Westminster Hall
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
Overseas Voluntary Sector
(14 years ago)
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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
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I thank you, Mr Bone, for taking the time to chair this debate. I welcome this Government’s policy to increase overseas aid from 0.56 to 0.7% of gross national income—a step that was agreed in 1970, the year of my birth. By the time I am 45, we might have met our promise. Other Governments have failed. I wish this Government well in meeting their stated aim within the projected time scale.
Although I welcome the increase in the Department for International Development budget, I want to know what it will mean in respect of my experience in the sector. One windy, rainy day in the Outer Hebrides—we do have such days—I clicked on the DFID website, being at a loose end, and looked at pages on working with DFID, funding opportunities, not-for-profit organisations, and programme partnership agreements. Hon. and right hon. Members will have guessed that it was one of those wet and windy rainy days in the Outer Hebrides when the wind howled and the rain lashed; they are few and far between, but they do happen. I also looked at the part of the DFID site that invites applications for a new round of PPA funding. Finally, in frequently asked questions, under “Proposal and Logical Framework information”, my eyes alighted on point 2, particularly the following sentence:
“Successful applicants cannot receive a PPA which is more than 40% of their annual income, averaged over the previous three years.”
Having been asked by VSO to go on an overseas placement to Cambodia, I had to ask what that meant. At this point, I should mention the sad news from the festival in Cambodia over the past couple of days, where up to 350 to 400 people lost their lives in a crush. In Cambodia, I was aware of DFID funding coming through VSO and of the high esteem in which DFID is held overseas.
Therefore, my interest in this topic was driven not by the rain, but by the fact that I had been on a placement to Cambodia, as a Member of Parliament, for two or three weeks, and I felt a debt to VSO. Voluntary service overseas expanded my horizons most definitely and I felt duty bound to ask what DFID had on the horizon for VSO—that will probably also affect One World Action and Progressio.
At a time of budgetary concerns, I felt that my interest was a mere courtesy, the sort of courtesy that we Scots are famous for—he said, looking at his friends from Northern Ireland—especially as the DFID budget is to grow, according to page 60 of the comprehensive spending review, by 37% over the next three years. Although my comments will be mainly about VSO, as I have said, this matter affects other organisations.
Two years ago, when I spent time as an advocate in Cambodia, using my status as an MP to bring about change in education, I saw the work of VSO and was privileged to bring about, to a slight extent, a change in teachers’ salaries, making them less prone to corruption and making exam results more believable, which is an important factor in an emerging economy if skills and professionalism are to be trusted. I saw the good work that VSO was doing. In its turn, VSO ensured that other MPs, not just me, saw what was happening outside the Westminster and western European bubbles.
Ever since its creation in 1958, with a grant of £9,000, VSO has blossomed into one of the foremost aid organisations in the world, aiding countries in training health workers and teachers, from Sri Lanka to Malawi and in 44 other countries, reaching 26 million people in those countries—not the total population, but the number of people that VSO reaches and touches through its programmes and partners.
David Simpson (Upper Bann) (DUP)
I welcome you to the Chair, Mr Bone, and congratulate the hon. Gentleman on securing the debate. I will not even try to pronounce his constituency. We have difficulties enough in Northern Ireland with the English language, so it would be difficult to try to get that.
Does the hon. Gentleman agree that, for many years, one difficulty in respect of overseas aid has been that not all the moneys have gone to those most in need? Although we appreciate and welcome the increase in funding for the overseas voluntary sector, does he agree that it is essential that, during these economic times, money is targeted, because it can so easily be sidetracked to unscrupulous characters?
Mr MacNeil
The hon. Gentleman anticipates me. He raises the concerns of many. I hope to demonstrate that such fears can be allayed, so perhaps the Gentleman will bear with me. If I do not answer his concern, I would welcome another intervention.
Malcolm Bruce (Gordon) (LD)
I congratulate the hon. Gentleman on securing this important debate. I apologise because I will not be able to stay to the end.
Does the hon. Gentleman agree that the partnership between DFID and VSO is hugely valuable and that millions of people benefit from it? It is not an unreasonable proposition for its funding to be limited to 40%, but it might be unreasonable for that to be done in too short a time. VSO recognises that, if it has to accommodate that within three years, its programme could be halved. Does he agree that the Government should be prepared to negotiate to ensure that VSO’s services are not cut and that it gets the money, and that business, for example, should support this valuable work?
Mr MacNeil
Again, my remarks have been anticipated. I welcome the right hon. Gentleman’s comments. It is important that money is spent properly and that, if changes are made, there is a managed transition, not a breakneck-speed shift overnight.
VSO has also helped in one of the most important government activities, without which there would no health care, no education and no spending. It has helped the Governments of Bangladesh and Sierra Leone specifically to collect taxes from their people. Perhaps Ministers’ eyes will light up at this point—perhaps not—but that is a sign that people are getting round to trusting their Governments. Perhaps some hon. Members would like VSO to go into the City of London to ensure that every penny of tax is paid. But I digress. VSO’s work in that regard shows that corruption abroad can be tackled, that the high-value components we take for granted in our civic lives can be established and that normal society can start to be built.
VSO specialises in capacity building. It takes nationals from various countries—mainly the United Kingdom—and places them mainly in less fortunate countries. The value of the professionalism of volunteers, if they were to be paid what the market paid them before they joined VSO, would be some £18 million. Hon. Members might want to think about that. Volunteers forgo £18 million in wages annually, presumably based on a 40-hour week, but on top of that they move abroad. However, it is not quite the abroad that we know or as we like to imagine it—it is the other abroad of malaria and dengue fever. I met a volunteer in Phnom Penh who was getting over a rather nasty dose of dengue fever. Of course, volunteers are often abroad in a village with no electricity and, perhaps, no running water—for not just 40 hours a week, but 168 hours a week and 24/7.
Volunteers build capacity in education and health. They build capacity wherever it is needed. They are ordinary men and women and I would argue, perhaps controversially in the current surroundings, that they have a greater sense of service than politicians, although, in fairness, most politicians get into politics to serve society. However, these people seem to get into volunteering to serve humanity.
These examples are just the tip of the iceberg and I am sure—I know—that other organisations do good work as well. However, this is threatened by what could happen to just 1% of the DFID budget. My colleague from Northern Ireland, the hon. Member for Upper Bann (David Simpson), raised the following matter in his intervention. VSO received 51% of its funding last year—less than a third of 1% of DFID’s budget in that period—from DFID. Almost a decade ago, VSO received 90% of its funding from that source, but this year it is projected to fall to 48% and in five years it will be less than 40%.
The problem stems from that rainy afternoon, where I read in point 2 of the FAQs titled, “Proposal and Logical Framework information”:
“Successful applicants cannot receive a PPA which is more than 40% of their annual income, averaged over the previous three years.”
That would be immediate from next April.
I know and hope that the Government’s heart—like that of every hon. and right hon. Member in this Chamber—is in the right place, but do they realise what a sudden swing of the axe could do? It could equate to a reduction of volunteers by 50% and reduce the number of beneficiaries—the 26 million who are affected, reached and touched by VSO programmes—to 12 million. In short, the cuts will not hurt VSO as much as they will hurt those who benefit from the help and aid.
Organisations such as One World Action and Progressio will be pushed to cut where it is administratively quickest and easiest. Cuts will be too quick and too deep; transitional arrangements will be hard to make, if indeed they can be made at all. However, DFID is receiving an increase in funding. It is one of four Whitehall Departments to receive an increase, and one of two Departments, together with the Cabinet Office, to receive a double-digit increase in funding. According to the comprehensive spending review, the Cabinet Office budget has risen by 28% and that of DFID by 37%. On the surface, that seems to bode well for all organisations that use DFID funds. However, an increase in the departmental administration budget seems not to guarantee the safety of funds that go to the overseas voluntary sector.
The Minister of State, Department for International Development (Mr Alan Duncan)
Perhaps it might help to shape the rest of the debate if I were to point out that the partnership programme agreement funding is but one source of possible funding streams for voluntary organisations. If there is, as there will be, a 40% cap on a PPA, that is not necessarily a 40% cap on all the money that could go to a voluntary organisation. Such organisations could, for instance, also apply for in-country funds.
Mr MacNeil
I greatly welcome the tone of the Minister’s remarks. They seem to indicate that the door is ajar, and that he is ready to ensure that the transition happens in the managed way that all in the Chamber would hope for and expect. The threat is perhaps not so great given that opening door from the Minister, and we have heard of the value of volunteering from the Prime Minister. I hope that I am wrong, and that this is not an instance where one arm of the Government is not fully aware of what another arm might do. In reality, we have been told that the PPA will give no organisation more than 40% of what they received, although the Minister now indicates differently and I am pleased at that.
What does the Department intend to do with the increase in funds? Under current budgetary plans, DFID’s budget will rise from £7.8 billion to £11.5 billion over the next four to five years.
Mr Gregory Campbell (East Londonderry) (DUP)
I congratulate the hon. Gentleman on securing the debate. He speaks about the increase in funding. Does he agree that on occasion, resistance in the media or among some sections of UK society to increases in overseas aid inevitably involves criticism about corruption? That is where there is resistance to overseas aid. The Government, and all of us, need to do everything possible to eliminate the concept of corruption as it affects overseas aid.
Mr MacNeil
The hon. Gentleman is correct in what he says about corruption. From my personal experience, and from examples of tax raising, VSO in particular has been effective in tackling corruption with very low resources. The increase in teachers’ salaries in Cambodia was about tackling corruption to ensure that students did not offer their teacher money to pass their exams. That was low-level corruption, but it is important that the idea and feeling of corruption is eradicated from a society.
VSO will put a volunteer in the field for about £661 a month; a consultant might cost up to £10,000. We have aid programmes that can use money and provide a good service with real value. During recent questions to DFID, a question was asked about the co-ordination between various NGOs and their advocacy departments. I went directly to some of the NGOs and found an umbrella group called Bond—British Overseas NGOs for Development. It ensures collaboration on various issues between the NGOs, so that each organisation works to its strengths and does not overlap. I say that to highlight that such groups are a lot more sophisticated than they are credited as being, certainly during DFID questions last week.
Why does the Department insist on cutting from budgets based on the average budgets of the past three years? If the cuts arrive, will the Minister guarantee that the shortfall will be made up by other pockets and purses within DFID? It is arguable that cuts based on average budgets of the past three years will be too deep and too fast. Although everybody has to find savings, surely we can find a way to cut that does not threaten our commitments to effectively spend 0.7% of gross national income in overseas aid. Organisations such as One World Action, VSO and Progressio are arguably among the best conduits for that aim. If the Government are committed to spending 0.7% of GNI on overseas aid while reducing the budget of UK-based agencies, where will those funds be spent? Where does the Department want to direct those funds? Is it planning for those funds to be directed to the World Bank, in the way I think has been suggested? What I said about consultant costs could be applicable to that.
Jo Swinson (East Dunbartonshire) (LD)
Like the hon. Gentleman, I have had the great advantage of taking part in VSO’s parliamentarian scheme this year when I worked on a climate change project in Nigeria. I take his point about the value of VSO. Does he agree that VSO is almost the ultimate in the big society, with volunteers from across the world giving up their time for the big global society? That means that every pound spent on that organisation is such good value.
Mr MacNeil
The hon. Lady is absolutely spot on. It is about the big society and being aware of a bigger picture. It is about spending money effectively. One thing that struck me when I spent two or three weeks in Cambodia with VSO was that I was not put in an hotel; I was not put anywhere plush or posh but I was camping in a room next door to the main VSO headquarters in Phnom Penh. No extra money was wasted. If I am honest, every penny seemed to be a prisoner with VSO, which means that it was being spent effectively in the right ways and places.
Jo Swinson
I hope that the hon. Gentleman does not mind me interrupting him once again, but I wondered whether I could ask if he had the experience of having electricity in his accommodation. Although there was supposed to be electricity in the flat in which I stayed in Nigeria, the vagaries of the power companies meant that it did not work while I was there. That is one interesting way of cutting back on costs.
Mr MacNeil
I am grateful to the hon. Lady for that. I must have lived at the posh end of VSO, because I had a mosquito net and a fan.
Mr MacNeil
Yes indeed—luxury. I had a reasonably comfortable night, but if the fan had broken down and the electricity had gone I would have been in real trouble. That goes to show that the experiences we have had were similar to those of other volunteers. Apart from a fan and a mosquito net, VSO has not feather-bedded MPs at all. Perhaps other volunteers have experienced far worse.
The reason that I make suggestions and raise the issue is to help the Government pause and get it right. I am sure that they want to get it right, but this is not about politics. Real people and real issues are at stake. The organisation started 52 years ago in 1959 with a £9,000 grant. That is approximately £160,000 in today’s money. It has blossomed into a world leader in overseas voluntary aid. It was the progenitor of other great organisations such as the Peace Corps in the USA, which started in 1961 with a grant of £30 million.
I believe that we are lucky to have such organisations working on our behalf and in our name, giving people from this country an opportunity to help, and most importantly, giving others a helping hand to make the world a better place. People do that without the need for weapons or sanctions. They do it mainly from the kindness of their heart and feel that the world could be a better place if they contribute in some small way. Their work should be supported at all levels and from all facets of life.
There is a fear—I hope only a fear as I am mindful of what the Minister said—that organisations could see a reduction in income from DFID. However, those organisations are planning to go below the Government ceiling anyway over the next few years. I appeal to the Minister, who I know is a sensible and reasonable man, not to do any harm, but to do good work. I ask him to crack canny with the pace, as they might say in Scotland, keep delivery in place and not endanger anything for the sake of 730 days, or two years, and to manage the transition in a careful, thoughtful way, without resorting at pace to the axe.
Mr Roger Gale (North Thanet) (Con)
I start by thanking you, Mr Bone, for enabling me to make a speech this morning rather than my being in the Chair. I know that that has been inconvenient for you, but it is very kind and much appreciated.
I congratulate the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) on his good fortune in securing the debate. I suspect there will be some repetition this morning. My right hon. Friend the Minister will be aware that many hon. Members on both sides of the House hugely appreciate the fact that, even at a time of austerity, the Government have found it possible not only to protect DFID’s budget, but to enhance it. That is not particularly fashionable electorally. We all have constituents who say, “Why are you wasting that money over there when we ought to be spending it here?” However, I think we all agree that it is a mark of a civilised society that the relatively rich do their utmost to help the very poor. It is also money well spent in terms of international security and even business investment. We appreciate that.
Jim Shannon (Strangford) (DUP)
The hon. Gentleman talks about the need for society to consider people in other countries, which is what we all look towards doing. I am sure that, before the election, he, like many other hon. Members in the Chamber, was approached by Christian Aid and other organisations regarding ensuring that the moneys needed overseas would continue to be provided. I understand that the Government have given a commitment to that. However, this debate is about VSO—overseas volunteers. Clearly, they are part of society as well, and many people want to contribute and do something. Does the hon. Gentleman agree that we must do more than, possibly, what the Government are doing and go along with what the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) has proposed this morning?
Mr Gale
If the hon. Gentleman will bear with me for a few moments, he will discover that we are not poles apart. When I go on to talk about VSO, he will understand that I think that a very good way of making a significant and practical contribution.
I need to declare two interests. First, I am a trustee of an organisation called the Society for the Protection of Animals Abroad. SPANA is probably the leading charity worldwide in saving and caring for working animals. There are very significant parts of the world, and societies, where working animals are people’s livelihood. Following disasters such as floods, earthquakes and famine, if those animals are allowed to die, people die, and I have never seen any point—brutal though this may seem—in saving a child’s life today only to see it die of starvation tomorrow. If we are to invest money well, we must ensure that the long term and the mid-term are catered for, as well as the very short term. I mention that not because SPANA receives money from the Government. It does not; nor does it wish to. What it does want from the Minister’s Department is greater recognition, a greater opportunity to play its part in helping in places where there is poverty and disaster and, if possible, a seat at the Disasters Emergency Committee table, because there is no such representation in that body. I ask my right hon. Friend to take that thought away with him.
My second interest to declare is that I am one of the growing band of parliamentary graduates of the Voluntary Service Overseas scheme. The hon. Member for Na h-Eileanan an Iar is one such, and others are present. I know that my hon. Friend the Member for Southend West (Mr Amess), if he is able to catch your eye, Mr Bone, will want to make an equivalent contribution.
I had the good fortune to spend a fortnight in Ghana in 2009 with the Ghana Federation of the Disabled. My task was to seek to promote good governance within the disability community in Ghana. That organisation is facing considerable change internally, following the passing of laws designed to assist the disabled. It is a moot point whether they will do so. As we all know, Mr Bone, passing laws is one thing; implementation is just as important. Part of the task was to prepare a paper designed to offer a template for future work by other parliamentary colleagues and by the organisation itself, and establishing relationships with Members of Parliament on the all-party disability group basis that we understand here, but that Ghanaians have no experience of. As an aside, I think it incredibly valuable for parliamentarians to have the opportunity to go overseas to contribute, but also to learn.
Hon. Members’ experiences overseas have been mentioned. I, too, had a mosquito net and a fan. My fan was called Ed—Ed was a cockroach. Ed and I became great friends over my fortnight in Ghana. The existence was basic and the funding was basic. I am told that VSO volunteers generally receive no more than £200 a month. Even in these days of austerity, most people in this building are accustomed to living on a little more than that. The great thing about such a scheme is that we get out of the city, out of the big hotel, into where the action really is and see life as it is, and perhaps make a modest contribution.
When I arrived in Ghana, I had the good fortune to be coming in on the back of an intake of 30 VSO volunteers just in that one country. They were people from all walks of life. That needs to be underscored. There is an impression that VSO is a gap-year experience or an immediately postgraduate experience, when people have the opportunity to volunteer before they take on marriage, children and other responsibilities and can no longer do that. That is patently not the case. Those 30 volunteers were people from all walks of life and various countries.
I recall an oil engineer and his wife from Australia. Within a fortnight, that couple had made a decision—he had given up his job; they had let their house—and two weeks after taking the decision, they were in Ghana, ready to go out to the west of the country to set up a communications system in the form of a very basic local newspaper. They were people in their mid to late 50s. I recall the former head teacher of a special needs school from the north of England who had taken early retirement to go to the north of Ghana to engage, not surprisingly, in special needs education there. I recall a relatively young civil servant from Leeds, who had given up a secure, pensionable, well paid job to go out to that country to assist in the way she felt she could.
There were young, middle-aged and quite elderly people—I put myself in that category, I suppose—who were all trying to do the same thing. The point has been made, and we ought to underscore it, regarding the present Government, that that is really the big society. That is the global big society. That is what it is all about. That is what I believe the Prime Minister wants to promote and what I know the Department would like to promote. The beauty of it, and it really is a beauty, is not only that the people participating through VSO make a significant contribution—we flit in and out, but most of the people who do that make at least a two-year commitment and some carry on for much longer than that—but that when they come home, they become super-engaged in civic society here because of the experiences they have had overseas, because of the privation. Malaria has been mentioned. A young lady who had been in the north of Ghana came back to the flat I was staying in, with typhoid. Things are rough, but because of that, when the volunteers come home, they bring a huge amount back with them that then makes a significant contribution to our society.
On the current financial situation, I stand to be corrected, but I think I am right in saying that VSO receives roughly 51% of its funding from DFID—my miserable maths suggests to me that some 49% comes from elsewhere. I say to the Minister that if there is to be a 40% cap, realistically that ought to be a 40% cap based on the income worldwide, because a huge contribution is made by industries, organisations and people from around the globe. It would distort the picture a little, in terms of value for money, if the 40% cap were based solely on income in the United Kingdom. I am sure that none of us wants that to happen. I shall explain why it is of such concern.
Mr MacNeil
The hon. Gentleman is making an excellent point. Does he agree that the £18 million, which I suggested was the value in the marketplace of the wages of people such as the oil engineer from the antipodes who gave up his time to work for VSO, should be part of that equation?
Mr Gale
The hon. Gentleman is absolutely right. We are talking about 250,000 national volunteers spread over 20 countries. It is incredibly good value for money. We have heard, and I am sure will hear again, about the low costs.
VSO is hugely cognisant of the fact that we live in an age of austerity and is hellbent on cuttings its costs by up to 30%, as quickly as possible. That will not be easy. It is easy to say that one should cut head office costs and get the money to the front line. We all want to see the money being spent at the sharp end. However, in organisations that require the preparation and paperwork that are inevitable with visas and travel documents, and in looking after people, there has to be a head office operation. VSO has recognised that, as with any head office operation, there must be room for savings. It will do its best to ensure that all the money that DFID gives, from whatever pocket of funds, is used to the best possible advantage.
In conclusion, VSO gets huge bang for the buck. It is immensely valuable, not only worldwide but back here in the United Kingdom. In so far as is possible, even at this time, the Department should do its utmost to maintain the funding to ensure that current projects and planned future projects are possible.
Robert Halfon (Harlow) (Con)
I congratulate the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) on securing this debate. I am pleased that BT broadband is working so well in the Hebrides. I always enjoy watching his contributions from the other side of the House and his remarks today were particularly thoughtful.
