health service. I think that, somewhere along the line, hon. Members might like to refer to the comprehensive spending review.
Mr Barron
I had nothing to do with the interventions, Mr Gale, apart from giving way. There is no plan or plot. I thought I would seize the opportunity to talk about the commissioning report, because the current Health Committee is looking again at commissioning and the House has not had the opportunity to debate the report and the Government’s response, which came in July.
In relation to the latest intervention, at the last Health Question Time the Minister attempted to reply to what I said about major reorganisations in the health service. It is well known now that they take years to embed, are normally very expensive and usually have a negative effect on performance while they happen. That has happened under every major NHS reorganisation in the last 20 or 30 years. That is the truth of the matter. If the estimate of the increase in costs arising from the reorganisation is right, the CSR will have a significant impact on the NHS in the future.
Frank Dobson (Holborn and St Pancras) (Lab)
Beside the financial impact of reorganisation, even more important is the fact that large numbers of clinicians and others working in the NHS are distracted from their day job of looking after patients to go to innumerable meetings and discussions. In some cases, they even have to reapply for their current jobs. That is all to do with the reorganisation, so it wastes staff time, as well as wasting money.
Mr Barron
I think that there is some evidence in relation to that. Having said that, the evidence that we should be concerned about is the evidence that has come out in surveys recently about what GPs think about the proposed reorganisation.
I have in front of me a press release from what is probably the strongest trade union that we have in the United Kingdom, which is the BMA. The BMA does not like to be called a trade union, but, indeed, that is what it is. Along with the Minister’s favourite organisation, the King’s Fund, the BMA conducted a survey of doctors. I will quote from the results of that survey:
“Asked if the reforms would improve patient care, 38 per cent of doctors who responded either said they did not know, or said they neither agreed nor disagreed. Less than a quarter believed patient care would be improved.”
Obviously surveys are surveys—we do not know what question was asked. In addition, I think that the number of doctors who responded to that survey was quite low. I would not lay great store in it, and the Minister probably has the figures from the survey in front of him. However, I want to point out what Dr Hamish Meldrum of the BMA said about the White Paper. He said that it had “many positive aspects” but added:
“Giving more power to clinicians has the potential to improve the quality and cost-effectiveness of patient care, but as this survey reflects, doctors believe that many of the proposals in the white paper would make joint working much harder.”
He continued:
“GP-led commissioning will only be successful if there is effective integration between different parts of the NHS, but some of the proposals in the white paper will accelerate competition and fragmentation.”
That comment takes me back to the question that I posed to the Minister about whether those local GP consortiums can include other people who work in the NHS, such as consultants, other people from the local hospital or providers of primary care services. Can such people sit on those consortiums or is it exclusively GPs who will do the commissioning?
I will not go into much detail, but I want to refer briefly to the comment that the coalition said that these proposed changes are not “top down”. I appreciate that this debate might not be the right forum in which to debate that issue much further, Mr Gale, but what is the national commissioning board going to do if not act in a “top-down” manner?
There is good evidence—I do not think it has been denied by the Department of Health—that if a local GP consortium were to fail, the national commissioning board would intervene. I want to know what is the difference in concept between the national commissioning board and Richmond house. We have had about 40 years of battles between the NHS at local level and central Government, over central Government trying to give direction to the NHS at local level. How will that change?
Before I sit down I have a nice easy question for the Minister. I have here a press release that went out on 21 October, and the heading reads:
“New support for GPs will cut the costs of commissioning”.
The press release continues:
“A new series of resources to support GP Consortia to design and commission services for patients was announced today by Health Secretary Andrew Lansley”.
It says that those resources
“will provide… a set of tools and templates to use when designing and buying services for their patients. The first of these support packs published today is for cardiac rehabilitation services”.
We are apparently saving money with GP commissioning, so I want the Minister to tell us what evidence he has that this new system will save money and cut the costs of commissioning? I ask that question because such evidence—evidence of how commissioning had cut costs—was one of the holy grails that the Health Committee could never find. It has been said in the debate, and it is well evidenced, that the changes in commissioning that we have had during the past few decades have done anything but cut costs. In fact, they have increased them.
I will finish by saying that the Health Committee’s report on commissioning that was published in March said that we need to look wholesale at the past 20 years of payment by results, because payment by results is not working no matter what shape it comes in. We said that quite clearly in the report.
I do not necessarily want to make radical changes to commissioning, but I do want things to be better for patients and the public, and I am not convinced that the outcome of the White Paper will be better treatment for patients and the public, nor am I convinced about the evidence that the CSR’s effect on health will be a better outcome for patients and the public. As I said, organisations such as the Nuffield Trust, which have great experience of our national health care system, are talking about a reduction of 0.5% in NHS spending. I fear that that will happen, and it is not what was in people’s manifestos before the general election. I want the Minister to tell us what he thinks about that.
Paul Flynn (Newport West) (Lab)
I am very grateful for the opportunity to speak in this debate and I congratulate my right hon. Friend the Member for Rother Valley (Mr Barron) and my hon. Friend the Member for Easington (Grahame M. Morris) on their very illuminating speeches.
I will not follow the lines that my right hon. and hon. Friends have taken. However, I note that the comprehensive spending review has been described as generous by some. If we want to see a generous settlement in next year’s spending, it is the settlement that has been given to the landowners and farmers of the country, especially when one recalls that the price of wheat has gone up by 47% and the price of lamb has gone up even more. Not only will the £3 billion that was given out in handouts to the farming industry be protected but it will probably be increased by 3%. Now, there is generosity from a Government.
When one considers what is behind this CSR, one is filled with a sense of despair; we have a new Government with new myths and new jargon, and we will have new errors too. An example of a piece of new jargon is that the National Institute for Health and Clinical Excellence is about to be emasculated and replaced by something called “value-based pricing”. It sounds attractive, but we know that it will not work because the pharmaceutical industry supports it and the pharmaceutical industry has a long record over the years of demonstrating that the only thing that it supports is increased prices and an increased share of the cake for itself. That is what has gone on.
At least with NICE, we had a modicum of control over the increases in the price of pharmaceutical products and the increasing share that the pharmaceutical industry had of the NHS; a share that the industry took away for itself, consequently depriving other parts of the NHS.
We know of examples of that practice by the pharmaceutical industry, mostly involving anti-cancer drugs. One drug was promoted as an answer to pancreatic cancer. One of my constituents was very much involved in this field, and I did some research myself to find out exactly what that drug offered. As far as The Sun, the Daily Mail and all the other tabloids were concerned, this was a miracle drug that had to be obtained for patients and it was only the “mean” Government who were not allowing patients to obtain it. Having gone into the details of what this drug achieved, I found that it cost £16,000 a year and that it increased life expectancy by 12 days, but it caused side effects in 10% of the patients who used it, including death. The other side effects were so dreadful and destroyed patients’ dignity to such an extent that their 12 days of extra life were of no value and would possibly even have been an increased burden to themselves and their loved ones. As is the case with many other drugs now, however, that drug was being pushed by the pharmaceutical company and its agents.
If we take away the power of NICE to make objective, scientific judgments, we will have the power of the tabloids and the lobbyists replacing it, and the patients associations will all join in behind them. We will have campaigns to persuade us; we will have patients on the television making appeals, patients who will be good-looking and who will arouse our sympathy. The pressure will then be on to alter the priorities of the health service to accord with the demands of the pharmaceutical industry. This is a surrender from a reliance on objective, science-based judgments to a reliance on the prejudice-rich decisions of the tabloid press and “big pharma”. Will the Minister guarantee that the price of drugs will go down?
Frank Dobson
Does my hon. Friend accept that the 150 drugs that are most commonly prescribed in this country are half the price that they are in the United States, where the pharmaceutical industry, roughly speaking, determines the price of drugs? We can guarantee that prices will start to go up under the new system.
Mr Roger Gale (in the Chair)
Order. There is a very interesting debate to be had on those issues, but the hon. Member for Newport West (Paul Flynn) has been in the House a long time, and the right hon. Member for Holborn and St Pancras (Frank Dobson), who has just intervened, has been Secretary of State for Health and both are aware that, while the subject may be interesting, it is not to do with the comprehensive spending review, which is the title of the debate.
Paul Flynn
I want to address my remarks to the budget of the health service, and how it matches our priorities.
Perhaps I may move to a different subject. I should like to pursue what my right hon. Friend said. He is absolutely right that the lobbyists determine health policy in America, and will have an increasing effect on the comprehensive review, and on the demands on and priorities of the health service. However, I shall deal with another matter, which is not political in any way, because it involves decisions made by one Government, which were then approved by the pantomime horse of a Government we have now. It is about pandemics past and future. We have had a series of those, which have been costly for the health service. They go back to severe acute respiratory syndrome—a very severe and nasty illness, which killed more than half the people who caught it—through the threatened avian flu, which never lived up to its billing, to swine flu last year.
Swine flu in Britain cost the health service £1.2 billion on antivirals and vaccines. It also had other damaging effects, in that it scared the country greatly. People were frightened by the possibility of flu on the scale of the 1918 flu that killed between 25 million and 40 million people. It distorted all the priorities of the health service for a year. The health service gave attention to that rather than to the other things that it should have given attention to. It also involved the use of a vaccine that had not been trialled. The people who say it was not fully trialled are those who made it—GlaxoSmithKline and the other producers. That was a major event, and we might consider, knowing what we know now, how we got into that situation.
We were told by Liam Donaldson that it was likely that there would be between 3,000 and 750,000 deaths. He gave an average figure. We in the United Kingdom could expect 65,000 deaths, many of which would be among children. Rightly, that terrified the country and the media took it up. What was the source or basis for those figures, and the result? The result was that the number of people who died with swine flu was about 450. The number of people who died of swine flu was about 150. That compares with the 2,000 to 12,000 people—in one year it was 20,000—who die every year of seasonal flu. The swine flu outbreak was thus by any standards a minor event in Britain. Worldwide we were told to expect between 4 million and 7.5 million deaths. The total recorded was 18,000—a minute fraction of what had been expected.
In the context of the spending review, how do we prepare for another pandemic? What if we are given word by the World Health Organisation to prepare for another pandemic? Why did the WHO act as it did? It was for one reason—the definition of a pandemic changed between May and June last year. Scale 6 is the top pandemic; there is no six and a half, and no scale 7. The WHO told the press that there was a scale 6 pandemic; the press immediately went into hysteria mode and said that it was the same as the flu of 1918, and told us to prepare for tens of thousands of deaths. Until May 2009, the definition of a scale 6 pandemic was one that involved a tremendous number of deaths or serious illnesses. In June 2009 the definition was changed to take out that measure of severity and the point was made that it could involve mild flu. A pandemic would be a scale 6 pandemic depending on the geographical area in which the flu was detected. The alarming message came from Madame Chan, who was very much involved in the SARS outbreak in Hong Kong, and who expected something like SARS again. The world was expecting a flu epidemic, because we had one in 1957; there was a world flu epidemic in 1968, and another one in 1977. There was an expectation of a major flu epidemic, but we know the results now.
I want now to consider Tamiflu.
Mr Roger Gale (in the Chair)
Order. I am very sorry, but I must ask the hon. Gentleman to make at least a thinly veiled attempt to relate his remarks to the comprehensive spending review. We are not having a general debate about the health service.
Paul Flynn
As to the likely spending this year, if there is another threatened pandemic, how are we to fit it into the spending review, and future spending, since we are at present tied? Do we draw the lessons of what happened last year? If another epidemic comes along, will we react in the same panic-stricken way, or act as another country did? Perhaps we should consider the present spending review in the Polish Parliament. Ewa Kopacz, who has responsibility for health, was interviewed by GlaxoSmithKline, who told her, “We are not going to guarantee this vaccine, because we haven’t trialled it properly, and if there are any adverse reactions you, the Polish Government, will be responsible.” Ewa Kopacz said, “Well, if you don’t trust it, I don’t trust it.”
The Polish Government spent about 7 zlotys on the vaccine, compared with our £1.2 billion. The result was that they had half the number of deaths per million of population that we had. I want to point out that huge financial decisions were made in the swine flu pandemic, and we should have drawn the lesson from them, but we have not. We had a review, by one Department, which was a whitewash and was approved by the Government, and which said that the reaction was proportional. It was not proportional if we compare UK spending with the spending in Poland—which was virtually nothing—given the result that they had.
Tamiflu was approved by the Food and Drug Administration in America on the basis of its being a mass placebo medicine. In December 2009 the BMJ published an article alluding, in a reference along the lines of “Somebody stole my Tamiflu research paper” to the traditional excuse that students give for not doing homework. The authors had tried to find the research that said Tamiflu was some good, but it was not there. The BMJ could not find it. The FDA in America approved Tamiflu not because it found it was useful but because it had gone into the research and found that the drug was no better than a couple of aspirins. It had no perceived proved value; but the FDA approved it because it wanted to be able to prescribe something in the event of an epidemic. They wanted to show a man in a white coat, giving a pill. It would have an advantage as a placebo—but there is no advantage.
In spite of that, in this year’s spending review we shall almost certainly spend more money on Tamiflu and the vaccines that have not been properly trialled. I am not against vaccines, which are a huge and miraculous improvement in world health, and have saved thousands of millions of lives, but there are serious doubts about the fact that we spent our money last year, and might spend more next year, on a vaccine the side-effects of which are now becoming apparent in various countries—Japan, Finland and India.
I sense that you are going to call me to order, again, Mr Gale. My point is essentially how we order our finances in the spending review. With the changes in NICE, there will certainly be another increase in drug prices. The drug bill constantly increases, in real terms and as a proportion of the health budget. That has been going on for the past 20 years. It will happen again if we hand over power to the lobbyists and big pharmaceutical companies. We are seeing it now. It has been said that instead of a postcode lottery, we have a one-way escalator to higher prices. If we surrender further to hysteria about another world pandemic or to pressure from lobbyists to buy certain drugs to the detriment of other health services, the spending review will be inadequate. The Department will spend more money on drugs—some required, some totally unnecessary—and further impoverish the NHS, creating a decline in important life-saving services.
Rosie Cooper (West Lancashire) (Lab)
Thank you for allowing me to contribute to this debate under your chairmanship, Mr Gale. I am a passionate advocate for the national health service. For more than 30 years, I have been directly involved in it. Through the health authority, I was chair of Liverpool Women’s hospital for 10 years; just before I became an MP, we took the hospital to foundation status. I am also currently a member of the Select Committee on Health.
I explain my background because I want the Minister to understand that I have witnessed at first hand the roller coaster that the NHS has been on—reorganisations, crises, investment, disinvestment and improvements—as it has sought to deal with a dramatically changing world and shifting demands and expectations. However, today the NHS faces perhaps its most far-reaching and fundamental challenge since its inception. I will lay out some of the challenges for the future of the NHS that will be driven directly by the Department of Health settlement in the comprehensive spending review.
The Chancellor’s announcement in the CSR that health would receive a real-terms increase of 0.1% revealed the tension and struggle that will define the future of the health service. It is not exaggerating to say that decisions in the CSR and subsequently in the Department of Health are life-and-death decisions. We cannot afford to play Russian roulette with the future of the people’s health services.
We must disregard the rhetoric and myth-making of the Conservatives as they seek to demonstrate that they have changed when it comes to the NHS. Sadly for the health service, I am not convinced that they have changed at all. Before the general election, the now Prime Minister pledged clearly to end the merry-go-round of organisational change and to protect NHS funding. Those two clear and definitive statements would have suggested to voters a period of stability and continuity for the NHS, even in these difficult and challenging economic times.
There was certainly no indication at that point of what the Secretary of State was about to unleash. We are only now starting to get to grips with the implications of the proposed changes. As a member of the Select Committee who has addressed Department of Health officials and the Secretary of State, I am not sure that the Department of Health is really in control of what is happening. As far as I can see, the current policy in the Department of Health is “Don’t ask for the detail; we haven’t made it up yet.” All the changes are being led by the Secretary of State.
Statements change from one minute to the next. We are told that primary care trusts and strategic health authorities will remain until 2013 to underpin the changes; then, today, Sir David Nicholson, chief executive of the national health service, warned the Secretary of State that his proposal to abolish all PCTs by 2013 could affect quality and safety. The whole thing is becoming a circus. The plans were described by one journalist as an accident waiting to happen, and by a doctor as a politically motivated reorganisation of the NHS. That is hardly critical acclaim.
The Secretary of State for Health said to the Conservative party conference that the Government had made
“An historic commitment to increase NHS resources in real terms each year”.
That is over-egging the pudding somewhat, given the 0.1% increase. The Government could not have done any less without failing to keep their commitment. It is the lowest settlement since the 1950s. That promise must be seen in context: in-year efficiency savings of £20 billion; £1 billion taken out of the NHS to make up half the £2 billion allocated to local authorities for social care, which is not ring-fenced; an increase of £200 million to £300 million in VAT costs after the coalition increases the VAT rate; a possible £800 million to £900 million in redundancy payments over the next two years; an anticipated budget shortfall of about £6 billion by 2015; a 17% cut in capital expenditure; a two-year freeze for those earning £21,000 or more, with the expectation of a catch-up in salaries post-2013. Hospitals face financial pressures because the Department of Health has frozen the tariff. Those are the downward pressures on the financial strength of the NHS, without even taking into account the long-term strategic pressures that will shape the nature of health services and increase the strain on the NHS. They will inevitably require a more substantial budgetary provision than 0.1% year on year.
The Minister knows that the NHS faces increasing demand for services, an ageing population, an increasing number of people with complex long-term illnesses, rising treatment costs and more and more expensive medical technology. On top of that comes the far-reaching organisational restructuring of the entire health service. Sir David Nicholson told the Health Committee that the productivity challenge was huge and had never been done on the same scale in the NHS or anywhere in the world, and it is expected to happen during the transition into the new world of NHS commissioning.
With your permission, Mr Gale, I will quote Nigel Edwards, chief executive of the NHS Confederation. I asked him:
“I just wonder whether you could address this in a few sentences: do you think that we can release these productivity gains, face the furore of the populace, who will not be happy with the comments you have made about hospitals closing, and GPs in consortia trying to manage this system and, in the interim of trying to get there, a lot of the PCTs and strategic health authorities––the good people––are jumping ship? So you are now facing a huge, dangerous area where you may not have the personnel to keep what we have got going. How are we going to get the consortia—the GPs who are commissioning services—facing the wrath of their people, when some of the services they are well used to are closing down? At the same time we are busy saving all this money, do you actually think we can do it?”
He responded:
“I was going to say I think you have encapsulated the problem extremely well…my personal view is there is a very, very significant risk associated with the project that you have just described.”
On top of that, we have heard warm words from the Secretary of State. In various speeches, he has said that the guiding principle will be:
“‘No decision about me, without me’”,
yet when we examine the detail—very little of which is available—the truth appears different.
Frank Dobson
My hon. Friend is right to deal with such global matters. Does she think that it is possible for the Secretary of State or the Minister to reconcile all that benign guff about the money being there with the Government’s proposal to take £16 million away from Great Ormond Street hospital for sick children in my constituency? It is the most famous of its kind in Britain, with world-renowned staff, and it now faces major cuts.
Rosie Cooper
I share my right hon. Friend’s view. Alder Hey, which is adjacent to my constituency and serves my constituents, will be similarly affected. We are taking a worrying direction.
On “No decision about me, without me”, the Secretary of State said to the Select Committee that
“the conclusion that we reached was that we could achieve democratic accountability more effectively by creating a stronger strategic relationship between the general practice-led consortia and the local authority.”
Many people might imagine that that would mean patients being at the heart of decision making and that consortia would operate with councillors, the public and non-executives on the board with a vote. However, that will not be the case. The scrutiny will come from well-being boards. The fact that they will not be at the table and will not have a vote means—as with the current local authority overview and scrutiny arrangements—they might as well not be there. In the Health Committee, I said that such a situation was like throwing snowballs at a moving truck—in other words, the decisions and views of the well-being boards would make little or no difference.
In reality, the Government are giving the NHS budget to GPs, many of whom just want to practise medicine, rather than get involved in this giant policy experiment. There will be no testing; it will just be a big bang. The Government will use the consortiums as a shield to deflect criticism, rather like the way they are currently using the Liberal Democrats. There are rumours that the Prime Minister is getting worried about all of this. I can only hope that that is true.
The warning signs of what this means for the national health service are already apparent. There was an 80% increase in bed blocking in hospitals between May and September. I expect that that situation will only get worse, especially when the cuts to local government budgets really start to bite. Hospitals are once again increasingly becoming the safety net when the funding for social care has been used up. If a local authority cannot afford to provide the necessary care, people will end up in hospital.
Questions were asked at the Health Committee about reserves held by NHS organisations and how they would be treated. Primary care trusts are beginning to refuse to provide certain treatments. We have also had announcements on the future role of the National Institute for Health and Clinical Excellence, which will no longer advise on drug treatment and is moving towards value-based pricing. Will the Secretary of State control the drug companies pricing policies or, as most people think, will the drug companies shortly be back in control? We will soon be back to postcode prescribing and, more worryingly, we are making the availability of drugs a political rather than a clinical decision.
When I hear Government statements about their commitment to the quality of health care and delivering outcomes, my thoughts return to the fight between myth and reality. The idea that front-line services will not be affected seems somewhat delusional. During questions at the meeting of the Health Committee on 26 October, it became apparent from a witness giving evidence that hospital closures would be necessary to release moneys back into the wider health service. We were told that that was part of “managing demand” and “redesigning care pathways.” I have heard those two phrases throughout my health service attachment and they are very much back in vogue at present.
The failure adequately to address the true budget requirements of the NHS will not deliver and continue the quality of care that patients expect and need. These are short-term measures that have long-term consequences. They are ill thought out and will have major ramifications for the people who rely on access to vital health services. For those people, such services are a lifeline. Nobody is pretending that nothing can be improved in the health service. However, does it have to be subject to untested reorganisation while we are trying to manage increasing demand in the current financial climate?
The Labour Government were rightly proud that they reduced waiting lists from 18 months to 18 weeks. It took 13 years of proper investment to turn the NHS around, and it is a service that we should rightly be proud of. My fear is that Conservative policies could destroy all that hard work within a matter of 13 months. I agree with the comments of my right hon. Friend the Member for Wentworth and Dearne (John Healey) about the “broken promises” of the coalition. My fear is that those broken promises will lead us headlong into a broken NHS—or is that the intention?
Mr David Lammy (Tottenham) (Lab)
I congratulate my hon. Friend the Member for Easington (Grahame M. Morris) on securing this Back-Bench debate today. I shall take the opportunity to talk about the effects of the spending review on health care locally. In concentrating on my constituency of Tottenham and on the London borough of Haringey, I hope to illustrate some of the real concerns of what would traditionally be classed as deprived and disadvantaged areas.
When one looks across the canvas of political issues, it must be the sincere hope of all hon. Members that health care should not be treated like a political football. People’s lives literally depend on health services. In the run-up to the general election, I was therefore pleased by the Conservative party’s undertakings on health care spend. Frankly, I was pleased at the absence of detailed policy on health in the Conservative manifesto. It felt to me as if we had perhaps arrived at a place in which health care could be a quiet zone for a few years. That is absolutely and clearly not the case. The coalition Government and the rapid plans they have brought forward will bring about the biggest change to health care in this country that we have seen since the war.
I am absolutely certain that such changes will have a detrimental effect on my constituents in Tottenham. It is important to remember that Tottenham is a constituency with the highest level of unemployment in London. It is a constituency that we like to say is the most diverse in not just London but the UK and possibly Europe. Mortality rates among many of the members and subsections—different groups—of the community are high. If someone caught, for example, the W3 bus at Northumberland park—just up by the Spurs stadium—and travelled across the constituency to the other side of Haringey, they would experience a life expectancy rise of about 10 years. That is the reality in this part of north London.
We have heard about the conclusions reached by the King’s Fund and by the Nuffield Trust. Those organisations have been in the business for many years; they are independent and they are clear that there will be a cut in funding to the NHS over this next period. However, the truth is that the Minister knows that when we talk about health care, it is absolutely the one policy area that does not sit on its own in some kind of silo; it is dependent on what is going on around it.
Much has been said about multidisciplinary working and agencies working together, but what is happening at the coal face in an area such as mine is that the local authority is calculating how to afford 28% cuts in local community services. What is actually happening is that the borough commander is calculating cuts to his front-line services and that, in an area that has experienced high levels of knife crime, youth services will be cut over this next period. Right across the board, the things that people rely on will be cut. Where will those challenges end up? They will end up in the local hospitals and in the GP surgeries at a time when the Government are proposing a fundamental restructuring of how we afford health care locally and are handing power down to GPs.
Not all the country is like a leafy part of Surrey. There are GPs—sometimes single-handed GPs—in communities such as mine who are struggling. We have GPs, as has been said, who simply do not have the practical skills needed to engage in GP commissioning on the scale proposed and over the time frame proposed. What will that mean for health care? I would like the Minister to say something on what will happen in communities such as mine, and in London more generally. We still do not know the size of the areas proposed, so I would like to hear something on that today.
I remind the Minister of a recent debate on housing benefit that focused on the health implications of the proposed changes. In the London borough of Haringey, we have already seen other local authorities begin to place people in our borough in reaction to those proposals. I have been advised by the lead member for children on the council that 27 additional children who are on the child protection register have been placed in the borough in the past two months. In remind the Minister that it is in my constituency that baby P lost his life. Those were profound challenges that found the health care system wanting in that borough and involved one of our greatest hospitals, Great Ormond Street, which, as we have heard, now faces a £16 million budget cut. This is a serious debate and we need some serious answers.
The biggest problem facing health care in my constituency is that Haringey PCT is forecasting a year-end deficit of £35 million, largely because of some of the problems I have outlined. If one includes the deficits faced by Enfield and Barnet, that amounts to a £110 million deficit in that part of north London. Which GPs does the Minister think will take on a £110 million deficit, and what does his Department propose to do about PCTs that have deficits of that level? Is he asking them to make in-year cuts to deal with it, or is he saying that the Department will pick up the deficit? It does not take a rocket scientist to work out that few GP commissioners will rush to take on a deficit on that scale in a constituency with the needs that I have outlined. I ask him to read his notes quickly, because we want an answer. What are his proposals for PCTs with such deficits?
What are the Minister’s plans for mental health? We have heard very little about mental health services and the relationships that they will be expected to have in the new arrangements, in the context of cuts beyond the borders of mental health in the local authority and in relation to social care.
The Minister might recall that my first ministerial job was in the Department of Health. I remember working with my colleague, John Hutton, the former Member for Barrow and Furness, as he negotiated the GP contract. Many Members will have their views on our former colleague, who has most recently been employed by the Minister’s party. They will also have their views on the contract and the success of those negotiations, which I was not privy to, because they were being led by the Minister at the time, who has now taken his seat in another place.
Historically, the arrangement we have in this country is that GPs are the for-profit element of the NHS; they run small businesses and have done since the war. We are obviously grateful for the oath they take and the undertaking to serve people in their local communities, but does it not seem bizarre to hand power to the element within the NHS that has historically always been its for-profit element? How will that save costs in practice? Will it not make things even harder than they are?
I started my time in the Department in 2001, just as PCTs were beginning to bed down and find their feet. For a community such as mine, the great benefit of having the chair, the non-executive directors and sometimes councillors come forward to be on the boards was that local people were in the driving seat. I do not claim that that ever got to where we would have liked it to be, but for the first time in London we began to see the leadership of PCTs reflecting the communities they served.
I also remember the situation we inherited at the Whittington hospital, the other hospital that serves the local community, with beds lined up in the corridors—a problem that we successfully dealt with over time. The Minister has previously made a commitment that the Whittington is safe under the new arrangements, but will he reiterate that for the record? Will he state for the record that North Middlesex University hospital, which has just seen a huge rebuild, is also safe and commit to the health strategy for Barnet, Enfield and Haringey, which sees that hospital really servicing the needs of that poor part of London?
This is a hugely important time for health care in London. It is a time when I want to be able to talk to people. I want to be able to find people to discuss the deficit and the existing health needs, but guess what? I cannot find them. I cannot find them because they are beginning to leave and because there are now proposals to amalgamate so that there is a pan-London relationship on all those issues. That is not local at all. It is disastrous, frankly, for people in my constituency, which has seen profound health care challenges over the last period that have got on to the national agenda as a result. I am looking forward to what the Minister has to say.
Frank Dobson
Before my right hon. Friend leaves the subject of the Whittington hospital, in which he was born, does he remember attending one of the rallies to save the A and E department? The current Secretary of State, then the shadow Secretary of State, promised at the time that the unit would not be closed. Is he confident that that still applies, because there are all sorts of rumours that its closure is once again being contemplated?
Mr Lammy
My right hon. Friend is right. I am grateful to him for that question and for his great expertise in health care matters. We are lucky that he is one of the MPs representing north London. I was at that rally, as was he, along with all the MPs from the wider north London area, because it was a cross-party issue. It was absolutely clear that the then shadow Secretary of State had promised a future for the Whittington hospital and had said that the A and E would remain.I hope that that is still the case because, if it were to go, the effect on health care outcomes for the people of north London and certainly my constituents would be profound. The Royal Free hospital in Hampstead is too far away to expect them to drive there in the event of an emergency.
I conclude on that basis. I am grateful to have been able to put on the record some of the health care issues in Tottenham and Haringey.
Ian Mearns (Gateshead) (Lab)
Thank you for your indulgence, Mr Gale, in allowing me to speak this afternoon. I apologise; I was in the main Chamber earlier for the debate on policy for growth. I also thank my hon. Friend the Member for Easington (Grahame M. Morris) for securing the debate. To look at us, one would not believe that we are often mistaken for each other. I do not see how that comes about, but I understand that it does—it is something to do with the accent, I believe.
Despite pledges that the NHS would be ring-fenced from Government cuts, according to press reports, dozens of accident and emergency and maternity units have been earmarked for closure or merger. Let me highlight a few: Newark hospital in Nottinghamshire will have its A and E services downgraded, and emergency admissions will stop being taken from April 2011. At the Queen Elizabeth II hospital in Welwyn Garden City, A and E services will be downgraded and the consultant-led maternity unit could be closed. There will also be a downgrading of A and E services at Rochdale infirmary. The Conservative’s election manifesto promised a moratorium on the forced closure of A and E units and maternity wards, so what happened to that pledge?
The situation proves that the settlement provided for health by the comprehensive spending review is not sufficient to meet the pledges made by the coalition parties. As my hon. Friend said earlier, the Prime Minister’s promise in January, and the coalition agreement pledge to
“guarantee that health spending increases in real terms in each year of the Parliament”,
will not be met.
Ian Mearns
The settlement agreed by the coalition will leave the NHS unable to meet growing cost pressures, and that will reduce its purchasing power each and every year. The Government seem to be in denial—that has just been shown by the Minister’s sedentary comment.
Kieran Walshe, professor of health policy and management at Manchester business school, who has already been cited in the debate, puts the figure for reorganisation at up to £3 billion, but there is nothing to say that it will not cost significantly more. We do not yet see where the money will come from.
One of the last reorganisations under the Labour Government involved reducing the number of primary care trusts from 303 to 150. In oral evidence to the Health Committee, Sir David Nicholson, the chief executive of the NHS, stated that it generated
“significant management cost savings and gains at that time. If you look at productivity in the NHS in 2006-07, by 2007-08 you see productivity improved.”
If streamlining and reducing commissioning bodies has saved significant amounts in the past and created efficiencies, why does it appear that the Government now want to create more commissioning bodies? Some say that up to 500 general practice consortiums would be required, but it could be more than that.
The GP involvement in the process is questionable. My local experience in Gateshead as deputy leader of the council with the adult social care portfolio was that it was often difficult to engage GPs in the process of partnership working—they are very busy people. In addition, it takes time for any organisation to become an effective negotiator in commissioning relationships with acute care providers, and to develop health provision plans and purchasing capacity. Why is the coalition placing those additional pressures on the NHS at a time when it is cutting its spending power?
Press reports—the Minister refers to these as rubbish—give fairly extensive lists of hospitals facing A and E closures, maternity closures and cutbacks. Let me quote an example:
“Despite pledges that the NHS would be ring-fenced from government cuts, dozens of A&E and maternity units have been earmarked for closure or mergers.”
Those are the words of not some revolutionary incitement periodical, but The Sunday Telegraph. I do not think that many of the people on yesterday’s demonstration about the proposed hikes to tuition fees were hawking The Sunday Telegraph as some kind of revolutionary organ with which they could incite the crowd to further action.
The Sunday Telegraph refers to:
“More than 30 maternity and casualty units facing the axe”,
and provides us with a significant list of examples from all over the country. It also tells us that, as a result of the spending review, the NHS faces a bed-blocking crisis. It states that the permanent closures and downgrading of services agreed since May affect many hospitals.
Ian Mearns
There is a long list. However, according to The Sunday Telegraph:
“Maternity units in Tiverton, Okehampton and Honiton, Devon: plan to downgrade services so they will not offer any midwife care overnight. Solihull Hospital: maternity unit was shut as a temporary measure just before the election. It re-opened in July as a midwife-led unit. Proposals to make the closure permanent due to be published within weeks”—
I could go on. For Hartlepool, in my region, we are told that there is a “proposal to close A&E” and that that will be
“replaced with minor injuries unit, and direct admissions for emergency medical cases.”
Of course, that comes on the back of the announcement a couple of months ago of the cancellation of the replacement North Tees hospital.
Ian Mearns
This is a very recent Sunday Telegraph report. I am glad to hear what the Minister says, but it is not the real issue for the area—that is the replacement North Tees hospital. As the Minister told us in a previous debate in this very Chamber, a brand new hospital worth £450 million, with brand spanking new service facilities, will be sacrificed for the grand sum of £11 million a year over the life of the hospital.
The Sunday Telegraph goes on to state:
“Hexham, North Tyneside and Wansbeck hospitals in Northumberland: Casualty units would no longer take ambulance cases if a new hospital is built near Cramlington.”
The Hexham hospital provides A and E services for people in a large constituency. I would not like to be dragged backwards by my hair between that constituency and Cramlington, because it is an awfully long way. There is a great deal more in the article.
The health service in my constituency is unrecognisably better than the one that we inherited in 1997. I would like to place on record my personal thanks to the staff of the neurosurgery unit at Newcastle General hospital, without whose efforts I would not be standing here today, because I had neurosurgery on my spine about 22 months ago. The Queen Elizabeth hospital in my constituency is now a very well regarded resource for the region and has a regional surgical support unit. Our other primary care facilities include the successful Gateshead smoking cessation service, which has reduced the prevalence of smoking—[Interruption.] I am not having a go at the Minister; I really mean that. However, the service is important to my constituents. We have reduced smoking rates in my constituency with its help from some 35% just over 10 years ago to about 21%. That is vital to the life expectancy of many thousands of my constituents. There is great concern, worry and uncertainty about what the future holds for such services as a result of the Government’s decisions.
The spending review will force deep cuts in patient care as the Government focus on a wholesale NHS reorganisation that will negate many, if not all, of the efficiency savings. I have real concern about commissioning, in that we will see GP practices coming together and then outsourcing to some fairly significant global players. Those players will take over the services on a local basis—they are out there, ready and waiting. It is not in the interests of patient care for money to go out of the public sector as profit for those companies.
Derek Twigg (Halton) (Lab)
I thank my hon. Friend the Member for Easington (Grahame M. Morris) for securing this very interesting debate and his excellent speech. Such debates are important to our more detailed examination of Government policy. This is the first opportunity I have had to welcome the Minister to his obviously well-deserved promotion. He is a stalwart supporter of the coalition Government and I am sure that his efforts had a lot to do with the coalition coming together. I look forward to hearing his speech.
It is interesting that not a single member of the coalition has stood behind the Minister to support his policy. That might indicate that the Secretary of State and his Department are somewhat isolated because there is a great deal of worry about what is happening. All the speeches have been very important. Of course, they have all been Labour speeches.
Derek Twigg
No, not all old Labour at all. There has been a mix of Labour: young, old, new—some a bit younger than others. My hon. Friend the Member for Easington made some very important points about this being the worst settlement since the 1950s, and he raised the point about rising to the challenge of the financial settlements and the impact on social care. We heard many important points from my right hon. Friend the Member for Rother Valley (Mr Barron) who, along with my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), is probably the most experienced person in the Chamber, given his knowledge of the health service and his involvement in it over the years. One of those points was what the Nuffield Trust said about this being a real-terms cut, once the £1 billion that is being transferred from the NHS is taken out—I shall come back to that later. My right hon. Friend also made an important point about how the Government have used a Health Committee report to support their policies. His point was very clear, and he also raised the important issue of commissioning for GPs.
My hon. Friend the Member for Newport West (Paul Flynn) made a very important point about NICE and drugs companies with reference to funding and influence. My hon. Friend the Member for West Lancashire (Rosie Cooper) has great experience in the health service. She is a near neighbour, and our areas successfully share the excellent women’s hospital in Liverpool. She made a number of powerful and important points about the reorganisation and cost pressures, and their effects on patient care. She also talked about Ministers not listening—[Interruption.] I know that the Minister has listened to what has been said in the Chamber, but Ministers’ listening will also be an important aspect of the reorganisation.
My right hon. Friend the Member for Tottenham (Mr Lammy) made a powerful speech. I think he said that because he had believed what was in the Conservative and Liberal Democrat manifestos, he was somewhat disappointed—[Interruption.] Perhaps I got that wrong, but he made the point that what was said before the election and in the manifestos is not now being delivered.
Frank Dobson
Does my hon. Friend agree that if my right hon. Friend the Member for Tottenham (Mr Lammy) were a coalition Member and he believed everything that was in the Tory and Liberal Democrat manifestos, he would be unique?
Derek Twigg
I always carry a copy of the coalition’s programme for government—it is a fascinating read and, I must say, comforting at times.
My right hon. Friend the Member for Tottenham made some important points about mortality, the different life expectancy rates in his constituency, and the impact of the 28% cut on local government services, to which I shall return later in my speech.
Mr Simon Burns
I advise the shadow Minister to take the analysis of the right hon. Member for Tottenham (Mr Lammy) of the impact of the so-called figures that he used with a pinch of salt, because he also said that when he was as a Health Minister in 2001, he remembered the PCTs beginning to bed down. That was rather confusing, because of course the PCTs were not established until 2002.
Derek Twigg
The hon. Gentleman should have listened much more carefully to what my right hon. Friend the Member for Tottenham said. He made a lot of good points, including one about GPs being put under pressure by the reorganisation due to the fact that some of them do not have the skills that it will require. That was a very powerful point, because many GPs are either opposed to or very uncertain about the Government’s proposed reorganisation.
My hon. Friend the Member for Gateshead (Ian Mearns) made a very impassioned speech about his own experience, his local health service, of which he has great knowledge, and the consequences of the Government’s actions for A and E and maternity units. He also made an important point about the great uncertainty in the health service as a result of the reorganisation—not just financially, but in all aspects of the service.
It is worth reiterating that we have had some successes in the health service, although many of them were achieved in recent years by the Labour Government rather than during the Conservatives’ 18 years in government. Back in 1997, I was regularly contacted by constituents who had to wait between 18 months and two years to have an operation. We have now got that time down to 18 weeks or fewer, and two to three weeks for cataracts. I set out that information because the Government will be measured on such things, although I am not sure whether they will be “outcomes”, “horizons” or “milestones”. A million more operations have been carried out each year since 1997, and there is now rapid access to chest complaint clinics. A large part of the NHS estate dates from before 1948, but we now have more than 100 new hospital building schemes and more than 90 NHS walk-in centres.
We have not achieved those gains for patients without sustained, deliberate and targeted investment. The combination of reform and investment that Labour undertook when in it was power has brought about tangible results for patients: heart disease deaths are down by more than a quarter; cancer mortality rates are down by more than a tenth; and breast cancer and male lung cancer death rates have been cut faster than anywhere else in the world. Under the cancer target, patients now see a cancer specialist within two weeks, which saves many lives. We made real investment and real change, and real people’s lives were made better. Let us see how the coalition intends to honour some of Labour’s guarantees. It has scrapped the right to cancer test results within one week of referral.
Derek Twigg
As I said, that was one of our guarantees, and the Government have not taken forward those guarantees. They have gone against what we said, which was welcomed by many patients and organisations. Free prescriptions for vulnerable patients with long-term conditions have been scrapped and, in this Parliament, some 8,000 new psychological therapists have been scrapped.
Mr Burns
The shadow Minister is a reasonable and intelligent individual, so he knows that we did not scrap that target because it was never in place. All that happened was that the previous Prime Minister, at his party conference just over a year ago, made public an aspiration that was totally unfunded and totally untried against any clinical guarantee for quality.
Derek Twigg
The Minister should realise that he cannot meet what we proposed. I notice that he intervenes on that point, but not to congratulate us on the many improvements that we made in the NHS over the years. I look forward to hearing what he says about those improvements in his speech.
Returning to mental health, the Department of Health website says:
“Policy around mental health is developing…Mental health policy cannot be devised and implemented by any single government department or the NHS alone – it requires collaboration across central government, local government and the independent sector.”
We knew that already, did we not? However, the coalition has cut those 8,000 therapists. Of course the financial climate is difficult, and whomever was in government would have difficult choices and decisions to make, but the Prime Minister and the coalition have, again, broken their promises on health, which I want to explore, particularly with reference to the CSR.
For all the coalition’s boasts of ring-fencing the total NHS budget, the negligible 0.1% increase in NHS spending over the CSR period is low by historical standards, as we have heard. The King’s Fund has been cited, but let me give another quote from it:
“the NHS has averaged real terms increases of 4% a year since it was established and 7% since the turn of the century. The only similar period of near-zero real terms growth was in the early 1950s”—
I think that the Minister agrees. Spending in the NHS has increased from 6.6% of gross domestic product in 1996-97 to 8.7% in 2009-10.
The Minister might be interested to hear that the Royal College of Midwives has said:
“there are fears that a funding increase of 0.1% a year could be swallowed up by a rise in drugs, an ageing population, the cost of reorganisations and inflation.”
While we are on the subject of midwives, will the coalition deliver on the pre-election pledge to increase substantially the number of midwives, or will that be another broken promise?
Perhaps the Minister will want to respond to my next point. The CSR also announced that £1 billion will be transferred from the NHS budget to local councils for spending on social care. He will argue that that is designed to improve working relationships between the NHS and local social services departments, to improve health and to reduce costs on the NHS, such as by helping older people to stay healthy and independent in their homes. Of course, that is a good thing. However, the Government cannot have it both ways and double count. This is a real-terms change in NHS funding over the next four years. When we consider the net funding for social care support, there is a reduction of 0.5%, which is a real-terms cut.
Derek Twigg
The Nuffield Trust actually supports that point of view. This is a broken promise. Will the Minister confirm that not all the additional money for social services announced in the CSR is ring-fenced?
Mr Burns
I want to respond to the point that the shadow Minister made about the Nuffield Trust. He said that we were giving £1 billion to local authorities for social care, but we are not giving—[Interruption] I think that he did say that, but if he did not, we will wait for my speech.
Derek Twigg
Let me make it clear that £1 billion is being taken out of the NHS budget. Is that correct?
Derek Twigg
I am asking the Minister to intervene. Has £1 billion been taken out of the NHS budget for social care?
