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Mr Ben Bradshaw (Exeter) (Lab)
1. What assessment he has made of the likely effects on businesses of introducing daylight saving time.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
I am aware of a range of arguments regarding the effect of introducing daylight saving time on business and other areas of activity. There has been no recent Government assessment of the merits of those arguments. However, as the right hon. Gentleman will recall, in our recent debate on the private Member’s Bill on this issue, I made it clear that Government are willing to publish a review of the available evidence of a move to central European time. That would, of course, include evidence of the effects on business.
Mr Bradshaw
We know that this Government are having trouble reaching agreement on a lot of things, but on this issue, where there is overwhelming support from business and other organisations, cross-party support in the House for the private Member’s Bill that the House debated before Christmas, and strong support and promises made by both the Prime Minister and the Deputy Prime Minister before the election, why is the Minister not moving more quickly?
Mr Davey
This coalition Government of two parties can make more decisions more quickly than the previous Government, of one party, did, and I am surprised that the right hon. Gentleman disagrees with the Prime Minister’s statement on this issue, in which he said that there should be consensus across the nations of the United Kingdom. That is a sensible approach to take, and we will follow it.
Duncan Hames (Chippenham) (LD)
I welcome the decision of the House to allow the Daylight Saving Bill to proceed into Committee. Has the Minister considered the possibility of changing the time in the year when the clocks change, so that British summer time can last longer, while still affording the benefits, which some people cite, that occur at times of the year when daylight hours are shortest?
Nigel Adams (Selby and Ainsty) (Con)
2. What plans he has for the future of his Department’s provision of business support.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
The Department’s plans for supporting business are being developed in a growth review looking at all the barriers to private sector investment growth and job creation—in particular, access to finance, planning and regulation. I shall be specifically working to support business through the regional growth fund, establishing the green investment bank and launching technology and innovation centres.
Nigel Adams
In the early 1990s, when I set up my first business, I received a small weekly grant through the successful enterprise allowance scheme. It was only £20 a week—but in those days people could fill up their cars with fuel for £20 a week. It was enormously helpful in supporting the early stage of the business. Can the Secretary of State give me, and constituents of mine who are thinking of setting up a small business, any indication that the Government will introduce a similar scheme?
Vince Cable
I can give my hon. Friend that assurance: indeed, we have already done so. In October my colleague the Secretary of State for Work and Pensions launched a new enterprise scheme to help precisely the category of people that my hon. Friend describes. It will provide mentoring and funding of up to £2,000, including a weekly allowance and access to a start-up loan.
Mr Denis MacShane (Rotherham) (Lab)
Does the Secretary of State agree with Winston Churchill’s formulation that he would
“rather see finance less proud and business and industry”
more confident? Does he think that the grovelling capitulation of his Bullingdon club colleagues to the banks this week really upholds that principle?
Vince Cable
Mr Churchill’s views have much to commend them, and they are still relevant in many ways. Certainly, we wish to see manufacturing promoted and finance working in support of it rather than against it.
George Freeman (Mid Norfolk) (Con)
The Secretary of State shares my view that the life sciences are a key part of the UK small business sector. Does he share my concern that on the basis of the initial representations from the new local enterprise partnerships, there appears to be a lack of appreciation of the importance of joined-up national work on life sciences? Will he agree to meet me and a delegation from the UK life sciences network to talk about how we can ensure that life sciences are properly built in?
Vince Cable
I would certainly be very happy to meet the hon. Gentleman. As it happens, as part of the growth review, life sciences and related activities are subject to close scrutiny, and I know that my colleague the Minister for Universities and Science is giving the matter a very high priority.
Mr Jim Cunningham (Coventry South) (Lab)
3. What steps he is taking to increase employment levels in the manufacturing sector; and if he will make a statement.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)
The jobs summit held earlier this week demonstrates the Government’s commitment to a pro-growth, pro-jobs agenda. We are committed to a huge increase in the number of apprenticeships leading to technician status; that will nurture the advanced skills we need in manufacturing, technology, and engineering, which are vital to strengthening our economy.
Mr Cunningham
Will the Minister have a discussion with his colleagues in the Ministry of Defence regarding any joint ventures with the French, so that British companies and British workers get a fare shake in those contracts?
Mr Hayes
The hon. Gentleman was an engineer at Rolls-Royce, and I am sure that he agrees with engineering employers who say that growth is driven by innovation, investment and exports. That is why we are investing £200 million to support manufacturing and business development and £50 million to enhance the manufacturing advisory service, and are setting up a green investment bank. I will certainly take up the challenge that he offers me today, because he, like me, believes that manufacturing in Britain is excellent, deserves praise and has been talked down too long. This Government will give it the boost that it needs.
Robert Halfon (Harlow) (Con)
Will the Minister look into replicating around the country the Harlow college and Essex county council apprentice scheme for manufacturing and engineering? Ninety young people have qualified already, and 15 more will start in apprenticeship week this February.
Mr Hayes
Having anticipated that question, I have already had a meeting with my hon. Friend on just that subject, and I am pleased to be able to say that we will look very closely at the work being done at Harlow college, which is an exemplar in so many ways. We will look at how that can be spread across the whole country, providing more opportunity and apprenticeships, and building a Britain that works.
Ian Lucas (Wrexham) (Lab)
A strong manufacturing sector needs a powerful digital economy at its core. Does the Minister agree that it would be good for jobs in the digital economy sector for it to be outside the control of the Business Secretary?
Mr Hayes
One of the things about coalition is that it brings together people from different starting points. [Interruption.] I have to say that this coalition has convinced me that the Business Secretary’s commitment to jobs, apprenticeships, manufacturing and British business is unrivalled in his post, and is certainly considerably greater than that of his predecessors.
Sheila Gilmore (Edinburgh East) (Lab)
4. How many universities he expects to charge £9,000 in tuition fees in 2012-13.
The Minister for Universities and Science (Mr David Willetts)
Universities have not yet set their level of graduate contribution for 2012-13. Any institution in England wishing to charge above £6,000 must have an access agreement approved by the director of fair access. The Office for Fair Access will shortly begin discussions with individual institutions that intend to submit an access agreement under our demanding new requirements. We have always made it clear that £9,000 should be charged only in exceptional circumstances.
Sheila Gilmore
The Minister will be aware of the discussion within the university sector; many universities, especially Russell group universities, have already said that they are likely to charge at the higher level. Even some other universities are saying that to break even, they would need to charge more than £7,000. What modelling did the Department for Business, Innovation and Skills do when presenting its financial calculations to the Treasury, if it does not know the answers to questions that the universities appear to know?
Mr Willetts
We are waiting for universities to approach OFFA; they will have to submit a request to OFFA if they wish to go above £6,000. In our financial modelling, which we shared with the House, we made it clear that on average, replicating the income that universities are getting at the moment would involve fees of around £7,000. Of course, we are expecting universities, just like every other organisation in Britain, to make significant efficiency savings and hold down their costs.
Mr Rob Wilson (Reading East) (Con)
My right hon. Friend will remember that under the previous Government a number of higher education institutions were categorised as being at risk of financial failure. In the light of the funding changes taking place, has he updated his risk assessment of the HE institutions at risk?
Mr Willetts
The Higher Education Funding Council for England has always kept an eye on the financial position of universities. As a result of the new revenues that universities will get from graduate contributions, we estimate that it is very possible that at the end of this Parliament universities could well have a higher combined cash income in total from the Exchequer than they do at the moment; that is a sign of our commitment to the strength of British universities.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
Like the Minister for Universities and Science, the Secretary of State says that universities charging the full £9,000 in tuition fees will be the exception. No one independent thinks that that is credible. The Secretary of State also says that university leaders support his plans, yet not one university vice-chancellor supports the 80% cut in university teaching grants. He cannot even organise a scholarship fund without creating perverse incentives for universities to turn away students from the very poorest backgrounds, so just to get back to being Mr Bean the Secretary of State has quite a long journey ahead of him. Is it not clearer now that the trebling of tuition fees was not fair or necessary, and still has not been properly thought through?
Mr Willetts
The hon. Gentleman is absolutely wrong. It was made clear when the House debated the issue last month that more than half of all vice-chancellors support our proposals, because, given the tough decisions that we have had to take on public expenditure, we have provided them with an alternative source of income, coming not through a quango but through the choices of students, who can be confident that they will have to pay for their higher education only after they have graduated and are earning more than £21,000 a year.
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
I know that the Minister recognises the force of the point made by the Glasgow university principal, Anton Muscatelli, in his recent article in The Sunday Times, about the fact that the decisions in England will inevitably create a funding shortfall for Scottish universities. Will the Minister again undertake to stay closely in touch, on behalf of the UK Parliament, with the Scottish Parliament, which has reconvened the all-party technical working group to look at the matter ahead of the all-important May elections?
Mr Willetts
I have ministerial responsibility for the financing of universities in England only, but the right hon. Gentleman is absolutely right, and we do keep in close contact with the devolved Administrations, because there are significant connections between decisions that we take in England and decisions that they take affecting Scotland and Wales.
Grahame M. Morris (Easington) (Lab)
6. What assessment he has made of the prospects of establishing a single local enterprise partnership in the north-east; and if he will make a statement.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
We have received two proposals for establishing local enterprise partnerships in the north-east—one to cover the Tees Valley, which was cleared to proceed last October, and a second that was received recently for one to cover the remaining local authority areas. I can tell the House today that the second proposal meets the Government’s expectations, and we are today writing to the partners to confirm that. This means that just 16 weeks after we sought applications, there is complete coverage in the north-east.
Grahame M. Morris
I welcome that announcement and thank the Minister for that information. The Business Secretary controversially abolished our regional development agency, One NorthEast, and the Government parties have cut funding for regional development by two thirds. I welcome the good news for my area, but there are concerns among Opposition Members that in the transition period between the RDAs going out and the LEPs coming in, there will be a problem or a vacuum, and we will not be able to encourage investment or secure the regeneration jobs that we require.
Mr Prisk
Let me assure the hon. Gentleman that we are working very closely both with the outgoing RDA teams, to whom I am grateful for their co-operation and collaboration, and with the incoming local enterprise partnerships. There might be stumbles along the way, because this is a complex path, but I am determined to ensure that we do our best to encourage growth and remove the barriers to growth, especially in the north-east.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
I warmly welcome the Government’s announcement today that there will be an LEP for the whole north-east apart from Teesside, which already has one, but will the Minister discuss with the Minister responsible for tourism and heritage the transitional problems facing the tourism industry? Its promotional work, uniquely in the north-east, was directly operated by the RDA, One NorthEast, and the business-led alternative will need some transitional help.
Mr Prisk
Given my right hon. Friend’s expertise in the area, I would be happy to talk not only to the Minister but to my right hon. Friend himself, in order to ensure that we get the balance right. There is a good opportunity before us, and managing the transition needs a little care and patience, so I shall be happy to work with my right hon. Friend.
Mr Gordon Marsden (Blackpool South) (Lab)
My area, in Lancashire, still does not have a local enterprise partnership. Does not that process just confirm that the Secretary of State is still losing the plot on business and growth in England’s regions? On 11 November he told the Lunar Society in Birmingham that his LEPs process was “Maoist” and “chaotic”, and he repeated that confession to reporters from The Daily Telegraph on 20 December. Meanwhile, the Department for Communities and Local Government has just put in a takeover bid for his European money, which is meant to boost regional businesses and growth. Is not his business and enterprise Minister now left like the boy standing on the burning deck, whence all but he have fled?
Mr Prisk
That was a very stretched literary metaphor, if I may say so. [Interruption.] No, in spite of the question, the reality is that the Government are working very closely in that area, and as we have demonstrated in the north-east, we are making good progress. I work closely with my colleagues in the Department for Communities and Local Government, as I do with other Ministers, and I am sorry that Opposition Front Benchers have nothing positive to say on this subject.
John Glen (Salisbury) (Con)
7. What steps he plans to ensure that small and medium-sized enterprises are able to gain access to finance.
Christopher Pincher (Tamworth) (Con)
8. What steps he plans to take to ensure that small and medium-sized enterprises are able to gain access to finance.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
The Chancellor and I are currently in discussions with the banks and are seeking an agreement for them to lend verifiably more than they were planning to viable businesses, especially SMEs. We want more competition in business banking, which is why we have set up the Independent Commission on Banking and we are supporting alternatives to bank lending, such as the equity-based enterprise capital funds.
John Glen
I thank my right hon. Friend for his reply. My constituent Neil Carden recently visited a Department for Business, Innovation and Skills summit. When giving me feedback, he said that despite my right hon. Friend’s efforts to improve SME access to finance through the enterprise finance guarantee scheme, the more important issue of the continuing risk-averse culture among banks remains unchecked. Given my right hon. Friend’s recent comments about the armoury of weapons he has at his disposal, could he set out which ones he is going to use to tackle that culture and get banks to lend more to small businesses?
Vince Cable
My hon. Friend successfully ran a family business for some years, I believe, so he understands risk management. Clearly, in the banking sector, in many cases banks took extraordinary risks in commercial and domestic property and derivatives. It is right that they should be conscious of risk, but to some extent they have lurched to the other extreme. That is one of the reasons why the Chancellor and I are discussing how to maintain a steady flow of credit to viable enterprises.
Christopher Pincher
May I continue the theme begun by my hon. Friend the Member for Salisbury (John Glen) and tell my right hon. Friend about an SME in Tamworth called Summit Systems? Although that company has never been in debt it is finding it very difficult to access a normal bank loan, and it does not qualify for the £1 million-worth of regional growth fund funding because it does not need that sort of capital. What can my right hon. Friend do to ensure that smaller amounts of funding are made more readily available to organisations such as Summit, and will he encourage the new Greater Birmingham LEP to take these issues very seriously?
Vince Cable
I hope that the LEP will take this matter seriously. My hon. Friend is right to say that the regional growth fund has a limit of £1 million, which precludes small businesses from applying directly. None the less, the company he mentioned and others do have access to, for example, the enterprise finance guarantee scheme. I think that 37 companies in his constituency have already drawn £4 million from that source.
Mr John Denham (Southampton, Itchen) (Lab)
In September the Secretary of State said:
“If banks are saying to us they have got lots of money to spread out on bonuses…at a time when they are constricting credit to small and medium enterprises, then the government may have to use some form of taxation to change their behaviour”.
The whole House knows, and has already heard this morning, that small businesses are still finding credit too hard to get and too expensive when they do get it. The Government have given up on bonuses. The chief executive of Lloyds is purported to be getting £2 million after he has left his job, so why is taxation on the banks being cut?
Vince Cable
The right hon. Gentleman was present on Tuesday when the Chancellor gave a very clear statement of our current position in dealing with the banks, and made it very clear that nothing was off the table. However, the right hon. Gentleman is quite right: there is an issue for small-scale business in relation to credit supply as well as lack of demand. We are trying to remedy that through the discussions that we are having.
Mr Denham
The truth is that, for all his hollow rhetoric, the Secretary of State has failed small businesses. He promised that the banks would be taxed more if they did not lend. They are not lending, yet taxes are being cut. He has damaged small businesses with the chaotic abolition of regional development agencies, he has excluded small businesses from the regional growth fund, and he promised to publish a growth plan, but could not do so because his civil servants said there was nothing to put in it. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk) is reduced to telling Members of Parliament that they will have to write to the banks to help their small businesses, and now the Secretary of State has lost the part of his Department that supports small businesses in the digital economy for no other reason than that he is not a fit and proper person to take the biggest competition policy decision we will see for years. Everyone knows that he is hanging on to his job by a thread, waiting for the Prime Minister to cut it.
Vince Cable
The right hon. Gentleman has obviously been trying to polish that intervention for the past three weeks; it is getting a bit stale. The simple truth is that if he had read the latest small business survey, he would have seen that rapid growth is taking place and more jobs are being undertaken—300,000 in the past six months, almost all of which are in the small business sector. That is the sector that will drive the British economy forward and achieve the recovery that this Government have achieved.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Next week I will meet a small business man in my constituency who runs a plumbing business employing 10 people, and whose current finance is under threat of being removed by a bank. If we do not succeed—as I hope we will—in negotiating continued finance, what remedies are there to allow small businesses to get support in their battle, given that the Government are very clear about this, and that we need the banks to deliver?
Vince Cable
My right hon. Friend is absolutely right; many companies are in that position. He will be aware that the banking taskforce recently produced a whole set of remedies for companies such as the one that he described, which have had bad experiences with banks and wish to pursue an appeal.
Andrew Miller (Ellesmere Port and Neston) (Lab)
The Secretary of State will realise that we now have a good opportunity to strengthen the supply chain in the automotive sector. However, unless he comes out with a clearer policy position on longer-term finance for medium-sized businesses, that will not happen. What is he going to do to strengthen the supply of finance?
Vince Cable
I am aware of the importance of the automobile industry in the hon. Gentleman’s constituency, where I have seen the excellent Vauxhall operation. Specifically, we are working through the Automotive Council, of which I think he is aware, and with which all the leading manufacturers in the UK are associated. One of its earliest decisions was on deepening the British supply chain, and several companies have already reported that that process is happening in a positive way.
Mr Sam Gyimah (East Surrey) (Con)
I thank the Secretary of State for his answers so far on bank lending. A lot of risky start-up businesses still rely on business angels and friends and family to invest equity. What are the Government doing to plug that equity gap so that people can start up new businesses, employ people and get the economy growing?
Vince Cable
The hon. Gentleman is an authority on this; I think that he was entrepreneur of the future several years ago. We do have the growth funds that provide equity. He may also have noticed that as a result of our discussions with the banks, they have established an equity fund in order to achieve precisely the aims that he describes.
Ian Austin (Dudley North) (Lab)
9. When he expects the independent advisory panel to meet to consider applications to the regional growth fund.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
The advisory panel is currently expected to meet in late February to consider applications from the first bidding round to the fund—once, of course, the bids have been processed.
Ian Austin
When the panel meets, will the Minister ensure that the west midlands, hit hardest during the downturn and taking the longest to recover, gets the greatest help from the fund? Does he accept that the fantastic work that has been put in by business men in the black country to get our local enterprise partnership off the ground will be seriously hampered if they do not get the funds they need from the regional growth fund?
Mr Prisk
I very much welcome the work that has been undertaken by businesses in the black country, and I pay tribute to them for that. Of course, the regional growth fund has to be based on merit, because it needs to be focused on making sure that the best cases come forward. Like the hon. Gentleman, I suspect that some excellent examples will come forward from his area, and from the west midlands as a whole. Cases must be judged on merit alone.
Margot James (Stourbridge) (Con)
The Black Country Reinvestment Society has a very successful record in arranging loans to micro-businesses and small and medium-sized enterprises across the black country. Does the Minister agree that a good way of getting regional growth fund money to small businesses is by enabling grants from the RGF to investment co-operatives such as the BCRS?
Mr Prisk
I strongly agree with my hon. Friend, who is also very expert in this area. We can do this not only through the regional growth fund but by ensuring that we work through, for example, the enterprise finance guarantee, so that small institutions such as community development finance institutions are able to participate, and the micro-loans to which she refers can be extended. I have changed the rules; they can now get involved.
Mr Chuka Umunna (Streatham) (Lab)
11. What discussions he has had with representatives of the banking industry on payment of bonuses since 21 December 2010.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
I meet the banks frequently to discuss a range of issues, remuneration being one of them. As confirmed by the Chancellor on Tuesday, he and I are in discussions with them to see whether we can reach a new settlement in which banks show restraint and pay smaller bonuses than they would otherwise have done, and demonstrate greater transparency and disclosure.
Mr Umunna
On 23 November the Business Secretary said:
“Transparency is key to creating confidence in any commitment from our banks to behave more responsibly on pay”.
Yet his efforts in Cabinet to implement a City pay and bonus disclosure scheme have come to nothing. On 19 December he was still claiming:
“There is much more disclosure in some other Western countries, and this is something we can do, something I can do.”
Yet the Chancellor will not allow him to do anything. Does not the Government’s inaction on this issue demonstrate that we have a Business Secretary in office but increasingly out of power?
Vince Cable
The hon. Gentleman tells a very interesting fictional story about Cabinet discussions. On transparency, we have a system of disclosure in this country for directors of public companies, as I am sure he is aware.
Vince Cable
In relation to banking, we are looking in our discussions at how to strengthen the system in line with international practice.
Mr Edward Leigh (Gainsborough) (Con)
Does the Business Secretary acknowledge the contribution made to the economy by the 1 million people working in the UK financial sector, who contribute £25 billion in taxes every year, on top of the staggering £54 billion contributed to the UK economy by the financial sector. That is essential for schools and hospitals. Will he defend the sector that he is charged with promoting?
Vince Cable
My hon. Friend is absolutely right. That is a massive sector of the UK economy and it makes a major positive contribution. It is unfortunate, in a way, that its reputation has been so damaged by activities in a handful of banks.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The Secretary of State has been right to say that as long as the taxpayer acts as a guarantor of the banking industry, the Government have a legitimate interest in remuneration, specifically in banks in which the state has a large stake. Will he therefore tell the House what he and the Chancellor mean when they say that no option will be taken off the table if the bonus round is not agreed to the Government’s satisfaction? In other words, what specific actions will the Government take if they are not satisfied with the outcome of the bonus round?
Vince Cable
The right hon. Gentleman poses the problem absolutely correctly. The reason why bonuses are an issue—they are not one to anything like the same degree in other industries—is that some banks are publicly owned and others are guaranteed. The remedy lies in the work of the Independent Commission on Banking, which reported last year on issues such as generating competition and the possible break-up of particular institutions.
Mr Philip Hollobone (Kettering) (Con)
May I say to the Secretary of State that big bank bonuses are entirely inappropriate when lending to small and medium-sized enterprises is not taking place as it should? Only this week I was told of a business franchisee in Kettering who was told by Barclays bank that his account, which had been in credit for five years, would be closed unless he paid an annual fee of £25,000 because of spurious new audit requirements—which, when he looked into it, were completely false. He has been lied to by Barclays bank, and its chief executive should not get a bonus.
Vince Cable
Indeed, it would help if bonuses, where they exist, reflected performance in lending to the good companies that my hon. Friend describes. That is precisely why the Chancellor and I are discussing how we will ensure a proper flow of credit to those excellent enterprises, which are the backbone of our economy.
Gordon Banks (Ochil and South Perthshire) (Lab)
We have just heard a lot of drivel from the Secretary of State. The coalition agreement said:
“We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector; in developing these proposals, we will ensure they are effective in reducing risk.”
Will the Secretary of State use his nuclear option to make that happen, or will he dance away from it, in the same way as the coalition has danced away from the net lending targets that were also in the coalition agreement?
Vince Cable
The coalition agreement is a much more eloquent statement of our position than the hon. Gentleman’s rather tortured metaphors. It states precisely that we will take robust action on unacceptable bonuses, and that remains our position.
Katy Clark (North Ayrshire and Arran) (Lab)
12. Whether arrangements for the privatisation of Royal Mail will enable it to discontinue the use of post offices in favour of other outlets.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
Royal Mail and the Post Office are natural partners with a strong existing commercial relationship. As the House heard yesterday, the chief executive of Royal Mail, Moya Greene, has said that it is “unthinkable” that that will not continue after the separation of Royal Mail and the Post Office.
Katy Clark
The Minister will be well aware of the huge concern in the country over the implications of the privatisation of Royal Mail for the post office network. Will he give a simple assurance that not a single post office—not no outlet, but no post office—will close as a direct result of privatisation?
Mr Davey
We had this debate yesterday and I answered that very question. I made it clear, as did Ministers in the previous Government, that it is impossible for a Minister to say that no post office anywhere in the country will close, because 97% of them are run by private individuals, who may decide to sell up or retire. That cannot therefore be required. However, we will not repeat the major closure programmes of the previous Government.
Mr Robin Walker (Worcester) (Con)
I recently met the management of the Black Pear credit union in Worcestershire, who warmly welcomed positive noises from the Government about the idea of credit unions working with post offices. Will the Minister update us on the progress that the Government are making with that idea and on the other opportunities he sees for post offices to expand their business in future?
Mr Davey
We are certainly doing that, as we set out in our post office policy document last year. There is a pilot in Glasgow and south Lanarkshire in which pay-out technology is being used in co-ordination with credit unions, and guidance has been given to sub-postmasters about how they can work with their local credit unions.
Hugh Bayley (York Central) (Lab)
Hundreds of post offices up and down the country are temporarily closed. If the Minister is really committed to not having closure programmes such as we have seen in recent years, what is he doing to get those post offices reopened, and when will the post office on Walmgate, in York, reopen?
Mr David Evennett (Bexleyheath and Crayford) (Con)
13. What progress he has made on preparations for the higher education White Paper; and if he will make a statement.
Justin Tomlinson (North Swindon) (Con)
14. What progress he has made on preparations for the higher education White Paper; and if he will make a statement.
Nicola Blackwood (Oxford West and Abingdon) (Con)
15. What progress he has made on preparations for the higher education White Paper; and if he will make a statement.
The Minister for Universities and Science (Mr David Willetts)
We are consulting students, universities and other experts and will publish a White Paper in the early part of this year. It will set out how we will sustain our world-class universities, encourage them to deliver high-quality teaching and improve social mobility.
Mr Evennett
I thank my right hon. Friend. As he knows, a significant number of higher education courses are now being provided at further education colleges. Can he advise me whether the White Paper will build upon that?
Mr Willetts
My hon. Friend was, of course, a lecturer in a further education college, and it is only right that he should remind us of the contribution that FE colleges can make. He is absolutely right, and we do hope to encourage higher education in further education institutions as part of our White Paper.
Justin Tomlinson
In an ever more complex financial world, does the Minister agree that offering additional financial education will give universities a unique selling point in providing quality student support on post-study matters, and therefore should be considered as part of higher education pastoral support in the forthcoming White Paper?
Mr Willetts
My hon. Friend is absolutely right about the importance of people having access to good financial advice. Of course, one thing that students can be advised is that in future, under the coalition’s proposals, their monthly repayments on their student loans will be lower than under the current scheme.
Nicola Blackwood
The Institute for Fiscal Studies has found that socio-economic disadvantage has already had an impact on academic outcomes by the age of 11, and that disadvantage explains a significant proportion of the gap in HE participation at 19 or 20. Does the Minister agree that simply expecting universities to bridge educational inequalities once they have become entrenched will not work? If so, how does he intend to work with relevant Departments, such as the Department for Work and Pensions and the Department for Education, and with universities as they develop their access programmes, to try to break the link between socio-economic disadvantage in the early years and HE participation once and for all?
Mr Willetts
My hon. Friend is absolutely right to say that that problem needs to be tackled at all stages of the educational process, in early years, at school and at university. I am pleased to inform the House today of a new initiative, an excellent collaboration between KPMG and the university of Durham, whereby school leavers will go straight into employment with KPMG while also studying at the university, with their fees paid by KPMG. That is an excellent example of the type of initiative that we want to see.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
What assessment has the Minister made of the disconnect between the cuts in higher education funding, particularly in the arts and humanities, and the delayed implementation of the education White Paper, which contains the new funding arrangements? Universities will have cuts before they get the new funding arrangements following that White Paper.
Mr Willetts
As I said earlier, it was clear in the grant letter that we sent to the Higher Education Funding Council for England that over the next few years, as the teaching grant income of universities falls, there will be increased income through the graduate contribution scheme. We believe that by the end of this Parliament, universities could well have a higher total income than they have at the moment.
Mr David Lammy (Tottenham) (Lab)
On graduate contributions, can it be right that we are asking students to pay more when some universities have clearly not sorted out their inefficiencies? For example, is it right for Oxford fellows to get a free lunch on the taxpayer?
Mr Willetts
I think that we in the House have to be careful about free lunches. I do not know about the specific arrangements at Oxford, but I agree with the right hon. Gentleman’s wider point and appreciate his experience as a Minister in the Department for Business, Innovation and Skills. We are entitled to expect universities to make efficiency savings. There should be more contracting out; they should hold down their pensions costs—there is a lot that universities should do to hold down their costs. They should not simply pass them on to students in higher fees.
David Simpson (Upper Bann) (DUP)
Further to the point on universities, how many children of servicemen and women killed on active duty are expected to be eligible for the new university scholarship scheme?
Mr Willetts
We obviously do not know, as the years progress, how many children in those tragic circumstances can benefit. I think some estimates suggest that the figure could be 100 a year at the peak of the scheme. Our commitment to the education of the children of servicemen who sadly lost their lives is an important sign of our commitment to maintaining the military covenant.
Michael Ellis (Northampton North) (Con)
16. What representations he has received on his Department’s policy on the future of the post office network; and if he will make a statement.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
I have received representations on the Government’s policy on the future of the post office network from a range of interested organisations and individuals. We are providing £1.34 billion of funding to modernise the network and to safeguard its future.
Michael Ellis
I thank the Under-Secretary very much for that answer. Under the previous Labour regime, many post offices in Northampton North and throughout the country were forced to close. Will my hon. Friend assure me that the Government will do everything that they can to protect that vital local service and allow it to continue to provide the assistance that it obviously does to so many people?
Mr Davey
I can certainly give my hon. Friend that assurance, not just because we are putting in £1.34 billion but because we are developing new services. I hope that I will be able to make more information on that available to the House in due course. In our policy paper last year, we talked about several pilots, which will go ahead.
Ian Mearns (Gateshead) (Lab)
17. When he expects the independent advisory panel to meet to consider applications to the regional growth fund.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I refer the House to the answer that I gave to an earlier, similar question.
Ian Mearns
I would like to press the Minister a little further on tourism. The tourism and hospitality industry employs 20,000 people in Gateshead and Newcastle alone, and we collaborate on an awful lot of work. The industry is therefore important for the entire regional economy. However, with the demise of the regional development agency and cessation of our successful “Passionate people, passionate places” advertising campaign, we have a vacuum. You have already agreed this morning to meet the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). Will you meet me and other interested Members from the Tyneside area to discuss the future of tourism in our region?
Mr Speaker
Order. I remind the hon. Gentleman that I have not agreed to meet anybody, but perhaps the Minister has. We will soon hear.
Mr Prisk
Perhaps, Mr Speaker, we could travel together to the delights of the north-east. I would be only too pleased to ensure that we make a joint effort, working with my colleague, the tourism Minister, on the matter. The north-east has some marvellous places to visit, although, given that I am a born Cornishman, it was a slight distance for me to travel when I was child. Nevertheless, we need to consider that area carefully and I am happy to accede to the hon. Gentleman’s request.
Mr Marcus Jones (Nuneaton) (Con)
I would like to bring to the Minister’s attention a proposal by the Motor Industry Research Association, which is based on the border of my constituency and that of my hon. Friend the Member for Bosworth (David Tredinnick), to build a new technology park. It aims to attract £250 million in investment and directly create 2,000 jobs in the next 10 years, with 200 in place by 2013. MIRA wants to bid for regional growth funding shortly to facilitate that project. Will the Minister agree to meet representatives of MIRA to discuss that exciting proposal for the east and west midlands?
Miss Anne McIntosh (Thirsk and Malton) (Con)
18. What steps his Department is taking to increase economic growth through the provision of assistance for small businesses.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
On 5 January, the Prime Minister announced plans to overhaul the Business Link website, provide a national contact centre, establish a network of business mentors and launch the business coaching for growth programme. This is in addition to the enterprise finance guarantee, providing £200 million more in equity funds and extending and improving the manufacturing advisory service.
Miss McIntosh
I thank the Minister for that particularly helpful answer. I am concerned about local enterprise partnerships and the transition period, and about whether the businesses, particularly rural businesses in north Yorkshire that currently benefit will lose out in the interim.
Mr Prisk
There are two aspects to how we ensure that small businesses are helped. The first is the online offer and the modernising and improving of what is available in businesses’ own premises so that they can access the information they need. The second is the quality of business-to-business advice. We think that the people with real business experience—business-to-business mentors—are the best answer, which is why I am proud to stand at the Dispatch Box and say that already, six months ahead of launch, we have identified 40,000 experienced business people who have offered to provide precisely that kind of help.
Keith Vaz (Leicester East) (Lab)
One of the problems that small businesses have is the acquisition of premises. If the Minister would care to walk down the Melton road in Leicester with me, he would see a very vibrant area, but a lot of empty shops. What can be done to assist local businesses in acquiring premises?
Mr Prisk
I would be delighted to walk down the Melton road with the right hon. Gentleman, although my travel diary is beginning to get a little pressed. The crucial opportunity here comes from the local enterprise partnerships and removing barriers to growth. The business and civic communities in those cities and areas are best placed to identify where the pressure is and to talk to the landlords and municipal authorities involved. That is why we want to ensure that LEPs make a real difference in removing the barriers to growth.
Rehman Chishti (Gillingham and Rainham) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
My Department is the Department for growth, and has a key role in supporting business to deliver growth, in rebalancing the economy by bringing enterprise, manufacturing, training, learning and research closer together, and in the process creating a stronger, fairer British economy.
Rehman Chishti
Business leaders in my constituency are concerned about the effects of rising costs, such as fuel prices. What support is being given to businesses to help them with such pressures in these difficult times?
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
In response to the business question, the crucial issue is ensuring that we deal with issues within our purview—in other words, cutting corporate taxes and dealing with business rates, which we plan to do. On the fuel question, which I understand as a former businessman, we are monitoring the situation closely and will bring back our proposals on the fair fuel stabiliser in due course.
Mr Tom Watson (West Bromwich East) (Lab)
T4. The House will have noticed in recent weeks the Secretary of State’s remarkable transformation from Chairman Mao to Mr “Has Been”. Will he tell me how he is enjoying the long march of government?
Vince Cable
That must be about the 10th repetition of that joke. It was nothing like as good as my original.
Tom Brake (Carshalton and Wallington) (LD)
T2. Over the Christmas and new year period, some of my constituents received no post for up to a fortnight. Does the Minister agree that this is not acceptable, and could he talk to the Royal Mail about whether residents should be allowed to present themselves at a sorting office, providing they have identification, to collect mail that has been stockpiled there?
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
I am grateful to my hon. Friend for raising this matter with me; it was the first time I had heard about it. Although it is an operational matter for Royal Mail, there are certain procedures it must adhere to. For one, it must ensure that the right letters and parcels get to the right people. Of course, in normal circumstances, a “sorry you were out” card is left for the person, if they are out, after which they go and show their identification. However, it seems common sense that in exceptional circumstances, when Royal Mail cannot deliver, an individual should be able to go to their local delivery office. I know that my hon. Friend has contacted Royal Mail to raise this issue. I have looked into it overnight, and it appears that that particular office has experienced high levels of sickness in recent weeks. However, I will liaise with him on the matter.