The economic crisis and the £900 billion public debt have made times hard. Charities and voluntary groups feel that pressure considerably. I welcome this debate because organisations such as Voluntary Service Overseas have transformed people’s lives. It is important that the House think of them as we try to bring public finances under control.
We must acknowledge that there is some good news: the Government are committed to spending 0.7% of our national income on aid and the DFID budget will grow to nearly £10 billion a year by the end of this Parliament. I welcome DFID’s plan to reform the aid system to prioritise clean water and sanitation programmes, and to give British taxpayers more transparency so that they can see where their money is going. I welcome the fact that the Government will cushion the impact of reductions in public spending through the £100 million transition fund, which will be available to smaller charities and social enterprises. Above all, we have a duty to show that we are getting value for money as Government spending is restrained to grow in line with inflation.
I will focus on apprenticeships abroad. When aid is well spent, it is hugely in our national interest. As was stated in the policy paper, “One World Conservatism”,
“well-spent aid has worked miracles: eliminating smallpox, almost eradicating polio…helping get millions of children into school and saving millions of families from hunger and disease.”
In the debate on global poverty on 1 July, I made the point that the best form of aid is sharing expertise and know-how. Above all, there is no substitute for knowledge. Providing vocational skills and training, such as apprenticeships, is one of the best ways in which we can help our neighbours overseas.
Hon. Members have spoken of their work for VSO. Many of them will have heard of Project Umubano in Rwanda, which I was privileged to go on over two summers to teach English. The people there are hungry not only for food and work, but for knowledge and skills. VSO does a huge amount to share concrete, practical skills. The Westminster Foundation for Democracy, with which I worked a few years ago in Uganda and Tanzania through the Conservative party, shares technical knowledge and advice with democratic parties abroad.
Perhaps in future, DFID might sponsor aid apprentices through VSO on a kind of apprenticeship gap year. Businesses, too, might contribute through social responsibility initiatives, and help to build technical capacity overseas. When apprentices return home to the UK, they will have a proper qualification and will have gained valuable experience, which will help to boost our domestic economy. The gap year is a time-honoured institution. It boosts the confidence of young people before they go to university or start work. Apprenticeship gap years would channel young people’s raw energy and enthusiasm into aid projects, and give them structured training.
We live in a multinational world. Working as an apprentice for DHL in Harlow is similar to working as an apprentice for that company in places such as Delhi, Hong Kong and Beijing. If we offered a high-grade apprenticeship, perhaps a level 3 qualification, it would be as well regarded as doing an apprenticeship at home.
The DFID accounts show that in 2009, we spent £356 million on “innovative approaches to development”. That pot of money might be refocused.
Many of my constituents in Harlow earn less than £200 a week. They ask why, at a time of cuts in public spending, we plan to spend so much on foreign aid. That is not an easy question to answer, other than with the moral case. However, if we can show that we are giving young people opportunities that they would never otherwise have, giving them proper qualifications and, on top of that, helping the poorest communities in the world, perhaps my constituents and the British people will welcome aid spending with open arms. A gap year apprenticeship scheme would be similar to the Government’s planned national citizen service. It might transform the lives of young people, and give them jobs and opportunities.
This is a matter not just of economic efficiency but of social justice. We cannot help everyone, but we can look for ways to increase what my hon. Friend the Member for East Hampshire (Damian Hinds) recently called the gross world product, or GWP, which benefits everybody, including the United Kingdom.
As I have said, there are pots of money in DFID, such as the spending on “innovative approaches to development”, that could be used to deliver this policy. I hope the Minister will consider this idea and the benefits it might bring to young people across the British isles and to our neighbours overseas.
Mr David Amess (Southend West) (Con)
I congratulate the hon. Gentleman who introduced the debate; I will not attempt to pronounce the name of his constituency. He covered the arguments extremely well, and there is little that I can add. I will not get too involved in the argument about funding, given the Minister’s intervention in which he suggested that it will all be fixed and that there is nothing to worry about. We will have to read Hansard carefully and reflect on the possibilities for VSO.
My being here is entirely the responsibility of my hon. Friend the Member for North Thanet (Mr Gale), but I do not regret it. He told a wonderful project manager at VSO, Elizabeth Goodwin, that I was just the right sort of person to take part in her scheme. Like my hon. Friend, I declare an interest that is listed in the Register of Members’ Financial Interests. The trip that I experienced this year was funded by VSO.
To outdo colleagues, I concur that the living conditions were austere. I think that I had electricity—at least, I could see what I was doing—but there was no hot water. I ended up having to dangle some contraption in water. Initially, I thought it was a conspiracy to get me to electrocute myself, but I survived that prospect. There was also what appeared to be a tarantula that was keen, every evening, to get into bed with me, although I was somewhat reluctant to share my bed. There were other sorts of insects, which “I’m a Celebrity…Get Me Out of Here!” would be keen to have on board as a test.
In my early years as a Member of Parliament, in the ’80s, I went to the Philippines through the Inter-Parliamentary Union. The trip was well organised and I thoroughly enjoyed it. I suppose that as a result of that trip I fell in love with the country. Indeed, when President Fidel Ramos visited this country, I had the privilege of taking him on a tour of this place, and I kept in contact with him. Therefore, when Elizabeth Goodwin gave me the list of possible countries for me to visit, and one of them was the Philippines, I immediately said yes.
We in this country now know the Philippines far better than was the case in the ’80s, because many of our care homes and hospitals benefit from the wonderful care of Filipino nurses. I was told that my job was to support the Filipino nurses. I was somewhat bemused about how I was to support them but, simply put, I was told that my arrival would mean that doors would be opened. That is what I was charged with.
I stayed in the residence of the Philippine Nurses Association, which was right next to a large church that seemed to be worshipping 24 hours a day. Two days before I left, Filipino students were collecting their certificates from the college next to where I was staying— 34,000 students were queuing up, over a number of days, to get their certificates. I will never forget that. Sadly, because of the economic circumstances not only in this country, Ireland and Greece but all over the world, it will be difficult for those students to get jobs. Nevertheless, I congratulate each and every one of them.
During my 10-day volunteer period, I was tasked with a number of objectives, all of which we achieved. I was able to understand the depth and the extent of the current issues and concerns of the Filipino nurses regarding the health challenges faced in the Philippines. I was able to acknowledge the unique skills that Filipino nurses bring to their work, thus making them a much-cherished asset in the health care delivery system—as far as the Philippines is concerned, one of its greatest gifts is the people themselves. I always say to one or two grumpy constituents, “A smile doesn’t cost anything”, and yet it lifts spirits—it is certainly a great gift of people from the Philippines.
Another task I was given was to assist the Philippine Nurses Association in soliciting commitments and concrete action from the Philippine Government and the agencies. We argued the case for the placement of a nurse consultant position in the Department of Health, and we were able to meet everyone except the President of the Philippines, although the newly appointed Secretary of Health seemed distracted by the Miss Universe contest, which was going on at the time, and by an urgent message that dengue had broken out in one of the villages. However, I think he understood the message that Filipino nurses needed recognition and a consultant position.
We were also tasked with ensuring that Filipino nurses were provided with humane working conditions and properly reimbursed for their dedication and excellent skills. We argued for the creation of more jobs for nurses in the country, especially in rural areas, where health services are in dire need.
I was born in the east end of London, so I do not need anyone to lecture me about poverty in the UK, although I did not feel as a child that I was being brought up in poor conditions. However, we are all extremely wealthy in this country compared with the circumstances abroad. When one goes to the north of the Philippines, one can see how difficult life is. We went to Ifugao and climbed the rice terraces—I was in one of the two teams and I am delighted to report to the House that we did it four times more quickly than team A, which was supposed to be full of professionals. It was a wonderful experience, but we also visited what they called a health care centre there. We saw a lady who was waiting to deliver a baby—she had been in labour for about three hours—and the process of getting her to this particular health care situation on a stretcher was unbelievable. If any colleagues feel hard done by, they should take advantage of one of the opportunities presented by VSO to see how tough life is for some people.
Another task was to ensure the implementation of existing laws for nurses’ welfare. We argued for the implementation of the Nursing Act 2002 and the Magna Carta of Public Health Workers. We argued for an increase in the health budget—we visited the Senate and the Congress, and even lobbied Imelda Marcos and a number of other politicians in the Philippines.
We also argued for ethical recruitment policies when hiring Filipino nurses to work abroad. I am delighted to say that, when we visited our embassy in the Philippines, we were very impressed with how it was staffed—it was well run and there was a Filipino lady in charge of processing the work permits. However, a great concern—something I have raised with other Departments—was some unscrupulous companies in this country, which solicit money from Filipino students to get them to this country under a student visa programme, while misleading them by giving the impression that they can convert their student status into a permanent job here. Given how tough it is to seek any sort of living wage in the Philippines, such companies in the United Kingdom should be ashamed of themselves. I hope that the Department I am in touch with will eventually name and shame them. Hopefully, our embassy is dealing with that serious situation.
I was able to share experiences in advocacy and lobbying with key Philippine Nurses Association leaders through a forum and seminar that I addressed. I also feel that I was able to strengthen the positive image of Filipino nurses. We know that the chaps work on ships throughout the world, but Filipino nurses are also a great gift as far as the Philippines is concerned.
In conclusion, I felt that VSO had made a real impact in the Philippines, at least with the project I was introduced to. VSO Bahaginan is well organised and an efficient operation. It has made a tremendous impact, as far as I am concerned. VSO chooses its partners carefully, to ensure that they are in a position to make a difference in their country and able to benefit from the capacity building and skills support that volunteers and learning exchange programmes offer. VSO has long-standing relationships with its partners, and a sudden drop in funding, without due planning for withdrawal, would lead to a severe reduction in the working relationship. Hopefully, that will not happen.
VSO Bahaginan is a volunteer sending organisation. The profile of VSO volunteers has changed dramatically since the VSO began. Now, 30% of the volunteers are from southern countries—professional Filipinos volunteer in VSO’s programmes worldwide, then return to the Philippines with increased self-confidence.
Mr MacNeil
When I was in Cambodia, we benefited round the table from the work of Filipino nurses, who were volunteering to help deal with the situation there. They took their expertise from the Philippines to help people somewhere else, which was a very heartening aspect of VSO. Help was going not just from the developed world to the developing world, but between countries in the developing world.
Mr Amess
I thank the hon. Gentleman for his contribution, which reinforces just how valuable this scheme is to a nation. Furthermore, the pattern that I mentioned is repeated for southern volunteers from India, Sri Lanka, Kenya and Uganda, to name just a few.
VSO volunteers also make other aid more effective. Many of our partners received direct funding from the Department for International Development, other donor Governments and international organisations. VSO volunteers’ capacity-building work—transferring skills, improving financial and human resources and management systems, and helping to shape strategies for partners—makes the money that countries receive work even harder. As a result of VSO volunteer efforts, partners can work out how funding can be spent more effectively, as well as evaluating its impact, accounting for money flows and reporting back appropriately to donors. The 2010 external evaluation report on this work said:
“Donors recognise that community-based organisations who have benefited from VSO support have more robust plans, structures and systems”.
The presence of volunteers therefore acts positively to support financial aid, and volunteers are value for money.
Obviously, all parliamentarians will say that they are in favour of VSO, which is a wonderful scheme. All parliamentarians understand that these are tough times for the economy, but I for one am delighted that we have had this debate, and I am pleased that we already appear to have had a positive response.
Jo Swinson (East Dunbartonshire) (LD)
As ever, it is a pleasure to serve under your chairmanship, Mr Bone. I congratulate the hon. Member for—I will try to say it—Na h-Eileanan an Iar (Mr MacNeil) on securing a debate on what is undoubtedly an important issue. I am glad that the Minister has expressed his willingness to listen and perhaps to find an innovative solution. There is general agreement that all organisations—even those working in the international development sphere—need to spend money more efficiently and to reduce their reliance on public funds, but it is important that that transition should be managed in a way that does not unduly damage the great projects that organisations are running abroad.
I would like to share the experiences that I had this summer, and I draw Members’ attention to my declaration in the Register of Members’ Financial Interests. As I said, I undertook a VSO placement in Nigeria. There is a level of competition about the various bugs that Members have had to put up with. The hon. Member for North Thanet (Mr Gale) had Ed the cockroach, while the hon. Member for Southend West (Mr Amess) had the tarantula that was keen to get into his bed. I am thankful that I did not experience cockroaches or tarantulas, and that was down to the gecko that lived in my bedroom. I think that it was eating everything else, so I am quite pleased that my cute little gecko was there.
I worked alongside the International Centre for Energy, Environment and Development, which does essential work, particularly on climate change. One thing about going to other countries is that we find out things that we had no clue about before. For example, the third biggest killer in Nigeria after malaria and tuberculosis is poisoning by fumes from cooking stoves, which kills 79,000 people every year. Never in a month of Sundays would it have crossed my mind that that would be such a huge problem. One of ICEED’s projects involves improving the efficiency of cooking stoves, which obviously has a health benefit. However, it also has a massive benefit in terms of climate change and emissions. Furthermore, if stoves are more efficient, the amount of deforestation can also be reduced. In a country where most cooking is still done on a stove, that makes a big difference.
The VSO office in Abuja, where I was, had projects on education and HIV, but I was working very much on the climate change projects, as I said. For a country such as Nigeria, climate change is an absolutely vital issue. The north is already experiencing the impact of increased desertification and a reduction, therefore, in agricultural effectiveness. In the south, one just needs to look at a map to see that the former capital, Lagos, with its 38 million people, is very vulnerable to any sea level rise. For such a densely populated city, that is obviously a great concern. Furthermore, the country is blessed with massive energy reserves, but it has frequent blackouts. It also has no proper gas network, so when the oil is extracted, the gas is flared. There are therefore many challenges in tackling the important problem of climate change.
The project I was involved in worked with a network of climate change organisations that was trying to pass a Bill. The Bill is somewhat similar to our Climate Change Act 2008 and would set up a commission on climate change to provide cross-departmental expert advice to the Government. That would perhaps be done with a little more force than has been the case under the Ministry of Environment on its own. Although the Bill had been through both Houses of Parliament, the problem was that it needed to be harmonised, much like when we have ping-pong in this Parliament, and then signed off by the President. A very real deadline is approaching in April, when elections will take place. If the Bill is not signed into law by then, the whole thing will fall, and the process will have to start again from scratch.
I was giving advocacy and lobbying advice to the network of organisations involved. I ran a workshop to share some of the experience that we have had in this country of campaigning on issues such as climate change. I am pleased to report that since my visit in September, the Bill has been harmonised. The final hurdle involves getting the President to sign it off, and I hope that some of my suggestions to the youth organisations involved about a Facebook campaign—President Goodluck Jonathan is indeed on Facebook—might help to raise the issue up the agenda as the elections approach.
When I was in Nigeria, I was also able to see examples of best practice. Often, we in western countries think that we know best, and we go out and preach to people in other countries about what they should do. I was keen not to do that on my visit, so I did some research as preparation before I went and arranged to visit Cross River state, which has 60% of Nigeria’s forests. As Members will know, deforestation is a major factor in climate change.
In 2008, the state’s forward-thinking governor, Governor Imoke, introduced a moratorium on logging for two years while a UN process was put in place to decide how to bring in money for the forest, other than through deforestation. Those moves have been incredibly successful, and they are important for the unique habitat in the forests. I was able to meet the governor and to give some support to his work. Furthermore, Odigha Odigha, who has a long track record on campaigning to protect the lifestyle in the forest, has been put in charge of the forestry commission.
Experience outside the project is another of the real benefits of VSO, because we get to see the true country in a way that does not happen on a normal parliamentary visit. At ICEED, I worked alongside the volunteer Emily Bullock from the UK, who has a lot of experience in renewables.
I went down to the market to buy food and met a young lady called Chizoba, who was a tailor. She has worked hard to get her skills and to buy a little sewing machine, which she sets up in a corner of the market. She wants to build a business and, ultimately, to rent her own little shop in the market—I say shop almost in inverted commas, because these things are in the open air, where it is very busy. Dickson the driver was trying to save up the money to go to college to get his education. Meeting real Nigerians and being able to understand their lives was a huge benefit.
Taking part in the VSO parliamentarian scheme gave me a window, in a short time, through which to see the great value that organisations such as VSO provide. That value is not only in the projects in the countries that receive volunteer support. There is also great value for the volunteers, because of the skills and experiences in relation to life abroad that they bring back to this country.
Volunteering raises awareness that most people in the world do not have the home comforts, which we are all used to, of inside toilets, clean hot running water and electricity that continues throughout the day. It is easy, in our cocooned lifestyles, to think that life is the same everywhere, but that is not true. I hope that the Minister will be positive, and that some innovative solutions can be found to the funding concerns of VSO. I am delighted to have taken part in the debate.
Mr Peter Bone (in the Chair)
I thank Back-Bench Members for keeping their comments relatively brief, which meant that they could all contribute.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Bone—I think it is the first time I have done so. I congratulate the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) on securing the debate and giving us the opportunity to hear from several hon. Members about their experience of volunteering. That has been extremely interesting and helpful in showing some of the advantages and benefits that volunteers and host communities get from volunteering.
Hon. Members painted a series of pictures of their life as a volunteer, each one more gruesome than the last. Perhaps we should be grateful that everyone survived their experiences; but I found the speeches very useful—particularly the suggestions made by the hon. Members for North Thanet (Mr Gale) and for Harlow (Robert Halfon) about positive further action that might be taken. I am sure that the Minister will respond to those points. I was also struck by the work done by the hon. Members for Southend West (Mr Amess) and for East Dunbartonshire (Jo Swinson) in relation to volunteering abroad. Both seemed to have spent quite a bit of time working on advocacy, communication and policy, which shows that work done by NGOs in that area, both overseas and in the UK, is very important. Sometimes people criticise the advocacy and communications work of those organisations, and clearly it should be only a small part of their overall work, but it is also an important part of it, and we have seen the benefit of it in what hon. Members have told us today.
The background to any discussion of DFID budgets is of course different from the current discussions in relation to most Government Departments, because DFID is not suffering the large cuts being imposed on most other Departments. That is as a result of the commitment by the coalition, continuing the commitment of the Labour Government, to reach the target of spending 0.7% of gross national income on overseas aid. Of course we have questions about how the Government will get to that target, and concerns about the freeze for the next couple of years; but the Government know that we are fully behind the commitment to the overall target. The Minister and his colleagues will find that we support him in his commitment to it, even if sometimes those sitting behind him in his own party may be more lukewarm.
There will of course be a debate about how DFID money will be spent under a new Government. Some programmes will change. The Government are perfectly entitled to have such a review and debate. However, it is important that any review should not threaten the viability of existing, valuable programmes by organisations such as VSO. Nor should there be prolonged uncertainty during the review. I reiterate the concerns expressed by several hon. Members today about future funding for VSO. The point has been made that VSO does not object in principle to the objective of diversifying funding; but it is concerned—as are many other organisations—that the reduction to a share as low as 40% coming from the Government could have a negative effect on its work and, consequently, on already poor communities.
I welcome what the Minister has said about other possible sources of funding being available to organisations that currently get funding through partnership programme arrangements, but some of the other funding sources also have a 40% cap. There would not be any benefit in having to move from one scheme with a 40% cap to another one with a 40% cap. I hope the Minister will listen to today’s comments, and consider the suggestions that have been made by VSO for a transitional arrangement that would allow minimisation of the negative consequences of the 40% cap on PPA for the relevant organisations’ good work.
Volunteering overseas can and should, in good programmes like those run by VSO, maximise beneficial long-term effects on local development efforts by the way in which it builds the skills and capacity of local communities. As hon. Members have said, that is a crucial aspect of volunteering. The benefit is not just the effect of two, three or four weeks, months or years of volunteer work. Host communities gain long-term benefits from volunteers’ work. There is no doubt that the presence of volunteers is welcomed by the host countries. Also, there is little doubt that when volunteers return to the UK they have a greater understanding and appreciation of the issues that developing countries face. Hon. Members’ speeches made that clear.
Volunteering programmes from the UK can also provide an opportunity for members of the diaspora communities in the UK—from south Asia, Africa and elsewhere—to develop or indeed re-forge their links with their countries of birth or heritage. That is another area of work in which VSO has been involved for a number of years. One programme, which, I understand, faces the end of its DFID funding, is VSO work with diaspora communities in the UK to allow them to develop links with their countries of birth or heritage. The current programme, which I understand finishes in May 2011, was funded under a scheme that will not continue after 2011. I understand that VSO has been told it could apply for funding from the global poverty action fund, but it will not be able to do that if it also gets money under the PPA fund, which is its main source of funding. I hope the Minister will comment on that, today or later.
Inevitably there is much agreement on both sides of the House in a debate such as this, which reflects the recognition of the good work done by volunteers and organisations such as VSO. I welcome what the Minister said about considering other sources of funding to assist VSO, in particular, with its concerns and fears, and I hope he can answer today the questions raised in the debate. The hon. Member for Na h-Eileanan an Iar told us that the monetary value of the work done in developing countries through volunteering is £80 million a year; but, because of its knock-on effects—the multiplier effects and the funding that can be obtained locally for volunteering work that is also done locally, and the long-term benefits—even that £80 million a year proves its value many times over. The Government should consider that when they make decisions about future funding of VSO and similar organisations that do valuable work overseas.