Mr Burns
I will be careful because of the context in which the shadow Minister is trying to put the matter. We have made no secret of what we have done. Because of the lack of funding for social care and the demand for it, which we inherited, we have decided that we will use £1 billion out of the capital budget on social care and, at the same time, local authorities, through the revenue support grant, will provide another £1 billion. There will be £2 billion of extra money: £1 billion from the health service, which the health service will spend, and £1 billion through the RSG.
Derek Twigg
I am not sure about that, although I am always happy for the Minister to intervene. Will he confirm, just for the record, that £1 billion has been taken out of the NHS budget?
Derek Twigg
I will carry on and we will take this up later during the Minister’s speech.
Will the Minister make clear whether the money has been ring-fenced? What what will be the impact on local services of the 28% cut in councils’ budgets over the next four years, which was announced as part of the CSR? We must not forget the increase in VAT to 20% from January, which several of my colleagues mentioned, which will do little to enhance the NHS’s spending power. It is little wonder that the King’s Fund feels it necessary to warn:
“slashing budgets and cutting services should not be the answer to the financial challenge facing the NHS.”
I cannot allow the Government to get away with another disastrous decision for the NHS and it will be interesting to see what the Minister has to say about this.
The NHS has accumulated £1.8 billion of capital and £3.7 billion of revenue underspend. It would normally be allowed to keep that money to reinvest in patient care or to help deal with future overspends, but the CSR has abolished end-of-year flexibility. Perhaps the Minister would like to deny that or tell me that we have got it wrong.
What estimate has the Minister made of the number of job losses and redundancies in the NHS that will occur as a result of the CSR? What will be the impact on waiting times in the spending review period? What is his estimate of the number of nurses who will be employed in the NHS at the end of the spending period? What measures has he implemented to deal with winter pressures? How many specialist nursing posts will be left vacant at the end of this financial year? I have many other questions. We do not have time to go into them now, but I shall be tabling a lot of written questions for the Minister to answer.
We now move on to another broken promise in the context of the CSR, which has been the subject of a fair bit of comment. An ideologically inspired, top-down reorganisation of the NHS has been proposed. It has been put forward in defiance of the coalition agreement. The approach is untested and threatens the viability of the NHS. I remind hon. and right hon. Members that the coalition agreement says:
“we will stop top-down reorganisations of the NHS”—
another broken promise. Here is a straight question for the Minister: why, as many believe, did his party hide their plans for such a massive reorganisation from the public? Why did it make no mention of the scale of the proposed changes in its manifesto or election campaign? This is the biggest reorganisation in NHS history. The King’s Fund estimates the actual cost at some £3 billion, and that is at a time when the NHS can ill afford it. The British Medical Association has stated:
“these proposals risk undermining the stability and long-term future of the NHS”.
What is the Minister’s latest estimate of the financial cost of the reorganisation, and will he publish the rationale underpinning the assumption for those costs?
The coalition talks about reducing waste, but the 45% cuts in strategic health authorities and primary care trust management will save just £850 million of the £15 billion to £20 billion of efficiencies that are required. I could not agree more with the words of my right hon. Friend the Member for Wentworth and Dearne (John Healey):
“This reorganisation is untested and unnecessary. It is high cost and high risk. At this time when finances are tight, all efforts should be bent to making sound efficiencies and improve patient care. We are in favour of giving clinicians greater responsibility and patients a greater say in their healthcare. NHS experts, professional bodies and patient groups say ‘slow down’, because this big reorganisation is a big risk for the NHS.”
Trade unions such as Unison, the RCN and Unite, who represent many who work in the NHS, have raised genuine concerns, but we do not believe that the Secretary of State is listening to what is being said.
As part of these changes, there is danger of fragmentation, of more of a postcode lottery and of doctors’ time being diverted from their main role of looking after their patients. We need to know the extent and nature of future private sector involvement in running the health service. How and to whom will organisations be accountable? How can we deal with current overspends in organisations, which my right hon. Friend the Member for Tottenham mentioned?
Will the Secretary of State and the Chancellor listen to the appeal of patient groups, Royal Colleges practitioners and other health staff, or is he bent on setting his face against the view from the coal face—from the same professionals whom his party’s manifesto says we should trust to deliver services?
I want to mention another important issue: the proposed stealth cuts to the funding of specialist children’s hospitals, which will affect the hospitals that treat some of the most severely ill children in the country. The Prime Minister promised that the health budget would be “protected”. In an interview with Andrew Marr on 2 May 2010, he said that he
“would not accept cuts to the NHS”.
It is unarguable that specialist children’s services are the front line, so even that is not being protected. This is another promise broken by the Prime Minister.
The Secretary of State is not being straight on this matter. During oral questions on 2 November, he told my right hon. Friend the Member for Holborn and St Pancras that the hospital that my right hon. Friend asked about would face a 2% cut under the proposed tariff changes. That is bad enough, but it is contradicted by the trust’s own assessment of those changes, which suggests that they will bring about much larger cuts. Will the Minister set out—I ask him this carefully—what the situation is and how much funding the hospitals will lose?
I will give a couple of examples of the figures that we have received from the hospitals involved. Great Ormond Street hospital, which is in the constituency of my right hon. Friend the Member for Holborn and St Pancras, will face a cut of £16.3 million. In Birmingham, the cut will be £12.8 million, and at Alder Hey hospital, on the doorstep of my constituency, it will be £12.9 million. Will the Minister confirm what the funding cuts will be and how much those hospitals will lose? What figures have the hospitals provided to the Department in their assessments of the cuts? Will he make public any assessment that has been sent to his officials about the impact of the tariff changes?
I do not feel that Liberal Democrat or Conservative Members have realised the true extent of what the coalition Government are doing to the health service and the impact that it will have on their constituencies. Perhaps they are not in the Chamber because they find the measures difficult to support. As the impact of the health cuts becomes clearer, I believe that hon. Members will become more worried and will seek answers to the broken promises of the Prime Minister and the Secretary of State.
There have been broken promises on NHS funding to protect front-line services, and broken promises about structural change. Hon. Members might ask why the Secretary of State is forcing the NHS into a major reorganisation that costs valuable time and resources at a time that the King’s Fund and the NHS Confederation have called the biggest financial challenge of its life. I assure the Minister and the Secretary of State that we will hold the coalition Government to account for what they have said and what they will do.
The Minister of State, Department of Health (Mr Simon Burns)
I begin by thanking the Backbench Business Committee for and congratulating the hon. Member for Easington (Grahame M. Morris) on this interesting debate. In passing, let me say what a difference six months makes. Six and a half months ago, all the Labour Members who are sitting on the opposite side of the Chamber were in government. Some of the examples of reconfigurations and decisions taken on the health service happened under the last Labour Government, although some hon. Members seemed oblivious to that as they criticised what is happening.
Mr Burns
One moment; let me make a start. We have taken difficult decisions and, as I will explain, we have honoured our election pledge on a real-terms increase, albeit a modest one, as a number of hon. Members, including the hon. Member for West Lancashire (Rosie Cooper), pointed out. However, no hon. Member tried to explain why that increase had to be so modest, which amazed me. The reason was, quite simply, our inheritance of the most horrendous debt and deficit problems, left to us by the previous Government. That would have tied the hands of any party, including those of the Labour party had it won the election. Rest assured, if the previous Government had been re-elected, they would have been making serious cuts.
Having listened to a number of speeches, it is slightly ironic that some hon. Members present seem to be oblivious to the fact that one of the Labour leadership candidates during the recent campaign, the former Secretary of State for Health, the right hon. Member for Leigh (Andy Burnham), criticised us for honouring our pledge of a real-terms increase in NHS funding. He said that it was a disgrace that we were keeping to that pledge and that, in the overall spending programme, we should not be honouring our pledge of a real-terms increase in health spending. I find that a bizarre proposition from a former Labour Secretary of State for Health, but that was his view and his decision. Judging by the faces of some Labour Members, they seem oblivious to the fact that the right hon. Gentleman criticised us about that. That somewhat undercuts the arguments that I have heard today from those who say that we have broken our promise and not kept to a real-terms increase. They will have to make their mind up one way or another.
Grahame M. Morris
The Minister has just destroyed my reputation. My point is about the cost of the reorganisation at what is a difficult time for the economy. Why embark on an expensive major restructuring of the health service? It does not make any sense. Previous reorganisations were expensive and time consuming. Surely, if we learn anything from evidence, it is that now is not the time to do this. Another top-down reorganisation is the last thing we need.
Mr Burns
I am grateful to the hon. Gentleman for that intervention, and I am sure that his reputation will survive my praise of him. I shall, in my own way, come to the point that he raises.
Before I begin to explain why we have not broken our election pledge, let me congratulate the hon. Member for Halton (Derek Twigg). He is a dedicated and decent man who was always an exemplary Minister when he was in government. I am delighted to see him back on his party’s Front Bench, albeit in a shadow ministerial post, and I wish him well in his endeavours. I trust that he will be doing the job for many years to come and that the same fate will not befall him as sadly befell him when he left the previous Government: ironically—I grieve as much as he does about this—his place was taken by someone who was ostensibly a Tory, who was, for some bizarre reason, embraced with both arms by previous Prime Minister. It is great to see the hon. Gentleman back, and I look forward to many debates over the coming years as our careers continue.
This debate goes to the heart of two of the coalition Government’s main priorities: bringing the public finances back on to a sustainable footing and ensuring the future health of the nation. Our manifesto commitment, reiterated in the coalition agreement, was to increase spending on the NHS in real terms for every year of this Parliament. Notwithstanding the comments of some hon. Members, I am tremendously proud of the fact that we have kept the faith and honoured that pledge. Before anybody jumps up to try to intervene, let me remind them that I am proud of keeping that pledge.
The right hon. Member for Leigh, the former Secretary of State in the outgoing Labour Government, has criticised my party for keeping that pledge because he thought it was wrong. It would be difficult for any Labour Member to claim that we have broken the pledge, because, by definition, if we have broken the pledge, the right hon. Gentleman is factually incorrect in his criticism of us. It is a bit of a dilemma for Labour Members.
Mr Burns
We will come to that point. Whenever there is a parliamentary briefing or statement for a debate that fits the prejudices that Labour Members want to project—their straitjacket—that is fine, but anything that does not conform to their prejudices or prejudged views, or to the facts, such as the comments from the King’s Fund on which I kept pressing the hon. Member for Easington, which confirmed its view that we had honoured our pledge and made a real-terms increase, they dismiss as fiction. I am afraid that I do not share the support offered by the right hon. Member for Rother Valley (Mr Barron) for the views in the Nuffield Trust document.
I will come on to social care spending, because I know that the shadow Minister, the hon. Member for Halton, made quite a lot of that. I will try, in a longer period than I would have in an intervention, to show that he is wrong and the Government are right.
Frank Dobson
What is the Government’s estimate of the money that will be consumed by the process of reorganisation during the process of reorganisation?
Mr Burns
I will briefly answer that now; I was going to come to it later. The figure that has been bandied around by shadow Ministers, Labour Back Benchers and so on is £3 billion. The Department does not recognise that figure. We recognise the figure that the previous Secretary of State for Health, the right hon. Member for Leigh, put in this year’s Budget, which is 1.7%. He put that in specifically for reorganisational purposes under a Labour Government. That is the only figure—[Interruption.] That is the only figure that we recognise.
Derek Twigg
The Minister is using a figure that was in the Budget for reorganisation. I assume that that reorganisation is not the reorganisation that his Government are proposing, so have he, the Department and his officials made any assessment of the cost of their reorganisation? That cannot in any way be linked to a figure that was laid down by the previous Government; it is bizarre if it is. If they have made such an assessment, what is the rationale for it and will he publish it?
Mr Burns
I am saying that the previous Secretary of State had built in to this year’s Budget a £1.7 billion figure for reorganisational purposes and we recognise that amount of money as money that can or could be used for reorganisational purposes. On the question of the full figures, we will publish in due course our response to the consultation process on the White Paper and the documents that flowed from that White Paper. Also, we will respond on any decisions that we have taken emanating from that consultation process. We will also publish the Bill, which will flesh out more of the details where details need fleshing out.
As a number of hon. Members mentioned, there are parts of the Bill where we are not prescriptive and we are not dictating, down to the last dotting of an i and crossing of a t, what has to happen. That will be down to local decisions. That will then put us in a position—
Mr Burns
I am not scared of anything. The purpose of my speech is to outline the Government’s view on the subject, rather than simply, as in an Adjournment debate, answering every single point from hon. Members who have contributed. I will not fall into the trap of being sidetracked into answering, as in an Adjournment debate, all the points that have been raised. I will certainly deal with those that I can deal with in the time available, but I shall primarily give the Government’s view on the topic before us, so I beg some indulgence from hon. Members as they listen and learn why we have kept our pledge.
I shall start again. This year, before we spend a single penny on health, education, defence or anything else, we shall have to pay £43 billion simply to service the interest on our debts. That is £120 million a day and more than £83,000 a minute. Those who are mathematicians will realise that during this three-hour debate that will have cost us £15 million. The colossal debt racked up by the previous Government is crippling the country. That is why, through my right hon. Friend the Chancellor, we have had to act decisively to lay the foundations for setting the economy back on track. The country simply could not continue to sustain such debt and payment of debt interest.
When the Chancellor stood at the Dispatch Box last month to deliver the spending review, he set a course for sustainable finances. He set out our plans to turn the country round, so that by the end of this Parliament our national debt will be falling, instead of rising, as a proportion of national income. To achieve that, over the next four years we need to reduce public spending by £81 billion. Difficult decisions have had to be taken, and more lie ahead, but the result will be a strong economy, more jobs and sustainable public services. As I have said, just as important as reducing the deficit is protecting and improving the nation’s health.
Paul Flynn
On a point of order, Mr Gale. There is a tradition in this place that Ministers making the winding-up speech reply to the debate. This Minister has been speaking for 14 minutes and has not mentioned a single point made in the debate.
Mr Roger Gale (in the Chair)
The hon. Gentleman has been in the House long enough to know that the Minister is responsible for his own speech and his own remarks.
Mr Burns
The hon. Member for Newport West (Paul Flynn) probably is not aware, because this is a new form of debate following the setting up of the Backbench Business Committee, that I am not winding up the debate, even if I am speaking last. I am making a speech on the Government’s position on the subject that we are debating, and I will certainly—on occasions, where appropriate—refer to and answer hon. Members’ questions, although I have to say to the hon. Gentleman that I probably will not answer any of his questions because he was not taking part in the same debate that is on shown on the annunciator. He was having a general roam-about on NICE and pharmaceuticals, rather than speaking on the spending review and health.
Mr Burns
No, it is not. It is a fact, and the hon. Gentleman knows it.
As I said before the intervention and the point of order, just as important as reducing the deficit is protecting and improving the nation’s health. That is why I am proud that we have kept our pledge to protect the NHS budget. More than that, it will receive an increase of 0.4% over the next four years. In this difficult financial climate, that demonstrates the Government’s determination to provide the best care and the best outcomes for patients.
This year, the NHS budget is £103.8 billion. That will rise to £114.4 billion by 2014-15. No matter how anyone looks at that, it is obvious that it is a real-terms increase. A number of people who have sent in briefings for this debate and who have commented on the spending review have echoed the view that I have just outlined. It is a self-evident fact that it is a real-terms increase, however much Opposition Members prefer to say that it is not. The facts do not bear out that criticism.
Mr Burns
The shadow Minister must be patient; I will come to social care.
The Department’s capital budget will be sufficient to ensure that key schemes that have already been agreed are continued and that the NHS estate is properly maintained. The NHS capital budget will pay for, among other things, publicly funded projects at North Cumbria University Hospitals NHS Trust, Pennine Acute Hospitals NHS Trust, and Epsom and St Helier University Hospitals NHS Trust.
Notwithstanding the real-terms increase in funding, we always knew that the NHS was facing challenging times. That is self-evident and we have never sought to hide behind it; everyone recognises it. As a number of hon. Members said, that challenge is due to an ageing population, expensive treatments, and health care and social care costs rising substantially every year. That is why the NHS and social care need to do more with their resources and make every penny count. In health, we are asking the NHS to secure, as a number of hon. Members said, up to £20 billion of efficiency savings over the next four years through the QIPP—quality, innovation, productivity and prevention—programme.
In addition, every penny of those savings will be reinvested in front-line services, enabling us to meet the costs of increased demand for care. The savings will come from cutting administration costs across the system by a third, as well as from other efficiencies throughout the NHS. Frequently, better care can save money. It is cheaper, as well as better for people, to get the right care first time, rather than the inappropriate or insufficiently relevant care that is involved when people have to go back to be provided with extra care—an expensive way to provide care and not an experience that patients should have.
Rosie Cooper
I appreciate what the Minister is saying, but does he not agree that radical change to or redesign of a system often requires investment to get those costs out at the end? We are hearing about lots of cost cutting, but there are no obvious signs of a process or pathway where investment is taking place to get those gains out.
Mr Burns
In the overall run of things, the hon. Lady makes a genuine point, but most of the cost cutting that I heard about during the speeches involved accusations of services being cut without the reasons for the status of what are, in many cases, reconfigurations being gone into. Also, until conclusions have been reached, there is no guarantee that those reconfigurations will happen. They might do so, but there is no automatic guarantee that, just because there is to be a reconfiguration, the end product will be what was first proposed.
Furthermore, I heard very little comment—indeed, I do not think that anyone passed comment, although I apologise if someone did—on the QIPP programme, which is so important and vital for raising standards, using innovation to improve quality of care and delivery. In that, we have examples across the country of the NHS finding changes that can make a big difference.
For example, Southend Hospital NHS Trust is saving £160,000 a year by mapping postcodes—patients who live near each other can be picked up together for their dialysis appointments. Oxford Radcliffe Hospitals NHS Trust is saving £1 million a year by implementing an electronic blood transfusion system, which cuts the staff time taken to deliver blood and reduces transfusion errors, thereby improving services for patients. Ten NHS trusts have been piloting a new pathway to improve care for patients, mainly elderly people who have suffered a fractured neck of femur. If that were rolled out across the country, it could save £75 million a year.
Those are just small examples of things that can be done where savings are made, the quality and appropriateness of care improve, and money can be ploughed back into front-line services, which is so important.
While we are talking about resources, I shall answer the important question asked by the right hon. Member for Holborn and St Pancras (Frank Dobson). He specifically mentioned Great Ormond Street hospital, but this applies across all the specialist children’s hospitals. The Department is having ongoing discussions with Great Ormond Street and the other relevant hospitals in England about potential—I emphasise “potential”—changes to the tariff for specialist children’s hospitals for 2011-12.
I can tell the right hon. Gentleman that no decisions have yet been taken and the discussions are continuing. On his specific question about how much less money is going to be given, there is no answer at the moment, because no decisions have been taken. The discussions will continue. I hope, for the time being, that he is reassured by that answer.
Frank Dobson
Can the Minister confirm that Great Ormond Street hospital was asked to do without £16 million during the course of those wondrous negotiations he is talking about?
Mr Burns
No, but I will confirm that discussions with the hospital are ongoing and, flowing from that, decisions will be reached in due course. At this point it would be inappropriate for me to interfere by giving any confirmation or denials of anything, because the situation does not arise in that context. Discussions are going on, and no decisions have been made. We will have to see once the discussions are concluded.
Mr Roger Gale (in the Chair)
Order. We cannot have such discussions going on across the Chamber. Either the Minister will give way or he will not.
Mr Roger Gale (in the Chair)
Order. The Minister has made it plain that he is not giving way.
Frank Dobson
On a point of order, Mr Gale, the Minister might be inadvertently misleading those present here today, on the basis of information available to me.
Mr Roger Gale (in the Chair)
That is not a point of order for the Chair, Mr Dobson.
Mr Burns
I honestly do not see what more I can say—my answer seems fairly conclusive, so I will make progress. If the right hon. Gentleman wants to have a quick word with me afterwards, I am more than happy to do so.
Moving on to social care, which a number of hon. Members and the shadow Minister have mentioned—
Frank Dobson
On a point of order, Mr Gale—as I understand it, the Department of Health has been briefing that it wants to take away only £4 million from Great Ormond Street.
Mr Roger Gale (in the Chair)
Order. That is not a point of order for the Chair. The right hon. Gentleman has been in the House long enough to know that.
Mr Burns
On the issue of social care, it is accepted by all parties that we need to be more efficient. There have been historic problems in the funding of social care and we found that, given the mounting pressures and the economic situation when we came to power, there was a serious problem that needed to be addressed so as to provide support in the forthcoming year and thereafter for some of the most frail and vulnerable members of society.
We believe, as I am sure the hon. Member for Halton does, that re-ablement services can restore someone’s independence. They have a crucial role to play, where appropriate. Around half of those who go through re-ablement require no immediate care package afterwards. The NHS is investing £70 million this year, £150 million in 2011-12 and £300 million a year for the rest of this Parliament in better re-ablement services. That will have a significant impact on improving the lives of many people.
Telecare, too, can help keep people safe and feeling more confident in their own homes, reducing their reliance on formal home care services. These are not isolated cases. There are similar remarkable stories across the country.
Re-ablement can make a real difference, provided that the authorities act seamlessly and quickly to ensure the equipment and anything else needed to assist someone to return home, avoiding a stay in a hospital, care home or any other non-domestic environment.
Derek Twigg
We will pursue the issue about specialist children’s hospitals, but I will now concentrate on the issue of the £1 billion that the NHS has set aside for, or put into, social care. No one argues that putting more money into social care is not a good thing, but we want to ensure that there is no double counting. The Minister confirms that £1 billion has been set aside, but will some of that money, or all of it, be used to fund the social care side of those services provided by local authorities?
Mr Burns
If I may, I shall start on that point in my own way, as I want to give the setting for the whole social care thing. I know that the hon. Gentleman and the right hon. Member for Wentworth and Dearne (John Healey) have shown considerable interest in the matter.
The shadow Minister accepts that the NHS does not stand alone. It is only one part of this country’s care system; another essential service is social care, which helps hundreds of thousands of people to live as independently as possible. As I said earlier, when the Government were elected, we found a huge hole in funding for social care. That affects some of the most frail and vulnerable, and we believe that it is imperative to do something immediately to make up some of the shortfall. As the shadow Minister will know, the Department of Health has always funded social care—not all of it, but part of it—and local authorities have funded the other part. In some areas, there is a means test under the National Assistance Act 1948, so there are possibly three funding streams. I hope that I carry the shadow Minister with me.
To redress the funding gap in social care, the NHS will transfer up to £1 billion from the health capital budget to the health revenue budget by 2014-15. That will be spent by the health service on measures that support social care as well as health. That will include a specific allocation for re-ablement services to help people regain confidence and independence following discharge from hospital. We believe that this will help hundreds of thousands of people to live as independently as possible. To the person who uses both services, it makes no sense that health and care should be separate. I hope that I have given the shadow Minister sufficient explanation.
Mr Burns
If I carry on for another minute, the hon. Gentleman may not need to intervene.
As well as the extra £1 billion that the Department of Health is making available for NHS social care, additional grant funding—again, rising to £1 billion by 2014-15—will be made available for social care through the revenue support grant. By 2014-15, the total additional funding for social care will amount to £2 billion, half from the NHS and half in grant funding. That will be allocated in addition to the Department’s existing social care grants, which will rise in line with inflation. In total, therefore, grant funding from the Department of Health for social care will reach £2.4 billion by 2014-15. I hope that that explains the situation for the shadow Minister.
Derek Twigg
I want to be clear about it, so I put the question again. How much of the £1 billion that is being taken from the NHS budget will be spent on services that council and local authority social services provide?
Mr Burns
The £1 billion will come from the NHS capital fund and be transferred to the NHS resources fund. It will then be spent by the NHS on re-ablement and other sorts of help and care for which the NHS is responsible. The NHS is responsible for the social care element of the assistance required by those in need. [Interruption.] So that the shadow Minister understands, on top of that, £1 billion will be coming from local government through the RSG.
Grahame M. Morris
It is an important point, and an issue that the Select Committee has considered. Evidence presented to the Committee shows that, over the lifetime of this Parliament and beyond, the gap between funding and demand will grow. There will be an ongoing problem of underfunding in social care. I would not like the Minister to give the impression that this demographic time bomb can be resolved by this single measure.
Mr Burns
The hon. Gentleman is right. I do not claim that the demographic time bomb will be resolved by this measure. The trouble with personal social care is an historic one; Governments have always been playing catch-up. That is beyond dispute. I am saying that we recognised the growing pressures, and we believed that we had to act. That is why we have done so. It will reduce the problem, but the hon. Gentleman is right that it will not solve it, as more work has to be done. No doubt, it will be done, as we catch up with the past. I hope that I have reassured the hon. Gentleman. I now wish to make progress.
We believe that funding social care is important not only in its own right but for the sake of the hundreds of thousands of people who rely on it—and because the NHS cannot function without social care. Without it, people have to stay in hospital beds for longer, inappropriately blocking beds that other patients could use. It is important that we invest the money to ensure that there are no delayed discharges, and that we can provide an appropriate setting for those who are discharged.
Rosie Cooper
I thank the Minister for giving way. I am trying to be helpful. My hon. Friend the Member for Easington (Grahame M. Morris) is right. The Select Committee suggested that there was a £3 billion or £3.5 billion gap. Evidence to the Committee clearly showed that local authorities believed that if they invested a pound, the saving and the benefit was likely to be seen in the health service through exactly what the Minister mentioned—beds not being blocked and so on. This might help my hon. Friend the Member for Halton (Derek Twigg), the shadow Minister; I suggested in Committee that the element of funding that lies currently with local authorities should be transferred to the NHS. We would not then have such a gap. The local authorities resisted, but the core of the problem that both Front Benches are outlining is that the £1 billion that the councils have is not ring-fenced and will be spent on whatever provisions are desperately needed. The money that the Minister says is for the NHS will be spent only on NHS re-ablement and other stuff that is absolutely within the NHS, but the local authorities do not believe that. They think that it will be dropped on their toes at any minute, and that they can spend it.
Mr Burns
I fully understand the issue that the hon. Lady raised about whether we merge the NHS part of social care in local government into the NHS, or vice versa. That has been an ongoing debate for many years. The hon. Lady may find it difficult to believe, but 13 years ago I was the Minister with responsibility for social care. The argument was raging then. I have no doubt that it will continue to rage for some time to come. I, too, have heard the worries that the money that comes through the RSG will not be spent on social care. From the discussions that the NHS has had with local authorities, I have been led to believe that that will not be such a problem. Given that there is a problem with social care and a need to provide support, there will be a determination and a positive attitude to ensure that the money is appropriately spent on what it is designed for and that it will, with the money from the NHS, make a significant difference to a very serious and sensitive problem that we, as a society, have to address.
In conclusion, the spending review is the necessary consequence of this Government’s facing up to the financial responsibilities and problems that we inherited when we came to power. If we are to secure a future of growth, prosperity and jobs and if we are to fulfil our commitment to increase funding for the NHS in real terms for every year of this Parliament, then we must place our public finances on a stable, sustainable footing.
We will not ask the sick, the disabled or the elderly to pay the price of the previous Government’s economic mismanagement. We are increasing the health budget in real terms and reforming the service, not only to make the most of every penny but to put power in the hands of those who know best how to improve services. I am talking not about the Ministers and civil servants in Whitehall but about the NHS staff and patients on the ground.
Mr Roger Gale (in the Chair)
Mr Morris has indicated that he wishes to make a few closing remarks with the consent of the Members present. I am perfectly prepared to facilitate that, but the hon. Gentleman must understand that these are closing remarks, and that he is not actually responding to the entire debate all over again.
Grahame M. Morris
With the leave of this Chamber, I thank you, Mr Gale, for your courtesy and stewardship of this debate. I thank my hon. Friend the Member for Halton (Derek Twigg) and the Minster for responding, and the Backbench Business Committee for giving us the opportunity to hold this debate and to scrutinise the impact of the comprehensive spending review on the Department of Health. Within the context of the CSR, Members present have highlighted concerns about the cost pressures on the NHS arising from the huge organisational change, hidden costs of VAT increases, drug inflation and cuts in local government and welfare budgets. Indeed, many questions have been raised that may be the subject of future debate in Westminster Hall or in the Chamber.
Members on the Labour Benches call on the coalition Government to honour their pre-election pledges to safeguard the NHS and enable it maintain a comprehensive service that is free at the point of need. I make this pledge. We on the Labour Benches will hold the Government and Ministers to account for their stewardship of the NHS.
Finally, I thank all of the Members who are here today. More than a dozen have participated, which is too many to mention by name.
Question put and agreed to.
Written Ministerial Statements
Double Taxation Convention (South Africa)
(14 years ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
A protocol to the double taxation convention with South Africa was signed on 8 November 2010. After signature, the text of the protocol was deposited in the Libraries of both Houses and made available on HM Revenue and Customs’ website. The text of the protocol will be scheduled to a draft Order in Council and laid before the House of Commons in due course.
Decent Homes Funding
The Minister for Housing and Local Government (Grant Shapps)
Since coming to office the Government have made clear that our most urgent priority is to tackle the UK’s record deficit in order to restore confidence in our economy and support the recovery. Throughout the spending review the Government have been guided by a commitment to fairness, protecting the most vulnerable people in our society and as far as possible protecting front-line services. In DCLG, that commitment includes continuing to fund the decent homes programme.
The spending review announced that the Government will invest over £2 billion of capital funding to help towards completing the decent homes programme. Of this, funding of £1.595 billion is available over the next four years to help make local authority social homes decent (with an additional £0.510 billion being provided for “gap” funding existing stock transfers). We will be working with the Homes and Communities Agency to ensure that decent homes funding is allocated where it is needed and in order to support the self-financing settlement.
The coalition Government wish to be fair in their approach to all, so we will not be as rigid about local structures as the last Government. This funding will help ensure that all councils can deliver a sustainable 30-year business plan under self-financing. It would therefore not be appropriate to restrict access to funding on the basis of current organisational structure or performance. We will therefore open the process of allocation of funding for the period 2011-15 to all local authorities who have a significant backlog of decent homes work. This Government consider that the two-star rating is not in itself a guarantee of ability to run a capital programme, or of good value for money; there will, therefore, be no requirement for a two-star housing inspection standard to be achieved to access funding. This is also unfair to tenants who have little control over the star rating of their landlord, but are currently made to suffer a potentially un-decent home as a result. In future it will be up to councils whether they want these inspections to go ahead reflecting the Government’s commitment to reduce regulatory burdens on local authorities.
Today, we are jointly publishing with the Homes and Communities Agency (HCA) our proposals for managing the allocation process in a consultation document and welcome the views of local authorities, arm’s length management organisations and other interested parties on how we propose to gather information and make fair funding decisions. A copy has been placed in the Library of the House.
Constitutional Reform and Governance Act 2010 (Ratification of Treaties)
(14 years ago)
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The Minister for Europe (Mr David Lidington)
The Constitutional Reform and Governance Act 2010 Commencement Order No.3 was made today 11 November, 2010. This brings into force part 2 of the Constitutional Reform and Governance Act 2010 (CRaG Act) which deals with the ratification of treaties. The Foreign and Commonwealth Office has overall responsibility for the conclusion of treaties, and leads on policy in this respect. Part 2 of the CRaG Act is the new basis for treaty scrutiny by Parliament, and replaces the former constitutional practice dating from 1924, known as “The Ponsonby Rule”, with statutory provisions.
The effects of part 2 of the Act may be summarised as follows:
Section 20 provides that a treaty that is subject to ratification or its equivalent, is to be published and laid before Parliament for a period of 21 sitting days, during which both Houses have the opportunity to resolve that the treaty should not be ratified. If the 21 sitting days expire with no such resolution being passed by either House, the Government can proceed to ratify the treaty. It also defines the legal effect of a negative vote by either House.
Section 21 provides a mechanism for Parliament to request extensions to the 21 sitting day period, in blocks of up to 21 sitting days, at the discretion of the relevant Minister.
Section 22 provides an “alternative procedure” in exceptional cases where a Minister is of the opinion that it should be ratified without following the procedures in section 20.
Section 23 makes provision for classes of treaties that are to be dealt with differently because they are scrutinised by other means, notably—(i) under the European Parliamentary Elections Act 2002 or the European Union (Amendment) Act 2008, (ii) agreements and arrangements relating to taxation, or (iii) because scrutiny of them is not for the UK Parliament that is, treaties concluded by overseas territories, the Channel Islands and the Isle of Man as authorised by HMG.
Section 24 requires that treaties laid before Parliament under section 20 shall be accompanied by an explanatory memorandum explaining the provisions of the treaty, the reasons for HMG seeking ratification of the treaty, and other relevant information.
Section 25 defines “treaty” and “ratification” for the purposes of the Act.
The Act changes the Ponsonby rule in several respects:
Part 2 gives legal effect to a vote against ratification in the Commons or Lords. It prevents the Government from moving immediately to ratify a treaty if either House votes against ratification.
If the Government nevertheless wish to proceed to ratification, the Minister must lay a statement giving reasons why. If the Commons voted against, a further 21 sitting day period must expire before ratification can take place. If the Commons vote against ratification during this subsequent 21 sitting days, the Government are prevented from ratifying the treaty. However, a statement can be laid more than once and therefore this process can continue. If the Lords vote against ratification, but the Commons do not, then a ministerial statement must be laid before Parliament explaining why the treaty should nevertheless be ratified.
The definition of “sitting days” is limited to days on which both Houses sit.
Part 2 also provides that the Minister can extend the sitting period by 21 sitting days or less (and votes against ratification will continue to have legal effect in this period).
Part 2 also requires the Minister, if the “alternative procedure” in clause 23 is being used in exceptional circumstances, to lay a statement giving reasons.[Official Report, 13 December 2010, Vol. 520, c. 3MC.]
Guidance on the ratification of treaties and part 2 of the Constitutional Reform and Governance Act 2010 is published by the Foreign and Commonwealth Office on its website (www.fco.gov.uk/treaty).
Advisory Group on Human Rights
(14 years ago)
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The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
In my statement on 15 September 2010, Official Report, columns 45-46WS following my speech on “Britain’s Values in a Networked World”, I announced that I would convene an Advisory Group on Human Rights to ensure that I have the best possible information about human rights challenges and benefit from outside advice on the conduct of our policy. I would now like to provide the House with further details.
Members of the group will be:
Kate Allen, Director of Amnesty International UK
Dr Chaloka Beyani, LSE and UN Special Rapporteur on Internally Displaced People
Dr Agnes Callamard, Director of Article 19
Mr Joel Edwards, International Director, Micah Challenge
Malcolm Evans OBE, University of Bristol, Member of the United Nations Sub-committee on the Prevention of Torture
Sapna Malik, Partner, Leigh Day and Co. Solicitors
Professor Susan Marks, LSE
Tim Otty QC, Blackstone Chambers
Tom Porteous, Director of Human Rights Watch, London
Sir Nigel Rodley, University of Essex, Member of the UN Human Rights Committee
Dame Barbara Stocking, Chief Executive of Oxfam GB
Professor Surya Subedi OBE, University of Leeds and UN Special Rapporteur for Cambodia
Sir Nicholas Young, Chief Executive, the British Red Cross
These are eminent individuals with a broad range of human rights and humanitarian experience. They are drawn from NGOs, the legal and academic communities and international bodies.
I will chair the group. I intend to hold two meetings a year. Ministers and officials will also chair additional meetings on specific issues agreed by the group. The first meeting will take place on 2 December 2010.
The members of the group will not be paid. FCO officials will provide the secretariat for the group from within existing resources.
As I made clear in my statement of 15 September, human rights are essential to and indivisible from the UK’s foreign policy priorities. This Government intend to improve and strengthen our work to promote human rights internationally.
Iraq: Export Licence System
(14 years ago)
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The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
The arms embargo in Iraq continues under United Nations Security Council resolution 1546 with exemptions for supplies of arms and related matériel required by the Government of Iraq (GoI) or the multinational force (MNF) to serve the purposes of the resolution.
Following a thorough review of its procedures for processing export licence applications to Iraq, Her Majesty’s Government will consider as exempt from the embargo exports to the GoI, the United Nations Assistance Mission in Iraq, diplomatic missions in Iraq, the US forces in Iraq, the NATO training mission in Iraq, the UK naval training mission training the Iraqi Navy and entities contracted or subcontracted to the GoI, US or UK forces or NATO. Export licence applications to these end users will not therefore require the approval of the GoI prior to approval of the application but may require extra information to be provided by the entity seeking the export licence. For exports serving the purposes of UNSCR 1546 to entities other than these, the exporter is required to provide a supporting document from the GoI to demonstrate that the proposed export is required and thus exempt from the embargo. All export licence applications for Iraq as elsewhere will be assessed on a case-by-case basis against the Consolidated EU and National Arms Export Licensing Criteria and will not issue a licence where to do so would be inconsistent with the criteria.
Prisons and Probation Ombudsman for England and Wales
(14 years ago)
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The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
Stephen Shaw CBE stood down as prisons and probation ombudsman earlier this year to take up appointment as chief executive of the health professions adjudicator. Stephen was appointed as ombudsman in 1999.
The Ministry of Justice will shortly be advertising the vacancy and seeking applicants for the office of prisons and probation ombudsman. Although the post is not within the remit of the Commissioner for Public Appointments, the appointment will be made using a process which takes account of the commissioner’s code of practice as best practice. I will inform the House once I have selected my preferred candidate for the office.
Patrick Finucane
(14 years ago)
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The Secretary of State for Northern Ireland (Mr Owen Paterson)
The House will be aware that one of my predecessors as Secretary of State for Northern Ireland, the right hon. Member for Torfaen (Paul Murphy), announced in the House on 23 September 2004 that he would take steps to establish a public inquiry into the death of Patrick Finucane in 1989. To date no such inquiry has been established.
I believe it is right that I should determine the way forward in this case and that consequently I should set out a clear decision-making process both to the House and to the Finucane family. I met the family on 8 November to listen to their views and I have written to them formally inviting their representations as to whether it is in the public interest that I should establish a public inquiry into the death of Patrick Finucane. I will consider those representations carefully and in detail, along with any other relevant representations that I receive over the next two months, before deciding this question.
In addition to considering representations on the case, I shall also need to take into account a broad range of other factors in determining what the public interest requires. The other factors that I will consider when deciding the public interest will include:
The commitment given to this House in 2004;
The conclusions of reviews and investigations into the case and the extent to which the case has caused, and is capable of causing, public concern;
The experience of the other inquiries established after the Weston Park commitments;
The delay that has occurred since the 2004 announcement and the potential length of any inquiry;
Political developments that have taken place in Northern Ireland since 2004; and
The potential cost of any inquiry and the current pressures on the UK Government’s finances.
It is my intention to consider the public interest carefully and in detail at the end of the two-month period for representations and then to take a decision after such consideration as to whether or not to hold a public inquiry into the death of Patrick Finucane.
House of Lords
Death of a Member
The Lord Speaker (Baroness Hayman)
My Lords, it is with great regret that I have to inform the House of the death on 9 November of the noble Baroness, Lady Carnegy of Lour. On behalf of the whole House, I extend our condolences to the noble Baroness’s family and friends.
Media: Ownership
Lord Fowler
To ask Her Majesty’s Government what safeguards exist to prevent too great a concentration of media power in the United Kingdom.
Baroness Rawlings
My Lords, the Government believe that it is important for the media to reflect different viewpoints so as to safeguard democratic debate. In order to have a level playing field, undue concentration of media power is prevented in three main ways: first, there are statutory media ownership rules, which are enforced by Ofcom and provide absolute restrictions of ownership; secondly, mergers involving newspapers and media enterprises, like all other mergers, are subject to competition-based regulation by independent competition authorities; and, thirdly, the Secretary of State has an exceptional power to intervene in media mergers if necessary.
Lord Fowler
My Lords, I thank the Minister for that reply. In last week’s debate on media power, all 20 speakers on the list supported the decision to refer the News Corp attempt to take full control of BSkyB to Ofcom. Does the Minister agree that this shows the great concern that there is on this issue? Does she also agree that, in safeguarding the media in this country, it is absolutely essential to retain a strong and independent BBC?
Baroness Rawlings
My Lords, I am delighted that my noble friend Lord Fowler, who is always ahead of the game, had already tabled his Question before the debate last week in the name of the noble Lord, Lord Puttnam. During the debate, I set out the process for public interest investigation in respect of News Corporation’s proposed purchase of BSkyB. Clearly, there are merits in doing so again. The Secretary of State intervened in this merger last week and asked Ofcom to provide him with an initial report considering its potential impact on the public interest concern with media plurality. This came at the time of the debate. On receipt of Ofcom’s report—I wish to spell this out clearly, because it was a theme that went through the debate—the Secretary of State might need to decide whether to refer the merger to the Competition Commission for a more detailed investigation. If such a reference was made, the Competition Commission would report within 24 weeks and the Secretary of State would need to make a final decision on what action to take within 30 days.
Baroness Rawlings
I am sorry that it is a little long, but this issue is very important at the moment.
Lord Borrie
My Lords, given the importance and the independence of the bodies to which the noble Baroness has referred—Ofcom and the Competition Commission—why are they given this huge level of uncertainty through being listed in various schedules to the Public Bodies Bill?
Baroness Rawlings
The noble Lord, Lord Borrie, asked this question in the debate. I thought that I had assured him that Ofcom is not going on to the scrapheap, but it will be reviewed. I can assure him that, although changes will be made to the economic network regulatory functions of Ofcom, it is not being scrapped.
Lord Steel of Aikwood
In reference to the third part of her Answer, does the Minister recall that, at the end of the excellent debate last Thursday, the noble Lord, Lord Puttnam, referred to a phrase used about the coalition by my noble friend Lord Razzall in saying that for some of us this issue would be a “significant marker”. Will she recognise that my noble friend was understating the case and that the transfer of ownership of a major television news station into the hands of the owner of four national newspapers, regardless of whose hands they are, would be an illiberal media outrage and wholly unacceptable?
Baroness Rawlings
We had the debate last week, when we went through this. It is not in the hands of the Government; it is in the hands of the Secretary of State. It is in the hands of the Competition—
Baroness Rawlings
After being examined by the Competition Commission and Ofcom, it will go to DG4 of the European Commission. Only when the Secretary of State has heard the representations from all those bodies will he make the final decision. It has to go through all those three stages, which will take until the end of the year.
Baroness Jones of Whitchurch
My Lords, will the noble Baroness clarify something? If Ofcom’s position is so secure, why is it on the endangered list in the Public Bodies Bill, as has been referred to?
Baroness Rawlings
It is no longer on the danger list; it has been removed. It is in Schedule 5 and will be removed from Schedule 7.
Lord Roberts of Conwy
My Lords, in view of yesterday’s peaceful protest by the students, which, as I understand it, was hijacked by an anarchical and violent element, leading to police injuries and damage to property, can the broadcast media be reminded that they should take the utmost care to ensure that they are not open to the charge of encouraging further violence by their comments or in any way whatever?
Baroness Rawlings
My noble friend Lord Roberts is absolutely right and I could not agree with him more, but it is the Government’s position not to interfere with any of the media, including television.
Lord Pearson of Rannoch
Even so, my Lords, will the Government encourage the BBC to fulfil the single promise that it made in the wake of the Wilson report in 2005, which was to explain to the British people how the institutions of the European Union interact and their effect on British life?
Baroness Rawlings
The European Commission will have a role in this because it is wide-ranging. DG4 is examining whether the merger may result in a loss of effective competition in the market. It must decide by 8 December whether to clear the merger or to proceed to a full second stage of investigation.