Nick Smith (Blaenau Gwent) (Lab)
T5. The new enterprise tsar, Lord Heseltine, said in Cardiff this week that 400,000 new jobs will be created in the private sector in the next five years. Will the Minister tell us how many of these jobs will be created in Wales?
Vince Cable
The Welsh position with respect to regional development is different from the position in England, but I will be going to Wales shortly, together with the Secretary of State for Wales, to talk about how we can promote manufacturing and enterprise there.
Paul Maynard (Blackpool North and Cleveleys) (Con)
T3. Last night I had the pleasure of meeting three community learning champions from Blackpool at an event promoted and organised by NIACE—the National Institute of Adult Continuing Education—but funded by this Department. Does the Minister of State agree that money spent on informal adult learning needs to be valued and assessed for the benefits that it brings, because of its life-changing impact, and that money spent on informal adult learning is money that does not need to be spent on either the welfare system or social care?
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)
I think it was Yeats who said that education is lighting a fire, not filling a pail. I want the light of adult learning to burn brightly across the whole of Britain, which is why, against expectations and the predictions of our critics, we protected the adult learning budget, of more than £200 million, in the spending review. That light will burn as long as we are in government, and as long as I am the Minister.
Mr Chuka Umunna (Streatham) (Lab)
T7. The Business Secretary campaigned under the slogan “A fair banking system—change that works for you”. Eric Daniels, the outgoing CEO of the part-publicly owned state banking group Lloyds, will reportedly be taking home a package of £4 million in the current pay round—£2 million by way of bonuses and £2 million by way of incentives. Does the Business Secretary regard that as acceptable, and if not, what action will he be taking?
Vince Cable
I am amazed that Opposition Members keep dragging up issues relating to the contracts of senior executives in the semi-nationalised banking sector that they negotiated without proper support for the companies to which they are due to lend.
Stephen Barclay (North East Cambridgeshire) (Con)
T6. Phoenix trading, whereby directors in financial difficulty set up a new business and then buy back their assets at a knock-down rate—that is, for less than the bad debts that they walk away from—is a serious issue for small businesses that supply those goods in good faith, both in my constituency, and, I am sure, those of many other Members. In reply to my parliamentary question, the Government said that no legislation was planned, but what comfort can they provide to small businesses? Will the Minister meet me to discuss the various tools that his officials could use to provide such comfort?
Mr Davey
I am grateful to the hon. Gentleman for raising this matter. Pre-packs, which is the name of the process that he is talking about, are a way of dealing with companies that are already insolvent. In some circumstances they can work well. However, I recognise the concerns that he has raised about the process, especially when the sale is backed to connected parties, such as the phoenix-type companies that he talked about. I am currently considering the responses to a consultation that the previous Government held on improving transparency and confidence in the pre-pack approach to administration. I plan to make an announcement on that in the near future, and I would certainly be happy to meet him.
Kelvin Hopkins (Luton North) (Lab)
My hon. Friend the Member for Luton South (Gavin Shuker) and I have been in correspondence with the Secretary of State about the future of the General Motors van plant in Luton. I thank him for his reply, which we received this week. It seems from press reports that, as of yesterday, there are still uncertainties about the future of the van plant. Will he now intervene directly with the company to ensure that a new vehicle comes to Luton for the period after 2013?
Vince Cable
Yes, I know that this is an extremely important part of the British car industry; indeed, it is a highly productive and successful one. I have spoken to Mr Reilly about the issue, and I think that this part of the industry has a very good future.
Andrew Bridgen (North West Leicestershire) (Con)
T8. Does the Secretary of State agree that although the 50p rate of tax may be necessary in the short term, it will have a detrimental effect on economic growth in the UK in the medium to long term? It scares away foreign investors, acts as a disincentive for home-grown entrepreneurs to start businesses and offers a massive incentive for some of our brightest and best business brains to leave this country and pay less tax elsewhere.
Vince Cable
When I was in opposition I spent quite a lot of political energy arguing against a 50p tax rate. However, in the present context we have to understand that the burdens of the very difficult period through which we are passing have to be shared fairly, and that is why the tax remains in place.
Stephen Timms (East Ham) (Lab)
What assessment has the Department made of the impact on competitiveness, particularly in rural areas, of the delay, from 2012 to 2015, in the target date for a universal broadband service?
Vince Cable
I think that that is a question that the right hon. Gentleman may now wish to direct to my colleagues in the Department for Culture, Media and Sport.
Michael Ellis (Northampton North) (Con)
T9. The competition for university places becomes more intense every year, as increasing numbers of young people apply for university. The Minister visited Northampton college in my constituency during the recent election campaign. Can he elaborate on any plans that would allow students to study for a degree or do a vocational course at their local college, such as Northampton college, rather than applying for university?
Mr Hayes
I enjoyed my visit to Northampton college. It was not the first time that I had been there and I am delighted that my hon. Friend continues to champion its cause. We are determined to drive up the status of vocational qualifications and colleges play a vital role in that. Like my hon. Friend, I also want more HE taught in FE, because that is a key way of widening access to those who currently do not benefit from a university or from higher learning.
Kevin Brennan (Cardiff West) (Lab)
I was a former competition Minister in the Department for Business, Innovation and Skills, so will the Secretary of State tell me whether he regards the conversation he had with journalists before Christmas about the BSkyB case as a serious breach of the ministerial code?
Vince Cable
I did indeed express regret for the comments made, but they were not considered to be a breach of the ministerial code.
Mary Macleod (Brentford and Isleworth) (Con)
The businesses of London play a key role in building a strong economy for the future. Will my right hon. Friend meet me and a west London business to talk about challenges and priorities and how to create new jobs and growth for the future in west London?
Stewart Hosie (Dundee East) (SNP)
In my Dundee East sorting office, the deployment of the Royal Mail’s “Way Forward” system has been described variously as shambolic and chaotic. Hundreds of people have complained directly through my office. Even this morning, one constituent was waiting on parcels sent on 6 December, which is quite unacceptable. Is the Minister aware of this problem? What has he done and what discussions has he had with Royal Mail? Will he assure the House that the “Way Forward” system will not be implemented in any other large sorting offices until each and every one of these problems is resolved?
Mr Davey
I am grateful to the hon. Gentleman for raising this point, of which I am aware. Royal Mail accepts that there were initial problems with establishing the new delivery system in the Dundee East delivery office and I am sure that it will learn from them. Following a review, a recovery plan was put in place, but I am afraid that the severe weather hindered it. Royal Mail has apologised for the disruption to services and taken a range of measures as a matter of urgency to ensure that households and businesses in Dundee East receive all their mail. For example, 70 extra staff and managers have been drafted in to help the recovery following a major push last weekend. I hope that the hon. Gentleman will be able to report back to me that his constituents and businesses are seeing an improvement.
Julian Smith (Skipton and Ripon) (Con)
May I pay tribute to the excellent work of the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk) and the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), in reducing the burden of red tape on British small businesses? Will they update me on progress made in one of the biggest areas of burden—that of employment law—and on any exciting steps that might be taking place in the coming weeks?
Steve Rotheram (Liverpool, Walton) (Lab)
In a letter to the Prime Minister, my right hon. Friend the Member for Southampton, Itchen (Mr Denham), the shadow Secretary of State for Business, Innovation and Skills highlighted the confusion relating to ministerial responsibilities, following the comments by the Secretary of State on the issue of BSkyB. Does the right hon. Gentleman regret the loss of these responsibilities to his pro-Murdoch colleague?
Vince Cable
I can indeed explain the allocation of responsibilities. The responsibility for competition and policy relating to media broadcasting, digital and telecoms lies with the Secretary of State for Culture, Olympics, Media and Sport. Our two Departments have worked together very closely in the past and will continue to do so. The precise allocation of responsibilities will be set out in a written ministerial statement very soon.
Jake Berry (Rossendale and Darwen) (Con)
Will the Minister update the House on what steps his Department is taking to encourage investment in industrial small and medium-sized enterprises in east Lancashire, which are so vital to job growth in my Rossendale and Darwen constituency?
Mr Prisk
I am pleased to say that we are not only going to extend the manufacturing and advisory service for all businesses, including the excellent ones in my hon. Friend’s constituency, but improve it so that we can help the productivity and competitiveness of small businesses in Lancashire and, indeed, across the country.
John Cryer (Leyton and Wanstead) (Lab)
The Business Secretary continually tells us that the economy is steaming along very nicely and that everything is wonderful. If that is the case, why are wage settlements running at a rate far below price inflation?
Vince Cable
The British economy is indeed recovering. It was in an appalling state, but economic growth is now strong. It will become stronger as a result of the work that the Government are doing in stabilising finances, and real wages will appreciate on the back of that.
Fiona Bruce (Congleton) (Con)
We have heard today about some excellent initiatives involving skills training, apprenticeships and mentoring for business. What concerns me is that many owners and managers of small and medium-sized enterprises spend their days with their heads down, concentrating on their businesses. What we need to do is communicate the opportunities to them. What can the Minister do to reassure me that the 4,000 SME owners in my constituency will hear about those initiatives?
Mr Prisk
Not only have we put the information online, but we are working through the excellent trade bodies representing small businesses to feed it out to them. I urge Members, when talking to members of the small business community, to tell them what is being done to help their businesses to grow and prosper. That is the job that we need to do, and I hope that Members will support us in the task.
Chris Leslie (Nottingham East) (Lab/Co-op)
It is clearly embarrassing for the Business Secretary that he has failed to deliver robust action on banker bonuses and to deliver the net lending targets. If he cannot persuade the Chancellor to fulfil those coalition agreement promises, will he resign?
Vince Cable
That is an utterly absurd question. The hon. Gentleman knows that after the massive banking crisis that happened under the last Government as a result of poor supervision of an overweight banking sector, this Government are trying to introduce measures to make it more stable and to contribute to the real economy. That will happen; it did not happen under the last Government.
Zac Goldsmith (Richmond Park) (Con)
Following the coalition’s commitment to phasing out fossil fuel subsidies via the Export Credits Guarantee Department, has any progress been made on agreeing a definition of such subsidies?
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
The cuts in higher education funding will begin at the beginning of the next financial year, in April 2011. The university year will not end until the summer, and the new income streams from tuition fees will not arrive until some indeterminate time in the future. There is a disconnection in the cash flow to higher education. What is the Minister doing to prevent it from damaging higher education?
The Minister for Universities and Science (Mr David Willetts)
As I explained earlier, we are of course providing an alternative source of income for universities as graduate contributions come in. There will be a reduction in the teaching grant in the coming year, just as there will be public expenditure savings across many Departments, but universities will be able to go through that period, and we expect that at the end of the current Parliament, they will have a higher total income than they have at present.
Petition
(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
Stephen Williams (Bristol West) (LD)
This is a petition concerning my constituent Sivarajah Suganthan. Siva is a native of Sri Lanka, but he has lived in the UK since he was 14 years of age and is now aged 26. The case of that particular asylum seeker has aroused much concern right across the city of Bristol, and I should particularly like to thank the Bristol Refugee Rights centre for co-ordinating and collecting the signatures of approximately 800 people in the city and further afield who wish to express their support for Siva.
The petition states:
The Petition of residents of Bristol West, and others,
Declares that the Petitioners support Sivarajah Suganthan, a fellow Bristolian who has previously been detained in Campsfield detention centre, awaiting deportation to Sri Lanka.
The Petitioners therefore request that the House of Commons asks the Home Secretary to reconsider Sivarajah’s case.
And the Petitioners remain, etc. [P000877]
Business of the House
(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Hilary Benn (Leeds Central) (Lab)
Will the Leader of the House give us the forthcoming business?
The Leader of the House of Commons (Sir George Young)
The business for the week commencing 17 January will be as follows:
Monday 17 January—Second Reading of the Localism Bill.
Tuesday 18 January—Remaining stages of the Fixed-term Parliaments Bill.
Wednesday 19 January—Opposition Day [9th Allotted Day]. There will be a full day’s debate on education maintenance allowance which will arise on an Opposition motion, followed by a motion to approve a Statutory Instrument relating to proscribed organisations.
Thursday 20 January—Motion relating to the future of the horse racing levy, followed by a general debate on improving life chances for disadvantaged children. The subjects of both debates were nominated by the Backbench Business Committee.
Friday 21 January—Private Members’ Bills.
The provisional business for the week commencing 24 January will include
Monday 24 January—Continuation of consideration in Committee of the European Union Bill (Day 2).
Tuesday 25 January—Continuation of consideration in Committee of the European Union Bill (Day 3).
Wednesday 26 January—Continuation of consideration in Committee of the European Union Bill (Day 4).
Thursday 27 January—Second Reading of the Scotland Bill.
I should also like to inform the House that the business in Westminster Hall for 27 January will be a debate on a Communities and Local Government Committee report entitled “Beyond Decent Homes”.
Hilary Benn
I thank the Leader of the House for his statement, and may I wish all Members and you, Mr Speaker, a very happy new year?
After a week in which the Government have made it clear that while they will act to make it easier for people at work to be sacked, they will not act on bankers’ bonuses—as we have just heard—thereby breaking a pledge on the very first page of the coalition agreement. May we have a debate on “all in it togetherness” so that the House can discuss just how let down by this Government the British people feel?
On Monday, the Leader of the Opposition proposed that last year’s bonus tax, which raised more money than the Government’s levy, be applied again. On Tuesday, the Chancellor, in what was a truly dismal performance at the Dispatch Box—it was all waffle and wind—had nothing to say about what will actually be done to tackle unacceptable bonuses. Therefore, as the Chancellor is not up to the job, and as the Deputy Prime Minister is not much better—his contribution this week was to ask banks to be
“sensitive to the public mood”—
may we have a statement from the Prime Minister? After all, it was he who made an unequivocal pledge that if bankers
“decide to pay themselves big bonuses...they should know”
that a Conservative Government will step in. He also promised that in banks where the taxpayer has a large stake, no cash bonus would be more than £2,000. Yet yesterday we learned that the boss of Lloyds—which has a 41% taxpayer stake—is in line for a bonus not of £2,000 but of £2 million. What is going to be done about this? What is the Prime Minister waiting for? When is he going to act?
Surely it cannot be that the Prime Minister is afraid about the use of nuclear weapons. I do not mean to start the year on a downbeat note but, as we know, just before Christmas the Business Secretary, who has now left the Chamber, revealed that being in the coalition was like fighting a war:
“They know I have nuclear weapons, but I don’t have any conventional weapons. If they push me too far then I can walk out of the Government and bring the Government down.”
Of course we on the Opposition Benches wish the Business Secretary every success in this endeavour, but it does not say much for the unity of the coalition.
On which subject, the Business Secretary also had this to say—same interview, same bogus constituents—about broken promises:
“They”—
he is referring to his Cabinet colleagues—
“made a pledge not to do anything about universal child benefit. Cameron had personally pledged not to do it, so they had to bite this bullet…they haven’t yet done winter fuel payments, but that’s coming, I think.”
May we have a statement to confirm whether the Business Secretary was right in inadvertently telling pensioners that a reduction in their winter fuel payments is coming?
As we know, the main consequence of the Business Secretary’s comments on the other war he has been engaged in—the one with Rupert Murdoch—was that his responsibilities for media and broadcasting policy were instantly taken away from him. Yet as we have just heard, getting on for a month later there has still been no detailed statement clarifying exactly what areas of policy and which staff have been moved. One result, as you heard earlier this week, Mr Speaker, is that the Table Office is unsure where questions should be directed. This is clearly unsatisfactory and unacceptable, so will the Leader tell us when we can expect a statement on who is responsible for what?
The latest broken pledge is on VAT. It went up to 20% last week, even though before the election the Prime Minister could not have been clearer when he told the British people:
“Our plans don’t involve an increase in VAT.”
May we therefore have a debate on why—first it was education maintenance allowance, then it was child benefit, then it was top-down reorganisation of the NHS, then it was tuition fees, then it was cuts to front-line services, and now it is VAT—the Government have broken one promise after another? Is it any wonder that public confidence in the Government is draining away, because they cannot keep their word, their members are at war with each other, and they cannot find the bottle to deal with the banks?
Finally, as it is the new year, on a consensual note, will the Leader of the House tell the House whether the Government plan to make a submission to the Independent Parliamentary Standards Authority consultation?
Sir George Young
May I begin by reciprocating the right hon. Gentleman’s very good wishes for the new year, and join him in extending those to you, Mr Speaker, and the whole of the House?
We will take no lectures from the Opposition about the banks, because the regime that is currently operating is the one we inherited from them. The right hon. Gentleman was a member of the Government who signed the contract with RBS, obliging it to pay market-based bonuses this year. We regard that framework as wholly unsatisfactory and so we are changing it. We have introduced the most stringent code of practice for any financial centre in the world; we have replaced Labour’s one-off tax on bonuses with a permanent levy on the banks; and, as he will have heard from the Chancellor on Tuesday, we are looking for a fresh settlement with the banks on bonuses, on lending and on transparency. With us nothing is off the table; with the Opposition there is nothing on the table. The shadow Chancellor gave a dismal performance on Tuesday, failing to mention the initiative announced on Monday by his leader: the wish for a permanent tax on the bonuses. That did not feature, in any way, in the shadow Chancellor’s response. Is this evidence of a further rift between the shadow Chancellor and the Leader of the Opposition?
The second point made by the shadow Leader of the House related to the secret taping of Liberal Democrat Members, and I think that Members on both sides of the House should be concerned about the tactics that were used. I think that journalists posing as constituents, raising fictitious cases with MPs and taping them without their knowledge all risks prejudicing the relationship between a Member of Parliament and his constituent at his advice bureau. [Interruption.] This does not seem to me to be responsible journalism—[Interruption.]
Mr Speaker
Order. The hon. Member for Cardiff West (Kevin Brennan) should not be yelling across the Chamber at the Leader of the House; it is very discourteous and very uncharacteristic of the hon. Gentleman.
Sir George Young
On the substance of the stories, what was reported and what the shadow Leader of the House just mentioned were absolutely nothing compared with what Labour politicians have been saying about their colleagues behind their backs over the past 10 years. Indeed, just before Christmas it was reported that a Labour insider had said:
“Ed Miliband’s team are terrified of Ed Balls and Yvette. They think they’re going to come and try and kill him. And the reason they think that is because they will.”
Whatever my colleagues said to The Daily Telegraph, at least there were no death threats.
We are committed to making winter fuel payments. On the machinery of government, I believe that the shadow Leader of the House was in the Chamber to hear the Business Secretary answer that specific question. The answer is that the details of the change will be set out to Parliament in the usual way and in full.
Sir George Young
Shortly.
I was asked two more questions, one of which was about VAT. May I remind the right hon. Gentleman of what his party said about VAT before the election? The shadow Home Secretary has said:
“ultimately we made no hard commitment on VAT. That was partly the traditional caution of governments, wanting to keep options open.”
When pressed on this, the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), has said:
“The advantage of VAT is it brings in a lot of money. It would have allowed you to have done you know a lot to take down the deficit”.
So it ill behoves Labour Members to criticise us for what we have done on VAT.
Finally, on IPSA, I am a statutory consultee—as Leader of the House—under the relevant legislation, so I will indeed be submitting evidence to IPSA in due course.
Mr David Nuttall (Bury North) (Con)
May we have a statement on the Government’s plans, contained in the coalition agreement, to allow petitions with more than 100,000 names to be debated in this House?
Sir George Young
I thank my hon. Friend for reminding the House that the coalition agreement contains that commitment to introduce e-petitions, with those that reach a certain level—100,000 names—becoming eligible for a debate in the House. That is an important step in building a bigger and stronger bridge between this House and those we represent. I have already had some informal discussions with the Procedure Committee about this and I will have further discussions, both with that Committee and with the Backbench Business Committee. I think that this would be a very appropriate subject for the House to debate, if it wished to do so.
Albert Owen (Ynys Môn) (Lab)
May we have a debate in Government time on the Government’s proposals to close coastguard stations across the United Kingdom? This approach goes against the grain of localism. This centralisation has the potential to put lives at risk and to do away with local expertise, so may we have an urgent debate on it?
Sir George Young
I understand the hon. Gentleman’s concern, which I know is shared by others and which was raised at Prime Minister’s questions yesterday. I shall draw his concern to the attention of the Secretary of State for Transport, who has responsibility for this matter. It might be an appropriate subject on which the hon. Gentleman can seek an Adjournment debate.
Mr Peter Bone (Wellingborough) (Con)
This Government have put Parliament first much more than any previous Administration. Select Committees are elected, the Chairmen of Select Committees are elected, we have the Backbench Business Committee and Conservative Members have free votes in Committee. The one thing that is still causing some concern is programme motions, which would be resolved by having the House business committee. What progress is there towards that?
Sir George Young
We made a commitment that the previous Government refused to make, namely to introduce a House business committee within three years of this Parliament. I want to evaluate the work of the Backbench Business Committee at the end of its first year and then to take forward the discussions on how we might roll that into a House business committee that would embrace both the Backbench Business Committee and the Government business managers.
Clive Efford (Eltham) (Lab)
May we have a statement from the Secretary of State for Transport on readiness for future spells of severe cold weather, snow and ice? We had the report from David Quarmby, published on 21 December, on the response to the previous spell of cold weather. My constituents suffered chaos on Network South East during the recent period of bad weather, and it is right that this House should hear a statement on what the Government are doing to ensure that we do not have that chaos again in future.
Sir George Young
I am grateful to the hon. Gentleman. He will know that the Secretary of State made a statement just before we rose for the Christmas recess. The country is, I think, in a much more resilient position this winter than in the past couple of years, but we are not complacent. The Secretary of State, in a written statement on 21 December, informed the House of the publication of the report to which the hon. Gentleman just referred. The Secretary of State undertook, on behalf of his Department, to do further work on how well highways authorities and transport operators in England coped with the cold weather between 24 November and 9 December. I cannot promise a statement, but I know that the Secretary of State will want to keep the House informed.
Bob Russell (Colchester) (LD)
The Government say that they wish to help disabled people back into work. May we have a debate to contrast the rhetoric with the reality? It is quite clear to me that those who are responsible for the disability living allowance and for Motability and those who conduct tribunals—such as the judge in one such case in Colchester—can show a lack of compassion, understanding and common sense. I have a constituent who will lose his job next week. Mr Robert Oxley is a married man with four children who lost the use of both legs in a motorcycle accident but is no longer deemed to be a suitable person to have a Motablity car. He will thus lose his job, and the burden on the financial purse—you know this, Mr Speaker, because I have given you the details—will be greater than the cost of keeping him in work. May we have a debate to discuss such cases?
Sir George Young
I will certainly be happy to raise with the Secretary of State for Work and Pensions the specific instance that my hon. Friend has mentioned. I think we are still operating the regime that we inherited— I do not think the changes have yet been made. When we propose changes to the DLA, that will require primary legislation and will lead to an opportunity for debate in this House.
Helen Goodman (Bishop Auckland) (Lab)
This morning, the Secretary of State for Justice announced the first prison closure programme since the second world war. He briefed the press before he made his written ministerial statement and that briefing took place only 24 hours after Justice oral questions. That follows the Ministry of Justice’s failure to make a statement on the prison riots. These are important matters. Will the Leader of the House encourage his colleagues in that Department not to be quite so evasive?
Sir George Young
My right hon. and learned Friend was at this Dispatch Box on Tuesday, answering questions on behalf of his Department. He issued a written statement, to which the hon. Lady referred, on closing three prisons, one of which is a 13th century castle, and set out the reasons why. I very much regret that that written ministerial statement may have leaked to one particular paper. My right hon. and learned Friend set out the reasons why the closures were the right thing to do, referred to the increased capacity that is coming on stream and confirmed that there is the capacity, even with these closures, to cope with those likely to be sentenced by the courts.
Mr Lee Scott (Ilford North) (Con)
Will my right hon. Friend allow a debate about the continued plight of the Tamil people in Sri Lanka? It is not only about the oppression they have experienced; they now have to take into the account the floods that have hit the country.
Sir George Young
I very much welcome the work that my hon. Friend does in this respect. We have encouraged the Sri Lankans to ensure that the lessons learned and reconciliation commission produces recommendations that address all the past allegations to which my hon. Friend refers and encourages all communities in Sri Lanka to live peacefully together.
Mr John Spellar (Warley) (Lab)
Will the Leader of the House arrange for a statement or debate on today’s announcement about charging those who use the Child Support Agency? Members across the House will have had experience of constituents who have been affected by that shocking agency, which has targeted those in regular work, done little about those who evade their responsibilities and been shockingly inefficient in its handling of cases. To charge for that service would be a stealth tax and would add insult to injury.
Sir George Young
I hope that the right hon. Gentleman recognises that the written ministerial statement that the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller), put out this morning takes forward work started by the previous Government to move work away from the failed CSA and to promote conciliation. The Green Paper is a consultative document, and at the end of her written ministerial statement, my hon. Friend states:
“I welcome your contribution to this important piece of reform to the Child Maintenance system.”
I encourage all those who have opinions on what the Government suggest to take the opportunity to respond to the consultation document.
Mrs Anne Main (St Albans) (Con)
May we have an urgent debate on the state of Britain’s roads? After the parlous weather we have had for the past three years, the potholes and the state of road surfaces in heavily utilised areas such as mine around St Albans are an absolute disgrace because of the historical underinvestment.
Sir George Young
Some roads will be Highways Agency roads but others will be the responsibility of the county council. There is a debate this afternoon in Westminster Hall on the consequences of the comprehensive spending review on local government; my hon. Friend might have an opportunity to take part in that debate and raise her concerns with the relevant Minister.
Thomas Docherty (Dunfermline and West Fife) (Lab)
Yesterday morning, the Department for Environment, Food and Rural Affairs issued a press release notifying us for the first time that the H1N1 influenza virus had been found in poultry in the United Kingdom, but no announcement has been made to the House through either written or oral statement, and nor has the Select Committee on Environment, Food and Rural Affairs been notified of this very serious matter. Will the Leader of the House make urgent inquiries to find out why the Secretary of State for the Environment, Food and Rural Affairs does not respect the House?
Sir George Young
My right hon. Friend does respect the House, but I will ensure that the hon. Gentleman’s question is communicated to DEFRA immediately and that my right hon. Friend takes any appropriate action to keep the House in the picture.
Dr Andrew Murrison (South West Wiltshire) (Con)
May we have a statement on civil unrest in Tunisia and Algeria? The Maghreb now counts as our near abroad and there are worrying signs that al-Qaeda and its spin-offs and fellow travellers are profiting from the current dire situation, which has clear implications for the United Kingdom.
Sir George Young
I understand my hon. Friend’s concern. I cannot promise him an immediate debate but there will be an opportunity on 1 February to raise questions with the Foreign and Commonwealth Office. In the mean time, I shall pass on his concerns to the Foreign Secretary and ask my right hon. Friend to write to him.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Does the Leader of the House agree that we ought to have a debate on the misuse of council tax payers’ money by council leaders such as Mike Whitby in Birmingham? He forced Birmingham taxpayers to pay a bill of more than £3,500 for his accommodation, meals and a rather large drinks bill during a five-day binge at the Tory party conference in 2008. Should we not have an urgent debate on that misuse of public money?
Sir George Young
I have to say that that is a game that more than one party can play. I hope the hon. Gentleman will support what we are doing to promote transparency in local government expenditure and to oblige local government to report all details of expenditure. We believe that that transparency will reduce any abuse by any party of local government expenditure.
Mr Gary Streeter (South West Devon) (Con)
Given that Air Southwest, which is now owned by Eastern Airways, has this week decided to close the vital air link between Plymouth Newquay and London Gatwick, with no consultation with the local community, may we have a statement from the Transport Secretary on the coalition’s strategy on regional airports? Is it not right that Eastern Airways should discuss the decision with the local community, because the link is a hugely strategic one?
Sir George Young
I well understand the importance of that link for my hon. Friend’s constituents and many others in the south-west. I shall try to arrange a meeting between him, other local Members and a Transport Minister to see whether this issue can be pursued.
Mr Tom Watson (West Bromwich East) (Lab)
Very large machinery of Government changes were announced before Christmas, but this morning the Business Secretary could not tell the House which areas of policy he was responsible for. It is not unreasonable to ask the Leader of the House for a debate on those changes, not least because the Select Committee on which I sit does not know what work to scrutinise and for which areas it is responsible.
Sir George Young
I think the shadow Leader of the House asked not for a debate but for a written ministerial statement on exactly which responsibilities have been transferred. As I said a few moments ago, such a statement will be made very shortly.
Joseph Johnson (Orpington) (Con)
Is it possible for the House to debate the lamentable value for money of commuter rail services provided by Southeastern? Its fares have just risen by a higher rate than any other operator in the country to the outrage of my constituents in Orpington and doubtless those of many other MPs in the franchise region.
Sir George Young
I understand my hon. Friend’s concern on behalf of his constituents. There will be questions to the Secretary of State for Transport on 27 January, but in the mean time, he and other Members for south-east London might like to apply for a debate in Westminster Hall or an Adjournment debate. Let me say finally that the comprehensive spending review provided a generous settlement for rail investment. That has to be funded and I think it is legitimate to look to travellers to pay their part in funding that investment.
Kate Green (Stretford and Urmston) (Lab)
May we have a debate on the overall impact of Government policy on disabled people and their families? Some constituents came to see me last Friday, very concerned about a range of policies on employment, benefits, social care and local authority services. Will the Leader of the House consider which of his Front-Bench colleagues could respond on behalf of the whole Government to reflect the cumulative impact of the changes on disabled people and on those who care for and love them?
Sir George Young
I understand the hon. Lady’s concern. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller), has overall responsibility for disability, but we have put an extra £2 billion into social care between now and 2014-15 and it strikes me that the subject that the hon. Lady raises is suitable for a Back-Bench debate. The next time the Backbench Business Committee holds one of its Monday sessions, she might like to go along with colleagues and put in a bid for such a debate, which I think would be broadly welcomed on both sides of the House.
Nadhim Zahawi (Stratford-on-Avon) (Con)
Now that the country has been pulled back from the brink of bankruptcy, may we have a debate on the bank bail-outs? Small and medium-sized businesses in my constituency are asking me why, at the pivotal moment when we bailed out the banks, we did not get them to agree to lend to small and medium-sized businesses.
Sir George Young
This specific issue was addressed in my right hon. Friend the Chancellor’s statement on Tuesday. He made it clear that in the discussions we are having with the banks there have to be verifiable increases in bank lending over and above what they would otherwise have lent. The Opposition failed to secure that assurance when they were in government, but we are determined to secure it because it is vital in promoting growth and prosperity.
Mr Ben Bradshaw (Exeter) (Lab)
May we have a debate on schools funding, particularly the application of the much-trumpeted pupil premium, given that figures published by today’s Financial Times show that in the south-west of England nearly 90% of pupils will see their school’s funding cut? That is completely contrary to the promises made by Ministers.
Sir George Young
I reject the assertion that any promises made by Ministers have been broken, but I shall draw the right hon. Gentleman’s assertions to the attention of my right hon. Friend the Education Secretary and invite him to rebut them in a letter as quickly as possible.
Harriett Baldwin (West Worcestershire) (Con)
May we have a debate in Government time on black holes? My constituents were extremely alarmed to hear in the media during the recess about almost £20 billion of unfunded tax cuts promised by the Leader of the Opposition.
Sir George Young
I would welcome such a debate. I do not know whether my hon. Friend has looked at The Times or The Guardian today, but apparently at a meeting of the shadow Cabinet, the Leader of the Opposition at last recognised that they had been in deficit denial and they decided to abandon such a policy. I hope that we can have a debate on the black hole and welcome the fact that the Labour party, which was responsible for the black hole, now recognises that. Labour will have no credibility at all until it comes up with some proposals for dealing with it.
Mr Pat McFadden (Wolverhampton South East) (Lab)
Will the Leader of the House schedule a debate on the future of the financial inclusion fund and the wider issue of funding for citizens advice bureaux? The citizens advice bureau in the city of Wolverhampton does a fantastic job, and I am sure bureaux do so in the constituencies of right hon. and hon. Members across the House. Does he accept that it is perverse to be cutting funds to citizens advice bureaux for advice on debt relief and financial management at the same time as the Government are making wider cuts in benefits that are driving more people to seek the advice for which they are cutting the funding?
Sir George Young
I am sorry that the right hon. Gentleman did not have an opportunity to put that question during BIS questions, when it would have been appropriately dealt with. I pay tribute to the work of the CABs, as all hon. Members do, and I hope that, as local authorities make difficult decisions, they will try to do their best to preserve the funding of CABs, to which people look at a time of recession and real problems of hardship. A £100 million fund is available to help certain charities, and I do not know whether the right hon. Gentleman has thought of applying to that.
Gareth Johnson (Dartford) (Con)
Will my right hon. Friend grant time to debate the proposed closures of the Limes and Manorbrooke care homes in my constituency of Dartford? Those homes are relied on by my constituents, who will be dismayed at the prospect of their imminent closure.
Sir George Young
I understand my hon. Friend’s concern about the proposed closure of those homes. The responsibility, of course, rests with Kent county council. I will pass on his concerns to my right hon. Friend at the appropriate Department, but I wonder whether my hon. Friend might seek an Adjournment debate so that the issue may be given more attention.
Keith Vaz (Leicester East) (Lab)
May we have a statement on the Government’s final position on control orders? I understand that that went to Cabinet on Tuesday. It was then reported by the BBC and newspapers. Indeed, they have got the name of the order that will replace the control order; it will be called the surveillance order. The Home Affairs Committee is currently investigating those important issues, and it would be helpful if the Home Secretary came to the House and gave a statement. There is business next week on the Home Office side. Perhaps she could make the statement next week.
Sir George Young
These are important and controversial issues, and I welcome the work that the right hon. Gentleman’s Select Committee has been doing on them. The review of security powers is ongoing; it has not been completed. The Home Secretary will make a statement to the House once it is completed, and I expect that statement to be made in the week commencing 24 January.
Gavin Barwell (Croydon Central) (Con)
In the light of Lord Adonis’s comments supporting the principle that all schools should be able to become academies, may we have a debate on the progress of the Government’s academies programme, as that would, among other things, give Opposition Front Benchers the chance to join the growing coalition in favour of school reform?
Sir George Young
I welcome my hon. Friend’s intervention, and we would be delighted to have such a debate, although it would probably have to take place in Back-Bench time. I welcome what Lord Adonis has just said:
“Neither I nor Tony Blair believed that academies should be restricted to areas with failing schools. We wanted all schools to be eligible for academy status, and we were enthusiastic about the idea of entirely new schools being established on the academy model, as in Michael Gove’s Free Schools policy.”
So there is a growing consensus, and I hope that it might include Opposition Front Benchers at some point.