The Minister of State, Department for International Development (Mr Alan Duncan)
I thank the hon. Member for Western Isles—[Laughter.] I have copped out—for initiating the debate, which is particularly poignant in the light of the recent death of Linda Norgrove in Afghanistan, who came from the hon. Gentleman’s constituency. We have people like Linda in mind when we approach this debate.
I welcome the opportunity to address the issue of international development and the important contribution that can be made by the voluntary sector. I assure hon. Members that the coalition Government are certainly not reducing the budget for the work of the voluntary sector overseas. Indeed, as will be seen, we have set out our plans for increasing support to the most effective voluntary organisations. Over the years, Britain has established a global reputation for its work on international development, as a result of the work of successive UK Governments and the contributions from civil society, the private sector and UK citizens.
Mr MacNeil
I shall not say Na h-Eileanan an Iar again. What the Minister said sounded very welcome on first hearing. Is he guaranteeing that VSO organisations that believe their funding will be cut will not suffer a sudden drop in their funding but will be able to continue on their expected path—that come this April, the axe will not be falling?
Mr Duncan
I shall come to that point more specifically in a moment. In short, the answer is that I am not going to guarantee that individual organisations will have all their funding guaranteed in perpetuity. The whole point of what the Department is doing is to establish value for money, but I shall come to those arguments later.
Mr MacNeil
Our argument is not for funding in perpetuity, but for managed funding transitions and changes. We do not want a sudden drop in April. We want organisations to be able to manage the changes that are already projected, with spending being limited to below 40% in the next three to four years. I ask the Minister to take that on board, and to ensure that the good work that we heard about from all Members is not threatened in any way. That is a really serious point.
Mr Duncan
I fully understand the hon. Gentleman’s argument. I shall deal with it later in more detail, but we believe that there are additional components in any organisation’s potential funding that will allow flexibility and additional funding on top of the core funding. That could—although it is not necessarily guaranteed—sustain the level of funding that they hope for.
The House will be aware that, despite the difficult economic challenges, the coalition Government have publicly stated that we will not balance the books on the backs of the world’s poor. We have protected the aid budget, and made a firm commitment to achieving the aid target of 0.7% of gross national income from 2013. The Prime Minister, the Chancellor and the Secretary of State for International Development have shown tremendous courage and leadership at a time when many were calling for reductions in the UK’s aid budget.
Tackling poverty is not only a moral imperative; it is in Britain’s self-interest. Well spent UK aid is one of the best investments we can make. Not only does it enable poor people to improve their lives, but it is good for our economy, our environment, our safety and our future. Quite simply, it is tremendous value for money. Our vision is simple. It is to make life better for the poorest in the poorest countries.
There is clear evidence that aid works. Over the past 25 years, we have seen 500 million fewer people living in poverty despite the rapid growth in the world’s population. In 2007-08, UK Aid trained more than 100,000 teachers, vaccinated 3 million children against measles and supplied just short of 7 million anti-malaria bed nets. However, we should not underestimate the scale of the challenges that we face. Some 25,000 children die every day from easily preventable and treatable diseases; and 1.4 billion people still live on less than $1.25 a day, more than two thirds of them being women and girls. Those factors, as well as new challenges such as climate change, mean that we need to maintain and strengthen our efforts.
I recognise the valuable contribution made by international voluntary organisations, many of which are effective in tackling poverty and promoting growth. They deliver services to improve the lives of poor and marginalised people, often in places that official donors do not reach. They enable citizens to be more effective participants in decisions that affect their lives. They hold Governments and others to account, and they assist public engagement in development. It is for those reasons that the UK places importance on building and maintaining the capacity and space for an active civil society; it is part of our overall approach to international development.
Members will be aware that an important part of the UK voluntary sector’s work overseas includes the special contribution of international volunteering organisations. Such organisations make a valuable contribution by offering UK citizens and others a unique opportunity to make a practical difference to poor people’s lives in developing countries by sharing their skills, their knowledge and their commitment. I pay special tribute to former volunteers who have returned to the UK from their overseas assignments and are putting their knowledge, skills and learning to good use in their local communities. Some, it seems, are in the Chamber doing just that.
The House will be aware that in October the Prime Minister announced a new scheme to support international volunteering. The international citizen service will give thousands of young adults in the UK the opportunity to join the fight against poverty by volunteering in developing countries. Volunteering is a powerful way to experience other cultures, and it allows the returned volunteers to broaden the UK’s public understanding of global poverty.
The Department for International Development funds voluntary organisations in many ways. More than 50% of the support provided by DFID to civil society organisations is made through DFID’s country offices. The remainder is provided from central funds. I shall come to these shortly. In 2009-10, DFID provided £362 million to UK civil society organisations to assist in poverty reduction overseas. That was equivalent to roughly 9% of UK bilateral assistance. Additionally, DFID provides support to many local voluntary organisations in those countries where the UK has a presence. The UK also supports voluntary organisations indirectly, through contributions to the United Nations, the European Commission and other multilateral organisations.
Through those investments, we have been able to achieve significant results. With DFID support, Care UK is working with the private sector in India to provide affordable micro-insurance to 210,000 families in disaster-affected communities; the Gender Links programme in Malawi has contributed to an increase in women’s representation in its Parliament from 14% to 22% in the May 2009 national elections; and WaterAid is helping 1 million people gain access to clean water and sanitation in Asia and Africa. These are significant results, and the UK can and should take pride in them.
The coalition Government are strongly committed to supporting effective civil society organisations. The House will be aware that DFID is providing support to civil society organisations over the next three years through its PPAs, or programme partnership arrangements.
Mr MacNeil
Aid works—as the Minister said, fewer are in poverty, and he gave a list of impressive statistics. However, I have to say that I am not as heartened as I was when he intervened on me. Will he work to ensure that there is a manageable and careful transition—the £26 million being reduced to £12 million—without damaging any of the good work?
I say this with open hands: I do not want the Minister to find himself painted into a corner. I am sure he is not trying to do that. I ask for the flexibility of approach that will enable this good work to remain intact. That is really important. I know he might not feel able to give a full commitment this morning, but he might want to give himself wriggle room to make the transition manageable. It is most important, but it is above politics.
Mr Duncan
There is plenty of scope in the way the system works to give the hon. Gentleman a solid degree of reassurance and the comfort he seeks. I shall explain the components of the system; it might lead him to feel he has had that reassurance.
I start with the programme partnership arrangements, the crux of our funding debate. They provide flexible funding. That is the key. A flexible contract emerges from the PPAs for those partners that get a three-year funding deal. The PPAs provide funding for some of the best-performing organisations, and they are highly competitive. We also want to ensure that voluntary organisations do not become dependent on DFID funds. That is a key part of the argument. That is why, in the next round of PPA funding that begins in 2011, DFID will provide funding to a maximum of 40% of an organisation’s annual income. That is what we have been discussing this morning.
Our commitment to supporting voluntary organisations extends far beyond the PPAs. In October, the Government launched a new £40 million a year global poverty action fund, and projects will be selected on the basis of demonstrable impact on poverty, the clarity of their outcomes and the value for money they offer.
Let me respond to some of the contributions made this morning, which will add further detail to our discussion. We have covered—if not wholly to the satisfaction of the Member for Western Isles—the shortfall point.
My hon. Friend the Member for North Thanet asked if the 40% threshold should apply to an organisation’s global income. We have to look at the audited accounts of any such organisation. Looking at global income compared with UK-only income, we see that UK-only income is the major component of British voluntary organisations’ income. For instance, for VSO in the year 2009-10, the UK-only income was about £50 million and the global income was about £60 million. So, yes, my hon. Friend’s suggestion would make a difference, but the difference between global income and UK-only income is not so huge that it is—let us say—a multiple of the amount of money that would otherwise emerge from a PPA.
My hon. Friend also asked if his charity, or the likes of it, could be represented on the Disasters Emergency Committee. DEC is not in the gift of DFID. It is a voluntary alliance of the UK’s biggest charities and is designed to co-ordinate urgent action in response to any large-scale disaster. So, membership of DEC is more about scale and urgent response than anything else.
My hon. Friend the Member for Harlow (Robert Halfon) asked whether we could support overseas apprenticeships. That is why we are supporting the new international citizen service, so there is scope for a very positive outcome regarding the objectives set by my hon. Friend.
My hon. Friend the Member for Southend West (Mr Amess) asked how we can support volunteer organisations. Let me outline again the components of our support. We offer support through PPAs; through in-country funds, which have significant scope for supplementing anything that emerges out of the capped 40% of a PPA; through challenge funds, which can do the same, and now we also have both the global poverty action fund and the international citizen service. So there are many routes through which the total picture of a volunteering organisation’s funding can be pieced together.
Mr Duncan
I will give way one more time in a moment.
The key for the coalition, at a time when we are under enhanced scrutiny of the way we spend our development money, as my hon. Friend the Member for North Thanet rightly said, is that we must look for quality and value for money in everything we do. We also need to enhance the process by which we do that—hence, the various components I have just outlined—and not just offer a lump sum of funding through a PPA.
Mr MacNeil
One point I want to draw to his attention is that I fear that organisations that are holding PPA money are unable to apply for or access other pots of money from DFID. I am not certain whether the Minister is saying today that they will now be able to do that, or that other organisations might come in. However, the difficulty is that we have this transition phase; the organisations are planning for that change anyway, but it is just the speed of the change that is a concern. It is in April—or two or three years from next April—that the change is due, and I ask him to allow some latitude to ensure that it is a managed and not a brutal change.
Mr Duncan
I would wholly agree with the hon. Gentleman if there were to be a sudden cut with no alternative funding stream or transitional source, but that is not the picture. Yes, there will be a cap of 40% on the underlying three-year agreement, but I have just outlined three, four, even five different channels that an organisation, if it can show value for money, can readily use to supplement what he describes as a “shortfall”.
For example, if we take an organisation that might have, through its PPA, 50% of its annual income paid for by DFID, and that figure goes down to 40%, it is not beyond possibility that that 10% difference can once again be made up from the alternative funding sources I have outlined.
Mr Duncan
I will say something else, if I may, and then see whether the hon. Gentleman still wants to intervene. He himself asked whether other funding schemes have a 40% cap. The 40% figure applies only to PPAs because a PPA provides far more flexible funding than project-based funding does, and that is why the regime is designed to be different.
Mark Lazarowicz
I am grateful to the Minister for giving way. Can we have some clarity, either in today’s debate or afterwards, regarding the ability of organisations that qualify for PPA funding to get other types of support as well? I have been briefed that one of the schemes that VSO might otherwise have been able to gain support for from the global poverty action fund will not be able to gain such support because VSO holds a PPA with the Department. Is the Minister saying that in fact, organisations can have a PPA and also receive funding from some of the other sources he has outlined?
Mr Duncan
I cannot say whether that is true in all cases; I do not want to mislead the hon. Gentleman by saying for certain that it is true in all cases. However, in many if not most cases, I believe it to be true. I undertake to write to him with a clear explanation of how the system works in detail, which is one of the advantages of having a debate such as this in Westminster Hall.
Robert Halfon
I thank my right hon. Friend for giving way and for his remarks on the international citizen service. However, will he give real incentives to companies, particularly multinational companies, to ensure that the service offers real apprenticeships for people to work overseas in the countries we have discussed?
Mr Duncan
I am grateful to my hon. Friend for raising that point, because one of the important thrusts of DFID under the coalition Government is that we want far greater engagement from the private sector, both in the delivery of development and in the likes of the apprenticeship scheme he is describing. So, the answer is yes—that is exactly the direction in which we want to go. That is why my right hon. Friend the Secretary of State for International Development is setting up a specific, bespoke private sector section within DFID, to ensure that the private sector can be a real engine for development in the years ahead.
In today’s difficult fiscal landscape, the increased funding that DFID is making available imposes a double duty to ensure that every pound of taxpayers’ money is well spent and can demonstrate real value for money. We cannot maintain support for a growing aid budget unless we can offer the British public independently verified evidence that funds are being well spent and achieving practical results. That is why the coalition Government have established the independent commission on aid impact, and why we are seeking value for money in every review we conduct and decision we make.
Earlier this year, the Secretary of State announced that DFID was undertaking comprehensive reviews of the UK’s bilateral aid, multilateral assistance and humanitarian and emergency support. Those reviews aim to ensure that UK aid focuses on the areas where we can have most impact and deliver maximum results and maximum value for money. We are also working to ensure maximum value for money from our support to voluntary organisations. That will mean higher levels of competition.
Many British organisations are doing a brilliant job in tackling poverty. We will continue to support those excellent organisations, and through greater competition we will ensure that every pound of taxpayers’ money is well spent and produces top quality results.
Mr Peter Bone (in the Chair)
Order. Thank you for that splendid debate. As the hon. Gentleman who has secured the next debate is here in advance, and as I believe that the Minister is doing a “double-act” this morning—
Mr Peter Bone (in the Chair)
Therefore, we will move on to the next debate.
Lesotho
(14 years ago)
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Ian Lucas (Wrexham) (Lab)
Thank you, Mr Bone. It is a real privilege to appear before you in your elevated status; I think that this is my first time. I also thank you very much indeed for giving me that extra two minutes. I am sure that the extra time will serve me, the Minister and indeed the people of Lesotho very well.
Lesotho is an extraordinary African country. It is surrounded by South Africa, whose influence there is substantial, indeed crucial. Along with the UK alone, Lesotho has the dubious honour of having hereditary peers in its legislature. [Hon. Members: “Hear, hear.”] I gather that that “Hear, hear” is support for the maintenance of hereditary peers by the Tory-Lib Dem alliance that is currently running the country, and I will note that accordingly.
Lesotho has a population of about 1.8 million people and its terrain is mountainous, with less than 10% of its land being suitable for cultivation. Unlike many African countries, it is very green and I think that its biggest export is water. If that sounds vaguely familiar, it may be that some friends of Lesotho see those characteristics of the country as being similar to those of Wales, for which I am proud to be one of the Members of Parliament.
In the 1980s, those common characteristics led Wales to be twinned with Lesotho. The relationship has grown since then, and a strong bond has developed between the two countries. An organisation called Dolen Cymru, the Wales Lesotho Link, has worked hard over many years to develop that bond, and initiatives across Wales, funded by the Department for International Development and the Welsh Assembly Government, have created joint working to confront the issues of our time: primary education, health—especially AIDS—and sustainable economic development.
Lesotho’s schools are a credit to the country. If anyone here has the chance to visit Lesotho, as I had the privilege of doing in 2006, they will see schools packed full of individuals who want to learn and get on. Free primary education is a recent innovation, so Lesotho has some of the oldest primary school children one is likely to meet. Secondary education is keenly sought after, although unfortunately many of those who seek it do not have the means to advance themselves by that route.
Lesotho also faces many health challenges. It has the planet’s third highest rate of HIV infection. Some 23.2% of the population between 15 and 49 are infected: 26% of women and 19% of men. Due to economic pressures, those infected are often unable to travel to seek the health and medical care that they need, even when that care is available.
Lesotho’s economy is another challenge. The country is striving to move away from being a subsistence economy to being a modern diverse economy, but it is a struggle. The world recession has had a major economic impact on developed nations, but nations seeking to develop have been hit even harder. Textile subsidies that helped Lesotho export, particularly to the United States, have ended, which has had a major impact on the country, which makes wonderful wool products and marvellous tapestries, if anyone would like to adorn their walls with something beautiful. The products are made in Lesotho, but the country’s ability to export those products to the rest of the world is limited.
There are pressures. Unemployment is high—rates of more than 40% are not unusual—and at present the country does not have the capacity to support a vibrant private sector. Little professional support exists for business. In advance of this debate, I received an interesting report from the Chartered Institute of Public Finance and Accountancy about work that it is doing to develop expertise and support for business in Lesotho. I commend that work. I think that the report is in draft, but it will be available shortly. Such support for business, and the development of a private sector that provides work and the ability to export, is important for the future of Lesotho.
Guto Bebb (Aberconwy) (Con)
I congratulate the hon. Gentleman on securing this debate on the links between Wales and Lesotho. It is important to make the point that the Welsh contribution has been significant. On economic development, does he agree that the priority given by Dolen Cymru to educational links is a long-term strategy for securing economic growth?
Yes, there are short-term things that should be done, but in terms of educating a work force who can compete internationally, forming links between 130 schools in Wales and Lesotho is a step in the right direction. It is a good example of long-term planning in aid projects between this country and Lesotho.
Ian Lucas
The hon. Gentleman is absolutely right. The introduction of free primary education in Lesotho is having a massive positive impact. I will say a few words about the thirst of people in Lesotho for education. They see it as a way to progress within their lives, become teachers or entrepreneurs and develop the skills that they need to take their country forward. It is such a recent innovation—it has only happened within the past decade—that many lives previously did not reach their full potential.
People in Lesotho understand the importance of education, and it is valued in their schools. Both teachers and pupils are enthusiastic about education and its transformative power. I wish we saw that more often in some UK classrooms; I never heard a pupil in Lesotho say to me, “I’m bored.” I would love never to hear such a comment in the United Kingdom.
The hon. Gentleman mentioned the links between schools in Wales and in Lesotho. I commend the Department for International Development for focusing over many years on global schools partnerships, which have been positive as far as Wales is concerned. I particularly commend the fact that the partnerships require commitment from UK schools to work with schools in developing countries, so that they can learn from each other. What I have seen in the Wrexham schools involved in the project is a strong sense that not only is Lesotho learning from us, but we are learning from Lesotho.
That is an important part of the process of developing the global schools partnerships; the schools are working together. Countries at completely different stages of development are engaging and working together to confront the problems of developing countries and the developed world, and that engagement creates a much stronger understanding of what developing countries’ problems are.
That understanding is transmitted not just between staff but between the pupils who are fortunate enough to visit the others’ country. Perhaps I should declare a sort of interest: my wife is a schoolteacher just outside my constituency, in Clwyd South, which recently had a visit from some schools in Lesotho. That link has developed over three years. It has added hugely to the understanding of those in the senior school, as well as those in the two Wrexham primary schools involved, and it has massively benefited our experience and knowledge of international development.
DFID has played a major role in that. I know that securing finance for the global schools partnership is demanding and requires a lot of commitment. There is an element of form-filling that is not popular with the applicants, but it is positive in that it requires those applying to think constructively about how they approach the global schools partnership and how they can engage, for benefit in two directions, in the work being done.
The link between Lesotho and Wales is massively important, and it is keenly felt in Wales. Established some years ago, it has developed hugely and is important in both countries. Lesotho is somewhat similar to Wales in that it is dominated by a slightly larger neighbour. Lesotho has South Africa; Wales, of course, has England. I think that Lesotho sometimes feels a little undervalued by the UK Government—for example, when its high commission closed. It supported the movement against the South African apartheid regime, but was not valued as much as it should have been.
The DFID office in Maseru is the only UK Government presence in Lesotho and it is greatly valued. It would be a major step backwards if there were any thought of closing that office because it is the only representation that we have in the country. For many years, Lesotho was our window into southern Africa. It was a place where people sought refuge from the apartheid regime and that offered assistance to people from outside who were threatened by the appalling policies of South Africa at that time.
Mr Andrew Smith (Oxford East) (Lab)
I congratulate my hon. Friend on securing this important debate and commend the links with Wales to which he has been referring. I strongly support the remark that he has just made about the value of DFID’s presence in Lesotho. On the overheads involved in aid programmes in relatively small countries, the last evaluation report on DFID aid to Lesotho that I was able to find referred to the importance of partnerships with other European donors and better close working with the Foreign and Commonwealth Office. Would he care to comment on that?
Ian Lucas
My right hon. Friend is absolutely right. I know that both Germany and Ireland contribute to development in Lesotho and have been very active in the country—along with China, which is also becoming an increasing presence in Lesotho. The link with Wales is really valued within Lesotho. In celebration of the links between the two countries, the Queen of Lesotho recently visited Wales and went to a school in Penley to see the development of the global schools initiative. She saw how well that project is progressing and how much benefit both countries are securing from it.
If we are to have a partnership, it is crucial that the Government do not withdraw from activity in Lesotho and that they retain their presence there. We need to have a presence to facilitate the involvement of more private sector and non-governmental organisations, because the need in Lesotho is massive. I have already referred to the rate of AIDS infection within the country. That is a major problem with which Lesotho has to cope in a way that few other countries do. That issue requires our immediate attention. We all understand that there are tough times at home, but the people of Lesotho are having a tougher time. They have a massive rate of HIV infection in their country, and it is draining away enthusiastic young people who are keen to get on.
Guto Bebb
That is an important point. I support the hon. Gentleman’s call for the UK representation in Lesotho to continue. We talk about the big society and, in a Welsh context, this is very much a big society project. Community groups have come together—Merched y Wawr, the Women’s Institute and so on—to raise money, and the Welsh Assembly has embarked on support funding for the project. However, none of that would have been possible without the facilitation of UK Departments. A successful partnership approach has created an enthusiasm for a country that, previously, few people knew much about in a Welsh context.