Treasure Act 1996
Lord Renfrew of Kaimsthorn
To ask Her Majesty’s Government whether they will review the definition of “treasure” in the Treasure Act 1996 in the light of the sale at auction of the Roman parade helmet recently found in Cumbria for £2 million.
Baroness Rawlings
My Lords, I refer the noble Lord to the Answer given to him on 20 October:
“The Department for Culture, Media and Sport plans to”,
conduct a consultation that will,
“review the Treasure Act Code of Practice and … the definition of Treasure contained in the Treasure Act 1996. This … will provide the opportunity to consider whether it would be appropriate to extend the definition of treasure to include items such as the Roman parade helmet found”,
in Cumbria,
“at Crosby Garrett”.—[Official Report, 20/10/10; col. WA 186.]
Lord Renfrew of Kaimsthorn
My Lords, I thank the Minister for that helpful Answer. It is strange that a national treasure can be sold at public auction by an anonymous vendor to an anonymous buyer. Can the noble Baroness tell us where the Crosby Garrett helmet is now and who bought it? If not, will the Government consider reviewing the law on antiquities at sale by auction in favour of some transparency?
Baroness Rawlings
My Lords, I acknowledge the expertise of my noble friend Lord Renfrew on the subject of antiquities and greatly appreciate his long-standing dedication to this area. I understand his concern that the buyer and the seller may remain anonymous. However, I am told that it would be a breach of the principles of confidentiality and data protection for information about buyers and sellers to be released into the public domain without their consent. I am afraid that I cannot tell him where the helmet is.
Lord Clark of Windermere
My Lords, does the Minister appreciate how disappointed the people of Cumbria are that they have lost this fine artefact? Will she join me in congratulating the staff of the Tullie House Museum in Carlisle, who led a campaign that raised £1.96 million to try to purchase it? I understand that the buyer is based in the UK, which means that an export order was not required. Will the Minister assure the House that, if the artefact were to be exported or transferred abroad, an export order would be required?
Baroness Rawlings
I thank the noble Lord for that question. I understand that there have been calls for an export licensing ban to be placed on the helmet. I cannot speculate on what will happen next. However, the general position is that, if the Secretary of State decides that an object of cultural interest is of national importance and the owner has applied to export it, he may impose a temporary export ban under the Waverley criteria, as the noble Lord will know. That would quite rightly give an individual or institution time to raise the money to make a fair and matching offer to try to keep the object in the United Kingdom.
Lord Allan of Hallam
My Lords, my noble friend will be aware of the valuable work of the Portable Antiquities Scheme in recording important archaeological information about finds under the Treasure Act, such as with this helmet. Can she give the House any assurances about the future funding and management of the Portable Antiquities Scheme?
Baroness Rawlings
The Portable Antiquities Scheme is very important and I thank the noble Lord for that question. I appreciate that there is concern over the future of the scheme in the light of the announcement that the Museums, Libraries and Archives Council, which currently provides most of the scheme’s funding, will be wound up by April 2012. I am pleased to confirm that the scheme will continue. Discussions are taking place about the best way for it to be managed and funded.
Lord Howarth of Newport
My Lords, can the Minister offer any comfort to archaeologists, faced as they are with cuts to funding for museums, universities, English Heritage and local authority archaeological departments and, indeed, the collapse of archaeological businesses that are dependent for their funding on developers? Do the Government have any policies to support archaeology?
Baroness Rawlings
The noble Lord, Lord Howarth, is very much involved with this subject and I understand his concern about the cuts, which will be across the board and which we all know about. Measures included in the Coroners and Justice Act to improve the treasure system will be implemented. Ministers are still considering the feasibility of a coroner for treasure. DCMS and the Ministry of Justice are working together to assess the extent to which measures on treasure may be implemented within current financial constraints.
Lord Redesdale
My Lords, are moves afoot to look at the practices of the auction houses, given that this helmet was found in many pieces and an enormous amount of archaeological information was lost when conservators put the pieces back together without consulting archaeologists? Is that a practice that auction houses should undertake, given that loss of information on a very rare artefact? Are the Government looking at sales of antiquities through internet sites such as eBay? That is becoming a real source of worry, as much of our heritage is disappearing abroad without any record whatever.
Baroness Rawlings
My noble friend Lord Redesdale makes interesting points on the pieces and on eBay. It comes back to provenance. It is in the interests of both auctioneers and dealers to check that the provenance of items is acceptable to reduce any risk of prosecution for handling stolen goods or dealing in tainted or mended goods. However, the Government consider that the existing offences adequately satisfy the United Kingdom’s obligations under the 1970 UNESCO convention and would be wary of introducing further legislation unless there was a proven need to do so.
Lord Inglewood
My Lords, I declare an interest as chairman of the Reviewing Committee on the Export of Works of Art. Bearing in mind the Minister’s reply to my noble friend Lord Renfrew, can she confirm that the review of treasure will include wide consultation, not least with my noble friend?
Baroness Rawlings
My noble friend Lord Inglewood makes a very good point and of course we will make certain that it does.
Energy: Nuclear Safety
(14 years ago)
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Lord Jenkin of Roding
To ask Her Majesty’s Government when they will lay the proposed Legislative Reform Order to change the status of the Nuclear Installations Inspectorate.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the Government attach great importance to the ongoing robust, effective and efficient regulation of the nuclear energy sector in the UK and expect to make a full announcement on the future of nuclear regulation very shortly.
Lord Jenkin of Roding
I thank my noble friend. He may find himself slightly surprised to be answering questions about nuclear safety, but is he aware that this legislative reform order is essential now if the inspectorate is to meet all the challenges with which it is faced? Is he also aware that this has been going on for months and months and that the order has the full support of the whole industry, the unions and the inspectorate? Forgive my impatience, but how much longer are we going to have to wait?
Lord Freud
My Lords, as I said, we are hopeful of making a full announcement in the very near future. The two options under consideration for reform of nuclear regulation are, first, for a discrete agency within the Health and Safety Executive, which could be achieved rather rapidly without legislation, or, secondly, for a stand-alone statutory corporation, which could be delivered on a slower timescale either through the drawing up of a legislative reform order or through primary legislation. Both legislative routes offer potential advantages and disadvantages. As I said, I hope to be in a position to announce our decision very shortly.
Baroness Whitaker
My Lords, can the Minister assure the House that the independence and expertise of the Nuclear Installations Inspectorate—I declare a long-ago interest as a former planner there—will be maintained under any new arrangements, since this is surely what has kept our nuclear industry safe over the years since that inspectorate joined the Health and Safety Executive?
Lord Freud
I thank the noble Baroness for that question. Yes, it is absolutely at the centre of any decision going forward that we keep an effective safety regime—a regime that has indeed been congratulated on being a world leader. We would absolutely aim to keep that objective front and centre.
Lord Taverne
My Lords, given the vital importance of this order to the nuclear programme and therefore to the future of environment policy—and, indeed, of energy security—should not effective control over and responsibility for such matters, given the delay that there has already been, be transferred or, in effect, ceded to the Department of Energy and Climate Change?
Lord Freud
I thank my noble friend for that question. The inspectorate is kept separate for very good reasons, which are connected to my last answer. If you have one department whose job is to put nuclear resources on the ground, so to speak, it is important that another, independent department is ultimately responsible for making sure that that is done in the safest possible way. That is the rather peculiar reason for my standing here discussing nuclear energy, as my role in this House is to look after nuclear safety in this country.
The Lord Bishop of Bath and Wells
My Lords, the county of Somerset is experiencing a considerable reduction in employment at present, but with the proposed nuclear power station being currently planned on site, does the Minister agree that it is imperative for the future of the labour force in Somerset and for encouraging people to find work that these regulations are very quickly and immediately put into practice?
Lord Freud
My Lords, I thank the right reverend prelate for that question. What is absolutely imperative is that we get rid of any uncertainty that there may be in the nuclear industry, so that it can go forward at speed to produce the facilities that we need in order to cover the energy position in this country which, as your Lordships know, is pretty tight as we look at the decade ahead.
Lord Hunt of Chesterton
My Lords, will the Minister’s plan ensure that it will be easier for retired inspectors to return? I know that some of them are younger than me and I am sure that that is part of the plan. Will he also ensure that these arrangements will ensure that what was called the National Radiological Protection Board, which was a world-famous organisation for ensuring safety around our nuclear power stations, will have its important status restored? The board became part of the Health Protection Agency, which is now being changed, so it is very important that this aspect is also maintained.
Lord Freud
My Lords, I thank the noble Lord for that question. The important thing that we need is to have a body that is regarded as totally independent by the industry and that the industry can interact with it. Clearly, if the body is independent in that way, it will make its own decisions on who to recruit, whether they are retired, from abroad or from wherever. What is needed is an efficient capability.
Lord McKenzie of Luton
My Lords, a consequential benefit of the proposed change of status of the NII would be that it would be outside the Treasury pay remit, which obviously could potentially help with the recruitment of specialists and progress on the generic design assessment. Will the Minister update us on issues around recruitment for the NII and whether that is still a problem?
Lord Freud
My Lords, the nuclear inspectorate has been able successfully to fill some of the gaps that it has had in the past couple of years, so it is now much more strongly staffed. That is not a problem. The issue, looking forward, is whether it will be in a position to recruit people of the calibre that it needs. Whatever form it goes forward in, whether as a discrete agency or as a statutory body, it is essential that the inspectorate is able to make the appropriate recruitment.
Lord Broers
My Lords, I ask the Government, through the Minister, to reassure us that they realise the urgency of the situation. There is a limited capacity for making nuclear plants and the suppliers of nuclear plants already have their order books filled. China is currently building four or five new plants. We must get on with this, as it is extremely urgent. We must take safety into account, but please reassure us that the Government realise the urgency of the matter.
Lord Freud
My Lords, we realise the urgency. That is why we are going to produce a full statement on the issue very shortly.
Burma: Elections
(14 years ago)
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Baroness Cox
To ask Her Majesty’s Government what assessment they have made of the recent elections in Burma.
The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, the elections on 7 November were a sham. They were neither free, fair nor inclusive and they do not represent progress. We have heard reports of voter intimidation and irregularities in the results. Over 2,100 political prisoners remain in detention, including Aung San Suu Kyi. Many ethnic groups were excluded from the process. It is clear that the military is determined to maintain its grip on the country. An opportunity for national reconciliation has been missed.
Baroness Cox
My Lords, I thank the Minister for that reply, with which I entirely agree. Is he aware that, while the sham nature of these elections has been widely and appropriately reported, less widely reported are some of the abuses in remote areas, such as the intimidation and arrest of Chin and Rohingya people and military offences against the Karen, which have led tens of thousands to flee into Thailand? Will Her Majesty’s Government consider some humanitarian assistance for the newly displaced and ensure that all the ethnic nationals, comprising 40 per cent of the population of Burma, are fully involved in all future discussions and dialogue?
Lord Howell of Guildford
I am grateful to the noble Baroness, who is second to none in her grasp of these developments; I believe that shortly she will once again be travelling to the Chin state area to see for herself some of these very bad conditions. The broad answer is that we are monitoring the situation and looking carefully all the time at whether additional aid and support can be mobilised for these ethnic groups. Among the refugees on the Thai border there are now reports of unpleasant developments in Chin state, northern Rakhine and other areas. We are looking at these things closely. It is a little early to say whether additional international aid is required, but we stand ready to examine in close detail the points that the noble Baroness has rightly made.
Baroness Kinnock of Holyhead
My Lords, after the rigged and fraudulent election in Burma, is it not now time that we sent a clear signal to the military junta that it can no longer enjoy impunity for its war crimes and crimes against humanity over many years? In that respect, the United Nations special rapporteur has recommended a commission of inquiry into these crimes. The UK has supported that view. Will we therefore, in the United Nations Security Council, in the United Nations General Assembly and at the European Union next week when the election is discussed, support that view and press for a commission of inquiry?
Lord Howell of Guildford
The noble Baroness is quite right. This is our policy, as she well knows, having administered it herself. As she also probably realises, the problem is that of gathering the appropriate international consensus. If we rush in too soon and fail to get the consensus, that will merely send a signal to the generals in Burma that the international community cannot do anything. We want to get the timing right, but the policy is exactly as the noble Baroness says. We support the idea of a commission of inquiry and the rapporteur’s proposal, but it may take quite a time to build the broad consensus that is needed to make this a success.
Lord Avebury
Should we not make it crystal clear to the Government of Myanmar that, if Aung San Suu Kyi is released on Saturday, that will be grossly insufficient to meet the many criticisms in the special rapporteur’s report, which is now before the General Assembly? Have the Government pressed for a UN-led dialogue on all the recommendations in that report, including for a commission of inquiry, which was mentioned by the noble Baroness? Is it in the EU recommendations to the General Assembly for discussion in December?
Lord Howell of Guildford
My noble friend is right: merely releasing Aung San Suu Kyi from her detention is only part of the story and certainly not a full response. There is a need for far greater pressure on Burma to begin to return itself to democracy. The EU has a tough sanctions policy, as my noble friend knows. We all have an agreed EU position on Burma, which the British Government are entirely consistent with and support. As to the policy at the UN, the position is as I described to the noble Baroness. It is a question of building the consensus and getting the timing right so that we and our EU colleagues can press ahead successfully and get full support for a commission of inquiry. It is no good if we rush in and find that we cannot get adequate support for it.
Lord Alton of Liverpool
My Lords, on this day will the Minister recall that, in the Second World War, principal among the quarter of a million Burmese who fought alongside us or supported us as civilians were the Karen people, whom Lord Mountbatten of Burma described as our bravest allies? Will he also recall that, following what he has called sham elections, 30,000 Karen people have fled from the new upsurge of violence described by my noble friend in her question to the refugee camps along the border, where there are also 150,000 refugees? What aid and support can we give to these, our forgotten allies?
Lord Howell of Guildford
The noble Lord is right. I have a slightly smaller figure of 20,000 but, really, who cares? Thousands upon thousands of desperate people have fled across the Thai-Burma border to escape clashes between troops and the ethnic Karen rebels. We are deeply concerned about the reports of this fighting, which serves only to underline the fact that flawed elections will not create the national reconciliation that noble Lords have rightly urged and called for. As to assistance for refugees, I will have to write in detail to the noble Lord. We are looking at it and thinking about the possible focusing of additional assistance, but I will supply the precise details in a letter.
Equitable Life (Payments) Bill
Health: Cancer
(14 years ago)
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Baroness Finlay of Llandaff
To call attention to measures to improve the quality and quantity of life of people with cancer; and to move for papers.
Baroness Finlay of Llandaff
My Lords, I am delighted to have secured this debate at this time. We are facing a huge upheaval in the way the NHS functions. The good news is that cancer deaths are falling. Cancer control is key as cancer becomes a chronic disease. However, cancer still kills more than 150,000 people a year—a quarter of all deaths in this country. It cuts many off in their prime; 23 per cent of those who die are aged 18 to 64. They often leave behind young children, who carry the details of their parents’ death emblazoned on their memory. Unlike many others in Europe we have excellent registration data that allow us to progress year by year and monitor that, but the EUROCARE study data suggest that we lag behind Scandinavian countries, which are the best in Europe, probably because of delayed diagnosis.
We must improve time survived as well as quality of life for patients, so let us look at the cancer journey, the problems on the way and the issues that the planned NHS reorganisation throws up. Smoking is the biggest single risk factor for cancer. A third of all cancers, and nine out of 10 lung cancers, are attributable to smoking. Cancer prevention through tobacco control strategies is already having an impact; the peer pressure to smoke is less. Tobacco control is cost-effective and a public health success. There is evidence that even once one type of lung cancer has occurred, stopping smoking slightly improves survival time. Can the Government assure me that the planned regulations to ban point-of-sale displays will come into force soon?
I turn to early diagnosis through screening. The breast screening programmes are improving their information to patients to provide a more balanced view on early detection. Bowel screening through faecal occult blood has been rolled out to those aged 60 to 75, but adding flexible sigmoidoscopy at 55 years of age should detect many more early cancers. It is being assessed through pilots already, but in the new NHS how will new screening programmes be advanced, commissioned and progressed? What will happen about the increasing calls for PSA tests for prostate cancer and the problems of interpreting results? How will biopsies be commissioned? As other early diagnostic tests emerge, such as viral testing for cervical cancer, how will they be rolled out nationally?
The biggest challenge we face overall is that of delayed diagnosis. Patients are seeing cancer specialists too late in their disease. The target of diagnostic testing within a week has been abandoned. Patients wait terrified, believing that every day's delay lessens their chance of survival, so if we are to have a patient-focused NHS why has that one-week wait been dropped? In the new NHS, whose responsibility will it be to ensure early diagnosis? Public health should encourage patients to come forward to the GP, who is in turn responsible for diagnostic testing. If the delays worsen, who will be held to account? Currently, GPs act as gatekeepers, sometimes holding the gate too tightly closed. I know only too well that having the right “index of suspicion” is not easy, but who will ensure that GPs examine and investigate, and if in doubt proactively bring patients back in two weeks for review, rather than become overzealous gatekeepers at a time of pressure to limit referrals?
In the GP consortium, what sanctions will there be against primary care if diagnostic delays continue or worsen? Will there be greater powers to counter clinical underperformance? It is not enough to say that a patient can change GP; for the patient subject to delay that is too late. People with suspected or proven cancer want to see a specialist. They will travel to an expert in a centre of excellence with good outcomes, whose team personalises treatment with good information to meet a patient’s individual needs.
Specialist oncology services peer review—the CQuINS report—shows that, despite many recent improvements, 5 per cent of teams are underperforming and some patients are not being referred readily enough to specialist centres. The report shows the impact of national benchmarking, quality assurance and specialist centres. It highlights the adverse patient outcomes when complex surgery is undertaken outside a specialist centre, when there are gaps in the core multidisciplinary team membership, when data use is suboptimal and when communication across organisational boundaries is poor.
The Government have stressed the need for good outcome measures in mortality, morbidity and patients’ reported experience of care. The National Cancer Action Team report illustrates the importance of collaboration, but when each hospital is a foundation trust how will cross-referral be assured? Decision aids are being developed to help patients access information about treatments when various options are available. These are particularly important in conditions such as bowel cancer, where laparoscopic surgery for an early tumour may be the best choice. However, if the hospital does not offer that option, who will be responsible for ensuring that the patient is referred, and what sanctions will be in place if a trust hangs on to patients inappropriately? What will stop competing trusts dabbling in oncological surgery or chemotherapy, especially if the Patient Safety Agency monitoring is cut back? How will the CQC's responsibilities link with Monitor and who will determine whether a local service should continue? What if the GP consortium, the CQC and Monitor's conclusions suggest different decisions?
There is always a balance between locality and centres of excellence, but real choices need to minimise risk. Commissioning along disease pathways will require secondary and tertiary care to be at the table with primary care in planning a whole service to optimise outcomes across the population. Individual needs vary. Cancer management is not an off-the-shelf package. It is complex, involving close collaboration between many experts from different fields to personalise care for patients. Patients cannot possibly know the ins and outs of each option. Choice per se can be a red herring. The choice that is important to patients is the choice of appropriate treatment, with people working together, driven by clinical quality assurance not financial gain. The previous Government instigated quality standards development by the National Institute for Health and Clinical Excellence. Can the Minster assure us that this work will continue to inform the national outcomes framework?
When it comes to non-surgical cancer treatment, radiotherapy and chemotherapy are the mainstays. Where will the levers for building capacity lie? Radiotherapy will have to be centrally commissioned, given the need for major capital investment. Techniques such as intensity-modulated and image-guided radiotherapy reduce toxicity by ensuring accurate targeting of the tumour at every dose. CyberKnife, which was featured in the news yesterday, and results from the prostate radiotherapy trial in my own centre in Cardiff, have shown remarkable results. Other super-targeted techniques are developing apace. We know if radiotherapy is poorly targeted; there is a 20 per cent deficit in two-year survival. How will the commissioning board ensure that the ongoing functioning of a modernised unit is not starved of funds locally by a consortium?
As chemotherapy also becomes more targeted, new genetic tests indicate who is likely to respond. For example, colon cancer patients with the K-ras mutation have a much higher chance of responding to Cetuximab, which costs about £1,000 per dose. The test costs £140. It is really good value for money. In 4 per cent of non-small cell lung cancers, the presence of a specific fusion protein indicates likely drug response, allowing far better patient selection and avoiding inappropriate chemotherapy for those who will get only side effects without a response. Quality control and economies of scale suggest that it is better to invest in a few laboratories to do all such tests nationally. Will these be centrally commissioned or left to the randomisation of market forces?
There is evidence that patients treated in research-active cancer centres have better outcomes overall, whether or not they are in a clinical trial. The National Cancer Research Network has increased patients entering trials from 4 per cent to 18 per cent over the past decade. The investment is reaping rewards for everyone going through these services, so will research-active units be commissioned as accredited centres nationally? Major advances occur, often sporadically, in a research-rich environment. The human genome project revealed that the B-Raf mutation is a key trigger in melanoma, with a B-Raf inhibitor showing a short-lived but dramatic effect in 60 per cent of patients with the mutation.
The cancer drugs fund was welcomed, but now that it has been handed out to local SHA decisions a postcode lottery has emerged. Avastin for bowel cancer is funded in Newcastle for first-line therapy, in London only for second-line therapy, and in Wales and Scotland not at all—in line with NICE’s recommendation. Rather than abandon NICE’s decisions, with its rigorous processes, would it be useful to discuss variable parameters around their QUALYs assessment mathematics, or will litigation eventually set a precedent before NICE’s role is reconsidered and reinstated?
Palliative care has a role during active treatment, not just at the end of life. Recent research published in the New England Journal of Medicine showed that early palliative medicine interventions in patients with lung cancer improves the quality of life and mood of patients, including lower depression scores. This was a proper randomised controlled trial, analysed on an intention-to-treat basis, so the data are very robust. The surprising finding was that those who had prospective palliative care lived longer, with an average of three months’ extra life of better quality, than those in oncology who were referred only as the clinician saw fit. Given the impact that my discipline—I declare an interest—of specialist palliative care services has across the UK, will the Government ensure that such services are commissioned at a local level in line with national guidance, with stated minimum levels of specialist palliative care staff everywhere, recognising the enormous contribution of charitably funded hospice inpatient, daycare and home services?
For the 150,000 people who will die of cancer this year, whose preferred place of care is often home, seven-day services are essential. However good the cancer care, it is a disaster if it falls apart over a weekend. All the good is undone. I suggest that England should follow Wales's example of seven-day working by dedicated palliative care teams, with consultant advice available 24/7 everywhere. I declare my interest here, too. It is proving very effective at low cost. If the local supermarket is open seven days a week, why is our NHS fully operational for only 30 per cent of the time? Seven-day working would be a more efficient use of valuable resources in primary, secondary and tertiary care.
We face a huge upheaval in GP commissioning that raises more questions than it answers. I was privileged to be part of the original Calman-Hine committee that recommended cancer centres and units, with national standards. Cancer services have come a long way since then. Multidisciplinary teams and tumour site-specific groups are firmly embedded across the UK's NHS services. There is real anxiety that market forces may fragment this progress. Services from screening through primary care to secondary and tertiary care must be planned and integrated. The cancer journey will be a far better pathway if there is integrated planning. Patients will live longer and better. Independent living allows them to return to economic activity. If young patients die early, it is their children who carry the scars and burden of bereavement for the rest of their lives.
Delivering high-quality care depends on co-operation between professionals. The idea of any willing provider, and competing hospitals, is anathema to the collaborative model of delivering stable, high-quality healthcare. We cannot promote fragmentation if patient outcomes in cancer are to continue to improve, as they have done so dramatically over the past 10 years. I beg to move.
Viscount Bridgeman
My Lords, the whole House will be grateful to the noble Baroness, Lady Finlay of Llandaff, for securing this important debate. In her speech she once again reminded us of the leadership that she continues to give in this field, which is of continuing urgency. I declare an interest as a former chairman of St John’s Hospice in St John’s Wood, central London.
I will speak briefly on care at home in the context of cancer sufferers. A joint report by Healthcare at Home and Dr Foster estimates that delivering end-of-life care services at home could save the NHS £160 million, yet only a quarter of patients are able to die at home. It is worth talking through what a well organised hospice—and I am happy to say that there is a gratifyingly large number of them—is able to achieve with Hospice at Home.
The totem words are “hospital avoidance”. The core of the home service is a close relationship with community nurses and GPs. However, the important point is that there is also a team of carers without formal qualifications who are given basic training at the hospice. They will look after the patient's basic needs such as washing, bed-making and shopping. Often, they become effective counsellors, which is particularly important to long-term cancer survivors as it can restore their confidence to get back into the world around them. These carers not only provide a valuable human resources augmentation, but they can at any time call on the community support team of trained professionals and on the resources of the hospice. It has been said to me that the fact that the patient can be cared for at home is in itself one of the most valuable and effective palliative treatments. So it is, if one can use the term respectably in this context, a win-win situation. The patient, often very confused and terrified of any form of hospitalisation, has all the familiarity of home surroundings; at the same time, hospice and hospital beds are freed up and, significantly, Hospice at Home is a cost saving for the health service.
I have referred to long-term cancer sufferers, for an increasing number of whom life expectancy has been prolonged thanks to new and effective drugs. The noble Baroness referred to clinical developments in palliative care which are assisting this extension of life, which is of course pertinent to the subject of this debate. This extended life expectancy will provide additional demands on community and palliative care nurses.
The Government’s commitment to 24/7 community nursing is to be welcomed. More of concern, however, was the announcement in the comprehensive spending review that the Department of Health will no longer financially support the previous Government’s commitment, given by the then Prime Minister personally in a speech to the King’s Fund on 8 February, to provide one-to-one nursing services for every cancer patient. That said, however, I was encouraged by the remarks of my honourable friend Paul Burstow, the Minister for care services, in another place on the debate on rarer cancers on 27 October. He said that the Government are re-examining the question of one-to-one support. I shall very much welcome any further reassurance that the Minister can give on the current position and on one other small point. Can any initiative provide for the requirement that, wherever possible, a terminally ill patient’s preferred place of death is recorded? I do not need to point out how useful this information is in planning the care of cancer patients.
Lord Kinnock
My Lords, I naturally join the noble Viscount, Lord Bridgeman, in thanking the ever-vigilant, ceaselessly campaigning and profoundly knowledgeable noble Baroness, Lady Finlay of Llandaff, for initiating this debate. In my contribution, I want to focus on the need for improved measures of information, advocacy and treatment relating specifically to prostate cancer.
In the UK, around 36,000 men are diagnosed with prostate cancer every year, making it the most common cancer in men. More than 10,000 men die each year from the disease—about 12 per cent of the total number of men killed by cancer. Only the rates of lung cancer exceed those figures among men. Prostate cancer mortality rates have remained almost constant for the past 20 years in the United Kingdom.
Against that background, I offer the argument that this major killer, which on average takes the life of more than one man every hour, should be a high-priority target of policy-makers and medical practitioners, as it is a disease which, if diagnosed early, can be very effectively treated and even cured in many cases. The requirement of early diagnosis is therefore vital. To fulfil it properly, however, several barriers of ignorance and cultural diffidence have to be dismantled, advances have to be made in the knowledge and practices of general practitioners, as my noble friend Lady Royall has emphasised on previous occasions, and far stronger efforts must be made to implement policies which have been approved by successive Governments but have not been applied with the necessary vigour.
The need for the first development—combating public ignorance—is graphically illustrated by the fact that, while at least 10,000 families, neighbours and workforces every year suffer the loss of a male relative or friend, seven out of 10 adults do not know what the prostate gland is or what it does. Forty-six per cent of respondents to a reputable survey earlier this year were unaware of the prevalence of prostate cancer. The same survey also showed that 70 per cent of the men questioned were not aware of the existence of the prostate specific antigen blood test, which so far is the only easily administered test that can identify a prostate abnormality and, helpfully and indicatively but not unerringly and conclusively, show the presence of cancer.
As a result of these factors, the simplest of measures to improve the quantity of life of men with prostate cancer would be hugely to increase printed and broadcast publicity about the nature and incidence of the disease, the need for the earliest possible diagnosis and treatment, the existence and the limitations of the PSA test and the right of men—recognised and accepted by the current and previous Governments—to make an informed choice about whether to have a PSA test, and to get the test on the National Health Service if they want it.
That established entitlement to make an informed choice is crucial. Indeed, I would make the argument that the full and effective exercise of that right requires the introduction of a national programme of screening that is comparable with the programmes for detecting breast, cervical and bowel cancer. The National Screening Committee has, I know, been consulting on this matter, and I would be grateful if the Minister could now say what, if any, conclusion has been reached on those consultations. I would also like the Minister to respond to the following questions.
First, it is now three years since the Department of Health’s cancer reform strategy recognised the need to explore new approaches to improving the information about prostate cancer and the PSA test. No new approaches have been introduced or even piloted. I would like to know whether action is going to be taken.
Secondly, the Government’s worthy and continuing policy—explicitly expressed by the Chief Medical Officer in July 2009—of recognising men’s right to make a universally informed choice about having a PSA test, and to be tested on the NHS if they want it, is commendable. However, that policy must be embraced by the cancer reform strategy, supported by much more resonant and widespread publicity, and communicated more directly and rigorously to general practitioners.
Finally, I emphasise the irreplaceable role of GPs in achieving improved knowledge about the diagnosis and treatment of prostate cancer. But I also underline the need to deepen and widen the awareness of GPs—a need which is made emphatic by the following survey results. 75 per cent of the 250 GPs surveyed by the Prostate Cancer Charity this year were not aware of government guidelines for delivering information to men about the PSA test. 75 per cent of those surveyed said they never or only occasionally had unprompted discussion about the PSA test with asymptomatic men aged 50 to 70. 15 per cent of the surveyed GPs said that they do not support the right of asymptomatic men to have access to the PSA, even if requested by the patient on the basis of an informed decision. These findings are cause for concern. I do ask the Government, forcefully, to take their responsibilities seriously, to implement their policies and to secure a new level of awareness and action, particularly among GPs.
Lord Clement-Jones
My Lords, I, too, congratulate the noble Baroness, Lady Finlay, and pay tribute to her for her tireless campaigning on cancer services. At the outset, I want to recognise the great progress made in cancer treatment and survival rates under the previous Government. I welcome the coalition Government’s commitment to refresh the cancer reform strategy. I also welcome the other actions that they are taking and the additional resources being made available to cancer services, such as the cancer drugs fund announced in the comprehensive spending review and committing the funding needed to deliver 1,200 additional specialists involved in cancer services by 2012. I welcome other measures to expand access to certain therapies and the raising of cancer awareness, but as the noble Baroness, Lady Finlay, so ably put it, more needs to be done.
Given the time available, as vice-chairman of the All-Party Ovarian Cancer Group and a former trustee of Cancerbackup, whose cancer information service is now part of Macmillan Cancer Support, I want today to concentrate essentially on the implementation of information prescriptions on issues relevant to ovarian cancer diagnosis and treatment. Research by Macmillan Cancer Support shows that 93 per cent of cancer patients want to be “very or fairly involved” in decisions about their treatment and care. My late wife, Dr Vicky Clement-Jones, who founded Cancerbackup, rightly described,
“knowledge as the antidote to fear”.
Information is the key to realising the vision of a patient-centred NHS. To make informed choices, a patient must be enabled and empowered with the right information at the right time. The creation of information prescriptions was announced in 2006. These would be designed to offer cancer patients high-quality personalised information and support at key points through their treatment. The pilot schemes for information prescriptions have shown the significant improvements they can make to the delivery of information. If every cancer patient received an information prescription as standard and was supported in understanding the information given, it would also help to tackle health inequalities. So it is extremely heartening that the coalition Government have made,
“no decision about me without me”,
the central theme of their health reforms.
But despite progress on information prescriptions in general, we are still awaiting the publication of the Department of Health implementation plan for cancer information prescriptions. The implementation plan needs to be launched as quickly as possible to guarantee that every cancer patient in England has an information prescription by 2012. Information prescriptions should be routinely offered to all cancer patients so that everyone can receive high-quality personalised information at key points in their cancer treatment.
I now come to issues relating to the less common cancers such as ovarian cancer. I pay tribute to Target Ovarian Cancer, the Eve Appeal, Ovacome and Ovarian Cancer Action variously for their work, information and advocacy in this field. After breast, lung and bowel cancer, ovarian cancer is the fourth most common cause of cancer death in women. It is estimated that at least 400 women’s lives could be saved each year if the UK matched the average European survival rates for ovarian cancer. England has the lowest ovarian cancer survival rates in Europe, and the UK as a whole is very close to the bottom of the table.
I have welcomed the Government’s commitment on spending on cancer drugs, but before treatment it is important to ensure early detection. Currently, 75 per cent of women with ovarian cancer are diagnosed once the cancer has already spread and successful treatment is much more challenging to achieve. Improving early diagnosis for women with ovarian cancer is essential in order to give them the best chance of survival. It is imperative that action on symptoms awareness and access to diagnostics is taken as a matter of urgency. To do that, women in the general population must be made aware of the symptoms of ovarian cancer, and of the importance of acting on frequent and persistent symptoms. Awareness of ovarian cancer is much lower than it is for symptoms of breast, lung and bowel cancer. In 2008-09 the Department of Health accepted that there is now robust evidence on symptom patterns for ovarian cancer that distinguish it from other conditions. I understand that NICE guidance on recognition and initial management of ovarian cancer will be published in April 2011.
I welcome the signs and symptoms campaign recently announced by the Department of Health, but it will focus essentially on breast, lung and bowel cancers. There do not appear to be plans to invest in ovarian cancer. GPs must also have prompt access to the diagnostic tests that help them to decide who should be referred urgently, and they should be updated on new developments in symptoms research. In autumn 2009, it was announced that all GPs would have access to urgent diagnostic tests for bowel and ovarian cancer within a week. That commitment to one week was removed in the CSR, but it is not clear whether there is still a commitment to make sure that all GPs have access to these tests. I would very much like to hear the Minister’s response on that matter.
I turn briefly to another site-specific cancer, lung cancer. Despite improvements in service provision, the UK still has one of the worst lung cancer survival rates in Europe. The recently announced awareness campaign will cover lung cancer, and I welcome that, but there is still a need to develop screening programmes because it is the only cancer among the main common cancers which does not have such a programme. The National Lung Cancer Audit shows that only 51 per cent of lung cancer patients receive any form of active treatment. I join with the British Lung Foundation, which states that more lung cancer patients should be considered for active treatment, with all centres learning from best practice, in order to bring about better patient outcomes.
Finally, I wish to express concern about the impact on world-leading cancer research of a cap on immigration for tier 2 migrants. My noble friend Lord Ryder, as president of the Institute of Cancer Research, expressed this extremely well in the debate in October on immigration controls. His fears are well founded and I hope the Minister will reassure us that exemptions can be put in place, along with answers to the other issues I have raised. I look forward to his reply.
Baroness Pitkeathley
My Lords, I thank the noble Baroness, Lady Finlay, for securing the debate. No one is more fitted to lead such a debate, and it is a privilege to take part. It is a privilege, too, to speak in your Lordships’ House from personal experience. It is even more of a privilege that, thanks to the expertise and dedication of NHS staff at many levels, I am alive to participate, as I have twice recovered from cancer—although on the second occasion it was a very close run thing.
As well as to that expertise and dedication, my recoveries—in the plural—can be put down to two things: early diagnosis and proper follow-up care. On early diagnosis, I am delighted that I share the view of the noble Baroness and of Professor Mike Richards, the cancer tsar. He was recently quoted as saying:
“if you wanted to sufficiently change outcomes from cancer I would not spend £200 million on expensive cancer drugs; I would spend it on earlier diagnosis and involving GPs”.
That was certainly my experience.
The first time that I was found to have cancer was due to the vigilance of my GP, as I had virtually no presenting symptoms; he just had an uneasy feeling that something was wrong so he sent me to see a consultant. The second diagnosis was made no less than 14 years later as a result of the screening that I was still having, although, admittedly, only occasionally. On that occasion, another primary cancer was detected in another part of my colon. I was considerably more ill the second time and spent a long time in hospital, but the important thing was that all the cancer was removed. Although I was constantly back and forth between intensive care and the ward, there was excellent liaison among all parts of the system.
In this context, I want particularly to mention the work of patient emergency response teams, which are now often referred to as critical intensive care outreach. My team was based at the Middlesex Hospital—it now operates at UCH—and ensured the liaison between teams that is so important to patients. The period of transfer between intensive care and the ward is often difficult for patients. I commend those teams.
I have mentioned the elements that I believe led to my recovery and to the excellent health that I now enjoy because, like the noble Baroness, I fear that they may at this moment be under threat because of the spending programme that is being implemented. We keep hearing that the money for the NHS is ring fenced but, as a 0.1 per cent real-terms increase is nowhere near enough to keep pace with demand, I wonder how these services will continue. As the coalition has abandoned the one-week target for cancer test results, literally more people will die as a result of late diagnosis. That figure is currently estimated at 10,000 per year.
Much late diagnosis is due to patients not seeking treatment until it is too late, so I hope that the Minister can assure the House that the Government have no plans to scrap screening programmes or those promotional activities designed to ensure that people seek consultation. As a result of there being a possible hereditary element to the cancer that I had, my son and daughter also have regular colonoscopies. Will such services fall victim to the “must do more with less” mantra? Sadly, there are still too many people who find a possible diagnosis of cancer so frightening that they put off consulting a doctor until it is too late. I am sure that every one of your Lordships could name a friend who has ignored obvious symptoms such as weight loss, unexplained bleeding, coughs and so on. That is one reason why those of us who are fortunate enough to have recovered have an urgent responsibility to say so and to help remove the fear that gets in the way of seeking help.
I do not see how, in these hard financial times, we can possibly be thinking of spending £3 billion on an NHS reorganisation, which few seem to want, without it further affecting the services that are so vital to early diagnosis. Moreover, I fear that giving the bulk of the resources to GP consortia will run counter to the liaison between hospital and locally based services, which proved so helpful to me. GPs will have to decide whether treatments are necessary, affordable and the cheapest option, but the care will be in the hands of the hospital consultant. How is that likely to benefit the patient? At the very least, it seems to provide much opportunity for delay and little encouragement for the integrated services that cancer patients often need. We must be wary, too, about GP consortia becoming so overloaded with their commissioning functions that they cease to have as much interest as they should in promoting lifestyle changes, such as smoking clinics and exercise clubs, which are so important in the prevention of cancer.
I finish with a plea to remember the families and carers of those with cancer. They, too, need to be involved in the process and fully informed, as they will often provide the bulk of the care. I know that confidentiality of information is an issue, but that can usually be resolved. If families do not know, they cannot help. Cancer affects the whole family and we need to remember that.
Baroness Emerton
I, too, congratulate my noble friend Lady Finlay on raising this debate and on so eruditely setting out the complexity of the integrated care plans for patients suffering from cancer. It is important to ensure a seamless service to patients who, together with their families, as the noble Baroness, Lady Pitkeathley, said, are filled with trepidation by the word cancer.
I shall highlight the importance of specialist cancer nurses. A recent report from the Royal College of Nursing entitled Changing lives, saving money states that evidence to date demonstrates that specialist nurses play a vital part in a range of ways in assisting patients through a complex pathway by delivering high-quality specialist care. They frequently help avoid unnecessary admission or readmission to hospital. They reduce post-operative hospital stays, thereby freeing up consultant appointments for other patients. They provide treatment at the point of need, so reducing patient drop-out rates. They assist in the education of health and social care professionals, provide direct specialist advice to patients’ families and ensure rapid referral if necessary to other medical treatment, so reducing waiting times.
A survey conducted by health advocacy groups nationally demonstrated that patients consistently rate the specialist nurse higher than any other healthcare professional in understanding patients’ needs. Specialist nurses provide a lifeline to many patients and families, the patient having gone through incredible physical and mental upheaval. While the good news is that survival rates have increased, patients will continue to need to access expert care and support. It is also proven that specialist nurses’ expertise keeps patients safe and exposes them to less risk.
The noble Viscount, Lord Bridgeman, mentioned the recent announcement in the comprehensive spending review that the right to one-to-one nursing care for patients, having been promised, is to be rescinded. I have heard that further consideration is being given to this decision. Will the Minister confirm that? Evidence points to unequal access to cancer specialist nurses across the country, and it is also reported that one-third of them are supported by the Macmillan Cancer Support.
Commissioners need to address as a priority whether there are enough specialist nurses to meet patients’ needs. Local management needs to ensure that the skills and expertise of specialist nurses are not deployed to fill gaps in ward or department staffing, as this is a waste not only for patients but also in economic terms. Another study shows that if provision could be made for administrative support for specialist nurses it would save 6.6 hours per week per specialist nurse. Specialist nurses are highly qualified and educated mostly to masters level and are too precious to be deviated from their dedicated programmes which would result in a loss of care to patients.
It is a known fact that patients prefer to be cared for at home where at all possible. Obviously early diagnosis is vital in order that treatment starts immediately; the majority of patients starting with surgery. With the least invasive approach, the length of stay in hospital is reduced and then the requirement is for expertise in the home by specialist nurses and experienced nurses in post-operative care. The Marie Curie and Macmillan nurses provide a very good service.
The noble Viscount, Lord Bridgeman, also spoke about the Healthcare at Home service as a leading provider of home care to cancer patients. The service has developed over the past 15 years and continues to grow, and now includes the administration of highly cytotoxic chemotherapy regimes to patients at home by highly skilled experienced nurses. The service delivers 24/7, 365 days a year and has improved efficiency and safety by investing in bespoke industrial leading infrastructure and new technology. It continues to develop outcome measures.
The service works in partnership with the Department of Health. The important thing is that the patients who have received Healthcare at Home are still maintained by their clinical teams, who retain ultimate responsibility for patients and with whom Healthcare at Home maintains close contact. Evidence so far shows improved outcomes, as has already been mentioned by Dr Foster Intelligence, and that a considerable amount of money has been saved.
Innovations as described by Healthcare at Home certainly cannot be ignored in taking forward the ways to increase the quality and quantity of life for cancer sufferers. I mentioned the good news of improved survival rates and much work is being developed in Living with Cancer. Emphasis on this work needs to continue with education to patients and the public as mentioned by the noble Lord, Lord Clement-Jones. This is an important point for all patients, their families and their friends. Healthcare professionals are taken up with the actual delivery of care, but there needs to be healthcare provision by experts in setting out the information that is so necessary for the understanding of the general public as well as patients and their friends.
Lord Howard of Lympne
My Lords, I rise with some trepidation to make my maiden speech in your Lordships' House. It is, after all, more than 27 years since I last made a maiden speech, so I am certainly out of practice. I am also cognisant of the many warnings I have been given about the differences between your Lordships' House and the House in which I was privileged to serve for those 27 years. It may take me a little time to adjust, but I assure your Lordships that I shall do my best.
I am most grateful for the welcome I have received in your Lordships' House, to the staff for their unfailing helpfulness and, particularly, to those in the information technology department who laboured so long to ensure that I was properly connected.
Before I turn to the subject of this debate, perhaps I could be forgiven for saying a word or two about the place from which I take my title. The spelling of the name, of course, bears only a passing relationship to its pronunciation, which is a frequent cause of confusion, but I suspect that it shares that distinction with many other places from which your Lordships’ titles are taken.