Kelvin Hopkins (Luton North) (Lab)
I note that the Leader of the House and I have similar tastes in ties and shirts, and I hope that he is equally agreeable to my request. This morning, The Times has reported that France is suggesting that Britain ought to help to save the euro—a thesis that I do not accept. It has also been suggested that the continuation of the euro would be beneficial for Britain—another thesis that I do not accept. I am sure that I speak for many other Members. May we have a debate on those important matters in the near future?
Sir George Young
They are important matters, and any responsibility for the choice of tie rests with my wife rather than me—a very tasteful lady.
On the substantive question, an important meeting is taking place as we speak with the French Prime Minister. My understanding is that, at 1 o’clock, there will be a joint press conference, where I have no doubt that the question that the hon. Gentleman has raised will be put and an answer given.
Neil Carmichael (Stroud) (Con)
Given the importance of exports to Britain’s economic recovery, would the Leader of the House like to consider holding a debate on trade policy, so that we could promote the actions already taken by the Government?
Sir George Young
That is an excellent idea. The Government have no plan to do so, but it might be a suitable subject for a Backbench debate. Many encouraging export orders have been made over the Christmas recess—some from China and many in the aerospace arena—and Sainsbury’s made a commitment on Monday to create another 20,000 jobs, but I agree that we must do all that we can to promote export-led growth. The Chancellor of the Exchequer, the Secretary of State for Business, Innovation and Skills and the newly appointed Minister for Trade will attack that task with vigour.
Kevin Brennan (Cardiff West) (Lab)
Why has the statement about the responsibilities that are being transferred from BIS not yet been made? Will the Leader of the House arrange for that to be done immediately? The Secretary of State was de-bagged on the last day of term. It has now been nearly a month since that change was announced. Is some sort of wrestling match going on behind the scenes over his residual responsibilities?
Sir George Young
Some details need to be finalised. The hon. Gentleman will know that all responsibility for competition and policy issues that relate to the media, broadcasting, digital and telecoms sectors has been transferred to the Secretary of State for Culture, Olympics, Media and Sport, and that includes full responsibility for Ofcom’s activities in those areas. The Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey) will be the Minister responsible for the digital economy. As I have said before, the details of those changes will be laid before the House in a written ministerial statement very shortly.
Robert Halfon (Harlow) (Con)
Will my right hon. Friend make arrangements for an urgent statement on the use of Government press cutting services? From answers to written questions, we know that the last Government spent £12 million in the past five years on press cutting services alone. Does he not agree that that is an obscene waste of money and that the use of press cuttings in Departments should stop immediately?
Sir George Young
We should certainly seek to reduce the cost of politics. As my hon. Friend knows, we are reducing the overheads of government. I am sure that we will look critically at the amount of money spent by the last Government on the press cutting service to find out whether worthwhile economies, such as those that he proposes, can be made.
Andrew Miller (Ellesmere Port and Neston) (Lab)
On exactly the same point, will the right hon. Gentleman look very carefully at the waste of money incurred in the inaccurate answering of written questions by Ministers? In column 29W this week, the Minister responsible for shipping so inaccurately answered a question that I posed about marine safety that our friends in Hansard catalogued it under aviation. That is an absurd waste of money, and it will require me to ask further questions, incurring further cost to the public purse.
Sir George Young
I very much regret any discourtesy that was extended to the hon. Gentleman, and I am sure that it was unintentional. Ministers at the Dispatch Box do their best to give accurate answers. Occasionally, amendments have to be made, and I am afraid that that has been the case with all Administrations.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Now that the Prime Minister has indicated that a decision will be taken by 1 April to amend or replace the Independent Parliamentary Standards Authority, can we have an indication from the Leader of the House on who will take that decision? Will it be a matter for the Government or a matter for the House? Is my right hon. Friend convinced that Members are getting as swift a response to our queries as members of the public are to theirs?
Sir George Young
I am grateful to my hon. Friend. It is important that the review that IPSA has announced takes place. Those who have issues with IPSA should take part in that review and communicate their suggestions for change. It will then be a matter for the House to decide whether IPSA’s proposed changes meet the requirements of the resolution that the House adopted unanimously in December. My hope is that IPSA understands the concern in the House about the current regime, reforms itself and makes proposals that meet the anxieties that my hon. Friend and many others have expressed. That would be an ideal solution, and it would be premature at the moment to look at plan B.
Mr Denis MacShane (Rotherham) (Lab)
May we have a clarifying statement from the Prime Minister on the royal wedding bank holiday? Everyone is looking forward to that joyous occasion, royalists and republicans alike, but the Library has issued a worrying note saying that employers do not have to give the day off and can dock pay or insist that a day is taken off from the summer holiday of their staff. We need clarification from the PM to make it clear to employers: let the people celebrate on 29 April.
Sir George Young
I entirely agree. I do not know what influence the right hon. Gentleman has with Mr Crow, but the latter’s level of enthusiasm for the royal wedding is apparently somewhat different from the right hon. Gentleman’s. It is not absolutely clear whether, if the RMT went ahead with its proposals, people would be able to get to work if they wanted to. If there is a need for clarity, I am sure that clarity will be produced.
Charlie Elphicke (Dover) (Con)
May I echo the call of the shadow Leader of the House for a debate on bank bonuses? My constituents are enraged that Fred Goodwin got £15 million in bonuses, that knighthoods were thrown about like confetti, and that bank bail-outs encouraged excessive bonuses for the fat cats. We need a change in policy from “everyone out for themselves” and “up with the fat cats,” to more “all in it together.”
Sir George Young
I applaud my hon. Friend’s sentiments. He was probably in the House when the Chancellor made his statement suggesting a very robust negotiating position with the banks. The Chancellor also indicated during questions and answers that he would want to report back to the House once those negotiations had been completed.
Steve Rotheram (Liverpool, Walton) (Lab)
Following on from the previous question, I understand that the Government’s ongoing talks with the five biggest banks on bankers’ bonuses is ironically called Project Merlin. Is that because Standard Chartered bank has already disappeared from the talks, and Santander is likely to vanish from them, too? Will the Leader of the House pull a rabbit out of the hat and facilitate an urgent debate on bankers’ bonuses, and everybody else can then fill in their own puns?
Sir George Young
I shall see whether I can produce a sword from a stone. We are talking about negotiations and discussions that should have taken place some time ago, when the taxpayer was helping the banks, but they did not take place then. We are now—belatedly, because of the inaction of the previous Government—trying to make sure that taxpayers get value for money for the investment in the banks. As I said a few moments ago, my right hon. Friend the Chancellor of the Exchequer made a statement about the talks on Tuesday, and he indicated that he would want to keep the House in the picture when they were concluded.
Nick de Bois (Enfield North) (Con)
Will my right hon. Friend consider finding time to discuss the impact of two recent resignations from the NHS in London, namely that of the chief executive officer of NHS North Central London and that of the CEO of my constituency hospital, Chase Farm, this week? Both were actively pursuing the previous Government’s policy of introducing unwelcome reconfiguration. The House would then have the opportunity to discuss the impact of those proposals and kick them out.
Sir George Young
I understand my hon. Friend’s concern about the configuration of the NHS in his constituency. I should like to pass his comments on to my right hon. Friend the Secretary of State for Health and see what appropriate action might be taken by the Government in response.
Stephen Timms (East Ham) (Lab)
It is extraordinary that the Government cannot tell us who is now responsible for what. Is it the case that the whole of telecommunications policy has been transferred from BIS to DCMS? Is the hon. Member for Wantage (Mr Vaizey), to whom the right hon. Gentleman referred a few moments ago, still a BIS Minister or not?
Sir George Young
I read out a few moments ago the words on the piece of paper in front of me that indicates where the responsibility rests. There will be a full written ministerial statement in due course, which I hope will answer the right hon. Gentleman’s question.
Alun Cairns (Vale of Glamorgan) (Con)
In view of the fact that the Government’s key challenge and objective was to save Britain from the brink of bankruptcy, will the Leader of the House arrange a debate so that the House can consider the progress made in reducing the structural deficit, following the mess left by the previous Administration?
Sir George Young
I would welcome such a debate. At the Budget, there will be an opportunity for several days’ debate on the Government’s economic policy. I share my hon. Friend’s welcome of the fact that we are no longer on the brink of bankruptcy, of the fact that our credit rating has been restored, and of the fact that we are not in the same position as some other countries that have not taken the action that we have taken to reduce the deficit.
Ian Lucas (Wrexham) (Lab)
Could we have a debate on the eligibility of council employees to stand for public office? In an increasingly unitary local government framework, does it make any sense to continue to disqualify lollipop ladies and classroom assistants from standing for election to their local councils? Should we not encourage public service by making those people eligible to be councillors?
Sir George Young
As the hon. Gentleman knows, we have introduced the Localism Bill. There may be an opportunity, as that Bill goes through the House, to have a debate on eligibility to be a local councillor, to see whether we can remove disqualifications for which there are no apparent reasons.
Mr Dominic Raab (Esher and Walton) (Con)
This week, the outgoing Dutch member of the EU Court of Auditors criticised the watchdog for its “cover-up culture”, “Kremlin-style” misinformation, and watering-down of criticism of financial abuse. May we have a statement from Ministers on what is being done to tackle endemic fraud at the EU?
Sir George Young
I understand my hon. Friend’s concern. Any level of fraud in the EU budget is wholly unacceptable. We recognise that major improvements need to be made to financial arrangements within the EU. We continue to support the work of the European Court of Auditors and to highlight the importance of independent scrutiny of the EU’s accounts.
John Cryer (Leyton and Wanstead) (Lab)
I realise that there is an Opposition day debate next week on the abolition of the education maintenance allowance, but does the Leader of the House not think that it should be held in Government time? Does he not think it extraordinary that such a far-reaching change has not even been the subject of a ministerial statement?
Sir George Young
I do not accept the proposition that the debate should be held in Government time. The whole point of having Opposition days is that the Opposition can choose a subject for debate about which they have an issue with what the Government are doing. That is what they have done. The Government will respond to the debate on Wednesday, explaining why we believe that the EMA had a lot of dead-weight associated with it and was not well targeted, and that the regime that we plan to introduce in the autumn will make better use of the funds available.
Jake Berry (Rossendale and Darwen) (Con)
Will the Leader of the House agree to a debate on any changes to the rules surrounding medical or two-pill abortions, and particularly on the level of involvement of medical professionals in those procedures?
Sir George Young
My hon. Friend refers to a case, initiated by the British Pregnancy Advisory Service, that is shortly to go to the High Court. The Government’s view is that, under present legislation, what the BPAS wants to do would be illegal; that is why we are resisting the application. The final decision will rest with the courts.
Julian Smith (Skipton and Ripon) (Con)
The rising cost of home heating oil is causing significant worry to householders and small businesses across north Yorkshire. May we have a debate on what pressure the Government could bring to bear on oil companies, which appear to have taken advantage of the very poor weather in recent months?
Sir George Young
Many Members with rural constituencies will have had representations, as I am sure my hon. Friend has, about the high cost of oil over the Christmas holidays. I believe that the matter is being taken up with the Office of Fair Trading, to see whether there is a case for investigation, but I will ask the relevant Secretary of State to write to my hon. Friend, outlining the action that the Government are taking to make sure that consumers are not ripped off.
Stephen Barclay (North East Cambridgeshire) (Con)
May we have a debate on opening up Network Rail to full scrutiny by the National Audit Office? Due to the bizarre legal entity set up by the previous Prime Minister, it stands to report to a small number of members, including train companies, and answers directly neither to Parliament nor to company shareholders.
Sir George Young
The governance of Network Rail is an extraordinary constitution, and of course it is right that it should be exposed to full audit. I will raise with my right hon. Friend the Secretary of State for Transport whether we have any proposals to change the governance of Network Rail that may solve the problem, or if we have not, whether we have any other proposals to make sure that its accounts are looked at properly.
Christopher Pincher (Tamworth) (Con)
Will my right hon. Friend ask the Chancellor to make a statement about the number of representations that he has received calling for an increase in employers’ national insurance contributions, and incidentally, will he tell us how many have been made from people in Hull?
Sir George Young
As my hon. Friend knows, we took the view that the last thing the country needed at this time was an increase in national insurance employer contributions, and that was the right decision to take. As to whether the shadow Chancellor is at one with the rest of the shadow Cabinet on the subject, I do not know, but I hope that he will welcome any increase in employment in his constituency as a result of the actions that we took.
Mr Speaker
Order. I am advised that the hon. Member for The Wrekin (Mark Pritchard) came into the Chamber well after the statement by the Leader of the House, and it is for that reason that I did not call him to ask a question. I say to the hon. Member for Wrexham (Ian Lucas) that we will come to points of order, but not before we have dealt with the application for a debate under Standing Order No. 24.
Factory Closure (Moreton)
(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
Ms Angela Eagle (Wallasey) (Lab)
I beg to ask leave to move the Adjournment of the House under Standing Order No. 24 in order to debate a matter that requires specific and urgent consideration: the decision announced yesterday by Burton’s Foods to end production of biscuits at its Moreton site, with the loss of 342 jobs.
The biscuit factory in Moreton is the largest private sector employer in my constituency. For well over half a century that factory has provided employment and security for many of my constituents living in Moreton and Leasowe. Entire families work there, often with more than one generation on the production line. The company has been the beneficiary of millions of pounds of regional selective assistance from the national Government, and of rates rebates from the local authority for the Moreton plant.
The company had announced a supply chain review last year, but just days into what we all know will be a very difficult year it has dropped a bombshell on Moreton. Despite an agreement to guarantee work until 2012 and develop the factory into a flagship site, and despite years of the work force delivering productivity increases and accepting pay freezes and new working practices, the company has abandoned its Moreton work force. It plans to implement the first job losses in May and to close the entire plant by the end of the year.
It would be an understatement if I were to say that my constituents feel betrayed by that decision. I entirely associate myself with their emotions, because I share them, and I urge the company to think again. In November, there were 16 people chasing every job vacancy in Wallasey. Since then, the local authority has announced 371 job losses, with 764 more under active consideration this year alone. The private sector is clearly not leading the revival, and I should welcome the opportunity to discuss those issues further in the House.
Mr Speaker
I have listened carefully to the hon. Lady’s application. As she knows and the House will appreciate, I am required to state my decision without giving reasons. I am not satisfied that this matter should be the subject of an emergency debate.
Points of Order
(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
Ian Lucas (Wrexham) (Lab)
On a point of order, Mr Speaker. Earlier this week I raised a point of order concerning the transfer of certain ministerial responsibilities from the Department for Business, Innovation and Skills to the Department for Culture, Media and Sport, and you indicated very kindly on that occasion that this morning we had Business, Innovation and Skills questions, which might clarify the position. Regrettably, they have not.
We do not have a written ministerial statement, but I have received representations from Members about the difficulty that the situation is causing when tabling questions, and from the telecommunications industry about not knowing the Department with which it should deal. This is an urgent matter that is affecting investment decisions. Is there any way in which the Government can expedite the matter, so that the effects of a decision that was made some weeks ago might be made clear to the House?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. It is for Ministers to define their responsibilities and to communicate the facts relating thereto. The matter was raised today, and the Leader of the House offered a reply, but the hon. Gentleman will know that I am not responsible for the content of that reply. It is a responsibility of Ministers. I feel sure that the point will have been heard by Members on the Treasury Bench, and that it will be communicated as appropriate to Ministers.
Mr Tom Watson (West Bromwich East) (Lab)
Further to that point of order, Mr Speaker. Standing Order No. 139, on the powers of the Administration Committee, allows the direction of Officers of the House to service Select Committees. This morning, during a debate in the Culture, Media and Sport Committee, of which I am a member, we did not know the ministerial policy areas for which we were responsible. If the Government cannot decide which Ministers are in what Departments or who is responsible for policy, can the Administration Committee aid Select Committees with that?
Mr Speaker
I think I can say without fear of contradiction that it is a matter that requires clarification. I hope such will soon be provided to the satisfaction of the hon. Gentleman and others.
Kevin Brennan (Cardiff West) (Lab)
On a point of order, Mr Speaker. When constituents write to me, I consider it a courtesy to write back to them in kind. I would expect the same thing to happen when MPs write to Ministers—for them to write back in kind with a signed reply. Recently, I received correspondence on behalf of the Secretary of State for Culture, Olympics, Media and Sport from something called the public engagement team—an electronic communication indicating that a unilateral decision had been taken without consultation by the Secretary of State, whereby in future no letters would be sent to Members signed by Ministers. I am not a dinosaur—I engage in electronic media, social media and so on—but do you, Mr Speaker, have any powers in the matter to require Ministers to reply in kind to MPs’ correspondence with a signed response?
Mr Speaker
I am not sure that that is a point of order; I think it is, instead, a point of offended sensibility. Nevertheless, the point has been made and heard. I can say only two things: how Ministers communicate with Members is a matter for them and I do not have any formal powers in that regard; but, I think that it is a matter of courtesy, and it has always been understood that, if a Member writes to a Minister, in most circumstances that one can predict the Member will get a reply from a Minister—and that is right.
Thomas Docherty (Dunfermline and West Fife) (Lab)
Further to the point of order from my hon. Friend the Member for West Bromwich East (Mr Watson), Mr Speaker. As a member of the Administration Committee, I wonder whether it would be possible for you to circulate that clarification later today, so that we Committee members might have a chance to discuss the matter on Monday at our next meeting.
National Insurance Contributions Bill
(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
14:17 - The House divided: - Ayes: 0 / Noes: 0 - Question accordingly negatived.
15:56 - The House divided: - Ayes: 92 / Noes: 271 - Question accordingly negatived.
Mr David Hanson (Delyn) (Lab)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
Amendment 5, page 2, line 20, clause 4, leave out ‘2013’ and insert ‘2012’.
Amendment 6, line 20, at end insert
‘The Treasury will carry out a review of the Regional Secondary Contributions Holiday before 5 December 2011 and may extend the relevant period until 5 September 2013.’.
Mr Hanson
The clue to the proposed changes before us is in the words that the Clerk read out, “not amended in the Public Bill Committee”. The proposals were reflected on and discussed in Committee, and I hope that the Exchequer Secretary to the Treasury has had time, with a good break behind him over Christmas, to reflect on the common sense in them.
I would find it amazing if the Minister were not able to accept new clause 1, because it simply asks for information that, if he looks carefully, he knows I could table questions—with probably more work for him and his officials—to secure in due course. It is important that he assesses the scheme to ensure that we have a national insurance holiday, which, under the current Bill, includes the whole United Kingdom minus three regions—London, the east and the south-east.
The Opposition support, welcome and recognise the Government’s objectives in seeking to use the mechanism of forgoing national insurance income to encourage businesses, but it is important that the Government, the Opposition and, indeed, the House, who endorse that proposal, know its impact over the relevant period.
New clause 1 asks the House to ensure that, following Royal Assent, there is an annual report to Parliament on the outcomes of the scheme, meaning that between now and 2013 we would potentially have three annual reports with the information outlined in the new clause. Essentially, that would include the total sum of national insurance expenditure saved by businesses under the scheme by constituency, but, if the Minister wanted to reflect on the proposal and have it brought back in another place, I would be happy for the information to be listed by sub-region or by region. The information would also include the number of businesses availing themselves of the secondary contributions holidays, the number of employees in each business and the total expenditure saved by businesses under the scheme.
I tabled new clause 1 for several reasons. It is important that we know the facts. The Minister said in Committee that he expects about 400,000 businesses to take part in the scheme during its operation. That figure is a valuable indication and a good benchmark by which we can judge the success of the scheme. When the Committee sat before Christmas, we were already effectively five to six months into the operation of the scheme and about 1,100 businesses had applied for it. An annual review to Parliament would not only have provided an indication of whether Parliament should pass the Bill but would have ensured that we know exactly the take-up of the scheme. New clause 1 refers to the fact that we would also know the take-up by constituency and by businesses.
That is important for two reasons. We need to know the trajectory of the take-up. Is the figure of 1,100 to date what was expected? What will the trajectory be for those businesses in 2011 and 2012? If we have our first annual report in, let us say, December 2011—when the scheme will have been operating for 18 months—what will the take-up of the scheme be? Is the trajectory for the remaining two years likely to mean we get to the 400,000 figure that the Minister has mentioned? An annual report would provide transparency and openness, to which the Government are committed, on those issues and those take-ups. There would be nothing in the report that I could not ask the Minister in a parliamentary question in December this year, next year or the year after. It would simply be good business for the Government to supply that information as a whole.
It is important to consider the number of businesses in each constituency, and we will return to the exclusion of London, the south-east and the east region when we discuss other amendments. Given the deprivation in many of the London constituencies represented by my hon. Friends in the Chamber this afternoon, we feel particularly strongly about that matter. The Bill will have a significant impact on 400,000 businesses across the remainder of the United Kingdom, but will it and the proposed holiday impact on areas that have the highest public sector employment, which is the Minister’s primary objective, and areas of high deprivation and unemployment?
We discussed unemployment and deprivation in areas of the United Kingdom a number of times in Committee. For the purposes of explanation, I shall randomly look at constituencies that currently benefit from the national holiday under the scheme and will benefit if the scheme goes ahead. The annual report is important because unemployment in the Tatton constituency of the Chancellor of the Exchequer is about 2.1%, in the Richmond constituency of the Foreign Secretary it is about 1.8% and in the Rushcliffe constituency of the Justice Secretary it is about 2%.
It is important that we look at where the scheme ultimately is taken up and who will benefit. If businesses are opening in Tatton, Rushcliffe, Richmond and, indeed, other constituencies with low unemployment, that is all well and good, but it will not tackle deprivation in Manchester Central, Liverpool, Riverside or Newcastle upon Tyne East, which ultimately also might benefit from the scheme. For transparency, it is important that the Minister produces an annual report showing not only how many people and businesses have taken up the scheme, but in which constituencies it was taken up outside London, the south-east and the east region.
Kelvin Hopkins (Luton North) (Lab)
I very much welcome what my right hon. Friend is saying. One of the estimates we should perhaps make is whether the loss of jobs as a result of the VAT hike will wipe out any possible advantage of the Bill?
Mr Hanson
My hon. Friend makes an important point. He will know that the Opposition are extremely concerned about the impact of the VAT rise on businesses, on consumer confidence and on consumer expenditure. Although the measure is not directly linked to the VAT increase, its aim is to help businesses in difficult times. From the Minister’s perspective, the measure is primarily designed to help businesses take up the slack caused by the massive 500,000 people who will lose their jobs as a result of public spending cuts. We will come back to the impact of that on London, the south-east and the east region, where many public sector related employment opportunities will be lost and there will be no benefit from the scheme.
It is important that the Minister not only takes on board where job losses will be but that he looks outside the three excluded regions at the benefits that the scheme will bring to England, Wales, Scotland and Northern Ireland. The production of an annual report will show with full transparency where the businesses are that benefit from and take up the scheme. If those businesses are in areas where there is already low unemployment and deprivation, or they are in areas in the rest of England or Wales where there is not high public sector employment, the objectives set by the Minister will not have been met. In the interests of transparency, it is important to have such a report.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
We support the Bill and the right hon. Gentleman’s new clause because we fear that the measure will not go far enough and that an annual report would show the need for further countervailing measures. Does he agree?
Mr Hanson
The purpose of the Bill, which the Opposition support, is to consider how we give limited help to start-up businesses through a national insurance holiday, so that we can get employment going across the United Kingdom with the exclusion, which we are trying to tackle, of London, the south-east and the east region.
Micro and macro-economic policy will need to be looked at again in many areas. My hon. Friend the Member for Luton North (Kelvin Hopkins) mentioned VAT. Hon. Members are concerned about the impact of public spending cuts on job losses. The issue of the economy generally is also extremely important, as are matters such as employment in west Wales. The annual report would clearly show where new businesses are commencing because of the scheme proposed by the Minister in the Bill and whether those new business commencements can be married to areas where there are high levels of public sector job losses, deprivation and unemployment and therefore where there is a necessity for new businesses to commence. If new businesses are starting up in areas where there is already prosperity, wealth and low unemployment, the loss of the £940 million of national insurance revenue that the Minister is proposing in the Bill could have been used elsewhere to meet the objectives of tackling deprivation and unemployment in a much more concerted manner.
Mike Gapes (Ilford South) (Lab/Co-op)
My right hon. Friend will know that the temporary Secretary of State for Business, Innovation and Skills represents a London constituency. Does he agree that it is deplorable that someone who represents a London constituency has not fought in Government for the interests of people living in London, including people in my constituency, who will be adversely affected by the measures?
Mr Hanson
This is a Treasury-led issue, but it will self-evidently have an impact on businesses. I would have expected the right hon. Member for Twickenham (Vince Cable) to use his Business Secretary responsibilities to bat very hard to ensure that the measure has an impact on London, the south-east and the east. Amendments that we will talk to later focus on those areas and show key issues that will be highlighted by the annual report, even if the Bill does not include London, the south-east and east regions.
If I look randomly at the figures before me, I can see that the unemployment rate in the constituency of my hon. Friend the Member for West Ham (Lyn Brown) is 6.8%, compared with the 1.6% unemployment rate in the North Somerset constituency of the Secretary of State for Defence. His constituency will get the benefit of the scheme; my hon. Friend’s will not. The annual report to Parliament will show whether businesses are being drawn to North Somerset at the expense of, for example, the micro-region of Somerset—Bristol and other areas—where there might be even higher levels of unemployment.
Joan Ruddock (Lewisham, Deptford) (Lab)
In my constituency, sadly, unemployment is even higher, but I want to make a different point to my right hon. Friend. Is there not a need to provide this assistance where there is the greatest risk of companies failing in their first year? In some of the most deprived areas, people with the fewest resources face the greatest difficulties in setting up businesses, and their business failure rate in the first year is highest. If we are to be fair, we should not be giving so much money to areas where that does not apply, and that is another reason for looking again at the distribution of this measure.
Mr Hanson
My right hon. Friend touches on an important point to which I will return when we discuss the group of amendments on London’s exclusion. She will be interested to know that the number of business deaths in London was 13.7% higher than anywhere else in the country. While business births are higher in London, at 12.6%, the figure for business deaths shows that there is a higher turnover and a greater loss of businesses in London than anywhere else.
London, the south-east and east region is not included in the Bill. However, even with the Bill as currently constituted, an annual report by constituency would clearly show where the business successes are, where new start-ups take place, and how many employees are being employed as result of the scheme—in other words, it would clearly show its success in meeting the Minister’s stated objectives. Without the annual report, I will have to table questions to find out that information. The Minister will need to have the information to monitor the progress of the scheme and look at its take-up and distribution, but it will not be public unless we have an annual report.
Kelvin Hopkins
On business deaths and bankruptcies, does my right hon. Friend agree that we have yet to see the full impact of the cuts in the school building programme, which will affect many small sub-contractors who work in the construction sector—precisely the businesses that might have benefited from the Bill had they continued to exist?
Mr Hanson
Indeed; my hon. Friend makes an extremely important point. The Minister’s objective in the Bill is to help new businesses to develop to compensate for the loss and shrinkage of public sector businesses in other parts of the country; that is his main focus. The annual report would clearly show not only where new businesses are commencing but, through other information that we will be able to glean, where businesses such as construction firms are shrinking because of cuts in public expenditure on schools, hospitals and other major capital projects. I can think of building firms in my own constituency in north Wales that depend on public sector contracts in housing, education and health for their work. As my hon. Friend says, if that sector shrinks, those employment opportunities will shrink too.
I would be interested to know how many new businesses commence, and how many people are employed in each of them, in my own area in north Wales as a result of this measure, but I will not have that information unless I table parliamentary questions.
Julian Smith (Skipton and Ripon) (Con)
I do not understand why one could not simply put a call through to Companies House. Why do we need a report from London about the minutiae of how British enterprise is developing as a result of this fantastic Bill?
Mr Hanson
We are forgoing £940 million of taxpayers’ money, in the shape of national insurance contributions, to pay for this scheme—£940 million that could be put into the Building Schools for the Future programme and hospital expenditure. I would have thought that the hon. Gentleman was interested in where and how that money was being spent and whether it was being spent effectively. The annual report would show clearly how that £940 million of forgone expenditure was being spent, and which constituencies or regions were receiving the benefit and which were not. My main focus is to ensure, from my perspective and that of my right and hon. Friends, that areas of unemployment, deprivation and high public expenditure get that resource, not areas that already have low levels of unemployment and high levels of prosperity, and do not require this level of resource.
The House is bound to consider how we expend public resources, and it is incumbent on the Government to provide that information. The Minister will have it as he monitors and receives reports on progress on projects, as I did when I was a Minister, and I do not see why he cannot publish it. Ultimately we can drag it out of him through parliamentary questions, but it would be far better for him to be transparent and open, in accordance with this proposal.
Kelvin Hopkins
On the point made by the hon. Member for Skipton and Ripon (Julian Smith), is it not important to disaggregate the statistics to show the specific impact of this Bill rather than taking them out of the general trends in small business creation and so on?
Mr Hanson
That is absolutely right. One of the key tenets of any objective in society has to be that if we set out on a course of action for which we have clear objectives, as the Minister has, then we need, at some point in time, to evaluate whether it has achieved what was claimed for it. The Minister’s objective is to ensure that this scheme benefits areas with high levels of public sector employment that are losing jobs because of public spending cuts. The annual report would show progress towards that objective. This is not meant to be threatening to the Minister—it is simply meant to say to him that the information that he will have, we should have, as a matter of course, so that we know exactly what the scheme has achieved. There is nothing wrong with that. We support the scheme. We are not complaining about the scheme—we are simply saying, “Let’s look at how it has operated in practice.”
Amendments 5 and 6 deal with the same issue in a different way. I suggest in amendment 5 that we should consider reducing the end of the scheme’s operational period from 2013 to 2012. That is not to say that we should stop the scheme in 2012, but that we should, as suggested in amendment 6, review it at the end of December 2011 and
“may extend the relevant period until 5 September 2013.”
The Minister’s scheme may well take off—the 400,000 businesses that he anticipates taking it up do so, and his objectives are being clearly and specifically achieved. However, it is also possible that only 200,000 businesses will have taken up the scheme by the end of the first or second year, and it might then be appropriate for him to amend it accordingly and consider widening its scope. Amendments 5 and 6 offer the Minister the opportunity, without scrapping the scheme, to evaluate it at a break point in December 2011. It is worth our examining whether the take-up he has promised has been achieved and, if not, whether we need to expand or modify the scheme accordingly.
The Minister has indicated that public sector employment is key to his objectives. The constituencies of Edinburgh South; Liverpool, West Derby; Glasgow North; Wansbeck; Wirral West; Blackpool North and Cleveleys; Plymouth, Moor View; Birmingham, Selly Oak; and Glasgow North East are in the top 10 on the scale of public sector employment. If, at the end of two years, there has not been business take-up in those constituencies, but there has been take-up in constituencies much lower down the scale, that would be a reason to review the operation of the scheme.
It may be appropriate to consider including London, the south-east and east region in the scheme. If the Minister cannot do that today through later amendments, he could consider doing so at a later date, and the proposed review point in the scheme would give him that opportunity. The Thames Gateway London Partnership, which is made up not only of authorities under Labour control but those under Conservative and Liberal Democrat control, says in a briefing sent to Members of this House:
“We urge the government to commit to an annual review of the National Insurance Holiday scheme. At this time should the minister find that some areas currently benefitting from the scheme already have a high rate of business survival and a low level of public sector job dependence we would urge him to consider retargeting the measure to allow some of the more deprived authorities in the Thames Gateway to take advantage of the benefits conferred by the scheme.
That reflects amendments that I will come to later. The briefing gives an example that is of particular interest to my hon. Friend the Member for West Ham:
“At a Local Authority level, Newham, which has a public sector employment level of 33.6% would not be eligible for the proposed NI Holiday, however, Macclesfield, which has a public sector employment rate of only 11.8% will benefit from the National Insurance holiday”.
Those issues could be reflected on and taken into account during the break in the operation of the scheme proposed in amendments 5 and 6.
The Minister would have my full support—even if he cannot accept including London, the south-east and east today—if he came back to the House in a year’s time to say that the Government had reviewed the scheme, come up with an annual report, and as a result would like to extend it to Luton South, Walthamstow, Lewisham Deptford, Ilford South, Luton North and Leyton and Wanstead, to give but six constituencies of Members in the House today. I am sure that my hon. Friends would welcome that move from the Minister; they would even say well done to him, invite him to visit the new businesses in their constituencies and cheer him from the rafters. I know that he would appreciate that greatly. I see no reason why he cannot say that he will review the scheme, even if he cannot accept the inclusion of other regions under later amendments. If the review shows that the benefit from the national insurance holiday is going to constituencies with low levels of unemployment, deprivation and public sector employment, he should consider bringing in those other constituencies by extending the scheme to a wider area.
Gavin Shuker (Luton South) (Lab/Co-op)
Those figures might also draw out the effects on constituencies that border areas that are covered, where there might be a differential effect on job growth and creation, which is an issue that came up in Committee.
Mr Hanson
Indeed. My hon. Friend knows that there are issues relating to the borders between London, the south-east and east and other regions, because there could be differentials relating to new businesses. He made that important point in Committee, and the hon. Member for Portsmouth North (Penny Mordaunt) has made it in parliamentary questions to the Minister. On Second Reading, Government Members asked questions similar to mine on why the scheme was not applicable to their regions.
I am not being aggressive, but am trying to give the Minister a chance to listen to the case. I hope that he accepts that there is a case for producing information, so that he can evaluate it and so that we as taxpayers know how the almost £1 billion of resource has been spent: where it is going, who is benefiting from it and how, and what levels of employment it is creating and where. Amendments 5 and 6 give the Minister an opportunity to have a break after about a year to review the scheme formally and to consider the issues that we will discuss later, which are important to my hon. Friends.
It does not matter where one is unemployed, because an unemployed person is 100% unemployed. For the Minister to say that we do not need to worry if public sector jobs are lost in London, the south-east and east, or in other regions of high employment, and that the scheme does not apply there, is not a positive way forward. I hope that he reflects on the proposals genuinely. I know that he is a reasonable chap and that he will consider them positively. He knows that the Bill will be considered in another place and that these matters can be discussed there, if not agreed today. I believe that a sensible case has been made for the proposals—although I would say that—and I commend them to the House and the Minister.
Stephen Hammond (Wimbledon) (Con)
I did not have the benefit of sitting on the Committee, although I did attend Second Reading and I think that I made a short intervention on the Minister.
I will make a short contribution in response to the new clause. I listened carefully to the Opposition spokesman’s speech, and to his closing remark that this is a sensible case that the Minister should accept. I ask the Minister to think carefully about the case that has been put to him. First, the full impact of the policy will inevitably not be shown after the first or second year. With such policies, there can be a significant cumulative effect, which is what the Government are looking for.