Ian Lucas
That is absolutely right. It is impressive that public, private and charitable sector organisations have come together to show their commitment to developing links between Wales and Lesotho. I commend the Tory-Lib Dem Government for maintaining DFID’s budget, because I know that there are pressures from sources within both parties to end such protection.
Within that context, we must prioritise the investment that is made and recognise that voluntary links between Wales and Lesotho have been established over many years. The Government have supported those links, which need to be fostered, encouraged and developed. Through education, to which we have already referred, capacity is starting to be developed within Lesotho. Governance also needs to be improved—a common theme across many developing countries—but progress is being made.
The past two to three years have been a very difficult period across the world, but that is particularly the case for developing countries. Now is not the time to step back from supporting a country such as Lesotho. We should build on the strong links that already exist between Wales and Lesotho and encourage more contact. We should certainly not withdraw the UK Government presence in the country.
The Minister of State, Department for International Development (Mr Alan Duncan)
I thank the hon. Member for Wrexham (Ian Lucas) for initiating this important debate. It is clear that global poverty is an issue about which hon. Members care deeply. Britain can be proud of that. I am proud that the coalition Government have not merely reaffirmed Britain’s commitment to meet the goal of 0.7% of gross national income spent on aid from 2013, but that they have reflected that in concrete terms through the recent spending review.
The hon. Gentleman is absolutely right to speak of Britain’s important relationship with Lesotho. Our relationship has a long and complex history. Back in 1868, Lesotho became a British protectorate under Queen Victoria and, in 1966, the Kingdom of Lesotho gained its independence from Britain. We now value Lesotho as a fellow member of the Commonwealth and, in 2008, Lesotho attained lower middle income status. Considering that long-standing relationship, I was pleased to learn of the personal links to the country maintained by the hon. Gentleman and his interest in the country’s development. I confess I never quite expected ever to hear in this Chamber the words “Wrexham twinned with Lesotho”—although I appreciate that there is a wider Welsh interest—and I am slightly envious that he was able to welcome Queen Masenate Seeiso to his constituency. That trumps me.
There are good reasons for all of us to be interested in Lesotho’s development. It is the fifth most unequal country in Africa and, as a result, poverty remains widespread and deep. Some 30% of people are living on less than $1 a day. Food insecurity and hunger mean that 41% of children under five years old are stunted, and Lesotho has the third highest HIV rate in the world, with almost one in four people living with the virus. The British Government are committed to using the wide range of tools at our disposal to champion justice, fairness and prosperity for the poor people of countries such as Lesotho. That includes not only our bilateral aid programmes but, often more significantly, our work through the EU and the World Bank, debt relief, trade facilitation, skills transfer and more.
In that context, let me comment first on DFID’s bilateral programme in Lesotho. The programme is relatively modest in scale at some £3 million per year, which is less than 2% of the overall aid that Lesotho receives. However, the programme has changed many lives. For example, our support in preventing and treating HIV and AIDS among workers in the garment industry—predominantly women—has reduced HIV prevalence in young female factory workers from 37% in 2007 to 29% in 2009. We have doubled the uptake of HIV testing by garment factory workers over the same period. An increase of £1 million in support to that programme over the year ahead will help to improve women’s lives, tackle a major cause of maternal death and support private sector growth by sustaining a healthy work force.
However, our bilateral support is much less than the substantial total funding—about £10 million each year—we provide to Lesotho through multilateral channels, including the EU, the World Bank, debt relief and international NGOs. We are stepping up our scrutiny of the performance of those partners around the world to ensure that UK aid is well spent.
It is also abundantly clear that the future of a land-locked country, such as Lesotho, cannot lie in aid alone. It will lie as well in Lesotho’s ability to trade with neighbours and Africa’s ability to trade with the rest of the world. The Prime Minister has made clear his commitment to supporting Africa’s ambition to establish a free trade area, thus freeing up trade between African states and with the world more widely. We are pursuing that aim through support to improve road and rail travel and to reduce the cost of trade across the region.
Mr Andrew Smith
We all support the goal of free trade in Africa and elsewhere, but does the Minister accept that, given the high proportion of Lesotho’s income that comes from custom dues, there will have to be a careful process of transition so that those revenues can be made up?
Mr Duncan
I accept that any establishment of a free trade area will have to look at such matters, and the right hon. Gentleman is right that existing patterns have to be taken fully into account when looking at a future goal.
Britain has a long history of skills transfer to African partner countries. For example, the British Council has provided Chevening scholarships to Lesotho for many years, and the British Government are committed to scaling up that programme over the years ahead.
I began my comments by reiterating the Government’s commitment to overseas development and poverty reduction. We should acknowledge the level of responsibility that we take on as a result of that commitment: the responsibility to ensure that we can demonstrate 100p of value for every £1 spent; the responsibility to ensure that UK aid is spent where it can make the most difference, tackling the problems on which the UK can have greatest impact; and relentless discipline, thrift and focus on value for money, which is essential in everything we do.
Ian Lucas
On value for money, I commend to the Minister the global schools partnership, which, from my personal perception, has tremendous value, particularly in creating strong, lifelong bonds between individuals in the UK and developing countries. I ask him to stick with that project, because it is a good one.
Mr Duncan
I hear clearly what the hon. Gentleman says. Global partnership can be one of the most effective ways of delivering aid at the lowest possible unit cost. It can be a highly efficient delivery mechanism and will remain an essential part of the menu of DFID’s activities around the world. The key to that is value for money and stretching every pound as far and as effectively as possible.
That is why in June this year my right hon. Friend the Secretary of State launched reviews of all bilateral, multilateral and humanitarian work undertaken by DFID. The aim has been to target our aid where the need is greatest and where the impact will be greatest. Ministers are currently considering the findings of our bilateral aid review and consulting with ministerial colleagues on how to take our recommendations forward. Our development relationship with Lesotho will reflect the choices that we have had to make in those reviews so that we can maximise the impact of our development spending. That will take account of the representations that have been made on behalf of Lesotho, and I have taken careful note of everything that has been said in today’s debate.
There are many pressing needs in Lesotho, and our aid over the years has played a role in helping to meet some of them, alongside a number of other donors. Our responsibility now is to ensure that Britain’s contribution to development is as effective as possible in future, through the choices we make—this is the crux of the debate—about our bilateral programme, about our support for the work of partners through multilateral channels and about the nature of our relationship as a whole.
One thing is certain: whatever the shape of our development support for Lesotho in future, it will reflect in some form the deep regard in which we hold Lesotho and its people, a regard that is clearly shared by many in this country, as has been articulated clearly this morning by the hon. Member for Wrexham.
Independent Retailers
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Mr Geoffrey Cox (Torridge and West Devon) (Con)
It is a pleasure to serve under your chairmanship, Mr Weir, and to have secured this debate on so important a subject. I welcome my hon. Friend the Minister to his position—this is my first opportunity to do so on the Floor of the House—and I know he will fill it with considerable distinction. When occasionally I give the odd, not criticism but constructive prod, I hope he will forgive me and take it in the spirit in which it is intended.
This afternoon is an opportunity for friends of the Government—those who support them—who represent market towns and town centres all around the country to draw to their attention the important predicaments, problems and issues that business people, particularly small business people and independent retailers in high streets and town centres, have confided in us. A great deal of hope is reposed in this Government.
On Monday, I attended a business breakfast with the Tavistock chamber of commerce. Broadly speaking, my experience is that local business people in my constituency—I would expect this to be replicated throughout constituencies in the south-west and beyond—are understanding of the Government’s economic policy. They perceive that dealing with the financial crisis that we inherited was the overwhelming priority for this Government. They understand that the necessity of controlling the deficit and getting on top of it was all-consuming, and that for the past six months Ministers in the Department for Business, Innovation and Skills, the Treasury and throughout the Government have been concentrating on that essential task.
Business people in my constituency are now looking for what the Government will do to stimulate growth. What will they do in terms of the range of measures available to them, given that they are hedged in by economic circumstances? What can they do to foster prosperity and to enable businesses to get going, which they will if they are given the means?
In respect of the high street—which I intend to concentrate on this afternoon, specifically high streets in market towns, four of which I represent—I want to have a word or two with the Minister and recommend several things. In doing so, I shall crib shamelessly from the Conservatives’ commission into small shops in the high street, on which I had the privilege of sitting, and which reported in July 2008. I am delighted to see in his place its distinguished chairman, my hon. Friend the Member for Northampton South (Mr Binley), who presided so expertly over that meticulous examination of all the issues that affect independent retailers. The commission included many people of great expertise, and I commend it to the Minister as a template for Government policy on this important subject, at least at the beginning.
The distinctive character of a town—its sense of place and individuality—is substantially created by the diversity and quality of the retailers on the high street who provide personal service and much of the town’s variety and interest to visitors. Empty shops, an increasing number of charity shops and dilapidated town centres affect the morale of a community. They deter visitors and lead to further decline. Last year, 12,000 independent shops closed.
I unashamedly declare that my focus today is on the market town. I have four of them in my constituency: Tavistock, Holsworthy, Great Torrington and Bideford, each with its own unique identity and traditions, and strong communities. Their business people are resourceful. In Holsworthy, they have joined together under the banner of the chamber of trade to create the Holscard, a loyalty scheme that entitles members who sign up and obtain the card free of charge to discounts and special offers.
Each year, the Tavistock food festival attracts a large number of local food producers who show off the extraordinary variety, sophistication and quality of food that our area has to offer. The chamber of commerce and other business organisations are active in supporting events that enhance the vitality of the town’s appeal to visitors. This Friday, Tavistock will have its Dickensian evening, which I strongly recommend to the Minister. It is great fun, and it heralds the real start of Christmas festivities in the town. The main streets are closed to traffic, all the shops are open until 9 pm, and the chamber of commerce organises a vast range of different activities: choirs, brass bands, a woodwind band, a fire eater, jugglers and morris dancers, to name but a few. Many of the shopkeepers dress up in Victorian costumes and hand out mulled wine to their regular customers as a way of thanking them for their custom throughout the year. There is a serious purpose to the evening. It attracts 12,000 visitors to the town who spend money in the local shops, and many return throughout the year. The town is also in the process of setting up a business improvement district.
Great Torrington’s rich civil war history provided the backdrop for its community development trust to set up Torrington 1646, a fascinating historical “time machine” which takes visitors, including schoolchildren, back to the days of the civil war and allows them to experience life in the town during that era. The trust has refurbished the Victorian pannier market to create a modern retail space and has enhanced the appearance of the town centre.
The Bideford 500 project to rediscover and promote the proud history of the town is well under way. It was in and from the port of Bideford that Grenville built his ships and set sail on his Elizabethan adventures, and some of the first settlers in America also started from there. The project complements the Bideford regeneration initiative that will redevelop important sites around the town.
I mention those few examples of the initiative, ingenuity and activity of local business people to demonstrate to the Minister that those communities have not sat back and declined to take responsibility for their own future. They are not without the will to seize control and to take into their own hands the initiative and responsibility for improving their lot, but they have not always felt that the Government, both local and national, have been on their side. It is to that end that I urge the Minister, after just six months in government, to bend his intellect and the resources of Government.
Times are tough. Small independent retailers and many other small businesses face increasing competition from the internet. They face often unfair competition from supermarket giants with their free out-of-town parking, and their ability to sell below cost to persuade customers through the door while they recoup the cost on other products. The Office of Fair Trading reported in 2006 that 1.8% of grocery lines were sold below cost. That sounds a small amount, but shrewdly shifting discount offers from product to product is a powerful commercial tool that represents a major disadvantage to independent retailers in the high street, as my hon. Friend the Member for Northampton South noted in the small shops commission report. In addition, of course, businesses cannot escape the inevitable difficulties of the prevailing national economic situation. Next year, VAT will rise to 20%, fuel prices are high, and shoppers are drawing in their horns and spending less.
As I said, I attended a business breakfast with members of the Tavistock chamber of commerce on Monday. I found a ready recognition of and support for the Government’s compelling priority of mastering the unprecedented peacetime deficit left by Labour. Not a single voice was raised against that Government policy in this crucial regard. The overall direction of our national economic policy is fully understood and supported by small business people.
I know that the Minister, together with my right hon. Friend the Chancellor of the Exchequer, is now concentrating on the measures necessary to stimulate and facilitate the private sector growth that will be essential to our economic recovery. The Minister’s Department will be central to that mission, as will others, and I venture to suggest to him that there needs to be concerted and co-ordinated action, in which all Departments, as well as local government, play a part.
In respect, however, of the vital need for leadership and the critical importance of local and national Government co-operating to support small businesses in town centres and on high streets, I have found apprehension, based not on the abilities of our Minister or on the willingness of our Government, but on experience of the previous Government. Small businesses are apprehensive about the necessary leadership being there to support the work they are doing to improve the situation. One local business man joked that the best way to start a small business under Labour was to buy a big one and wait. I am confident that the Minister and this Government will not be found wanting in that regard.
Mr Brian Binley (Northampton South) (Con)
It is a great pleasure to serve under your chairmanship, Mr Weir.
Does my hon. and learned Friend agree that local government has, in fact, a major part to play in aiding small businesses? We have seen parking charges increase to the point at which they are stopping people coming into town centres, and there is no ability to stop and shop for a short period. There is piecemeal planning, which cuts out small units for people to start up, and there is an unrealistic attitude to rateable values, which is not directly related to local government but related to government more generally. Out-of-town development has become a much more valuable area in which to do business than many of our town centres, and yet town centres are still rated very highly. I could go on, but do we not need to draw to the Minister’s attention the import of local government, and the fact that it has hampered small and medium-sized businesses in our town centres for a considerable time?
Mr Cox
As ever, I, regard my hon. Friend’s points in this, an area of expertise for him, as compelling and significant. There is no doubt that local government has a very important role to play, but national Government must give the lead, and I urge the Minister to act on that. We do not often talk about big measures but we often talk about small ones, which cumulatively can become a powerful support to high street shops and businesses. Planning is one example. Less than 40% of new retail space planned for the next 10 years is for town centres. The abolition of the need test for out-of-town supermarket developments in planning policy statement 6 was a retrograde step. I fully support that test and I urge the Government to consider restoring it, and I urge the Minister to discuss the matter with the Secretary of State for Communities and Local Government.
We should go further and consider inserting a diversity test into retail planning guidance. Small shops might have their own use class, so that they could receive the special consideration that their function on the high street deserves. Changes to the planning system regarding the need test, sympathy shown to small shops via the creation of their own use class, and a diversity test that would impose on planners the need to consider the balance between local independent retailers and vast out-of-town supermarket businesses and to give weight to the need for diversity on the high street, would be a positive step forward.
Jo Swinson (East Dunbartonshire) (LD)
I am listening to the hon. and learned Gentleman with great interest, and I congratulate him on securing the debate. What he says about planning is absolutely right, and it is not just about large out-of-town supermarkets. In Milngavie in my area, we face a potential Tesco Extra right in the middle of the town, with another massive supermarket possibly in Bishopbriggs, and the small traders in those areas are very concerned about the potential impact on the viability of their businesses. The hon. and learned Gentleman might find that that is also the case in other parts of the country.
Mr Cox
My hon. Friend’s experience is, I think, replicated in dozens of constituencies around the country, and I fully understand her concern. What I am asking for is a co-ordinated approach. The Departments for Communities and Local Government and for Business, Innovation and Skills, and the Treasury, need to get together and think about the high street as a separate issue. That would include looking at planning decisions and guidance, and considering what we could do about charity shops, for example.
Simon Danczuk (Rochdale) (Lab)
I, too, congratulate the hon. and learned Gentleman on securing this very important debate. I also congratulate the Government on producing their document about a health check in town centres and on the high street. It is a valuable document, and of good use.
On charity shops, I had a look at the hon. and learned Gentleman’s website before I came here today. It rightly says that charity shops are better than empty shops, and I agree, but the proliferation of charity shops in my constituency of Rochdale has reached the point at which they become a problem. So in respect of planning regulations, I urge the Minister and the Government to consider giving local authorities the power to determine the number and location of charity shops in their areas.
Mr Cox
I agree with the hon. Gentleman, to a large extent. The main issue that I have heard is that charity shops are selling new goods. More and more charity shops are setting up on the high street, and instead of selling the donated goods of many hundreds and thousands of well-wishers, they are selling a whole range of brand-new goods—often sports goods and clothing.
It is not hard to understand the chagrin, confusion, dismay and disappointment of a shopkeeper, selling the same product lines, on hearing that the charity shop next door has been given not only the mandatory 80% relief, but the other 20% that the local authority can give. The charity shop might, therefore, be paying no rates at all. Its waste is treated as commercial, but the private shopkeeper is unable to have their waste treated thus, and it would seem to the struggling shopkeeper—who, after all, will be here in many years and is supplying a vital service for the community, bringing about a sense of well-being and contributing to the local economy—that the playing field is not even.
I do not suggest, as the hon. Member for Rochdale (Simon Danczuk) noted, that we should be anti-charity-shop, but I do propose to the Minister that we need to look at a protocol for local authorities, which would allow them to consult local shopkeepers about the product lines that might be sold in a charity shop. Such consultation would help, but equally we need to look at whether charity shops that are selling brand-new goods should receive the rate relief that they currently do.
Andrew George (St Ives) (LD)
Does my hon. and learned Friend not also agree that on the non-regulatory side there are things that the Government could do, simply by using their influence? For example, there is the established practice of upward-only rent reviews, which informs the rates charged in town centres. I urge him to highlight that issue and, on the regulatory side, to ensure that the free parking from which out-of-town retailers benefit is properly valued, because of the consequences that it clearly has for their competitors in town. Free parking gives out-of-town retailers an enormous advantage, and that is not properly reflected in their rating levels.
Mr Cox
My hon. Friend has, with uncanny empathy, predicted my next set of points, although he did not express them with the same eloquence as I would have, and probably not the same passion. I shall, therefore, go on to make the points, and a few others besides.
Rents and rates are a vital issue for high street shops and independent retailers, and my hon. Friend makes a very powerful point about upward-only review clauses. I would welcome the Government’s investigation of that issue, because the Conservatives’ commission into small shops in the high street recommended that we examine it to see whether we could make inroads into the unfairness. I want, however, to come on to rates.
I hear about planning, rates and charity shops, and rates come up time and again when I talk to small businesses in my constituency. The system is byzantine; it is incomprehensible. Walking into a local business, I sometimes find that the pub or petrol forecourt, for example, has had its rates lifted by thousands of pounds in the past year or two. In 2009, there was a 5% rise for inflation. A transitional relief scheme came to an end, so shopkeepers and business people were hammered by large rate rises.
However, the small business rate relief has not kept pace. Many businesses that are regarded as small—we would all regard them as such—are no longer covered by the relief. I urge the Government to consider raising the threshold for that relief. The Government could, importantly, immediately and urgently, translate the Conservative manifesto commitment, with which I have no doubt my Liberal Democrat friends will agree, to make small business rate relief automatic. It should not depend on an application. The rate authorities are able to see whether a business complies with the conditions necessary for small business rate relief, so why do they not simply apply it?
I implore the Minister to lend impetus to our examination of this issue. If we can raise small business rate relief, increase its threshold and make it automatic, we will do a lot to cause a sigh of relief up and down high streets.
Chris Ruane (Vale of Clwyd) (Lab)
I congratulate the hon. and learned Gentleman on securing this debate. I share many of his concerns. Does he believe, as I do, that many small businesses in our town centres face a double whammy when a national chain locates in the town centre, often selling the same products as smaller companies, but at a lower price? The rates for those smaller companies increase because the big national has come into town and allegedly increased the footfall. So those smaller companies lose both ways: their rates go up and their ability to sell cheaper goods goes down.
Mr Cox
I do not want this debate to appear a depressing, gloomy litany of problems for the high street. I prefaced my remarks with the kinds of initiatives that communities throughout the country are showing—business improvement districts, taking on regeneration and community trusts—as they fight to sustain their towns and town centres. All communities will have a similar interest.
I agree with the hon. Member for Vale of Clwyd (Chris Ruane). The small business in the high street needs special consideration from the Government. That is why I make my proposal to the Minister today and ask him to reflect on it.
On Monday, I met representatives at the Tavistock chamber of commerce and one trader said to me, “Mr Cox, 25 shops in Tavistock are currently unoccupied. Why should we not grant a rate-free period for a small business that is willing to take on one of those shops, with phased gradations up to the full sum, say, over three or four years?”
The Minister could adopt that measure, which would greatly benefit businesses setting up in our market towns throughout the country. Nowadays, they could probably get a rent-free period, but why not enable the local authority to grant a rate-free period? If we did that, it would be a small measure, but its overall effect would be disproportionate and would impact on the confidence of businesses to enter the high street, off-setting some of the difficulties that the hon. Member for Vale of Clwyd mentioned a moment ago.
Paul Uppal (Wolverhampton South West) (Con)
May I thank my hon. and learned Friend for securing this debate? The gist of his speech is specifically about market towns, but my constituency is particularly marked by the number of empty shops. The point that he mentioned has been raised by shopkeepers, entrepreneurs and landlords in the centre of Wolverhampton. Giving relief on empty shops when new tenants are coming in would be a constructive way to take the issue forward.