Lympne is a village in my former constituency where my wife and I have the pleasure and privilege of living. It dates back to Roman times when Portus Lemanis was built to protect the Roman ships in the harbour, which then existed below where the current village is situated. It also features frequently in books by HG Wells, who lived nearby. It is mentioned in both “The First Men in the Moon” and “War of the Worlds”, which may have something to do with the fact that, more recently, several observers have claimed to see unidentified flying objects in the vicinity of my house. I am afraid that I have never seen them or been in any way aware of their existence, so I cannot confirm, but nor of course can I deny, the veracity of those accounts.
It is a privilege to be able to take part in today's debate. I do so for two reasons. The first is the kind of personal reason that I know touches so many of your Lordships. My father died of breast cancer 44 years ago at the young age of 49. This coming Saturday would have been his birthday. He died at home and was wonderfully cared for in his last days by a dedicated group of nuns whose selflessness far exceeded any praise I could bestow on them.
The second reason is that, in a few days’ time, I shall have the honour of succeeding my noble friend Lord Newton of Braintree, who I am delighted to see sitting beside me this afternoon, as chairman of Help the Hospices. I am conscious that my noble friend’s shoes will be very difficult to fill, but the opportunity of helping this great movement in however small a way was one that I could not turn down.
For the hospice movement, to which tribute has already been paid in this debate by, among others, the noble Baroness, Lady Finlay, and the noble Viscount, Lord Bridgeman, is surely one of the finest jewels in our healthcare crown.
“We lead the world in quality of death; many developed nations must work to catch up”.
These are not my words; they are the words of an independent report commissioned recently by the Economist Intelligence Unit, which went on to say:
“The UK has led the way in terms of its hospice care network and statutory involvement in end-of-life care and ranks top of 40 countries measured in the index”,
which that report drew up. It quotes Sheila Payne, Director of the Institute of End of Life Care at Lancaster University as saying:
“The UK has perhaps had the longest period of sustained charitable development of hospices and, more recently, limited statutory involvement and investment”.
I am of course conscious of the fact that today's debate is about cancer patients and about the quality and quantity of the life of those patients. Although hospices increasingly care for patients suffering from conditions other than cancer, it remains the case that a large majority of the people they look after do have cancer. Indeed, local hospices support almost 28 per cent of all people diagnosed with terminal cancer. What is perhaps less well known is that access to high-quality hospices and palliative care is important not only at the very end of life but often from the point of diagnosis. Many hospice patients are supported by their local hospice for many months or even years, benefiting from a suite of flexible services that are tailored to meet their own individual needs.
Something else that is not very well known is that 70 per cent of hospice care is provided in people's own homes through a range of community and home care services, including hospice at home, day care and out-patient care. In recent years there has been a dramatic increase in the number of hospice patients supported in their own home. In fact, between 2004 and 2008 it increased by 58 per cent, and this trend is continuing.
What is most remarkable about all this is the extent to which it has been achieved with a minimum of financial help from the Government. Health services are funded separately by the devolved Governments in each nation of the United Kingdom. In England, the Government contribute an average of 32 per cent of running costs for adult hospices, predominantly through primary care trusts, and about 15 per cent for children's hospices. The rest has to be found by charitable fundraising. Together hospices raise £1 million pounds a day to pay for the services that they provide. Almost 100,000 volunteers work in hospices throughout the United Kingdom, and the hospices could not do the work they do without them. It is hardly surprising therefore that my right honourable friend the Prime Minister, answering a question in another place from the honourable Member for Worcester, said on 30 June that,
“the hospice movement ... has been one of the great successes of the big society that we have in this country. I think we all cherish what the hospice movement does”.—[Official Report, Commons, 30/6/10; col. 859.]
Of course, challenges lie ahead, and we look forward to the Demos report on those challenges which is to be published next week. I hope to have something to say about those challenges on future occasions. For the moment, conscious of the need in this speech to eschew any hint of controversy, I content myself with commending to your Lordships the enormous contributions made by the hospice movement to the quality and quantity of life of people with cancer.
Lord Hameed
My Lords, it is a matter of great honour for me to follow the maiden speech from the noble Lord, Lord Howard. It stands out as a unique piece of thought and vision, for which I am sure we would all want to congratulate him and to wish him many great and productive years in this House, in the ongoing contribution to this country, its Parliament, leadership and democracy which he has made over the years from the other place.
Turning to the debate, I was given some statistics by Cancer Research UK which I would like to share with your Lordships. More than one in three people will get cancer at some stage in their lives. Nearly 300,000 people are diagnosed with cancer each year in the UK and one in four people will die from the disease. However, cancer survival rates have doubled in the past 40 years, and now half of people diagnosed with cancer survive for more than five years. Yet outcomes from cancer diagnosis in the UK remain behind the best performing countries in Europe. The diagnosis of cancer in the UK is often late. This is one of the primary factors in the UK’s survival rates being behind those of other countries. This tendency for late diagnosis has a negative impact on both the quality and quantity of life of people with cancer because if cancer is diagnosed early, treatment is nearly always more likely to be effective. Estimates suggest that up to 10,000 deaths could be avoided each year if we diagnosed cancer earlier and ensured access to appropriate treatment.
Cancer prevention is the most cost-effective approach to saving lives. Extensive research indicates that alcohol is definitely a cause of cancer. In particular, alcohol consumption increases the risk of oral cancer and cancer of the oesophagus, or food pipe, the oral cavity, pharynx and larynx, as well as increasing the incidence of bowel and liver cancer. Vegetables and fruits contain antioxidant nutrients such as vitamin C and carotenoids, folate and a range of phytochemicals. Studies indicate that each daily portion of 80 to 100 grams of fruit or vegetables halves the risk of oral cancer, reduces the risk of squamous cell carcinoma of the oesophagus by approximately 20 per cent and of stomach cancer by about 30 per cent.
Surgery cures more patients than any other type of treatment. It is another strong argument why early diagnosis is so imperative. With late diagnosis, surgery becomes less feasible and effective. Further progress should be made in rolling out new surgical techniques, such as laparoscopic surgery, robotic surgery and radio surgery across the United Kingdom. Radiotherapy services in the UK lag some years behind those in other, comparable countries. Planning should incorporate the need to replace radiotherapy machines once they have reached the end of their working life.
Improvements in research mean that the treatment of cancer with the use of chemotherapy and other systemic agents is rapidly changing. The rate of introduction of new drugs is accelerating and the number of patients benefiting from such treatments is rising. Patients are increasingly being treated closer to home, while chemotherapy is becoming much more targeted and tailored to individual cancers.
Providing patients with access to high quality information is a prerequisite for them to be able to participate in decision-making about their care and reduce their fear of cancer. Individual patients will want to acquire information in different ways. For many, face-to-face communication with a health professional they trust is of paramount importance. Many people wish to be cared for and to die in their home, but the number of people able to do so varies significantly with age, geographical area and by condition. The key challenge facing all of us who are committed to caring for people at the end of their lives, and their families and carers, is making sure that even in times of economic uncertainty, high quality palliative and end-of-life care is available to those in need.
An independent evaluation of Marie Curie Cancer Care by the King’s Fund found that there was an increase in the proportion of deaths at home and a corresponding decrease in deaths in hospital. It was shown that the proportion of those able to die at home could be doubled. Evidence therefore shows that this can be done through providing good quality services in people’s homes, at no extra cost to the NHS. These changes can only be brought about through partnership between health and social care agencies and professionals, local authorities, voluntary organisations, community groups and individuals working together to mobilise a community to meet the need of their local population. This allows more people at the end of life, with their families and carers, to choose what is best for them.
Lord Beecham
My Lords, I come to this debate two years after my wife was diagnosed with inoperable bowel cancer and with secondaries in her liver and lungs. I therefore hope that your Lordships will bear with me if I speak in a more personal vein than is perhaps usual in debates in your Lordships’ House. My wife was diagnosed after some months of suffering from constipation. Her GP did not refer her to a cancer department—despite there being something of a family history—although in all fairness, as it turns out, it was probably too late in any event. But it is quite significant that constipation is not always recognised, even by some bowel cancer charities, as a significant symptom. It is to be hoped that that matter can be addressed in alerting the public in future to the need to seek advice.
I join most of the speakers who preceded me in paying tribute to the noble Baroness, Lady Finlay, for securing this debate and in particular for her emphasis on the quality of life. My wife was very realistic about her prospects. She did not chase after alternative treatments. She did not seek second opinions. She was determined to make the most of what time was left to her. Within a couple of months of being diagnosed, she made an acclaimed documentary for BBC North East and Cumbria about her condition and about the need for people to seek advice. She even wheeled on a footballer who had previously captained Newcastle United and Scotland to participate in that programme. Indeed, only last week I was approached by somebody quite unknown to me while shopping who had seen that programme and who had, as a result, sought advice and undergone a colonoscopy.
Not only that, my wife subsequently underwent a caecostomy in 2009, which made her a stoma patient. Of course, stoma patients have suffered from a variety of conditions, not just cancer, but together with other stoma patients she went on to make a DVD called “Have Bag, Will Travel”. It was trying to explain to both patients and their friends and, indeed, to practitioners about how to cope with stoma. That is also now being much used. It is available on YouTube and is being used and disseminated in hospitals, universities, medical schools and the like. She had undergone chemotherapy; at first, it seemed to be successful but the tumours began to grow again. She then had a second course of chemotherapy, which did not work; finally, she was treated with cetuximab. She passed the gene test, probably marginally, but alas the treatment did not work. However, NICE did its job. It was an approved treatment and, with some more luck, she might have been able to benefit from that.
However, she went on in her efforts to promote information. As a life coach and counsellor, she then organised a group counselling course for a number of other women who were cancer patients. That has been written up in a booklet called Moving Forward, published by Coping With Cancer. The aim of the booklet is,
“to provide tools to help people who have experienced cancer to reassess their present situation and move forward with their lives”.
That also is now being quite widely disseminated.
In the mean time, she received excellent treatment and support from the new cancer unit at the Freeman Hospital in Newcastle, from her district nurses and from Macmillan nurses. These were all very helpful. In her last weeks, a series of aids and adaptations were installed extremely rapidly. She did not in fact live long enough to gain the benefit from them, but close collaboration between the adult services department of the local authority and the PCT led to those being installed. There are considerable advantages to the close collaboration of those two organisations. Finally, she went to a hospice and received excellent treatment there. As she wished, she was sedated so that her last two or three days were spent without pain.
A number of policy issues arise from this and, of course, from many other similar histories. The first is to promote a better understanding of symptoms, not only among patients but among practitioners. The second is to welcome the improved screening; I am now speaking particularly about bowel cancer. The previous Government instituted tests by faecal smears. The present Government have promoted flexible sigmoidoscopies, although it should be pointed out that my wife had a sigmoidoscopy but it was not able to detect the tumours; the process does not go far enough, as it were, whereas colonoscopies do. I understand it to be the case, certainly in America and maybe in other places too, that more regular colonoscopies are available and are almost treated as routine. That could have a significant effect on detecting cancer early. Although I would not of course expect the Minister to make any kind of commitment, perhaps he would like to comment on the possibility of going beyond the further use of sigmoidoscopies. I would also like the Minister to comment on the provision of stoma nurses because it was apparent, certainly in our area, that there was a limited number of stoma nurses in the community. It would be helpful to have more of them.
A further issue is psychological support, which is the subject of the booklet that I have just mentioned and which again perhaps needs further emphasis. There again, GPs really must be encouraged to have closer contact with cancer patients.
There is also the question of support for the charities that the noble Lord, Lord Howard, so eloquently referred to: Macmillan, Marie Curie and the hospice movement. It is of course wonderful that so many people devote time to, and raise funds for, those hospices, but surely it is time to recognise that perhaps a greater degree of government funding and support is necessary.
Many patients, and my wife was one of them, would like to die at home. It was not possible in her case and perhaps not appropriate, but for many others it would be. I endorse the views of noble Lords who have called for further efforts to ensure that that is available to more patients.
Baroness Hussein-Ece
My Lords, I, too, congratulate the noble Lord, Lord Howard, on his excellent maiden speech and on his new important role in leading the hospice movement. I also thank the noble Baroness, Lady Finlay, for securing this debate and for the leadership that she shows in this subject.
All people who have cancer want high quality services and want to be involved as equal and active partners in decisions about their treatment and care. I welcome measures to improve cancer services in the UK over the years. Attitudes towards cancer care and quality of life have changed, and many want to ensure, as has been mentioned, that cancer care and early diagnosis are given the same priority as research into treatments and cures. Improving quality of life matters as much as improving quantity of life.
Dealing with a cancer diagnosis is difficult for both the patient and their family and friends. Being given the right information and support, whether that is someone to talk to, information about specific cancers or advice on benefits, can make a difference and make living with cancer a little easier.
More than 109,000 people of working age are diagnosed with cancer each year. The impact of this usually means people making changes to their working lives or leaving work. The effects of cancer and treatment can impact on people’s lives in many different ways and can affect them for weeks, months or even years after treatment has ended. Fatigue—extreme tiredness—is a very common and frustrating problem, with 65 per cent of cancer survivors saying that they have to deal with fatigue following treatment. Then there are the practical problems when people who are diagnosed with cancer need to take time off from work for treatments or check-ups. Practical problems such as these can make a person’s working life difficult, especially if employers are not supportive or understanding of their needs.
I was interested in what support is currently given to people with cancer to help them remain in work or return to work. The truth seems to be that too many people do not receive enough help or support. There is a lack of information available for people who want to remain in work, and there seems to be a lack of knowledge of legal responsibilities. A supportive employer can be vital in helping someone with cancer return to work. However, new research shows that the majority of employers do not know about their legal responsibilities towards people with cancer—for example, fewer than half of employers know that cancer is covered under the Disability Discrimination Act. Equally, employees also lack knowledge of their employers’ legal obligations to them, and so will often not request the support they are entitled to.
Fewer than 40 per cent of people with cancer know that cancer is covered by the DDA. From 1 October this year, all disability discrimination legislation falls under the Equality Act, as we know. Under the Equality Act, employers must consider requests such as flexible working hours or physical adjustments to the workplace from someone who has cancer. If they meet these obligations, they can avoid potential discrimination charges along with damage to their reputation, legal fees and lost time. Employers who support an employee with cancer will generally foster a greater sense of loyalty from them and improve engagement and morale. Seeing a colleague supported in this way can also reinforce other employees’ sense of fairness and trust and fosters a positive image of that particular employer. Sometimes it will take a minor adjustment to help that employee to remain in work. I ask my noble friend the Minister what can be done to address the lack of information to patients on this matter.
I turn to an issue that, sadly, is not consistent across the UK. Overall, England spends 5.6 per cent of its healthcare budget on cancer, compared with 7.7 per cent in France and 9.6 per cent in Germany. Spending on cancer services has increased by an estimated 36 per cent over the past five financial years, but survival rates have not improved at the rate they should have done, given the increased investment. In January this year, research found that patients from deprived areas in England were more likely to have a late cancer diagnosis and be admitted to hospital as an emergency, as a study suggests. Women and older people also fare worse in getting a prompt diagnosis, as a study team from University College London found. Patients from deprived areas were also less likely to undergo key procedures for rectal, breast and lung cancer, despite the good news that there was a downward trend in the proportion of patients with breast cancer admitted as emergencies. In all, though, patients from deprived areas, older people and women are more likely to be admitted as emergencies.
We know, as has been mentioned, that good-quality palliative care, which helps the most seriously ill and terminally ill to make the most of the time they have left, can provide a period of quality of life for terminal cancer patients. A recent study found that patients who started, soon after their diagnosis, on palliative care along with usual cancer care lived nearly three months longer than people given only standard cancer care, even though this second group had more chemotherapy. I touched on my own experience in a recent debate in your Lordships’ House when my own late father had a very late diagnosis followed by an extremely poor standard of care. This seems to vary from hospital to hospital. Older people are also less likely to receive appropriate pain control than their younger counterparts. This is especially so for patients with dementia.
We need to focus not on the question of additional resources but on ensuring consistency across the country. Older people in particular should be given the same treatment as a young person.
Baroness Masham of Ilton
My Lords, I thank my noble friend for raising this important matter today. I am a member of the All-Party Group on Cancer and I know there are many improvements that should be made.
I know two people who went to our local GP’s surgery for help, only to be told to come back later if they did not feel better. For Lucy, had there not been a three-month delay the outcome might have been different. She was diagnosed with bowel cancer eventually. She had a very hard struggle, which she fought bravely until she died. My other friend went three times to the surgery but was not diagnosed. It is often said that men are loath to turn up at doctors’ surgeries but he did. In the end, with no diagnosis, Mike was taken by his son to a clinic here in London and was diagnosed with prostate cancer straight away. Unfortunately, the delay meant the cancer had progressed to his bones. He is now having hormone treatment. If I know of two late diagnoses from the same surgery, how many must there be throughout the UK?
I read in the Times on Monday that hundreds of people could be saved by a new mix of prostate cancer therapies. It is found that the results in Canada, the USA, Australia and Germany in the treatment of prostate cancer are better than those in the UK. We should find out why this is so. Does the noble Earl agree that when the GP consortia are in place, they should have access to the expertise available to cancer networks to help the effective commissioning of cancer services? Cancer is a set of 200-plus different diseases, most of which have highly complex care pathways. Understanding is needed for both the clinical and longer-term needs of people living with and after cancer.
The NICE appraisal system is inappropriate for dealing with ultra-orphan treatments. It seems appropriate for the remit of the National Specialised Commissioning Advisory Group to be extended to include the commissioning of all ultra-orphan cancer treatments. It is essential that any new decision-making process should be transparent, fair and speedy. There is fear that, with a new organisation within the National Health Service, there might be extended postcode lottery prescribing. Can the Minister assure us that this will not happen? Many pharmaceutical companies are not interested in orphan drugs since they are not cost-effective. However, to the individual patient they are vital.
This week it was announced that an NHS hospital has a cyberknife to treat difficult cancer tumours. This is excellent news. However, last year, on a visit with the health group to the London clinic that had installed a cyberknife, we were told that Turkey has seven. At a drop-in session at St Thomas’s Hospital a few weeks ago, it was shown how the incidence and mortality rates for both prostate and breast cancer in different regions of the country have wide variations. There is a pledge which I hope all Members taking part in this debate will sign. It is:
“I support the UK’s fight against cancer and urge the government to continue in its efforts to bring our survival rates in line with our European counterparts”.
I have been told by a man who has an elderly mother living in south-east Kent, who has cancer and is treated at two different hospitals, that the voluntary drivers who give friendly support to the patients have been told they will no longer receive help with the cost of their petrol. They have also been told that they can no longer have the use of a room with a kettle to have their sandwiches and a drink. These budgetary cuts seem to hit the most vulnerable patients with grass-roots needs. In so many ways throughout a patient’s journey with cancer and other long-term conditions, volunteers—who have often gone through treatment themselves—give great support. This can be lost and dismissed in the costs of high-tech treatment by managers who forget the human needs of a patient’s journey.
Lord Wills
My Lords, I, too, congratulate the noble Baroness, Lady Finlay, on enabling the House to discuss a subject of such importance to so many people in this country, and on her most impressive and comprehensive speech. I cannot lay claim to her professional experience and wisdom but, in the short time available, I will make two points about early diagnosis, which is so crucial to outcomes for people with cancer, as the House has heard so often today in so many moving speeches.
First, I ask the Minister about the Government’s plans to scrap the Labour Government’s commitment to reduce waiting times for cancer tests to one week. There is a legitimate debate to be had about the place of targets in the NHS, but it must be rooted in fact. The Government’s July White Paper states:
“Success will be measured, not through bureaucratic process targets, but against results that really matter to patients—such as improving cancer and stroke survival rates”.
This is a caricature of the previous Government’s health policy. It misses the point that these so-called process targets have been focused on outcomes and have played a significant role in the improvements in clinical outcomes in recent years. Moreover, it is not clear exactly how the Government’s theological position on targets has determined them to scrap the one-week waiting time for tests while retaining the two-week target for seeing a specialist. I hope everyone accepts that reducing the time that patients and their families have to wait anxiously for results must, axiomatically, be welcome. I also assume that it is accepted that the prompter the test results, the sooner any necessary treatment can begin.
So I would be grateful if the Minister could explain exactly why the Government have kept the Labour Government’s two-week target to see a specialist but scrapped the one-week target for test results. All I have heard by way of justification are vague words about there not being enough clinical evidence to support it. Can the Minister provide the detailed reasoning for this assertion and for retaining the two-week target?
My second point is about prostate cancer. Here I associate myself with the powerful speech by my noble friend Lord Kinnock. Prostate cancer is the second largest cause of cancer death in men and has seen no significant improvement in mortality rates. As the House will know, there are specific problems with early diagnosis of this cancer. There is poor awareness of it. Many men, for whatever reason, have been squeamish about discussing possible symptoms with their doctors. There has been a particular problem with the reliability of diagnostic procedures. The PSA test is a blunt instrument. In addition to producing false negative results and a relatively high level of false positive results, it cannot accurately distinguish between aggressive and indolent forms of the disease. This has created doubt about its suitability as the basis for a screening programme. As we know, screening has proved very effective in the successful treatment of other cancers.
On the other hand, last year the European Study of Screening for Prostate Cancer, which surveyed 182,000 men aged 50 to 74 in seven European countries, suggested that PSA-based screening can reduce the rate of death from prostate cancer by 20 per cent, although it also suggested that it was associated with a high risk of overdiagnosis. The Minister will be aware that the Prostate Cancer Charity has been working to develop the concept of universal informed choice to overcome these difficulties. With universal informed choice, it would be not for the Government to make the decision on screening but for the individual, on the basis of properly informed choice. The Government’s role would be to create the circumstances and conditions in which everyone was enabled to make such an informed choice by ensuring that every man over 50 and younger men at higher risk would have access to balanced information about the PSA test.
The charity has suggested three models: one that is GP-led, one based on community walk-in clinics and one based on roadshow clinics. The Minister will I am sure be aware that these are not necessarily alternatives but could well be complementary. Whatever model is adopted, it would, as my noble friend Lord Kinnock pointed out so powerfully, have to be supported by regular public awareness campaigns and consciousness raising among healthcare professionals.
I should be grateful if the Minister could say whether he believes that this approach could play an important role in at last reducing mortality rates of this cancer. If he does not agree, I would be grateful if he would explain why. But if he does agree, can he say what steps he will take in the next year to implement this new approach? For example, will the revised cancer reform strategy endorse the need for universal informed choice in relation to prostate cancer screening?
I recognise that this debate has already been wide-ranging, so the Minister may not have the answers to hand or have time to address all these questions fully. In that case, I would be grateful if he could write to me with the answers.
Lord Crisp
My Lords, I, too, congratulate my noble friend on securing this debate, with its focus on patient experience, and on her forensic presentation of the risks of fragmentation. I am sure that we are all looking forward to hearing the Minister’s response.
As many Members of your Lordships’ House will know, I was the chief executive of the NHS for some years. However, I want to use these few moments to talk about the experiences of people with private health insurance who are seeking treatment for cancer. It is clear that the NHS is the priority, and it is important to get it as good as possible for everyone. Where drugs are proven as effective, they should be available to everyone, and I absolutely take the point about early diagnosis. However, this is not the whole story. I understand, too, that private medicine or insurance have their place for some patients, and any debate about cancer care needs to take account of this.
I have learnt about some of the practices of some insurers thanks to the sad experiences of a friend who has cancer. In a nutshell, people who thought they had bought complete cancer care funding find out, sometimes in the worst of all possible circumstances, that they have bought partial cover at best. I was shocked when my friend told me that his insurer was setting limits on his treatment options which were not referred to in his policy documents and, even worse, proposing to change the terms of their agreement after he had started to claim. My friend is a lawyer, who has great determination and a very loving and supportive family. He decided to fight, and got his MP and me involved. We met the insurers and won some concessions which have prolonged his treatment. It should not be like that.
Having made some inquiries, I find that my friend is not alone. I have spoken to a number of consultants who have told me of patients faced with similar problems who are now paying their own way or have given up. I know of one woman who has to make that decision this week.
These would be sad stories but understandable if it had been clear at the outset what their policies covered. It was not. The fundamental problem is a lack of transparency. Insurance policies are all too often vague and confusing. They do not tell people precisely what they have bought or give them the certainty they need at the time they need it most. Patients find themselves in a negotiation where the insurers hold all the cards. The vagueness of the policies allows the insurers to make decisions entirely on their own terms. I have heard some say that this allows them to exercise compassion and to cover treatments that are not really covered. I am sure that they are compassionate people but they also have a financial bottom line, and such vagueness also allows them to be less compassionate.
The Association of British Insurers has a mandatory code of conduct which sets out the information patients should be given. However, even on its publication it was subject to criticism in the industry, with one source saying that it is very difficult to get any clarity over what is and is not covered. It is not just a question of picking up the policy document; we have to consult the medical advisers and heads of claims in each insurer, and even then it is not clear.
Private health insurance is a financial product, and individuals can complain to the Financial Ombudsman Service. By all accounts, this service works well although of course it can be very difficult for patients to pursue lengthy complaints when they are ill. Nobody, however, appears to be looking at complaints or problems which affect groups of patients or the whole industry. The Financial Services Authority has the power to do that, but has not looked into this in any depth, and I believe that the regulatory system is not working.
Cancer research is developing rapidly, with many new diagnostics and therapies. They offer hope but often bring extra costs. I can see that this makes it difficult to provide cover, but it also makes it all the more important that NHS and insurers’ policies develop equally rapidly.
When I was NHS chief executive, I was very familiar with the criticisms that we did not pay for new and expensive cancer drugs and that patients were subject to a postcode lottery, with access to treatment depending on where they lived. We tried to deal with these problems by setting up the clinically led National Institute for Clinical Excellence to assess scientifically how effective the drugs were. Decisions were made in public; NICE is accountable to the public.
More recently, I have campaigned with others for patients to be able to pay for additional drugs which did not meet NICE’s criteria on the understanding that this field is developing very fast and new treatments are being introduced. In 2008 I was delighted and honoured to co-author a piece to this effect in the Lancet, along with the noble Baroness. I am delighted that the previous Government agreed to do this, and I congratulate the current Government on increasing funding for cancer drugs.
The NHS continues to develop its policies and to improve. It could go further, but what about the private insurers? Let me be clear that not all insurers are as bad as those of my friend; when I talk to consultants, they name the same two or three which they believe are very good and the same two or three which they believe are very poor. But the reputation of all of them is damaged. The industry needs to get its act together. The Financial Services Authority needs to act and the Government need to ensure that they review this whole area.
In the mean time, I would advise any patients in this situation to do the same as my friend—to get their MP involved and to fight. I know that this is not the Minister’s responsibility and that he will refer this matter to his colleagues. However, the Department of Health has a responsibility for looking across this whole territory—we have been given wonderful voluntary sector examples of hospices—and at the impact on the NHS of private insurance and private healthcare. My complaints about clarity also apply to the NHS. It is very important that the NHS spells out what treatment people can expect and therefore, by implication, what space may be available for private insurance.
My experience is that people want clarity and certainty. Whether they are NHS or private patients, they do not want to wait around for decisions. The private insurance industry is failing on this, and I believe that the Government and the NHS could do more.
Lord Colwyn
My Lords, despite the fact that successive Governments have generally maintained funding, modern medicine is, I believe, experiencing an economic crisis that has brought changes that have alienated patients and eroded the job satisfaction of physicians. It has become too expensive. The resultant managed care system is making the lives of both patients and doctors difficult. One of the attractions of medicine as a profession was the promise of autonomy. Today, few doctors can succeed in solo practice and most must work in group practices or corporate settings, where they are told how many patients to see in an hour, which treatments are authorised and which are not.
The very success of modern scientific medicine has been partly responsible for this situation. Eliminating infectious disease—the major killer of the early 20th century—has left us to deal with chronic degenerative illness. The success of medicine has also contributed to the ageing of the population. Of course, medical expenses increase the more elderly people that there are.
Another reason for the expense of conventional medicine is its extreme dependence on technology. Medical technology is inherently costly, and unless we change that dependence, there is little hope of cutting costs. Another powerful economic force impacting on medicine is the still-growing consumer movement that is demanding low-tech options for preventing and treating illness. Consumers are very clear about their desire for natural, complementary and alternative therapies. This is not a passing fad but, rather, a sociological trend with deep roots and a great economic significance.
Patients want greater empowerment in medical intervention and they want doctors who share their views about health and healing. They want doctors and specialists who have time to sit down with them and help them understand the nature of their problems rather than just promote drugs and surgery as the only possible treatment. They want doctors who are aware of nutritional influences on health and who can answer questions about the complex array of dietary supplements and natural therapeutic agents in health food stores. They want doctors who are sensitive to mind-body interactions, who are willing to look at patients as mental-emotional beings as well as physical bodies and who will not laugh at them for inquiring about Chinese medicine or therapeutic touch.
Those are all reasonable demands. A problem is that medical schools are not training doctors in the ways that consumers want and many patients are turning elsewhere. At a time when healthcare institutions are economically pressed, medicine cannot afford to ignore where the market is moving.
It is possible to teach both patients and practitioners about the strengths and indications of standard medicine without in any way rejecting its real achievements. Alternative, complementary medicine is a rich mixture of wisdom and folly. A few alternative therapies are dangerous, more are ineffective and still more are unproven, but many conventional practices are also unproven and many are dangerous as well as ineffective and costly. The use of complementary medicine in the treatment of cancer has attracted particular attention because of the fear among oncologists, radiologists and cancer surgeons that patients may be denied effective and potentially life-saving treatment because of a reliance on unproven fringe techniques. This issue arouses strong feelings among orthodox and complementary practitioners and their patients.
A 1984 study by Cassileth et al found that, in their beliefs about illness and treatment, cancer patients using complementary medicine differed substantially from patients using only conventional therapy. Patients using complementary medicine were more likely to believe that their cancer was preventable, primarily through diet, stress reduction and environmental changes. They were also more likely to believe that disease in general is caused mainly by poor nutrition, stress and worry. Almost 100 per cent of the patients interviewed believed that they should take an active role in their own health as compared with 74 per cent of patients having conventional therapy only.
The challenge is to sort through all the evidence about all healing systems to extract those ideas and practices that are useful, safe and cost-effective. Then we must try to merge them into a new comprehensive system of practice that has an evidence base and addresses consumer demands. The most appropriate term for this system is “integrative medicine”. That term is neutral, accurate and acceptable in academic discussion and it avoids the misleading connotations of “alternative medicine”, which suggests a replacement of the standard system, and of “complementary medicine”, which suggests retention of standard therapies as central and primary.
Integrative medicine is not simply concerned with giving physicians new tools such as herbs in addition to, or instead of, pharmaceutical drugs; rather, integrative medicine aims to shift some of the basic orientations of medicine towards healing rather than symptomatic treatment, towards a closer relationship with nature, towards a strengthened doctor-patient relationship and towards an emphasis on mind and spirit in addition to body. These shifts should make for better medicine in addition to greater satisfaction for patients. I should declare that I am president of the All-Party Parliamentary Group for Integrated and Complementary Healthcare.
Integrative medicine offers the promise of restoring values that were prominent in medicine of the recent past, cutting healthcare costs, improving health and renewing consumer confidence and satisfaction. I hope that my noble friend will confirm that the White Paper will enable and promote patient choice, and that cancer patients and those patients who wish to access complementary therapies will have that access and will not be discriminated against in any way.
Baroness Wall of New Barnet
My Lords, I thank the noble Baroness, Lady Finlay of Llandaff, for giving us the opportunity to debate this important subject. It is a subject which, in one way or another, touches the life of every member of our society. My husband was diagnosed four years ago with an aggressive, inoperable tumour on his tonsils but manages to have quite a good life and is looked after very well within the NHS. There can be few, if any, members of our community, rich or poor, young or old, who do not know someone who suffers from one of the many forms of this diverse condition or, sadly, has suffered, or suffers, from it themselves, for cancer in its various forms is no respecter of class or status.
Even among those of us who have not been touched in these ways, the fear of this condition has probably been with us for some time. We hear much about the war on cancer, but in truth the treatment of these conditions is a campaign, one in which the outcome may be determined at many stages, sometimes, sadly, by the disease itself, but increasingly and positively by the exertions of staff at all levels within our health service. I declare an interest in that I am the chair of Barnet and Chase Farm NHS Trust, which delivers the greatest volume of cancer-related healthcare of any trust in north London. It is clear to those who work in the NHS that enormous strides have occurred in the management of cancer, aided by the investment in funding and purpose of the NHS by the previous Administration. There is therefore both a heavy burden and an expectation on the new Government to maintain and, indeed, increase this commitment. When he responds to the debate, I am sure the noble Earl will assure us that this will be the case.
It is of vital importance in the maintenance of services to our patients, particularly in the present economic climate, that these resources are used wisely and are not dispersed on ill-considered schemes of centralisation, which, while appropriate for some areas of management, often provide an expensive service of no greater quality—often the quality is less good—at a place remote from the patient’s community and friends. Noble Lords are aware of these issues, which are mentioned in the White Paper.
As we seek to improve the lot of those who suffer from this disease, it is important to realise that the greatest possible impact that we as a society can make in improving outcomes is by investing in the education not only of our clinical staff but of society as a whole. As many noble Lords have said today, early diagnosis is undoubtedly the key to better prognosis. In this, much may be gained by ever closer integration of primary and secondary care services that fit together “like a jewelled bracelet”, as Winston Churchill said of the services at D-day. Will the noble Earl assure us that this is the Government’s policy and that it will continue to be so?
However, this will be of little avail if we do not continue the previous Administration’s investment in high technology diagnostic techniques and continue to press forward with the new and innovative surgical and oncological methods now available. It is the experience of my trust, which is among the UK leaders in the application of minimal access and robotic technologies, that these can be applied safely, economically and effectively in the setting of a large district general hospital, with improving patient outcomes and reduced length of hospital stay.
It is impossible to overstate the importance that our patients ascribe to maintaining the highest quality of care for these conditions. However, contrary to the views often expressed by those on committees charged with organising services, our patients are clear that for them one of the most important aspects defining quality of service—let us not forget that they constitute both consumer and paymaster—is local provision. It seems to me that too often current agendas display an arrogance which serves to cover for the self-interest and vested interests of some central institutions in that they believe the service they provide is more important to patients than patients themselves believe.
I should be failing if I did not bring to the attention of the House the concerns felt by our clinicians and patients about the lingering effects of postcode prescribing. We have discussed that in the House before. Nothing can be more corrosive to the local community and its health services than the fear that the quality of your treatment is determined not by your clinician but by your postcode. I therefore welcome the recent announcement by the Secretary of State with regard to the setting up of a limited fund to allow the prescription of some of the recently introduced and very expensive pharmaceutical agents. However, in the individual prescribing, I ask that we make sure that the bureaucratic opportunity is removed and that the clinician is the absolute and ultimate person to ensure that the treatment is applied wherever it properly needs to be.
Other noble Lords have referred to the hospice movement and the choices that people are sometimes able to make at the end of their lives. I endorse and encourage whatever our Government and the noble Earl can assure us about the hospice movement being supported in many ways.
Lord Kakkar
My Lords, I thank the noble Baroness, Lady Finlay of Llandaff, for having secured this important debate. I congratulate the noble Lord, Lord Howard of Lympne, on his excellent maiden speech, defined by the strong values that have characterised his contribution to public life over three decades.
I propose to contribute today on the subject of thrombosis blood clotting, which is common in cancer patients, and in so doing refer your Lordships to the entry in the register of interests where I state that I am a practising cancer surgeon; that I am director of the Thrombosis Research Institute in London, where I lead a large programme of research globally on the problem of thrombosis in cancer patients; and that I have a scientific advisory role to a number of pharmaceutical industry organisations involved in thrombosis research.
We have heard about the important advances in clinical outcomes that have attended many cancers over the past two or three decades; that is welcome. That has been achieved through a better understanding of the biology of many cancers, which allows us to characterise them in more detail and to ensure that targeted therapies can be provided to patients, so improving both survival and quality of life. As we have heard, improvements in the outcomes for patients with malignant disease have also been achieved through earlier diagnosis. That is critical, because many of the advances in surgical practice can be applied only to those patients who present with earlier-stage disease, where radical interventions can in some cases cure, and in other cases ensure long-term palliation.
Advances are available beyond intervention in surgery, through new therapies. One of the exciting developments over the past five to 10 years is targeted biological therapies, which definitely improve outcome and survival but are frequently associated with a high frequency of unintended complications. The agents will improve outcome but can be associated with problems such as infection/febrile neutropenia and, of course, thrombosis blood clotting. Blood clots in any patient population develop in the deep veins of the legs and can often grow up the venous system of the leg, break off and pass to the lung, where they occlude the circulation from heart to lungs and can frequently be fatal. In the United Kingdom, the Health Select Committee of the other place in 2005 undertook a report into thrombosis and blood clots in hospitalised patients—a world first for a parliament—and identified it as a problem, with 30,000 deaths a year associated with thrombosis unnecessarily after hospital discharge.
As a result, we now have a system available throughout the NHS of risk assessment for patients coming into hospital, so that those at the highest risk of developing a blood clot can be provided with appropriate interventions to prevent them. One of the most important risk factors for developing a blood clot is the presence of malignant disease. Some 20 per cent of the total burden of thrombosis is seen in patients with cancer and, regrettably, cancer patients who develop a thrombosis are three times as likely to develop recurrent blood clots during the course of their natural history. Even though they are provided with anti-clotting drugs, they are twice as likely to develop major bleeding complications as a result of their use, so it is a problem.
While cancer patients are in hospital, they will be subjected to risk assessment in the perioperative environment or if they are admitted to a hospital bed for other management of their malignant disease. However, the management of cancer patients extends well beyond a short period in hospital. There are important opportunities to improve clinical outcomes through extending risk assessment into the other care environments where patients with malignant disease are managed. As we have heard, that is at home, potentially in hospice, or in other care environments such as ambulatory care for receipt of chemotherapy in the community. The National Institute for Health and Clinical Excellence has excellent guidelines at the moment on the prevention of venous thromboembolism in all patient populations. When it reviews that guidance, will it take the opportunity to look specifically at the problem of thrombosis in patients with malignant disease outside the hospital setting, and undertake some review of the available evidence with regard to risk assessment in the out-of-hospital environment and the potential use of anti-clotting drugs to prevent thrombosis and potentially improve clinical outcomes?
I ask that of the Minister because cancer patients who develop a thrombosis regrettably have a much poorer prognosis than those patients who never develop one during the natural history of their cancer. With so much emphasis directed rightly on early diagnosis and the provision of surgical intervention or chemotherapy and biological interventions to improve clinical outcomes, we also need to pay attention to avoiding unnecessary complications and to ensuring that the whole spectrum of supportive care for those with malignant disease means that they can benefit from increased quantity and quality of life.
Baroness Morgan of Drefelin
My Lords, I ask the leave of the House to take a couple of minutes to speak in the gap. In doing so, I declare an interest as the patron of the Breast Cancer Campaign and a founding fellow of Breakthrough Breast Cancer. Perhaps more relevantly, given today’s debate, I also declare an interest as someone supporting both my sister and my niece through their own cancer treatments at the moment.
This has been a truly fabulous debate in which noble Lords have touched on almost every aspect of concern around cancer. It has thrown up some significant and challenging questions for the Minister to address, so I do not want to impinge on his time. However, I am particularly concerned about the whole question of the reorganisation of the NHS. Why are focusing our resources—£3 billion in estimate—on that? As the noble Lord, Lord Colwyn, pointed out, it is a time when there are challenges for the cost of care going forward.
Many speakers talked about breast cancer and the improvements that we have seen in outcomes for the 45,000 patients diagnosed with it every year. The noble Lord, Lord Howard, spoke eloquently about his father’s breast cancer. He has personally raised awareness of breast cancer among men; 300 men are diagnosed with it every year. Those improvements have come about because of early diagnosis and awareness-raising by thousands of charity activists. However, also important have been screening and improvements in treatment, most notably because of progress in research but also because of a greater focus on improving service delivery.
I have two questions for the Minister. The first is very much about screening. In the 2007 Cancer Reform Strategy, there was a commitment to ensure that all breast screening units in England had at least one digital mammography set by 2010. I hope that he can update me on progress with delivery of that new technology, which is much more flexible. Secondly, how will the Government continue to work in partnership with charities and voluntary sector organisations to continue to improve the development of infrastructure research projects such as the Breast Cancer Campaign’s national tissue bank—a proposal made following a gap analysis which looked at the barriers to research and how to improve outcomes for people with breast cancer?
Baroness Thornton
My Lords, I join other noble Lords in congratulating the noble Baroness, Lady Finlay, on initiating this important debate. We have had a debate of exceptional quality, but that is only to be expected in your Lordships’ House on this subject. I also join others in congratulating the noble Lord, Lord Howard, on his maiden speech. I am sure that it is the first of many sparkling contributions to your Lordships' House.
I shall start by echoing the remarks of the noble Baroness, Lady Finlay, on tobacco regulation. This seems to be a question that I ask every week. What exactly is happening to the implementation of vending machine bans and point-of-sale tobacco regulation?
The timing of this debate is most appropriate. It is a snapshot of where we are after the previous Government’s work and investment, which have so improved the prospects for cancer patients, and of what still needs to be done. It is also an acknowledgement that change is coming, and poses questions to the Government about what that will mean for cancer patients and their families. It has also provided some suggestions for inclusion in the refreshed, new Cancer Plan.
I was moved by many of the speeches, not least that of my noble friend Lord Beecham, who I am delighted to have as a member of our small but perfectly formed opposition health team. My noble friends Lady Pitkeathley, Lord Kinnock and Lady Morgan made contributions that were enhanced by personal experiences, and my noble friend Lord Wills brought to the House’s attention his forensic ability, which I am sure we shall benefit from as we move forward.
We know that the most effective way of improving cancer survival rates is through prevention and early detection. That is why as a Government we invested in improved cancer prevention and diagnostic services. Breast screening for women, for example, means that 14,166 cases were diagnosed in women aged 45 and over—a figure which is similar to the one the previous year and nearly double that of 10 years previously. The Labour Government also rolled out the NHS bowel screening programme, the first screening programme targeted at both men and women. As a result of cancer screening and the two-week requirement for a specialist to see the patient, survival rates for breast cancer, as for bowel cancer, are improving for those getting this early screening and diagnostic.
The premature mortality rate for cancer is the lowest ever recorded, saving nearly 9,000 lives in 2006 compared with 10 years previously. A recent study by the International Agency for Research on Cancer found that breast cancer mortality rates in the UK were reduced by 30 per cent during the period 1989 to 2006, more than in any other European country. We are on the right trajectory, and it is important to keep moving in the direction in which we have started.
I should like to make a related point to the Minister. It is important to stop allowing this issue to be used as a political football. Andrew Lansley’s continued suggestions that the previous Government somehow failed cancer sufferers is not appropriate. I would be the first to admit that this was work in progress and that there was much more to do, but Mr Lansley does not need to attack the previous Labour Government to justify keeping cancer high on the healthcare agenda.
The Government have, for example, recently used data from EUROCARE that compare UK survival rates of patients diagnosed between 1995 and 1999 and between 2000 and 2002. The data show that the UK has lower survival rates for the most common cancers—lung, breast, prostate and bowel—than other countries with a similar health experience. However, there are two problems with this comparison. Few other European countries have the fully comprehensive cancer registry—referred to by the noble Baroness, Lady Finlay—that England has. Cancer data in Germany, for example, relate to only 1 per cent of the population. This information comes from the King’s Fund. It is also worth keeping in mind that there is a five-year time lag associated with five-year survival rates and that, at the end of this Government, EUROCARE will be measuring the experience of patients diagnosed during the early part of Labour’s Cancer Plan 2000. We know that five-year survival rates for the 21 most common cancers improved for both sexes between 2003 and 2007, compared with the period between 2001 and 2006.