Secondly, it has been estimated that the scheme will have considerable benefits. The Opposition spokesman did not query the basis of the estimates made by the Government and outside bodies on the impact of the holiday. We have a pretty good assessment of its impact, so the Government should consider whether the annual report would add to that.
Thirdly, I ask the Minister to consider that the policy is temporary. Although it is a recurring cost, it is only for three years. Were the policy extant for a longer period, the Opposition spokesman’s arguments might have more basis.
Fourthly, the Opposition spokesman made the point several times to the Minister that he could table questions. He did not say whether he thought an annual report would be cheaper than that. If he wanted to do so, he should have given a cost analysis. I fear that the proposal is an expensive way of getting at the information that he wants, and probably does not cover everything.
Finally, when the panoply of talent on the Conservative Front Bench was not as great, I spent four years as an Opposition spokesman. I spoke on various measures that, like the Bill, were extant for the life of the Parliament, such as the Concessionary Bus Travel Act 2007. I made similar requests for annual reports and, time after time, Ministers told me that such proposals would be costly and serve no purpose; that they would of course keep the scheme under review; and that there was transparency through other sources of information available to me. Therefore, before the Minister is tempted by the beguiling words of the Opposition spokesman on transparency and the need to review the policy, I ask him gently to remember that, freed from the responsibility of Government, the Opposition are not accepting the arguments that they made in government.
Kelvin Hopkins
I welcome what was said by my right hon. Friend the Member for Delyn (Mr Hanson), and support strongly new clause 1 and amendments 5 and 6.
In the context of the current economic situation and the level of the cuts being imposed by the Government, the Bill is a relatively small reflationary measure. It is a supply-side measure, rather than the direct reflationary measure of additional spending that I would like to see. If I was in government and had £1 billion to spend—I would love that opportunity, but am unlikely to get it, at least in the short term—I would not spend it in this way. We could, for example, increase capital spending programmes in sectors such as construction and restore school building programmes; £1 billion would sustain a much larger capital programme as a measure of revenue support, so that is the direction in which I would go.
Stephen Hammond
I am interested to hear the hon. Gentleman’s argument. Has he noticed the latest academic evidence on the size of the public expenditure multiplier? It suggests that in an open economy, the actual size of the multiplier is something like 0.1%.
Kelvin Hopkins
I have not seen that academic work, but I will be interested to read it in due course. I remain fairly convinced that spending capital funds on school building actually generates a lot of employment, certainly in my area. The cuts in school spending programmes will have a damaging effect on local employment in Luton. We can debate that in another economic seminar, perhaps, and we shall see. Nevertheless, the measures in the Bill pale into insignificance compared with the overall level of cuts that will be imposed. Some have suggested that the VAT rise alone will cause 250,000 jobs to be lost, which is a staggering figure and surprised me greatly.
In Committee, the Exchequer Secretary leapt on the fact that I was giving lukewarm support to a measure of tax relief, which is not normally my politics. However, it was lukewarm—I said that the Opposition had decided to acquiesce in what the Government were proposing, but that our Front Benchers had tabled substantial amendments. I still believe that tax reliefs are the wrong way to go. They tend not to be as reflationary as direct spending on jobs, particularly in areas where manual workers on relatively low wages tend to spend all their money, which is then circulated in the economy, causing the multiplier effect that the hon. Member for Wimbledon (Stephen Hammond) mentioned. Tax reliefs tend to go at least partly, and sometimes substantially, into savings and have less of a reflationary effect, so I prefer direct spending to help job creation.
The Chartered Institute of Personnel and Development has suggested that there might be as many as 900,000 job losses in the private sector, which is a vast number. Added to the nearly half a million jobs being lost directly through public expenditure cuts, we are talking about 1.5 million jobs being lost. The Bill will go only a tiny way towards countering those massive losses. Indeed, the effect of those job losses, added to the 2.5 million people already unemployed, means that nearly 4 million people will be unemployed, which is a staggering figure. That will be deflationary, because people will become frightened of losing their jobs and stop spending in the shops.
Stephen Hammond
I wonder whether the hon. Gentleman would like to clarify the number of private sector job losses that he has just mentioned. Actually, we have seen in the past two quarters—the evidence from the following quarter is the same—that the private sector is creating jobs.
Kelvin Hopkins
I thank the hon. Gentleman for that intervention, which gives me the opportunity to say what I have said many times in recent weeks and months. We are still benefiting from the pre-election reflation of the Labour Government. To save the economy from a massive depression, and perhaps from sliding into serious long-term deflation, Labour sharply reflated the economy, and it was absolutely right to do so. We are still benefiting from that, because of the time lag effect in economics.
John Cryer (Leyton and Wanstead) (Lab)
May I remind my hon. Friend that some time ago, leaked Treasury papers demonstrated clearly that unemployment in both the private and public sector would rise very sharply during this Parliament? When the Prime Minister was questioned about those figures on the Floor of the House, he refused to answer the question.
Kelvin Hopkins
I am not at all surprised that the Prime Minister was not prepared to be drawn on that. What happens in a year’s time, and in two years’ time, as a result of what the Government are doing now will be the true measure of whether their policies are successful. I suspect that we will have a massive rise in unemployment, as forecasts suggest. That will tend to damage confidence among consumers, businesses and everyone else in the long-term future of our economy, so the Government are pursuing a dangerous policy.
The Bill, although welcome, is modest in comparison with what the Government are doing as a whole. The precise impact of what it will do needs to be measured and published, so that we can set it in the context of the rest of the economy rather than let it drift along, with the Government perhaps making exaggerated claims for its success.
Dr Stella Creasy (Walthamstow) (Lab/Co-op)
Does that mean that my hon. Friend agrees with the Minister, who told me in a letter that £940 million was a large sum of money to allocate for an uncertain benefit? That is exactly why we need to see the figures, to see whether the Bill is working.
Kelvin Hopkins
My hon. Friend is absolutely right, and in the context of the current economic situation, the level of Government cuts and what the Government are spending on the European Union, bailing out Ireland and so on, £1 billion is a small amount of money, especially when it is spread over a number of years. My right hon. Friend the Member for Delyn is right to insist that the new clause be inserted into the Bill, so that we can measure its true impact.
I will leave my comments there, although I will wish to speak to other amendments later. The Bill is modest, and, as my right hon. Friend has suggested, we must ensure that a true measure of its impact is published.
The Exchequer Secretary to the Treasury (Mr David Gauke)
It is a great pleasure to return to the Bill and to some of the arguments that were made many times in Committee, and indeed many times in the speech of the right hon. Member for Delyn (Mr Hanson) this afternoon. It is always fascinating to hear Opposition Members talk about the beneficial effect on employment of reducing employers’ national insurance contributions, although to be fair, I should exempt the hon. Member for Luton North (Kelvin Hopkins) from that comment.
I do not intend at this point to address all the points about regional matters and so on that the right hon. Member for Delyn touched upon, because we will return specifically to them later. I shall address new clause 1, which would require the Treasury, after Royal Assent, to provide to Parliament an annual report on the national insurance contributions holiday for new businesses. The report would be required to contain the total sum of business expenditure saved under the scheme and a breakdown by constituency of
“the number of businesses availing themselves of the secondary contributions holiday…the number of employees designated qualifying employees under the scheme; and…the total expenditure saved by businesses under the scheme.”
I think it would be fair to say, as my hon. Friend the Member for Wimbledon (Stephen Hammond) did, that it is not uncommon for Oppositions to table amendments requiring reports on the implementation and operation of a Bill, and for Governments to resist them. I say to the right hon. Member for Delyn that I do not believe the new clause is necessary, because in Committee I undertook to provide updates to the House and the public on the operation of the scheme after the end of the tax year, including information at regional level. His point that we should provide such information was entirely reasonable, and I can now give a little more detail about what we intend to provide.
We envisage a factual report that will state, regionally and nationally, the number of new businesses applying, the number of applications rejected, the number of qualifying employees for whom a holiday has been claimed and the amount claimed. The main difference between what I am saying we will do and the requirements of the new clause is that the latter would require a constituency-level breakdown, even though the scheme is regional in England and will not cover every English constituent.
The central point, which I made in Committee several times—the hon. Member for Luton South (Gavin Shuker) also touched on it—is that the locations of people’s work and of the businesses for which they work are not necessarily the same as the locations of people’s homes. Many people travel to work, and operating specifically on a constituency basis could result in a somewhat misleading view of the way in which the scheme works. We could identify one constituency that falls within a relevant region, where many businesses that benefit from the scheme are created and have many employees, and where public sector employment or unemployment is not high, and the right hon. Member for Delyn might then say, “This is an example of the scheme not operating as it should. Money is going into a relatively prosperous area and is not well targeted.” However, that ignores the fact that many employees who benefit from the scheme could live in neighbouring constituencies that are heavily dependent on the public sector, or where unemployment is high. I believe that looking at the matter on a constituency basis does not necessarily give a fair indication, and that examining it on a regional basis is better and more accurate. I therefore intend to prepare my reports on not a constituency but a regional basis. None the less, that should be helpful to hon. Members.
Joan Ruddock
The Exchequer Secretary seemed to say that even if an hon. Member tabled a parliamentary question requesting the information on a constituency basis, he would not provide it. That is unacceptable. Often, what happens to one’s constituents is affected by the neighbouring borough or area where a small company sets up. That is of interest to us, and I think that we should know.
Mr Gauke
I do not intend in any way to restrict what hon. Members ask, or the responses to the questions. My point is that it would be better for the Government report that sets out the working of the scheme to consider matters on a regional and national basis. I can understand why individual Members would want to ask about their constituencies. If information is available, it will be provided. I do not dispute that. However, when the Government provide an update on the scheme, it is right to focus regionally and nationally. I understand the right hon. Lady’s concern about her constituents, and the scheme will not apply in her constituency, but a regional or national approach is a more reasonable and reliable way of examining areas where it applies than trying to break it down into individual constituencies.
Joan Ruddock
I am most grateful to the Exchequer Secretary, who must clarify the matter, for giving way again. If an hon. Member tables a question requesting information about his or her constituency, will he be in a position to provide it?
Gavin Shuker
Will the Exchequer Secretary confirm that the evidence we took in Committee shows that there are no technical restrictions on looking at the postcodes of qualifying businesses and therefore on providing that information? In other words, restricting the information would be an ideological rather than a technical decision.
Mr Gauke
It is not an ideological position. I am finding it surprisingly difficult to convince Labour Members of my point—or perhaps they are not prepared to be convinced of the fact that people do not necessarily work in the constituency in which they live, and that it would therefore be wrong to try to make a big case about the number of employers in a particular constituency being low compared with the number of people living there, and their not benefiting from the scheme.
John Cryer
If the information is available, I do not see any problem with just publishing it. I represent some of the poorest wards in London—and that is against some pretty stiff competition. My constituency will not be subject to the holiday for start-up businesses, whereas some of the leafier areas in the north-west will benefit. Tatton, a wealthy area with low unemployment, springs readily to mind as somewhere that will be subject to the national insurance contributions holiday.
Mr Gauke
We come back to the central point that we are acting on a regional basis rather than trying to break down the figures for wards, constituencies or boroughs because of the nature of the labour market and people travelling to work. I concede that several hon. Members will not accept that, but it is the right approach given the nature of the labour market.
Gavin Williamson (South Staffordshire) (Con)
Seventy per cent. of my constituents travel out of the constituency to work in neighbouring boroughs—in Wolverhampton, Dudley and Stourbridge. It is more typical for the benefits to come to those boroughs than to South Staffordshire, but people throughout the region will benefit.
David Mowat (Warrington South) (Con)
I want to respond to the point about Tatton. Many of my constituents work in Tatton, yet parts of Warrington are extremely deprived. Perhaps Labour Members will explain how publishing numbers specifically for Tatton would identify the impact on the deprived areas of my constituency next door.
Mr Gauke
My hon. Friend is absolutely right. He brings a great deal of business experience to the subject. Trying to pick out individual constituencies in the way in which the right hon. Member for Delyn intends will add little to our understanding of the operation of the scheme, but, as a Government, we are keen to put out more information and to make the scheme transparent.
Mel Stride (Central Devon) (Con)
Does my hon. Friend agree with Mr Mitah from HMRC who pointed out in Committee that the greater complexity and costs involved in the sub-regional route would damage the scheme overall? He said:
“If you have a system that required us to operate a more complicated, or a narrower, range of areas, by reference to which we were giving relief, that would raise the costs of compliance substantially.”––[Official Report, National Insurance Contributions Public Bill Committee, 2 December 2010; c. 35-6, Q121.]
Mr Gauke
My hon. Friend is absolutely right. Certain compliance problems would arise. Could we tell whether an address was for work or home? The scheme would become more complicated. Those claiming would need to ensure that they were in one particular postcode area or another, and there would be issues with boundaries. Distortions could be much greater than under the simpler scheme that we have introduced with essentially one boundary and three excluded regions. A host of difficulties would arise if we tried to follow the sub-regional route. Where would we draw the line? Would we end up considering boroughs, wards or polling districts? Exactly how would that work? We will revert to the matter later, but my hon. Friend is right.
Amendments 5 and 6 are aimed at providing flexibility to reduce the duration of the regional employer national insurance contributions holiday for new businesses. This would reduce the cost of the holiday to the Exchequer, and correspondingly reduce the benefit to new businesses. As I have explained, the Government want to target available resources to the regions most dependent on public sector employment. We do not intend to widen geographical coverage, and therefore have no need to find ways of reducing costs. We know that this scheme will reduce labour costs for new businesses, and has been widely welcomed by their representatives.
We have acknowledged that beyond this there is a good deal of uncertainty about exactly how the scheme will pan out in practice. However, introducing some flexibility to change the details of the scheme as proposed in these amendments would increase uncertainty for those who might potentially benefit, and could risk inhibiting decision making. This particular proposal could affect those who are already benefiting from the scheme, or those who are currently considering setting up a new business bearing in mind the Government’s policy. For example, a new business set up this month, which plans to take on employees towards the end of this year, would not get the full year’s holiday for these employees if we were to stop the scheme in September 2012.
I hope that the right hon. Member for Delyn would agree that we were right to start operating the scheme as soon as we could, in anticipation of legislation being passed. Had we not done so, the benefit to businesses would have been delayed, and new businesses that had planned to start operation might have delayed in order to benefit fully from the scheme. I am conscious of the fact that the scheme requires the consent of Parliament, and we have been very clear about that in our guidance to potential beneficiaries. We are not pre-empting the decisions of Parliament. However, I hope that hon. Members would agree that it would not be desirable to withdraw the benefits we had planned to give to entrepreneurs who have already decided to set up in business. That risk applies to these amendments, and I am advised that as drafted the amendment is insufficient to provide a mechanism for extending the holiday, and does not therefore meet the intended aim.
With the commitment I have made today on the reports, I hope that the right hon. Gentleman will withdraw new clause 1 and, in the light of my comments, not press amendments 5 and 6.
Mr Hanson
We have had a useful debate. I tabled the new clause and amendments to secure from the Exchequer Secretary a commitment that the expenditure that we are forgoing—some £940 million—will be monitored and reviewed for effectiveness, that a mechanism will be put in place by which we can judge where, for whom and how it is having a benefit, and that we will review take-up over the three years of the scheme. I am reassured that he has reaffirmed what he said in Committee and will produce information on take-up on a regional basis. I genuinely welcome that.
It might help if the Exchequer Secretary could indicate—he did not do this in his response—the current level of take-up of the scheme. In early December, at the end of the Committee stage, he mentioned that about 1,100 businesses had taken it up. One of our concerns was that his ambitious target of 400,000 over the duration of the scheme would not be met because of the slow take-up in the first six months. It would help initially if he could give that information now.
Mr Hanson
The key issue—this is one reason I have suggested an annual report—is that 1,500 is significantly less than the trajectory we would hope for and which is necessary to achieve a take-up of 400,000 by the end of the scheme. It is already six or seven months since the Exchequer Secretary announced the scheme, and we effectively have two years this September—until September 2013—before completion. A target take-up of 400,000 and today’s take-up of 1,500 show that the trajectory is not there.
I intend to withdraw the new clause—the Minister can relax in that knowledge and take it as a helpful contribution to the debate—but I hope he will still reflect on the fact that one reason we have asked for an annual report is to ensure that we are able to know every year what the trajectory of the take-up is and in which regions and sub-regions it is occurring. If, for example, by the end of 2011, 30,000 or 40,000 businesses have taken up the scheme, and there is a capacity of 400,000 and just two years left of the scheme, a considerable effort would be needed to generate those new businesses in the two years.
If the Minister does not want to build in failure to his scheme, he needs to monitor that and, if need be, consider the suggestions we will make later about expanding the scheme into other regions, such as London and the south-east, to ensure that the 400,000 take-up that he wants is met. I will make the case later, supported by my right hon. and hon. Friends, that high levels of public sector employment in London and the south-east region will be hit by public spending cuts; without the necessary debate on those issues generally, that will happen as much in London and the south-east as in north Wales, the north-west, Yorkshire, Scotland, Northern Ireland and other parts of the United Kingdom.
If we do not have the trajectory of take-up that the Minister anticipates, we might end up with a scheme that, after three years, does not deliver a take-up of 400,000. At the same time, colleagues in London and the south-east and eastern regions will have been impacted by public spending cuts, but their constituents will not have benefited from that scheme. In tabling the new clause and amendments, I was trying to give the Exchequer Secretary some flexibility to enable him to design the scheme, review it and bring back suggestions accordingly. More importantly, hon. Members on both sides of the House, including the hon. Member for Wimbledon (Stephen Hammond), whose constituency will not benefit from the scheme, can assess its impact.
We welcome the holiday and think it will have a positive impact, although it will not compensate for the things that my hon. Friend the Member for Luton North (Kelvin Hopkins) mentioned. We will have to consider what its outputs are, whether we achieve them and whether the scheme is successful, and we will return to these matters in parliamentary questions. I hope that the Exchequer Secretary will reflect on some of those issues before the Bill reaches another place. I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
Clause 3
Increased product of additional rates to be paid into National Insurance Fund
John Healey (Wentworth and Dearne) (Lab)
I beg to move amendment 8, page 2, line 2, at end insert
‘The National Audit Office shall report to Parliament by the time of Royal Assent on the Finance Act 2011 on the sum that would be required from the product of additional rates in order for the health service allocation to grow in real terms in every year.’.
It is good once again to face the Exchequer Secretary across the Dispatch Box, although not so good to do so from the Opposition side and with him on the Government side. However, he is a serious Minister doing a serious job. He showed that in the way he responded to my right hon. Friend the Member for Delyn (Mr Hanson) and the debate on the first group of amendments. I hope that the Exchequer Secretary will feel that amendment 8 and the amendments that were not selected were intended to be helpful to the Government. With them, we are offering to him, his boss the Chancellor and his colleagues in government the opportunity to act to prove to the public that they will honour the promises the Government made about protecting NHS funding and ensuring it sees a real funding increase each year, not a real cut.
The Bill and national insurance contributions legislation more generally are about raising and allocating national insurance funds and contributions paid into that fund. The NHS has had a special place in that legislation certainly since 2002, when we decided to move, from April 2003, to raise an extra 1% on earnings above £43,800 and to allocate all that extra income to the health service and the NHS. The amendments we tabled, including amendment 8, give the Government the chance to do the right thing by the NHS and the British people. Amendment 8 in particular lays the groundwork for the Exchequer Secretary and his colleague the Chancellor to make the right decisions in order to honour their promises in the Budget.
There were big improvements as a result of Labour’s investment in the NHS over the past decade—51,000 extra doctors, 98,000 extra nurses, patient satisfaction at an all-time high—and it is hard to remember that in 1997 there were more than 280,000 people waiting more than six months to get into hospital for the operations they needed. I make that point to explain the broader context to amendment 8, as I am conscious that the House is debating a relatively narrow provision.
Mr Kevan Jones (North Durham) (Lab)
Does my right hon. Friend agree that the NHS will incur another huge cost—a cost that will not go towards improving patient care—owing to the announced reorganisation of the NHS? For example, with the abolition of the primary care trust in my constituency, most of the money will go on redundancy and organisational costs, which will be another burden and, basically, a cut in the NHS budget.
John Healey
It is an extraordinary state of affairs that a series of serious and significant pledges, set out formally in the coalition agreement in May, should have been broken in the White Paper produced by the Health Secretary in July. My hon. Friend is right: the one thing that the Government promised not to do in the coalition agreement was to go ahead with a top-down internal reorganisation, but that is exactly what is now planned. It could cost up to £3 billion. It is high risk and high cost; it is exactly the wrong thing to do at this stage, when the NHS is facing such tight financial pressures. I also have to say to the Minister that his colleagues are already showing signs of strain.
I am anxious to return to the amendment that the House is discussing. The House will notice that it refers to the National Audit Office, which is an independent, authoritative body. The Minister will appreciate the assessments, analyses and authoritative views of independent bodies. He and his colleagues set up the Office for Budget Responsibility. Its independence has—shall we say?—been put on perhaps a slightly more questionable footing than that of the NAO, but it is nevertheless an important organisation. Indeed, the problems of the hon. Gentleman and his colleagues were compounded when their Office for Budget Responsibility updated the economic forecast and the fiscal numbers in November. One of the significant changes in its independent, authoritative assessment of this country’s economic prospects was to its forecast for inflation, thereby changing the deflator—in other words, the amount by which the Government and everyone else anticipate that costs in general, and Government spending in particular, will rise. Instead of a GDP deflator for 2011-12 of 1.9%, as set out in the OBR’s June report, its updated economic forecasts in November gave a deflator of 2.5%.
In other words, even before we take into account the double-counting of funding for both the NHS and social care, we have, instead of the wafer-thin rise of 0.1% for England that the Chancellor promised, a much heavier cut, of 0.5%. That has been confirmed by the Library, and by independent, authoritative bodies in the health field and the Select Committee on Health, which said in its report into public expenditure on 14 December that
“the Government’s commitment to a real terms increase in health funding throughout the Spending Review period will not be met.”
So the Government are breaking their promises to protect NHS funding in England, Scotland and Wales. Next year, Scotland is now being short-changed in NHS funding by £70 million, while Wales is being short-changed by £40 million. In total next year, there will be a shortfall from the promise made by the Government to the British people in their coalition agreement of more than £1.3 billion—not a rise in NHS funding next year, but a cut. On 20 October, the Chancellor promised to increase health spending over and above inflation. That promise is being broken by £1.3 billion.
Our amendments today, including amendment 8, are intended to be helpful, as I said to the Minister. They are intended to demonstrate how the Government can deal with the problem, if they have the will to keep their promises on funding for the NHS. We endeavour to act as a responsible Opposition, as our leader promised we would. The amendment is therefore designed to show helpful ways in which the Government can use this legislation to keep good both the Chancellor’s word and the Government’s promise to protect NHS funding, and thereby to see a real increase each year in this Parliament, and not, as at present, to deliver a real-terms cut.
The amendment suggests having an independent assessment and a report carried out by the National Audit Office. The independence is important: it is designed to try to give the public more confidence in what the Government are doing; to give this House more confidence in what they are doing; and to give everyone more confidence that what was a central promise from the Government and a personal promise from the Prime Minister is in fact being met.
This subject came up at the last Prime Minister’s Questions before Christmas, and it was interesting to note that the Prime Minister told the House:
“I am confident that we will fulfil our goal of real-terms increases every year in the NHS.”—[Official Report, 15 December 2010; Vol. 502, c. 902.]
That will not happen next year. The Exchequer Secretary is a talented Minister and he has an opportunity to give his big boss, the Prime Minister, the confidence that he clearly wishes to see by accepting the amendment and allowing the NAO to do an independent report, demonstrating the extent of the shortfall and the extent to which the Government are breaking their promise fully to fund the NHS. By doing so, he would do the House and perhaps even himself a favour.
Jonathan Edwards
In the light of the situation that he has explained applies in England, does the right hon. Gentleman agree that it is reckless for the Conservatives in Wales to promise in the forthcoming National Assembly elections to increase spending on health above the retail prices index?
John Healey
One of the two consequences of devolution is that in this area of health such decisions are taken in Wales for Wales. The second, however, is, I have to concede to the House, that I, as an English shadow Health Secretary do not follow those decisions in detail, so I think the hon. Gentleman is going to have to prosecute that argument in his home area.
Finally, the House will note that the date in the amendment is anticipated to be after the expected Royal Assent to the Bill, so it is tied to the Finance Act. The Exchequer Secretary might want to discuss with the Chancellor the idea of doing this assessment, publishing the report and highlighting the shortfall, showing the extent to which the promises they made to protect NHS funding and give it a real-terms increase in each year of this Parliament are being broken. The Budget, of course, provides the Chancellor’s opportunity to make good his word and make good the promises that his Government have given to the British people on the NHS.
Dr Creasy
I rise to speak to amendment 8, because it goes to the heart of the Bill and what we do in this House. We do not pass laws to raise money for no purpose. Clearly, we raise national insurance for social insurance purposes. Since 2003 there has been a hypothecated fund in our national insurance contributions specifically for funding the NHS, and the amendment addresses that. It is critical that we get the Bill right and that it reflects the important purpose that we attribute to national insurance. I note that, back in 2003, the then Opposition opposed such use of national insurance, but they have come a long way in the past seven years. That is why it is important to get the Bill right and make sure that the public can have confidence that when national insurance is levied, funding will go to national health care services. My first point concerns why that is important and why the NHS therefore needs the guarantee that amendment 8 would provide. Secondly, I will explain why the public have a reasonable expectation that such provision be made.
Mel Stride
Does the hon. Lady accept that, irrespective of whether the amendment is accepted, the Government have the ability to provide whatever level of resourcing for the national health service that they deem fit?
Dr Creasy
The hon. Gentleman raises the interesting question of how we guarantee that. That is precisely the point that I am coming to, because his Government made a pledge to my Walthamstow constituents that they would “cut the deficit, not the NHS”. As my right hon. Friend the Member for Wentworth and Dearne (John Healey) has set out in his remarks, there is some uncertainty over whether that is the case. Indeed, we could be seeing cuts in the NHS unless we can be sure that the money it needs will be generated. The amendment provides the Government with an opportunity to show how and why they will do so and to consider hypothecation through the national insurance contributions fund, which has been accepted as a principle across the House, to ensure that the money is provided.
There has been sleight of hand in the investment promised by this Government for the NHS through the attribution to social care. As a former local councillor I know that social care is one of the largest costs that any local authority will face, so the cuts that we have seen in local authority budgets over the last couple of months raise severe questions about the ability to deal with adult social care—even before we consider its relationship to health care at local level. It is very clear to me that there are real concerns about the funding that will go to the NHS in the years ahead.
The amendment would mean that we could all have confidence in the fact that money would go to the NHS budget, about which I know Members across the House care, so that the real-terms increase that my constituents and the Minister’s constituents were promised can be made good—not to mention concerns about job losses in the NHS as a direct result of some of this Government’s policies. If Government policy is about job creation and the Bill is about ensuring that people are employed and the economy is in recovery, cuts in the NHS that will lead to job losses will provide a real challenge. The amendment is designed to make sure that, given the pressures on its budget, the NHS has the money that it needs, and that the public’s expectation, which is reasonable and proportionate given the statements made by Ministers both before and after the general election, will be met.
I note in particular that before the election the Chancellor was very concerned about what the national insurance contribution rise might do to the NHS budget. I am sad to see that the Chancellor is not in his place today; I wish he was here to talk to us. I know that my right hon. Friend the Member for Wentworth and Dearne wrote to him, encouraging him to participate in today’s debate. The Chancellor should apply the same degree of concern to ensuring that the money is there for the NHS.
As a member of the Public Accounts Committee, which deals with the National Audit Office, I particularly support the amendment. The amendment would involve the NAO, which has a strong track record of ensuring not just probity but value for money. It is a key concern for us all in these times of economic austerity to ensure that the money goes to the front line in the NHS, that there is a real-terms increase, as we have been promised, and that the Government are held to account if we do not get that, because my constituents living in a poor area such as Walthamstow are already losing out by not getting the national insurance holiday and should at least have confidence that when national insurance contributions go up, the money will go to the NHS, as many of us hope.
I hope that the Government will accept the amendment. It is a reasonable amendment to help the Government keep their promise to the people of Britain that the money goes to the NHS so that we can all have confidence that the NHS will thrive in the years to come.
Kelvin Hopkins
I shall speak briefly in support of the amendment. I strongly endorse what my right hon. Friend the shadow Health Secretary and, indeed, my hon. Friend the Member for Walthamstow (Dr Creasy) have said. Strains in the health service are already being felt, as are pressures on jobs. In my constituency, we are already seeing job losses in the primary care trust and the hospital trust.
There are obvious points to be made about the increasing costs of modern treatments and the reorganisation mentioned by my hon. Friend the Member for North Durham (Mr Jones), who is no longer in the Chamber. Even Conservative Members have suggested that that reorganisation will lead to further privatisation of the health service, and private health services are inherently more inefficient than public health services. The Americans spend twice as much on health as we do, yet millions of Americans have no proper health cover, because private sector health care is much more expensive than public sector health care. We want to keep public health care in the public sector. Indeed, I believe that even the services that have already been privatised should be returned to a full public national health service. I am sure that Nye Bevan would agree. No doubt he is turning in his grave at this moment at the thought of what the Tories are going to do to the health service, but that is a debate for another day.
However, there are other, less obvious points to be made about the health service. It is, for example, inherently labour-intensive. Unlike manufacturing, it cannot take advantage of productivity gains. Its costs rise not in line with inflation, but in line with average earnings. If we are to ensure that health service employees are properly paid, there must be real-terms increases equivalent to the rise in earnings, not just the rise in prices. In general, earnings rise more quickly than prices as the economy grows, although that is not necessarily the case at present. If we are to have a health service that is as good as we wish it to be, we must bear the employment costs in mind.
I agree with what my right hon. Friend the Member for Wentworth and Dearne (John Healey) said about what Labour achieved during its 13 years in office by increasing spending and improving the quality of the health service. The previous Tory Government had left it in a terrible state. However, although the improvements have been massive, there is still more to do. We must not allow health service funding to be threatened in the ways that have been mentioned today. Amendment 8 is important because it will ensure that that funding is protected. There are many other problems in the health service, and we must not put more pressure on it. We do not want what happened at Stafford hospital to happen elsewhere because of underfunding and understaffing in wards. We must ensure that the service is properly funded.
Steve Baker (Wycombe) (Con)
I cannot help wondering whether the hon. Gentleman realises that Buckinghamshire, for example, has inherited an underfunding of 17% per head in comparison with the national average. I am afraid that Labour did leave us a legacy of underfunding, although only in certain parts of the country.
Kelvin Hopkins
I believe that there is a massive difference between the proportion of gross national product spent on health under the Tories before 1997 and the proportion spent on it now. Although I think that we should spend more on health—I have always argued that we should spend as much on it as Germany and France, but we have still not quite reached those funding levels—we have made massive improvements.
For a long time I complained that health service spending in Luton was below the fair funding target. We lobbied our own Ministers heavily on the issue, and I think that we made some progress in persuading them to move in the right direction, but we must ensure that health funding in all areas increases as a proportion of GDP. I hope that Buckinghamshire as well as Luton North will benefit in that regard.
We must accept that improving health care sometimes means increasing rather than decreasing labour intensity. Health care will improve if a ward containing 20 beds and two nurses is given a third nurse. That is certainly true in the elderly care sector, about whose future I am seriously concerned. The fact that our population is ageing is an additional major burden for the health service. We all want to ensure that we are cared for properly when we are elderly—even more elderly than I may be at present. When we are elderly and need care, we want that care to be properly funded, so that we do not suffer in the later stages of our lives.
I strongly support what was said by my right hon. Friend the Member for Wentworth and Dearne, and I hope very much that the Government will accept the amendment.
Sheila Gilmore (Edinburgh East) (Lab)
It has puzzled me slightly over the years that successive Governments, and the Treasury in particular, have been so reluctant to engage in hypothecated funding. I know that there are arguments for and against it, but one of the main arguments for it—as has been borne out by the changes in 2003 involving the hypothecation of increased national insurance contributions—is the building of public support for the deed itself. It is true that if we want good services we must pay for them, but people want to know for sure that their money is going where they think it is going.
People in Britain tend to say that we should have Scandinavian-style public services with American-style taxes, but the two simply do not fit together. Scandinavian-style public services come with high taxation. If people can feel confident that their money is going where it is most needed, they will be much more committed to spending it. As I said earlier, I have not always understood why even my own party’s Governments have not necessarily been particularly keen on that point of view. It seems that Members have been captured by the Treasury as soon as they have become Treasury Ministers. However, an innovative step has been taken.
Amendment 8 does not ask for the national insurance increase to be hypothecated at this stage. It merely suggests that the door should be left open, and that if it proves impossible to reach the health service spending target to which the Government have committed themselves, it should be possible to use the national insurance increase to ensure that that commitment can be fulfilled.
Gavin Shuker
Have not the Government already accepted the case for the hypothecation of national insurance contributions for the health service? Does not the amendment merely seek to help them along the way by ensuring that the hypothecated funds end up in the right place so that they can fulfil their own commitment?
Sheila Gilmore
It is true that they have not chosen to retreat from the path taken by the previous Government, but the amendment gives them an opportunity to use the fresh, additional contributions if that is required.
The Government have taken a huge step forward in accepting that more money needs to be spent on the health service. For some years, when we were in government, one of the themes that emerged from the then Opposition was that spending lots of extra money was not making a difference. According to them, lots of money was going in at one end, with no indication that anything good was happening at the other end. I perceived that as a sort of softening up: they were telling people that they would still have a good service if they did not spend as much on it. Now, however, there seems to be a recognition that the money is important, and that spending is necessary after all.
That approach is vindicated by the increase in public support for the health service over the past 13 years. According to the findings of a 1997 survey, the level of public satisfaction with the service then stood at 34%. When the same question was asked in 2009, it had risen to 64%—the highest level since the study was first conducted, well before 1997—which showed that people really appreciated what was happening to health spending. I urge the Government not to put all that at risk, but to leave this opportunity open by accepting an amendment that would allow them to meet their own health spending targets and ensure that we do not lose people’s current satisfaction with the NHS.
Mike Gapes
I will be brief. This amendment is important. As my hon. Friend the Member for Walthamstow (Dr Creasy) said, it has been tabled in the context of the fact that provision for spending on social care is being taken into consideration in the overall budgeting, and there are clearly big problems. There are already concerns about the impact of bed blocking this winter.