Mr Cox
I agree with my hon. Friend. In fact, I would go further and place in the hands of local councils the ability to grant a temporary rate relief for new businesses.
My right hon. Friend the Chancellor of the Exchequer has already introduced in the Budget a number of measures for new business and start-ups. It is a critical priority for this Government. But we could help shops setting up specifically in the high street. They are so valuable and important to the overall welfare and well-being of the towns that we represent. It would be a simple measure that would, cumulatively with others, have a powerful impact. I want to mention other measures, but I want to sit down soon because I am interested in hearing the experiences of other hon. Members.
The measure that I have proposed is consistent with the overall philosophy of this Government, which is to place into the hands of local communities’ councils the power to do something about the fabric and infrastructure of their communities. I urge the Minister to consider that measure.
Whenever one mentions high street shops, issues arising always include parking. I am dismayed and disappointed at how often local authorities, particularly county councils, seem to use parking as a generator of revenue. Time and again the national Government have urged local government—often with a measure of disingenuousness, given the fact that they have starved local government of the means with which to do its work, while piling extra responsibilities on it—
Mr Cox
This is not meant to be a partisan point. I am not, on this occasion, having a jab at the previous Labour Government. I apply this point to all Governments.
So often, Governments say to local government, “You should be doing this and that”, but do not provide the wherewithal for local government to do it. Local government has to understand that it is no use proposing new and ever-increasing parking charges and not expecting to deal a blow not only to the morale and confidence of traders, but to their economic interests.
Good parking, easy access and quick-stop parking, as the commission headed by my hon. Friend the Member for Northampton South called it, are vital to the health of the high street. It is essential that, in our constituencies, local government consults traders, stands by their side and designs parking and transport systems in a way that helps traders and does not simply generate cash from the consumers and customers on whom they depend. That is an easy statement to make.
I am dismayed that Devon county council, a Conservative council, proposes parking meters throughout the county towns even though that is inappropriate in some towns. Towns are struggling on the edge—the precipice—of economic viability, and to add extra charges for parking when people could go down the road to out-of-town free parking, as the hon. Member for St Ives (Andrew George) mentioned, is an extraordinarily crass, clumsy action. I urge Devon county council to think again or at least ensure that its consultation is real and that it tailors any parking schemes to the economic interests of the high streets in the towns on which it intends to impose those charges.
It is vital that we get parking right. Not only must we have a sensible parking regime, with different structures for times of day and the ability to park free for up to an hour, which are vital, but it must be enforced sensitively. How many times, when one goes to the local town council—hon. Members may have heard this—does one hear them say, “If only we could just enforce these things relatively flexibly and intelligently”?
The memory of getting a £40 or £60 parking ticket in a town stays with the visitor. They are not likely to look favourably on the town if, after a few minutes, they get a parking ticket for overstaying. It is crucial that local governments understand such things, and I believe that the national Government can set a lead with advice and guidance.
To that end, I agree with the hon. Member for Rochdale, who mentioned the high street health check issued by the Department for Business, Innovation and Skills. That is an interesting innovation; I do not believe that it is anything more than a start, but it is certainly worth doing and I urge the Minister to follow it up. I have read the document with interest and it touches on some important issues. We need that kind of leadership. We need local leadership supported by local authorities and underpinned by encouragement and leadership from the Government.
This should be a crusade. I want to paint for the House a picture of the Minister on his white horse, dressed in shining armour and shouldering his lance.
Mr Cox
He does not have the hair to be Lady Godiva, although he has a fine head of hair none the less. Picture him riding out on his white charger, shouldering his lance and flying the flag for the high street. I know that the Minister is a Cornishman, and speaking as a Devonian, we look across the Tamar river with admiration, regard and not a little envy. The sum of £132 million is being spent on the good people of Cornwall—and by Jove they deserve it—joining up every village, town and community to super-fast broadband. The people of my constituency are like small children pressed up against the window of the pie shop, envying the sight of the riches within.
Broadband is important, and in Cornwall people are getting access to that wonderful opportunity—as a Cornishman, the Minister will be delighted with that. In market towns, high streets and small businesses in the wider area, broadband is crucial. However, in parts of my constituency, people can barely get half a megabit, and the best speed is about 5 or 6 megabits. We will look at speeds of 100 megabits in Cornwall. I do not know about Devonwall; we might even apply to join. Tremendous advantages can be conferred by broadband, and I urge the Minister to remember the Government’s commitment.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
On that important point, is the hon. and learned Gentleman aware that more than half of small businesses rely on the internet for up to 50% of their annual turnover? It is crucial for the Government to bear that in mind.
Mr Cox
We can join across the House in the nicest possible way and agree that that is a critical issue for small businesses, not only in the high street but in the rural areas that I represent and in cities and towns across the country. It is a particularly important issue in Torridge and West Devon, where the broadband service is poor. Across the border, however, there will be a wonderful broadband opportunity. We are committed to rolling out fast broadband by 2015, and I urge the Minister to accord that due priority. A combination of those things will make the difference to the high street.
My hon. Friend the Member for Northampton South, who is no longer in his place, recommended in the Conservative commission into small shops in the high street that we should look at a community hub enterprise area that brings together all partnerships and schemes under one simple banner, thereby enabling the Government to support them. I commend the recommendations of that 2008 commission to the Minister. I humorously referred to him as a white knight, riding out in support of the high street. In his response, I hope that he will make it clear that that is what he intends to be.
Mr Mike Weir (in the Chair)
Order. Several hon. Members are seeking to catch my eye. I hope to start the winding-up speeches no later than 3.40 pm, and I hope that hon. Members will bear that in mind. Those intervening should remember that interventions should be brief. Some have been pushing the envelope a wee bit.
Chris Ruane (Vale of Clwyd) (Lab)
Apologies for my late arrival to this important debate, Mr Weir. As I said in my intervention, I share many of the concerns that have already been expressed.
Eight years ago, I convened a meeting on improving the retail sector within my constituency. I asked Professor Michael Carley of Edinburgh university to address my local retailers. He had just conducted research into 14 successful town and city centres around the UK, including market towns, seaside towns and inner cities. The meeting heard that a successful town centre needs three crucial things: first, it should feel safe; secondly, it needs to be clean; and thirdly, it needs affordable and accessible car parking—that point has been addressed in full by the hon. and learned Member for Torridge and West Devon (Mr Cox).
We have had 13 years of a Labour Government, but those issues have not been addressed in my town. It does not have a Labour local authority but an independent Conservative local authority, and although we have had the Welsh Assembly Government and 13 years of the UK Labour Government, the problems were not resolved. I hope that they will be resolved under this Government, although I fear that they will not.
Chris Ruane
Absolutely. One reason is that local government faces a 40% cut to its budget. Many issues that need addressing, such as those of having a clean, safe environment, are functions of local government. In my area, Denbighshire, the funding will not be there. The local government is already offloading those functions to the town councils, but they do not have the funding either. If the environment is not clean, visitors will not be attracted.
We have made great strides over the past two or three years in my constituency. I could see the quality of the environment declining, so I put my town forward for “Wales in Bloom.” That was before the big society was mentioned, but we got 60 local organisations such as schools, Churches, banks, businesses, Nacro and the probation service. They all pulled together, and we came third last year and second this year—hopefully, we will be first next year.
However, people will not actively take part in improving their local environment if they think that the local authority is passing the buck and saying, “Will you do this for nothing? We are not going to pay for it anymore.” We cannot engage and have the big society if people feel that they are being used. A clean environment is essential, and the engagement of the public, private and voluntary sectors is key.
Let me pay tribute to the work of the probation service in my constituency. The community payback team has probably done as much work as local authority workers to improve the quality of the town. That is a great way to go about things. They are young men, and a few young women, who would perhaps have been sent to prison or an approved school. Instead, they were told to pay something back to the community where they committed a crime. Those people are tending the gardens, making the flower beds and engaging with the community.
If we are to reduce the number of prisoners, we need to get offenders working in the communities in which they committed the offence. I support the Government on that. I would not like to see people who have committed offences in poorer communities being taken away and made to work in a leafy suburb or town. I pay tribute to the community payback team that has done so much in my constituency to improve the quality of the environment, and to the local government workers who, on diminishing budgets, year after year, pulled out the plugs—indeed, planted the plugs—to make Rhyl the second best town for its size in north Wales according to “Wales in Bloom”.
The second issue is that of a safe environment. The west ward in Rhyl had 900 houses in multiple occupation and a high crime rate. Over the past 10 years, that has come down dramatically and of the 376 crime and disorder reduction partnerships in England and Wales, the county of Denbighshire, in which my constituency is located, was the third best performer. That was done by adopting a neighbourhood approach to crime and disorder reduction partnerships, with everybody getting around the table together and saying, “This is not just a policing issue; it is about social services, education, prisons and getting people back to work.” That is how we got on top of crime in my constituency and reduced it dramatically.
I do not want to be too party political, but we may be facing 20% cuts in policing. Last week, my hon. Friend the Member for Wrexham (Ian Lucas) joined me at a meeting with North Wales police. All the AMs and MPs in north Wales were invited, but I am afraid that no Conservative MP or AM attended. We were told that the number of police officers in north Wales will be cut by 200, from 1,600 to 1,400. The number of support staff, including police community support officers, will fall by 250. We cannot have cuts of that calibre without affecting front-line policing. I fear that the cuts will fall hardest in the poorest communities, where crime rates are highest. If we have these huge police cuts, that will make my task of helping to regenerate my town centre more difficult.
The third issue that I want briefly to address is affordable and accessible car parking. Again, the person in charge of the county’s finances is a Conservative councillor. They control the purse strings and thought that it was a good idea to stick up car-parking charges, which grew and grew over 10 years. The authorities use them as a milch cow, but I fear that they have killed the goose that laid the golden egg. Statistics from my local authority show that car parking increased until about five years ago, but then steadily decreased. I would not mind if the authorities ring-fenced some of the money from the huge car parks in Rhyl to improve the environment in the car parks or the town, but they do not; they cream the money off and do not put it back into the community to improve the shops or the retail offer.
We have such things as loading bays. I am not sure whether anybody knows what a loading bay is—I do not. I do not know how long someone is allowed to stay in one, whether they have to put their lights on or whether they have to put a message in the window. However, people get fines time and again. As the hon. and learned Member for Torridge and West Devon said, they leave the town very disappointed. Local councillors have said, “These are seaside towns. We need to sting the visitors rather than the locals for the car parking.” I do not think that we should be stinging anybody. We should look at car parking as a way of enhancing the retail offer in our communities, not as a way of punishing people or taking money from one area and gifting it to another.
That was just my short contribution on the environment, policing and safety, and car parking. If we can get on top of those issues, we will be doing well. I congratulate the Government on their excellent document, which I have only just seen and browsed through. It is a great little document, and I will take it back to Wales to see what we can do with it. Once again, I congratulate the hon. and learned Gentleman on securing this important debate. I hope that the Minister is listening, because we will be watching.
Anne Marie Morris (Newton Abbot) (Con)
After such a bravura performance by my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox), it is with some trepidation that I contribute to the debate. This is a very worthwhile topic, and I would like to contribute my view that the solution is a matter not just of what local authorities can do or what the Government can do—as has been said, many of these issues are within the hands not of the Minister, but of a number of his colleagues. The solution is also in the hands of people. In that respect, we can look at the role that the big society can play for small business, because I think it has a place.
In the south-west, we have a high number of small businesses; indeed, 91% of businesses employ fewer than five people. This debate about the small retailer is therefore crucial to us. Unlike my hon. and learned Friend, I will include the small villages in my constituency —there are 30 of them alongside the four towns—because these problems also exist in those villages. Small retailers, particularly in those small villages, are the lifeblood of their communities. They can be like the local pub, which is too often long gone. They can also be like the local post office, which is, again, too often long gone. I am therefore pleased that local residents in Stokeinteignhead have come together to found and now run a volunteer system to keep the local shop in their community. That helps elderly residents, who will come in—perhaps a little confused—to do their shopping. The shop also produces newsletters. It does all sorts of things that mean that that small retailer is at the core of the community. I reinforce the points that have been made about colour, diversity and, indeed, identity, which we need to retain not only on the high street, but in villages. That is a key issue.
The Independent Retailers Confederation has looked at the issue and come up with a number of thoughts, which I can perhaps share with the Minister. The confederation represents 100,000 small businesses, which is no small number. It has categorised its findings into five key areas. I will not spend a lot of time on each area, because hon. Members have already covered a lot of these points very well. In fact, there are six areas, and I want to explain what they are. They include planning, which we have touched on; skills training, which we have not touched on, and which I will come back to; regulation, which we have touched on in part; crime, which we have also touched on in part; and access to finance. To that list of five, I would add taxation. Business rates must, of course, be key. I will go briefly over each of those subjects.
On planning, there is clearly an issue about the power of the supermarket. There is also the issue of charity shops, which has been well rehearsed. When the Secretary of State for Communities and Local Government begins to look at the overall shape of planning, I want him to consider localism and the power that he intends to give to local communities to make proposals for plans and for what they should look like. I would encourage him to ensure that the plans consider not only housing, but businesses. We will help to shape the planning of our communities if those plans look at businesses as well as residential. If they do that, they will say, “We want one supermarket here, not two.” In one town in my constituency, Dawlish, we have an ongoing battle between Tesco and Sainsbury’s, which is a waste of taxpayers’ money and deeply frustrating for local residents.
I would also commend the greater use in our communities of the community land trusts. We look at them just as vehicles for residential, but they are equally appropriate in this context. I would encourage the Government to market such things better and to explain to local communities what they can already do.
On parking, which, if I may, I will envelope within planning, there are a number of very good schemes in other parts of the country—I regret that they are outside Devon—that combine the idea of a loyalty card with the idea of sharing parking. I absolutely take on board the point that local authorities will often use parking as a milch cow. However, there are schemes that allow shops, working with the local authorities, to increase the revenue and put some of it back into the local community. I commend those ideas.
Jim Shannon (Strangford) (DUP)
Does the hon. Lady agree that of all the six critical factors that she is speaking about, parking is the most important, because it shapes what happens in the town? There is not a one-hat-fits-all approach, whether we are talking about out-of-town, out-of-town-centre, in-town-centre or off-town-centre parking. The chamber of trade must be involved in these issues. There is also the issue of the connection between the centre of the town and the edge of town and the issue of regeneration. There are many things to be done, and the same hat does not fit everything when it comes to planning.
Anne Marie Morris
I thank the hon. Gentleman for his contribution. I think that that is an issue, but it is not the most important one, as I will explain.
The second issue is Training Access to training for retail skills is pretty rare. I am pleased that South Devon college, which is in my constituency, has a course on retail skills, and I would like the Government to encourage more such courses.
Let me move swiftly on to the third issue, which is regulation. As I am sure many Members are aware, it is estimated that it takes the average retailer seven hours a week just to deal with regulation, and that can cost them anything from £100 to £10,000 a year. This is about not just employment regulation, which is clearly one of the most onerous issues, or health and safety, but issues such as the minimum wage and how pension schemes will change. We need to look at the perhaps unintended consequences of the new shape that regulations will take when the Government put them forward.
The fourth area is crime. This is probably a well-known statistic, but crime and theft cost the retail sector £2 billion a year nationally. Two issues have been raised by the Independent Retailers Confederation: one is antisocial behaviour, which has been covered by the hon. Member for Vale of Clwyd (Chris Ruane); the other is theft. The challenge in dealing with the problem is that a theft does not happen until the culprit leaves the premises. How many small shopkeepers wait until the individual has left the shop to apprehend them? The answer is that they do not. They keep the individual there and call the police. The result is that there is no prosecution and police time is not particularly well used. There must be a better reporting method, and it must be possible to find a legal approach that is a better deterrent than the system we have now.
I am saddened that only two of the large banks are making significant progress with the lending guarantee scheme, and I look to the Minister to encourage more on that front. However, something that the banks suggested, which I think is very helpful, would be the introduction of a new mentoring system that would ultimately replace, in a way, much of what Business Link, which is being phased out, used to provide. That would provide excellent support for the retail sector. I suggest that such mentoring should be something we can see—the big society for small business in action. In my constituency I have considered getting local businesses together and asking them to help each other. Business surgeries are being set up, and local business men and women, as well as local banks and others, will be involved.
We are also setting up a group of individuals who will act as one-on-one mentors—not expensive, paid-for, qualified mentors, but local business men next door to other local business men. For example, the other day a business man wanted to become VAT deregistered and did not know how to go about it; a colleague had the answer. There are all sorts of things that we can do, and politicians can play a role in our communities. I am pleased to say that I have a great deal of support from my local chambers of commerce.
Rehman Chishti (Gillingham and Rainham) (Con)
I am pleased to serve under your chairmanship, Mr Weir, and congratulate my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox) on securing the debate. Given that banks are not lending as much as before, and small business is being starved of cash, does my hon. Friend the Member for Newton Abbot (Anne Marie Morris) agree that stricter regulation is needed in relation to corporations having to pay suppliers within a very short time? Often, smaller businesses get penalised much more for delays in paying tax and VAT. Does that need to be reviewed?
Anne Marie Morris
That is a valuable contribution on an important issue, and I am sure the Minister and his Treasury colleagues will take it into their thinking.
My hon. Friend’s intervention leads me neatly on to taxation and business rates. I take on board the points that were made earlier about timing, and the fact that we have revalued at exactly the wrong time, when the market is in recession, with figures from when the market was at its peak. I am sure that the Minister and his Cabinet colleagues have taken that on board and will consider it. However, I offer congratulations to, I think, the Treasury team, on thinking about a holiday—100% relief—between October this year and next September from business rates where rateable value is less than £6,000. That is an excellent thing to do, and I commend it. I would like that to be extended, if it works well.
Hon. Members will be pleased to hear that I have now covered my six areas.
Guto Bebb (Aberconwy) (Con)
Many retailers, especially in my constituency, which is very dependent on small businesses and retailers, feel frustrated because when Governments—of all colours—decide to help them, they often do it by promising to reduce corporation tax. However, small businesses are often sole traders and partnerships. There is great frustration because, when corporation tax is reduced to help small businesses, they face increased national insurance contributions.
Anne Marie Morris
I thank my hon. Friend for that intervention, which follows on from one I made in the House yesterday. I agree that small businesses need some help. I should like the holiday that has been extended to new businesses to be extended to what I would describe as micro-businesses—those small businesses with one or two employees that find it a significant challenge to take on a third employee. I entirely understand his point.
There is much to be done. The sector is a very valuable one. May I commend to the Minister the idea that there is such a thing as the big society for small business? He might want to consider how to promote that. Finally, micro-businesses deserve particular attention, and the retail sector provides a good example. There is a very large number of such businesses, and whether the issue is tax or regulation they need special care and consideration.
Mike Weatherley (Hove) (Con)
I, too, congratulate my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox) on securing the debate, and on a vibrant speech.
Adam Smith, the father of modern economic theory, asserted that Britain is a nation of shopkeepers.
Mike Weatherley
The Opposition may disagree about who said it first, but I assure them it was indeed Adam Smith.
It remains widely recognised that the small and medium-sized enterprise sector today will play a pivotal role in the recovery of our economy—and rightly so. All hon. Members will be familiar with tales of the local independent retailer who goes that extra mile to take care of their community. They provide essential services and fulfil the retail needs of those who are less mobile and most vulnerable. The idea that independent retailers are the heart of communities will not come as a revelation to most hon. Members present for the debate—if it does to any of them. Despite that, in February this year the Local Data Company reported in a study that one in eight high street shops lays empty.
The economic slowdown clearly had a role to play in the shuttering up of our independent high streets, but there are far more fundamental causes, which will not reverse with the advent of economic recovery. The report cited a combination of rising business rates, soaring rents and draconian parking restrictions as being to blame, and I know from speaking to my constituents in Hove and Portslade that the study paints a pretty accurate picture. However, my constituents would all add one key issue to the list: the massive over-regulation that the sector endures. Government’s role is to ensure that causes are identified and that there are market conditions that foster an independent retail sector. There is a balance to strike between deregulation and positive and protective legislation. I believe that the Government’s challenge is to sift through the deluge of regulation that we inherited.
Some hon. Members may know that I have recently been vocal about the tobacco display ban. To recap, that legislation was brought in without the benefit of a small business impact assessment. The cost to the independent retail sector of implementing it is assessed at £33 million. Independent analysis shows that in countries where the ban is implemented small shops are disproportionately affected and there is no health benefit. Indeed, it is estimated that 2,600 small shops may close as a result of that legislation alone. At the moment the Government do not have any plans to carry out an evaluation of its impact. Overturning that inherited legislation is but one example of the right and appropriate path of deregulation needed to protect our independent retailers. If we do not do so, our nation of shopkeepers will become a nation of clone towns, with local shop models of supermarkets replacing the traditional British independent offering. The Government are currently reviewing the legislation and I urge all hon. Members to speak to the Secretaries of State for Business, Innovation and Skills and for Health and to register opposition to that over-burdensome, soundbite regulation.