The noble Baroness, Lady Finlay, raised some important questions about the cancer fund. I am still unclear about how the decisions to use this fund will be made and about what will happen if it runs out of money, as it surely will. There are various estimates about the inadequacy of the fund to meet the need. The British Oncology Pharmacy Association has estimated that the real cost of funding treatments will be £85 million this year and £120 million in a full year. We have to ask questions about the fund, which are linked to questions about NICE.
Can the Minister tell us which is likely to save more lives—investing in early diagnosis, or in cancer drugs not approved by NICE? Linked to this is the Government’s intention to downgrade NICE’s work in this area. It is extraordinary that the Government are removing NICE’s authority. It is the one outfit designed to prevent the Secretary of State having to take responsibility for unbearable rationing decisions. As the Guardian reported recently, and as the Minister said, NICE will become “somewhat redundant”. That week we saw the Daily Mail crowing about victory for its campaign. Under the headline “‘Penny-pinching’ NICE stripped of power”, the article stated:
“The scandal of patients being denied drugs just because the NHS rationing body decides they are too expensive will end”.
There is a serious problem here because, regardless of whether the NHS budget is increasing, it is vital to preserve NICE’s integrity and to ensure that the use of all drugs and treatments on the NHS is approved on an equal and fair basis while ensuring that they are cost-effective to the taxpayer. I do not understand why NICE cannot be the body that undertakes the new value-based system which the Government have been outlining. At the end of the day, if the changes go through, how will the Government help those GP commissioners who will be targeted in local campaigns by newspapers and patient groups to prescribe expensive drugs for rare conditions?
I shall return to the issue of waiting lists which I raised in an Oral Question to the noble Earl in the past couple of weeks. I asked about the lengthening of waiting lists for diagnostic tests and its impact on the diagnosis of cancer. Waiting lists for diagnostic tests have almost doubled since Andrew Lansley got rid of the 18-week target. Those are the Government’s statistics, not mine. I clearly did not put my supplementary question to the noble Earl correctly because he told me that I was completely misinformed and wrong. I was pointing out that if diagnostic tests are being delayed, it seems likely that cancer patients will be in that cohort, and that the two-week target—which I am not disputing; I am glad that the Government are keeping it in place—therefore begs the question: how will the Government monitor the consequences of increasing waiting lists for cancer patients and other conditions? Is it acceptable for waiting lists to be lengthening in this manner? How will GP commissioning deal with this issue, and how will the two-week target be maintained under the new regime?
I shall conclude with two questions, one of which picks up on the remarks of the noble Baroness, Lady Hussein-Ece, about people with cancer in the workplace. I am also grateful to Macmillan Cancer Care for sending me a briefing which calls for a set of initiatives to deal with people who want to work and who have, or are recovering from, cancer. Will such initiatives be included in the new Cancer Plan? Macmillan is calling for every patient who wants to work after cancer to be given back-to-work information; explicit outcomes on cancer patients remaining in and returning to work to be included in domain 3 of the NHS outcomes framework; vocational rehabilitation services to be included in cancer quality standards and the NHS Commissioning Board's guidance; and the Department for Work and Pensions to promote employers' awareness of the employment provisions of the Equality Act and their impact on disabled people, in particular those affected by cancer.
Finally, I return to an issue that I have raised before with the noble Lord, namely, the impact of excessive hospital parking charges for those with cancer and other conditions. The average cancer patient pays £325 in travel costs and hospital car parking charges while travelling 53 times to hospital in the course of their treatment. We know that the department's guidance is not working because it is not enforced. Around 60 per cent of cancer patients still have to pay the full price for parking during their treatment, even though DH guidance recommends that hospitals offer free or concessionary rates. Excessive car parking charges are too often the final straw that breaks the camel's back during a highly stressful, emotional and financially challenging time for the patient and their loved ones. We have had a full and fascinating debate and I look forward to the Minister's response.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, I begin by expressing my gratitude to the noble Baroness, Lady Finlay, for securing today’s debate and I pay tribute to her for the expertise and leadership that she has shown as chair of the All-Party Parliamentary Group on Dying Well. It is also a particular delight to welcome my noble friend Lord Howard of Lympne and to congratulate him on the not unexpected excellence of his maiden speech.
Cancer, regrettably, touches many people’s lives. In England, more than 250,000 people are diagnosed with it every year. One in three of us will develop cancer in our lifetime. One in four of us will die from it. Today’s debate comes at a timely point, as the Department of Health prepares a new strategy to improve cancer care in this country. While survival rates have improved over the past 25 years, we still compare unfavourably with other leading European countries. We believe that up to 10,000 lives a year could be saved if we could bring cancer survival up to the standards of the best.
One of the main reasons why we languish behind is that we diagnose cancer at a later stage, partly because British people typically present later with symptoms. Cancer Research UK’s cancer awareness measure suggests that only one in three people can recall common cancer symptoms. I agreed with everything that the noble Baroness, Lady Wall, said on that issue. We need to do better, which is why the Government are investing nearly £11 million in new campaigns to alert people to the symptoms of bowel, breast and lung cancer—three of the biggest killers. These will not be the conventional, one-size-fits-all campaigns that we have seen in the past. Most of the funding will go into tailored, local approaches—genuine grass-roots campaigns—firmly evidence-based and using the best marketing techniques to raise awareness.
Once a person presents with suspect symptoms, fast access to diagnostic tests is crucial. The noble Baroness, Lady Finlay, my noble friend Lord Clement-Jones and the noble Lord, Lord Wills, referred to the one-week commitment. The previous Government proposed this policy with considerable fanfare, although they were a little quieter about how it would have been paid for. The price tag attached is very considerable, reflecting the serious practical implications that the policy entails. The coalition’s view is that a blanket one-week access target would not be the best use of the resources that we have and that the proposed target was not based on clinical evidence.
Patients with suspect symptoms are already placed by their GPs on the two-week urgent referral pathway. On average, that pathway is being adhered to. My noble friend Lady Hussein-Ece rightly emphasised early diagnosis. The cancer reform strategy review is looking at what we need to do to tackle late diagnosis of cancer, such as encouraging patients to recognise and present cancer symptoms, supporting GPs to diagnose cancer earlier and improving primary access to diagnostic tests for cancer. The new outcomes framework will give a consistent set of measures and expectations for the NHS to follow. GPs will make their referral decisions based on the best clinical evidence on what achieves the best outcomes.
Of course, good information is the key to this. If commissioners can see what others are spending their money on and what results they are achieving, they are in a better position to make the right choices for their patients. The department is already helping commissioners to interpret the data that they have in order to support better decisions. This includes the latest information on access to cancer services. The noble Baroness, Lady Finlay, asked whose responsibility it will be to ensure that early diagnosis happens once the reforms have taken place. In future, the new public health service will have an important role to play in promoting awareness of symptoms of disease and in encouraging early presentation. Of course, the public health service will need to work closely with the NHS, which will be responsible for having the services in place. We continue to publish diagnostic test and referral-to-treatment waiting times so that service commissioners and providers can address any long waits and variations in waiting times and so that patients can take this information into account in deciding where they want to go for their diagnostic tests. Patient decision aids are one way of helping patients to make better decisions with their doctor about their care and treatment. We are seeking views on the use of patient decision aids as part of the consultation that is under way on greater choice and control.
The noble Baroness, Lady Finlay, asked about the sanctions and levers in the system. The NHS commissioning board will be responsible for ensuring that consortia are accountable for the outcomes that they achieve, for their stewardship of public resources and for their fulfilment of the duties placed on them. The board will intervene in the event that a consortium is unable to fulfil its duties effectively or where there is a significant risk of failure.
Screening is another key way of detecting cancer earlier. As noble Lords will know, NHS screening programmes save many thousands of lives each year. Breast cancer screening alone saves 1,400 lives, making it one of the most effective programmes in the world. However, people should go into screening programmes with their eyes open, aware of what the procedure involves and what the risks and benefits are. Concerns have been raised about overdiagnosis and overtreatment of breast cancer due to screening. We are now redrafting the leaflet that all women receive prior to screening so that those risks are made clear. The new leaflet will be published in the near future.
The noble Lord, Lord Wills, spoke about prostate cancer screening and we heard a powerful contribution on prostate cancer from the noble Lord, Lord Kinnock. As both noble Lords will know, the Government work closely with the Prostate Cancer Charity—as did the previous Government—through the Prostate Cancer Advisory Group. Overarching the advice on screening that we receive is the work of the National Screening Committee, which advises on, and continues to review the evidence for, screening programmes. The noble Lord, Lord Wills, asked whether we would introduce screening for prostate cancer. The NHS constitution states:
“The NHS … commits … to provide screening programmes as recommended by the UK National Screening Committee”.
We have said that we will support the rollout of screening programmes for common cancers where the evidence supports this. On 22 October, the committee’s consultation on screening for prostate cancer came to an end and it will make recommendations to Ministers in due course.
We believe that the new flexible sigmoidoscopy for bowel cancer could save up to 3,000 lives a year. The National Screening Committee met yesterday to discuss how this procedure could be used to deliver best results. The noble Baroness, Lady Finlay, spoke about this, as did the noble Lord, Lord Beecham, in his very moving speech. The National Screening Committee has just met to review the evidence for a bowel cancer screening programme using flexible sigmoidoscopy. The recommendations will be in front of Ministers shortly. The noble Lord, Lord Beecham, also referred to stoma nursing. The Government recognise the valuable role that specialist nurses, including stoma nurses, provide. The noble Lord may wish me to write to him on that subject, which I am happy to do.
The noble Lord also spoke about colonoscopy. I have it on good authority—that of the noble Baroness, Lady Finlay, who has kindly passed me a note—that colonoscopy is helpful but looks only at one point in time. It is not a pleasant procedure and it is not risk-free either, so overall many clinicians believe that there can be better approaches to diagnosis.
After diagnosis, surgery tends to be a key part of the clinical response. New and less invasive surgical techniques are being developed, notably keyhole surgery, but of course access to the new techniques requires trained, specialist surgeons who treat enough patients to keep their skill levels up and the safety risks down. As NICE guidance tells us, this may mean consolidating specialists into regional centres of excellence, where there are sufficient volumes of patients.
The noble Baroness, Lady Wall, spoke about postcode prescribing. I agree that this has been a worry for some time. We need to expand access to cancer drugs in particular. That is why last month the Government launched a consultation on the cancer drugs fund and confirmed that from next year the NHS would receive £200 million a year on top of the £50 million provided for the rest of this financial year. Patients are already benefiting from the interim funding. The Rarer Cancers Forum has said that the fund could help more than 2,000 patients this year alone.
For 2011-12, the cancer drugs fund will continue to be run through strategic health authorities. We believe that that is the best way of balancing responsiveness to patients with consistency and fairness across the system. The noble Baroness, Lady Thornton, questioned whether this was a wise use of NHS money. I simply say to her that I do not see this as an either/or situation with regard to early diagnosis; we need to do both. We believe that, from 2012 onwards, the fund should be taken over by the NHS commissioning board, which will look at how it administers the fund locally. Although the noble Baroness, Lady Finlay, suggested that a postcode lottery was emerging in the cancer drugs fund, we do not have any evidence that that is the case. However, if she has that evidence, I should be very glad to hear about it.
Of course, treatment is not just about chemotherapy; radiotherapy is another key area. We are putting an extra £43 million into proton beam therapy treatment over the next four years, which will benefit up to 400 patients a year by the end of the spending review period. We want patients to benefit from the most sophisticated techniques, such as intensity-modulated radiotherapy. Some services may be more appropriately commissioned by the NHS commissioning board than by GP consortia—again, an area raised by the noble Baroness, Lady Finlay—where large populations are needed for planning and commissioning. Radiotherapy could well be an example of that. I say to the noble Lord, Lord Hameed, that improving cancer awareness and early diagnosis is likely to increase demand for radiotherapy. We need to ensure that capacity is in the right place and that the most effective use is made of existing capacity. We are planning ways in which to boost services so that we can offer radiotherapy to all those who would benefit from it.
Sadly, even with a focus on improving survival rates, some patients lose their battle against cancer. In these sad circumstances, we need to do everything that we can to improve the palliative and end-of-life support that they receive, improving pain relief and emotional support and joining up acute and community services so that more people can die at home rather than in hospital.
My noble friend Lady Hussein-Ece mentioned the recent medical paper on palliative care for patients with metastatic non-small-cell lung cancer. The Lung Cancer and Mesothelioma Advisory Group is currently reviewing this study and will consider its findings as part of its advice to the Government.
My noble friend Lord Howard, in his excellent speech, took us right to the heart of the issue of palliative end-of-life care. The Government recognise the valuable role that hospices play in delivering end-of-life services, in particular for cancer patients, and their good work of course extends far beyond the buildings that they occupy. We demonstrated our commitment to supporting hospices when the Treasury reconfirmed the £40 million capital grant scheme for hospices in the current year, originally announced as part of the end-of-life care strategy. We are concerned to improve the quality of end-of-life care for everyone, regardless of diagnosis, and we look forward to working with the hospice movement to achieve that aim.
My noble friend Lord Bridgeman also spoke on that theme. Too often, a person’s needs and those of their family and carers are not adequately assessed and addressed, including finding out a person’s preferences for the type of care that they would wish to receive and the setting or location in which they would wish to be cared for at the end of life. I agree with my noble friend that advanced care planning is a helpful way of addressing these issues. That was highlighted as a key area within the end-of-life strategy. We recognise the need to ensure that the care that people receive at the end of life is compassionate and appropriate and that it supports the exercise of choice. We confirmed our commitment to improving quality and choice in palliative and end-of-life care in the White Paper that we published in the summer. This includes the commitment to move towards a national choice offer, supporting people’s preferences about how to have a good death.
The noble Baroness, Lady Finlay, asked about cancer centres. The NHS commissioning board will provide leadership for quality improvement through commissioning. This will include setting commissioning guidelines on the basis of clinically approved quality standards developed with advice from the National Institute for Health and Clinical Excellence. However, we recognise the excellent work that is currently done by cancer centres and indeed by cancer networks.
The noble Baroness also asked about foundation trusts and the possibility of the inappropriate retention of patients in certain circumstances. Our long-term vision for the benefit of patients and taxpayers is that care will be provided by responsive autonomous providers who will be accountable to Monitor and the Care Quality Commission. Where specific control mechanisms are needed for providers, these should take effect through regulatory licensing and clinically led contracting rather than through hierarchical management by regions or the centre.
A number of noble Lords, including my noble friend Lord Bridgeman and the noble Baroness, Lady Emerton, whom it is a great pleasure to see back in her place, raised the issue of one-to-one support for cancer patients. We want every cancer patient to have access to appropriate care, support and information, but this must be affordable and sustainable for the NHS. We are reviewing the evidence to see whether one-to-one support can improve care for people after a diagnosis of cancer, as well as ensure the efficient use of NHS resources. We are working with Macmillan Cancer Support to understand the costs and potential benefits of one-to-one support. The results of that work will be made available as part of the review of the cancer reform strategy later this winter.
I return to the powerful speech of the noble Lord, Lord Kinnock, on prostate cancer. He was right in so much of what he said. Survival rates for prostate cancer in England still lag behind those of comparable countries in Europe. Late diagnosis is likely to be a significant contributor and, again, the cancer reform strategy will be looking at what we need to do in this area. I should be delighted to have a one-to-one conversation with the noble Lord if he would find that helpful. I simply add that the prostate cancer risk management programme is in place and that the intention behind it, as I am sure he is aware, is that men without symptoms of prostate cancer should be able to have a PSA test free on the NHS.
My noble friend Lord Clement-Jones raised the important topic of lung cancer. Once again, our survival rates for lung cancer are low compared with those in Europe. We are committed to improving outcomes for those with lung cancer, which is one reason why we have asked the national cancer director, Professor Sir Mike Richards, to lead the review of the cancer reform strategy. I am pleased to learn that the British Lung Foundation contributed to the consultation on the review. We will be publishing in the strategy a future direction for lung cancer care. We know that early surgical intervention can be critical for lung cancer patients, but that is often not possible if the cancer is too far advanced. We have to look carefully at why there is variation, although I think that the low rate of lung cancer surgery is likely to be due in part to late diagnosis.
My noble friend also spoke about ovarian cancer, to which many of the same messages apply. Our public awareness campaign is focusing on the three biggest killers, but the Department of Health has worked with ovarian cancer charities to develop the key messages on the signs and symptoms of ovarian cancer.
The noble Lord, Lord Kakkar, raised the important issue of risk assessment for thrombosis during treatment in a range of settings. I can tell him that that will be an important issue for NICE to consider as it develops quality standards for cancer care.
The noble Baroness, Lady Emerton, powerfully emphasised the importance of chemotherapy at home. The NHS operating framework for this year confirmed the direction of travel towards having more services closer to home. Where there are skilled and experienced staff, chemotherapy in community settings can help to meet increasing demand and provide greater choice for patients.
The noble Baronesses, Lady Finlay and Lady Thornton, asked about our tobacco policy. At the moment, we are considering options for the display of tobacco in shops. We seek to balance public health priorities with reducing burdens on business. Those matters are under consideration by Ministers. It is probably premature for me to discuss the details of the options that we are considering, but an announcement will be made in due course.
I am aware that time has run out. Suffice it to say that I believe that this has been an excellent debate. I undertake to write to those noble Lords whose questions I have not been able to cover. I think that we all agree that advances in medical science mean that cancer is no longer the death sentence that it once was. That is a cause for satisfaction and for congratulating those cancer specialists in the NHS who do such wonderful work. We want to build on those achievements to take cancer care to new heights, to ensure that those beginning treatment for cancer do so with confidence and hope.
Baroness Finlay of Llandaff
My Lords, I thank the Minister for his reply and all noble Lords who have spoken in this outstanding debate. I particularly thank the noble Lord, Lord Howard of Lympne, for having decided for his maiden speech to contribute to this debate. He raised the tone even higher than that set by everyone else in this House.
There are some very clear messages here. People want the choice to be treated well at all times and, to cite the title of the book by the late Lady Beecham, to be moving forward with their cancer and living with it. Integration, not fragmentation, must be the way that the changes take us in the new world that we face. Outcomes can and must improve. Prevention must continue. We must not lose sight of tobacco control.
I finish simply. There has been a call for information from around the House. In the words of the late Vicky Clement-Jones, whom I had the privilege to know, knowledge is the antidote to fear. This debate has demonstrated that.
Welfare Reform
(14 years ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, with the leave of the House, I shall repeat a Statement on welfare reform made earlier today in the other place by the Secretary of State, Iain Duncan Smith. The statement is as follows.
“In this House, in October, I set out our resolve to secure a welfare system fit for the 21st century, where work always pays and is seen to pay.
Following consultation, a broad positive consensus has emerged—from Citizens Advice to the Institute for Fiscal Studies, and across the political divide. The White Paper that we are publishing sets out reforms to ensure that people will be consistently and transparently better off for each hour they work and every pound they earn. We will cut through complexity to make it easier for people to access benefits. We will cut costs, reduce error and do better at tackling fraud. The detail is published today and the White Paper is available in the Library. Let me take this opportunity to thank all who have helped build and write these reforms.
Let me remind the House of the problem that we are trying to solve: 5 million people of working age are on out-of-work benefits; 1.4 million people have been on out-of-work benefits for nine of the past 10 years; 2.6 million working-age people are claiming incapacity benefits, of which about 1 million have been claiming for a decade; and almost 2 million children are growing up in workless households—one of the worst rates in Europe.
Some have said recently that it is jobs—not reform—that is important, but in doing so, they miss the point. This is a long-standing problem in this country. We have a group of people who have been left behind, even in periods of high growth. Even as 4 million jobs were created over 63 quarters of consecutive growth, millions of people in Britain remained detached from the labour market. Four and a half million people were on out-of-work benefits even before this recession started. These reforms are about bringing them back in. I want them to be supported and ready to take up the 450,000 vacancies that are currently available in our economy. If we solve this problem, we begin to solve the wider social problems associated with worklessness.
The measures in the White Paper get this process under way. They are the first key strand of our welfare reform. By creating a simpler benefits system, we will make sure that work always pays more than benefits. By reducing complexity, we will reduce the opportunities for fraud and error, which currently cost the taxpayer more than £5 billion a year.
Work is the best route out of poverty. At present, some of the poorest who take modestly-paid jobs can risk losing £9 or more out of every £10 extra they earn. The universal credit puts an end to some of those perverse disincentives that make it so risky for the poorest to move into work. The highest marginal deduction rates for in-work households will fall from 95.8 per cent to 76.2 per cent. That is the absolute maximum, incorporating both tax and the withdrawal of benefits. There will be a single taper rate of about 65 per cent before tax. That means that about 1.3 million households facing the choice to move into work for 10 hours a week will see a virtual elimination of participation tax rates of more than 70 per cent. With single tapers and higher disregards, the system will be simpler and easier, and people will keep far more cash in their pockets when they move into work.
Our guarantee is crystal clear: if you take a job, you will receive more income. Some 2.5 million households will get higher entitlements as a result of the move to universal credit. The new transparency in the system will also produce a substantial increase in the take-up of benefits and tax credits. Taken together, we estimate that these effects will help lift as many as 350,000 children and 500,000 adults out of poverty. That is our analysis of just the static effects of reform. Analysing the dynamic effects is not easy, but we estimate that the reforms could reduce the number of workless households by about 300,000. Let me also provide assurance about the transition. We will financially protect those who move across to the universal credit system. There will be no losers.
A far simpler system that operates on the basis of real-time earnings will also reduce the scope for underpayments and overpayments, which we all know can create anxiety and disruption and can prove very difficult to correct. This simplification and reform will help end that problem. As well as reducing official error, these changes will also make life far more difficult for those who set out to defraud the system—they are a small group, but nevertheless they are there. The system will be simpler, safer, more secure, fairer and more effective.
That will require investment, with £2.1 billion being set aside to fund the implementation of the universal credit over the spending review period. I have been assisted in this work by my right honourable friend the Chancellor, who has agreed to this investment programme. This is not just expenditure but investment, and investing to break the cycle of welfare dependency is a price worth paying. The universal credit will provide a huge boost to the individuals who are stuck in the benefit trap by reducing the risk of taking work and lifting 850,000 out of poverty in the process.
This investment will produce a flow of savings, as a simpler system helps drive out over £1 billion of losses due to fraud, error and overpayments each year. In the wider economy, dynamic labour supply effects will produce net benefits for the country as greater flexibility helps business and fuels growth, particularly in the high street. We are investing £2.1 billion in spending review 2010, and we are seeking a multibillion pound return.
That is how we will make work pay, but that is not enough on its own as we also have to support people as they make their move back to work—the two issues cannot be separated. That is why we are moving ahead with our new work programme, which will provide integrated back-to-work support, and that is why we have already started a three-year programme to reassess 1.5 million people who have been abandoned for years on incapacity benefit—something that the Opposition started before the election for the flow of new claims. We are now trialling that programme in two cities in the UK.
This is our contract: we will make work pay and support you through the work programme to find a job, but in return we expect you to co-operate. That is why we are developing sanctions for those who refuse to play by the rules as well as targeted work activity for those who need to get used to the habits of work. This work activity will be targeted at those who need it most: those who face the most significant challenges engaging with the labour market. Furthermore, evidence from the work capability assessment—36 per cent of people have withdrawn their application before reaching the stage where they are assessed—underlines the effect this could have on those currently working while claiming benefits.
This new contract represents a fair deal for the taxpayer and a fair deal for those who need our help. I commend these reforms and this White Paper to the House”.
My Lords, that concludes the Statement.
Lord McKenzie of Luton
My Lords, I thank the noble Lord, Lord Freud, for repeating the Statement that was given in another place today and acknowledge his personal and detailed engagement in the development of these proposals. On this side, we are grateful for advance sight of today’s Statement. Beyond the normal courtesy of being sent an advance copy and being able to hear it in the other place, we have of course been able to read about it in the newspapers over the past couple of months.
On the substance of the Statement, we have always been clear that we agree with the broad principles of what the Government are doing. We made good progress through the introduction of tax credits and the minimum wage to make work pay, and we made good progress in reducing the number of workless families by 350,000 and the number of unemployed lone parents by a similar amount, but there is plenty more to be done. The system is too complex at present.
The right honourable Secretary of State and the Minister have on more than one occasion gone on the record in acknowledging the work that we did in government that they are building on. We agree that work is the best route out of poverty and we agree with strong conditionality in the welfare system so that benefit recipients get something for doing something. We agree with the principle of a single welfare-to-work programme—we were introducing the personalised employment programme to do just that but at a much more modest pace than the Government are proposing in the work programme. In successive policy, we set out our long-term aspiration for a single working-age benefit papers that would simplify the system, as the universal credit seeks to do. Attaining that would be a significant technical as well as policy achievement, so on our part there is no opposition for opposition's sake.
On this side, we will offer constructive opposition to try to help the Government make their principles a successful reality. It is in that spirit that I raise some concerns. First, it is right that there should be a contract setting out the expectation between the state and the claimant to enshrine the something-for-something nature of things, but as well as providing benefit is there not an obligation on the state to grow employment? Will the Minister agree to publish, perhaps with his friends in the Treasury, targets for employment growth and unemployment reduction? I notice the claims in the media, which we have heard repeated today, that the tougher conditionality will reduce unemployment by 350,000. I would be interested to see the evidence supporting that.
The noble Lord, Lord Freud, will recall our extensive debates on conditionality during the passage of the Welfare Reform Act 2009. In particular, he will recall the consensus that lone parents, particularly mums, should not have to be available for work outside school hours, that there needs to be affordable childcare and that transport costs should be taken into account in assessing availability for work. Can the Minister confirm that tougher conditionality is not to weaken these protections and that good cause will still apply? What is proposed for the protection of children when benefits are withdrawn? Will hardship payments still be available and, if so, at what level of benefit?
Through the future jobs fund and the young person’s guarantee, we found that offering a real job on the minimum wage lifted people's aspirations and got a lot of really good work done for the community. That is what the unemployed—all the way back to the “Boys from the Blackstuff” in the 1980s—have always wanted: they want a job. The new work programme is dependent on successful job outcomes, so they need this too. When will the Government publish a credible plan for jobs growth? The Bank of England said this week that the prospects for growth are highly uncertain, but it is certain that more than 1 million people will lose their jobs as a result of the comprehensive spending review. Can the Minister give hope to those who are currently unemployed that the number of vacancies will start increasing again?
The benefit of work is in building self-confidence and self-esteem. How will the work experience proposals offer that and other gains such as something on the CV and a good reference? How will it be different from the community payback work that we successfully introduced in government? Will it just look like another form of punishment? How will he find these work placements and guarantee us and the work programme providers that the scheme will not just displace other jobs that are needed to get people permanently off benefit? In our experience, as with apprenticeships, it is easy to announce the policy and the funding, but it is much harder to persuade employers to take them up.
On universal credit, there are many points of detail that we wish to explore about how the credit will operate, but those questions are mostly for other occasions. We recognise that the proposal is ambitious, but can the Minister comment on the reports that, in order to fulfil the commitment that no one will be worse off under the proposals, up to an additional £2 billion a year will be required after 2016? Given the time that will be taken to introduce the universal credit, has any thought been given to utilising the better-off-in-work credit in the interim?
We will need to explore the detail in the White Paper on what is included within the credit. Can the Minister say today whether DLA is in or out and whether it is to be subject to the taper? Given that the previously announced decision that council tax benefit—with a 10 per cent cut, of course—is to be devolved to local authorities will potentially lead to differential arrangements up and down the country, what is the Minister’s understanding of what that will mean for the universal credit?
There has been much debate about the draconian changes to the housing benefit regime. In due course, we will want not only to unpick the evidence base on which that is predicated but to look for answers, which to date have not been forthcoming. Will the universal credit allow the separate net identification of components of the credit, given the possible combination of overall caps, individual rent caps and the standard tapers? Does that preclude the direct payment of rent to RSLs and landlords in the private rented sector? If child benefit is to be included, how does the Minister respond to the point that one consequence will be potentially to reverse the hard-won campaign that such support should be a resource that transfers from the pay packet to the purse?
I reiterate our concerns about what is being cut to pay for the proposals. The arguments setting out our opposition to the unfair and damaging cuts to housing and child benefit are well rehearsed and will be made again and again. I should also say that the noble Lord could avoid these damaging cuts by taking more time and, in doing so, he could possibly lower the risks around the delivery of the proposals. We can achieve political consensus on this and agree a programme that goes beyond a single Parliament. That would allow time to build employment in the economy, get reassurance about the success of the IT upgrade on which the universal credit is dependent and allow a smoother transition from the flexible New Deal to the work programme, thus avoiding a damaging gap in provision that potentially will hurt contractors and, more important, vulnerable job seekers.
Let me be clear that we support the strategic direction of the proposals, but what counts is the decency with which they are implemented. We will work constructively with the Government to seek to ensure that that is the case.
Lord Freud
My Lords, I thank the noble Lord, Lord McKenzie, for his gracious speech. I welcome his overview that this transformation is going in the right strategic direction and that he and his party are prepared to make sure that we get the very best out of it. There is much consensus around this issue and, as anyone who has looked at my career over the past few years will recognise, it may be that I almost personalise some elements of that consensus. I do acknowledge, as the Secretary of State has acknowledged, that we are building on elements, but we are making them truly transformational by ensuring that people will be able to understand that it is always worth working in a way that, because of the complexity of the current system, it has been impossible for them to do.
The noble Lord put a series of questions to me and I shall do my best to answer all or virtually all of them. He queried the obligation, as he put it, in the contract to grow employment at the same time. I want to make it clear that two separate things are happening here. In the 16 or 17 years to 2008 we had the longest boom in growth that this country, in common with the rest of the western world, has seen. However, we still ended up with a lot of people trapped on out-of-work benefits. What is key here is to untrap them because during the boom we were sucking in labour from abroad which proved to be much more flexible. Before we worry about anything else, we must unlock the people who are living here so that they can play their part in the workplace. That is what these reforms are about.
On the noble Lord’s question about lone parent conditionality, we will of course maintain the good cause provisions that are agreed. We are very sensitive to the school hours measures and so forth, and they will be taken through. Hardship payments will be available, and the exact levels will have to be determined. He made the point that people need self-confidence and good self-esteem to be able to get back into work. The whole point of the work programme is to put in place a structure where providers are incentivised to get people back into the workplace whatever it takes. My own expectation, for what it is worth, is that one of the things that work providers will spend a lot of time on is rebuilding the self-confidence that people need to get back into work. So I expect that to be happening.
We have talked about mandatory placements. They are not a punishment, but are to be used for those for whom working for four weeks will be transformational in how they interrelate with work and in getting used to the basic disciplines of work. The placements will be designed for those people for whom we think they will be of the most value. Clearly there is a secondary issue, which is that making people do something for four weeks when they actually have another job anyway is a useful winnowing tool.
The noble Lord queried the costs and mentioned stories about an extra £2 billion in the next Parliament or at the next spending review. Frankly, we are talking about a very complicated series of movements, and any figures at this stage would be simplistic. The point is that by the next Parliament, the new system will be locked in, so that in the next spending review we will have to take account of what that system is, along with its costs.
I am not sure whether we will be running ahead with the “better off in work” credit because there is so much to do in bringing forward the universal credit. We need to concentrate on the big picture rather than amelioration of bits and pieces of the existing system. The plan is to bring in the universal credit from October 2013 and then start to move as soon as we possibly can the people for whom those incentive effects will work the best. They will be the earliest people to move across.
I can assure the noble Lord that the disability living allowance is out of the universal credit because we accept the reason for the allowance, which is to provide for all people with disabilities who need help with the costs involved in their support, whether they are in work or out of work. Those costs do not change in line with levels of wealth. They represent a basic strapline of expenditure according to an individual’s disability, so we have decided to leave DLA out. On council tax benefit or rebate, depending on what we call it, we are looking to devolve this so that local authorities can start to shape where it goes. We are also determined to make sure that it works with the incentive structure of our taper on the universal credit. This will ensure that we do not have something working against that set of incentives.
I turn to housing benefit, which is effectively one element of the universal credit. We have some work to do on exactly how it will go in and at what rate, but in practice the universal credit is a basic credit with disability add-ons, child add-ons, housing add-ons and so forth. We aim to see the portfolio of an individual’s universal credit build up depending on who they are. On the question of direct payments to RSLs, we will make sure that the risks to RSLs in terms of getting payments are not increased. Their anxiety is that their ability to finance will be undermined, but we are determined to ensure that, whatever we do with this, it does not undermine that ability. We are looking at quite a few options where we can achieve our aim without necessarily having direct payments.
Is child benefit included? No, it is not. As to the noble Lord’s concern about wallet and purse, which would apply also to the universal credit—he did not ask the question but I am happy to answer a question he did not ask but should have—we want to ensure that the credit gets paid to one member of the household, although we will explore ways of dividing it. One hundred per cent may well go to the purse or to the wallet, but we need to consider the middle and whether we should make special arrangements for those people who would like it there.
The noble Lord asked me to take more time. This is a big project and we are doing it at the speed we can. Nevertheless, it will take a long time. We will have the system ready to roll in October 2013 and people will migrate steadily on to it; we will not throw everyone in at the same time. Up to half of the people involved—particularly those who are most incentivised by being in the system—will be in the system by April/May 2015, and the remainder in the next two years. It is a longish process.
I welcome the noble Lord’s closing words—that this will go beyond a second Parliament—but one never knows what will happen in an election. I welcome the fact that the party opposite has indicated that it will be supportive and co-operative because you never know who will be in charge in 2016.
Lord German
I congratulate the Minister on the Statement, particularly on him and his team securing £2.1 billion of expenditure to overhaul a system that has had many epithets, including “complex”, “cumbersome” and “inefficient”. I am sure that if we wrote a dictionary of the problems of the current system, we would see the need for making progress towards change.
I am keen to explore the key area of the Statement—that 850,000 people in our land will be lifted out of poverty as a result of these measures. That would be a tremendous achievement for the Government, one which we have not seen in the past. Can the Minister explain how that figure is arrived at and the Government’s direction of travel? It is an aim worth achieving in itself, although it is not the only ambition they have.
Given that there will be a long period of transition, how will the existing benefit structure begin to look to the new benefit structure? Clearly you do not want to continue the old system and change rapidly; you will need to ensure that the sense of direction is towards the new structure. I am sure the House will wish the Government every good speed in doing this, but “crawling” is not the epithet that I would use at the moment.
Lord Freud
I thank my noble friend Lord German for raising the issue of the impact on poverty. I have a much shorter word on record: it is not “complex”, “cumbersome” or “inefficient”; I call it a mess.
How will this work? In effect, by having more generous tapers and disregards we are putting money into the pockets of people doing small amounts of work. So there is the direct economic impact of that money going in. There will be a second order impact, which will be twice as large because we will simplify the system and have only one form. This will encourage a much higher take-up rate and, in practice, will almost eliminate the scourge of in-work poverty. So that is where the figure of 850,000 comes from.
There will also be the dynamic or incentive effect of always knowing that it is worth working, and being incentivised to work will reduce the number of workless households by about 300,000. We have not put that poverty impact in the Statement; it is in addition to it. Some households will be pulled above the artificial 60 per cent median line, and we expect the poverty impact to be even greater than the 850,000 we have referred to. These are big figures. I remind the House that, on conventional analysis, the reduction in child poverty during the 13 years of the previous Government was about 600,000 children, so we are looking at making a big relative effect in one go.
Lord Clinton-Davis
I wish I could share the Minister’s optimism. I believe that immense difficulties will arise in practice.
I wish to ask about handicapped people. Are any changes envisaged in this approach in regard to those claiming to be handicapped? Will they have a right of appeal if they are turned down—after all, experts can be wrong—and will legal aid be available in the vast majority of cases? If it is denied, that will not be fair—and, after all, fairness goes to the heart of what we are talking about.
Lord Freud
I thank the noble Lord, Lord Clinton-Davis, for his question. I hope I am not being too optimistic. On the handicapped issue, there are a few concepts buried in the question and I shall try to disentangle them.
First, how does the universal credit look to a disabled person? In the present system we have a conflation between disability and inactivity in the labour market. It is one or the other; you can do a little work, but not much. The beauty of the universal credit is that people on disability benefit will be on the same taper as others, with generous disregards, so that they are not in the desperate position of being inactive on disability benefit or working. We should remember that 40 per cent of people with disabilities are in the workforce—they want to be in the workforce—and that some of the most heavily disabled people want to work. We want to build up a system to help them to do so.
The second element of the noble Lord’s question deals with the work capability assessment process that we are now trialling. There will be an independent and elaborate tribunal process through which people can go. They can bring in legal support if they want but, in reality, most people do not need it because it has been accepted as a relatively balanced process, and robust systems will be in place to make sure that people do not get put into the wrong category. However, putting the money aside for one minute—clearly one likes to have more money than less and to be on a higher rather than a lower benefit—the reform will unlock the inactivity that we are in effect forcing on too many disabled people.
Lord Bilimoria
My Lords, I served on the New Deal taskforce for many years and then on the National Employment Panel for seven years. I am delighted and heartened by many of the initiatives in the Government’s programme for welfare-to-work reform, in particular tackling the benefits trap.
We used to talk about the Australian experience. I spoke to John Howard after he stepped down as Prime Minister and asked him about Australia’s welfare-to-work experience, which we used to look to as a great success. He said that he did not want to remove the safety net but to get people back to work. One way in which his Government had sought to do that was a programme whereby people were made to do some community service. He thought that it would be a very unpopular move; it turned out to be very popular, because people who worked and paid taxes did not like to see people, quite a few of whom could have worked, not working. As a result, the Australian Government got public support for it. Have the Government looked at the Australian experience? Have they learnt from it? Do they think that it was a good and effective scheme, and will their scheme be as effective?
Lord Freud
My Lords, I thank the noble Lord, Lord Bilimoria, for that question. We have spent a lot of time looking at the lessons from abroad. When I was doing an independent report three and a half years or so ago, Australia was one of the places that I looked at very closely. I had someone who had been working there to inform me about what was happening. Australia and Holland are two places from which we learn a lot of lessons. There is a debate about whether action should be mandatory or voluntary. Voluntary action works if people have the self-confidence to say, “Yes, I want to try something”, but when you have been out of work for a long time, one of the first things that goes is your self-confidence. That is why mandatory action is not cruel. You need to pick people up and make them do things, because they do not have the self-confidence otherwise. That is one of the main lessons to be learnt from the Australian experience.
Lord Mawhinney
My Lords, perhaps I may say how many of us appreciate the fact that, in trying to unlock lives and aspirations, the Minister is focusing on allowing people to keep more of what they earn and trying to build self-confidence. There may be two other locks that he needs to unpick. The longer someone has not been in employment, the more inadequate or perhaps absent altogether will be their education and training. It would be my guess that those locks will need to be unpicked for very many people. Does he share that view? If so, who will have responsibility for addressing proven lack of education and training, and who will pay for it?
Lord Freud
My Lords, I thank the noble Lord for that question. I not only share his concern but am very firmly on the record as being very concerned about the division between the Work First strategies that we have been adopting in this country and skills and training. One of the mainstream drivers of the work programme philosophy is an attempt to pull training and employment strategies together. It does that partly by price differentiation, so as people become tougher to put into work, the price goes up. We need to find the right mechanisms to make sure that we price up. It does it also by ensuring that the payments system in the work programme is based on sustainment in work, which can be for one, two or three years. You do not sustain someone in work for a long time unless you pull in the whole training and education element. That kind of change should be going through.
Lord Young of Norwood Green
My Lords, I, too, welcome the direction of travel of the Government. If there is a doubt, it is about whether, after the comprehensive spending review, their growth strategy is coherent. The Statement referred to 450,000 vacancies, but that is before we have seen the impact of the comprehensive spending review. The Minister has just mentioned skills. We have concern about the Government’s abolition of the Train to Gain programme and the funded NVQ programme.
I shall focus on two areas on which I would welcome some further explanation. As I think the Minister would readily acknowledge, matching people to jobs will in some cases require an awful lot of support. In the other place, the Secretary of State talked of mentoring, not only to get people into work but to provide support when they are in work. The Minister has spoken of integrated back-to-work support. Who will provide this support and will it be resourced and properly costed?
The Secretary of State denied in the other place that the Access to Work grants had been cut, saying that they had just been refocused on larger employers. However, on other occasions, the Minister has stated that job growth will come from SMEs. That is a contradiction. If the Government want people with disabilities to get back into work, Access to Work grants are an important part of creating employment opportunities.
Lord Freud
My Lords, I thank the noble Lord, Lord Young, for that question. We have an integrated strategy. Measures in the CSR will ensure that mentoring takes place; there is also the new enterprise allowance and so on. We are building those packages and will announce details in due course. Our main change to Access to Work is to make sure that when someone goes for a job they have the funding required. No one will take someone if they do not know whether they will receive Access to Work. That is the main way in which we are refocusing Access to Work, which we think is a good programme.
Baroness Thomas of Winchester
My Lords, I, too, warmly welcome my noble friend’s repeated Statement today. I have one very simple, fundamental question to which I do not know the answer. How much discretion will decision-makers at Jobcentre Plus have about the sorts of work that jobseekers will be compelled to take? We hear that the conditionality rules will be tougher than those set by the previous Government. Let us suppose that a graduate or a highly qualified person can find only a cleaning job. Will they be compelled to take it and does the decision-maker have any discretion about that?
Lord Freud
My Lords, I thank the noble Baroness, Lady Thomas, who has been incredibly involved and interested in the development of the universal credit. Jobcentre Plus is structured in such a way that there is a very light touch in the early months which becomes gradually firmer and starts being a heavy hand on the shoulder after six months. There is a reality period. Most people look after themselves and find a job, but some need to have the reality of their position in the marketplace brought home to them, so that they match what work they can realistically expect to do with what is out there. You are much better off being in work and looking for a better job from an in-work position than from an ever longer period of inactivity.
Baroness Afshar
Thank you very much. I am very grateful that you allowed me in. I have two related points. First, the welfare legislation that did not get final approval put the welfare of children at its centre. It was the first thing that was stated. Can we hope that the current measures will begin with that statement?
Secondly, there are minority women, particularly Muslim women, who would find it very hard to front up and be consulted by a man who told them what to do. We need to have much more appropriate arrangements, because jobcentres have targets to meet. A specific woman may not want a job that staff think is appropriate. We need leeway and I wonder whether there will be room.
Lord Freud
I thank the noble Baroness, Lady Afshar. Children are at the heart of this. In our view, intergenerational poverty and joblessness are the basic reasons for the much too great child poverty that we have. This measure is designed with children in mind—right at the heart.
I take the noble Baroness’s point about cultural differences. One of the things I expect to see in the work programme—I know it is not in Jobcentre Plus—is quite sophisticated addressing of particular cultures. It is designed to force individualisation. In the work programme at least we will see start the kind of responses the noble Baroness is looking for.
Lord Christopher
I am not giving away after the 19th minute. I have tried four times.
