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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.