As late as July this year the London assembly added its voice to the many expressing concern for the sector in its report, “Cornered Shops”. The report indicates that 7,000 independent shops shut in the last 10 years alone—or 13 a week. That marks a long-term decline, exacerbated by the recent economic crisis and punctuated now by a continuing lack of access to credit, which we have heard about today. We all recognise the frustration at the fact that, after the bail-out of irresponsible bankers, those bankers are not doing their bit to lend to small businesses and kick-start the economy. Something needs to be done to ensure that access to credit is made simpler for independent and viable retail offerings—and quickly.
We have seen the rise of supermarkets in the past 10 years, and there has been an aggressive expansion in the past few years into the local stores format. Our planning law needs to recognise and cauterise that practice, which is slowly bleeding out our independent high streets. Planning law needs a sustainability test, under which multiple chains would need to demonstrate that any proposed application would not adversely alter the mix of small, medium and large stores on high streets. Supermarkets account for a massive 75% of the market and 80% of independent retailers say that multiples are the single biggest threat to their livelihoods. I certainly do not advocate getting rid of supermarkets and propping up failing independent retailers for the sake of it: both have their place in a healthy and modern economic mix; they are not mutually exclusive.
Although this is by no means atypical of the operating experience of all independent retail sectors, I shall give just one example of how the scales are tipped against newsagents. The National Federation of Retail Newsagents, and newsagents in my constituency, have told me that one of their biggest problems is the lack of control that they have in the newspaper supply chain versus supermarkets’ buying power. We need to protect our independent high streets, which are far more vulnerable than the multiple retailer end of the sector. Once they are gone, they are gone for good, as are the friendly face of our local independent retailer and the heart of our community.
I recently went to the ceremony for the independent achievers awards, which celebrated best practice in the sector. The energy in the room was electric with the buzz of the best independent, innovative retailers regaling one another with stories of how they had adapted to support their local communities and build up successful businesses. That is the sense of pride and enthusiasm that we need to regain.
Our independent retailers work long hours, seven days a week, all year round, only to combat increasing costs, aggressive competition from multiple retailers, decreasing profits, increasing bureaucracy and decreasing access to credit. We need to reinvigorate the small business sector with a package of measures. Scrapping the tobacco display ban would be a good start.
Lorely Burt (Solihull) (LD)
I shall be brief because another hon. Member wishes to speak before the start of the winding-up speeches. I congratulate the hon. and learned Member for Torridge and West Devon (Mr Cox), who spoke with passion, knowledge and humour and is a true crusader for his cause. I particularly agree with him on rates. The Liberal Democrats would like eventually to move to a system of site value rating, but I totally agree that raising the threshold at which rates are paid would be a good start to help retailers. I believe that the Minister will confirm that automatic rate relief is in the coalition agreement and we will be implementing it soon—the sooner, the better.
The state of the country is very bad. As the hon. and learned Member for Torridge and West Devon mentioned, 12,000 independent shops closed in 2009. When people buy their consumables in the local economy, 50% to 70% of that money stays in the local economy. If they go to a large retailer, £7 of every £10 that they spend will leave the local economy. It is therefore very important that the Government give a lead on public procurement. There is a Government aspiration that 25% of procurement will come from small businesses. What is the proportion now and what steps are we taking to achieve that? I commend the Federation of Small Businesses, which has been a tireless campaigner on this matter, particularly with its “Keep Trade Local” campaign. That has been tremendous.
I want to ask the Minister a couple of other questions. Many retailers export, but when I was reading the Department for Business, Innovation and Skills business plan the other day, I could see no mention of support for retailers or small businesses seeking to export—unless of course it is arms that are being exported, which seems to be all right. Also, the hon. and learned Member for Torridge and West Devon talked about the local government role in assisting small business. It has been perceived in the past to be more of a hindrance than a help, although I am sure that that was not intentional.
Simon Danczuk
I want to make the point about local government in relation to Rochdale. About two years ago, I suggested that Rochdale council introduce free parking across the town centre. It eventually introduced that a few months ago, with much reluctance on the part of senior council officers—it is not so much elected members who are the issue. I have to put it on record that the credit goes to a Conservative councillor, Ashley Dearnley, who had to drive that change through the local authority. Free parking on a Saturday is not the complete solution, but it does help.
Lorely Burt
Absolutely. I could not agree more with the hon. Gentleman. The point of local government is to show good political leadership.
The hon. and learned Member for Torridge and West Devon talked about the needs test and the local interest test, which would be a tremendous help. If we had that now, we might not have the situation that we have in my constituency of Solihull, where a huge Asda is being built on 3 acres of parkland on the main shopping street of Shirley. Will that stimulate custom for small independents on the rest of the high street? I doubt it. I think that it will bleed them dry, but we shall have to wait and see.
I welcome the help that the Government are already giving. With regard to regulation, we have the one-in, one-out policy and the sunset-clause policy and all the other aspirations that we are moving strongly towards. I would like to suggest consideration of small business as an automatic part of any pre-implementation review of new regulation and of the post-implementation review. It would be very good to build that into whatever legislation we produce.
With regard to the banks, I have a constituent who has an independent retail company. She applied for some help from the banks and was told, “Sorry. You’re in the wrong sector.” My right hon. Friend the Secretary of State for Business, Innovation and Skills is examining that, and I hope that he has a good go at ensuring that the banks give small business, independent retailers and everyone else who needs it the help that they deserve.
Mr Mike Weir (in the Chair)
I now call Justin Tomlinson, but remind him of the need to allow time for the winding-up speeches.
Justin Tomlinson (North Swindon) (Con)
Thank you, Mr Weir; I will be on time.
I congratulate my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox) on securing this excellent debate. It has captured the interest of so many hon. Members both because of the subject and because of his engaging delivery.
I am a big fan of small shops, for a number of reasons. First, I am the vice-chair of the all-party group on small shops and I am a member of the all-party retail group. I also come from a family of small business shop owners. I have many happy memories of growing up in the back of my parents’ wool shop, which was very handy in these colder days.
Justin Tomlinson
That is right. As has been said, small shops provide diversity but also character and interest to the high street. My local authority, Swindon, is embarking on trying to secure significant town-centre regeneration but, ever mindful that we will always be competing with Oxford, Bristol, Reading and Bath, we need something that sets us apart from those other towns as potential shoppers head down the M4 and choose which ones to go to. Through small independent retailers, we can have that unique offering.
I shall start by being positive. A recent BBC TV programme was called “Mary Queen of Shops”. I am a big supporter of the idea that she put forward, which was that it is not all doom and gloom and that many retailers need to embrace changing customer expectations. I shall use just two quick examples, one of which was a struggling greengrocer’s that was very quiet in the daytime. She encouraged the people at that greengrocer’s to go out and get orders for delivering vegetables to people’s doors. In the daytime, when they were quiet, they could pack those boxes, and that increased their income significantly. The other example came from an area in the south-west that was a tourist attraction—I forget the name of the place—where there was a struggling convenience store. She had the store redesigned so that it became more old-fashioned, to buy into the tourism aspects of the area, and encouraged it to promote local produce, which had a story, and to have events inside the store. Again, that increased business.
There is a part that retail has to play; it is not just the Government and local authorities that have to act. However, there are other challenges. Many hon. Members have mentioned the banks. I get very cross when banks say to me that they are doing their bit; they have signed up lots of customer relationship managers. In my experience, they do not have the relevant business experience and they still rely on the computer, which all too often says no.
I support the comments that many hon. Members made about rates. In other debates, I have urged us to ensure that there is some flexibility in the rates system. We have so much spare capacity with empty shops and, using the rates system, we can help to attract the next generation of small retailers. That would not only tackle ghost high streets but create new employment opportunities, and surely a small rates contribution is greater than none at all.
I agree with many of the comments on parking. I am delighted that my local authority has cut parking charges and seen footfall and income increase, although I have just one proviso before we bash all local authorities. There was a lot of emphasis by the previous Government on encouraging green travel, which, perversely, encouraged councils to make it harder for people to park in their town centres.
Finally—because I am conscious of the time—I echo the support for the Conservative small shops commission, chaired by my hon. Friend the Member for Northampton South (Mr Binley), who has now left the debate. We should embrace and deliver the thrust of that, to restore pride and life to our high streets.
Ian Lucas (Wrexham) (Lab)
Welcome to the Chair, Mr Weir. I congratulate the hon. and learned Member for Torridge and West Devon (Mr Cox) on securing this valuable debate. I commend all hon. Members for their brevity and their comradely manner in allowing everybody to contribute, which has made the debate all the better.
This is an important issue for all hon. Members, whether they represent towns, cities, villages or a combination of all those elements. Independent retailers are important in all communities, as is clear from the debate. We all recognise that we are in a difficult economic situation that has hit independent retailers hard over the past couple of years. However, there has been a decline in independent retailers in our communities over many years because of supermarkets, the increased use of private transport, differing demands and changing consumer habits. We must recognise that it is not only Government behaviour that has changed people’s use of independent retailers; it is a product of the different way in which people shop. The independent retailer network recognises that and successful independent retailers are consequently more flexible in their shopping times and offer greater quality and reliability in their products. Many are competing successfully with supermarkets by offering innovative and distinctive products that people want to buy.
All the speeches that have been made are worthy of comment. The hon. and learned Member for Torridge and West Devon has a long record of campaigning on this issue. He spoke clearly and eloquently about his community. On broadband, the Labour Government’s commitment of at least 2 megabits by 2012 has been removed by the Liberal-Tory Government. Unfortunately, his community will have to wait longer for satisfactory broadband services. I am sorry that Devon is not progressing as quickly as Cornwall. It is unfortunate that that commitment, which would have helped villages and smaller communities, has been reneged upon.
My hon. Friend the Member for Vale of Clwyd (Chris Ruane) spoke about Rhyl—few people know more about Rhyl than he does. He spoke of the importance of safety, cleanliness and presentability to all communities. We all recognise and value those things. It is important that communities are safe and we should recognise the important contribution that CCTV makes in our communities, including in my community of Wrexham.
The hon. Member for Newton Abbot (Anne Marie Morris) mentioned theft from shops, which is a big problem for smaller shops, where there are often fewer members of staff. It is clear that CCTV makes a major contribution to tackling that problem. I would not like to see the popular provision of CCTV in places such as Wrexham diluted by the Government. It is not clear whether the current review will lead to a reduction in CCTV provision. It has had a big impact in providing a safe and satisfactory shopping environment in my constituency. She also spoke about regulation, to which I will return.
I was interested in the contribution of the hon. Member for Aberconwy (Guto Bebb) on corporation tax. It was such a good point that the only other person whom I have heard make it is me. We talk too often about reductions in corporation tax. Those of us who have run a business as a sole trader know that those reductions do not result in any benefit for such individuals. We need to be more flexible in the way in which we use such provisions.
The hon. Member for Hove (Mike Weatherley) was right that the phrase “the nation of shopkeepers” comes from Adam Smith. The hon. Gentleman made an interesting point about regulation. I am sorry to disappoint him, but the Secretary of State for Health spoke only this week about additional regulation on tobacco products, with the introduction of plain labels. Far from following the hon. Gentleman’s advice, the Government are going in the opposite direction.
The hon. Member for Solihull (Lorely Burt) told us about Asda in her constituency, and it is also a major influence in my constituency. We all face the conflict between supporting the work of independent retailers, which are important to our communities, and wanting to bring more jobs to our communities, which supermarkets are very effective at doing. They often provide flexible terms of employment for those who want to work there. We must get that balance right, which is difficult.
The hon. Member for North Swindon (Justin Tomlinson) made a valuable contribution. I am pleased to hear of his work with the all-party small shops group and I am sure he will continue to make valuable contributions.
One of the most difficult issues for independent retailers is regulation. That is a difficult issue for all of us. Many of the proposals that have been made in the debate, such as on parking and charity shops, would require additional regulation and new legislation. It is easy to create good soundbites such as “one in, one out”, but it is more difficult to devise the regulation that is necessary to pursue particular policy ends without its being onerous for small business.
As a former Minister with responsibility for regulatory reform, I know that the Better Regulation Executive will provide excellent support to the Minister by nagging him on regulation—I am sure it will nag him just as avidly as it nagged me. Contrary to the perceptions of some Government Members, I did not used to wake up dying to regulate every morning, but tried to reduce regulation as much as I could. One of the previous Government’s most positive moves in reducing regulation was the forward regulatory programme, whereby Departments have to publish what they propose to regulate. It frightens Ministers when they see the length of the list they present. I am delighted that the Government are continuing with that programme, because it is a good discipline. Dealing with new regulation is in many respects more difficult than dealing with stock. It is quite easy to get rid of a regulation about driving horse-drawn carriages across particular heaths, but it is more difficult to prevent Ministers from legislating with new regulations. As we all know, independent retailers suffer disproportionately from regulation because they have so many other things to do.
We have a common aim of improving the position for independent retailers. There is a lot of imagination in the independent retail sector. When I was fortunate enough to be a Minister at the Department for Business, Innovation and Skills, I made an interesting visit to Westway in west London, where, under the ring road, there is a co-operative enterprise of different shops that offer distinctive products. If the hon. and learned Member for Torridge and West Devon has an opportunity to visit that enterprise, I commend it to him. It shows that when a community is changing, independent retailers often identify more quickly and appropriately the opportunities in the market, and are often more imaginative in the products that they provide.
We have discussed some interesting incentives such as rate relief and enabling students to consider taking on empty units for a limited period—perhaps for a month or two. We should encourage such flexibility at a local level. Contrary to the observation of the hon. and learned Gentleman, the Opposition want small business to succeed and see it as an important driver of economic growth. Economic growth is vital and it is regrettable that the Government have not yet brought forward their growth White Paper.
I agree with the hon. and learned Gentleman that growth is imperative. We want small businesses and large businesses to succeed. We need to convince our young people to run their own small businesses, which is something I did but would never have contemplated as a teenager—it just happened that way in the end. Doing so gives you individuality, freedom and potential, and we should be encouraging people to do it. We need to devise and put in place the policies to take that forward.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
May I begin by congratulating my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox), not only on securing the debate but on his characteristically eloquent and powerful advocacy of the arguments that he had marshalled? He ranged across some of the crucial touch points that allow our town centres, villages and high streets to prosper but that, in some cases, prevent them from trading at all. I want to touch on as many of those points as I can.
It has been an excellent debate and there have been a number of common themes. I will use the nine minutes or so remaining to tackle some of the wide range of issues, but I will canter through them, if I may use the white knight metaphor without too much danger, leaving it there for Members to mull over if they have strong stomachs. I will not get into some of the finer points or the broader issues around regulation. We have important issues such as business rates, planning, the role of high streets, town centre management and the commission that my hon. and learned Friend mentioned.
First, as someone who started his own business at the bottom of the previous recession, I share my hon. and learned Friend’s interest in and passion for enabling our independent retailers to start and grow. Times are difficult for many retailers, as well as other small businesses. The point that hon. Members in all parts of the Chamber have made is that small businesses, and small shops in particular, are not just vital parts of the local economy, but focal points for the community. We need to bear that in mind.
It is also important to bear in mind that at the moment, in some places, independent retailers are often feeling squeezed out by some of the larger chains, which can threaten to reduce consumer choice and competition. In the time that I have, without stretching the metaphor too far, I will seek to saddle up and tackle some of the practical issues, which our constituents are keen to learn about.
The Government inherited some plans that would not be good for small businesses, such as planned increases in small company corporation tax and in employer’s national insurance. We have made it clear that we will reverse both increases. For example, the impact of the planned national insurance rise, which we have now shown how we will reverse, would in the estimation of the Federation of Small Businesses have cost up to 57,000 jobs—often in the local shops that our communities value. We are, therefore, reversing the approach on employer’s national insurance, for the most part. On small company corporation tax, from next April we will be cutting—not increasing—the level of the rate on profits by 1%, which should be crucial for the viability and, indeed, profitability of many of the smaller retailers.
A number of people raised some powerful issues about charity shops. The question concerns when people enjoy special treatment but trade in areas that they had not previously traded in. I want to raise those issues with my ministerial colleagues.
The hon. Member for Hove (Mike Weatherley) mentioned tobacco displays, but the choice is difficult. We all want to ensure that underage smoking is tackled, but we do not want to penalise the smaller business unduly. We are having a strong discussion in Government on that subject, and the Secretary of State for Health will be making an announcement shortly.
The issue of business rates was raised by a number of hon. Members. When running a business, business rates sit on the overheads—they are fixed costs, so in good and bad times they affect people equally. That is why I can confirm in one case, and newly announce in two other cases, changes that address many of the questions asked in the debate about small business rates and the relief.
I confirm that we are doubling the level of small business rate relief in England for one year, with effect from this October, reducing the fixed cost for small businesses and helping them to continue to trade while the economy returns to growth. As suggested by hon. Members, that means that eligible businesses occupying properties with a rateable value of up to £6,000 will pay no rates, with tapering relief up to a rateable value of £12,000.
In practice, what does that mean? It means that more than half a million businesses in England will benefit, with 345,000 businesses paying no rates at all. In value terms, the saving amounts to £390 million. In particular, my hon. and learned Friend the Member for Torridge and West Devon will wish to know that we think about 65,000 businesses in the south-west will benefit. My right hon. Friend the Secretary of State for Communities and Local Government has announced that we intend to proceed with legislation to ensure that small business rate relief will be automatic. We made that commitment before the election, and we are honouring it. It will be set in legislation shortly.
Today, we announced our plans to change the rules so that councils can set further business rates locally, to respond to specific needs or to help high streets that are struggling and where a little local application of further discounts could help. It is a good local programme, funded locally, which will provide vital flexibility in our areas. I hope that right hon. and hon. Members will take those points further forward.
Planning was raised by several hon. Members. Independent retailers in the high street have been anxious about some of the changes made under the previous Government. This Government strongly support a localist approach to planning for the high street, which is why we have a clear commitment to the “town centres first” planning policy. In practice, it gives local authorities the ability to consider the vitality, viability and diversity of shopping districts when considering controversial planning applications.
Ministers are also making it clear that any specific changes to national planning policy will be brought forward through the national planning framework. There is, therefore, clarity and an element of consistency. We are committed to returning power to local communities, to enable them to shape the development of their areas, which is why we will present to Parliament a simple and consolidated national planning framework covering all forms of development. The announcement will be made soon, in particular on how we propose to progress the framework and on the implications for specific areas of planning policy. However, to be very clear, the principle of “town centres first” is a vital part of that framework.
Mr Prisk
I will canter on, if I may, because I feel honour bound to mention a couple of questions asked by other Members.
On procurement, the answer for the hon. Member for Solihull (Lorely Burt) is 16%. Measures for transparency and removing red tape will help. If she looks at the UK Trade & Investment website, rather than at the Department for Business, Innovation and Skills one, she will find the export advice that she seeks.
I turn briefly to two other things, one being rural broadband, about which my hon. and learned Friend the Member for Torridge and West Devon is keen to have answers. We are determined to ensure that we do not just have a slight improvement—2 megabits—but that we have super-fast broadband right across the country. Our commitment is to deliver that by 2015, backed by a £530 million package. We are piloting it, in particular, in rural areas—we understand their difficulties—such as the highlands and islands of Scotland, Herefordshire, Cumbria and North Yorkshire. The commitment is clear, and we want to ensure that we deliver on it.
Lastly, I turn to the broader question. My hon. and learned Friend was, under the chairmanship of my hon. Friend the Member for Northampton South (Mr Binley), part of the commission referred to in the debate. A vital beginning to that process is the document—the tool—that I am holding, entitled “Healthy High Street?”. The process is about understanding the holistic issues that affect town centres—whether planning, parking or whatever. I happily and strongly commend the proposals, which have come from the retail industry jointly with the Government. The document begins a process to strengthen town centres.
Times are tough for retailers, which is why we are tackling their costs, dealing with planning and are open to helping them in the months and weeks to come.
Concessionary Travel
(14 years ago)
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Karen Lumley (Redditch) (Con)
It is a pleasure, Mr Weir, to serve under your chairmanship. I thank all hon. Members for giving up their time to attend this debate, which is about an important subject. Concessionary fares come with a history of controversy, and I have received many representations on the topic from my constituents. I hope that we get some clarification from my hon. Friend the Minister today.
Concessionary travel is vital to many communities, especially to the elderly, the disabled and those who live in rural areas, who would otherwise be cut off from basic services. Eleven million people in England qualify for the concession, which is no small number. Since the introduction of the scheme in Worcestershire in 2008, we have seen an 18% increase in the number of concessionary journeys made in the area, and the county has issued more than 100,000 cards.
The preservation of concessionary travel is a huge deal. For me, it is especially important to Worcestershire and my constituency of Redditch. When I was a Redditch councillor in 2004, the Conservative minority-control council scrapped the free bus pass on advice from council officers, who told us that it could not be sustained, but we soon realised what a gigantic mistake it had been. At the following local elections, Labour election literature branded me the “bus pass snatcher”. Needless to say, we lost the election, and I am certain that the issue was a significant factor in my losing Redditch in the 2005 general election. The Labour group reinstated concessionary fares in 2004, but the disaster that I have mentioned must not be repeated.