I saw a letter yesterday from the chief executive of the Barking, Havering and Redbridge University Hospitals NHS Trust, John Goulston, that was sent to my constituency neighbour, my right hon. Friend the Member for Barking (Margaret Hodge). It was about the closure for periods over this recent winter of the accident and emergency services at the Queen’s hospital and the King George hospital, because of the impact of massive increases in admissions and bed blocking. That is serious, and it shows that we need the commitment to the ongoing level of spending in the NHS that is conveyed in the amendment. Because of the decisions of the Joint Committee of Primary Care Trusts in December, the Barking, Havering and Redbridge trust is about to close the accident and emergency and maternity services of King George hospital in my constituency.
Also, yesterday I was informed that the chief executive of the Barking, Havering and Redbridge trust is about to leave for pastures new—for a job with London regional NHS—after three years in post, during which he has not managed to remove the deficit, which is ongoing in that two-hospital trust. He is to be replaced by the chief executive of Chase Farm. She has presided over getting rid of the accident and emergency services at Chase Farm, and she will presumably get rid of the accident and emergency service at King George hospital, Ilford next.
Nick de Bois (Enfield North) (Con)
She has not done away with it yet, and nor, indeed, has North Central London, but they have been putting up a determined fight to do so, and I entirely understand the point that the hon. Gentleman is making.
Mike Gapes
I am grateful for that intervention. The hon. Gentleman will know that the previous Member of Parliament for his constituency, Joan Ryan, fought very hard over many years, as I was fighting for my hospital with my neighbour, the hon. Member for Ilford North (Mr Scott) and others, and we continue to do so. As a result of a motion carried unanimously, across the parties, by Redbridge council last week, we are calling on the Secretary of State to intervene to save the accident and emergency and maternity services at King George hospital, Ilford.
If the spending is not in place, more and more hospitals and NHS trusts will face such a problem. It is not just about money; it is about management incompetence, NHS bureaucrats and some consultants who have a model of health care that is not in the interests of the community. However, it is about resources. Those responsible hide behind all kinds of arguments, but ultimately this is an extremely important issue that cannot be left to consultants or NHS managers. It requires political accountability and political decision making, because the public provide the money and vote the money, and it is important that we are accountable for how that money is spent—and so should those people in the NHS bureaucracy on massive inflated salaries, earning two, three, four times what Members of Parliament earn, who do not take account of the wishes of the local community, the local councillors or local Members.
Nick de Bois
The hon. Gentleman should take some comfort, as we have done since the election, from the fact that the Secretary of State has imposed four very determined tests that will allow for GP support and public support. He can take some encouragement from that.
Mike Gapes
I am sorry to disappoint the hon. Gentleman, but I have read the tests. They talk about clinical support, but what we have had is a rigged consultation and a group of placemen and women—hand-picked GPs—who are in charge, and there has been no ballot of GPs so there is no means of assessment. Those responsible say that the decision is clinically led, but we are now beyond that because the Joint Committee of Primary Care Trusts has said there has been clinical support, even though we know there is significant opposition. We now require the Secretary of State to intervene, and to save King George hospital’s accident and emergency and maternity services, which we have had in my constituency since 1926.
Mr Gauke
First, may I welcome the right hon. Member for Wentworth and Dearne (John Healey)? It is a great pleasure to debate with him again. My first experience as a Front Bencher was debating with him and, although we now sit on different sides of the House, it is good to do so once again. I am pleased to be sitting on the Government Benches now, rather than on the Opposition side, but I am sure he has ambitions to return to these Benches. There are not many subjects on which I agree with the vast majority of Labour MPs, but one on which I do is the high regard in which they obviously hold the right hon. Gentleman. I am pleased by his popularity and the progress he has made.
Amendment 8 would require the National Audit Office to report on how much would be required from the additional rates in order for the health service allocation to grow in real terms every year. It may be useful to clear up one or two potential misconceptions. The amount that is to be spent on the NHS was confirmed at the spending review, and is unaffected by whether funds come from national insurance contributions or elsewhere. The amount of national insurance contributions allocated to the NHS depends on economic circumstances as well as the proportions specified in legislation. I would like to reassure the House that it is no part of Government policy to cut NHS funding automatically if, for example, global economic conditions lead to a reduction in national insurance contributions allocated. To be fair, that has not been the position of any Government, notwithstanding the fact that there has been an allocation element of national insurance contributions not just from 2003, but from 1948 when the NHS was created.
Kelvin Hopkins
We have to be very precise about what we mean when talking about cutting funding. Previous Governments and Ministers have talked about funding not being cut when it has stayed the same in money terms, which is a real-terms cut. Even raising funding in line with one or other measure of inflation may mean a cut. We have to talk about this in real terms in the sense of what is actually done within the health service. That is the measure we should use, in order to make sure nothing is cut inside the health service.
Mr Gauke
I note the hon. Gentleman’s remarks. The position is set out in the coalition agreement, and the October 2010 spending review met the Government’s commitment on HNS funding in full, and did so without changing the allocation of national insurance contributions to the NHS. The effect of our policy is to maintain the level of national insurance contributions allocated to the NHS and to allocate additional revenues from rate rises to the national insurance fund. This helps ensure that plans for payment of pensions and other contributory benefits are sustainable in the long term. We can protect pensioners by the new triple-lock, which guarantees each and every year a rise in the basic state pension in line with earnings, prices or a 2.5% increase, whichever is greater.
In ordinary circumstances, we should expect contributions to rise broadly in line with earnings, and therefore to rise in real terms. Therefore, under the Government’s proposals we should expect allocations to the NHS to rise in real terms in a typical year. Amendment 8 would require the NAO to report on how much would be required from the additional rates in order for the health service allocation to grow in real terms every year. The Government’s view is that this would be a pointless exercise, since whether or not the NHS allocation grows, the Government have decided on the amount the NHS will spend. In any case, the amount allocated to the health service from national insurance contributions would, other factors being equal, be expected to grow in line with earnings and therefore grow in real terms every year under the terms of the Bill. This amendment is therefore unnecessary, and I recommend that the right hon. Member for Wentworth and Dearne withdraw it.
I have focused my remarks narrowly on what the amendment is about and why it does not do what is intended. However, I must remind the House of Labour Members’ comments on the subject of health spending more widely. The right hon. Gentleman’s predecessor as shadow Health Secretary, who is now shadow Education Secretary, has said:
“It is irresponsible to increase NHS spending in real terms within the overall financial envelope that he, as chancellor, is setting.”
It was also not that long ago that the shadow Chancellor, whose remarks we study closely, said that there was
“no logic, sense or rationality”
to the policy of ring-fencing NHS spending. I am pleased that Labour Members are now taking a different approach. It has been clear from the remarks made by the right hon. Member for Wentworth and Dearne that they are in favour of real-terms increases in health spending, and we are pleased that the Government have won that argument.
John Healey
The Minister was talking about the shadow Chancellor and the approach we take to the decisions that the Government have made on NHS funding. May I therefore remind the Minister of what my right hon. Friend said when he so ably responded to the spending review statement? He said:
“We support moves to ring-fence the health budget”.—[Official Report, 20 October 2010; Vol. 516, c. 968.]
Mr Gauke
That was the shadow Chancellor’s position then, but I believe that a few days earlier he had said that there was
“no logic, sense or rationality”
to the policy. If he has changed his position, Government Members would welcome that. The Prime Minister—my “big boss”, as the shadow Health Secretary has described him—has said that we are
“confident that we will fulfil our goal of real-terms increases every year in the NHS.”—[Official Report, 15 December 2010; Vol. 520, c. 902.]
That will occur, regardless of whether any amendment such as that proposed by the right hon. Member for Wentworth and Dearne is included in the Bill; this is a matter of spending and this mechanism is not terribly helpful. Given those comments, I hope that he will withdraw the amendment, although I am not optimistic.
Chris Leslie (Nottingham East) (Lab/Co-op)
I should like to say how pleased I am that my right hon. Friend the shadow Health Secretary has been able to extend the offer of support to the Government with this amendment. He seeks to be as helpful as an Opposition can be and to encourage the Government to live up to their coalition agreement promise to ensure real-terms growth for our national health service.
As many of my hon. Friends have said, the NHS is absolutely at the top of our constituents’ concerns and it is important that we ensure that we deliver a real-terms increase, particularly given the relatively high level of NHS inflation compared with mainstream inflation. I am sorry that, despite the hand of friendship being offered, the Minister felt that amendment 8 was “a pointless exercise” and “unnecessary”. I thought that rather cruel. We think that the National Audit Office probably would be more than happy to undertake a study to find out how much money the Chancellor would need to add to the sum already committed in order to fulfil the Prime Minister’s promise. Interestingly, the Minister said that he was confident that the Government “will” meet their commitment; he did not say that they “have” met it. Perhaps I am reading between the lines in a way that I should not, but it was almost as though the Minister was conceding, to a degree, that the sums allocated in the spending review do not fulfil that real-terms growth.
I am sorry that the Minister did not address the two key points, and I would be more than happy to give way to him if he would care to address them. The first relates to the social care switch, whereby accounting and statistical opportunities have suddenly been taken to move a sum that had been and still is to be delivered by local authorities under the budget heading of the NHS—of course, social care will continue to be delivered by local authorities. Perhaps the Minister would like to confirm that that is the case. Therefore, to classify this money as part of the NHS growth is disingenuous in almost anybody’s book.
Kelvin Hopkins
My hon. Friend mentioned inflation costs, over which the health service currently has no control, because they relate to things such as energy, fuel and food. All those costs are externally generated, because we import a lot of those things, and so we have no real control over the costs. Therefore, the health service has to be compensated properly for the extra costs.
Chris Leslie
Absolutely. My hon. Friends the Members for Luton North (Kelvin Hopkins), for Walthamstow (Dr Creasy) and for Edinburgh East (Sheila Gilmore) have all mentioned that these costs are increasing. As we know, the drugs budgets and so forth are increasing, so this issue will be right at the centre of the national political debate. We know that this Government have a habit of casually casting aside the commitments that they made in the coalition agreement. We really do not want them to rack up yet another broken promise, but it is starting to look as though the Treasury is in that particular space. This situation is not good for our constituents, we want the national health service to grow successfully and we thought that this amendment would offer the olive branch of friendship across the Chamber so that the NAO could, once and for all, clarify whether the Government are living up to their promise. The Minister’s description of our attempt as “a pointless exercise” is hurtful and, for that reason, we probably have to divide the House to ensure that we can at least test this issue and try to keep the Government to their commitments.
Question put, That the amendment be made.
The House divided: Ayes 90, Noes 262.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this we will discuss the following:
Amendment 2, page 2, line 21, leave out subsection (5).
Amendment 3, in clause 11, page 6, leave out lines 24 to 29.
Amendment 4, page 6, leave out lines 35 to 41.
Mr Hanson
The purpose of the amendments is self-evident and clear. We discussed this issue at great length in Committee but it is worth revisiting today to see whether the Minister has reflected over Christmas and the new year on the views that we put forward in Committee. The amendments would do one simple thing: include the regions of London, the south-east and the east in the regional secondary contributions holiday in the Bill. As I have said in relation to earlier amendments and throughout the Bill’s proceedings, we welcome the idea of a payment holiday but we do not believe that its implementation is fair or that it meets the objectives that the Minister has outlined of helping to tackle problems in areas with high public sector employment that will be disadvantaged by the pending public sector cuts, which will impact on both local government and central Government services throughout the country.
I accept, as my hon. Friend the Member for Luton North (Kelvin Hopkins) has said, that the Bill as a whole is not a panacea for tackling long-term unemployment or, indeed, the impact of public spending cuts and further potential unemployment across the board. What it does do, however, with its limited scope, is ensure that we provide an incentive over a short period—the next three years—for new businesses to be established. They will receive a payment holiday for national insurance contributions, which will be a small but a significant help towards the establishment of new businesses.
The Minister’s logic is that the scheme will operate in the selected regions because it should be used to help businesses where there has been a major impact on public sector employment, and he has specifically excluded the whole of the London, south-east and east regions. Let me chide him slightly, because I think he has fallen into the trap of believing that the whole of the London, south-east and east regions are similar in characteristic, have low levels of unemployment, low levels of deprivation and a low level of public sector employment. If the Government did not believe those things, he would have included those three regions in the scheme.
There are certainly high levels of employment and great prosperity in the east and south-east regions and there are certainly constituencies and even sub-regions with low levels of public-sector employment. However, there are also areas, as I am sure my hon. Friends who represent those areas will testify today, with extremely high levels of deprivation, unemployment and dependency on public sector employment that will be excluded from the potential benefits of the secondary benefits holiday because the Minister has excluded those three regions from the scheme.
Joan Ruddock
Perhaps my right hon. Friend is aware that the average level of public sector employment in the UK is 21.7%, but the figure in my constituency is 30%. Does he share my astonishment that my constituency and other parts of London with such a high level of public sector employment—leading, I am sorry to say, in these times, to high public sector unemployment—are being excluded?
Mr Hanson
My right hon. Friend makes that point in relation to Lewisham and her constituency, but as I shall discuss, it is not just her constituency and Lewisham borough that will be excluded and disadvantaged by the scheme. For example, the constituencies of Oxford East; Luton North; Lewisham East; Canterbury; Southampton, Test; Eltham; West Ham; North Thanet; Hackney North and Stoke Newington; Tooting; Islington North; Dulwich and West Norwood; and Brighton, Kemptown all fall, by the Minister’s own criteria, in the top 60 constituencies for public sector employment, but they will not be eligible for the scheme because the Minister is excluding them from it.
If the Minister looks, as he has, at the House of Commons figures that I raised with him in Committee, he will see that 23 of the top 100 constituencies for public sector employment in England, Wales, Scotland and Northern Ireland fall within the three regions that are excluded from the scheme. So my right hon. Friend makes a clear and telling point on behalf of her constituents, but 23 of the top 100 constituencies fall into the same category.
Jonathan Edwards
I accept the point made by the right hon. Gentleman, but does he not recognise the need to rebalance the economy on a geographical basis? If he does not support this measure, what measures would he like to introduce?
Mr Hanson
I certainly would not have abolished the regional development agencies or cut public spending with the speed and to the extent that the Government are doing. I certainly would not have cut the Welsh Assembly Government’s budget in our own areas to the extent that the Government will do over the next two to three years. That would have helped to manage the necessary downturn in public spending that we needed to make to readjust the economy in a way that was proportionate, fair and met our constituents’ needs for public services and for employment.
Mike Gapes
My right hon. Friend refers to 23 of the top 100 constituencies, but if he extends the list to 105 constituencies to include Ilford South—my constituency—all those next five constituencies are also in the relevant regions, so he could refer to 28 of 105, and there is 38% public sector employment in my constituency.
Mr Hanson
I am grateful to my hon. Friend. Would I ever try to miss out the good constituency of Ilford South? My purpose was to indicate that the inclusion criterion that the Minister has selected is based on one simple issue: how to compensate for and deal with public sector job losses and provide a mechanism to help to support the creation of new jobs where public sector jobs are lost. On his criterion, 23 of the 100—or 28 of the 105, to take my hon. Friend’s figures—show that those issues are not being dealt with in the way in which the Minister has said.
If I look at the impact of the possible 490,000 public sector job losses, I see that they will hit hardest those constituencies with public sector employees. If I add to that, as I have to do, the benefits of job creation and look at local authorities on the economic deprivation index, I see that no fewer than seven of the top 12 of those economically deprived boroughs fall within areas that are excluded from the scheme. The boroughs of Hackney, Newham, which is represented here today by my right hon. Friend the Member for East Ham (Stephen Timms) and my hon. Friend the Member for West Ham (Lyn Brown), Tower Hamlets, Islington, Barking and Dagenham, Haringey and Lambeth are all in the top 12 economically deprived boroughs, yet they cannot avail themselves of the scheme.
Other constituencies throughout the country—again, I will alight on Tatton, because its is the Chancellor’s constituency and one that I know well—where unemployment is low and there are many business start-ups and great pockets of wealth, will benefit from the scheme and can apply to include businesses in the scheme, while boroughs such as Newham, Tower Hamlets and others that I have mentioned will not be able to do so. If we look at the unemployment rate across the United Kingdom, which is 7.9% on the latest figures, we see that unemployment in London is 9.1%.
Henry Smith (Crawley) (Con)
As an MP from the south-east, I resent being put into this invidious situation. But why does the right hon. Gentleman think that we are in this invidious situation, whereby we must make tough choices to re-stimulate the economy after the economic disaster in which the Labour party left the country?
Mr Hanson
I am happy to discuss macro and micro-economic issues with the hon. Gentleman. There is a clear divide between the current Government and the previous Government. We had a deficit reduction plan over three years. We would have cut public expenditure and made savings. In the Department in which I was a Minister in the last Government, we had earmarked £1.5 billion of savings over the next three years. We would have done that.
There is a difference about the scale and depth of the cuts. The hon. Gentleman and I can argue about that, but he needs to recognise that, if he walks through the Lobby to vote against the amendment today, he will be denying new businesses in his constituency the ability to gain access to the scheme, while allowing areas with lower unemployment and lower deprivation, perhaps in parts of the north of England, which are not completely a desert, to benefit from the scheme. He has to wrestle with that issue. Let me advise him that however he deals with it, we have the ability to let the residents of Crawley know what he will do on the issue. He and others need to look at that. There is still time for him to vote with the Government today, but then to speak to the Minister privately, to get his colleagues from Kent, other parts of Sussex, Berkshire and Hampshire together, to get them to talk to the Minister, and to get the Minister to reflect on this in the other place, so that we can make the scheme much wider. Colleagues from London and I would give him credit for doing that.
I put this to the Minister: the unemployment rate in London is higher than in the south-west, in my region and in that of the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), in Wales. It is higher than in Scotland, the east midlands and the north-west, and it is above the UK average. The unemployment rate in the constituency of my hon. Friend the Member for West Ham was 6.8% at the last count. The rate is 7.7% in Tottenham, and 6% in Camberwell and Peckham; in Tatton, Richmond and Derbyshire Dales, it is under 2%.
I have no objection to a scheme being developed to help create employment where employment is lost, but if the logic of the scheme is what the Minister has made it out to be—to deal with public sector employment —I should point out that at the moment 23 of the 100 constituencies with the highest levels of public sector employment are not included. If it is to deal with unemployment, which is higher in the places that I have mentioned than in other parts of the country, the Minister needs to reflect on that in relation to what he has done today.
The Minister does not need to listen to me; John Walker, the national chairman of the Federation of Small Businesses, has said:
“With small firms in the South East most likely to be working below capacity, this shows how wrong the Government is to not include this vital region, as well as the East and London, in its proposals for a National Insurance holiday…With 600,000 public sector jobs expected to be lost, stimulating private sector job creation…in small firms, will be vital to rebalancing the economy.”
The Thames Gateway London Partnership makes similar points:
“the data clearly shows that…the National Insurance Holiday is unfair as it excludes areas in the Thames Gateway which we believe would otherwise be targeted for government support.”
The partnership has helpfully shown—this backs up what my right hon. Friend the Member for Lewisham, Deptford (Joan Ruddock) has said—that there are high levels of public sector employment in the London area, which would benefit from the scheme.
Joan Ruddock
I am most grateful to my right hon. Friend for giving way yet again. He may be aware that of the 10 Thames Gateway London boroughs, seven are in the 40 boroughs with the highest levels of multiple deprivation. My borough is at No. 39. Surely we have to be included in the scheme.
Mr Hanson
My right hon. Friend makes an important point supporting my central argument. I am trying to argue on the Minister’s own grounds. He argues that the scheme aims to help where there is loss of public sector employment. If 23 of the 100 constituencies with the highest levels of public sector employment do not benefit, the Minister’s scheme is not meeting the needs that he has set it to meet.
Let us look at public sector employment in the London Thames Gateway region. Some 21% of people employed in Barking and Dagenham work in the public sector. The figure is as high as 31% in Greenwich, 30% in Lewisham, 33.6% in the borough of Newham, 28.4% in Redbridge, and 26.6% in Waltham Forest, in the constituency of my hon. Friend the Member for Walthamstow (Dr Creasy). The Thames Gateway London partnership has helpfully provided me with information on the subject. Even boroughs represented by two Conservative Members of Parliament, such as Southend-on-Sea, will not benefit from the scheme, although it has 24.66% of people employed in the public sector. Let us look at authorities in Kent, represented not by Labour Members of Parliament, but by Conservatives. In Medway, nearly 24% of people are employed in the public sector. In Gravesham, it is 22.2%, and in Swale it is 19.7%. Those are areas with high public sector employment that will not benefit from the scheme.
Andrew Bingham (High Peak) (Con)
I support the general idea and hear the points that Opposition Members make, but we have to remember that in High Peak setting up a business is not easy. It is not easy anywhere in the country, but we need to look at rebalancing the economy, and in the north-west, or in the east midlands where High Peak is, we have to contend with such issues as rurality and communication links that are not of the same gravity in the south-east. Members might recall how I went on about the Mottram-Tintwistle bypass, but that road link in and out of High Peak makes it difficult for businesses to get going and to survive.
I remember setting up a business years ago and how difficult it is. On transport costs, we used to deal predominantly with south-east companies. We had to get goods up from the south-east and deliver them around the country, which created extra costs. Hon. Members might smile, but one of the things I have noticed since being elected to the House is that it is so much warmer in the south. I can assure hon. Members that it is cold in High Peak and that there are extra heating costs and numerous other extra costs and overheads. The measure is an incentive to business men and, importantly, new business men to start their businesses in the north.
Dr Creasy
I draw the hon. Gentleman’s attention to the fact that business men and women in the south-east may well be familiar with a concept called the living wage, which reflects the high cost of living in London and therefore some of the difficulties that new employers might face in attracting staff because they have to pay a higher wage in the south-east. It is not all grim up north.
Andrew Bingham
We have expensive houses in High Peak—I have seen something on my BlackBerry today about house prices being expensive. We have issues, but it is not grim up north. Speaking as someone who is technically the Member for Royston Vasey, as the programme concerned was filmed in my constituency, I implore all southern MPs to come to High Peak. It is not grim. [Interruption.] It is beautiful. Thank you; we agree on something.
I reiterate the point that there are challenges to setting up businesses outside the south-east—for example, slower broadband. That is another hobby-horse of mine. The measure is an incentive. It will get local people setting up local businesses in the north and outside the south-east, which will rebalance the economy. I hope that more businesses will flow up north to High Peak and other constituencies. The measure is an excellent policy. We hear all about the cuts, but they are having to be made because of the economic carnage left by the Labour party. If we acknowledge that, we might get somewhere.
Stephen Timms (East Ham) (Lab)
I am very grateful to my right hon. Friend the Member for Delyn (Mr Hanson) for tabling the amendment and for the fact that he has already referred to the Thames Gateway. I want to refer to issues associated with the Thames Gateway area and the borough I represent, Newham, together with my hon. Friend the Member for West Ham (Lyn Brown) who is in her place.
It is clear that the Government have simply got this wrong. If we consider the criteria that the Government have said should be applied to choosing where this incentive is available, as my right hon. Friend has said it is in those parts of the country where the proportion of public sector dependence is high that we need to encourage new businesses to start up and take on employees. Of course that is exactly the situation and is what is required in the Thames Gateway area on the east side of London. It is absurd to omit from the scope of this initiative areas that the Government have themselves identified for the promotion of new business growth.
I put it to the Minister that he is not being invited to support the policies of the Labour party or, indeed, any other institution; he is being invited to support the policies of the Prime Minister. It is extraordinary that the one area of the country where the Prime Minister has called explicitly for the creation of Silicon Valley-style economic regeneration based on high-tech start-ups is being missed out from the initiative. Let me refer the Minister to the speech that the Prime Minister gave in east London on 4 November—his east end tech city speech—and point out some of the comments he made. The Prime Minister said:
“Only three years ago, there were just fifteen technology start-ups around Old Street and Shoreditch…it’s clear that in East London, we have the potential to create one of the most dynamic working environments in the world. And I believe we can really turn this vision into a reality.”
I agree with the Prime Minister. I am baffled by the fact that in this Bill the Prime Minister’s initiative is being undermined, and I want to find out from the Minister why that is so. I hope he will accept the case that my right hon. Friend the Member for Delyn has made and, even at this late stage, accept the amendment.
Joan Ruddock
I think my right hon. Friend is providing the answer to the hon. Member for High Peak (Andrew Bingham). This is not about rebalancing between the south and the north; it is about rebalancing within London and the south-east where people are put out of public sector jobs and we hope that they might go into new businesses.
Stephen Timms
My right hon. Friend is absolutely right. I also agree with the hon. Member for High Peak (Andrew Bingham) about the importance of high-speed broadband for bringing about this kind of change. Of course, at the moment we do not know which Department in Government is responsible for broadband—we were attempting to clarify that earlier.
In his speech on 4 November, the Prime Minister went on to spell out how his vision could be achieved. He said that experience
“teaches government some simple things. Go with the grain of what is already there. Don’t interfere so much that you smother. But do help out wherever you can. Help to create the right framework, so it’s easier for new companies to start up, for venture capital firms to invest, for innovations to flourish, for businesses to grow.”
That is what the Prime Minister has said he wants to happen in the east end tech city initiative.
Gavin Williamson
Does the right hon. Gentleman feel a sense of responsibility, as a former Minister, for the 11,000 pages of tax code which, every single day and every single year, stifles new businesses in setting up? Does he accept a responsibility for that stifling of innovation and industry?
Stephen Timms
I take a good deal of satisfaction from the progress that we saw with the development of high-tech business spin-outs from universities under the aegis of the previous Government. That was one of their very significant achievements.
Gavin Williamson
Do you not accept that the 11,000 pages of tax code, which doubled under the last Labour Government, is stifling British industry, and that that is partly your responsibility and your party’s responsibility?
Stephen Timms
I do not think that it is the Deputy Speaker’s responsibility.
Mr Deputy Speaker (Mr Lindsay Hoyle)
In fairness, some may hold me responsible, but I can assure the hon. Gentleman that I am not.
Stephen Timms
This is what the Prime Minister called for in November:
“The right framework, so it’s easier for new companies to start up”.
That is what he wants to happen in the east London tech city initiative. My question to the Minister is why is the Bill not doing that which the Prime Minister has so clearly called for? If it were my right hon. Friend the Member for Delyn appealing to the Minister to do that, I could understand why he would not be willing to do it, but it is the Prime Minister, who appointed the Minister to his job. Why is the Minister not doing what the Prime Minister said?
I commend to the Minister the Prime Minister’s speech of 4 November, in which he went on to describe what different parties are doing to help to secure this vision of a new high-tech city in east London:
“But what about here—in the heart of east London where there’s already so much to work with? We’re working with business to make sure the infrastructure and advice you need is in place. Imperial Innovations, the venture capital arm of Imperial College London”—
Andrew Bridgen (North West Leicestershire) (Con)
Does the right hon. Gentleman welcome the coalition Government’s reintroduction of the enterprise allowance scheme, which we have opened to people the length and breadth of the UK who have been unemployed for six months or more to help them get into self-employment?
Stephen Timms
I have always taken the view that self-employment is a very important vehicle for helping people not in work to get into work. That is why the new deal for self-employment, as an element of the new deal in the past, was so valuable, and I welcome other initiatives to achieve the same thing.
The Prime Minister went on to say that Imperial Innovations
“is going to advise on making sure this accelerator space is attractive to spinout companies from academia and beyond. Indeed, they will be encouraging some of their own brilliant companies to be based here.”
I very much welcome that. I look forward to those start-up companies being established.
Harriett Baldwin (West Worcestershire) (Con)
I am fascinated to hear the right hon. Gentleman make these points, because I do not remember you proposing a national insurance cut. Indeed, you went to the polls with a national insurance increase.
Mr Deputy Speaker
Order. I was not in the Treasury. I am getting a lot of your blame, and I do not like it.
Stephen Timms
I reassure the hon. Lady that when I was in the Treasury, I put an enormous amount of effort into supporting exactly this kind of initiative. I supported the Thames Gateway initiative specifically, as well as other regeneration initiatives.
The Government are now saying that they will not give grant funding, but instead will provide incentives. This is our one opportunity to boost the incentives for establishing the kind of business that the Prime Minister wants in east London, and it will be forgone unless the amendment is agreed by the House this afternoon.
I do not know exactly how things work in the Conservative party. Who speaks to whom, and who is on whose side is all closed to me. It may be that the Exchequer Secretary feels that he does not need to take much notice of what the Prime Minister says. Perhaps he speaks to other people in his party. Let me therefore point out that it is not just the Prime Minister who wants the initiative to go forward. I point him to what the Mayor of London said—perhaps he takes more notice of him than the Prime Minister, I do not know. The Mayor said:
“we can and must do more to cement our position as a global magnet”.
He went on:
“the Olympic and Paralympic Games will bequeath to London a vibrant new business quarter in the east of our city. We must do everything we can to support its development”.
This afternoon, we have the opportunity to do something to support the Mayor of London’s call to develop the vision set out by the Prime Minister. We must not let this opportunity pass us by.
Perhaps the Exchequer Secretary does not take much notice of what the Mayor of London says, either—again, I do not know about that. If that is the case, let me point out to him the position of the Department for Communities and Local Government. Its website states:
“The Government is committed to making a success of the Thames Gateway…we will promote incentives to invest and develop in the area, instead of grant funding specific projects.”
That returns me to the point that I made a moment ago in response to the hon. Member for West Worcestershire (Harriett Baldwin). We understand that the Government are not now willing to contribute grant funding. We disagree with them about that, but are told that there will instead be incentives to invest and develop. Here we have an opportunity to provide just such an incentive. As far as I am aware, the Government have not come forward with any other incentive, and we can provide one along the lines of the policy that the DCLG has set out. We should take that opportunity, and I hope that the Exchequer Secretary will do so this afternoon by accepting the amendment, so that we can provide an incentive in an area that has been so specifically identified by the Prime Minister, the Mayor of London and the DCLG.
The DCLG website also states that the Government will
“work with other departments to identify how their programmes bear on the Thames Gateway and need to be adapted”.
The initiative in the Bill clearly needs to be adapted to fulfil the Government’s policy for the Thames Gateway. I hope that the Minister will tell us what representations he has received from the DCLG, because it is an extraordinarily disjointed approach for one Department to say that it will introduce incentives and initiatives in one area and for the Treasury to take not a blind bit of notice and send all the incentives somewhere completely different.
The previous Government used to talk about “joined-up government”, and indeed we made important progress towards achieving it, so that all the different parts of Government were pushing in the same direction towards the same goal. Here we have a case in which the Prime Minister, the Secretary of State for Communities and Local Government and the Mayor of London are on one side, and the Exchequer Secretary and his colleagues are on the other. I invite him to support what his right hon. and hon. Friends are saying, and not to stand aloof from the policies of the Government of whom he is a member. The Treasury should not be an island, cut off from everybody else and doing its own thing without talking to others or supporting what they are doing, but that seems to be the position with this Bill.
I invite the Exchequer Secretary to accept the amendment and agree that the incentive should be applied in places in which the Prime Minister has so clearly identified its importance.
Sheila Gilmore
As a Member from Scotland, I might be expected to give the Scottish whinge about how everything goes to the south-east and nothing comes to Scotland. I am not going to do that, because the way in which the Bill has been constructed has not been well thought through. It is not clear, at least to me, what are the intentions behind parts of it and what set of policies it is meant to fulfil.
Is the Bill about helping areas with high levels of unemployment, some of which have never fully recovered from previous recessions, or helping areas with high levels of public sector employment, which we anticipate will suffer greatly from what will happen over the next couple of years? They are not necessarily the same places. The constituency of my hon. Friend and neighbour the Member for Edinburgh South (Ian Murray) is at the top of the list provided by the Library of areas with the highest public employment. Most people would think that large parts of that constituency are fairly affluent, because the public employment is, I suspect, largely at the university. It is perhaps not perceived, certainly in Edinburgh or even in Scottish terms, as in particular need of employment support. My hon. Friend, who is sitting on my right, probably disagrees.
We must decide what we are trying to achieve. I am very persuaded by what I have heard from many colleagues, particularly in London but also in other parts of the south-east, which has a long history of difficulty. The south-east is by no means all affluent. It is important to create employment in the parts of London and the south-east where unemployment is high. Those places are suffering many problems and are now affected by the cuts in public expenditure. People there are being told that they may have to move because their homes are too expensive for them. Many things are coming at those areas, and I am persuaded by my colleagues’ words and by what I have seen in London that there is a need to boost employment in many places.
I am not convinced that the particular cut of the cake for which the Bill provides is the best. I am not clear about the reasons for it. On Second Reading and in Committee, it was suggested that it was done to target places that need help most. I do not think that that is necessarily the case. At other times, it was suggested that we have to do what the Bill proposes because we cannot act everywhere—that would cost too much. We are then back to the arguments about the need to reduce the deficit and the speed at which that has to happen.
However, the best way in which to get out of recession is to grow the economy and create jobs, and it is important to do that everywhere. I appreciate that, in terms of the amendment, we cannot ask for further expenditure at this stage, although we could review the position in later years. However, tax loss could be recouped quickly if new businesses grow and employment increases. It is important to build employment throughout the country. There is no particular reason for taking the route that has been suggested.
We are constantly told that we have to act in this way because the country is in such a mess and we must reduce the deficit more quickly. Labour Members do not accept either the Government’s description of how and in what circumstances the deficit arose, or their prescription. We must build employment and provide the economic stimulus that we need in various ways—the scheme is only one method; there are many others. National insurance contribution relief is only one small, albeit important part of a bigger picture.
We need a continuation of the policies that, in early 2010, meant that unemployment did not rise as high as had been predicted and that the deficit was falling more than had been predicted before the election. It is not true to say that the deficit was increasing—it was falling under our policies. The growth in various quarters of 2010 was the result of the economic stimulus package that we put in place. We should continue the economic stimulus. National insurance contribution relief is one small way of doing that and, in my view, it should be country-wide.
Kelvin Hopkins
I strongly support the amendments, which my right hon. Friend the Member for Delyn (Mr Hanson) moved so ably. As it stands, the Bill has crude, arbitrary and unfair discrimination built into it. The amendments would remove the unfairness and discrimination at a stroke and turn the measure into something that we could all happily accept.
I have to declare an interest: my constituency is in one of the excluded areas. The proportion of public sector employment in Luton North puts it at the top end of the table—number 48 out of 650 constituencies. Some 41.2% of employment in my constituency is in the public sector, so it will suffer substantially as a result of the Government’s cuts in public spending. If 450,000 jobs go nationally, we could be talking about 1,000 jobs in my constituency at the very least. Already it is suggested that 500 jobs might be going in Luton as a result of the cuts, and a higher proportion of those will be in Luton North because of the degree of public sector employment there. I therefore have a vested concern and a constituency interest.