Following the question asked by the noble Lord, Lord Mawhinney, will the Government produce proposals to deal with the situation that is bound to arise where the number of unemployed far outstrips the number of jobs available, which is particularly the case in the north? Will the Minister confirm that the Government have carefully considered ILO Convention No. 29, which Governments of this country have supported for 80 years? Is what the Government doing in accordance with that?
Lord Freud
My Lords, what we are announcing today is a structure that will encourage people to take the jobs that there are. A snapshot figure of 450,000 vacancies in Jobcentre Plus does not show the whole picture. There were 1 million vacancies in jobcentres in the past three months. In devising this strategy we will have looked at all conventions to make sure that we comply with them.
Public Disorder at NUS Rally
(14 years ago)
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The Minister of State, Home Office (Baroness Neville-Jones)
My Lords, I beg leave to repeat a Statement made earlier in the other place by my right honourable friend the Minister of State for Policing and Criminal Justice. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on yesterday’s public disorder at the National Union of Students rally.
The House will be aware that yesterday, following a peaceful demonstration organised by the National Union of Students, a violent faction directed a series of criminal acts against the office complex on Millbank, which houses a number of organisations and businesses.
This Government have been clear that we are committed to supporting peaceful protest. Indeed, we included the restoration of the right to peaceful protest in our coalition agreement. However, as the Prime Minister said this morning, we are equally clear that when people are bent on violence and on destruction of property, that is completely unacceptable.
The operational response to the violence is quite rightly a matter for the Metropolitan Police, but I want to give the House an early indication of what happened yesterday, the action taken by the police and the follow-up action that will now be necessary. This information was provided at 9 this morning by the Metropolitan Police Service.
The NUS had predicted that yesterday’s protest would attract around 5,000 demonstrators. This estimate was then revised upwards to 15,000. The police had planned to deploy around 225 officers to the protest. As the situation developed during the day, an additional 225 officers were deployed.
In the initial stages, the march passed the Palace of Westminster in an orderly manner. However, this meant that vehicle access to the Palace was not possible for around two and a half hours.
At about 1.10 pm, the front of the march reached the rally point at Millbank. At the same time, a group of protestors ran towards the Millbank office complex, which houses the Conservative campaign headquarters. Protesters from the main march then seemed to be encouraged by a number of individuals to storm the building and throw missiles. Windows were broken and significant damage to the property was caused. Some protestors also managed to gain entry to the building and some got on to the roof.
At its height, it is estimated that about 2,000 people were around Millbank, though many appeared not to be directly involved in violence. It is now clear that a small hard core within this group were intent on violence. Additional officers were then deployed in public order protective equipment. The Department for Business, Innovation and Skills was also attacked by a small number of protesters.
At about 3 pm, the police were informed that members of staff within the Millbank complex were concerned for their safety. They advised them to stay in the building. Officers were deployed to make contact with the staff and secure their safety. This took some time to achieve. By 4 pm, police officers had located the staff members and, over time, arrangements were put in place to escort them from the building.
The police then undertook a search of the office complex and made 47 arrests for criminal damage and aggravated trespass. The British Transport Police also made three arrests. Around 250 individuals were also searched, photographed and then released pending further investigation. Forty-one police officers received injuries. A small number were taken to hospital for treatment and were subsequently released.
The police are committed to bringing the criminals who carried out this violence in front of a court. The whole House will join me in condemning the minority who carried out these violent and criminal acts. There is no place for such behaviour in Britain’s democracy. I would also like to thank the police officers who were deployed to the scene and who helped to protect innocent bystanders. They acted with great courage, particularly those who were holding the line until reinforcements arrived.
Yesterday, during the violence, the Home Secretary was in contact with the Metropolitan Police Commissioner, Sir Paul Stephenson. The Home Secretary also spoke to the Mayor of London and I spoke to Kit Malthouse, the chair of the Metropolitan Police Authority, which has responsibility for the governance of policing in London. I would like to praise Sir Paul for his swift and candid response to yesterday’s events.
I spoke to Sir Paul this morning. He confirmed to me that the Metropolitan Police will also be undertaking an immediate and thorough review of their operational response to the incident. This will include an examination of why numbers and violence on this scale were not anticipated.
The police have to strike a balance between dealing promptly and robustly with violent and unlawful activity on the one hand and allowing the right to protest on the other. Clearly, in this case the balance was wrong, but these are difficult decisions and they are not taken lightly.
Let me finish by saying this. Yesterday did not go according to plan and the police will learn the lessons, but the blame and responsibility for yesterday’s appalling scenes of violence lie squarely and solely with those who carried them out. I commend this Statement to the House”.
That concludes the Statement. In the course of questions afterwards, my right honourable friend the Minister for Policing and Criminal Justice corrected himself. The Home Secretary did not in fact speak to the head of the Metropolitan Police yesterday. However, my right honourable friend did.
Lord Hunt of Kings Heath
My Lords, I am grateful to the noble Baroness for repeating the Statement and for the further clarification that she has just given regarding the Home Secretary.
I start by agreeing with the Minister’s right honourable friend, the Police Minister. The right to peaceful protest is a fundamental part of our democracy, supported on all sides of this House. Tens of thousands of students and lecturers came to London from across the country yesterday to exercise that right and to make their voices heard. However, the Police Minister is right to say, as the Prime Minister said last night, that the vandalism and violence that we saw yesterday were completely unacceptable. They were perpetrated by a small minority of thugs who hijacked what was planned to be a legitimate and peaceful demonstration and in so doing denied tens of thousands of students the right to have their voices properly heard.
The Metropolitan Police have told us that the National Union of Students worked closely and co-operatively with them before and during yesterday’s events, as it has done in the past. The president of the NUS rightly said yesterday that the actions of a small minority were despicable and designed to hijack a peaceful protest. We on this side of the House are clear that there is no excuse whatever for such criminal behaviour and that those responsible must be brought to justice. We note that 50 arrests have been made. It is the job of the police not only to tackle crime and protect the safety of all our communities but also to keep public order as they ensure that the law-abiding majority can exercise their democratic right to protest and make their voices heard. The police ensure that thousands of major events and demonstrations pass off peacefully each year, often in difficult and challenging circumstances. I am sure that all noble Lords will want to join me in commending the hundreds of individual officers involved in yesterday’s events, particularly the small number outside 30 Millbank and Millbank Tower early yesterday afternoon, for their bravery and dedication.
When things go wrong, it is vital that we ask questions, find out what happened and learn lessons for the future, so we welcome the urgent investigation that was ordered later yesterday afternoon by the commissioner of the Metropolitan Police and his straightforward and responsible admission that these events were “an embarrassment for London” and that there were lessons to be learnt. The Metropolitan Police have acknowledged that there was an operational failure and it seems sensible and appropriate in this instance that the investigation be conducted by the police themselves quickly and reported to the independent police authority.
I am sure that this investigation will look at a number of operational policing issues, including: whether sufficient officers were on duty to police what was expected to be a peaceful demonstration; why, when estimates of the size of the demonstration were revised up from 5,000 people to 15,000 and then 25,000, the Metropolitan Police made the judgment that this would be a peaceful demonstration; and whether there was any intelligence to suggest that violent actions were pre-planned. We also need to know whether sufficient back-up was available, how quickly it was able to be deployed and how operational decisions were made about which buildings and public spaces to protect.
However, wider questions were raised by yesterday’s events, which go beyond the direct operational responsibilities of the commissioner and the Metropolitan Police and which are rightly also matters for the Home Secretary and the Government. Given the failure of intelligence in this case, will the Home Secretary assess whether the gathering of intelligence by the police and security services was sufficient and sufficiently well co-ordinated? Will she discuss the procedures for assessing risk and intelligence in advance of protests of this kind to ensure that the full risks are understood in advance? Given that yesterday and on previous occasions mobile phones and social networking have been used during demonstrations to co-ordinate actions and build momentum at short notice, what work are she, the Home Secretary and her ministerial colleagues doing to support the police and others in responding to this new challenge and what wider public order issues does this raise?
Given that this was a demonstration against a controversial aspect of government policy and that police officers were deployed outside the party headquarters of the Conservatives and the Liberal Democrats, did the Home Secretary or her advisers have any advance discussions of possible risks with the Metropolitan Police and lead party officials? At what time was the Police Minister alerted to the risk of elements in the demonstration becoming violent? What plans does the Home Secretary have to update the House following the conclusion of the Metropolitan Police investigation and the wider investigations that are now taking place?
Yesterday’s events were at root the fault of no one but a small minority of violent demonstrators, whom we all roundly condemn. They are a timely reminder of how all of us are reliant on the police to maintain public order and ensure legitimate and peaceful protest. Is the Minister confident that the police will have the resources that they need in the coming years to deal with threats to our national security, to tackle organised crime, to ensure a safe and successful Olympic and Paralympic Games, to continue to provide visible neighbourhood policing in all our communities and to ensure public order at major events?
Baroness Neville-Jones
My Lords, I am extremely grateful to the noble Lord for his endorsement. I think that it is the shared sentiment of the House that we do not accept violence as an accompaniment to the right to demonstrate. He was correct to commend the officers who were involved in dealing with the violence in Millbank Tower. Of course it is right that the police will want to learn lessons; the head of the Metropolitan Police has made that clear and has himself said that there was an operational failure. I have no doubt that it betokens a serious and detailed investigation that he will want to take place and I am confident that we can expect that. Of course, he will be reporting to the Metropolitan Police Authority.
As for the questions that the noble Lord put to me, in the first instance it is clearly for the police to decide how it was that a failure of intelligence arose. They were clearly not aware of the faction that appears to have come to the scene. It will be for them to assess why that was the case. There is no reason to suppose that it was in any way a result of a failure of resources. If the head of the Metropolitan Police decides to come to talk to the Home Secretary about some of his findings, I have no doubt that my right honourable friend will wish to listen to him and see where, if anywhere, the Home Office can offer help. However, in the first instance, it is clearly for the Metropolitan Police to make these judgments.
On the noble Lord’s other points, I do not know whether there was advance discussion about Millbank Tower. It is clear from the dispositions of the police that they were aware of some of the sensitive buildings along the route. The Police Minister was certainly in touch with the Metropolitan Police during the demonstration, although I cannot give the noble Lord a precise time. As for the resources available, this is not a resource question; it is very clear that that was not the issue yesterday. I am confident that the measures that the Government have taken in relation to policing will not in any way impede an adequate response to all the various points that he mentioned in his list of issues, which undoubtedly we will need to take care of in future years.
Baroness Hamwee
My Lords, there will be criticism no doubt that the policing was too light on this occasion and there was criticism that the policing of the G20 demonstrations was too heavy. Does the Minister agree that it is important that the pendulum does not keep swinging and that we seek the right level of policing for such demonstrations?
Baroness Neville-Jones
My noble friend puts the point, which I am sure we all appreciate, that these decisions are difficult. Getting the balance right between protecting the legitimate right to peaceful protest and safeguarding the public against illegitimate activity—and certainly violence—is precisely the issue that the police face. She is also right to say that in the past the police have been criticised for being too heavy-handed, whereas this time there was clearly not quite enough resource immediately available. However, once the police had learnt the nature of the situation, they were pretty fast in bringing the right sort of people in protective gear to the scene. I am sure that this is the aspect that the head of the Metropolitan Police will be looking at with great care.
Lord Bilimoria
My Lords, yesterday I was rushing to get to the House for our weekly Cross-Bench Peers meeting at 2 pm, but I was stuck on the Embankment for an hour. I eventually made it to just below Big Ben, where a policeman kindly let me through after I showed my pass and I drove, very slowly and carefully, through the mass of protesters. In front of the House of Commons, I was then surrounded by demonstrators with placards, who started to get violent and then lay down in front of my car and refused to let me move. The police standing around immediately came to my rescue. Four of them removed the demonstrators and I was able to proceed. When I made it here into the House the doorkeeper, when he heard my story, said, “My Lord, either you are the bravest Peer in this House or out of your mind to drive through that”.
Only afterwards did I learn of the violence that had taken place, but when I was in that car I did not feel scared. I just thought to myself, “You’re not doing any favours to your cause. There is no place for violence”. There is every place for peaceful demonstration and I have every sympathy for the students who were demonstrating peacefully. I want to place on record my thanks—I request the Minister to convey them—to the police who saved me yesterday.
Baroness Neville-Jones
My Lords, I am sure that the police will be extremely grateful for what the noble Lord has just quite rightly said. I am sure that one of the points that the head of the Metropolitan Police will be looking at is the question of access to the House, which was not available to vehicles for rather more than two hours. I am sure that he will want to look at the whole question of how you combine the right to peaceful protest with continuing to enable Members of the House and, indeed, members of the public to gain access to the Palace of Westminster during protests. Perhaps I might say that the president of the NUS, to do him credit, has written to the head of the Metropolitan Police saying in formal terms that he is willing to co-operate with the police in their investigation, which shows a good sign of responsibility on the part of the NUS and its president.
Lord Dubs
My Lords, I join in praising the police for their efforts yesterday and in condemning those demonstrators who resorted to violence, thereby weakening their case. I am pleased that the Government have committed themselves to the right of peaceful protest, as we all do. However, I have one difficulty with what the Minister said: that it was not a matter of resources. If the police are using what intelligence they have to assess the likely amount of trouble that may be associated with a demo, the pressure on the police will be to have police officers in reserve and sitting in their vans in case trouble should develop. The difficulty for the police is that keeping those officers there is pretty expensive in overtime. I should like an assurance that the pressures on police finances, through the Government’s decisions, will not be allowed to affect the right and the ability of the police to have officers in reserve, should they seek to do so.
Baroness Neville-Jones
My Lords, I should perhaps have been more specific when I commented that it was not a matter of resources. It was not a matter of the availability of resources. This was not a case where the police were constrained from having the necessary resources available. I think that it was an operational decision that they were not necessary but, as regards the future, that is obviously going to be very important. I am sure that the police will wish to make sure that in the resources available to them are the resources necessary for policing this kind of demonstration.
Lord Brooke of Sutton Mandeville
My Lords, I first declare an interest as somebody who, perhaps surprisingly, was once elected deputy president of the National Union of Students. The Official Opposition spokesman raised the fact that the estimates of those who were going to attend rose steadily in the 48 hours before the protest. Do the police have a figure for those whom they believe to have been involved at the end of the day?
Baroness Neville-Jones
My Lords, I think I am right in saying that the figure is 40,000 involved. Certainly, there was a relatively late surge and the figures rose. I am sure that is precisely the point which the Metropolitan Police Commissioner, when he is investigating how they did their planning, will want to look at—including whether they had enough regard to possible, last-minute additional numbers joining the demonstration. Until we have had the results of that investigation, it is quite hard to go any further in examining the whys and wherefores or the lessons that we need to draw.
Lord Clinton-Davis
The Minister was quite right to underline the fact that most students conducted themselves in a seemly manner and that it was a minority who misbehaved, but will she also direct her attention to the way that the press—some of the press, not all of them—have depicted the view that a large section of the protesters encouraged riotous behaviour? It was unseemly of that section of the press to so behave.
Baroness Neville-Jones
Well, my Lords, we have a free press, do we not, and we may not always agree with either what they say or do. This is not quite so germane to the noble Lord’s question, but it turns out that the correction I made was erroneous. The Home Secretary did not speak to the mayor; I had said it was the Metropolitan Police Commissioner, so I apologise to the House. However, as is clear from the Statement, there was contact between the Government and the police. There has also, obviously, been extensive contact today as a basis for giving accurate information to the House.
Lord Brett
My Lords, yesterday when watching television I had a sense of déjà vu watching the disgraceful events in Millbank Tower. The déjà vu was: 1996 in Seattle with the World Trade Organisation, where I was one of the people inadvertently suffering from pepper gas and tear gas, because the police were seeking to protect the delegates but had the Seattle sound with a 30 mile an hour wind to put up with. The thing that was in common was watching people dressed entirely in black and wearing hard hats, smashing into Millbank Tower then encouraging young people to go in and themselves, noticeably, not necessarily going in but walking away. That is exactly what I saw when a Starbucks coffee house was burnt out in Seattle. The gentleman who threw the brazier in—he had lit a whole pile of rubbish—then walked away, taking off his black shirt and putting it underneath his other T-shirt.
It is therefore not necessarily just a question of students, because I suspect that some of the people have nothing to do with being students. I trust that the investigation will therefore look at that. More particularly, there was intelligence about Millbank Tower, where I used to work. It is a large building with lots of staff who must have been very terrified when that happened. If there was such intelligence, was the management of the building informed of the likelihood of such dangers?
Baroness Neville-Jones
The noble Lord makes some good observations about what went on. The Statement was rather careful in just referring to a “faction”, because at this stage we simply do not know exactly who was involved. He is quite right, and anyone who viewed television saw what he saw, that there was obviously preparation; you do not come along with a mask without the intention of doing something, or indeed with, I believe, a hammer. Clearly there was premeditation.
The noble Lord is also right to say that this must have been pretty frightening for those who were in the building. I would say that one of the first cares of the police when they arrived in that building was to secure the safety of those in it and, thereafter, to begin to eject the intruders.
I cannot answer the question about the information to the management. I would hope that because of the route, and given that the police were there, the management of the building had some forewarning.
Lord Marlesford
My Lords, I am sure we all agree that peaceful protest is a crucial element of democracy and that the right place to protest against Parliament is Parliament Square. Unfortunately, Parliament Square is barely available now to protesters. Because of the misuse of the whole green area over a long period, it has all had to be closed off, and now the pavement in front of that area is occupied by a permanent camp. Will my noble friend recognise that Parliament Square should be kept as an open space, available for protest, and that the way of achieving that is to say that there should be no permanent camps in the square? I suggest that at some stage in future—I do not know whether it needs legislation—all impedimenta is removed between midnight and 6 am. People can come and protest any time they like but, between midnight and 6 am, anything that has been left behind is removed by appropriate vehicles. That at least will mean that Parliament Square is then available for protest, which is such an important aspect of our liberty.
Baroness Neville-Jones
The noble Lord is right to say that we need to have Parliament Square available for protest. The House had a big discussion of this issue a few days ago and I repeat what I said then: we entirely agree that that is the case. At the moment the grass is being reseeded, which is why the square is not available. The Government intend to bring forward a first Session Bill not so much directed at in any way limiting or trying to curtail the right to organise a protest but to deal with those things that get in the way of and frustrate the right to peaceful protest, which will include encampments.
Lord Elystan-Morgan
My Lords, I commend to the Minister the wisdom of the late James Callaghan, whom I had the honour of serving in the Home Office some 40 years ago when there were some very robust protests, as she will remember. He used to say, “It is far better to have a surplus of officers on the scene rather than the other way round. The more officers you have, the less likely will be the need to resort to violence”.
Baroness Neville-Jones
I have no doubt that the head of the Metropolitan Police will heed those words. It is obviously not just the number of policemen that is important; it is how they manage the protest as well. It is clear, though, that one has less chance of being able to police it satisfactorily if the numbers are not adequate.
Lord Brooke of Alverthorpe
My Lords, the demonstrations yesterday were about tuition fees. Today we have the announcement about welfare reform. Next year we will start to see the consequences of the housing benefit changes being introduced and there will be a growing mood, as I am sure most people will agree, of dissatisfaction in many quarters. Do the Government have appropriate resources available, following on from my noble friend Lord Hunt’s question, for the appropriate intelligence research to be undertaken?
As a side issue, I draw attention to what happened in Newcastle when there was the debacle with Mr Moat. We saw that a substantial website was quickly established, with thousands of people signing up to it and supporting him, quite contrary to the view expressed on behalf of the public by the Prime Minister. We then saw a funeral that literally hundreds of people attended, contrary to what most people would have thought would happen. There is a distinct possibility, with the technology that is now available to us—we see this when surprise parties are called by teenagers and thousands of people descend on their home for a party—that in 2011 we will see a different mood entirely, with a different technology available that could lead to demonstrations of a nature that we have not previously experienced. Are we geared up for this when we face substantial cuts in the Home Office?
Baroness Neville-Jones
My Lords, as I said previously, I am confident that this is not a question of whether the numbers and resources are available for the acquisition of intelligence. The noble Lord makes a good point when he says that modern technology—mobile telephony, combined with the use of the internet—can produce situations that can change rapidly, as in the immediate run-up to a demonstration of this kind. That is clearly something that the police will need to take into account in how they use their intelligence resources with the help of other agencies, and how they plan for demonstrations. I am confident that the police have both the resources and the capability to do this.
Baroness Sharp of Guildford
My Lords, were any police resources outside those of the Metropolitan Police used to help to police this demonstration?
Baroness Neville-Jones
I am afraid I do not know the answer to that question. I will have to write to the noble Baroness. Clearly, students came from some distance so it would be logical for there to have been contact, but I do not specifically know.
Diplomacy
(14 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Hannay of Chiswick
To call attention to the case for Britain to have a properly resourced and active diplomacy; and to move for papers.
Lord Hannay of Chiswick
My Lords, the timing of this debate on the case for Britain to have an active and well resourced diplomacy is fortunate, not just fortuitous. If we had been holding this debate in advance of the comprehensive spending review, it could easily have been dismissed as a piece of special pleading on behalf of one of many government departments about to face deep cuts—all the more so since I have to declare an interest as a former member of the Diplomatic Service. But now that the comprehensive spending review is out on the table, the opportunity is there to focus not on the overall quantum but on how best to put it to good and effective use in the national interest—how to ensure that doing more with less is not just one of those meaningless and infuriating mantras but is a reality.
It was well over a century ago that Lord Salisbury gave his often repeated prescription for British foreign policy—that it should be like floating down a river, fending off the bank from time to time. In fact, this classical description of a passive, purely reactive foreign policy was out of date even when it was coined. As the country found at the time of the Boer War, it could well lead to splendid, or rather not so splendid, isolation; and that discovery led to a hasty scramble to acquire allies in the failed attempt to stabilise Europe, which culminated in two world wars. Out of date then, any such prescription is a great deal more out of date now.
The hard fact is that a country that is a global superpower, as Britain was then, needs an active diplomacy less than a middle-ranking power with worldwide interests, such as we are now. Everyone beats a path to the door of a superpower, which can take its time in responding because it is so indispensable. But a middle-ranking power has to work actively to further and protect its interests if they are not to go by default, and it needs to have strong alliances and networks in good working order for when they are needed. That is a lesson which was very clearly drawn in the recent national security strategy and in the defence and security review.
Such networks and allies do not simply drop effortlessly into our lap; nor can their policies be shaped to fit our as well as others’ interests without ceaseless diplomatic work. Add to this the fact that multilateral diplomacy, which now makes up so much of the foreign policy mix, is a labour-intensive industry necessitating work not just where a particular organisation is headquartered but in the capitals of each of the members of that organisation, and you have a lot on your hands. It was considerations such as those which led the Callaghan Government, some 30 years ago in the midst of an earlier period of cuts and austerity, to reject the view of the Berrill report that Britain could no longer afford what was charmingly described as the luxury of a first-class diplomatic service. Those considerations are even more compelling today than they were then.
If we are successfully to do more with less then we will have to increase the coherence of the foreign policy instruments at our disposal and the way they are deployed. We will need to marry our hard power—now considerably diminished—to our soft power and ensure, as we have not always done in the recent past, that together they are up to the demands we are putting on them. We will need to break down the stovepipes in which policy is formulated at home and executed abroad—security, diplomacy, development, energy, climate change and so on. We must also ensure that the practitioners—the diplomats, the military and the development aid experts—understand each other’s work much better and gain experience of each other’s work and how to work together and not in competition with each other.
We will need, too, to make the best possible use of the new European External Action Service, which is gradually taking shape in Brussels and around the world. To treat it as, at best, a tiresome and duplicative nonsense and, at worst, a competitor would be to miss a golden opportunity. We surely need to be thinking imaginatively about what the European External Action Service can do collectively for us and for the rest of the EU and what we should therefore no longer be trying to do individually ourselves. We need to second good people to the EEAS and support its efforts to reduce turf fighting between the European institutions, to achieve greater policy coherence among the EU’s external policies, to increase its own professionalism and to extend its outreach so that less time and effort are spent on cobbling together tortuous internal European compromises, and more time is spent on persuading third countries of the value of the EU’s policies and on public diplomacy.
Let me turn to the issue of resources, without which all that I have said previously in general terms could just remain empty words. Here are a few suggestions. First, I hope that we will avoid falling into the false dichotomy of thinking that there is a choice to be made between bilateral and multilateral diplomacy. One does occasionally hear echoes of that sort of approach in ministerial statements and briefing. But this is surely not an either/or matter but, rather, one of both/and. The two forms of diplomacy are now inextricably linked and need to be mutually supporting if we are to further our interests successfully.
Secondly, on the exchange rate risk to British diplomacy’s overseas expenditure—that is, most of it—I do not wish to delve too deeply into the background to the decision a few years ago to remove the existing policy of compensating losses as a result of exchange rate fluctuations. It reflects credit on neither the Treasury, which imposed it, nor the Foreign and Commonwealth Office, which accepted it. The result when sterling dropped sharply in 2008 was a double whammy for the Foreign and Commonwealth Office of external and internal cuts. Can the Minister tell the House that this will not happen again?
Thirdly, I hope the temptation to save by closing more diplomatic posts will be resisted. Multiple accreditation—having a mission in another country that serves the country in which you have closed down on a very random basis, visiting once or twice a year—is not a viable alternative to a presence, however small, on the spot. I still remember the helplessness I felt as ambassador at the UN when we had no post in Kigali when the Rwandan genocide broke, no post in Kabul in the years after the Soviet withdrawal and no post in Mogadishu through the UN’s troubled experience there. If very small posts have to operate somewhat differently from larger ones, and we have to accept that we can get fewer services from them, I would say “So be it”. We will just have to get used to that, but let us avoid ending up with a diplomatic cloak full of holes. I hope the Minister can say something on that aspect too.
Fourthly, my view is that the decision to shift the funding of the BBC World Service from the Foreign Office budget to that of the BBC should be a plus, at least in presentational terms. I have to admit that I never managed to persuade a single foreign interlocutor of the BBC World Service’s total editorial independence every time I had to admit that it was in fact being financed from the Foreign Office budget. That should be easier to achieve now. But how are we to be sure, under the new arrangements, that the World Service is not being bled to meet the BBC’s domestic demands? How, too, is the World Service’s coverage and editorial autonomy to be protected from interference by the BBC’s management, as it was from interference by the Foreign and Commonwealth Office? I wonder whether the Minister could give us a bit more detail on this; not very much has been said so far about this really important aspect of our foreign policy and our soft power. Could he also say something about that other crucial part of Britain’s projection of soft power, the British Council?
Of course, the resources that really matter in diplomacy are the Diplomatic Service’s human resources. I have the impression that in recent years those resources and their morale have been under considerable stress. Recent losses through early retirement, while perhaps unavoidable, have resulted in the departure of many top-class diplomats whom Britain could hardly afford to do without. I am, however, struck when travelling abroad by how well the morale and quality of our diplomats is holding up. But it is surely time that a bit more effort was put into reducing the stresses on them. We often speak, quite rightly, in this House about our admiration for Britain’s Armed Forces; not so often about our admiration for our diplomats, who also run very considerable risks. We should not forget what the Duke of Wellington said when asked, towards the end of his life, what he would have done differently. He replied, “I should have given more praise”.
I hope I have managed, in opening this debate, to set out a compelling case for Britain having an active and well resourced diplomacy. If we are successfully to meet the challenges of the increasingly multi-polar world in which we now live, that is what we will need. If we are to work effectively for an increasingly rules-based world, which I believe it is in our interests to achieve, that, too, is what we will need.
I conclude with a perhaps slightly eccentric plea for less frequent use of the phrase, “Britain punches above its weight”. I admit that I may have been partly responsible for its entry into our diplomatic lexicon but it tends to play to a strain of post-imperial nostalgia which I believe we must now leave behind us. Like courage, it is surely one of those characteristics which are better noted by others and not bestowed on ourselves. I beg to move.
Lord Bates
My Lords, it is a privilege to speak in this debate. I congratulate the noble Lord, Lord Hannay, on securing it and on the way in which he has introduced it. He has certainly made the case for an active and well resourced diplomacy.
Had the great minds who organise the sequence of speakers known something of the content of the contributions, mine would probably have come a little further down the list as it is more esoteric in nature and focuses particularly on an instrument called the Olympic Truce. The noble Lord, Lord Hannay, will be familiar with the subject as we had a debate on it in this House on 11 October. I want to place it in the context of public diplomacy and the comments about soft power.
In a speech in the Foreign Office on 1 July setting out the new direction of foreign policy under the coalition Government, my right honourable friend the Foreign Secretary said that the coalition Government’s goal was to,
“deliver a distinctive British foreign policy that extends our global reach and influence”.
That is absolutely right. Influence matters in the modern world, as the ability for nation states to act alone is severely constrained in the modern era—and many of us would say rightly so. Modern diplomacy, like politics, is now the art of persuasion, and as in any exercise in persuasion, reputation is vital, hence the unarguable importance to the Foreign and Commonwealth Office and to British diplomacy of the BBC World Service, the British Council, the Chevening and Marshall scholarships and Wilton Park. They set the mood music around which the negotiations, discussions and diplomacy are conducted.
There has been some discussion about whether it was right to separate DfID from the Foreign and Commonwealth Office, as the valued work that DfID does around the world is phenomenal. I am immensely proud to be a member of the coalition Government who will increase overseas aid to the 0.7 per cent figure to which we have aspired for so long. We should be very proud of that.
The Olympic Games are referred to on the Foreign and Commonwealth Office website under the heading “Public diplomacy”. It states that it is:
“A once in a generation opportunity”,
and that:
“As 2012 approaches, the London Olympic Games will focus the world’s attention on Britain. The Games offer unique stimulus to invite people from around the globe to re-examine their views about the UK.
The FCO and our Public Diplomacy Partners view this as a remarkable opportunity to demonstrate the open, connected, dynamic and creative country that is Britain today”.
Nobody would argue with that. It is absolutely right that the eyes of the world are on London. The success that the Olympic Games are having is amazing. The stadium will be finished a year in advance. The velodrome, one of the largest facilities, will be opened in a few months. When the Chinese were doing that sort of thing for the Beijing Games, we all stood in awe; when the British do it, somehow we do not take the same pride, but it is a tremendous tribute to the reputations of the people who have worked on the Games and the leadership of the noble Lord, Lord Coe.
The Olympic Truce is a convention stretching from the original Games which says that, during the period of the Games themselves, the member states will,
“take the initiative to abide by the Truce, individually and collectively, and … pursue … the peaceful settlement of all international conflicts”.
That truce is moved in the United Nations General Assembly by the host nation, so it will be moved by the Government at the 65th session of the United Nations, next year. Her Majesty’s Government, like any previous Government in this country, have no intention whatsoever to take any initiative for peace or reconciliation during the Games at all. For not doing so, Britain will not be regarded as a pariah state because none of the other 191 countries that signs up to the Olympic Truce at the UN General Assembly, saying that they will pursue initiatives for peace and reconciliation during the Games, will do anything either.
I am trying to make the case for this being a great opportunity for British diplomacy. It can show us at our best. It is a once-in-a-generation opportunity to do something worth while. The United Nations truce will be the only element of the Olympic Games that falls directly within the bailiwick of the Foreign and Commonwealth Office. It is therefore astounding that there is no mention of it on the website. Yesterday, the Foreign and Commonwealth Select Committee in the other place had a hearing on public diplomacy at the London 2012 Games. During that, Jeremy Browne, the Minister, gave evidence for an hour but did not mention the truce once. In advance of that meeting, there was a 50-point statement as to what the Foreign Office would do on public diplomacy surrounding the Olympic Games, but it made no mention of the Olympic Truce.
I urge my noble friend to consider the Olympic Truce and give it its right place so that it can be an important element of how Britain is seen around the world, and in promoting good around the world.
Lord Anderson of Swansea
My Lords, I have just excised from my speech the phrase “punching above our weight”.
Britain's Diplomatic Service is a centre of excellence admired worldwide and the noble Lord, Lord Hannay, is an outstanding example of the service at its best. I have had close contact with the FCO since 1960, when I entered as a third secretary. Traditionally, the service has been able to take a major share of the available pool of talent and, from my experience even over recent years, I am convinced that it still attracts high-quality personnel. The question, therefore, is whether that will continue as the CSR cuts bite. What will be the effects on recruitment and morale?
There are some welcome features in the CSR, such as the new foreign currency mechanism that will increase stability, but the settlement overall will have a disproportionate and negative effect on the service, with 25 per cent in cuts over four years. By 2014, the FCO budget will be £1.3 billion, which is only just above the UK's contribution to the European External Action Service. By then, DfID will have £11.56 billion—nine times as much as the FCO. DfID officials will not easily substitute for FCO officials.
Of course, traditional diplomacy has its faults. The “déformation professionelle” results in excessive caution and a yearning for the quiet life, but officials are immensely competent and loyal to the Government of the day, even when they feel under fire from that Government. For example, it was claimed that the noble Baroness, Lady Thatcher, in the 1980s said that the Ministry of Agriculture represented farmers and the FCO represented foreigners. Echoes of this arise in the talk of a cull of faceless bureaucrats in London. Is it right that over four years there will be a reduction of 10 per cent in the number of diplomats overseas? How many compulsory redundancies are planned for? Given the number of redundancy payments, how long will it be before the savings actually begin? Will the payment of school fees for diplomats’ children continue after the redundancy of their parents?
Even within the reduced total, the traditional diplomatic role will be reduced. That is, a larger share of the reduced budget will reflect changes in our society and mobility worldwide, such as the increase in consular and visa work. Will the Minister give an assurance that personnel, building security and counterterrorism will not suffer, and that language training will not be reduced? Our hard language ability is much admired and, of course, costly. I am sceptical about the claims of a revolution based on the new emphasis on trade promotion. For many years, the path to promotion has lain through expertise in trade. Trade envoys—yes, but ambassadors from the business community—no. Apart from the reduction in salary, the job is very different.
How do we mitigate the effects? I have time to give only some headlines. On the selling of the FCO estate, much has already been done, for instance, in the Lisbon and Vienna residencies. Is there a threat even to the Paris residence? As the noble Lord, Lord Jay, will evidence, it is much used for trade promotion. More locally engaged staff can have only a limited effect because there is clearly a ceiling for their promotion. If there are more jobs in London and development of the hub concept, we may lose the value of personal contacts cultivated over time and the facilitation of networks and alliances. As for co-location and overlapping subject areas with DfID, there is some scope in the fields of governance and conflict prevention.
On greater co-operation with allies, now that there is new Franco-British co-operation in defence, why not in foreign affairs? There are potential benefits in premises and personnel, particularly in west Africa. Co-operation with the European External Action Service includes the co-location of embassies and delegations and long-term personnel secondment. It is an interesting paradox that, by these cuts, a Conservative-led Government will lead to the posts in the European External Action Service, with its budget of £8 billion, having greater weight than our own diplomatic personnel.
Clearly, the role of diplomacy is misunderstood and undervalued. If we want a still substantial global role, we will have to pay for it. Development aid cannot be effective if there are problems of governance, as we have seen in Somalia. It is odd that a Conservative-led coalition is reducing our strategic strengths and promoting a “littler England”. Is this our “east of Suez moment” in foreign affairs?
Finally, the Independent of 8 July stated that after the FCO leadership conference, which was attended by more than 200 ambassadors and high commissioners, the Prime Minister addressed business leaders at Downing Street. The newspaper said:
“Mr Cameron laughed: ‘We made them all travel economy class, wherever they came from, I'm pleased to say’. The assembled audience laughed”.
Is the aim, or at least the effect, of these cuts to reduce a first-class service to an economy-class service?
Baroness Falkner of Margravine
My Lords, I, too, thank the noble Lord, Lord Hannay of Chiswick, for initiating this debate. It is now nearly 50 years since Dean Acheson said that Britain had lost an empire but had not yet found a role. In many ways, this is still true today. We continue to have tremendous reach. Senior membership of the United Nations Security Council, the EU, NATO, the Commonwealth and a host of other multilateral institutions are all admirable roles. However, alongside our desire to sit at the top table, there seems to be a lack of vision about how this middle-sized country on the edge of Europe can project its capabilities in a fashion commensurate with its ambitions.
The record of the recent past is poor in vision. Mr Blair's Chicago speech of 1998 on liberal interventionism seems as anachronistic as Britain's rhetoric at the time of Suez. Through our use of force, we have lurched from the positive power projection of the 1990s to international criticism and domestic cleavage. I say to the noble Lord, Lord Anderson, that if we have a “little England”, it is partly due to his Government's extravagances rather than to anything that was planned or preordained. This Government have moved with admirable speed to come to grips with what a national security strategy should look like. However, a security strategy inevitably does not cover the central question of how the Diplomatic Service should serve our national interest.
Despite the Foreign Secretary's excellent speeches in recent months, we are not yet clear about the shape and form of our Diplomatic Service in this period of austerity. While financial savings can and must be found, they will be least damaging if we have a clearer sense of our priorities. Building Britain's prosperity and safeguarding her security are not always compatible or obtainable in equal measure. The two require very different skill sets and capabilities in policy and diplomacy. The balance between them becomes ever more important in a democracy in which every citizen, through the internet and news media, becomes a freestanding and engaged foreign policy expert. On the high street, the exigencies of national interest are not always understood or supported. A recent YouGov poll, in advance of the Prime Minister's visit to China, showed that nearly 64 per cent of people were less concerned about our security, trade and economic interests there than in the plight of Tibet.
The national security strategy highlights how we find ourselves in a world that is more uncertain than it has ever been. Globalisation is in a “long crisis”, according to a recent Chatham House paper. This extended period of volatility, where demographic, economic and security challenges extend across the globe and where nationalism and interdependence are rising together, opens up a fresh set of challenges. Our values and outward-looking posture mean that we are better suited than most to confront these new trends, yet the comprehensive spending review has left our foreign policy capabilities rather weaker. In these circumstances, perhaps we need to define our power and those capabilities rather more narrowly than our ambitions would suggest.
Alongside the national security strategy, we need a more pragmatic view of our foreign policy priorities. Principal among these must be a realistic assessment of our global reach. I suggest that it should be somewhat more limited than the fully adaptive posture that the strategic defence and security review suggests. In these austere yet unpredictable times, we may well have to make a case for defining our international mission more accurately as managing global risks on behalf of British citizens. In practical terms, this should result in our lending more support to the EU's External Action Service than we have given to date to allow it to do more representational work for us while our own independent presence is reduced.
While there may be some specific differences in foreign policy among our EU partners, overall our values and priorities are surely more aligned than divergent, and we should consider how we might use the External Action Service as an opportunity rather than view it as an inconvenience. The vision of our strategic reach must nevertheless not be constrained merely to our commercial or national security imperatives. DfID’s budget and objectives should rightly be more closely aligned with our Foreign and Commonwealth Office-led interests, and indeed with the MoD’s capabilities, particularly in conflict-afflicted states, and I welcome the direction of travel in that regard.
The projection of our soft power is the reason why we are still well regarded in the world. Our language is spoken across the Commonwealth and beyond, our universities are worldwide centres of excellence, and the BBC and the British Council are almost as important for projecting influence as our military is for projecting power. Although the CSR has been “creative” in spreading the costs of these institutions across other bodies, they have all undoubtedly been rendered more vulnerable with the cuts. The danger is that years of success will be lost over a short period, with a cost to the nation over the longer term.
Therefore, we now find ourselves with these substantial reductions in budgets, which necessarily will have been arrived at without forethought. What is now needed is a hard-headed judgment of what we can achieve and, where these goals are more limited than those we have aspired to in the past, we need to set out and prepare for them in a more considered and coherent manner. That should be the basis of an active diplomacy that has risen to the new challenges, and I hope the Minister will be able to give us an indication of how he intends to achieve that.
Baroness Afshar
My Lords, I thank my noble friend Lord Hannay for placing this debate on the agenda. I have to declare an interest because I shall be speaking about Iran. I was born and raised in Iran and I worked there as a journalist. However, what I really remember from my past is the extraordinary influence that Britain had on Iranian politics during my childhood—so much so that I remember whenever anything happened to the soup, our cook would immediately say, “Poltiqueh inglissas”. It took me a while to understand that she meant, “It’s because of the politics of the English”. It seemed to have an influence right across our lives.
I suggest that the BBC in particular retains the kind of punch that it has had for a long time. In Iran at the moment, with many of our journalists languishing in prison, it is regarded as one of the most reliable sources of information there. I can tell your Lordships that the BBC has been listened to and watched by Iranians for ever. I remember, as a young student, giving an interview to the BBC and inadvertently admitting that I was helping behind the scenes of the local pantomime. I was suddenly hit by an avalanche of calls and letters from irate aunts and uncles telling me how I should not be mixing with thespians. They had all heard the programme, in which I had thought I was just having a chat in an interview.
I find that appearing on BBC television has exactly the same impact. Iranians watch it. The Iranian Vice-President is on record as admitting that he does not like BBC Persian Television, although he has watched it during a Cabinet meeting. Therefore, it seems to me that Britain is punching above its weight in the case of Iran. That is not surprising, particularly as BBC Persian Television is run by people who have been largely recruited in Iran, including many young journalists who have found the situation there impossible. Therefore, not only to avoid imprisonment but also to have a voice, they have come to work for the BBC, and I assure your Lordships that their voice is being heard loud and clear in Iran. It seems to me that, in response, the Iranians provide the BBC with an enormous amount of information.
Interactive connections exist with the BBC, and I understand that at some point eight videos per minute were sent to the BBC during times of crisis in Iran, when no one in Iran could broadcast them but the BBC could. It became a source of information for many news agencies around the world. That interactivity is feared by the Iranian Government but respected by Iranians, because they do not see the BBC as the voice of the British Government. Often, the BBC reports the unheard voices of Iranians, and many of us rely on the BBC reports because our e-mails are checked and we do not get phone calls that are not controlled. Therefore, it is crucial that the BBC retains its ability to broadcast to Iran. We know that the Government fear it by the number of jammings of BBC programmes that have occurred again and again.
Given this important impact, given that Britain needs all the friends it can possibly get in the Middle East in general and in Iran in particular, and given that the nuclear debate has been very counterproductive in its impact on the popular mind in Iran, the BBC—radio, bbcworldnews.com and television—is the most effective informal channel not only to influence Iranians but to convey Iranian views abroad. It is therefore a matter of great regret that, as I understand it, the Foreign Office has taken a 10 per cent cut in its budget but the BBC World Service is about to take a 16 per cent cut. Does the Minister consider that there is any room for reconsideration?
Lord Monks
My Lords, it is a pleasure to follow the noble Lord, Lord Hannay, in a debate on diplomatic questions because of his immense knowledge and experience of world diplomacy. I lay claim to some experience, if not expertise, in that field; I currently work in Brussels for the European TUC as general secretary. The UK diplomatic representation, inelegantly called UKRep, is generally admired as the classiest operation, the top team, around the town—even by the French.
I do not always agree with what UKRep does on behalf of Her Majesty's Government. It has blocked progress on some important social issues dear to my heart, such as insisting on maintaining the working time opt-out. Why is it that UK workers can be pressed to work what are on average the longest hours in the European Union? On posted migrant workers—the category of migrants who are brought with an employer to fulfil a contract—why do only the minimum rates need apply in the UK, not the rate for the job? They often undercut British workers, and then people are surprised when there is some anti-migrant feeling.