Mr Robin Walker (Worcester) (Con)
I congratulate my hon. Friend on securing this debate. She makes a strong point. Does she acknowledge that the problems of the present concessionary fares scheme affect county towns such as Worcester particularly badly, and that if the Government are going to switch it from the districts to the counties, it is essential that they reallocate the grant and not simply the cost of the scheme?
Karen Lumley
I totally agree with my hon. Friend. I shall probably come to that point later.
I fully support the announcement in the Government’s comprehensive spending review to
“Protect the statutory entitlement for concessionary bus travel, ensuring that older people can maintain greater freedom and independence.”
However, I am worried that it does not go far enough. I believe that the Government are not effectively addressing the serious concerns voiced by district and county councillors about the reduction to local government resource grants of 28%, the transfer of grant funding administration and the 20% cuts to the bus service operators grant. Together, those will have a significant effect on the provision of concessionary travel.
Today, I wish to speak particularly about the implications that the transfer of grant funding from district councils to the county council, mentioned by my hon. Friend the Member for Worcester (Mr Walker), will have for two-tier authorities. I stress that the problem is not the principle of transferring the funding to county councils, but the process of reallocating financial responsibility. Under current plans, the national scheme, which is administered locally, is to be withdrawn from district councils and transferred to county councils from April next year. In the past, councils have often had to deal with substantial shortfalls in funding for the scheme, and the latest development appears to be a continuation of this struggle.
Harriett Baldwin (West Worcestershire) (Con)
I congratulate my hon. Friend and Worcestershire colleague on securing this important debate. Does she agree that it would be desirable for councils, whether at district or county level, to be net-net—not out of pocket either way—when implementing the scheme on behalf of the Government?
Karen Lumley
That is the point that I am making. The proposal could be devastating for district councils, as they stand to lose significantly more than they spend. The system has been described as a mess by the District Councils Network. Changes to the formula need to be clear, transparent and accurately carried out, but many councils are concerned that the implications have not been properly thought through.
Mark Garnier (Wyre Forest) (Con)
I congratulate my hon. Friend on securing this incredibly important debate. To give substance to her argument, I should say that the leader of Wyre Forest district council told me only this afternoon that the potential cost to that one council would be £1 million if the worst option is selected. That is £1 million a year on top of the expected cuts resulting from the comprehensive spending review.
Karen Lumley
I thank my hon. Friend for that. I know that Redditch is looking at similar figures.
It is most likely that the transfer will result in neither a fair nor a transparent funding deal, some councils being hit harder than others through losing a disproportionate amount of grant funding.
Simon Kirby (Brighton, Kemptown) (Con)
On that point, Brighton and Hove city council is looking at a shortfall of £1.3 million. I suggest that a grant should be provided to cover the fact that some places are tourist destinations and have extensive bus networks as a result.
Karen Lumley
We in rural Worcestershire suffer from different problems, but I take that point on board.
The system is surely not in line with the Government’s message on fairness. I wholeheartedly support that message, but on this matter it is failing to get through. We need to ensure that funding is allocated fairly and equitably.
Heather Wheeler (South Derbyshire) (Con)
My hon. Friend makes a good point. The changes affect different parts of the country differently. In South Derbyshire, we are trying to negotiate friendly terms with Derbyshire county council. However, in the past Chesterfield and Derby city lost huge sums as a result of various changes.
I understand that consultation with the Government is going well. There are four options. In two we lose dreadfully, and in one we are just about okay. As for the option for the rural and tourism areas, I sincerely hope that our ally will come along with some good news later this afternoon.
Karen Lumley
Like my hon. Friend, I hope that we get some good news this afternoon. That is why we are here.
I seek clarification from the Minister. Will he assure the House that district councils will not be significantly financially disadvantaged as a consequence of the transfer of the administration of concessionary fares from district to county council level? If some councils are to be disproportionately affected, may I suggest a top-up fund to ensure that those councils likely to face substantial losses will not be financially disadvantaged?
In the light of the tremendous upheaval that the transfer will cause, the time scale allowed for councils is less than satisfactory, given that local authorities already have to deal with the comprehensive spending review. Will the Minister consider making representations to his Department to change the date required for publication of the scheme from 1 December? As we know, the spending allocation will not be published until later, which will leave local councils second-guessing how much will be needed.
Justin Tomlinson (North Swindon) (Con)
I congratulate my hon. Friend on securing this excellent debate. I feel like the odd one out, given that I represent a unitary local authority. Does she agree about the need for clarity, especially in the long term, so that local authorities can plan accordingly?
Karen Lumley
Wouldn’t that be nice! When I was a councillor, we worked year to year; we never got any further ahead than that. I totally agree with my hon. Friend. That would be fantastic.
I hope that the Minister agrees that clarity would allow districts fully to assess the impact of funding adjustments, and thus be able to make more informed decisions on the possibility of continuing local enhancements to the national scheme. For example, the Redditch scheme runs for the whole day, so whenever the buses start—it is usually 7 am—residents are able to use them. However, the national scheme starts at 9.30 am, and our residents lose out by not being able to travel during busy commuter times.
I shall speak briefly about the bus service operators grant. There was much speculation before the comprehensive spending review about Government plans to cut the BSOG entirely, but it proved to be unfounded. Instead, the grant will be reduced by 20% from 2012. I welcome the Government’s view that that reduction will have a marginal impact that can be absorbed without fares needing to rise. However, many do not believe that. The impact of individual cuts could be absorbed, but when combined with cuts to the revenue grant and changes in the funding system, they will have a potentially devastating effect. Will the Minister say exactly how these cuts can be absorbed, and what practical measures are in place to ensure that concessionary fares will not cause increases?
Many authorities are approaching the comprehensive spending review outcomes positively—I know that Redditch is—and they hope to be in a position to meet the loss in grant without a disproportionate impact on service delivery. However, some councils will not be so lucky. As we heard from my hon. Friend the Member for Wyre Forest (Mark Garnier), many will have to raise fares, reduce service availability, alter or cancel routes altogether and consider the impact on longer-distance rural bus services, all of which will significantly undermine the concessionary scheme. I have to ask what the point is of having a bus pass if there are no buses to use.
We understand that cuts in all services are a necessary evil, given the economic catastrophe left by the last Labour Government. However, the lack of clarity about the transfer of funding and about where the brunt of the cuts will fall is unacceptable.
Rosie Cooper (West Lancashire) (Lab)
I congratulate the hon. Lady on securing this debate. We have heard about councils that are net losers today. My local authority of West Lancashire is a net gainer and must contribute to the county these days.
Does the hon. Lady agree that concessionary travel is a lifeline for many pensioners? As for rural areas, she is absolutely right—there is no point in having a bus pass if there are no buses. Would she seek to ensure that all pensioners and all communities have fair and equitable access to concessionary travel, especially because, as I say, West Lancashire is a gainer?
In my area, my local pensioners want to have the option of concessionary rail travel on the same basis as their neighbours in Southport, Wigan and Liverpool. The pensioners of West Lancashire actually feel that they are not getting a fair deal out of concessionary travel and yet it is a net gainer, so there really are swings and roundabouts here.
Karen Lumley
I agree. There are obviously swings and roundabouts across the whole country and it would be nice if we had a uniform scheme whereby everybody could benefit; it would also be nice if we had the money to do that. However, I understand that we are in very difficult times and we have to make very difficult choices.
Gavin Williamson (South Staffordshire) (Con)
I congratulate my hon. Friend on securing this debate and I thank her very much for giving way. On that point, some of the current schemes that have been discussed are incredibly penal against rural district councils and we could actually see many services just being totally destroyed, such as those in my district council of South Staffordshire. We must have consideration for those authorities in the future, a point that she has been explaining fantastically well in this debate.
Karen Lumley
I thank my hon. Friend for that intervention.
Part of my constituency is rural and part of it is urban, so the problems facing those two parts are very different. That is one of the reasons why I wanted to speak today, because it is probably easier to get a bus in Redditch than it is to get one in Wychavon, which is the rural part of my constituency. So, as the hon. Member for West Lancashire (Rosie Cooper) said, it is only right that we treat people as fairly as we possibly can.
Andrew Bridgen (North West Leicestershire) (Con)
My constituency is very similar to that of my hon. Friend; it has both urban and rural areas. My district council has currently budgeted to spend £887,000 on the concessionary fare scheme this year, and it will receive a specific grant of £196,000 to meet part of that cost. However, my county council is concerned that, when this spending on concessionary travel passes to county councils, the formula grant will be reduced by more than that £691,000 shortfall—many other Members have expressed similar concerns about shortfalls today—and that that would put added pressure on a budget that has already been cut by 25%. If we want to avoid rural isolation, we must have a guarantee that we will not have a shortfall.
Karen Lumley
I agree with my hon. Friend and I look forward to hearing the Minister’s reply to the debate in a few moments’ time.
The Government have promised to examine smarter ways of administering the bus service operators grant subsidies, as well as a system that more clearly—
Andrew Jones (Harrogate and Knaresborough) (Con)
I congratulate my hon. Friend on securing this debate and I thank her for giving way.
In the area that I represent—Harrogate and Knaresborough—the actual cost to Harrogate district council of concessionary fares in 2009-10 was £2.9 million and yet the total special and formula grant received was only £1.5 million, leaving the balance of £1.4 million to be met by local taxpayers.
As the grant is reallocated, with responsibility for the service transferring to the county council, it is quite important that we allocate the grant and not the cost that county councils and district councils have been facing, so that the local taxpayers of Harrogate district council are not hit twice.
Karen Lumley
I totally agree with my hon. Friend and let us hope that we can move on to the type of system that he has just suggested.
We need to look at a system that allows local communities and local authorities to determine how the funding that is allocated to their area should be spent, but I do not think that we have seen any evidence of such a system yet. I ask the Minister today to reconsider the proposed changes in the light of the cumulative effects that they will have, not only on district councils and local authorities but on the provision of vital services for our elderly and disabled people. I also ask him to address these issues as a matter of urgency.
The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I begin by congratulating my hon. Friend the Member for Redditch (Karen Lumley) on securing this debate on a very important issue. This debate has probably set a record in the House of Commons for the number of interventions in 15 minutes. I counted 10 interventions—so 11 speeches, as it were, in 15 minutes perhaps sets an example to other Members in other debates.
Let me say right away that the coalition Government are committed to protecting the concessionary bus travel scheme. We made that clear in the coalition agreement, the Chancellor reconfirmed that commitment in the recent spending review, and the Prime Minister has given his own support for the continuation of the scheme.
The scheme is of huge benefit to millions of people, allowing free off-peak travel anywhere in England and providing older and disabled people with greater freedom and independence. The concession enables older and disabled people to access facilities both within and outside their local area, and it helps them to keep in touch with family and friends. It also provides new leisure opportunities, so that when eligible people are visiting other parts of England on holiday, they can travel free on local buses at off-peak times, and it encourages those people to visit popular tourist destinations—such as Brighton and Hove—which brings benefits to the wider community.
About £1 billion is spent on concessionary travel every year. The Government currently provide funding for the scheme through two channels. The majority of the funding comes through the formula grant system, and since 2008, when the England-wide concession was first introduced, the rest of the funding has come through a special grant from the Department for Transport.
In line with the reduction in separate funding streams to local authorities, from April 2011 all funding for the scheme will be provided through formula grant, giving local authorities the freedom and flexibility they want in their use of funding. Overall, the Department for Transport is reducing the number of funding streams for local authorities from 26 to just four, which is in line with the Government’s general trend towards localism.
The Government are aware of how precious this benefit is to older and disabled people, which is why we are focusing our efforts on assisting local authorities to find efficiencies through reforms to the administrative and reimbursement arrangements for the scheme, rather than cutting back on the entitlement.
Only one change has been made to eligibility for the scheme—to increase the age of eligibility in line with the changes that are taking place to the state pension age. In fact, that change was introduced by the previous Government, and I understand that it was done on the basis that people are living longer, staying healthier for longer and tending to stay in work until later in life. That change will clearly assist with the financial sustainability of the scheme.
From April 2011, responsibility for administering the scheme will move from lower-tier local authorities such as district councils to upper-tier local authorities such as county councils. This reform will assist in overcoming a number of problems that have been identified by local authorities, stakeholder groups and operators. The change will enable efficiencies to be realised, through economies of scale and by reducing the number of negotiations with bus operators. It will also make accurate funding by formula easier, because there will be less variation in the size and characteristics of authorities. Furthermore, it will harmonise concessionary travel and wider transport authority responsibilities.
If individual councils have had a rough deal, such as the one in Harrogate, and other councils have benefited rather more in the same county area, such problems should therefore be eliminated by this scheme. I accept that it will not solve all problems, but that is one problem that can be eliminated by this move from districts to counties.
The Department for Communities and Local Government recently consulted on how the transfer of responsibility for concessionary travel will be taken into account in authorities’ funding allocations from 2011-12. That consultation was an opportunity for local authorities to influence decisions on the final distribution method. By the way, I should say that many of the points that have been raised by Members today are actually points for the Department for Communities and Local Government, in a sense, rather than for the Department for Transport. Clearly, I will do my best to answer those points, but the funding allocation is through the DCLG rather than the DFT.
A number of authorities, especially district councils—including my own district council in Lewes—have expressed concerns about the potential implications for their future financial position as a result of the administrative changes. That is the nub of the case that is being put today. Discussions have been taking place at official level between the DFT and the DCLG to try to ensure that the distribution method taken forward after the consultation does not result in unintended consequences for authorities.
It is important to remember that the figures presented in the DCLG consultation were only illustrative and that the actual effect on authorities is likely to differ, following final decisions on matters such as the amount of funding to be transferred from lower-tier to upper-tier authorities for concessionary travel and the level of floor damping to be applied to particular types of authority. In other words, the change will be phased in, which I think was one of the concerns expressed today. My hon. Friend the Member for Redditch talked about “top-up” funds. The DCLG’s preferred method is through damping and the provision of floors, to ensure that there is not a sudden cliff-edge. I am sorry to use all these terrible metaphors; they are official DCLG metaphors.
The overall amount of funding available for local government was set out in the spending review. DCLG will publish details shortly about the outcome of its formula grant consultation and how the overall funding pot will be distributed among authorities. The formula grant is allocated on the basis that the level provided overall is sufficient to enable authorities to deliver effective local services while ensuring that they do not set excessive council tax increases. In a sense, local authorities will be more able to decide how they allocate their funds than they have hitherto been.
The hon. Member for Brighton, Kemptown (Simon Kirby) asked about the effect on unitary authorities. I am afraid that I cannot give any specifics on that matter until the DCLG makes its announcement on the spending review, but I can say in general that all the comments made today are being noted by officials and will be passed back to the DCLG as part of ongoing discussions between our Departments. I also mentioned that the impact will be mitigated by the use of floors to prevent sudden changes in local government finance for individual authorities.
In her introductory comments, my hon. Friend the Member for Redditch asked whether the date for the publication of local authority schemes could be moved from 1 December. I am afraid that that is not possible. Travel concession authorities are required by the Transport Act 2000 to publish schemes four months before they come into force. It is not possible to amend the date without primary legislation, which she will understand could not be enacted before 1 December.
I am aware that concerns that have been expressed about the potential impact of the administrative changes on local discretionary concessions; I believe that the hon. Member for West Lancashire (Rosie Cooper) mentioned it. It is not the intention that the change in responsibility should have any impact on the additional entitlements offered by local authorities. The order laid before Parliament earlier this year to enact the change does not prevent upper-tier authorities from maintaining or introducing district or local level discretions where needs differ within different parts of a county boundary, for example. Nor does it prevent district councils from providing funding to county councils to administer discretionary concessions on their behalf.
Furthermore, district councils will remain able to consider discretionary travel schemes using the well-being powers in the Local Government Act 2000, so in theory, they could introduce concessionary rail travel within their areas if they wanted, irrespective of any move from district to county. However, local authorities should take legal advice when creating, amending or withdrawing discretionary concessions and should also ensure that they comply with their own disability equality schemes.
We are assisting local authorities to make efficiencies through reforms to the arrangements for reimbursing bus operators, on which we recently published draft guidance. We held a consultation on the new concessionary travel reimbursement guidance and will be issuing the final guidance to local authorities shortly, with a view to introducing changes to the reimbursement regime for schemes beginning in April 2011. I stress that it is for local authorities to decide whether they wish to take advantage of that guidance, but it will nevertheless be issued by the Department for Transport in order to enable local authorities to engage more effectively with bus operators.
The consultation sought views from stakeholders on the revised reimbursement guidance, which adopts a more directive approach to reimbursement calculations, requiring fewer data inputs and assumptions but leaving scope for local flexibility where appropriate. Analysis of historic reimbursement by travel concession authorities indicates that councils could make up to £130 million in savings under the revised reimbursement arrangements. The proposed new guidance is based on extensive new research carried out by the Institute for Transport Studies at the university of Leeds and will help to simplify the current system and enable more accurate reimbursement.
My hon. Friend the Member for Redditch mentioned the bus service operator grant. As she will know, all sorts of wild suggestions were made in the national press that BSOG was being abolished. I made it perfectly plain to the House in June or July that the Department values BSOG as a sensible contribution to ensuring good public transport. I therefore hope that it was not surprising that BSOG was retained with a cut of just 20%, which is below the average cut for revenue budgets in the spending review. That is a recognition from the Treasury and the Department for Transport of the value of its contribution to bus services. I spoke to the chief executive of the Confederation of Passenger Transport UK, which represents the five main bus companies, after the Chancellor’s spending review. The chief executive was hopeful that in general terms, the cut in BSOG could be absorbed without any increase in bus fares. That was a good outcome.
The concessionary fares scheme remains based on the same solid principle as ever: bus companies should be no better and no worse off as a consequence of the scheme. That is relevant when we consider the new guidance on reimbursement arrangements. Concern was expressed that the changes might affect the level of service provided. As I said, bus companies should be no better and no worse off as a consequence of their dealings with local authorities. Therefore, in principle, irrespective of anything else, there is no reason why service levels should be affected. The concessionary fares scheme, if it delivers its outcome, should not lead to a reduction in bus services.
I point out that the vast majority of bus services are commercial rather than subsidised, so the secondary and understandable concern expressed by my hon. Friend and others that local authority budgets will be stretched, as undoubtedly they will, would in any case relate at maximum level only to subsidised services, not commercial services, which are independent of local authority funding. That said, local authorities, particularly rural ones, provide subsidies for some bus services in their area, and they will want to consider how best to use their funding. I hope that when it comes to difficult decisions, local authorities will consider—as central Government have done in recent months—where they can make savings without affecting front-line services. Affecting front-line services through cuts is the easy option. Rather than resorting to unfortunate cuts, local government can make a number of savings—for example, by combining back-room functions—without affecting the public. I hope that local authorities will approach their budgets in that way.
I hope that I have been helpful in responding to hon. Members’ comments. I recognise that the issue is important—the turn-out has reinforced that—and I take it seriously. The Government’s overall intentions are, first, to protect the concessionary fares scheme, and secondly, for good environmental and social reasons, to get more people on buses. We do not want to pursue policies that have the opposite objective or consequence. We will take back the comments that hon. Members from all parties have made this afternoon and feed them through to the Department for Communities and Local Government, which will ultimately decide the allocation for local authorities.
Pennine Lancashire Local Enterprise Partnership
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Graham Jones (Hyndburn) (Lab)
This is a matter of importance in supporting growth in Pennine Lancashire and the north-west of England. I intend to discuss three main points. First, Pennine Lancashire’s skills base and great heritage make it perfectly placed to pursue a local enterprise partnership. Secondly, a pan-Lancashire LEP is not an appropriate solution for either east or west Lancashire and will not work in the region. Thirdly, the Government must recognise the unique differences between those two local economies and the need for two LEPs for the region, and move toward a solution involving a Pennine Lancashire LEP.
When the Government invited local authorities and business leaders to submit proposals to form LEPs, we in east Lancashire saw it as a perfect opportunity to build on years of existing partnership work. In his letter of 29 June, the Secretary of State makes three clear points:
“some local and regional boundaries do not reflect functional economic areas. We wish to enable partnerships to better reflect the natural economic geography of the areas they serve and hence cover real, functional economic and travel to work areas.”
There is no doubt that Pennine Lancashire functions as a natural economy and fits the three points mentioned by the Secretary of State.
Economic, skills, housing and transport strategies are already developed and implemented along the lines of that footprint, and they have been for many years. With a population of more than 500,000 people, the area is greater in size than many major UK cities and is similar in size or greater than some of the LEPs already approved. The area is characterised by a strong manufacturing base and entrepreneurial people. More than 21% of employment in the area is in the manufacturing sector, compared with 10% in the UK as a whole. Self-employment rates are significantly higher than regional and national levels. Despite not having a dominant city centre, the area collectively contributes more than £6 billion gross value added to the economy each year.