I am more concerned, however, about the overall principle, which will affect so many other people unfairly. My right hon. Friend the Member for Delyn suggested that because of the likely decline—certain decline, I think—in economic activity and rising unemployment, take-up will be much lower, owing to the fact that far fewer businesses will be formed in an atmosphere of the economy entering recession, with jobs being lost in both the public and private sectors. If the economy were expanding, of course, we would expect many more small businesses to be created, and therefore a much higher take-up. The take-up will probably be well below anything that the Government anticipate, simply because the economy is going to enter—I believe—serious recession as a result of their policies.
It is strange that the Government have chosen the British standard regions to discriminate in this way. They have actually played down regionalism—they are abolishing the regional development agencies—and are diminishing the regions as a basis for policy in other areas, but they are using the standard regions as a basis of policy in this area. That seems to be contradictory. If we are to provide assistance to industry and employment, it would be preferable to target it much better and in other ways. Given that the Bill will work in such a way, however, the only fair approach is to apply it across the country as a whole. As my right hon. Friend the Member for Delyn said, the costs would not be so great of including the three regions excluded in the Bill and ensuring that every small business across the country has the advantage of the subsidy.
Neil Carmichael (Stroud) (Con)
Surely the whole point of the regional argument is that we should be focusing on the regions that need extra help to encourage the development of smaller business. On the hon. Gentleman’s point about the state of the economy, it is the growth of new small and medium-sized businesses that will boost the economy. That is what we want to encourage through this legislation.
Kelvin Hopkins
I thank the hon. Gentleman for his intervention, but the Government have chosen to play down regionalism by getting rid of RDAs, yet have chosen regions as a crude way of excluding certain areas from the policy in the Bill. Within those regions, of course, some areas really require assistance, and by any standards, Luton is one of those. We have seen a massive loss of jobs there as a result of the decline in manufacturing industry. Fortunately, we have an airport, public sector employment and so on, which has helped, but we have also lost a lot of jobs and need assistance more than most other areas not just in the south-east, but elsewhere in the country.
Stephen Williams (Bristol West) (LD)
The hon. Gentleman said that the Government have abandoned regionalism. It is true that RDAs are going, but they have been replaced on a more localised basis by local enterprise partnerships. If he and his colleagues have a really compelling case for investment in the Luton or greater Bedfordshire area, surely a bid to the LEP would benefit his town, even though it cannot benefit from the scheme in the Bill.
Kelvin Hopkins
I am strongly in favour of proper targeting, but the RDAs could do that: they could look at their regions, advise on which areas needed the most support and provide assistance in that way. I am in favour of targeting, but if we are to exclude areas, it should not be done regionally, because within regions there are areas that need strong support and other areas that need less support. As I said in earlier debates in the Chamber today, I would use that £1 billion in other ways and target it rather better. We in Luton feel unfairly discriminated against for the reasons that I have set out.
There is also a problem with regional boundaries, which have been mentioned before. In Committee I mentioned a regional boundary that goes right through a small conurbation not far from me, Leighton-Linslade. Linslade is in the south, in Buckinghamshire, and Leighton Buzzard is in Bedfordshire. We therefore have a conurbation that is split by the regional boundary. How will people in that small conurbation feel about one side of the town getting a benefit and the other side not getting it?
I think I have probably made my point, and others wish to speak. The Government have got this wrong. I hope that they will accept the reasonable amendments tabled by my right hon. Friend the Member for Delyn and make this a fair Bill that we can all support.
Mike Gapes
Allegedly, we are all in this together. If so, why is it that those of us in east London, along with people in the 21 authorities in the Thames Gateway, which include authorities in Kent, where there is not a single Labour Member of Parliament—they are only Conservatives—and those in Essex, are excluded from the package that we are discussing? We heard earlier today about the Maoist chaos of the Government’s regional policy. That is not the responsibility of the Treasury; it is the responsibility of its close allies and partners, and the Business Secretary. However, as we are all in this together, presumably the Treasury is also involved up to its neck.
We have also heard that, apparently, the Government are refocusing regional policy. Well, that regional policy refocus includes, in today’s measures, discrimination against poor people in poor communities. My right hon. Friend the Member for Delyn (Mr Hanson) spoke from the Front Bench about a number of boroughs and constituencies that have high unemployment—higher than the national average—and where, at the moment, there are also high levels of public sector employment. Those areas will take a disproportionate hit because of the measures announced in the comprehensive spending review and the Government’s policy to reduce, for ideological reasons, the size of the public sector so drastically and quickly.
So, we are not all in this together: some of us are in it much deeper than others. I suppose that we are a bit like the residents of Brisbane, Australia. When the tsunami or flood comes in, we hope that it will meet a certain ceiling point before going back down, and that the next day it will go no higher. Some people have a little footbridge or step to get them above the water, but others are pushed down below it. People in the small business sector in my community—in Ilford and Redbridge, which is a Conservative-Liberal Democrat borough—will not benefit from these measures. When it comes to benefits, we are not in this together with those in Tatton or elsewhere. We will lose out.
Other Members represent poorer communities than mine, but I have wards in my constituency with very high unemployment. I also have a very diverse community. One of the interesting features of excluding London from the proposals is that it is not only discriminatory geographically; it could also be discriminatory ethnically. That needs to be taken into consideration, given the way in which the measures disproportionately affect different communities in different parts of the country.
I do not want to delay the House for long. I spoke on Second Reading in November. I hoped at that time that the Government would come forward with some changes to their proposals. I hoped that they would listen to the logic, but they did not. We have already had Committee stage and Report brings us to today.
The Thames Gateway Partnership for London, Kent and South Essex recently wrote to Members, urging us to make representations to the Minister—[Interruption.] He might wish to listen to this. It wanted us to write to him to point out the discriminatory nature of the proposals and to urge the Government, even at this stage—I say again, even at this stage—to see what they can do to help the Thames Gateway authorities. The partnership pointed out that there are 3.5 million residents in the Thames Gateway local authorities area and that it believes that in
“excluding London and the South East from the regional freeze on National Insurance contributions the government is failing to take proper account of local economies, particularly the challenges faced by the Thames Gateway growth corridor.”
My right hon. Friend the Member for East Ham (Stephen Timms) has already referred to that.
The Bill is damaging to a potential growth sector of our economy. The Thames Gateway is part of the future of London as a global city. It is vital to the prosperity of our nation, yet this short-sighted, quasi-Maoist Government are operating in such a chaotic way that they cannot see the damaging consequences of what they are proposing. Next year, I hope, they will come seriously to regret what they are doing. I urge all local authorities in the Thames Gateway area to look very closely at the Division lists for today and to register which Members from Essex, Kent and London went through the Lobby in favour of such discrimination against London, Kent and Essex and which Members voted against it. Then, hopefully, those local authorities, councillors and communities will hold those Members to account.
Dr Creasy
I want to talk about three things in my comments on the amendment, the first of which is the test set by the Opposition about what this policy is designed to achieve. Secondly, I shall explain why the amendment is needed to ensure that the policy achieves what is intended. Thirdly, I shall say a little about the evidence base for the policy, which was a matter of great concern to me in Committee—and the Bill is still found wanting in that respect. I shall show how the amendment addresses some of those challenges.
The test we set for this policy and, indeed, for this Government, given our concerns about their economic approach, relates to jobs. At the heart of what we do as a Parliament must be the concerns of our constituents, and I know that one of the main concerns of my Walthamstow constituents and those of many other Members is jobs. How are people going to keep a roof over their heads, keep their families fed and ensure that their families stay together? Those concerns relate to the jobs people have and the support we can give to them in their jobs. Job creation is, as my hon. Friend the Member for Edinburgh East (Sheila Gilmore) ably set out, absolutely key to how we judge this policy.
In that context, the symptoms are not good. We know that unemployment is rising and that it has hit 2.5 million—it has been suggested that it is likely to increase further, especially in areas currently excluded from this policy—so job creation is a critical aspect of what the Government can and should be doing. Six people are chasing every vacancy in this country; if there were ever a time when we needed to create more jobs for which people can apply, it is now. We cannot have a jobless recovery; that is not sustainable. Indeed, the cost to the public purse of doing so would be tremendous. It is worth noting that every extra 100,000 people on the unemployment register is half a billion pounds of welfare expenditure that has to be found. There is a great cost to us of not doing something about rising joblessness.
We therefore look at this policy and ask how it will meet the test that the Minister set. In Committee, he said that the purpose of the policy was specifically “the creation of jobs”. It was to
“help the wealth-creation sector in regions currently reliant on the public sector”. ––[Official Report, National Insurance Contributions Public Bill Committee, 2 December 2010; c. 47, Q167.]
That is the second test that we put: does this policy affect not the regions but the people it is designed to help? If we look at the people test, we see that, as currently constructed, the policy does not meet it; it fails on that basis.
Many Members have named areas in which some of the public sector workers most affected by the Government’s cuts are living. My constituency is already among the top 100 in the unemployment league. Our current unemployment rate is 8.5%, and it is rising as we speak. About 24% of people living in Walthamstow work in the public sector. They are losing colleagues, and they are worried about themselves. My surgeries are full of people asking for help after receiving redundancy notices. I ask the Minister what I should tell those people. What will this policy offer them? The task of Government is supposedly to support people and create jobs in the economy. What can I tell those people in Walthamstow who work in the public sector and risk losing their jobs, or have already received redundancy notices?
Ian Murray (Edinburgh South) (Lab)
As was pointed out by my hon. Friend the Member for Edinburgh East (Sheila Gilmore), my constituency is at the top of the league in terms of public sector jobs, yet unemployment is less than half that in the constituency of my hon. Friend the Member for Walthamstow (Dr Creasy). Does that not highlight the discriminatory nature of the Government’s policy?
Dr Creasy
That is a very good point. I am talking about the public sector workers who are most at risk of redundancy. The people who live in my constituency may not do the same jobs as those who work in the public sector in Edinburgh. They are teaching assistants, nurses, and people working in inclusion units and Sure Start. They are losing their jobs because of the cuts that are being made in local and national Government. People such as civil servants—who knows, perhaps they include the admin assistants in the Minister’s offices—fear for their jobs. They are looking to the Government, who say that the private sector will pick up the pieces following the cuts in the public sector, and they are asking how that will happen. In my region, the answer is very unclear.
This policy could be part of the remedy, and that is the aim of the amendment. It asks, “How can we generate jobs? What are the motives that lead people to set up businesses and industries that generate jobs in the private sector?” Many of us share an interest in whether the private sector could generate jobs as part of the recovery. We think that the policy has failed that test, and needs to be amended. Excluding London and the south-east means excluding a key wealth-creating element of our national economy, and we feel that that is remiss.
I also think that the Government have been remiss in excluding the voluntary sector and charities, and in Committee I supported amendments seeking their inclusion. According to the National Council for Voluntary Organisations, if the voluntary sector could benefit from the change of policy on national insurance holidays, an extra 2,500 charities could be created. Perhaps even more could be created through the big society, given the interest in how the voluntary sector could work in public sector commissioning. Cruelly, however, they have been excluded. The questions “Who are the people who are generating jobs?” and “Where are the places where people who are losing their jobs in the public sector can best find employment in future years?” have not been answered; the test has not been passed.
I ask the Minister to consider amending the policy in the way we have suggested, not least on the basis of his own evidence. He will recall that, in Committee, I was particularly concerned about the way in which the Government had constructed the policy, and the evidence on which it was based. He himself has described it as an uncertain benefit, and his officials have admitted that they did not have much evidence on which to assess whether they could reach all the people whom they wanted to reach, or involve all the businesses that the Minister had hoped to involve. In the impact assessment, the Minister said that he hoped that the policy would help 400,000 businesses, but he has admitted today that only 1,500 have applied so far. In Committee, one of the officials suggested that the number of applications would increase at the remittance stage, but that is not job creation. The jobs would have already been created, and people would be applying retrospectively for remittances. That suggests a challenge to the status of the policy as a job creation measure.
According to the Minister’s own analysis, the inclusion of London and the south-east might well make possible the creation of an extra 300,000 businesses. Before he says that there is no extra money, let me suggest to him that the creation of those extra businesses might enable him to meet his target of 400,000 over the three years. He could then return to the House and reassure all of us who are concerned about the efficacy of the policy that it had succeeded in generating new business in the United Kingdom and forming a key part of our recovery. Let me also encourage him to consider the extra tax take that the Treasury would gain as a result of the creation of all those new businesses, as well as the fact that all the extra national insurance funds could be spent on the national health service or on pensions, as he desired. There are many benefits in considering how the Bill could be amended to include London and the south-east. Let us think about all the people who would be affected by the jobs that this would create, the money it would bring into our national Exchequer and, above all, the economic recovery it could help drive.
I therefore hope the Minister will accept the amendments and acknowledge that they have been tabled in good faith. They are motivated by a genuine desire to make sure this policy is effective. Whether or not we agree with the Government—and we certainly disagree with many of the changes they want to make—I hope the Minister will understand and share our concern that jobs must be the first priority of any British Government in the current economic climate.
Gavin Shuker
I believe these amendments would make a real and fundamental difference to people in my constituency who wish to start their own businesses—to people who are creative and dynamic, and who want to have the opportunities that come from not being at a disadvantage to those running businesses in other parts of the country.
This Bill seeks to bring about a social benefit. There is a reason why national insurance contributions are going up. They are going up to help bring down the deficit, which is important. The structural deficit needs to be tackled over time. There is a further aspect to the Bill, however: it is also about trying to rebalance the economy.
The Minister has been very clear about his desire to see public and private sector employment rebalanced in various regions, but I personally do not have a problem in this regard, because for me a job is a job. I do not think people in the public sector should be in any way disadvantaged or looked down on because they work in the public sector rather than the private sector. We accept that private sector jobs should be generated, however, because Opposition Members believe that economic growth is the way to tackle the deficit, not slash-and-burn economics.
We accept that under the Government’s plans to reduce the number of public sector workers by about 500,000, those of us in areas with high public sector employment will need more businesses coming up and through. My point is simple, therefore. Across wide swathes of the greater south-east, including the Luton seat I represent, there are areas of very high public sector employment and high unemployment, and the Minister would do well to accept these amendments in order to ensure that we are not disadvantaged, which we are. That would be a positive step.
I agree that legislation has a role to play in helping to moderate behaviour. We want more businesses coming up and through. In Committee, the Minister made a number of salient points about the complexity that might be added by including regions such as the greater south-east, but we are not just in politics to administrate. We are in politics to make a difference. We are in politics to ensure that everyone in this country has a job they enjoy and through which they can generate both wealth for their family and self-worth, and it is unfair to the people in my constituency, and to others in the east, the south-east and London, that they should be exposed to this great disparity.
We in Luton have a number of particular issues with this proposed legislation. First, we have great transport links, which is a positive. It is why businesses like to locate in Luton. However, those same transport links also allow people to travel outside Luton to set up their new businesses, meaning that people in Luton who need a job cannot find employment. We have a young and creative work force; they are the kind of people who want to get stuck into building new businesses, and I am constantly amazed by the range of new businesses I see in my constituency. They are innovative, professional young people who want to establish businesses and set out on their own path, but they are going to be disadvantaged by these measures.
Luton has areas of deprivation, and we also have high public sector employment; that is certainly the case in the constituency of my hon. Friend the Member for Luton North (Kelvin Hopkins), as well as in Luton South. It would be deplorable to say to the people in my constituency that if they move 15 or 20 minutes up the train line or on the roads they will get a £50,000 golden hello, which they would not get if they set up their business in Luton.
Labour Members who represent seats in the greater south-east are willing to make a stand. We want to stand up for our constituents and constituencies, and to talk about our creative people. I hope that the Government will support these amendments, and that Conservative Members will want to stand up for their constituents as well, and say that this disparity is wrong.
In Committee, the Minister discussed why this exemption is being applied and spoke of a constrained budget. We could tackle that in a number of ways, and the amendments take account of them. Obviously, we could address the amount of time on the scheme, the number of businesses that engage in it, the percentage rate of take-up and the number of employees that the businesses take on. I urge the Government to re-examine the matter and find a way to include the greater south-east in this arrangement.
I make my final point to ensure that we are not in any doubt. The Committee took evidence from the assistant director of Her Majesty’s Revenue and Customs, who made it clear that it is possible to check where people are in the scheme. There was a high level of postcode accuracy about businesses, so it would be possible to re-examine this. As his first point in thinking again, I urge the Minister to consider the greater south-east as a region. It has great disparity between parts and constituencies, containing areas of deprivation, areas with high public sector employment and areas with high unemployment. He should say that those areas are just as deserving as the others represented here today.
Mr Gauke
In this group of amendments, the right hon. Member for Delyn (Mr Hanson) has returned to a matter that was debated extensively on Second Reading and in the Public Bill Committee. I commend him on his persistence, but I expect that he will not be surprised with my response, given the Government’s position, which I have set out in the earlier debates.
The amendments relate to the regional nature of the national insurance contributions holiday, a matter that was raised during all the earlier stages of our consideration of this Bill. Amendments 1, 2, 3 and 4, if taken together, would make the holiday a UK-wide scheme. The NICs holiday is aimed at helping the formation of new businesses employing staff in those countries and regions most reliant on public sector employment. The reason why the Greater London, east and south-eastern regions are excluded is that the proportion of the population in public sector employment is lower in those regions as a whole than in any other part of the UK. We also estimate that a national scheme would increase the costs by about 70%.
Joan Ruddock
Before the Minister goes into more detail—I warn him that I might seek to intervene again then—can he tell us whether any assessment was made of the impact of this on ethnic minority communities? The real observation has been made that the proportion of ethnic minority people who are great entrepreneurs and who wish to set up a business may well be greater in London and parts of the south-east than in some other regions.
Mr Gauke
Of course the Treasury examined all these matters in respect of its policies as a whole, its budget announcements and so on. I must point out that although the excluded region as a whole is diverse, the areas that will be included are equally so. I am not strongly persuaded by the arguments that have been made about this being discriminatory. When listening to these arguments, I was struck by the fact that it is worth reminding the House of what we are seeking to do. We are seeking to reduce the amount of NICs that will be collected, because we believe that in the way that we are doing so, we will be able to help to encourage business—
Mr Gauke
I want to develop this point, but I shall give way after I have done so. We want to encourage the creation of new businesses and more jobs. That issue has been raised in some of the earlier remarks. The hon. Lady discussed the importance of jobs and the hon. Member for Ilford South (Mike Gapes) discussed the impact that failing to reduce NICs might have on the Thames Gateway. The conceit of the speech made by the right hon. Member for East Ham (Stephen Timms) was that there was some division between the Treasury and No. 10. I do not know whether he was thinking of his own lengthy period in the Treasury rather than of the current circumstances, but let me assure him that there is no great tension between the Treasury and No. 10. I know that that has not always been the case in recent years.
Mr Gauke
I will give way on that point, but the central point I want to make is that all Labour Members fought the last election—indeed, the right hon. Gentleman was the Minister responsible—on a policy of increasing national insurance contributions throughout the entire country, which would have done harm not just to the Thames Gateway, east London and Walthamstow, but across the country.
Stephen Timms
I am grateful to the Minister for giving way. On 6 January, the Prime Minister spoke—I think at No. 10—about
“nurturing small clusters of innovative companies and web start-ups, as we are in the new Tech City—our own Silicon Valley—in East London.”
Why is the Minister not contributing to this nurturing of start-ups in east London? This is his one opportunity.
Mr Gauke
The Government are doing a great deal to help London. We need only consider the transport infrastructure as well as the fact that we are protecting investment in Crossrail, in upgrading the tube and in Thameslink. We are taking a number of steps. I think it is astonishing that Labour is complaining about the fact that some businesses will not receive a reduction in their national insurance contributions when its policy at the last general election was that businesses should be paying more.
It is very helpful to look at the well-remembered interview with the shadow Chancellor on the “Today” programme on 4 January, when he said that we need to get the structural deficit eradicated and that there was no argument about that. He recognised the existence of a structural deficit and did not particularly differ from the Government’s position on the size of the structural deficit. There was a disagreement on timing—I think he disagreed with his own policy on timing, but he disagreed with the Government’s, too. He said that the balance between public spending cuts—we do not know which of our proposed public spending cuts the Opposition support—and tax rises should be 60:40. I think that the proportion for tax rises was 40%, although it was not entirely clear.
The shadow Chancellor was asked by Evan Davis:
“In principle you would like VAT not to go up and instead, at some point, not now, National Insurance to go up by more?”
The shadow Chancellor’s response was, “Yes.” He said that that was the Labour party’s argument at the general election and that it was still its argument now, because national insurance is a better tax. That is the Opposition’s position—they want to increase employers’ national insurance contributions. They oppose all the cuts and they oppose our VAT increase, but they want to increase national insurance contributions. Yet when we have a Bill in this House that provides a reduction in national insurance in some areas, their biggest complaint is that they want to do it in more areas. How incredible is that? How lacking in coherence is that policy?
Mr Gauke
The right hon. Gentleman knows the state of the public finances that we have inherited. We have pursued the policy that we set out in our party manifesto before the general election and have reversed the most serious effect of Labour’s jobs tax. The Opposition’s policy is to go further—they want a bigger jobs tax. The increase in the rate for employers’ national insurance contributions, which is mitigated by the increase in the threshold, involves the rate going up from 12.8% to 13.8%—I say that for the benefit of any Labour Members, including the shadow Chancellor, who are not quite aware of that. To raise the same amount of tax as the VAT increase would have done, Labour would have had to increase that rate not just to 13.8% but to 16.7%. What do hon. Members think that the impact on the Thames Gateway, east London and jobs in Walthamstow would have been if we had pursued that policy, which the Labour party believes in? It does not have much by way of economic policy, but that is one of them.
Ian Murray
Let me give the Minister a little of my experience as a business owner with up to 12 staff. Small entrepreneurs and people who run small businesses in Edinburgh are, like me, far more concerned about the impact on our businesses of the number of customers not coming through our doors because of the VAT rise than they were about any increase in national insurance that the Labour party proposed before the election. I would gladly pay £30 a week more for each member of my staff than have no customers left.
Mr Gauke
I do not want to reopen the whole argument on everything that should be done to reduce the deficit, but we have to get it down. I am not sure whether the Labour party grasps the need to get the deficit down, but there is no doubt that it has to be eradicated at some point—even the shadow Chancellor agrees with that. The Labour party believes that national insurance contributions are the best tax by which to do that, but all we have heard from Labour Members this afternoon is why they want a cut—and they want a bigger cut than we are offering.
Kelvin Hopkins
The chief economic adviser for the Chartered Institute of Personnel and Development has said that
“the VAT hike will prove a far more significant ‘tax on jobs’”—
to use the Government’s term—
“than the hike in…National Insurance contributions”.
That outside organisation estimates that 250,000 jobs will be lost because of the VAT rise.
Stephen Timms
Has the Minister received representations from the Department for Communities and Local Government about the inclusion of the Thames Gateway area in this incentive?
Mr Gauke
Not that I am aware of, but as the right hon. Gentleman knows, tax is a matter for the Treasury. I must say that the Thames Gateway would have been hit by a much greater jobs tax if the Labour party were in power.
Both today and in earlier debates, I have understandably been asked about take-up and whether there is a plan, if take-up is lower than expected, to expand the holiday to cover the whole of the UK. Let me reiterate to the House and Opposition Members that this is not just about cost; it is also about the policy rationale for the holiday, which is to target incentives on new businesses in regions with high levels of public sector employment. In their evidence to the Committee, representatives of the Federation of Small Businesses and the British Chambers of Commerce made it clear that the south-east is more resilient than the rest of the UK and that new business formation would not be harmed significantly because the holiday would not be available there. I should also mention to the House, and particularly to the right hon. Member for Delyn that all new and existing businesses in the south-east will benefit from the increase in the employers’ national insurance contributions threshold, which I assume the Labour party will oppose when we bring it forward, and from the reduction in corporation tax rates, as compared with the increase that Labour was going to bring in for small businesses.
Mike Gapes
The Minister refers to the FSB. Will he confirm that it wrote before Christmas saying that his proposal is
“a crude assessment as it does not account for areas within these regions that would really benefit from policies that would help bolster employment”?
That remains the position of the FSB.
Mr Gauke
That is the same Federation of Small Businesses that said that the Labour party’s policy to increase national insurance contributions would cost about 52,000 jobs just among its own members.
We have touched on the fact that labour markets are much bigger than ward, borough or constituency boundaries. It is not quite clear what the Labour party would do if it were to extend the scheme. Its policy seems to be that it would remove the scheme from some parts of the regions that would currently benefit. It is not quite clear how the Labour party would do that. I do not know—perhaps the right hon. Member for Delyn could explain—whether the plan is that the scheme would be available in Flint but not in Prestatyn. I am not quite sure what the Labour party has in mind. Perhaps it thinks that the scheme should be available in Oldham but not in Saddleworth. I really do not know what the Labour party wants to do with the scheme, but it clearly wants to increase national insurance contributions, not to reduce them, despite what we have heard this afternoon.
The NICs holiday is targeted at regions and countries with the highest proportion of public sector dependence, to encourage new businesses to start up and take on employees. Expanding the holiday to the whole economy would undermine the policy rationale. I therefore ask the right hon. Member for Delyn to withdraw the amendment.
Mr Hanson
We have had a very good debate, and my right hon. Friend the Member for East Ham (Stephen Timms) and my hon. Friends the Members for Walthamstow (Dr Creasy), for Luton South (Gavin Shuker), for Ilford South (Mike Gapes) and for Luton North (Kelvin Hopkins) have put the case strongly for their constituents to be included in the scheme.
The scheme does not do what is says on the tin. It will not fulfil the Minister’s objectives. It will not help regions and areas with the highest public sector employment. I reiterate for the House’s benefit that 23 of the top 100 constituencies in the country for public sector employment will not benefit from the scheme. The Minister knows that we have suggested alternatives, and my hon. Friend the Member for Luton South mentioned a range of ways that we could cut the cake to include London, the south-east and east, so that those areas of high deprivation with high public sector employment could benefit from the scheme. I am not satisfied with the Minister’s response. We need to ensure that the scheme is fair and equitable. I therefore intend to press the amendment to a Division.
Question put, That the amendment be made.
Mr Gauke
I beg to move, That the Bill be now read the Third time.
We have reached the final stage of the House’s deliberations on the National Insurance Contributions Bill. The first part of the Bill, on which we perhaps spent less time, introduces a 1% increase in the class 1 employee and employer and class 4 self-employed rates of national insurance contributions from April this year. As some hon. Members will remember, that was announced by the previous Government in the 2009 pre-Budget report. Although not part of the Bill, we intend to reverse the impact of the previous Government’s tax on jobs by increasing the employer national insurance threshold and income tax personal allowance. Those changes are part of a progressive package of measures that shifts the burden of Labour’s taxation away from lower earners and lower-paid jobs.
First, I remind the House that the provisions will increase the employer rate from 12.8% to 13.8%. That is a fact I am sure we should all get right. That 1% increase will also apply to class 1A and 1B contributions that are paid by employers on benefits in kind and pay-as-you-earn settlement agreements. Secondly, the Bill will increase the employee main rate from 11% to 12%. The same 1% rise will also apply to class 4 contributions paid by the self-employed, which will rise from 8% to 9%. Thirdly, the additional rates of employee class 1 and self-employed class 4, payable on earnings or profits above the upper earnings limit and the upper profits limit respectively, will rise from 1% to 2%. Compared with the plans that the Government inherited, more than £3 billion a year is being returned to employers through the threshold rise, and even more to individuals through the increase in the personal allowance.
Our actions will mean that some 880,000 low earners in the UK will be taken out of income tax altogether. Around 950,000 low earners will no longer pay national insurance contributions, although their benefit rights will be protected. Employees earning under £35,000 a year will pay less income tax and national insurance contributions and employers will pay less national insurance contributions on all workers earning less than £20,000 a year. We are keen to reduce the burden in this area although, as I set out earlier, it appears the shadow Chancellor wants substantially to increase that burden.
The regional employer national insurance contributions holiday for new businesses, contained in the second part of the Bill. That provision encourages employment and enterprise in the areas of the UK that are most dependent on public sector employment. Our aim is to help those regions in the transition to a more sustainable economic model based on private sector growth and investment. That is why we are introducing a holiday from employer national insurance contributions for qualifying new businesses in targeted countries and regions. The measure will reduce the costs of taking on staff and provide support in the vital early stages of business development. In order to ensure affordability, the holiday is limited to the first 10 employees taken on in the first year of business. For each of those workers, the holiday will last for 12 months, unless the closing date for the scheme—5 September 2013—is reached before the 12 months have elapsed.
In the Budget, we estimated that new businesses would save around £940 million of national insurance contributions over the next three years, giving them the ability to hire more staff, expand their business and invest in the recovery.
Nick de Bois
Will the Minister advise whether he envisages any problems from perhaps less than scrupulous companies that might go into pre-pack administration? Would they be able to claim the benefit if their new business started after a pre-pack administration, for example? If that is the case, will he take some measures to consider what can be done about this?
Mr Gauke
As we discussed in earlier stages of the debate, it is right that we look at this closely to see that the scheme applies where we believe it should, that we do not have artificial creations, that there is a proper need for this, and that the compliance capability of HRMC to address the matter is adequate, and we are ensuring that that happens.
I thank the many right hon. and hon. Members who have participated in the debates on the Floor of the House and in Committee. We have had a thorough examination of many of the arguments, perhaps occasionally at the risk of repetition, and we may have another opportunity for that later—who knows? I am grateful for the constructive way in which the Bill has been scrutinised by Members from all parties.
The Bill enables the reduction of taxation of labour nationally, and it provides extra support in targeted areas. It is good for growth and good for jobs, and I commend it to the House.
Mr Hanson
This is the fourth Treasury Bill that I have dealt with as Opposition Treasury spokesman in four months, and it is the fourth Bill that has reached this stage without a single amendment being passed, so I am continuing with my fine record of scrutiny but little success in making changes.
I want to be clear at the start that despite concerns about some aspects of the Bill, we support the broad thrust of the measures before us. I note, however, that despite the rhetoric about national insurance that occurred at the general election, the Bill takes through the national insurance contribution increase of 1%. I accept that the Minister has included in the Bill changes to the employers’ threshold, which will make a contribution towards those costs. However, even after that has taken place, the Bill still brings in a rise that will cost businesses about £1.4 billion a year. I make no complaint about that, because we proposed to do it at the election; my complaint is that there has been a lot of smoke and mirrors from the Government in their approach to national insurance.
Mr Gauke
As the right hon. Gentleman will know, the policy that we are pursuing is entirely consistent with what we set out in our manifesto. Given the position of his party and the shadow Chancellor on this, presumably they will be opposing the increase in the threshold for national insurance contributions that will be introduced very shortly.
Mr Hanson
The electoral rhetoric does not match the actuality of this Bill. The Minister has rightly said that threshold increases were trailed in the election manifesto, but £1.4 billion of extra expenditure on businesses is still being put forward in the Bill. I make no complaint about that, as it formed part of our manifesto commitments. However, we should examine the electoral rhetoric. During the election the Conservatives said, “Let’s Stop Labour’s Jobs Tax”, but they are still executing, through this Bill, some £1.4 billion-worth of extra costs on employers; again, we have no objection to that. We will look at all these matters in due course and make our judgments when we see the proposals that the Government bring forward. However, given what was said at the election, there is still a sting in the tail for employers in the small print of what the Minister has brought forward today.
My right hon. Friend the Member for Edinburgh South West (Mr Darling) announced in the pre-Budget statement on 9 December 2009 that we would increase national insurance contributions by 1%. However, in this Bill there is not only that increase but, side by side with it, the 2.5% increase in VAT that the Government have introduced. The Minister has put an extra £1.4 billion on national insurance and, at the same time, increased VAT. At least we were clear about our objectives in the election. However, we will support the Bill today.
We support the national insurance holiday, which engendered most debate in Committee and on the Floor of the House. We think it is important to consider measures that encourage business, but we disagree with the exclusion of London and the south-east and eastern regions. We have made the case on that issue and I hope that the Exchequer Secretary will reflect on it.
This debate has been very positive. I thank my right hon. and hon. Friends who have contributed, particularly those from London and the south-east and eastern regions. I thank my hon. Friend the Member for Nottingham East (Chris Leslie) and the Whip, my hon. Friend the Member for West Ham (Lyn Brown), for their help and support during the course of the Bill. We will not vote against the Bill this evening, but we will undoubtedly return to the scrutiny of it in another place shortly. Some of the arguments bear further repetition in Committee and on the Floor of the House there. Finally, I thank the Minister for his patience and co-operation. I look forward to seeing him on numerous occasions in the future.
Gavin Shuker
I, like many hon. Members, have followed the debate extremely closely. When the changes were first announced in June, I authored an early-day motion that stated the inadequacies of the Bill for the greater south-east—the south-east, the east and London. On Second Reading, I flagged up my concerns and in Committee we looked at the evidence in greater detail. The Bill will have a real impact on my constituents, and on those of hon. Members from across the House. In particular, it will impact on people in the greater south-east.
Obviously, we accept the Treasury’s need for more national insurance income to sort out the structural deficit. Although we are not opposed to the legislation and will not press for a Division, I still have a number of concerns that it is important to place on the record.
First, I believe that the Exchequer Secretary’s motivation is confused. We have heard contradictory statements. We have head that it is about rebalancing the economy; we have heard that it was decided which areas should receive a holiday to match the price tag that was set for the policy; and we have heard that it is about simplicity. Clearly, it would be simplest to implement the scheme for all new businesses across the country, yet that is not the scheme we are looking at.
Secondly, I believe that the implementation of the scheme is flawed. So far, just 1,500 applications have been received. We all hope that every eligible new business will take up the scheme, but the target of 400,000 for the next three years seems a long way off, given the current trajectory. The simplest approach would have been a blanket scheme, and that would have been simple to communicate to new businesses. Certain groups will be disadvantaged by the holiday: the east, south-east and London will be disadvantaged, and, as was discussed in Committee, charities who employ people will miss out compared with businesses. Also, as we discussed earlier, the NHS, for which some of the money is hypothecated, will not benefit to the extent we believe it should.
Thirdly, I believe that the spin relating to the Bill has been conflated. The Exchequer Secretary said that he is not implementing Labour’s jobs tax. However, there is a 1% increase, and it is important for this place to acknowledge that. The scheme will have an effect on businesses in certain areas. Although we accept the need to find fair and just ways to reduce the deficit, I am worried about some of the rhetoric about public sector jobs. Public sector workers not only support their families but serve us. Whether a job is in the public or private sector, people should be able to have pride in it.