Why do successive UK Governments continue to oppose a social clause in the single market and downplay the need for the single market to have a social dimension? Without such a dimension, hostility is likely to grow against free trade and the single market. That will encourage the protectionism that we saw in last week's American elections.
These are questions on which I battle weekly with the UK representation. Ruefully, I have to subscribe to the chorus of admiration for the skilful way in which it plays its cards. It is a powerful agent for UK government policy, and diplomacy is truly an area of British excellence.
I am conscious that I am very privileged to join this House. I hope to bring some insights, especially into economic and employment policy and European affairs. Eighteen years, first as general secretary of the TUC—it is good to see a quintet at least of former members of the General Council of the TUC, including the trio in front of me—and another eight years after that as general secretary of the European TUC, have strengthened a deep commitment to trade unionism as a force for good in our society. I hope that the economic crisis that we have at the moment will be rather like the 1930s in one respect in that people in difficulties will turn again to the union movement in democracies and that it will take its full and proper place in the national life of the country, not just as the awkward squad but as a real force for constructive engagement, especially on promoting greater equality, skills, productivity and, critically, higher standards of performance and governance in many of our companies.
I was addressing a City audience not long ago and making the case for more long-termist perspectives from investors and entrepreneurs. One financial executive smirked and said, “I have some long-term investments; they were short-term investments, but they have gone wrong, and I can’t sell them”. Short-termism is a British problem. It is a major reason why so many of our private sector companies, not just Manchester United and Liverpool, are carrying so much debt, why our manufacturing sector has shrunk to worrying levels and why foreign companies are able to pick up household names at bargain prices.
I certainly do not knock foreign companies generally. Some are exemplary long-term players, and they show up the weaknesses in too many of our own firms, but we need more home-grown companies that can hold their own in the world and do not sell out at the first whiff of a big cheque for shareholders and top executives. How company boards run themselves, which interests are included on the board, whether shareholder value should be the sole goal of companies, how to organise takeovers, and, if necessary, block them, and what to do about the often excessive levels of boardroom pay that risk directors being regarded, in Richard Lambert's memorable phrase, as “aliens”, and in my words as the Bourbons of our age, are all questions that are ripe for powerful scrutiny and new thinking. I am watching carefully the right honourable Vincent Cable, who has expressed himself strongly on these issues, to see whether he will maintain his interest and not get swamped by urgent, but not more important, questions.
Today is Armistice Day, and we remember all those who made and make the ultimate sacrifice for the country. The European Union was born out of the wreckage of the Second World War and has been a major part of ensuring that any repeat now seems a remote prospect. That is a huge achievement in a continent scarred by too many bloody battlefields and haunting cemeteries. Britain's place is in Europe, not just for reasons of the past, but for the future too, as new, major, formidable economies emerge to take a prominent place in the world. It is not just aircraft carriers that will need sharing in our corner of this world if European influence is to be sustained. Indeed, as the noble Lord, Lord Hannay, said, the European External Action Service, under the capable leadership of the distinguished former Leader of this House, the noble Baroness, Lady Ashton, is recognition that diplomatic efforts can usefully be shared in many parts of the world. I am sure that British diplomats will flourish on this particular European stage.
I finish by thanking noble Lords, the Clerks and, indeed, all the staff of the House for the friendly welcome that has been extended to me from all sides. I am very much looking forward to making my contribution to the work of the House.
The Lord Bishop of London
It is a great privilege to follow the maiden speech of the noble Lord, Lord Monks, on which I congratulate him. I also congratulate him on his—in the American phrase—non-remunerated endorsement of UKRep and its excellence in Brussels. As he reminded us, he speaks with a lifetime’s experience of industrial relations in this country and throughout Europe, not least in his service with ACAS, so he speaks about diplomacy as a practitioner. Offering the possibility of reflecting on the Stürm und Drang of professional life in the relative tranquillity of the British senate is one of the ways in which your Lordships’ House plays a unique and valuable role in our constitution. The speech of the noble Lord, Lord Monks, was a notable contribution to this tradition and I know that the whole House hopes that his voice will be more frequently heard in the future.
I am grateful to the noble Lord, Lord Hannay, for introducing this debate and for doing so in a way that acknowledged the alliance between the traditional actors in diplomacy and others who represent a multitrack approach. The dissolution of the Soviet Union brought to a close the period in which a single international conflict dominated the international system. Instead, we have seen intra-state rather than inter-state conflicts, ethnic conflicts, secessions and struggles often, alas, fortified by religious rhetoric and symbols become the norm. As we speak, the turbulence and the suffering in Iraq continue, not least on the part of the ancient Christian community, which has suffered grievously in recent days.
During the Cold War, international relations were largely the preserve of the professionals, the diplomats and the politicians. I think that we should pay tribute to a number of pioneers in the US and Europe who saw the potential of applying approaches that were being developed in the setting of industrial relations. These have played an enormously important part in the development of a multitrack approach and in community mediation work through their application to conflict in general, including civil and international conflict.
At this point the question arises as to whether, in addition to being part of the problem, the faith communities may have a contribution to make in the field of conflict prevention. It is a question that has aroused some academic interest in the Anglo-American world ever since the publication, well before 9/11, of Professor Samuel Huntingdon’s book The Clash of Civilizations and the Remaking of World Order. It is evident that many of the violent conflicts in the modern world are rooted in threats to identity. Religion in many parts of the world is crucial to social cohesion and is therefore likely to be co-opted in any struggle that centres on identity. Folk wisdom easily understands how the highest ideals are bent to the most malign purposes. Jonathan Swift, that Irish dean and the author of Gulliver’s Travels, lamented:
“We have just enough religion to make us hate, but not enough to make us love one another”.
However, are there positive resources within the traditions and institutions of the world’s faith communities capable of making a contribution to conflict prevention and peacemaking? Is it possible that, as the title of an influential book from the Washington-based Center for Strategic and International Studies suggests, religion is a missing dimension of statecraft? It seems obvious now that US monitoring of Iranian politics ought always to have included the religious dimension, but a report from CSIS reveals:
“The one recorded attempt to do just that within the CIA, before the revolution, was vetoed on the grounds that it would amount to mere sociology, a term apparently used in intelligence circles to mean the time-wasting study of factors deemed politically irrelevant”.
No one, so far as I am aware, is calling for the call-up of platoons of clerics and mullahs to shuttle between capitals like ersatz diplomats, but we must try to be practical.
Here I must declare an interest as the founder and current chairman of St Ethelburga’s Centre for Reconciliation and Peace. St Ethelburga’s is a little church that survived the great fire of 1666 and the blitz but not the effects of an IRA bomb in 1993. That bomb, from a conflict that has a religious dimension, made us determined, encouraged by the late Cardinal Hume, to rebuild the church as a centre for reconciliation and peace. Over the past two years, 20,000 people have participated in our programmes.
I make a plea that, as we enter the dangerous second decade of the 21st century, where even the editor of the Economist has written a book suggesting that God is back, we should look to develop our active and well resourced diplomacy by making deeper alliances with the new resources for conflict prevention that the faith communities, not only the Christian ones, have developed.
Lord Lea of Crondall
My Lords, I welcome the debate introduced by my friend—if I may call him that, as he is my friend—the noble Lord, Lord Hannay. I was in the UKREP office referred to by the noble Lord, Lord Monks, on the very day that David Hannay’s name was in the papers—I think it was the Daily Mail—as being appointed a people’s peer. The people in UKREP said that they had not heard anything so funny in their lives.
I add my thanks to the right reverend Prelate the Bishop of London, about whose diplomatic experience, in the broadest sense of the word, we have just heard. I have witnessed the remarkable outreach job that he does in the St Paul’s area and in London generally—a job that the Anglican community does in many countries around the world.
My noble friend Lord Monks—John Monks—is the fifth former general secretary of the Trade Union Congress to come to this House. He joins an illustrious list: Walter Citrine, who had an historic reputation in the trade union movement, including for his short book, The ABC of Chairmanship, which is used from the Pacific Islands to the Falkland Islands; Vincent Tewson, who followed Lord Citrine; and Victor Feather—George Woodcock must have declined the invitation, but I do not know that for a fact—who took the TUC through the difficult years of 1969 to 1973, from the proposals of Donovan and In Place of Strife to Ted Heath and all of that.
John’s only fault is that he is too fond of irony. At a meeting with Mrs Thatcher in 1980 on the issue of red tape—too much regulation on small firms and so on—John asked, tongue in cheek, “So why not exclude small firms from the 30 miles an hour speed limit?”, at which point Mrs Thatcher turned to a civil servant and said “Take a note of that”. The white van man has certainly taken a note of it.
There is another similarity between working for the TUC and the Diplomatic Service. I was reminded of this only yesterday when the noble Lord, Lord Hannay, chaired a meeting with senior American diplomats on Afghanistan through the All-Party Group on Multilateral Nuclear Disarmament and Non-Proliferation, of which I am the secretary. One of them remarked that it might be useful to distinguish process from outcomes. I recognised that distinction and noted that trade union officials do that every day of the week. Before John mentioned the trio—now the duo—sitting in front here, I thought that perhaps the TUC should do some job swaps with the Foreign Office, but I think that they are probably already doing it.
I have given the Minister—whom I admire without always agreeing with him—notice of this question: what is the headcount of the FCO and DfID at the present time, both in Britain and overseas? In the latter case, there is also the separate category of locally employed staff. We need to be able to track where, when and how this transition takes place, with the position before the cuts being the benchmark or starting line.
I know from experience that, if there are missions from five, six, seven or eight different European countries in a small African or South American country giving different advice about auditing, project finance or whatever, the messages from London, Berlin, Paris and Stockholm and so on are different, no matter that they get together once a week. Reality stands all this talk about defending the national interest on its head, because small countries often have only one man and a dog to listen to all the conflicting advice. That can be counterproductive and give a totally wrong impression. I have seen countries in many parts of the world waste the time of a very small number of competent people.
Someone should, therefore, challenge the doctrine of keeping all the UK missions quite separate. As we have very distinguished diplomats, we should—here I follow the message of the noble Lord, Lord Hannay—be on the front foot in the European External Action Service.
Coming to my final sentence, I have some sympathy with the argument about the cuts—
Lord Lea of Crondall
But that is an economic argument that goes wider than this debate.
Lord Patel of Blackburn
I thank the noble Lord, Lord Hannay, for introducing and securing this debate. I, too, congratulate the noble Lord, Lord Monks, on his excellent speech.
The work of the FCO is fundamental to the work of this Government. I consider it an honour to have worked with the FCO on a number of projects and programmes. The work ultimately involved promoting British interests abroad.
We as a nation have much more to work towards in dealing with conflict in too many parts of the world, so the FCO will be key to ensuring a safe, prosperous and strong Britain. The FCO's consular services have an enviable reputation across the world as being among the best. Their support, advice and guidance are second to none and are essential if we bear in mind the huge number of Britons who travel abroad. During a time of hardship, the FCO is also essential in bringing in inward investment and exporting our goods and services.
I have been privileged to have been asked to lead FCO delegations to Egypt, Malaysia, Indonesia, Sudan, Pakistan and Bangladesh among others. The work of those delegations was to engage in dialogue and to highlight what Britain has to offer—its diversity and equality of opportunity being two key themes.
In 1999, the UK was the first non-Muslim country to send a delegation to Saudi Arabia for the hajj pilgrimage to cater for the approximately 25,000 British pilgrims who attend over a two-to-four week period. Since 2001, I have led this delegation. The work involves providing consular, medical and support services to British pilgrims. The cost of the delegation is almost insignificant when compared to, let us say, a state dinner.
An FCO-commissioned independent evaluation published in 2006 clearly demonstrates that, for the cost of £120,000, the benefit to the UK of that delegation is estimated at more than £1.6 million. The benefits that the report identified were in four key areas: economic productivity lost as a result of illness back in the UK; reducing NHS hospital consultations in the UK; reducing in-patient readmissions in the UK; and reducing GP consultations in the UK.
I am sure that noble Lords would all agree that saving one life is valuable enough. Over the past 10 years, the delegation has saved thousands of lives. For example, a female British pilgrim was going into a coma at 2 am when a doctor from the delegation went to her tent. He was able to stabilise her while Saudi authorities responded. She would otherwise have died.
This year, without any formal consultation, the delegation has been cut. That is in spite of the fact that the delegation saves the UK money and works because of volunteer doctors. It is a true example of the big society, in which individuals give up their time to help others and ultimately the state. As stated, more than £1.6 million a year is saved. Given the monumental scope of last month’s comprehensive spending review, the cut is just not logical.
Despite the reasons presented by the FCO and the noble Baroness, Lady Warsi, in her letter to me, Saudi medical services have improved, but given the high level of demand, more than 3 million pilgrims are still relatively inaccessible save in the most serious cases. The examples that I have stated rely heavily on early intervention to prevent serious or life-threatening cases from developing—a stitch in time saves 10 in the future.
The value of British doctors is great. They know and understand the diseases and symptoms that are particular to British pilgrims. For example, the delegation was successful in convincing Saudi medical authorities not to amputate a British pilgrim’s leg because of infection and instead insisted on a course of drugs that removed the life-threatening infection.
Why did no public consultation take place? More importantly, why was there no consultation with Muslim organisations given that the service of the delegation in Saudi Arabia positively benefits British nationals? Was the Department of Health consulted? The FCO report of 2006 stated that the work of the delegation formed part of the FCO’s race equality scheme to demonstrate its statutory duty under the Race Relations Act. Was a race equality impact assessment undertaken for the decision and, if so, what was the outcome, or is the FCO in breach of its statutory obligations?
Finally, I understand but do not agree with the rationale to abolish a delegation that saves more than £1.6 million per annum to the state. Did the FCO undertake a cost benefit analysis before it decided to end the delegation? Will it finalise figures to demonstrate how it came to that conclusion? Thank you.
Lord Janvrin
My Lords, I add my thanks to my noble friend Lord Hannay for securing this Motion for debate today. I, too, declare an interest as a former member of the Diplomatic Service, although it was of a more humble status and variety than that of my noble friend.
This is a Motion of major importance and it is perhaps appropriate to be discussing it on Remembrance Day. If ever there was a reason to have a properly resourced and active diplomacy, it is to try to solve the world's problems, in Churchill's memorable phrase, through “jaw, jaw” rather than “war, war”. Beyond this, many of the other reasons for speaking in support of this Motion have been eloquently put forward by others, including in particular the importance of soft power, the World Service and the work done by the British Council.
I share many of the views expressed and particularly welcome the noble Lord, Lord Monks, and commend his maiden contribution today. I shall add my voice on two points—the issue of resources and the importance of retaining an active global network. On the issue of resources, I recognise that many government departments contribute to our diplomacy, but I should like to focus on the FCO's resources. This to my mind is the budget which is so crucial to the orchestration of our diplomatic activities overseas. The FCO's departmental expenditure limit in 2010-11, including the World Service and the British Council, is £1.6 billion. This represents less than 0.5 per cent of the Government's total budget. If you take out the new arrangements for the World Service funding, the FCO budget is to be cut by 10 per cent over the period of the spending review. Are we able to say now, “Thus far and no further”?
I do not doubt that there might still be some efficiency savings to make, but anything more than limited savings should in my view be strongly resisted, for two reasons. First, the Diplomatic Service has recently had to reduce its budget savagely in the light of exchange rate fluctuations, as my noble friend Lord Hannay reminded us. I welcome the spending review commitment to introduce a new foreign currency mechanism to manage exchange rate pressures. This must surely be right for the proper management of our diplomatic effort. I welcome anything that the Minister can tell us about this mechanism. Secondly, and most obviously, we are talking about really small amounts of money in overall government expenditure terms. Squeezing even limited savings out of the FCO budget will have a major impact on our diplomatic effectiveness; it will have precious little part to play in reducing our wider national budget deficit and we ought to recognise this.
This brings me to our global presence. We could trim our diplomatic reach to fit an ever smaller budget, but is this really the moment to do that? The world order is shifting; we have moved from superpower duopoly to G7/8 and now G20. The politics of globalisation, the economics of the emerging markets and the international consequences of climate change are shaping our diplomatic agenda. We have moved on from BRICs and are already looking at the emerging markets of tomorrow, including South Africa, Turkey, Indonesia, South Korea. The map of diplomatic and economic power is changing fast. We need to respond to the opportunities and the challenges of globalisation, not by withdrawing in on ourselves but by playing to our huge historical advantage of being an outward-looking trading nation with global links.
It is only by having a global network that we can be in a position to deal with the unexpected in this increasingly globalised world. We cannot know now what will be the future threats to our security, the opportunities for our business, or indeed the new pressures on our consular services. A properly resourced global presence must be part of the answer to dealing with the uncertainties of the future.
This brings me to my final point. Regardless of the internet and instant communication, it is only by having people in post and active on the ground around the world that we can continue to build and retain that deep political insight, that economic knowledge and that cultural perspective along with the language skills and the lasting, reliable contacts which are of real value to government and business. We need to retain that global network because once you close a mission, you lose it.
In conclusion, I pay tribute to the many men and women serving at home and overseas who are part of our national diplomatic effort. Many of them work in difficult and dangerous circumstances and they are certainly often the subject of admiration around the world. I am pleased to have this opportunity to speak in their support this afternoon.
Baroness Drake
My Lords, the Foreign Secretary’s speech delivered in July outlined the coalition Government’s diplomatic vision. Britain’s foreign policy is to be shaped around a number of key geopolitical challenges. Foremost among them is the establishment of stronger links to emerging economic powers, in order to gain influence and an improved foothold in the burgeoning markets of countries such as China, India and Indonesia. Britain’s need to generate wealth through trade is paramount, so few would argue that this kind of relationship-building should not be a top international priority. The process behind it is both complex and demanding, so the case for Britain to be equipped with a properly resourced and active diplomacy should be universally apparent. The reservation I have lies in the terms on which Britain’s future is articulated.
A pertinent question for debate centres on what, substantively, our diplomatic approach should be. When we talk of the need to build relationships with emerging economic powers, it effectively translates into a process of engagement with their Governments in the hope that mutually beneficial trade agreements can be established. The greatest challenge surrounding this endeavour is often identified as being that many of those countries do not share the same historical development as the UK and its counterparts in western Europe and North America, and that therefore they do not possess the same priorities and world views. Commitments to human rights, gender equality and political liberalisation, for example, may not be as strong in these societies as they are in our own. Such a diagnosis can indeed seem intuitive in light of the prevalence of misunderstanding and antipathy that is identifiable across the world today.
That is not a new problem. Experience has taught us that it is neither advisable nor feasible to expect another country to accept automatically that, in order for it to gain entry into the family of leading nations, it must embrace what we and others understand as the pillars of acceptable governance. For Britain, therefore, a dilemma presents itself—one that I am certain we will encounter increasingly in the future: that balance between the importance of our own economic prosperity and the well-being of the citizens of the countries with which we do business. Like the noble Baroness, Lady Falkner, I feel that we need to establish with greater clarity our international priorities.
There is no straightforward blueprint for the encouragement of social freedoms. I do not, however, subscribe to the view that certain cultures are intrinsically resistant to liberalisation. On the contrary, I believe that the universality of democracy and human rights lies in their universal appeal. We must avoid the adoption of a “clash of civilisations” world view that inadequately explains the international environment, portraying it as a series of rival and largely incompatible systems. This only serves to reinforce the already robust barriers that divide nations and ferment antagonism. If we are to learn anything from the global events of the last decade, it is that we must develop a more nuanced understanding of the world around us—one that avoids assumption, cliché and stereotype.
If it is to be lasting, the respect for human rights must be organic and possess credibility within the society concerned. Achieving this will be extremely difficult. There will be times when we should acknowledge that we have no political or indeed moral right to get our own way, especially when it is at the expense of ordinary people of other nations. While we continue to promote the introduction of democracy and human rights in tandem with economic pursuits, the temptation to relax the former for the benefit of the latter will always remain.
Actively building relationships with new economic powers is an opportunity to develop novel and lasting international alliances that cement Britain’s reputation as a country that operates globally, according to an intelligent mix of pragmatism and principled action. To achieve this, though, we need not only to build bilateral partnerships but to promote multilateral action. In the face of unpredictable geopolitical circumstances, we must alter our outlook from one that focuses on what divides us from these other nations to one that emphasises the inherent and shared interests and characteristics identifiable in all human beings. Our diplomacy must be properly active.
Britain’s future and international priorities must be articulated and pursued in such a way that our efforts to encourage liberalisation within the societies of new global partners are not rendered perfunctory by the pursuit of our own economic interests. For real results to be achieved, the freedoms and safeguards that we value must be framed in such a way as to appeal to as many different parties as possible. I argue that this is a diplomacy that is also properly resourced in its psychology, and one that is more likely to meet with success.
Like my other colleagues, I take this opportunity to add my thanks to the noble Lord, Lord Hannay, for securing this debate.
Lord Parekh
My Lords, I, too, thank the noble Lord, Lord Hannay, for securing and introducing this debate. As he rightly said, we are a middle-ranking power with limited resources but, thanks to our history, we have a global presence and a good reputation. Although our uncritical support for the US-led invasion of Iraq did us great damage, we are widely respected for our commitment to certain values and our ability to blend political realism with moral idealism.
Being a middle-ranking power, our hard power is limited. So far as what is called “soft power” is concerned, I am not sure that the term really makes much sense. It is a metaphor based on “hard power” and, like all metaphors, it is indeterminate and ambiguous. I have debated this with the father of the phrase, Professor Joseph Nye, and he takes it to mean “the ability to get others to think the way that we do”. I am not sure why we would want to do that; it has an element of intellectual seduction and manipulation, and I should have thought that diversity of view had much to be said for it. I would rather think that our concern should be to ensure that others think well of us, take care of our interests, are concerned about us and wish to be close to us. In other words, rather than talk about power, soft or otherwise, we should be thinking of building bonds of interest and affection with other countries.
If that is the goal, and it ought to be, there are three or four things that we should be aiming at. First, as a country, given our history and geography, we stand for certain values like human rights and mutual respect between nations. We ought to be able to display those values in our foreign policy. We should also encourage them in other countries, but never in a hectoring or arrogant spirit. The banal dichotomy of either intervention or indifference is not an option. I would like to think that the Prime Minister has shown how this can be done in his recent talk to students in China, talking about human rights, not as if it were a western export but rather something that China itself should want in order to create a stable and vibrant society.
Secondly, we live in a world of free and proud nations with different cultural traditions. It is extremely important that we should conduct our relations with them in a manner that does not offend or alienate them. There have been hilarious examples in recent years of how we can easily end up offending them. I was told—I hope this is not true—that one of our Foreign Secretaries, on a visit to India, addressed the Indian Prime Minister by his first name. You do not do that kind of thing. I was also told that the first Indian Prime Minister, Pandit Nehru, once complained to Sir Isaiah Berlin that, although he found American diplomats brash and full of themselves, he could handle them, while he had some difficulty with the British, whom he thought were rather patronising with an effortless air of superiority. He said, “I can’t handle that, having suffered it when I was a student at Cambridge”.
Having talked to Indian diplomats in recent years, I am told that things have changed considerably but, nevertheless, there are occasional glimpses of that effortless superiority. We ought to be careful about that. In other words, I am suggesting that we make sure that our diplomats are multiculturally literate and able to talk to people in other countries in the terms of the language and traditions that they share.
My third point has to do with the fact that the Foreign and Commonwealth Office should be open to new ideas and long-term perspectives. I am thinking not simply about tactical responses to this or that crisis, but rather about the deeper factors that influence a situation so that our response to a crisis is grounded in a long-term analysis. That will require that more of our academics and journalists are involved in the formulation of FCO thinking. In that context I ask the Minister: how many of the senior personnel in the FCO and in our diplomatic missions come from the ethnic minorities? My feeling is that, despite being a multiethnic society, we tend to present a rather monocultural, mono-ethnic profile to the world outside.
My fourth point has to do with our educational institutions, which play a crucial role. Overseas students are attracted to our great universities, and they are tomorrow’s leaders in government, business and the arts. It is very important that we should attract them, fund them and invest in them. The Chevening scholarships should therefore not be reduced. They are one way in which we invest in our own future.
In that context, we must also take a second look at the BBC World Service. It is widely respected as a source of unbiased information. As the noble Baroness, Lady Afshar, pointed out, the BBC’s Persian service, for example, is widely respected. It is striking that President Obama chose to give an interview to the BBC’s Persian service to reach out to the people of Iran and to refute President Ahmadinejad’s comments before the United Nations General Assembly in September. It would be a great mistake to deprive the BBC of this capacity to reach out to many people.
Finally, I greatly welcome the fact that the Prime Minister has set his heart on having special relations with India. The two countries have had close ties over the centuries, not just because of the imperial connection but going back further. This does not mean that Britain should be silent in those areas where India is wrong—for example, over Kashmir. I have protested strongly over the years that India’s policy in Kashmir is to be deeply faulted. At the same time, this can be done in different ways. Given the presence of the Indian diaspora, it is important that its people should be involved in formulating Britain’s policy and liaising with India.
Lord Sheikh
My Lords, I also express gratitude to the noble Lord, Lord Hannay, for securing this debate. Effective diplomacy is paramount in dealing with the emerging and existing challenges facing our nation, including tackling the effects of climate change, promoting free trade and protecting human rights. It is important not just to focus on our historic relationships but to seek avenues for building new friendships and influence with emerging players.
First, our diplomacy should recognise the importance of greater dialogue between the Department for International Development, the Ministry of Defence and the Foreign and Commonwealth Office. These departments are paramount in achieving progress through active and efficient diplomacy. The challenges facing our nation and the world at large require a multifaceted approach to how we conduct future relations. I was surprised to learn that officials from different government departments operating abroad do not work together routinely and are often located in different buildings. That is unsatisfactory and can only add to the expense while also undermining our effectiveness in projecting foreign policy abroad. I am pleased that the Government appear to have this in hand and hope that the Minister will be able to offer clear assurances on this point.
While strengthening existing relationships, we must forge greater ties with emerging economies such as the BRIC countries and the Gulf states where economic growth is likely to be considerable. During the year I visited Russia, Turkey, Qatar, Kuwait, Brussels and the United Arab Emirates, where I spoke at international conferences on boosting trade and achieving sustainable development. I recently visited Sri Lanka as a member of the Commonwealth Parliamentary Association delegation. I was impressed with the quality of our high commissioner and his staff but feel that there are business opportunities which we can pursue. We can also consider providing resources to aid in rebuilding the country.
I am pleased to note that the Secretary of State has undertaken to overhaul our network of foreign embassies, turning them into engines for trade that support our ambitions for an export-led recovery from the current economic situation. I see no reason why leading business people should not be appointed to diplomatic posts, and I commend the Secretary of State on his vision in making this announcement and undertaking to deliver on it. This accords directly with my experience of travelling across the world and speaking with key figures. The recruitment of senior business people should provide a new impetus for us to maximise trade opportunities, to deliver economic and political benefits to all parties.
I have established and maintained good relationships with the ambassadors and high commissioners of a number of countries and their diaspora. There is good will towards the United Kingdom but we need to build on these relationships further.
I support the Government’s effort to strengthen our economic strategy and commercial relationships with China and India. I was very pleased that our trade delegation to both countries was headed by the Prime Minister. We need to rectify the difficulties caused by our present economic situation. We can achieve this through spending cuts and raising taxes but we need also to look at ways of strengthening our business activities overseas. By increasing our trade with overseas countries, we not only generate wealth but also strengthen our political, social and cultural ties with them. Diplomacy has a key role to play in achieving these objectives.
I have spoken on several occasions and led a debate in your Lordships’ House on the importance of the Commonwealth. The linguistic and administrative legacy of British rule suggests that it costs less to trade within the Commonwealth than outside it. We need to work towards building closer business and social links with Commonwealth countries. However, we should not embark upon this at the expense of building wider alliances. We cannot use the opportunity to look at the issue of diplomatic activities without also considering the impact of the European External Action Service. A consequence of the Lisbon treaty, this approach could have a profound impact on our diplomatic footprint. We should not allow our footprint to diminish at the expense of European infrastructure that may be less efficient or effective.
I believe that the European External Action Service, now that it exists, should be harnessed to exert maximum influence. We should be proactive in helping to shape its agenda so that it can contribute positively on the international stage.
I would welcome further proposals to expand the United Nations Security Council. The emerging global order suggests that such an expansion is inevitable. I acknowledge that this will indeed result in challenges to our diplomacy as it will require efforts to extend and increase our influence among a larger group of countries. Effective diplomacy is necessary in order to secure our international prosperity. Our diplomacy requires a flexible and steadfast approach to how we further our interests in the emerging world order. This will undoubtedly contribute towards the reinforcement of British influence and prestige in global affairs.
Finally, I have been on pilgrimage to Saudi Arabia several times and agree with all the points made by the noble Lord, Lord Patel of Blackburn. I might add that I chair the Conservative Muslim Forum but there was no consultation on this with me or my members.
Baroness Taylor of Bolton
My Lords, I congratulate the noble Lord, Lord Hannay, on initiating this debate. I agreed with most of what he said and was particularly pleased that he sought further clarification from the Minister on our response to the EAS. I am glad that those remarks have just been echoed. I was also particularly pleased with his comments on cross-departmental co-operation, a subject to which I shall come back in a moment. I congratulate my noble friend Lord Monks. I do not know how many noble Lords noticed that he managed to slip in a reference to Manchester United in a debate on diplomacy. We may hear other such interventions in future but I am sure that they will be welcome, even on the part of those who do not support that team.
I wish to take up the final point made by the noble Lord, Lord Sheikh, who referred to the remarks of my noble friend Lord Patel of Blackburn. My noble friend spoke about a topic that he knows well. I suspect that few noble Lords have experienced the difficulties to which my noble friend referred in connection with hajj pilgrimages. When representing my former constituency in another place I was very well aware of those problems. I congratulate my noble friend on the very significant improvements that he has made. It is important to recognise that these are very real problems, not least because of the language difficulties that sometimes arise when people attend this important event. I hope that the Minister will look at that issue again as it is very important.
The noble Lord, Lord Hannay, said that this debate was timely given the announcement of the comprehensive spending review. It is also timely as tomorrow we will debate the strategic defence review. While that debate will rightly concentrate on aircraft carriers and Harrier jets, the two issues need to be considered together as we want a joined-up approach. It is important that we concentrate on that. In that context I remind the House of the Ministry of Defence Green Paper published in February this year entitled Adaptability and Partnership, which is a very important reference document for today’s discussion and tomorrow’s. Today’s theme is active diplomacy. One of the questions posed in the Green Paper is how we can deploy the Armed Forces more effectively to support wider efforts to prevent conflict and strengthen international stability. In the section of the Green Paper on adaptability and influence, mention is made of the work carried out by the Foreign and Commonwealth Office, the Ministry of Defence and DfID in order to understand better the contribution that defence diplomacy and security co-operation can make to wider government efforts.
My purpose in intervening today is to underline how important it is not to lose sight of the very important, sometimes critical, and often unique, role that defence diplomacy can play. During my time at the MoD I saw many examples of this work. I understand that we cannot always talk openly about this but defence diplomacy makes significant contributions across a wide field that people sometimes forget. I shall mention just one. The British Military Advisory and Training Team, based in the Czech Republic, works with it and others to provide multinational training courses both on peacekeeping operations and on the wider basis. It is important to realise that we are not just working with NATO allies in that; there are 31 partner countries, from central Asia, the Caucasus, the Balkans and north Africa. Indeed, when I visited, I was impressed to see someone from Azerbaijan sitting next to an Armenian, which you would not get in most circumstances. That approach shows the influence of soft power and the fact that this country can be extremely important in making sure that such things happen.
Time is short, so I shall just say that I think that those working in aid are sometimes apprehensive about people in military uniform providing advice in a country. However, as the DfID White Paper of last year pointed out, unless you have security and stability on the ground, it is often impossible to provide aid. Very often, people in fragile states who are in uniform will take advice only from other people in uniform. It is important that we build on that sort of thing.
I emphasise a significant step forward—the establishment of the stabilisation unit. That brought together not just funds from the FCO, MoD and DfID, but many of the personnel who now work together in a productive way.
I hope that the Minister will confirm that, in this compelling case for an active diplomacy, there is also a compelling case for defence diplomacy, and that the words in support of that uttered by Ministers will not just be words but will be translated into very direct and very positive support.
Lord Jones of Cheltenham
My Lords, I thank the noble Lord, Lord Hannay, for securing this important debate. He has great experience in the field and has made an unanswerable case today for a properly resourced and active diplomacy. I congratulate the noble Lord, Lord Monks, on his maiden speech. It is some years since he and I marched shoulder to shoulder with many others—including the noble Baroness, Lady Symons, the noble Lord, Lord Brett, and probably the noble Lord, Lord Lea—in support of GCHQ trade unionists in Cheltenham. He made an excellent speech today and I hope that we will hear more from him soon. I make him this offer: if Cheltenham Town are drawn at home to Manchester United in the FA Cup this year, I will make sure that he gets a ticket. If we are drawn away, I hope that he will do the same for me.
I want to make three points. The first is to thank those diplomats I have met in this country and overseas. The second is to give some anecdotal examples of the work that I have seen them do. The third is to express frustration that in recent years we have undervalued and underresourced our diplomacy.
One of the most challenging projects on which I worked before entering Parliament was in Iraq during Saddam Hussein's era. My task was to ensure that new British computer systems installed at Baghdad University did what was required of them. At the time I did wonder why we were selling computer systems to the Iraqi regime, which was at war. I was more concerned when I was asked to provide support to British systems in the Iraqi defence department. British Ministers gave their approval to those exports; the logic was that Iraq’s being opposed to Iran meant that Iraq was on our side. How things change. These systems were mentioned in the Scott inquiry into arms for Iraq.
I wonder what advice our diplomats in Baghdad gave to our Government of the time on whether those “sales” were advisable. A properly resourced diplomacy can and should give timely advice to the Government on commercial, cultural and security issues, and the Government should take notice of that advice before taking decisions which could have far reaching implications. I know that our diplomats gave advice on new missile systems produced by Iraq when I was there. The al-Hussein missile was powered by a lawnmower engine. The later al-Samoud missile was similar in design, but powered by an uprated lawnmower engine. The guidance system was such that the launchers put their fingers in the air to judge the strength of the wind, made a calculation and filled the device with the appropriate amount of fuel. When the fuel ran out, the missile dropped out of the sky onto whatever lay beneath. They were not the most accurate of missiles.
I know that our diplomats fed back information on Iraq’s military capabilities, so I wonder how the infamous “dodgy dossier” prior to the second Gulf conflict came into being to justify the claim that Iraq posed a threat to the United Kingdom and could launch weapons of mass destruction in 45 minutes. Why was advice from our diplomats in Iraq not heeded? A lot of lives, as well as a lot of money and Britain's reputation, could have been saved if we had avoided that unnecessary conflict.
I take a special interest in Africa and have visited many countries where I have seen the work of our diplomats. I have literally been saved by several of them. On a Commonwealth visit to Malawi, our vehicle was in a collision with a passing cyclist. Immediately, we were surrounded by a huge and angry crowd demanding vengeance on our driver. It was a very nasty situation. One of the diplomats, a lady, shepherded the MPs to another vehicle, ordering, “Get the VIPs out of here”, before calmly dealing with the crowd, taking the cyclist to hospital, where it was discovered that he was drunk and not badly hurt, and she arranged for a new bicycle to be delivered to him.
While observing elections in the Gambia, our delegation came across a riot in which at least one person had been shot dead and a Minister’s house set on fire. After listening to what the crowd had to say, we returned to our vehicle and shots rang out again. It felt as though we were being shot at. Fortunately, the British high commissioner and his staff helped us to recover.
Another incident occurred while observing elections in Ghana at the end of Flight Lieutenant Jerry Rawlings’s presidency. On the eve of poll, the British deputy high commissioner explained that there had been trouble in northern Ghana. We went to an independent radio station, Joy FM, which, through its sister station, Love FM, confirmed that a melee had taken place and a dozen or more people had been arrested, including an opposition candidate. When this news was broadcast, a group of large, uniformed, armed men arrived and told the radio station to stop broadcasting. I found these men from the Bureau of National Intelligence to be intimidating, but they were nowhere near intimidating enough for the deputy high commissioner who pointed out: first, that democracies do not close down independent radio stations; secondly, that international election observers were present and would include this incident in their report on the conduct of the elections; and thirdly, that if they did close down the radio station, the elections might well be judged not to have been free and fair, and it would all be the fault of the men in uniform. Eventually the men turned and left. If we had not been there, and if that diplomat had not taken calm and considered action, Ghana 2000 might well have joined a long list of failed elections around the world. As things turned out, there was a peaceful change of Government, which was a credit to the growing maturity of Ghana’s democracy.
That diplomat—now no longer in the service—was Craig Murray, who became our ambassador in Uzbekistan. During his time there he discovered and reported back on appalling incidents of torture, implicating the United States, which was believed to be receiving information obtained under torture. Instead of acting on the information provided by one of his most senior diplomats, the Foreign Secretary recalled him to the UK and dismissed him. That was a great injustice.
In many of the places I have visited, diplomats have told me of their frustration that the United Kingdom could and should be doing so much more if only our diplomatic services were properly resourced. The advantages are self-evident in terms of trade and in relation to human rights and progress. Recent reductions of British diplomatic presence in certain parts of the world give the unfair impression that we cannot be bothered any more. In his reply, I hope that the Minister will set our minds at rest that the coalition Government understand what has been said in this debate and will ensure that in future we have a properly resourced and active diplomacy.
Viscount Waverley
My Lords, I am grateful for the suggestion that the Diplomatic Service be open to new ideas. While there is apprehension about the cuts, active diplomacy in certain areas can deliver mechanisms to achieve results with less. The way forward might be to recognise that the role of government in bilateral relations, and by extension diplomatic endeavours, should be to create the environment to allow all the sectors that make up those relations to thrive, and that the United Kingdom is essentially a private sector-driven economy and that it is not the role of government to deliver for the private sector a better structured public sector/private sector partnership, whether for the benefit of trade or for the myriad other benefits that make up relationships.
Much of this type of initiative could be self-funding, thereby freeing government financial resources. Has a full review taken place to consider how non-critical outsourcing could play a role in the diplomatic world? Consular activities have always seemed to be a natural candidate. The parallel-to-trade objectives of advocating the benefits of democratic principles—good governance, transparency and accountability, freedom of the press and human rights standards—could all be addressed in a similar manner by appropriate specialists in order to make diplomacy effective.
Resourcing diplomacy in the context of today's debate must also be about bolstering abstract diplomacy with concrete and figurative measures. Leaving aside the complexities of whether the ECGD could be privatised, for trade diplomacy to be successful three components must converge. The first is on-the-ground preparation by ambassadors and their staff. The second is the fullest engagement, at Secretary of State level and above, regularly to lead missions overseas and to leave more diary space for meeting incoming leaders in London. The third component—I declare an interest as I am on the advisory board of the newly formed Central Asia and South Caucasus Association at Asia House—is the formulation of a well-defined partnership between the UK's public and private sectors, made up of trade and industry councils and umbrella self-funding representative organisations. This structure could create cost savings and replace anything other than support in strategic emerging markets. The money saved could be used to resource more effectively overseas posts’ commercial endeavours, with the remainder moved over to the general Foreign Office budget.
I congratulate the Prime Minister on leading two recent successful missions to China and India. I also welcome the Foreign Secretary's initiation of policy reviews of relations with priority strategic countries such as Brazil and Turkey. However, these endeavours need to be replicated many times over. Leaders such as Chancellor Merkel and President Sarkozy regularly travel around the globe signing bilateral trade MOUs and cutting megadeals in out of the way places. Secretary of State Clinton has even been supporting American interests in Papua New Guinea, where I happened to be this week. It is a country of crucial strategic regional importance to the UK, but our diplomatic financial resource is close to zero.
My concluding thought is that the Minister might wish to look at more speedily matching to requirements the qualifications of FCO London-based staff. Diplomats often find themselves in the corporate pool on their return from overseas postings. This human resource should be put to more immediate use and not be left to stagnate.
Lord Thomas of Swynnerton
My Lords, in requesting permission to speak in the gap, I should like to draw attention to the fact that in the past locally employed staff sometimes made major contributions to the work of an embassy. I recall, for example, travelling in Spain in the 1950s. The ambassadors, who were men of great distinction, had the benefit of the services of a former schoolmaster called Bernard Malley, who knew everything about the country in which he was serving. He had an honorary position and did not allow his loyalty to his Spanish friends to cause any difficulties with his loyalty to this country. He ended up with a CMG, which he greatly deserved. I believe that there was a similar person in Paris in the shape of Sir Charles Mendl. Malley in Madrid, however, was a wonderful example. I believe that in future we should consider this sort of appointment in many other countries than those that I have mentioned. For example, I recently went to a Latin American country where the only person who remembered the previous elections was the ambassador’s chauffeur. He was a very good source, although I am thinking of someone more distinguished.
Baroness Symons of Vernham Dean
My Lords, I, too, thank the noble Lord, Lord Hannay, for introducing this very timely debate today. The noble Lord has rendered the House two services: first, in his excellent speech he comprehensively and skilfully outlined the issues concerning a properly resourced and active Diplomatic Service; and, secondly, he has reminded us of the importance that we should attach to such proper resourcing by being the embodiment of active diplomacy himself.
I also add my congratulations to my noble friend Lord Monks. I thank him, too, for choosing a foreign policy debate for his powerful maiden speech. In another life, my noble friend and I used to sit around the same meeting tables, and I am happy to say that he has lost none of his highly persuasive and cogent powers of argument. He will be a huge asset to your Lordships’ House, as his speech today clearly demonstrated.
I begin by acknowledging that we on this side of the House know that all departments, including the FCO, must take some share of the impending cuts. As the G20 meeting in Seoul is acknowledging today, the international downturn is a global issue, in spite of what is sometimes said in our domestic politics. As a colleague of mine remarked to me in the Middle East a couple of weeks ago, the only countries unaffected are the ones that are not part of the global economy.
In looking at resourcing effective diplomacy in this country, I turned to the FCO’s business plan, in which the Foreign Secretary says that he has organised his department’s work with three overriding priorities: safeguarding Britain’s national security, building Britain’s prosperity, and supporting British nationals around the world through modern and efficient consular services. I say to the noble Lord, Lord Bates, that these bear a striking resemblance to the priorities that the late Robin Cook articulated when Labour came into office in 1997, proving that very often there is nothing new in foreign policy. To any sensible person, they must be the cornerstone of what the Foreign Office is there to do.
The Foreign Secretary also spoke of harnessing,
“the appeal of our culture and heritage to promote our values”,
including on human rights. I suspect that for many of us that is a bedrock point without which achieving security and prosperity on a sustainable long-term basis would be absolutely impossible, as my noble friend Lady Drake suggested.
I agree with the noble Lord, Lord Waverley, that the Government’s energy in relation to trade is very much to be welcomed, but I know that there is concern that the Foreign Secretary’s great emphasis on trade and investment runs the risk of undermining the FCO’s work on human rights. Amnesty International and Human Rights Watch have both warned us about that. Promoting human rights is not just right in its own terms; it is a matter of self-interest, too. Even countries where there is acute poverty see access to information and international communications as very obvious. Young people in all parts of the world have access to mobile phones and cameras, and of course televisions. They see injustice as it happens, and they see repression, the results of torture and the horror of innocent civilians caught up in warfare.