Export-led growth will drive economic recovery and Pennine Lancashire is well placed to capitalise on that, with more than 700 businesses involved in significant export activity this year. It is vital that we recognise what makes up east Lancashire. A key point is that there is a high degree of connectivity and interdependence between the Pennine towns. More than 10,000 jobs are provided by Blackburn employers and the same figure is provided by Burnley employers for residents of the area. In terms of Pennine Lancashire districts, my constituency provides 9,000 jobs. Some 84% of resident employees work in the area and only 16% work outside of it. Of those people who do not access employment outside the sub-region, almost three times as many commute to Manchester as do to Preston. We are talking about a very small connection to Preston. Independent analysis shows that more than 200 high-growth businesses have achieved at least three years continuous growth, despite difficult economic conditions. We are working hard as an east Lancashire region. Hundreds more businesses have the potential to grow and provide new jobs for the area.
I shall turn to why a pan-Lancashire solution is not suitable. The Pennine Lancashire LEP proposal is private sector led. The existing business leaders’ forum works alongside the east Lancashire chamber of commerce and other support organisations, such as the Federation of Small Businesses and the Asian Business Federation. The forum comprises prominent business leaders from each of the six district councils and a cross-section of representatives from local high-growth companies. It is chaired by a well-respected business leader and includes the chamber of commerce president and chief executive, college principals and the Lancashire Business Environment Association. The forum will act as a shadow LEP board. It is important that the Minister recognise the work already achieved in east Lancashire. There are already 150 business men and women involved in partnership activity within Pennine Lancashire.
Gordon Birtwistle (Burnley) (LD)
Does the hon. Gentleman agree that the fact that the business community is starting up two specific chambers of commerce—one for Pennine Lancashire and one for Preston and west Lancashire—proves that the business community wants two specific LEPs? The business community will work on that basis and will give such a proposal its full support.
Graham Jones
I accept that and I will come to that point.
The chamber of commerce in east Lancashire has a proven record of partnership development and business support delivery, not only locally but beyond its boundaries. However, its west Lancashire cousin hardly ever meets and does not function. The east Lancashire chamber has 800 members and covers 60,000 employees. One in four of the working population is covered by that chamber of commerce’s businesses. It has led a programme of consultation during the development of the LEP proposal and has circulated information to 8,000 businesses. The chamber’s elected board of directors fully endorse the Pennine proposal. Last week, the shadow east Lancashire private sector LEP board met to finalise governance arrangements and to give input into the development of a regional growth fund bid.
East Lancashire’s business leaders are getting on with the job in hand, so why are we having this debate today? Despite Pennine Lancashire fulfilling every criteria set out by the Government, the bid has yet to be approved—not because of the quality of the proposal or the private sector backing, but because of the conflicting bids from the county, particularly the county council. It is worth highlighting that the county council’s proposal does not cover the historic area of Lancashire and that it excludes Blackburn and Blackpool. They do not wish to participate. That is why I describe it as a Swiss cheese proposal—it leaves two great big holes in Lancashire and does not provide a pan-Lancashire solution. The proposal does not even command the support of the majority of district councils in Lancashire. On the other hand, east Lancashire local authority leaders are united and have been working on a cross-boundary and cross-party basis to promote economic growth in Pennine Lancashire for many years. In particular, Regenerate Pennine Lancashire is an exemplary example of economic co-operation.
East Lancashire welcomed the assurance given by the Minister of State, Department for Communities and Local Government, the right hon. Member for Tunbridge Wells (Greg Clark) in his letter to the district councils’ network on 25 August. The letter reiterated what has been said before:
“we are not expecting County Councils to act as sole ‘building blocks.’ We want to see economic geographies reflected in proposals, not administrative ones”.
Experience has shown that pan-Lancashire structures put in place to deal with economic issues are ineffectual and that local arrangements reflecting local economic footprints work better. If we are not careful, we will have the unnecessary duplication of bureaucracy of region and locality. Indeed, only this year, Lancashire partners agreed that the existing pan-Lancashire economic partnership was no longer fit for purpose and that the attempt to create a Lancashire-wide skills board has failed. However, the private sector-led Pennine Lancashire Employment and Skills Board goes from strength to strength.
There are also two British Chambers of Commerce accredited chambers of commerce in Lancashire. This point relates to the comments made by the hon. Member for Burnley (Gordon Birtwistle). One chamber of commerce is in the east and one is in the west. They both reflect the unique differences of the economies they serve. A two-LEP Lancashire solution is staring us in the face. A recent poll suggested that almost 70% of businesses in west Lancashire would back a two-LEP solution.
Rosie Cooper (West Lancashire) (Lab)
I congratulate my hon. Friend on securing the debate. None of the bids from Lancashire were accepted by the Secretary of State. In reply to a question I asked the Secretary of State, he said that the bids from Lancashire were
“overlapping…fiercely competitive and different.”—[Official Report, 28 October 2010; Vol. 517, c. 490.]
I understand my hon. Friend’s preferred position on dual Lancashire bids, but local authorities in Merseyside and Greater Manchester can work together, despite their areas being very different. Having two such dominant and powerful LEPs in the north-west will surely make it difficult for Manchester to compete for such resources—not to mention when we have to compete against other LEPs across the country. Does my hon. Friend agree that the predominantly Conservative administrations across the council need to act collectively to ensure that the people we represent are not at the back of the queue?
Graham Jones
I appreciate my hon. Friend’s comments, but I do not accept any of them. I do not accept that there is a pan-Lancashire solution because Blackburn refused such proposals and had the common sense to look south to Manchester. Blackpool is hesitant on the matter. I shall come on to some of the conflicts that exist. We do not have a pan-Lancashire solution; we have a proposal based on three separate areas. The problem is that three proposals are being labelled as one proposal. We will all lose out. There is no pan-Lancashire solution—there never has been and there never will be. There is Lancashire county council, Blackburn borough council and Blackpool borough council.
Gordon Birtwistle
The hon. Gentleman may remember that when he was, I think, a member of Hyndburn council and I was a member of Burnley council, we put forward multi-area agreements—the right hon. Member for Blackburn (Mr Straw) will remember those. Pennine Lancashire put forward its MAA and I had the pleasure of coming to No. 10 Downing street to sign it off with the previous Prime Minister. I do not think that the west Lancashire MAA was ever done. Why are we, in Pennine Lancashire, being held back while we wait for the rest of Lancashire to come up with some sort of solution to what they need?
Graham Jones
The hon. Gentleman makes a fantastic point. East Lancashire has an MAA and now west Lancashire has decided to have one because east Lancashire has one. That reinforces the point that there are two economic models and two different regions divided by the M6 motorway. He also makes the point that the direction of travel to work is to Manchester or inwards; there is none to the west.
Following that recent poll, which I think is striking, a strong Government recommendation to that end would quickly resolve the situation and leave Lancashire settled with a two-LEP solution.
The two areas are distinct, encompassing both Blackburn and Blackpool. I remind the Minister that we have recently seen a costly legal battle between the two areas over Tithebarn, a retail development intended to revamp Preston city centre. Lancashire county council backed Preston city council against Blackburn with Darwen borough council over the Tithebarn project, and £1.5 million of taxpayers’ money has been wasted in that legal battle. That is what will continue if we try to mix oil and water, and Tithebarn will not go away in the next decade. Trying to merge the two areas will result in a terrible situation. That battle in the courts was about not civic leaders but retail, and it was between businesses and, primarily, Blackburn council.
I am concerned by the fallout from Tithebarn. I do not see how Lancashire county council has a mandate for that proposal, and I do not know why it is bringing that forward. I have never seen an executive report on the issue from the county council, and nor have I ever seen the matter go to full council. I have never seen it brought forward. It is undemocratic, and I would like to see how much the county council is spending on it, as it does not even have a mandate from its members in the council chamber. It is a ridiculous bid and should be thrown out. It is a cynical attempt to undermine the established Pennine Lancashire LEP bid, and to use issues such as Tithebarn to impose a west-of-Lancashire solution. It goes against the spirit of local economic partnerships and the Government’s wider localism agenda. Lancashire county council should not be allowed to disrupt and jeopardise the economic prosperity of an area it is meant to serve in a misguided attempt to reassert control over the existing county boundaries on issues such as Tithebarn and others.
In summary, Pennine Lancashire LEP is based on evidence and understanding and has the support of the private sector, district authorities and all local MPs from the three main political parties. Business and civic leaders in east Lancashire all recognise what works locally and have a sense of common purpose about what needs to be done, one that transcends political differences. The economic capital should not be discarded, as years of work have gone on in east Lancashire involving all the authorities—of different colours—to try to drive growth in the area, which we have done.
It is clear that Pennine Lancashire has had a business-led and focused partnership that has developed over years. There is nothing comparable to the west. To send everyone back to square one to suit the county council’s agenda would be a gross waste of taxpayers’ money and would hit growth in the region. I urge the Minister to resolve the situation, approve a Pennine Lancashire proposal as a matter of urgency and allow us to get on with creating the private sector jobs and growth that the area so desperately needs.
Mr Mike Weir (in the Chair)
Order. It is normal for the Minister to have 15 minutes to respond to the debate, but I will allow other Members to speak if they do so briefly.
Lorraine Fullbrook (South Ribble) (Con)
I wish to address the issue of parochial interest, which is in danger of overriding the greater and more holistic approach in fostering and enhancing the economy of Lancashire. If we allow Lancashire to be divided, we will be unable to offer a broad and integrated approach to our economy. To argue that the Pennine area should be separate because of its manufacturing base is to encourage a parochial view of business.
Graham Jones
Does the hon. Lady not accept that, on travel to work, 84% of the people are contained in the east Lancashire region, and that that is where they work? Does she not accept that there is no economic connectivity of any significant scale between the east and west?
Lorraine Fullbrook
I appreciate the hon. Gentleman’s comments but I do not agree, because I believe that industry, the manufacturing base and professional services all have to be integrated across Lancashire.
Lorraine Fullbrook
I would like to make progress. We now live in a global economy, which demands a consolidated approach in all sectors: manufacturing, tourism and professional services. I submit that a united Lancashire is a stronger economic powerhouse than one divided into separate bids identified by geography. By unifying the system, the Government are cutting red tape and bureaucracy. Any investor looking to invest in the north-west will automatically be attracted to a unified LEP that offers a one-stop shop.
Lorraine Fullbrook
I have nearly finished.
The Business Secretary said last weekend that not one of the three proposals to create the partnerships had been successful, claiming that they would have ended up competing with each other for the Government’s regional growth fund. Meanwhile, schemes in Manchester, Merseyside, Greater Manchester and Cheshire have got their acts together and are getting the go-ahead. Other unified LEPs are currently bidding for funds that could be usefully deployed in Lancashire. The North and Western Lancashire chamber of commerce has said that an LEP based on the county of Lancashire is the preferred model for chamber members and the wider business community. On 2 November, Babs Murphy, chief executive of the chamber of commerce, said:
“A pan-Lancashire Local Enterprise Partnership was the only realistic model for this area, a model that had the support of the business community.”
Lorraine Fullbrook
I am nearly finished. I hope that we can come together to protect Lancashire as a whole and as a brand. Tourism, manufacturing, agriculture and professional services should unite and, regardless of parochial interests, work together to strengthen and enhance the great economic potential of Lancashire. I echo the words of Frank McKenna, chairman of the business lobbying group, Downtown Preston, who has said that anything other than a pan-Lancashire bid would stifle development and growth.
Andrew Stephenson (Pendle) (Con)
I will refer briefly to some of the comments that have been made. I congratulate the hon. Member for Hyndburn (Graham Jones) on securing the debate. As he pointed out, 84% of the work force in the region live and work in the Pennine Lancashire area, and three times as many people commute to greater Manchester than commute to Preston. It would make far more sense for Pennine Lancashire, if we cannot go alone, to go in with Greater Manchester, rather than with Preston. Going in with Preston would, economically, be complete nonsense. Lancashire is an historic county and there are many things that we can do by working together, and I applaud the work of the county council, but if LEPs are supposed to reflect natural economic areas, the case for Pennine Lancashire is fantastic. I hope that the Minister will set a decision date, and I urge him to bring the issue to a head.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I congratulate the hon. Member for Hyndburn (Graham Jones) on securing the debate and thank those Members who have been able to contribute. Although normally only a Minister replies in such debates, I think that it has been useful to allow other Members to contribute in this one. It is clear that there are strongly held differing views, both within the House and among the people whom Members represent. In that context, I want to help and have a positive proposal, to which I will come in a moment.
For the Government, creating the right long-term economic framework, whether in Lancashire or elsewhere, is an extremely important issue, and one that we take very seriously. Having once worked in Lancashire, I know the economic strengths across the county. BAE Systems, for example, has a heavy presence in the hon. Gentleman’s constituency, and it also has operations across the county. There is also the nuclear industry and, as others have mentioned, the automotive and paint manufacturing industries.
We believe that Lancashire would benefit—I mean the economy of Lancashire, and there is a slight nuance there—from the focus on economic growth that we strongly feel LEPs would bring. On 28 October, we announced the first wave of successful partnerships. In fact, the 24 partnerships that have so far been cleared are diverse, have strong ambitions and are focused on the local priorities that they think matter. They are wide in their scope and imaginative in what they are trying to achieve. If we look at the 24 partnerships that have so far been cleared, we will see that they represent, outside of London, more than half England’s gross value added, 58% of the businesses and nearly 60% of the work force.
The point about LEPs is that they should enjoy broad discretion so that they can choose the priorities for action in response to local needs. A number of them are focusing on the need to remove barriers to growth, whether they relate to transport and planning, matching skills provision with employers’ needs or helping fledgling companies get off the ground.
As Members will know, we were unable on 28 October to clear every bid we received to become a partnership. Of the three bids we received from Lancashire, we judged that none were ready to proceed without further work. The area covered in what I will call the pan-Lancashire bid included Preston, Lancaster, South Ribble, Chorley and West Lancashire. The Fylde coast bid comprised Blackpool, Fylde and Wyre, and the Pennine Lancashire bid originally comprised the area including Blackburn, Pendle, Ribble Valley, Burnley, Hyndburn and Rossendale. We were impressed by the commitment and ambition demonstrated in all three proposals. As with some of the cleared bids, we saw that there was a real wish to look at how, in response to local need, economies could be diversified. There were strong merits to the bids.
Let me turn to the problems. As they originally stood, the three overlapping bids clearly competed and conflicted with one another. Before we could consider whether they should progress, we had to be confident about the structures, and ensure that they were right for the business community and the communities as a whole. Clearly, where there is strong local disagreement among the potential members of a partnership, the possibility of making that partnership last is sharply diminished. Therefore, it has been disappointing that there have been continuing disagreements across the county, not only in local government but among the business community.
However, I now understand that partners involved with the Lancashire bid and the Fylde coast bid have been having productive discussions about the possibility of joining forces in one partnership. I hope that their discussions reach a successful outcome. It would be progress, but the problem would remain: we would still have two bids in opposition to each another in Lancashire.
To be open with Members, and to allow them to see exactly what the principles are, let me return to the criteria with which we are working. The criteria we set were that every partnership had to demonstrate, first, that it encompasses a natural economic area; secondly, that it has the clear support of business; thirdly, that there is an ambitious approach to transforming the area—something that adds value; and, fourthly, that it has buy-in from the key councils in the designated area. Let me look at the two bids that we are debating in this Chamber today: the pan-Lancashire and Pennine Lancashire bids.
Graham Jones
Will the Minister accept that there is no such thing as pan-Lancashire when we talk about historic Lancashire? We are merging two concepts. Blackpool and Blackburn, particularly Blackburn, are totally resistant, and Blackburn is an equal partner in local government with Hyndburn. They work together effectively. If Blackburn withdraws—it is insisting that it will go with Manchester—there will be no pan-Lancashire solution. There is a Swiss cheese solution that covers the vast majority—12 out of 14—but there is not a 14 out of 14 solution. There is no pan-Lancashire solution.
Mr Prisk
I will not comment on the value of the groupings. They are the ones that came forward. If a group chooses to call itself pan-Lancashire, that is its judgment. Given that we have a pan-Lancashire and a Pennine Lancashire, I thought that it would be easier to use that shorthand so that we know what we are talking about.
On the first criterion, the pan-Lancashire bid represents a strong, functional economic area. On the second criterion, it is clear that the bid enjoys strong business support, particularly from larger employers, but the support is not unanimous. On the third point—this is the issue around ambition and added value—pan-Lancashire also scores well. It would deliver the critical mass needed for Lancashire to compete with the likes of Greater Manchester, Merseyside, and West Yorkshire, as my hon. Friend the Member for South Ribble (Lorraine Fullbrook) pointed out. It would enable a joint approach to be taken on key sectors such as manufacturing. In addition, it includes Central Lancashire and Lancaster universities, and its scale is sufficient to bring together adjacent areas, thereby better integrating transport and planning.
It is the fourth criterion—local government support—that is the root of the problem. Clearly, some councils falling within the geographical scope of the bid are not signed up to it.
Mr Jack Straw (Blackburn) (Lab)
Will the Minister be good enough to acknowledge that support for the Pennine Lancashire bid and the serious concern about the so-called pan-Lancashire bid, arise not just from the local authorities in east Lancashire, on an all-party basis, but from the majority of businesses in east Lancashire? I cannot emphasise that point enough. BAE Systems, for reasons that one understands, has decided to sit on the fence, but it is not passionately in favour of one versus the other; if I were in its position, neither would I be. But the East Lancashire chamber of commerce, which is very representative and a very good chamber of commerce, and all the businesses that I know of—I believe that this is shared by my colleagues across the valley—are passionately in favour of the separate east Lancashire solution. In fact, none of us would be supporting that bid if they were not.
Mr Prisk
I totally understand the right hon. Gentleman’s point, and I respect the fact that where one is seeking secure evidence, it is inevitably often easier and quicker for larger organisations to respond. We have been mindful of the fact that there may be smaller businesses, about which we do not have evidence, that may support one bid or the other. I am mindful of the danger of assuming that familiar names on a particular bid’s proposal somehow mean that the whole of the business community is unanimous. I am sensitive to that—it is an excellent point. That is why we try to make sure that once we receive bids, we dig beneath the proposals and get a better understanding of the genuine nature of the support or otherwise, so that we can make a value judgment. That allows me to turn to the Pennine Lancashire bid.
On the first criterion—the question of a functional economic area—it has a plausible claim. I understand that economic geography changes. One of the points about changing the regional development agencies is that, in many ways, some of their boundaries simply do not reflect the economies that we have today, which have changed dramatically in the past 10 or 12 years. We think that the Pennine Lancashire bid has a plausible claim to being a functional economic area.
However, its links with other parts of Lancashire and Greater Manchester mean that its economic self-containment is not quite as strong as Lancashire’s as a whole. There are pros and cons. The hon. Member for Hyndburn rightly made the point that a high proportion of people work in the area, but we also need to look at the potential long-term success of a partnership—we need to think about its connectivity. The debate is two-sided; nevertheless, it is true to say that there is a plausible argument and a plausible element to the first question on whether there is a functional economic area.
On the second issue, on the evidence that we have to date—I will come to how we might solve this in a moment—the Pennine Lancashire bid’s claim, in terms of business support, seems to be smaller than that of the pan-county bid. [Hon. Members: “Not true.”] I hope to offer hon. Members a solution to that in a moment.
There is support from local businesses, especially including small and medium-sized enterprises, and I am grateful to hon. Members who highlighted that so that we can make an informed judgment. I am acutely aware of the two different chambers of commerce. I shall not comment on the pros and cons of either, but the fact that historically they exist tells me something about the nature of the economic geography in the county—I do understand it.
On the third criterion, Pennine Lancashire argues that its bid would give it the freedom to build on already close links with Manchester. The evidence is that 17,000 workers travel south to Manchester, and a far smaller number into Preston. I understand the motorway network, and that one does not look west; people look south, if anything, and perhaps a little east. In addition, private sector jobs growth is expected to be focused on Manchester. That brings me back to a point I made earlier about self-containment and balance.
There is then the question of the added value that would come from a Pennine Lancashire bid. We are looking for additionality in the proposal. What is the extra element? That is one of the questions that we want resolved. Like the pan-Lancashire bid, this bid failed on the fourth question—the issue of local authority support—as several hon. Members pointed out.
I am mindful of the challenge. Overall, we feel that the pan-Lancashire bid has some strong elements, but that the Pennine Lancashire bid also has good arguments in its favour. Neither is without its flaws. Like many hon. Members, I am keen to bring the matter to a conclusion without undue delay, so the Government are today asking partners involved in the competing bids to submit revised proposals no later than 8 December. We will write to the proposers today. Any revised proposal needs to be backed up with clear and compelling evidence to support the arguments that it presents. I hope that that clearly spells out the Government’s position. We want a lasting partnership, and that means that the partners must agree. We cannot make that happen without there genuinely being such a wish. That is the key point.
Mr Prisk
I am running out of time, and I am mindful that I will be in trouble unless Mr Weir allows me to stretch beyond 5 o’clock, but I do not think that I can do that.
We want to make a prompt decision and allow both sides to put their evidence firmly. That will allow us to make a judgment on which should be cleared: one, two or neither. We will seek to make that decision if the evidence is presented to us.
Question put and agreed to.