Finally, I believe that the analysis that comes out of the legislation will be flawed in a number of ways. We tabled amendments calling for a report and more information on the effectiveness of the scheme, but we will not receive the constituency-level data we would like. They would enable us to compare data for future reference, so that after, say, three years, we could consider how we might wish to implement the scheme again, whether it was worth extending or whether the time for which it was in place should be reduced. Instead, we will have to go through a laborious process of tabling parliamentary questions and will not be able to examine constituency-level data as a whole. That is a real shame.
The Exchequer Secretary says that in this case simplicity should outweigh justice and that the simplest way to balance the scheme is to exclude certain groups. I do not believe that that is the case, but we accept that there is a need for the scheme, and for that reason the Bill will go forward tonight.
I have one question for the House, though: what is just about business men and women in my constituency, an area with deprivation, losing out compared with those setting up businesses in other constituencies just 20 minutes away up the train line? I do not believe that there is a whole load of justice in that. I ask the Minister to think again as the Bill proceeds, and I know that if he does, living where he does, he will receive the thanks of a grateful constituency.
Jonathan Edwards
In general we support the Bill, not because we think it will make much of a difference—as we have heard, the take-up has been far from promising so far—but because it is recognition by the UK Government that the UK’s economy is geographically unbalanced and that action needs to be taken to address the problem.
The gross value added of the communities that I represent is 20% of that of inner London, something that clearly has to be addressed. Under the last Government, 10 jobs were created in the south-east of England for every job created in the north and the midlands, and I fear that Wales fared even worst. One of the great themes of the last Government was the concentration of jobs and money in the south-east and London, with massive growth in the financial sector and the destruction of other sectors of the economy, particularly manufacturing. That led to huge wealth polarisation on both a regional and an individual basis, and it was refreshing to read today in The Independent that the Leader of the Opposition at least recognises that damaging legacy.
We should also consider other areas that need action. The UK Government have been talking about the creation of enterprise zones in Northern Ireland and the use of different levels of corporation tax to stimulate private enterprise in areas of the state that are lagging behind. We will therefore support the Bill.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Immigration (Sivarajah Suganthan)
(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
Stephen Williams (Bristol West) (LD)
This is a petition concerning my constituent Sivarajah Suganthan. Siva is a native of Sri Lanka, but he has lived in the UK since he was 14 years of age and is now aged 26. The case of that particular asylum seeker has aroused much concern right across the city of Bristol, and I should particularly like to thank the Bristol Refugee Rights centre for co-ordinating and collecting the signatures of approximately 800 people in the city and further afield who wish to express their support for Siva.
The petition states:
The Petition of residents of Bristol West, and others,
Declares that the Petitioners support Sivarajah Suganthan, a fellow Bristolian who has previously been detained in Campsfield detention centre, awaiting deportation to Sri Lanka.
The Petitioners therefore request that the House of Commons asks the Home Secretary to reconsider Sivarajah’s case.
And the Petitioners remain, etc. [P000877]
Careers Advice (Schools)
(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Esther McVey (Wirral West) (Con)
I am delighted that this important matter is being debated in the Chamber today. However, as it is an important and complex matter, I would very much like this to be the start of a discussion on careers advice for all ages, so that we can create a much greater awareness of the issue as a whole.
It is because of the scope of the topic of today’s debate that I shall focus on careers advice for those at school and the importance of specialist careers professionals as a separate practice and distinct occupation, pushing the sector towards professionalism under a unified body and voice. At the outset I welcome the Government’s plans for an all-age careers service, but it is important that all Members can discuss the matter before any further steps are taken. I therefore welcome the time that we have been given in the Chamber this evening.
It is an apt time to examine careers advice for the young given that the latest figures for those not in employment, education or training are at an all-time high. At the end of the third quarter in 2010, the figure for those aged between 16 and 24 in England was 1.026 million. Of those, 160,000 are in the north-west—the highest figure of any of the UK regions. Of particular concern to me is the fact that, in Wirral, 16.8% of those aged between 16 and 19 are not in education, training or work.
Added to that is the ever more sophisticated array of choices of job, training, education and routes to work. It requires the accompanying sophistication of knowledge and know-how to enable students, at the right juncture in their lives, to choose the right subject so as to follow the right education path, preferred course or apprenticeship training, or fill out the right job application form. It is not only providing up-to-date information that will allow every student the best opportunity to pursue subjects and interests that best suit their talents and aspirations, but ensuring that young people and their parents are well informed about the potential of the decisions and the positive ways in which they can influence their future working lives.
All young people, of all backgrounds, abilities, interests and ambitions need good careers education information, advice and guidance so that they can achieve their best and fulfil their potential. However, that is currently not happening with sufficient consistency for every child throughout the country. That has led to comments such as those by the Local Government Association, which said that careers advice was found to be “not useful” by
“the majority of young people”.
The Institute of Career Guidance said that the provision of careers services in England was “patchy and inconsistent”. Although the National Foundation for Educational Research recognised that Connexions was making a significant contribution, it was for a small number of people in a very specific situation. Again according to the LGA, the majority of young people were
“more likely to ask their parents, teachers and youth workers”
for careers advice than to seek formal careers services.
If those points are added together, we have a lot of young children who are not getting the service that they require. I therefore agreed wholeheartedly with the Secretary of State for Education when he said at the annual conference of the National College for Leadership of Schools and Children’s Services in June:
“We are clearly, as a nation, still wasting talent on a scale that is scandalous. It is a moral failure, an affront against social justice which we have to put right”.
The question for all hon. Members is how we are going to put that situation right. How will we find a system that works for all children of all abilities from all backgrounds? How will we provide a flexible system with underpinning standards and requirements? Today, I will make a few suggestions, welcome others, and await the Minister’s replies.
I want to make it clear at this point that, when I pass comment on the failings of the current system, I am in no way passing comment on the thousands of careers staff, educational welfare or youth service staff, who work tirelessly throughout the year, dedicated to their chosen profession. The debate tonight is a constructive overview of careers advice; it is not a question of the staff, but a look at the current system, asking how best that focus should be directed, as well as how best the staff, resources, infrastructure and intelligence already in place can be used to achieve what is best for our youth today. There is also a key question about the transition from the current to the proposed system which I would like the Minister to address.
A quick look at the history of careers advice might provide a useful insight. From April 1974 to April 1994, local education authorities had a statutory duty to provide a careers service under sections 8 to 10 of the Employment and Training Act 1973. The purpose of the service had been mainly to provide guidance and counselling to young people in full-time education in order to help them make the best of their abilities when selecting a career. It had also helped adults requiring information on retraining and in promoting schemes directed at unemployed young people.
In 1990, the Conservative Government undertook a review of services to consider the effectiveness of existing organisational arrangements, with the aim of recommending the most relevant system for delivering careers information, advice and guidance for young people. The review led to proposals to introduce legislation that would facilitate a mix of provisions, including direct management by training and enterprise councils, joint TEC-local education authority provision and a local service contracted out to the private sector. That amended the 1973 Act and transferred the responsibility for the careers service from LEAs to the Secretary of State.
Under the previous Government, in 2001, Connexions was implemented and the careers service subsumed completely within the new Connexions structure. Subsequently, in line with the social inclusion agenda, the emphasis for careers advice was shifted away from universal schools provision to those not in education, employment or training. However, in July 2009, Alan Milburn published a report commissioned by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) into social mobility that was highly critical of the previous Government’s provision of career services, in which he judged Connexions an expensive failure.
Similarly, the Sutton Trust, the education charity, found that only 55% of pupils had a formal career action plan meeting with a careers adviser or a teacher—down from 85% in 1997. Recognising that the Connexions service was not working, in October 2009 Labour published “Quality, Choice and Aspiration: a strategy for young people’s information”. Criticism focused on the fact that poor or non-existent career advice had allowed many people to take A-levels inappropriate to the university degrees to which they aspired or to choose degrees unsuitable to their ideal career. Some were encouraged to go to universities when advanced apprenticeships would have been better or had gone for unsuitable short-term jobs from Jobcentre Plus. The National Council for Educational Excellence noted that
“state school teachers are often ill-equipped to offer adequate advice to students”,
leading to unjustified divisions of provision between different types of school.
Such criticisms of a system would lead me to believe that the advice being given was too little, too late, to too few, and of a varying quality. One of the questions being raised tonight is whether we need to start tackling careers at a much earlier age to discover where a child’s passions lie. We do not need anything prescriptive or pre-suggestive when a child is young; we need initially to allow a child to go on a natural discovery of his or her favourite subjects, and then to build on that love of a subject to explore career options constructively, asking, “Where would that subject lead?” We are talking about the application of education and appreciating the building blocks of school, work, employment and, most of all, life fulfilment.
In my mind, that falls in line with the recent report from the Institution of Mechanical Engineers, which stated that science, technology, engineering and maths—STEM subjects—are not being highlighted until later in the educational process, by which time students may have bypassed those career options. It added that there is evidence that
“engaging with young people before they reach secondary school has the potential to create more positive attitudes towards STEM”.
Potentially, therefore, we are missing out on a section of children who might have gone into a science career. Inadvertently, we have closed a career path to a swathe of children who may well have gone on to excel in and relish such a career. Most importantly, that affects the individual, but the wider picture is that it affects society as a whole.
As chair of the all-party group on the chemical industry, I am repeatedly told the same story, which is that we are losing valuable talent—so much so that reports are coming to me that we are losing and have lost generations of young technicians and engineers. Not only that, but the industry is crying out for posts to be filled. That equates to career opportunities and jobs that are not being taken. Those are employment gaps that we could easily be filling now, especially at a time of high youth unemployment. There have been so many wasted opportunities. The Institute for Manufacturing and Professor Allport, who is the head of particle physics at Liverpool university, co-ordinating projects at both Daresbury science and innovation campus and CERN in Geneva, confirm that point.
I hasten to add that I cannot believe that the current situation is unique to STEM subjects. It must span across a range of subject areas, the message being: if we can engage young people and children in future career options and get them interested from an early age, they can connect with a broad range of choices of which they might not otherwise be aware. If they have a particular interest, they can tailor their education to that interest. Young people often miss out on important opportunities because they do not take up the correct subjects and are not adequately informed early enough about the choices that they need to make for their careers.
Esther McVey
I have two hon. Members seeking to make an intervention—like buses, two have come along at the same time. I will give way first to my friend from Walton.
Steve Rotheram
I congratulate the hon. Lady on securing this Adjournment debate on an issue that is close to both our hearts: making certain that young people get the best possible careers advice, so that they can make informed choices—something that, unfortunately, I do not believe I got when I was 16. She asked how we were going to put the system right. Does she agree that sacking careers advisers and slashing funding would not achieve her aim of doing just that?
Esther McVey
I do not believe that that is what is happening. Not only have I read out quotations from other people, but when the right hon. Member for Kirkcaldy and Cowdenbeath commissioned a report into the matter, he said that the project in question had been expensive and had not worked. I also specifically said that I was not looking at the staff individually, because so many of them are well qualified, believe in the job passionately and are completely dedicated. The focus of this evening’s debate is where things are going wrong. Where do we need to focus our future direction so as to capture people with the infrastructure and the systems that are already in place, so that we do not lose anything, but instead take things forward?
Bob Stewart
I thank my hon. Friend for letting me get off the second bus. Does she agree that the focus in recent years has been far too much on pushing young people down the academic route, towards university? Many of the vocational ways of getting full-time work, including apprenticeships, have simply not been helped—I will not say “overlooked”—by the system. I want pupils in Beckenham, along with those in every other constituency, to be given more opportunity—a broader scope; a full range of options—so that they can choose the route that best suits them and their skills.
Esther McVey
My hon. Friend makes a key point, which I was going to touch on a little later. Did the requirements on schools perhaps produce some distortion, pushing children down a university route that might not benefit them all? That is why I am asking for far more sophisticated careers advice, so that each child gets the career outlet that is best for them, and not necessarily one that produces extra positive statistics for the school concerned. It is always about the child and how that child moves forward.
What sort of advice are we talking about, and who will provide it? In his review of higher education, Lord Browne stated that careers guidance should be
“delivered by certified professionals who are well informed, benefit from continued training and professional development and whose status in schools is respected and valued.”
However, in times of austerity, with ever-decreasing schools budgets, we need to ensure that we are able to make such a commitment. We need high-quality guidance for all children that can help young people make the right choices.
Added to that, a survey of young people from workless families found that 70% struggled to find work, that 25% felt that their parents did not have the knowledge to help them find employment and that 49% said that they did not have the role models to look up to or respect. That implies the need to bring such role models into schools to meet young people. In fact, the Deloitte Education and Employers Taskforce found a “substantial” divide between what young people wanted from their careers advice experience in school and what they actually got, including levels of involvement with employers. The findings showed that 95% of young people agreed that they would like employers to be more involved in providing advice and guidance about careers and jobs.
We therefore need to look at the interface between schools, other organisations and the professional careers bodies. I concur with the general secretary of the National Union of Teachers, Christine Blower, who said that the conclusion she drew from the Ofsted report on careers advice was that
“Not every teacher should be expert in careers advice, but… young people should know who to turn to when they need guidance on future learning or on employment. Careers education in secondary schools should not be an also ran. Schools should have the resources to employ staff who can give dedicated and knowledgeable advice.”
I would add that careers advice requires a co-ordinated interface of individuals and bodies working together, which requires standardisation as well as flexibility, aided by the creation of accredited professional organisations bringing real business examples into the schools.
My points for the Minister are these. We have to look at the new proposals, particularly the fact that schools will have a legal duty to secure independent and impartial careers advice for their students. Schools will be free to decide how best to support young people to make good career choices. It might be perceived that that could lead to a gulf in the provision of careers advice among schools, councils and areas. I would like to think that that will not happen, but I would like some clarification. Some children could be getting better advice than others, so we need to ensure that that does not happen. We need to ensure that what we have said about universal specialist training happens.
Dr Stella Creasy (Walthamstow) (Lab/Co-op)
I congratulate the hon. Lady on securing this debate. Like her, I feel strongly about the importance of careers advice. She makes a strong case for how to reform the careers advice system, but does she not accept the concern of some Opposition Members that our ability to provide the new careers service that she wants will be severely damaged by the fact that many careers professionals currently face redundancy? I understand that in Merseyside alone 130 places are due to be cut. In my borough of Waltham Forest, the careers service is at risk because of the cuts to local government. She might have great ambitions for an all-age careers service, but the people necessary to support it will simply not be there by September this year to facilitate it.
Esther McVey
What the hon. Lady has said is vital, which is why we are here today. We are saying that such a situation could be on the horizon, so we need to capture the people I mentioned. However, when Members on both sides of the House have said that Connexions is not working, failing and an expensive experiment, it shows that the system is wrong. It is not the people who are wrong but the system, so how do we get those people into the right system? That is what we are trying to do.
Moving on, we have to look at the transition stage. All Members are deeply concerned about that. We need to look at the age and the scope of career awareness. As my hon. Friend the Member for Beckenham (Bob Stewart) said, we also need to look into a possible distortion from within schools to push people into career paths down which they should not go—to university, for example. My hon. Friend is a champion of apprentices, and we know that there will be 75,000 more of them during this Parliament. How will people find out about that? That is why I am asking for a professional body with sophisticated knowledge which uses all the outlets—whether face-to-face or through the internet. There should be every opportunity.
Steve Rotheram
Thank you for allowing me to intervene, Mr. Speaker.
The hon. Member for Beckenham (Bob Stewart) made an important point. Apprenticeships are not just about careers advice: people do not embark on them just because someone has pointed them in that direction. It is true that there are real problems related to careers advice, but there is also the problem of the culture of apprenticeships and the lack of parity of esteem. In other countries, such as Germany, an apprentice is seen as the equivalent of someone who has taken an academic route. It is not just a question of those working in careers services pushing people into apprenticeships; it is a much wider issue. People should not be pushed into an academic route which might not be the best option for some individuals.
Esther McVey
The hon. Gentleman has hit the nail on the head. He has identified one of the key flaws in the careers advice that is currently provided. As he says, apprenticeships have equal standing. Careers advice should take account of the abilities and capabilities of the individual, and should aim for the complete fulfilment of that person. We need to increase understanding of the status of apprenticeships.
We have touched on many important points this evening, on which Members on both sides of the House have been able to agree. We all want children from all backgrounds and with all abilities to be able to fulfil their potential.
Andrew Miller (Ellesmere Port and Neston) (Lab)
I congratulate the hon. Member for Wirral West (Esther McVey) on securing the debate, and thank her for being gracious enough to allow me a few moments in which to address the House. I also thank you, Mr. Deputy Speaker, and the Minister for agreeing to that.
This is a hugely important subject. There are few words that the hon. Lady uttered with which I would take exception, but I should like to mention a detail relating to my constituency. I stress that I am speaking from a local point of view. Connexions worked in Cheshire: it was extremely well run, although I accept that its success was patchy in the country as a whole. Our present difficulty lies in the fact that the local authority, Cheshire West and Chester council, has agreed to re-inherit, through a TUPE transfer, 26 youth workers from Connexions. That will be the sole service available to people in the age group that we are discussing, which is inadequate provision according to any measure.
A constituent who works in the service has written to me saying:
“As you are aware, there has been talk of an all age careers service being established by… 2012 which would lead the way in providing careers information advice and guidance. As you might not be so aware… the all age careers service… although its remit would be to work with people from the age of 13… would not operate within schools.”
Therein lies the key problem. The hon. Member for Wirral West rightly identified the difficulties involving the STEM disciplines. With my Select Committee hat on, I have been discussing that huge and complex issue with a number of learned societies, including STEM Ambassadors and the UKRC. I am sure the hon. Lady agrees that it is sad that UKRC has lost its funding for supporting women in science and engineering, and the Minister may wish to comment on that en passant. Organisations such as those, which have been working extremely hard to promote STEM subjects, will find doing so much harder as a result of the vacuum that is being created. We are told that it will take until 2012 to set up the all-age service, and that it will not necessarily operate in schools. As all the STEM experts have observed, there is a gap in the schools sector.
I agree with the hon. Lady that people should receive careers advice at a very early age. If we are going to excite people about science and engineering, the “on” switch has to be found at a very early age. That is why I am a great fan of the National Schools Observatory operating out of John Moores university, where children from the hon. Lady’s constituency and mine—and, indeed, from the constituency of the hon. Member for Beckenham (Bob Stewart) and from across the country—can get access to the telescope at La Palma and engage in genuine science. It is a fantastic project but, unfortunately, for the sake of probably less than £2 million, the service is going to disappear. Therefore, even in schools that have a science driver—a teacher who is excited about the potential of creating the next generation of scientists—tools are being taken away.
I have known the Minister for a while, and I know he is a man of eclectic tastes. It says in his biography that he is interested in subjects as diverse as architecture and jam-making. I also know that he ran an IT company with some success, so he is a man who probably understands the point I am making. My plea to him is that he should sit down with his colleagues in the Department for Education, and with those with responsibility for business and higher education, and start to formulate a strategy that will maximise the impact at the primary level. We must ensure that we work with industry and academia to bring as much expertise as possible into the classroom, and we must continue the projects that are available at the secondary level, including the Catalyst centre, which is just down the road from the hon. Lady’s constituency. It is a great, exciting place where people can play with proper chemistry, and do things that I hope we will do in the House in a few weeks’ time to mark the anniversary of the Royal Society of Chemistry. I hope that will excite Members. We must also work at the higher level with university students—as many Members have done—and at a still higher level, working with people through the Royal Society pairing schemes. There are all sorts of things we can do.
I am not criticising the Minister for seeking change, but I am worried. We are going to have a vacuum, and in my constituency we are going to lose the skills of people within the system. My plea to him is that he should slow the process so that we make sure that the skills that we have are not lost, but instead are transferred into structures that are thought through and appropriate to the local community. I want to stress that final point about being appropriate to the community. One size does not fit all. In my constituency we created, quite away from my interest in the STEM areas, the Cheshire Oaks retail academy. That is a grand-sounding title. It started off helping the NEETs—those not in education, employment or training—to get jobs in the fantastically successful Cheshire Oaks retail operation. They were not getting jobs from the community, and we started at the very basic level, working with the further education college and the secondary school to help kids present a CV and present themselves for interview. The project has grown and grown, and now it is doing higher level national vocational qualifications, and has trained many young people—certainly at the top end of the second thousand of them. They have gone through training modules, working with all the employers on the Cheshire Oaks estate. There are therefore models that can be tailored to the needs of particular sectors.
There are changes we need to think about that apply to the primary sector and the secondary sector, but my plea to the Minister is this: for goodness’ sake, hold fire on pulling the plug on Connexions, because we need a more sophisticated transition from where we are now to where I think all of us on both sides of the House would like us to get to.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)
It is a pleasure to follow the hon. Member for Ellesmere Port and Neston (Andrew Miller), who chairs the Select Committee on Science and Technology and has a background as a technician and expertise in industrial relations. He said that I was “eclectic”. I like to be eclectic, and even idiosyncratic, but only to the point where it is still interesting and not weird, as I shall try to illustrate in these remarks. I will address the points that he made, but he will understand that as a matter of courtesy I wish to start by congratulating my hon. Friend the Member for Wirral West (Esther McVey) on securing this debate and on the contribution that she has already made on the subject of careers, aspiration and, in particular, the opportunities available to young women.
I was proud to attend, along with the Secretary of State for Work and Pensions, my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), whom I see in his place, the launch of this magazine “If Chloe Can”. It is tailored to promoting opportunities for young women, to opening up those opportunities and to spreading the message that people’s aspirations, tastes and talents can be met if the right support, the right advice and the right opportunity is in place. I will present a copy to you at the conclusion of this debate, Mr Deputy Speaker, and I hope that it will be signed by my hon. Friend the Member for Wirral West. She and other Members are a role model for young women, showing what one can achieve with hard work and determination. I know that she has been a success in business and in the media, and, as I say, she is making her mark in politics too.
My hon. Friend is right to say that high quality careers guidance is crucial if all young people are to receive the support they need to make well informed decisions about learning and careers. I listened to her carefully and she was also right to say that most young people garner that advice from social networks, parents and others in their immediate locale. I shall come on to speak at great but not inordinate length about social mobility.
The Secretary of State for Work and Pension (Mr Iain Duncan Smith) (Chingford and Woodford Green) (Con)
You’ve got plenty of time.
Mr Hayes
My right hon. Friend is pitching in from a sedentary position, Mr Deputy Speaker, and before you say so, I will say that he should know better.
The point about the garnering of advice from those networks is that it disproportionately favours those whose parents or friends know about opportunity, know about going to university, know about college or know about apprenticeships. Young people who do not have access to that familiar and social support to enlighten them about those opportunities are doubly disadvantaged. In order to compensate for that disadvantage—it is the mission of this Government to redistribute advantage in society, and I make no apology for saying so—we need to ensure that good quality advice and guidance is in place so that people can achieve their potential.
The right support is one of the keys to unlocking social mobility and opening the door to aspiration and progression. Ruskin once said:
“The highest reward for man’s toil is not what he gets for it, but what he becomes by it.”
The hon. Member for Liverpool, Walton (Steve Rotheram), whom I seem to recall is a successful apprentice, rightly says that this is not merely about wage returns. Of course it is about that, but it is also about elevating the status of the practical, understanding the aesthetics of craft and realising that vocational learning has its place. As my hon. Friend the Member for Beckenham (Bob Stewart) said, for too long in this country we have conned ourselves into believing that the only form of prowess that mattered came from academic accomplishment. Practical skills and vocational competencies also give people a sense of pride and purpose, which is vital to their self-esteem and the communal health of our country. I entirely endorse what the hon. Member for Liverpool, Walton, in a happy alliance—one might call it a coalition—with my hon. Friend the Member for Beckenham, said earlier. I recommend to them both a speech on that subject that I made at the Royal Society for the encouragement of Arts, Manufactures and Commerce. I have only one copy with me, but perhaps they could share it, passing it from one to the other.
Good guidance from a young age can stimulate ambition, inspire hard work and instil social confidence, even for the most disadvantaged young people in our society. As the hon. Member for Ellesmere Port and Neston said, we have some good examples of support offered to young people in schools and by the Connexions service. As he acknowledged in generously welcoming our initiative for an all-age service, we also have many instances where young people are not getting the advice they need. As my hon. Friend the Member for Wirral West made clear, the evidence clearly supports that conclusion.
According to a survey carried out by the Edge Foundation in 2010, 51% of young people reported that careers education, information, advice and guidance were simply not meeting their needs. Incidentally—this is not in the notes prepared for me, but I shall add it—the survey also revealed that teachers in schools knew less about apprenticeships than any other qualification with the exception of the Welsh baccalaureate. I have nothing against the Welsh baccalaureate, but one would have expected teachers to know rather more about apprenticeships than they do. As they do not have that information at their disposal, they cannot always match people’s aspirations and talents to the opportunities that I spoke of earlier. That is why we need independent, high-quality, up-to-date and impartial advice and guidance for all young people.
Ofsted has found, as hon. Members will know, that the provision of information, advice and guidance about the options available is not always sufficiently impartial. Those concerns also extend to the issues about which my hon. Friend feels so passionately.
First, on broadening horizons and challenging preconceived ideas about learning and careers for women, we must build on the work of my hon. Friend and others to ensure that young women are equipped and inspired to pursue the fullest possible range of careers rather than those that are too often mapped out for them based on stereotypical beliefs.
On making apprenticeships and vocational training equal in status—and appeal—to academic qualifications, I have, as hon. Members will know, long made the case for elevating the practical in our system. Through restoring a focus on specialist expertise in guidance for young people, I want us to inspire the next generation of young scientists, for example, as the Chair of the Select Committee recommended.
Steve Rotheram
I thank the Minister for giving way. I think I called you Mr Speaker earlier, Mr Deputy Speaker—I apologise for elevating you far too early. In case the Minister’s reference to coalitions with Government Members ruins my embryonic political career, I agreed on the one point and very little else as regards my political persuasions and those of the hon. Member for Beckenham (Bob Stewart). I want to put on record the fact that the previous Labour Government trebled the number of apprenticeships, so they did understand their merits. Like my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller), I have been contacted by constituents who are end users and employees of Greater Merseyside’s Connexions service, some of whom are facing redundancy. Does the Minister understand their feelings? They believe that the Government’s proposals are in danger of throwing the baby out with the bath water.
Mr Hayes
I shall come on to the issue of transition. The hon. Gentleman, like his hon. Friend the Member for Ellesmere Port and Neston, is right to raise the issue of how we deal with the transition from the existing arrangements to the all-age service. We will begin the all-age service, as has been said already, in 2012, but I want as much as possible to be in place by the end of this year. I shall come back to the transition, but let me say that this proposal is not just in the interests of the recipients of advice. It is also about re-professionalising careers advice for the people who give it. When I became the shadow Minister in the long-distant past, I met many people who worked for Connexions. Some were lifetime careers advisers who were desperate to have careers advice re-professionalised. They were asked during the Connexions regime to be advisers on all kinds of things—on careers, but also on sexual health, lifestyle choices and drug misuse. That was a very tall order. There is a place for that kind of advice, but I am not sure that it is best provided in a one-stop shop such as Connexions. It is much better to have a careers advice service that is just that. It is demanding enough for careers advisers to be up to speed and up to date with all the options for training, learning and jobs, let alone being asked to do much more. I say to careers professionals that this is not a threat but a serious opportunity, as our commitment to that service and their profession is unrivalled.
I have more time than Ministers usually have in Adjournment debates, and I cannot resist saying a word, with your indulgence, Mr Deputy Speaker, about apprenticeships. I do not want to get into a sterile debate about the history of this issue and the previous Government—a tragedy perhaps tinged with comedy—but I will say that I intend to build more apprenticeships in this country than we have ever had. We have already put an extra £250 million into the apprenticeships budget to secure that ambition. We have set an initial target of 50,000 more apprenticeships and I believe we can meet that target and exceed it in the lifetime of this Parliament—indeed, in this comprehensive spending review period. I want more apprenticeships at levels 2 and 3—and more too at levels 4 and 5—to fill the gap in intermediate and higher level skills that, as the hon. Member for Ellesmere Port and Neston is well aware, will inhibit growth, particularly in those high-tech, high-skilled industries that we need to foster.
Schools will continue to play an important part in ensuring that all pupils benefit from good advice. Teachers are so important. As this is becoming something of a wide-ranging debate, let me say, with your indulgence, Mr Deputy Speaker, that it is time for us as a Government and as a House to elevate the role of educators. Into the hands of teachers we place our future—our children. Every great civilisation from the past—Greece, Rome, Egypt, Persia and China—understood that educators and teachers are vital. Socrates himself was a teacher. However, we ask too much of our teachers when we expect them, in addition to inspiring young people with a thirst for learning, to be careers professionals. It is true that individual schools have the best knowledge of their pupils’ needs, and it must be their responsibility to ensure that those pupils can access the best possible advice, but it is not always best for those schools to provide the advice. Some do it very well, but others less so.
In the forthcoming education Bill we intend to introduce a duty for schools to secure independent, impartial guidance for their pupils, but they will be free to decide how that guidance is secured—through the all-age service or through another provider, all of whom will be expected to meet exacting quality standards. That will safeguard the partnership model in which schools draw on their knowledge of pupils’ needs and work closely with external independent advisers with expert knowledge and skills. It is crucial to place that at the heart of our new arrangements, because with all that is expected of schools, it is too much to ask them to provide careers advice and to keep up to date with the latest developments in careers and the labour market.
My ambition is to have guidance for both young people and adults that is widely respected and valued. C. S. Lewis said:
“You are never too old to set another goal or to dream a new dream.”
The important thing about the all-age service is that it will assist people who need to change direction or to upskill. One feature of an advanced economy is that as skills needs advance they become more dynamic. Businesses change more quickly to shape themselves around economic changes and skills needs change accordingly, so we need to help people to get the advice they need to get jobs, to keep them and to progress in them.
Information, advice and guidance will be available online. In those terms, we will build on the work of the last Government, who invented the Next Step service, which we were able to implement this summer and will provide a basis for a high-quality online product as it metamorphoses into the core of the technology offer that the all-age service will provide. Young people in particular tend to access information online, and as hon. Members will know, that will enable us to ensure that information is updated effectively, but face-to-face guidance matters, too. I am determined to use the limited resources that we have available—we live in tough times and the Government are determined to deal with the deficit, so there is no money sloshing about—to maximise the amount of face-to-face contact that people can enjoy, because it is needed to supplement what they can gain online.
To form a new professional basis to the service that will be crucial to its success, the Government are responding positively to the recommendations of the Careers Profession Task Force aimed at increasing the quality and status of the profession. That was led by Dame Ruth Silver, who has done an excellent job with her team. Members who were fortunate enough to read the report that emanated from that work will recognise that it was very much about building the kind of professional pride and purpose that I described when responding a few moments ago to the hon. Member for Liverpool, Walton.
Let me say something about transition. To be frank, I was concerned about that, too. Determined though we are to put in place the all-age service, it is vital that transitional arrangements are handled properly. During the transition period, we will support local authorities to work through any changes in local service provision that may be necessary as a result of the establishment of the all-age service, involving, where appropriate, Connexions service providers.
In 2011-12, the early intervention grant will support transitional arrangements to ensure that young people have access to impartial guidance in advance of the all-age careers service being fully operational. For those who want to check the figures—diligent Members will do so immediately after the debate—they were announced on 13 December in the local authority grant settlement. Transitional arrangements, by their nature, are never perfect, but we will use every endeavour to ensure the continuity of the advice offered and that the conditions in which it is offered are as appropriate as possible. Certainly, we want to support careers professionals, because they will form the core of the new service.
Andrew Miller
Given that the Connexions company locally has effectively been told to wind itself up, it will, by necessity, have to put people on notice of possible dismissal. What advice is the hon. Gentleman giving to the Connexions service and local authorities to give comfort to those people who have put a lot of time and hard work into the service that their jobs will be protected where the service has been of the standard that he quite rightly expects?
Mr Hayes
Local authorities will retain a duty to provide the service and the new all-age service will begin to kick in from this autumn, so any hiatus of the kind that the hon. Gentleman suggests is present should not be significant. I hope that local authorities would put in place arrangements to ensure that those people involved could move from one service to the other reasonably seamlessly. If he takes that message to his local authority with my endorsement, it may yield more fruit.
Andrew Miller
If the Minister were to write to local authorities and be kind enough to place such correspondence in the Library, that might give some comfort to hon. Members.
Mr Hayes
I am always informed by the contributions of hon. Members of this House, and I will certainly take what the hon. Gentleman says away and give it appropriate consideration. As I am a responsive, listening Minister, as you know, Mr Deputy Speaker, I will ask my officials to look at that matter closely, see what measures we have already put in place, and see whether we need to do anything more. That would be an appropriate way to deal with the hon. Gentleman’s query, as I think he would acknowledge.
The arrangements for the all-age service will, of course, include an emphasis—widely welcomed in this debate—on apprenticeships. My hon. Friend the Member for Wirral West spoke about vocational learning, as have others. She also spoke about the need to be open-minded about all the opportunities available to young people. As many have already said, that certainly includes learning at local college, learning in the workplace, and learning provided by independent training providers, as well as the academic route. I want to create a pathway on the vocational side that is as navigable, progressive and seductive as the academic route that many of us travelled. To that end, it is important that the House understands the new commitment that the Government have to apprenticeships, as a pivot of our skills policy. I want more apprenticeship frameworks, more higher level apprenticeships, and more apprenticeships permeating companies that have not had them in the past.
My officials are working closely on ideas for improving the status and aesthetics of apprenticeships, including proposals to introduce a more formal graduation process to give apprentices a proper sense of achievement; proposals to ensure that the frameworks are progressive; and proposals to develop more level 4 frameworks, in particular. I am also keen to ensure that we see apprenticeships as a route to higher learning. Many apprentices already go into higher learning through college or university, but I want to grow that over time. In our skills strategy, which I know sits by the bed of all hon. Members present, we committed to working with the National Apprenticeship Service to do many of the things that I have just described, but I have already spoken of the unprecedented financial commitment that we are making to apprenticeships, and I do not want to repeat myself.
Steve Rotheram
In Liverpool, there is no problem with careers advice attracting people into apprenticeships. It is the opposite way round: there are not the employed apprenticeship opportunities for people to move into. How does the Minister think the local government settlement in Liverpool—the worst in the country, which means that public sector jobs will be lost by the city council, which employs apprentices—will help people who want to get on the ladder as an apprentice?