They have their own opinions about what is fair, just and decent. Working for human rights to protect those who cannot protect themselves is another hugely important factor in our efforts to maintain our security. It is part of how we develop our agenda on counterterrorism and counter-radicalisation. When I looked beyond the opening headlines in the business plan to see how the FCO would be maintaining and expanding its work on human rights, in the 24 pages that follow those opening headlines, the subject was not mentioned once. Can the Minister explain why not? How is that to be delivered if the business plan does not offer us a mechanism to do so?
One way in which the previous Government sought to deal with that kind of outreach, both at home and abroad, was through our support for the hajj. My noble friend Lord Patel has argued that the cut in support for British Muslim pilgrims is damaging. Like the noble Lord, Lord Sheikh, and my noble friend Lady Taylor, I strongly agree with him. I declare an interest, because it was on my watch as consular Minister that the hajj support was introduced. Apart from the huge cut to the much-valued services to thousands of British pilgrims every year, does the Minister not realise what an appallingly negative signal that sends to the very countries that the Foreign Office is trying to impress in increasing our trade?
Do Ministers really not understand that many countries in the Middle East want a rounded relationship with the United Kingdom? They want a partnership with mutual respect and mutual understanding. I hope that concentrating so hard on trade, as the Government are doing—which I understand and, in many ways, support—does not lead to some of our friends in the Arab world to feel that we are not engaging as we should in politics and in seeking their views on interfaith issues, on the peace process, on Iran, Turkey and Somalia, and on the many multilateral institutions. If we really want trade, we have to do politics properly. That is what marks a real partnership that respects opinions as well as wealth.
I agree with my noble friend Lord Anderson that at the heart of what we are discussing today is an active diplomacy, which means people. We need active diplomats, and they need to be spread around the globe. I notice that the FCO business plan says that we shall have an enhanced partnership with India and closer engagement—I am not quite sure how that is different—with China, Brazil and south-east Asia. We shall need diplomacy campaigns, apparently—can the Minister please tell us what those are? I see, too, that the education conferences launched under the Labour Government will go global to get more students into the UK. All of that needs people and resourcing. My concern is that the commitment to review the UK's bilateral relationships and to look at something that we are calling the overseas footprint is in fact code for shutting down embassies and consulates in countries in which we do not have huge commercial interests.
The noble Lords, Lord Hannay and Lord Janvrin, are right: shutting our embassies is simply not sensible, because events catch up with us and stuff happens. By the Government’s yardstick, it can backfire very badly commercially. As the noble Lord, Lord Hannay, emphasised, we need embassies to maintain our intelligence networks, for our security and to build confidence—and, yes, at a very basic level, to be ready for those commercial opportunities when they arise.
One of the passages in the business plan that I find most perplexing is what was said about consular services. The headline objective of supporting British nationals around the world is apparently to be achieved through cutting our consular services. Consular resources mean FCO staff being trained to deal with a huge variety of problems, from lost passports to natural disasters and terrorist outrages. It is hard, painstaking work, and sometimes it is heartbreaking.
In 1997, the consular services were the poor relation of the FCO, and when I was first a Minister, I was astonished that Ministers did not meet the victims of terrorism or the families of people who had been taken hostage. Officials were told to increase the numbers and provide a better service to the British public. Let us face it; most people in this country do not wake up in the morning wondering what is going to happen at an EU summit or the UN General Assembly. They are much more concerned if they cannot get consular help when they or their families need it abroad.
Let me turn to soft power. The noble Lords, Lord Parekh and Lord Hannay, emphasised its importance. The business plan states that there should be a strategy to enhance the impact of the UK contribution on conflict prevention by looking at the UK’s educational scholarships, but in a Written Statement from the FCO on 10 July, a £10 million cut was announced in this year’s programmes of scholarships. There are no Chevening scholarships in 2010-11. Soft power, so brilliantly described by the right reverend Prelate the Bishop of London, is an enormously important building block in reconciliation and outreach, and we cannot have soft power without good networks. It all comes down to people and relationships. Often, we need our good diplomats to undertake that sort of soft power, and to do so they have to be properly resourced.
The World Service and the British Council have also been mentioned. I agree passionately with what the noble Baroness, Lady Afshar, and my noble friend Lord Parekh said. The BBC World Service is a huge asset. It is envied by so many other countries, particularly the United States, Germany and France. It is trusted, it is editorially completely independent of government, and it has a huge reach that is unrivalled by that of any other country. The important point is that we distinguish between the editorial independence on the one side and the responsiveness of the UK’s national interest to talk to parts of the world that are so hard to reach otherwise. Similarly, the work of the British Council is the bedrock of our national interest. It is important that its functions are recognised and properly resourced because that allows us to have the contact in helping development in many countries in the world, particularly among young people and women.
To sum up, I was enormously pleased to have the business plan. It is very much to the Government’s credit that they have published it. It is a real mechanism for accountability. It will help us and give us a real opportunity to ask questions and to get the answers we need. I appreciate the Minister’s experience and his willingness to give answers to the questions that we pose—I sometimes wish that more of his colleagues followed his example—and I look forward to what he has to say.
The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, like other noble Lords, I begin by warmly congratulating the noble Lord, Lord Hannay, on initiating this interesting debate. He has enormous experience from his previous profession as one of our country’s leading diplomats. I also extend warm congratulations to the noble Lord, Lord Monks, on his maiden speech. He brought to our Chamber his vast experience in matters of organised labour and unions and tactfully applied that experience to the world of diplomacy in a kind and understanding way.
I shall start my comments in the limited time available by concentrating on the people, the diplomats. I start by paying tribute to the work of all our diplomats overseas and at home and our locally engaged staff, who number about 10,000 overseas in FCO posts worldwide. A third of UK-based diplomats working overseas are in hardship posts, and this debate comes only a few days before the seventh anniversary of the Istanbul bombing on 15 November 2003 when 11 colleagues lost their lives in the service of our country. As recent events in countries such as Yemen or Iceland have shown, those working on Britain’s behalf continue to do so in the face of terrorist threats as well as of natural disasters. This creates extremely difficult conditions, as noble Lords have been good enough to recognise. The safety of all our staff is paramount, and our spending settlement, which I shall come to in some detail in a moment, will allow us to invest sufficiently in our overseas estate and in the security and safety of the staff. We continue to seek to upgrade our posts to meet modern-day threats, particularly in high security environments. We expect to complete all outstanding high- and medium-risk security projects by the end of this year, and our spending-round settlement, as I shall explain, contains adequate provision to allow us to continue this work over the next few years.
I apologise if I am putting excessive emphasis on the threat from terrorism, but it is very serious. The threat arises because terrorists are empowered with new weapons technologies, as well as emanating from other non-state groups and cells. It represents the biggest danger to the safety of our staff today. The number of posts where we assess the terrorist threat to be critical or severe has increased threefold since 2006. The nature of the terrorist threat is constantly changing and indiscriminate, as we saw in the two attacks on our staff in Yemen earlier this year. Fortunately, our security procedures worked in both cases and there were no casualties. However, it is not just Yemen, as although it is the latest place where our staff face a high threat to their personal safety, there are also acute terrorist threats posed in other locations such as Iraq, Afghanistan and Pakistan. Moreover, the threat of violent crime on top of terrorism is also serious and growing. Over recent months, several of our staff and their families have been the victims of armed robberies. Overall, our diplomatic network is operating today with much higher threats to the personal safety of its staff. It is a testament to them and their families’ resilience that staff are ready to live and work with these risks. I wanted to put that on the record right at the beginning of my remarks in closing the debate.
I turn now to our objectives, which rightly have been discussed by a number of noble Lords on both sides of the House. The Government understand that to promote and safeguard Britain’s priorities, we must have a firm picture of what we want to achieve in a very fast-changing world. We must properly resource our diplomatic effort to make this vision a reality, and have a clear understanding of our national priorities and positioning in today’s global order that goes hand in hand with our internal sense of unity and purpose inside this nation. I have no doubts about that at all.
From the outset, this Government have brought a strategic basis to our overseas relations. The National Security Council was established as a centre of decision making on all international and national security issues. It oversaw the development of the National Security Strategy and the Strategic Defence and Security Review which, taken together, cement the position of the Foreign and Commonwealth Office at the centre of delivering the Government’s international priorities. The FCO played a lead role in setting the context for the National Security Strategy through its work on the changing threats and opportunities that the UK faces, and ensuring that the capabilities and structures set out in the Strategic Defence and Security Review were fit for the purposes required. I can tell your Lordships that the FCO will be instrumental in taking forward the strategic defence and security goals of tackling threats at source, bringing all of the UK Government’s influence to bear in order to achieve our objectives both at home and overseas, and working more closely with our key allies and partners, both old and new. The FCO will give the lead that allows foreign policy to be supported by other government departments.
As we have heard in the debate from the noble Baroness, the high-level foreign policy priorities have a lasting and enduring continuity. As she rightly says, they are to safeguard Britain’s security, to build Britain’s prosperity and to provide—which we will do—full and effective consular support to British nationals around the world. Those are the overarching objectives, and within them I want to discuss various policy issues.
First, however, I turn to the spending settlement itself and how it fits in with those overarching and broad objectives. After a lot of pessimism in the press and elsewhere about cuts at the Foreign Office and so on, the settlement we have secured is an extremely good one. Like everyone else, of course, we have to take our share of the austerity package because of the overriding need to cope with the budget deficit that certain people left behind that we have to clear up. That is our problem and we have to grapple with it.
The noble Lord, Lord Anderson, seems to have got the wrong end of the stick on this matter. The net outcome is not a 24 per cent cut but a 10 per cent cut in real-terms spread over four years—2.5 per cent a year. It works out as a flat cash settlement which, given some of the difficulties that have to be faced, is not a dramatic change. It gets better than that: we have secured the restoration of the foreign currency protection mechanism and we will move the BBC’s World Service funding over to the BBC in 18 months’ to two years’ time, which will take 14 per cent off our budget expenditure straightaway.
Lord Anderson of Swansea
Will the flat cash settlement to which the Minister referred lead to a 10 per cent cut in Foreign Service personnel over the period until 2014?
Lord Howell of Guildford
I do not know where the noble Lord gets that figure from. I shall talk in a moment about personnel, but what he has said does not fit with what I am about to say.
What I have said means two things. First, we are reversing the previous Government’s disastrous decision to abandon the foreign exchange protection which wiped overnight 10 per cent off FCO budgets—it was an appalling decision. We now have a major boost, with the restoration of that mechanism freeing us from exchange rate gyrations. I hope that the shadow Secretary of State in the other place, who was a Treasury Minister at the time of that terrible decision, now welcomes what we have done to put it right.
Secondly, the BBC World Service move will enhance its independence—I agree with the noble Lord, Lord Hannay, about that—and it gives the BBC, at the same time, a flat-rate licence fee. The objectives will still be set by the Foreign Secretary and his approval will be required for any language service closures. The BBC has given solid guarantees that it will safeguard the World Service and I am quite sure that will be done. Your Lordships raised worries about this issue, but the position is absolutely secured.
That is the story of our comprehensive spending review outcome and it does not match some of the gloom that has been perpetrated all around. Indeed, there is still more good news to come because, in addition, our budget is being reinforced by new funding from the Treasury—I emphasise from the Treasury—which recognises the increased development work that we are now promoting in line with OECD rules. It does not come from DfID; we are not draining funds from the increased DfID budget, which is very large. It is a subvention which for us, on our scale of expenditure, is of a very pleasant kind, to match the increased development work which is undertaken in the Foreign and Commonwealth Office.
Several noble Lords raised the issue of posts, closures and postings around the country. In the coming weeks we will take strategic decisions on how to live within the settlement I have described. They will not lead to the kind of conclusion the noble Lord, Lord Anderson, has suggested. Our decisions—including on what we do, what activity we stop or scale back and whether our network of posts adequately meets the new realities—will be taken; none has been taken yet. I concede that this might mean closing some subordinate posts and consolidating in some capitals. Equally, in emerging markets or countries critical to UK security, it might mean opening new posts. We need a global diplomatic network to help bring the UK economy back to long-term health. The skills and expertise of our staff are vital to delivering active diplomacy. The settlement will allow us to invest in our staff, create a renewed focus on international policy and high-priority languages, and ensure that our diplomats are economic ambassadors for Britain, as all your Lordships wish them to be. The noble Lord, Lord Lea of Crondall, asked for total staff figures. There are approximately 4,500 UK staff working at home and abroad, and 10,000 local staff, all overseas.
I turn to the other theme which ran through your Lordships’ debate: soft power; that is, the capability required to match the hard-power resources that we have to maintain as a nation. We have provided the means to resource properly our diplomatic work. However, that was not the only part of the Question of the noble Lord, Lord Hannay. He also called on the Government to ensure that our diplomacy would be active. We will certainly be so in the security, conflict prevention and peacekeeping fields. If we accept, as I certainly do, the notion that our prosperity provides the foundation for our power, we must seize the openings available to us. This means developing much deeper links with key centres of influence such as Japan, South Korea, Malaysia, South Africa, Brazil, Turkey, the Gulf States and particularly, as the Foreign Secretary and the Prime Minister have made clear several times, China and India.
China may be the new giant market, and one must not forget that Japan is often seen as our best and most reliable friend in Asia, but perhaps the best gateway to the great new markets of the world is the network that is the modern Commonwealth, as my noble friend Lord Sheikh rightly pointed to. Today’s Commonwealth embraces at least six of the world’s fastest growing economies and markets, providing access to emerging powers where wealth is accumulating and purchasing power soaring. Stretching across continents and faiths, and covering almost 2 billion citizens, it is a soft-power network par excellence which Britain needs to serve our interests in, and give us access to, the new global landscape—obviously, that is a matter of great interest to me personally.
Deepening our links with these countries will have multiple benefits for British citizens. We accept that diplomacy is no longer just a government-to-government business. We must and will engage all sectors of society as well as multilateral and regional bodies. Links forged through trade, education—my noble friend Lord Bates pointed to scholarships—culture, sport, science and an active global diplomatic network will help not only to secure our economic future but to guarantee our future peace and stability.
Where combined EU action works best, we will use it to the full—the noble Lord, Lord Hannay, made a very good point here. We see the European External Action Service as a useful additional tool for our common purposes in key areas, lightening and assisting our nationally resourced activities. My noble friend Lady Falkner made the same point.
Both the British Council and BBC World Service—on which I have touched already—will remain fundamentally important parts of Britain’s presence in the world.
All parts of the FCO family will have to contribute to the cuts in public spending. I am quite clear that they will have to face budget restraints. Details have already been published. The British Council plays an important role in helping spread the UK's culture and values, and its charitable status and ability to raise a significant part of its budget through commercial and full-cost recovery activities give it independence from HMG’s policies. I was enormously impressed the other day in Kuala Lumpur to see how the British Council runs its programmes, including intercultural dialogue and promoting the UK's creative and knowledge economy, which supports our foreign policy objectives. The settlement that we have secured protects that fully.
In the face of great uncertainties and novel challenges, we need to deploy this nation's talents and resources with new agility and skill.
Lord Patel of Blackburn
The Minister has not commented on the issue of the hajj.
Lord Howell of Guildford
I can give the noble Lord a comment on the hajj and will certainly do so, but it will take the last of my precious minutes.
When the hajj delegation was first conceived, local Saudi medical facilities were not of a standard that we would like to see. Since then, this situation has changed significantly. In the light of that, the Foreign and Commonwealth Office conducted an objective review of the delegation's medical element. The number of people treated for minor ailments was 5,967 in 2007, 2,965 in 2008 and 254 in 2009. I hope that helps my noble friend.
We will pave the way into emerging markets to ensure Britain’s prosperity and our security. We will deepen our engagement with the rising powers and wealth centres and the great new markets of the modern and transforming world. We will steadily uphold our belief in human rights, political freedom, open trade and poverty reduction wherever we can. To reply to the noble Baroness, Lady Symons, I see no conflict between that commitment and the commitment to our access into markets and our new commercial drive.
People say that the age of the Atlantic and the West is passing, but our own age certainly is not so far as the UK is concerned. On the contrary, I see huge new possibilities for this nation as the pattern of world power and wealth shifts. We will move forward on to this new stage by working more closely with our partners across the world, because that is good for our own national interest and for all our citizens. I am confident that the spending settlement set out for the four years ahead enables our diplomatic community, despite all the challenges it faces, to play a full and highly effective part in this national strategy. I believe that we can have a resourced and active diplomacy of the sort that the noble Lord, Lord Hannay, has wisely called for and we can do it with great effect.
Lord Hannay of Chiswick
My Lords, I thank all noble Lords who have contributed to this excellent debate. I have served long enough in your Lordships' House to know that it is not my place at this moment to mention everyone who spoke. If I did, I would be way outside the limits. I have also learnt that it is not wise to refer selectively, so I will simply congratulate the noble Lord, Lord Monks, on his maiden speech and say what pleasure it gave me personally to know that the UK permanent representation in Brussels is still the best team in town, as I hope it was when I left it 20 years ago.
One thing that startled me most about this debate was the absence of any reference to that phantom beloved by newspapers—the special relationship. Not one single Member who debated mentioned it. I do not say that as someone who believes that our relationship with the United States should be downplayed—quite the contrary—but I have fought all my life against what I call the false choice between Europe and the United States. Having a debate today in which we were able to look at the whole world in the round and not obsess and agonise about the special relationship shows a great deal of wisdom and a healthy approach.
On a final point, a lot of noble Lords spoke about realism. I am sure that we must have it, but we must not confuse it with that dreadful concept, declinism. There is no reason for us to think that we cannot look after our interests in the world we now live in, if we are ingenious about it and apply the resources we have in an effective way. I hope that when we talk about realism we will mean seizing new opportunities, not retreating into ourselves. I beg leave to withdraw the Motion in my name on the Order Paper.
Sport and Recreation
Lord Moynihan
To ask Her Majesty’s Government how they propose to strengthen the governance of sport and recreation in the United Kingdom to assist clubs, voluntary organisations and governing bodies.
Lord Moynihan
My Lords, we are now left with a truly outstanding sporting array in your Lordships' House. I thank those who are taking part for doing so, because this debate has at its heart the importance of our voluntary organisations and the governing bodies in the development and delivery of sport and recreation throughout the United Kingdom.
First, I declare my interests. I am chairman of the British Olympic Association, a director of the London Organising Committee and a member of a number of International Olympic Committee and European Olympic Committee commissions and committees.
The word governance derives from the Greek verb “kubernáo”, which means to steer and was used for the first time in a metaphorical sense by Plato. As a former Olympian coxswain who once again is celebrating the outstanding performance of our rowers in New Zealand last week, the word has an important resonance for me. For governance has become an increasingly relevant issue throughout sport. Sport has been built on a foundation of volunteering and amateurism. That is, of course, one of its many assets, and the reason why sport and sport clubs thrive in local communities up and down the country. However, it has also meant that sports organisations have struggled to adapt as the world of sport has become more political, professional and global. In the UK, with the increase in Exchequer and lottery funding in the lead-up to London 2012, our governing bodies and sports organisations have had to address their internal governance as they seek to stabilise their own management and financial processes. It is a similar story around the world, and throughout the Olympic movement as sport adapts to the changing yet opportunistic corporate world around it.
The British Olympic Association recognised the need to review its own governance and last week concluded the most comprehensive review of its governance processes in its 105-year history. As well as ensuring that we met basic governance standards, we also wanted to create a framework which enables the BOA to discharge its duties to the athletes that it represents and its 33 member governing bodies. We needed to modernise our practices and operate within the Olympic charter to seek to deliver our mission in an exemplary fashion and ensure that the business of sport is conducted to the highest standards. To achieve this, there must be clarity of roles and accountabilities, clear communication between all parties, appropriate checks and balances and a culture of trust and transparency. We as a National Olympic Committee want to ensure that we set an example to our membership and many sports are indeed reviewing their own governance as a result.
In 2004, I led a debate in your Lordships' House urging the Government of the day to back the BOA’s proposed bid to host the Olympic Games in London. The Government took note of the all-party support, which has remained cross-party and remarkably strong to this day. The work of Tony Blair, Tessa Jowell and my noble friend Lord Coe proved invaluable to the success of our bid. Sport acts best when there is unity of purpose.
Winning the right to host the 2012 Olympic Games in London has placed sport higher up the political agenda than it has ever been in the United Kingdom. The consequential increase in the exposure and investment awarded to sport is most welcome, aiding Britain’s Olympic and Paralympic athletes in their quest for success in the home games in 2012. However, with the added interest in sport comes the danger that political intervention will affect the autonomy of sport and the strong foundations and principles of the Olympic charter itself. Over the past 105 years of the BOA’s existence, it has always sought the best possible relations with Government while retaining its independence, allowing for the freedom to act in the best interests of the sportsmen and women. With the enormous honour of the Games being bestowed on London in 2012, the BOA is for ever conscious of the growing involvement of government in all aspects of sport, driven by their direction of lottery and central government investment into elite and community sport, and the growing global recognition of the political and electoral power of sport in the 21st century. Whether it is taking inner-city kids off the escalator to crime through sport, recognising that sport and recreation should form a key component of health policy or as a central tenet of education policy, nowadays there is not a single department of state which does not have an involvement in policy affecting sport and recreation.
Hosting the Olympic Games increases exponentially the desire of Government to seek political benefit. The Olympic Games are regarded as the golden goose, eagerly sought by politicians for its glistening electoral egg. Throughout the 21st century, the temptation felt by politicians to reach out for Olympic and sporting magic will be too seductive to avoid on a scale not seen before. Sport has a duty to respond and to protect its autonomy. To do that, my message today is that it has to be equally well prepared and equipped.
All organisations involved in sport in the United Kingdom have recognised the magnitude of the challenge before them. Sport is built on the work of volunteers and those coaches, clubs, governing bodies and international federations who protect and promote their interests. No sporting organisation should ever succumb to being part of a politically controlled, centrally managed or nationalised industry—however strong the political pressure. The British Olympic Association believes that governing bodies are best placed to run their own sports and will continue to provide services, assist, represent and support them to ensure their autonomy and freedom to deliver are protected.
I firmly believe that the way to deliver a true legacy for the 2012 Games is not just through wider sporting participation, better facilities and a successful Team GB performance; it is about responding to the issues we face with greater politicisation of sport at the national and European level. I support the stance taken by the president of the International Olympic Committee, Jacques Rogge, who stated in September 2007:
“The responsibility sport has in society and the autonomy with which it regulates itself are central to its credibility and legitimacy. Autonomy thus means preserving the values of sport and the existing structures through which it has developed in Europe and around the world. Sport can play its unique role thanks to its autonomy, and this role would be seriously compromised if the governing bodies of sport are subject to public interference”.
I shall give an example of the importance of preserving the autonomy of sport and in particular the Olympic movement. The British Olympic Association has been asked by the coalition Government to work with them and Sport England to see whether it is possible to develop an “Olympic-style school sport” event as one of the key legacy programmes from the 2012 Games. From the outset, I warmly welcomed the Government’s approach to improving competitive sport in schools—the bedrock to ensuring we have a consistent stream of potential future Olympians, club membership and a pyramid of participation.
The Olympic-style school sport event should not duplicate existing good practice but should include those school sport organisations that are organised, without government intervention, by the national governing bodies of sport. As a membership organisation of the 33 Olympic governing bodies, we resolutely maintain that any new competition should fully incorporate the work of our sports and indeed, any other governing bodies which can be encouraged to join the project.
Similarly, there is no better model to follow in constructing the Olympic-style school sport event than the outstanding work of the London Youth Games, which many of us have followed over the years. The young talent on display there is impressive and typical of what we would hope to see nationwide throughout the new event. In this context, we at the British Olympic Association are working to meet our International Olympic Committee obligations regarding the protection of Olympic rights, the protection of our autonomy and the best possible structure, governance, commercial approach and, above all, the involvement of governing bodies in the design of the project.
The Team 2012 model, supported by the International Olympic Committee, provides an excellent starting point and I congratulate the Secretaries of State in both the DCMS and the Department for Education, as well as Sport England and the Youth Sport Trust, on their initial hard work to see whether it is possible to deliver an Olympic-style school sport event. We will need to avoid duplicating existing good practice and an inefficient use of resources, financial or otherwise, seeking instead to build on the outstanding work done by the voluntary sector. The Olympic-style school sport event has the potential to be a classic case of empowering local communities, schools, volunteers and clubs through an association with the Olympic movement.
We should also take note, however, of dissenting voices and concerns; for example, the indefatigable noble Baroness, Lady Billingham, who wrote to me recently and offered her regret for being unable to speak in today’s debate due to a wholly understandable prior commitment. She expressed concern about the governance of sport in Britain, the large governing bodies that sometimes fail, as she sees it, in their fundamental task. She wrote:
“Not only are they falling short in sporting excellence but grass root sport is also suffering. Some minority sports seem to have little or no support and they are often the activities that depend on volunteers to survive. We need a much stronger framework for sport in general, with transparency and accountability at its heart”.
Her comments should be studied carefully.
The best legacy that British governing bodies can receive in the context of today’s debate, and indeed in the context of the Games, is to be empowered. The clubs, voluntary organisations and governing bodies must be fit for purpose to deliver services of the very highest order to their membership and, through them, to the sportsmen and women who they ultimately represent. If sports organisations are fully equipped with good governance, transparency and in-house expertise and increasingly backed by lottery money resulting from the Government’s welcome reform plans, they will then be able to continue to resist attempts at interference from politicians of all political complexions, at whatever level, and protect the freedom and autonomy of sport and the sporting movement. The life blood of that movement is the volunteers who invest their time so heavily in the love of sport.
I call on the coalition Government to continue to dismantle the bureaucracy of centralised control; to retain the level of financial support to our athletes though the lottery for 2012, 2016 and beyond, with the light-tough regulatory control required by recipients of lottery money and public funding; and to leave a lasting sports legacy from the Olympic and Paralympic Games by empowering volunteers, clubs and governing bodies to be the sports delivery mechanisms for future generations.
Lord Addington
My Lords, when I saw that the noble Lord had tabled this debate, I rushed to put my own name down but, unfortunately, I did not bring dozens with me. I thank him for doing so, because sport is one of those subjects that politicians tend to clap about loudly but forget about when it goes away or when there is something else to clap about. That is the fact of the matter. Without people like the noble Lord taking the initiative, the subject tends to disappear under the radar.
The noble Lord made a central point about politicians tending to interfere in sport and then forgetting about it. I do not know how much interference has taken place in school sport. Maybe a few people have said, “We’ll have non-competitive sport in school”. Every time that we have discussed this, I have said: “You mean exercise? You mean formulated exercise, walking up and down and carrying something? That is not sport”. Sport has an element of competition. Whoever wins the game of some sort of tag race in the playground may not be a matter of life or death, but it has an element of sport in it, and that is what makes it attractive and gives you the buzz of taking part.
The noble Baroness, Lady Billingham, has talked about one sport in particular but, in general, when it comes to governance, large governing sports bodies have a nasty habit of talking to themselves about themselves and resenting anyone who tells them that they are not doing it right. They usually turn round and say, “You don’t know what you’re talking about; this is the way we’ve always done it”. And, because they have not spoken to people outside, the governing bodies themselves do not know what they are talking about, even if what they are doing is out of date and horrible. This circular process has occasionally been broken down, often because of a need for resources from outside.
We must not lose sight of these things. All sports have suffered from the fact that sportsmen like to talk about themselves to themselves. They are almost as bad as politicians; I give as an absolute example of this the next series of debates that the House of Lords will have about itself and, indeed, had last night. We like to talk about ourselves in select groups.
Having got that off my chest, I would like to talk about the bedrock of our sporting culture—that is, the volunteer and the volunteer-run clubs of this country. In Britain particularly, we have a tradition of clubs that get their own grounds, organise themselves on a volunteer basis and generate their own funds. They do not make heavy demands on the state. This means that there are governing bodies that do not talk to each other. There is also a political structure and a governing structure that do not have to pay much attention to each other. Traditionally, these two have worked together. Then there is resentment at the interference as one says “Oh, you need some help”. These two have got in each other’s way.
One logical extension of this is that you intervene positively and aggressively to make sure that these bodies are run better. Many nations do this. For instance, in providing grounds, the French stade municipale—where everybody plays in all the village events—is an excellent way forward. However, since we already have grounds, that might be duplication. We should make sure that schools are always open and always available to volunteers. Most sports clubs start by using school grounds. Previous Governments—the degree of sin here is eternal—have closed down school sports grounds or made them unavailable because it is uneconomic, under the models being used, to support them with staff. They also charged for their use under various underfunding relationships. These are ways in which government does not help.
You start a sports club by borrowing a ground. You get out there and you provide the kit and the opposition. Once you have got beyond that and are running your own ground—which you might have borrowed, rented or bought—it is a case of lowering the regulatory burden. That is another way forward if you are not going to invest positively.
I have had a go at offering some solutions. In the company of the CCPR I came up with a Bill that suggested one or two areas where we would like to see the regulatory burden cut back a bit. That approach seems to stand a better chance of being accepted by the Government in the current climate than asking for quite a lot more money. Also, money given sensitively and with thought and care is rare at all times, and money is particularly tight at the moment.
I had a series of examples but I will not weary the House with all of them. I would probably weary myself first. However, let us take the Licensing Act 2003. Club premises should not be looked on in the same way as an ordinary pub—a high-volume drinking den. Can we do something to reduce this burden? You may not approve of selling calorie-rich alcohol, which can lead to problems, as a way of funding a healthy activity, but it is the only way that these clubs can generate income on a regular basis. Their bar receipts guarantee their activity. The suggestion that the CCPR made to me was for a levy on sports club premises to certify fees against 20 per cent of the rateable value, in line with those other sports clubs that have CASC status. It would be a good step forward if that were brought in across the board.
We can go through other ideas but my favourite has to do with music licensing. If you have a television on the premises and you happen to watch programmes that have music in them, you end up with fees that are estimated this year at £369. Why do we have this if all people are doing is watching a football, rugby or hockey match with music at the beginning of it or in the programme immediately afterwards? Can we not make some form of derogation that means you only have to pay for this licence if you are using the place to generate income through playing music? Can we not have some way in which people can break out of this, or bring in some form of sensitivity?
These are very small fees that are being charged; they cannot be that beneficial to collect. Then there is the person who has to fill in the forms. I am secretary of the parliamentary rugby club and there are enough forms to frighten many people, although I manage to get somebody else to do most of them for me. But being faced with great volumes of forms can put off the secretary, the treasurer or the chairman. People need support and help in carrying out those roles. Can we not say, “Don’t do so much. If you cannot get somebody in who can show you how to do it, cut down”? Cutting down the burden will allow and encourage people to take part.
The Olympics is a catalyst for legacy; if we think that the legacy will disappear after the Olympics, we are doing sport the greatest disservice we can. It required people to think that the Olympics had to have a legacy. Let us face facts, something had already gone badly wrong. If we are going to make sure that people find it easy to do something, it is one of the best ways. People take a lot of time and put in a vast amount of effort and spend their own money so that they and others can play sport. They do it voluntarily. They do it because of the thousands of Saturday and Sunday morning soccer and rugby teams that are out there, not to mention cricket, tennis and hockey. These organisations are basically organically grown. If the state will not assist them aggressively, it must make sure that it does not impede them.
I look forward to hearing what my noble friend has to say about this. If you are not going to help, get out of the way.
Baroness Jones of Whitchurch
My Lords, I thank the noble Lord, Lord Moynihan, for initiating this debate. He has a wealth of knowledge and experience at all levels of sport, which makes him an ideal sponsor for this debate, and he has raised some important questions.
I approach this debate not as a sports expert—indeed, I can still vividly remember a number of rather painful experiences on the sports field of Whitchurch High School, which I will not regale noble Lords with now—but as someone who is rightly proud of my party’s achievements in investing in sport and encouraging all young people to find a sport that they can enjoy. So I disagree with the noble Lord, Lord Addington, that Governments meddle inefficiently in sport.
When we were elected in 1997, competitive school sports had virtually disappeared from the curriculum. Since that time, school sport has been transformed, with 84 per cent of pupils now doing two hours of PE per week and 78 per cent involved in competitive sport in school. In addition, strong partnerships with primary care trusts, local authorities, transport, police authorities and the voluntary sector have maximised the overall health, skills and confidence-building benefits that give young people a greater start in life.
Had we been re-elected, our manifesto aimed even higher: to extend participation in school sport further; to open up school facilities to the community; to create 10,000 new volunteer coaches; and to invest in new sports facilities. We were truly aiming for a golden decade of sport which, from the grass roots to the elites, would have allowed Britain’s sporting talent to be supported and celebrated. But now, instead of that hope and ambition, one of the first acts of Michael Gove at the Department for Education was to wind up the Youth Sport Trust, which had done so much to develop a nationwide programme of school sport, and instead redirect the money to general school funding. On this I very much share the view of my noble friend Lady Billingham, who, as we have heard, cannot be here today. She argued persuasively in the CSR debate last week that the outcome of this move will be inevitable; school heads, desperate to do well in Ofsted inspections and league tables, will be bound to transfer the money from PE into more academic subjects. The result will be a loss of all that expertise and commitment that have been nurtured over time. Therefore, I should like to ask the noble Baroness how much sport per week she envisages pupils taking under this Government’s proposals. What local partnerships does she envisage overseeing the sporting activities that will remain? What will be the impact on governance of sport at a local level?
As we have heard from the noble Lord, Lord Moynihan, this is a crucial time for UK sport in the run-up to the Olympics, and we are in the global spotlight as never before. We will be judged on our delivery of a successful Games and an increase in our cache of medals, but most importantly we will be judged on our legacy of embedding sport as a universal activity at grass-roots level, so is this not a rather strange time to start merging some of our key national sports organisations such as UK Sport, the Youth Sport Trust and Sport England? This will inevitably result in them taking their eye off the ball, so to speak. If we care about succeeding in delivering the Olympic legacy, surely the better route would be to leave the current bodies in place and build up their governance and accountability structures. I should be grateful if the noble Baroness could comment on this point.
At the heart of this debate is a very real concern about standards of governance in grass-roots and national sports. It is fair to say that sporting bodies have been slow to take up the challenge that business and the voluntary sector have been grappling with for years. Again, I slightly disagree with both previous speakers on this issue because it seems to me that the voluntary sector does understand the need for good governance in a way that some local and voluntary sporting organisations may not. It is obviously dangerous to generalise, but there have been some high-profile cases that have shone a painful light on some of our much loved institutions. In football, the recent cases of the disputed ownership of clubs such as Liverpool and Manchester United have raised the question of supporters’ rights to a say in the ownership. In cricket, issues of match fixing, betting and corruption haunt the international sport. In track events, the continuing shadow of performance-enhancing drugs and the lack of effective controls regularly hit the headlines. Even the Lawn Tennis Association is accused of a lack of transparency in its funding and a failure to deliver promises to roll out a grass-roots programme.
Some of these examples underline the fact that many sports are big business and there are obviously limits on how far government can intervene. But even in professional sport government can, and should, play a supporting role in order to get fans a fair deal from the sports they love. For example, government can intervene to combat cheating and ban the use of illegal substances. It can also prosecute those involved in match fixing, improve the regulation of betting and work with sporting bodies to make sure that they are accountable to their stakeholders, are transparently run and have the power to scrutinise the takeovers of professional clubs. Of course, where government money is used to help fund specific activities of these organisations, our powers to intervene are that much greater.
It seems to me that there are some key principles of governance that we could require sports organisations to adopt. It is no longer good enough to make excuses for the poor performance of some amateur organisations. The participants and supporters have certain rights. Sport England has already taken a first step by producing a self-assessment tool for governance, but more could, and should, be done. A recent report by Birkbeck College entitled, Good Governance in Sport, researched what national sports bodies were doing and set out a set of standards for the future. Its blueprint is a great starting point for governing bodies struggling to raise their game. It includes advice on the size of boards, the need for independent non-executive directors, annual board performance evaluation, appointments procedures and risk management policies. It also proposes that boards understand their stakeholders better and implement engagement and participation strategies, including representation on the board. For those of us who have been involved with governance in other sectors this might all sound rather obvious, but it seems that what is needed now are some core principles and measures of good governance that can underpin every sports body and reassure everyone involved.
This is a welcome debate that raises some fundamental issues about how our sports bodies are run. There is an opportunity here for the Government to follow on from the good work already carried out by their predecessor, and I look forward to hearing from the noble Baroness how she intends to take this crucial work forward.
Baroness Garden of Frognal
My Lords, I, too, thank the noble Lord, Lord Moynihan, for calling this debate today and for his excellent opening speech. As a former Olympian and Minister for Sport, and current chair of the British Olympic Association, he has great expertise in this area which is valued by colleagues across all sides of the House. I also thank the two noble Lords who have also spoken today on this important issue.
The governance of sport, and particularly the governance of sports by their national governing bodies—NGBs—is a key part of the sporting landscape. Over half of all the government and lottery funding distributed by UK Sport and Sport England goes to NGBs, so NGBs need to get their governance right if, as a country, we are to deliver Olympic and Paralympic success and encourage more people to take part in sporting activities. That is why I am grateful for the helpful and erudite contributions made to the debate today. We will take them away and reflect on them further as we develop our proposals in this area.
Before I turn to NGBs specifically, I ought to mention what the Government are doing to strengthen the governance at the very top of the pyramid; all three noble Lords referred to this. As they will be aware, we intend to merge UK Sport and Sport England after the Olympics and Paralympics, to simplify the current landscape. That change will facilitate a more coherent approach to issues which affect sport at all levels, such as coaching, and be more efficient, maximising funding to our front line. I reassure noble Lords from Scotland, Wales and Northern Ireland that we do not propose any changes to the sports councils in those countries, which are not our responsibility as they have been devolved. Also, we are discussing the details of our proposals for UK Sport and Sport England with Ministers and officials in those countries. We want the merged body to have an even stronger relationship with the home country sports councils and work with them even more closely for the benefit of sport across the UK.
The noble Lord, Lord Moynihan, is absolutely right that we need to work with NGBs to strengthen their governance, while protecting their autonomy and trusting in their expertise. But I add that we have a responsibility to ensure that their spending of public funding represents value for money for the taxpaying and lottery-playing public. It is not money for nothing. Along with the other speakers, I add tribute to the volunteers who do so much to ensure the high quality of sport in this country. Both UK Sport and Sport England have sought to tread the fine line in recent years, improving the regular mechanisms for holding NGBs to account for public money through their Mission 2012 and whole sport plan processes, while avoiding continual bureaucracy. Both bodies monitor the governance of NGBs as part of their overall assurance work.
However, that has been given added focus by an independent investigation established by Richard Lewis, chairman of Sport England, and undertaken by Timothy Dutton QC in 2009 into Sport England’s world-class payments bureau, set up under previous management and operated between 1999 and March 2007. The bank account had operated outside the usual financial controls of Sport England, falling far short of the procedures and safeguards now in place in the organisation. There were mistakes in the way this was run, which have since been addressed by the new management team in Sport England, but it was set up because it was not possible to have the appropriate confidence in certain NGBs’ governance and systems in relation to the use of public money.
More recently, there was the collapse of the British NGB for skiing and snowboarding, Snowsport GB, less than a month before the Winter Olympics in Vancouver in 2010. The quick work of the organisation of the noble Lord, Lord Moynihan, together with support from the talented athlete scholarship scheme and UK Sport, ensured that our skiers and snowboarders were able to compete in Canada.
In response to the noble Baroness, Lady Jones, UK Sport and Sport England are currently working together even more closely than before to help improve the governance of NGBs. Governance, together with performance and finance, is one of the components of Sport England’s and UK Sport’s overall assessment of NGBs. They are currently developing at nil cost a governance, finance and control framework tool which is shortly due to be available on both websites, and which has previously been referred to. This will set out the necessary standards for bodies and provide prompts on how they might go about meeting those standards.
However, the Government do not view this as the end of the story. We want to continue to work with NGBs to help them further to improve their governance as part of our Olympic and Paralympic legacy plans. London is not just about building fantastic sports venues, boosting the UK economy, regenerating east London and hosting a once-in-a-lifetime event. It is also about putting in place a world-class sports system with proper governance from top to bottom.
There are two areas in particular that we would like NGBs to work on. First, we would like to ensure that they have high-calibre independent non-executives on their boards to help drive business forward, whether this is in terms of financial management, efficiency or capitalising on their commercial potential. Secondly, we would like NGBs to consider whether their current boards reflect the diversity of our society today, in order to help sports provide a service for underrepresented participant groups who may feel that they do not have the opportunity to play, such as women, ethnic minorities, the disabled, gays, lesbians and transsexuals. We would hope that all with enthusiasm and talent can feel able to participate and to feel welcome when they do so.
As well as governance processes, we believe that reducing bureaucracy in sport will assist clubs, voluntary organisations and governing bodies, and this is why the Minister for Sport and Olympics, Hugh Robertson, has tasked the Central Council of Physical Recreation with carrying out a review of bureaucracy and red tape as they affect sport. The noble Lord, Lord Addington, referred to two particular issues which the CCPR has been asked to address, and I assure him that it should report its findings to the Minister in early 2011 and then pass recommendations to the Deputy Prime Minister, who is responsible for reducing bureaucracy in the life of the nation as a whole. Certainly, the items that my noble friend mentioned regarding the licensing of alcohol and music are pertinent. It will be very relevant to review how much of a hindrance they are to the good and honest management of local clubs.
Strengthening governance and reducing red tape in sport is not an easy task, but the Government are committed to taking this forward and to being accountable to communities for doing so. There are specific aspects to this which noble Lords have mentioned. Various references have been made to the noble Baroness, Lady Billingham. She spoke to me to say that she regretted not being here. She has in particular been a tremendous champion for lawn tennis and has done great things in widening access to young people and others to enjoy that sport.
The noble Baroness, Lady Jones, also mentioned school support. Indeed, this Government are fully committed to introducing more competitive sport within our schools and between all schools across the country. An aspect in the business plan of DCMS states that its overriding aim is to encourage competitive sport in schools by establishing an annual Olympic and Paralympic-style schools event, improve local sports facilities and establish a lasting community sports legacy. The words of the noble Lord, Lord Moynihan, in support of that Olympic-style school sport event were highly pertinent here. That is something which could get local communities and young people really enthusiastic about sport and able to participate as they wish.
I also take on board the comment of the noble Lord, Lord Addington, about the competitive element in sport. I agree that running an egg-and-spoon race where it does not really matter who hits the line first is probably not as exciting as having one where there is just that edge of getting there before the others. I have grandchildren and I know that primary school sports days can be truly exciting as long as no child is totally depressed and they can all find something that they can enjoy. That is something that the local community can be involved in: not turning off young people from sport if they are not winning, but finding something that they can participate in and truly enjoy.
Various noble Lords mentioned volunteers. Empowering volunteers is of the utmost importance. The Government must make sure that they help rather than hinder by moving things forward and making more sporting facilities available to more people.
I am conscious that I may not have answered all the questions that have been asked in today's debate. I will look through Hansard and, if I have not, I will of course reply to noble Lords in writing. I commend the business plan that the Department for Culture, Media and Sport published this week. It contains some noble aims and aspirations, and we intend to keep to them. I commend also the work done by all sporting communities, particularly in the run-up to the Olympics and Paralympics, which will be a focus for energising interest in sport. I thank the noble Lord, Lord Moynihan, for the opportunity to debate sport and recreation, which play such a significant part in the life of the nation, and I thank other noble Lords who contributed this evening.