Mr Hayes
I would not want to talk about local government; it is outside my purview, and you would not permit me to do so, Mr Deputy Speaker, because it is also outside the range and scope of this debate. The hon. Gentleman has put his remark on the record. What I will say is that on his substantive point about companies, he is right: we need to encourage more companies to take apprentices. The National Apprenticeship Service has been very busy doing just that. I have been working with it on a national campaign, unprecedented in its scale and penetration, to encourage more businesses to take on an apprentice. Seventy-five Members of this House have engaged with that campaign, working in their locality to promote apprenticeships. I do not know whether the hon. Gentleman is one of them, but if he is not, I hope that he will join their number. Many colleagues have taken on an apprentice. I have taken on one in my Department. I hope that Ministers and Members of the House will do that, too. Let us give apprenticeships the status that they deserve by what we do and what we say.
I shall now move to my exciting peroration, although I know that Members are, rightly, excited by this subject.
In summary, we have to improve our education system so that every young person gets the support, guidance and inspiration that they need to make a success of their life, and we need high-quality learning provision with clear routes into a range of rewarding careers. The establishment of an all-age careers service, which provides excellent, professionally delivered careers guidance to young people and adults, lies at the heart of that, and the support of schools will be a vital component in its success. As we take that work forward, I shall ensure that we address all the points that my hon. Friend the Member for Wirral West made at the outset of this debate.
Let me make myself absolutely clear. Education is a key driver of economic growth, individual well-being and communal health. It changes lives by changing life chances, and guidance and advice is critical to that. C. S. Lewis, whom I have quoted once already, also said, “What you believe is what you are,” and this coalition Government believe passionately in social cohesion, social mobility and social justice.
Question put and agreed to.
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Mr Clive Betts (Sheffield South East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Robertson. I am introducing the debate as the Chairman of the Communities and Local Government Committee, and I shall draw heavily on the evidence session that the Select Committee had with the Secretary of State; the Minister of State, the right hon. Member for Tunbridge Wells (Greg Clark); and the Minister for Housing and Local Government on 21 December 2010. I shall try to do so objectively, and I am sure that other members of the Select Committee who are here will do the same. However, we all have to wear our political hats as well, so my interpretation might be slightly different from that of some of my colleagues.
Other members of the Select Committee, particularly from the Labour side, wished to be here, but I am sure we are all aware that two of them have constituencies adjacent to one where a by-election is taking place today. I do not know whether the rumours are true, but perhaps the major Government party has not been quite as enthusiastic about fighting the by-election as some other parties have been.
I thought for an awful minute that the Minister might be late. I thought that he might have been detained in last-minute urgent discussions with the Treasury, and that he would come here and announce a little bit of improvement on the settlement. We would have had even more to discuss in terms of helping local government through what will be a difficult period.
I do not want to get bogged down in the Government’s overall policy on deficit reduction. The Secretary of State mentioned it in the evidence session, and said that everything had to be seen in that context, which was a fair point to make. I might make a different point about the depth of the attempts at deficit reduction and the speed at which the Government are going about it, but that is not our job here today; it is to look at the impact on local government and local services.
Nevertheless, it has to be said that if the impact of the scale and speed of deficit reduction is that the economy stalls and unemployment rises, it could lead to increased repossessions, increased rent arrears, pressure on housing services and housing and benefits advice, increased social tensions in communities, and an increase in crime. All those, of course, have an impact on local government: they increase the demand for local government services and increase the need to spend money at local government level and to switch it away from other important and essential services that local government carries out. I shall say no more about that.
Yes, all right, the Government have embarked on a significant deficit reduction programme which means, in effect, cuts to public expenditure. The average cut among Whitehall Departments will be 19% over the four years. I shall raise several matters which I hope the Minister can come back on. The first is that we have not had an explanation as to why the Department for Communities and Local Government seems to have been ready to offer itself up for the largest cut of all. The central Department’s spending will go down by 68% in real terms over the four-year period.
The Government are saying that that is all right because many of the functions that the Department carries out will be passed down to local authorities—the brand of localism is at the heart of what they are saying. On the other hand, the Localism Bill, which will come to the Floor of the House on Monday, includes a great deal of work for the Department at the centre to do. It provides some 150 order-making powers that Ministers and civil servants will be involved in administering. I have concerns about the effectiveness of future work in the Department, given the scale of the cuts.
George Hollingbery (Meon Valley) (Con)
As a matter of correction, I seem to recall from the evidence that the Secretary of State offered that the headline figure for the cuts in the central Department was 68%, but that if one took account of large amounts of direct spending that will be transferred from the Department to local government—not just administration but actual spending—the reduction is actually 33%, exactly equivalent to the Treasury cuts.
Mr Betts
That is still a big figure. It might be helpful to take this a stage further. Perhaps we could have at some point a note from Ministers to identify precisely where the difference between the 33% and the 68% actually goes in being passed down, because local authorities have not been claiming that they are seeing the benefit of an extra 35% in their budgets.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
Before my hon. Friend gets to the substance of his remarks, would he agree that cuts in themselves are one issue, but that there is a separate issue about fairness in how they are applied? It seems from the headline figures that areas in the most need are suffering disproportionately from the cuts, while areas that one might refer to as leafy boroughs and counties are getting away with small cuts.
Mr Betts
I agree with that. I believe there are statistics to prove it, although other Members might come to a different conclusion when looking at the same statistics. We had a discussion with Ministers about that in our evidence session. I shall come on to that specific point, which is an important one.
Moving on from the spending for the Department at the centre to local government budgets, there will be a 28% reduction in Government grant over the four-year period. I believe that that figure is agreed; I do not think that anyone denies it. Why is local government taking a hit that is much larger than the average reduction in Government spending as a whole? There is a slight feeling that it is because it is easier to give the problem to someone else to deal with rather than dealing with it oneself. Pass it on to local government: it will deal with the difficult job and someone else might be blamed.
Mr Stewart Jackson (Peterborough) (Con)
I hear what the hon. Gentleman says. However, given that the right hon. Member for Edinburgh South West (Mr Darling) committed to 20% revenue reductions before the election, and that, as I understand it, the policy of the Opposition is not to ring-fence any particular Government Department, it is clear that local government would have had to take substantial reductions if Labour had been re-elected. The difference is that the reductions have never been quantified by the hon. Member for Sheffield South East (Mr Betts) or any of his colleagues.
Mr Betts
I said at the beginning that I do not want to get into a long debate about the overall nature of deficit reduction, apart from saying that the Labour party has a different view about the scale—reducing the deficit by half, not totally eliminating it, over the four-year period—and the pace, which would not have been as great. We would not have started the cuts in this financial year, before the economy had properly started growing. There are differences.
However, I come back to the point that, whatever the average level of cuts across Government, there still has to be a justification as to why spending on local government—the money passed on by central Government to local government—is taking a hit that is much bigger than the average for all Departments. Why is that happening, particularly when local government has a good track record in making efficiency savings? If one looks at government as a whole, it was local government that led the way, even under the previous Government: 2% year-on-year efficiency savings were built into its budgets.
If one looks at the impact of government services as a whole, the services that are provided by local government are some of the most immediate to our constituents. They include services to the disadvantaged and those in need: social services care provision, aids and adaptations. They are about the quality of life: things such as parks, libraries and sports centres. They are about essential provision for daily life from which everyone benefits, whether it be refuse collection, street cleaning, highway maintenance, street lights—the kinds of things that everyone benefits from in terms of the taxes that they pay and the services that they get. Why put those immediate services for most of our constituents at more risk than the average in terms of cuts of Government spending as a whole? The Government must answer that question.
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
In fact, the figures show that revenue support for local authorities reduces by 26%, and that happens to coincide with the percentage of public sector spend that local government takes. However, the independent Office for Budget Responsibility has made it clear that because local authorities have forms of income other than the central Government grant—council tax, for example—the actual reduction in spending power is 14%, which is considerably less than that of central Government Departments.
Mr Betts
I accept what the Minister says about the different ways in which figures have been presented, and I shall come to that in a second. I am not going to complain about or disagree with how that was done, because it is important to look at spending power, but I come back to the point that I made. If central Government are looking to cut their spending, why have they cut the resources that they pass on to local government by more than the average cut in central Government spending as a whole? That seems a reasonable question, irrespective of the issue of local authorities’ spending power.
The second issue is: why have spending reductions been so front-loaded? Local government has rightly complained about that. There is no doubt at all that there is front-loading: of the 28%, 10% is in the first year and 8% in the second. Local authorities, not just the councillors but the officials, say that the immediacy of the actions they have to take means that decisions will be less well made and there will almost certainly be less opportunity for the transformation of service delivery, which we all agree can make savings without the need for service cuts. It also means that local authorities will be pushed back into the salami-slicing approach, which Ministers say they do not want. I am not making a party political point. Authorities of all political persuasions—Conservative, Liberal Democrat and Labour councillors in the Local Government Association—will all say the same thing: that the pressure of front-loading will lead to a less effective and less efficient use of the available resources.
The front-loading will also mean that authorities have less chance to use natural wastage to save money, and will be forced, to a greater extent, into making compulsory redundancies, which are expensive; the money used to pay people to leave and to enable cuts to be made, could have been used to provide service delivery. We know there is an argument there. In the evidence session, the Secretary of State said he thought that the LGA figure of 140,000 job losses in the next year was wrong, but we never quite got from him what the right figure was. Nevertheless, there will be significant job losses.
The Government believe that £200 million of capitalisation will be sufficient to cover redundancy costs; the LGA says £2 billion. Even if the figure is somewhere in between, local authorities will struggle if redundancy costs are of that scale, because getting rid of people in the first year might not make savings and might actually become a cost. The offer that I think the Secretary of State made, that if he had to provide another £1 billion of capitalisation he would cut the revenue grant by a further £600 million, does not seem to be the best offer that local government has ever had from central Government on such matters. Indeed, I think the rather angry response to the evidence that the Committee received from Baroness Eaton on behalf of the LGA has been circulated. In it she states that her recollection of the discussions with the Secretary of State on capitalisation was slightly different to that of which he had informed the Select Committee. She could not understand why, if local government had to make necessary redundancies and wanted to capitalise that cost further, it would be penalised by the Government’s reducing the revenue grant. It would be helpful to have some comments from the Minister, bearing in mind the LGA’s response.
There is a very big issue here of the speed of the cuts and their front-loading, and the effect of that on local authorities’ ability to digest the cuts into their systems and make sense out of them, as opposed to having to salami-slice at least an element of the cuts and having to pay quite a bit of money out for redundancy costs that would otherwise not have been necessary.
I shall now respond to the Minister’s point about how the announcement was phrased. The Secretary of State obviously tries to get the figures down in his announcements, and I happen to agree that looking at spending power rather than at simply grant allocation is the proper approach. We still should look at the grant that central Government give as opposed to what they are doing to cut spending elsewhere in central Government, but it does matter in the end how much local authorities have to spend. When we look at the figures, however, we see a difference between the 8.9% maximum reduction in spending power that any authority has to face and the 0.1% increase that Dorset has managed to receive.
As my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) mentioned, there is a significant difference in the level of cuts and the reductions in spending power between the most and least deprived authorities. The figures that came out of the Library from the Scrutiny Unit show that the 10% most deprived single unitary authorities lost 8.4% of spending power and the least deprived 10% lost 2.2%. That is a significant difference. We have had a discussion about the Scrutiny Unit’s figures, and those figures clearly show a correlation between authority deprivation levels and how much spending would be cut. I do not think it is fair, but I accept, to a degree, that it is more difficult to protect authorities that have large grants because they are deprived, when grant cuts happen. I accept that the Government have done something, at least at the beginning of the process, with the £85 million transitional money to mitigate the problem, but whether that money will be available later in the spending round remains to be seen.
Mr Stewart Jackson
Surely, the hon. Gentleman misses a number of points. One is that he is not looking holistically at the cumulative picture over the past number of years of the grant settlement between local authorities in the south-east of England and those in the north-west and the north-east. Frankly, his Government, when in power, had the opportunity to deal with those issues through, for instance, working neighbourhoods funding, and only very belatedly disaggregated that into super-output areas to tackle the worst cases. They had that opportunity to tackle the underlying problems of social deprivation, but failed to do so.
Mr Betts
I do not agree. We can always have discussions and disagreements about the extent to which grant allocations are fair, and I do not think there has ever been a grant allocation about which some Member has not stood up in the Chamber and complained, saying that their area gets a raw deal. That will always be the case, no matter where we get to. What tended to happen during the spending settlements of the Labour Government was that it was Conservative Members from the leafy shires who tended to get up and complain that they were getting a raw deal and that Labour was doing too much to help deprived areas. That was the general theme of discussions. I think that funds such as the working neighbourhoods fund were, in the end, both reasonably targeted to help some areas of deprivation and reasonably effective. I accept that the Government have decided to abolish the fund and to incorporate it into the revenue support grant.
Fundamentally, this is a matter of principle: as long as a fair settlement can be obtained through the RSG, I am not against the initiative. Over the past few years, there has been a move—under the previous Government and now under this one—to reduce, and hopefully eventually to abolish, ring-fencing and I am generally supportive of that as a principle. With the proviso that the allocation is fair, it should be up to local councils, once the allocation is given to them, to determine how to spend the money in their areas. There will be certain statutory requirements, but essentially, as a move away from ring-fencing and towards a more open method of allocation, I am supportive of this.
Paul Farrelly
I do not wish to campaign for cuts for anyone. My hon. Friend mentioned Dorset, and I shall read out some more names: Windsor, Maidenhead, Poole, West Sussex, Wokingham, Richmond upon Thames and Buckinghamshire. They are all in line for cuts of less than 1%, yet some inner-city areas are in line for the maximum 8.9% cut. Does my hon. Friend not agree that the general public will see that as profoundly unfair?
Mr Betts
The certainty is that people in Sheffield will think that that is profoundly unfair. I cannot resist making a party political point here: they will tend to wonder why a party controlled by the junior member of the coalition has not fought harder for the resources of northern cities such as Sheffield. I was perhaps tempting a response, but I am not going to get one. I am sure that issue will stay around.
I return to the point that one of the problems that the Government have in trying to make the settlement fairer than it is—I do not believe that it is fair—is that the speed of the cuts and their front-loading makes it that much harder to make any sense out of them. The element of transitional funding that would have been needed to mitigate that unfairness would have been a lot bigger than the £85 million that was finally agreed with the Treasury. That is one of the fundamental problems of the front-loading of the cuts and their scale.
I shall make another party political point—they are difficult to resist—but we must put the issue in context. The Minister may use this against me and say that local government has had a lot of money over the years, and that rowing back should not be too difficult. But the increase in total grants, including police and schools grants, and excluding business rates, that central Government provided to local councils from 1997 to 2010-11 was 80% in real terms, which is a very big increase. I return to the point that local government was asked to find 2% efficiency savings year on year, and it has achieved that. Local government as a whole is now a much more efficient organisation than 13 years ago.
A fundamental point about which the Minister may want to say something and on which the Committee challenged Ministers is the amount of business rates and the return of business rates to local authorities, and the fact that by 2012-13—the Secretary of State fundamentally confirmed this—the amount going to local authorities will be less than the business rates coming to central Government. There is a legal requirement on the Government to return all collected business rates to local councils. That will happen this year, but clearly it will not happen in future if the figures—they are notional at this stage—are confirmed.
The Secretary of State said that there were likely to be changes before 2013. There is a review of local government finance, and I understand that the Government’s intention is that business rates collected in an area should be retained there. How will there be an element of redistribution in grant to areas that are deprived and do not have a large business rate base if the total amount of money that central Government give to local councils is no more than the business rates collected, but the business rates will remain with local authorities? How can we achieve any element of redistribution to reflect differences in needs and resources if that is the Government’s intention? This is a really big issue, which Ministers will have to address at some stage.
I do not demur from the Government’s objective to relocalise business rates. I would like local authorities to be given the power to set the business rate. I do not believe that that is the Government’s intention, but it has been my long-term view. At a time when total Government money for local authorities is shrinking rapidly, if business rates are all they have left to give back, but there is no money because it will stay with the local authority that collects it, where is the element of redistribution of Government funding? The cavalry is behind the Minister, and I hope that he will be able to give us an answer.
I do not know whether the Minister will defend this, but can anyone seriously say that there will be no need for cuts in front-line local government services? I am sure that all hon. Members here have been talking to their local authorities, but I do not know anyone who has been assured by their council leader that there is no need for cuts in front-line services. This is not a party political point. All parties in the LGA will say the same. I accept that there has been an extra £1 billion for social services provision, but we all know that there are democratic pressures, particularly if we are trying to keep people out of hospital with aids, adaptations and care packages. That may not even take care of the demographic pressures.
The Secretary of State has said that the Supporting People programme need not be cut, but the next day Westminster council announced a £1 million reduction in its programme. We were told that there was no need for other cuts in front-line services, and that, if local authorities shared their chief executives and a few back-room functions and HR and planning departments merged, that would be sufficient to provide savings in all authorities. That is not true, is it? No one in the Chamber believes that sharing chief executives, HR departments and planning departments will mean no need for cuts in front-line services.
Mary Macleod (Brentford and Isleworth) (Con)
Does the hon. Gentleman agree that sharing services can bring about real savings to local authorities—there are definitely savings to be had from sharing chief executives—which could help local authorities to deliver better services?
Mr Betts
I do not want to give the impression that I am against local authorities deciding to share services in the right situation. My instinct is that an authority such as Sheffield probably needs its own chief executive, but perhaps some smaller authorities could reasonably share. Authorities such as Sheffield, which has very good departments—for example, our planning department —could offer services to other authorities. There is capacity for that. My point was whether such savings would be sufficient to deliver all the necessary spending reductions with no cuts in front-line services. That is not the message that I am getting from local councils of all persuasions throughout the country.
Justin Tomlinson (North Swindon) (Con)
The issue is not just about chief executives. My local authority combined the roles of head of the primary care trust and head of adult social services, which saved money and provided a co-ordinated approach to delivering improved front-line services.
Mr Betts
The only problem with that is that the post of PCT head will go shortly, so that saving will probably disappear. The issue is interesting. I would have liked to be much more radical and bring the functions of the PCT generally within the orbit of local authorities. One or two Conservative councils—I think Essex is one—were up for that. There could have been some more radical changes to make savings.
Local authorities know that they have areas of statutory responsibility in social services and will try to protect those as well as they can. They also know that if reductions are made—this is becoming clear throughout the country—standards of street cleaning will deteriorate, as well as highway maintenance, for which there will be a 19% cut in capital funding. It is right to protect concessionary bus fares for pensioners, but there will be a squeeze on funding for integrated transport authorities in metropolitan areas. For example, subsidies for evening and weekend services, rural services and young persons’ concessions will be hit, and that will then hit people who are more deprived and do not have a car, and who are younger or older and rely on local bus services. The services affected will be those that deliver quality of life—parks, libraries and sports centres.
The Secretary of State said that there was no need for cuts in front-line services, but Doncaster, which has an independent mayor and Labour councillors, will close 14 of its 26 libraries. I understand that Gloucestershire will close 11 libraries and have seven open for only three hours a week. Somerset will close 20 of its 34 libraries, and Croydon will close five. Those councils, which are not of a Labour persuasion, are all making cuts in front-line services. Is the view of the coalition—both parties in it—that all those cuts are unnecessary, and that those councils are maliciously ruining services for constituents and residents when they need not be cut?
Andrew Percy (Brigg and Goole) (Con)
If the situation is as rosy as the hon. Gentleman suggests, why did my Labour council in north Lincolnshire increase the cost of the young people’s post-16 bus pass by 500% four years ago? Why did it have to increase council tax significantly at the rate of 12% over three years? Why have libraries been closed, and why have rural bus services been cut during the past five years—all under the Labour Government when things were so rosy? Does he not understand that part of the problem has been that, although more money came in, the Labour Government told councils such as mine where to spend it instead of giving them discretion to spend it on the services that they wanted?
Mr Betts
I have already said that I generally agree that councils should have greater freedom to make choices about spending decisions. In general terms, I welcome the power of general competence to give local authorities even more discretion. Having greater ability to spend but their resources cut is the ironic position in which most of them will find themselves.
Neil Carmichael (Stroud) (Con)
I am from Gloucestershire, and I have been dealing with this matter with Gloucestershire county council. I echo the point made by my hon. Friend the Member for Brigg and Goole (Andrew Percy) that the Labour Government left councils in a bit of mess by being so prescriptive about areas where they should spend money. The great thing about the present Government is that we will introduce so much more flexibility. Total spending power for front-line services in my area has not been cut as significantly as the hon. Gentleman is suggesting.
Mr Betts
I have given the overall figures, and I accept that some areas have done slightly better than others, but all authorities throughout the country had real-terms increases under the Labour Government. I challenge anyone to come back with an authority that did not have a real-terms increase in its spending. Generally, I support that, and I will not defend everything that the Labour Government did. Ring-fencing should be reduced, and I did not agree with separation of the schools grant. The Government have not been willing to challenge that, or give school grant funding back to local councils. If we believe in the freedom for people to spend and choose priorities at local level, perhaps that should have been done. Equally, I am not terribly happy about the free schools policy. It could take money out of local authorities and separate it from the system.
I support allowing local authorities more control over general Government spending in their area—the “total place” approach. I am a little disappointed in the Committee budgets; they are narrowly focused and down to 16 authorities, and that point was made in the Communities and Local Government Committee. However, I welcome the comments made by the Minister of State, when he said that the Government would listen to proposals from local councils if they came forward with wider or more innovative ideas about how Government spending could be better dealt with, so that councils could take the lead as accountable democratic bodies. That was a helpful comment, and I hope that we will see good examples of councils coming forward, and that Ministers will respond positively.
Finally, I would like to look at housing. I welcome the Government’s assertion that they will carry forward reforms to the housing revenue account. That places powers and responsibilities at local level, which is a helpful and welcome move. Local authorities will be disappointed—as am I—that they will not be allowed to keep all the receipts from any right-to-buy schemes, as they could under the previous proposal. I am concerned that the Government have the powers to reopen that settlement at any time. However, the Housing Minister has said that such a move would take place only in certain circumstances, and there is no general presumption that the Government would open the settlement without a reason.
I am concerned that the Government want to impose greater controls on local authorities’ ability to borrow for housing purposes—that goes against the idea of localism. Are not the prudential rules sufficient? Why do further controls need to be brought in as part of the reform? That does not seem to run with the grain of localism promoted by the Government.
Paul Farrelly
My hon. Friend raises the issue of housing. Does he agree that in order to tide themselves over the transition, many councils will be forced to dip into their reserves? That will clearly have an impact on future income generation. In Newcastle-under-Lyme in 2006, after transferring the housing stock, the Labour party left reserves of over £40 million. Under the Liberal Democrat and Conservative local government coalition, those reserves now stand at £24 million. At that rate of spend, it looks as if the reserves will run out by 2012. There has been no satisfactory explanation of how that situation was reached, or of whether council tax payers have gained value for money. Even though the council has been prudent in dealing with its housing stock, it could face having no reserves to dip into in order to tide it through a transition when the cuts are made.
John Robertson (in the Chair)
Order. Interventions should be kept a bit shorter than that.
Mr Betts
It is a difficult issue. The Minister will say, “Look at all the reserves in local government. They can help mitigate the cuts to services.” They can, but reserves run out; they are spent once and cannot be spent again. During ongoing reductions in spending, reserves can help a council through a problem, but they will not permanently deal with it. Furthermore, reserves are not equally distributed and often they are found in authorities that have made housing stock transfers and have a big dollop of money from that. Some of the reserves cited come from schools and are held at the centre by local authorities, some are housing revenue account reserves with a specific use, and some are needed for the cash-flow issues that councils face on a day-to-day basis. The reserves may help during the first year, but they are not a permanent solution to the cuts.
We know that capital spending on housing will be cut by half in the spending round. We have not been building enough social housing—or enough housing as a whole—in this country, and we can argue on another day about whether the proposals for the new homes bonus and the planning changes will help or hinder that. The Communities and Local Government Committee will produce a report on that issue in due course. Nevertheless, spending will be halved and after the existing commitments to build houses at current rent levels are met, there will be no central Government funding for houses other than those with rents that are linked to market rents—that does not necessarily mean 80% of market rent, but means rents that are linked to the market in some form. Those higher rents will help provide money to build new homes in the future. However, 150,000 new homes will not deal with the waiting list, and of those, any new starts will not have rent levels that many people can afford. That is the real problem.
The decent homes funding is also going to be cut. From the figures provided by the Minister, I calculate that the amount of money for decent homes over the next four years will be just over £1 billion, and the backlog of work still outstanding is around £4 billion. Therefore, it will be about 10 years—probably longer—before all council homes in the country are brought up to a decent standard. That is an awfully long time for people to wait.
George Hollingbery
Will the hon. Gentleman acknowledge the plans for flexible tenancies? They will allow more social homes to be recycled through the market place on the basis of need, rather than having homes allocated for 20, 30 or sometimes 40 years, to people who may not need them. Does he acknowledge the enormous pool of assets in the social housing stock, particularly in housing associations? Those could be leveraged in the market place more effectively than presently happens. Would he approve of that?
Mr Betts
There is a role for different approaches to the provision of housing such as intermediate market rents, more private institutional investment in housing, or links between housing associations and private institutional investors. Those ideas are interesting, and I would welcome them if we were building social houses at existing rent levels at the same time. My concern is that the Government are withdrawing from that. The other ideas are interesting, and in some cases exciting. I support those ideas, but not to the exclusion of money for social housing or of funds to get all homes to a decent standard. I am worried about that, and my overall concern is that we are approaching a housing crisis. Levels of homelessness will rise as unemployment increases. It is not only a matter of Government funding being cut; it is about mortgage availability. With increased deposit levels, young people are not able to get on the housing ladder at present.
Mr Stewart Jackson
I hear what the hon. Gentleman says about the availability of housing. However, in a period of substantial economic growth, the previous Labour Government managed to build no more homes over the course of each year than were built in 1926. That seems faintly unbelievable. Despite the Rugg review of the private rented sector, the Treasury never produced realistic proposals on real estate investment trusts, which have had great success in Europe and north America. The previous Government had the opportunity in a growing market to look into such trusts and remove the fiscal and legal impediments to grow that market. They failed to do so.
Mr Betts
I am not going to defend the level of social housing building by the previous Government; I do not think that it was adequate and I have said that many times in the Chamber and in Committee. A lot of the things that the Labour Government did, including the decent homes programme, were good, but we ought to have built more social housing. I am not sure that the Government proposals will address that matter. There is effectively a total withdrawal of funding from social housing as we know it, so that does not address the reasonable criticism made by the hon. Gentleman.
We should perhaps look harder at the tax and other impediments to real estate investment trusts. They are a good idea. Yesterday, I met with organisations that seek a more direct way of getting institutional investment linked to people who may want to part rent, part own houses. Is the Minister willing to meet a delegation to look at that? Some interesting ideas ought to have cross-party support.
I am sorry for taking up so much time, Mr Robertson, but I have tried to take interventions. My questions for the Minister are: why are local governments taking cuts that are well above the average for other Departments? Why is such front-loading necessary? It creates particular hardships, as councils up and down the country are explaining. The cuts have been large and fast. Is that why the Government have not been able to make them fairer, meaning that they hit poorest areas the hardest? If changes are made to eligibility criteria for social care, if libraries and sports centres are closed and if bus services are withdrawn, will it not be those suffering the greatest deprivation and need who are hit hardest? Is it not likely that the housing crisis that is looming large will be worsened, not helped, by the Government’s measures?
Those are my questions, and it is probably appropriate to end on them. I am sure that the Minister will have positive and good things to say in answer to all of them, although whether I totally agree with him remains a matter for doubt.
Mr Stewart Jackson (Peterborough) (Con)
It is always a pleasure to serve under your chairmanship, Mr Robertson. Today, we have the opportunity to pay tribute to the Government, as you would expect me to, Mr Robertson, for being imaginative and innovative within the confines of the comprehensive spending review and for seeking to engineer a paradigm shift based on a philosophical underpinning of decentralisation, localism and the devolution of power. The Localism Bill, which will have its Second Reading next week, does not take a slash-and-burn approach to local government. Nor, incidentally, is it a refutation of everything that the former Labour Government did before 6 May last year. There is a general consensus that the current Government are in favour of what the hon. Member for Sheffield South East (Mr Betts) called a drive for transformational local services.
I am a glass-half-full kind of chap, so I see the Government’s measures as an opportunity to drive forward localism in the context of the big society. That concept is, I admit, misunderstood, not least by some in my own party, but it chimes with some of the issues that the former Government were talking about before they lost power. In the previous Parliament, I sat through the Committee stage of the Local Democracy, Economic Development and Construction Bill, which had come from the House of Lords. As hon. Members will know, my colleagues and I did not oppose every aspect of that important Bill; it was a bit of a spatchcock Bill, but we supported certain measures because we thought that they were going in the right direction by devolving power and responsibility to individual councillors and officers. One such measure was multi-area agreements and another was leaders boards, which could be seen as fledgling local enterprise partnerships.
I have always been a bit unfashionable among members of my party in that I have—[Interruption.] I am getting sedentary interventions from my hon. Friend the Member for Brigg and Goole (Andrew Percy). I have always been quite in favour of at least looking at city regions as super local enterprise partnerships and as a vehicle for driving regeneration, and it is important that we continue to debate that. I am talking not about reconstituting metropolitan or non-metropolitan county councils, but about having bodies with real resonance. Local enterprise partnerships go some way in that direction on key issues such as post-16 education, public health and strategic transport.
Andrew Percy
I thank my hon. Friend for allowing me to mention the local economic partnership for the Humber region in the Minister’s presence. A huge argument is going on between our four local unitary authorities—the estuarial authorities—which seem unable to agree with businesses about the need for a Humber-wide economic partnership. We need such a body for the simple reason that it would, just as my hon. Friend says, represent the sub-regional unit, as opposed to the area defined by the more historic boundaries. I thank my hon. Friend for allowing me to make that point once again to the Minister.
Mr Jackson
I am always happy to facilitate an advertising break for Yorkshire and the Humber, as I am sure the Chairman of the Select Committee, the hon. Member for Sheffield South East, would be. In the previous Parliament, a report published by the Local Government Association found that the specific argument against regional development agencies was that they had not overcome the differences in economic growth within or between their areas, and work by management consultants Ernst and Young also found that.
The philosophical underpinning for local enterprise partnerships is that we recognise that there are very local economies. Even in an area such as the north-east of England—I am mindful of the need not to go off the point too much, Mr Robertson—there is a quantum difference between the economic issues that inform decisions taken on Teesside and those that inform decisions taken in Tynemouth, north of Newcastle or in Stockton-on-Tees. Even within that area, there are sub-regional economies, so I think we have made the right decision on local enterprise partnerships.
I want to talk now about the less than benign fiscal climate that we face. I think we will have a mature and grown-up debate today, but it is worth saying that Her Majesty’s Opposition committed themselves to a 20% reduction in local government funding. If members of the Labour party in Parliament and beyond are not going to make that reduction now, and given the Minister’s very good point about the Office for Budget Responsibility having looked at the net reduction as a function of local authorities being able to recoup funding in a way that the Ministry of Justice, for instance, cannot necessarily do, the question is what core services Labour party members will cut.
We have had a lot of lectures from the Labour party recently about local government cuts, so let us look at one example: Durham county council. The unitary authority there will see its formula grant reduced from £263 million to £235 million. We should bear it in mind that Surrey county council, for instance, will see its grant reduced from £178 million to £152 million. Durham seems to find enough funds to spend £3.73 million on communication. It has five diversity officers, four European officers, two climate change officers and an undisclosed number of staff working full time for trade unions. It has also refused to say how much its chief executive is paid. Funnily enough, it is sitting on £93 million of reserves. If I can be slightly partisan, my colleagues and I will accept lectures about the impact of cuts only if all the alternatives to cuts are being pursued.
Chris Leslie (Nottingham East) (Lab/Co-op)
I assume that the hon. Gentleman is proud to be giving a £1 billion cut in corporation tax to the banks in the coming year. That is value for money, is it?
Mr Jackson
I am mindful of the fact that the hon. Gentleman has great expertise as a member of the shadow Treasury team. That is true not least of local government issues, because he and I sit on the board of the New Local Government Network. However, to pick up on the exchanges at Prime Minister’s questions yesterday, the former Government’s lack of effort and application speaks volumes about how imperative they saw the need to deal with that issue.
James Morris (Halesowen and Rowley Regis) (Con)
Is not my hon. Friend’s real point that although we hear a lot from the Labour party about the unexpected depth of cuts, preparations have been going on in local government for at least two years in the expectation that fundamental change would come along the line, irrespective of the party that was in government?
Mr Jackson
Absolutely. Credit where it is due; authorities of all political colours were mindful of the fact that, whichever party was elected, there would be a reduction in the revenue stream because of events in the world economy and the financial collapse. We should also mention the three pillars of the previous Labour Government’s economic policy. One was house building, which, as we have seen, did not work out too well. Another was unlimited public expenditure without proper reform. The third was financial services. I am afraid that all three pillars crumbled, and we are now having to pick up the bricks and mortar left by the parlous economic mismanagement of the elusive right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).
That is the situation that we face. Let us remember that we are now paying £120 million a day in debt interest. In September last year, we were borrowing £15.6 billion a month. During the same month, interest payments on borrowing rose to £2.3 billion, up 150% on the same period in the previous year. Indeed, at the present rate of borrowing, had the Government not taken the decisions that they did, Government debt as a percentage of gross domestic product would peak in 2014 at 70.3%. We would be in the Portugal, Greece, Iceland and Ireland ballpark. For the Opposition to say that the Government should not have taken the decisions they took in the emergency Budget and comprehensive spending review is extremely irresponsible.
To move on to the issues about local government, the CSR is an opportunity for local government to scrutinise spending, make financial savings and redesign the way it provides services. It is also a challenge for local authorities to consider not only the costs of services but their value to communities. The CSR is pushing councils in the direction of being more innovative and involving the private sector, the voluntary sector and business sectors—I shall talk about some practical examples of the big society a little later—in a dynamic and intelligent use of resources. Removing the ring-fencing of grants, and the aggregation of grant funding from 90 income streams to 10 is exactly the right way to do things. I shall talk later about some of the additional funding issues that will give sustenance to local government in looking to the future, when the economy begins to grow and we have reduced public sector debt, such as the regional growth fund, the new homes bonus and, of course, early intervention grant. All those are extremely important.
As the Minister said, we are facing a net reduction of 26% in real terms between now and 2015, but the likely reduction estimated by the Office for Budget Responsibility is 14%. Of course that is speculative because we do not know the level of the income streams, and how each council will innovate to maximise income and assets. The Localism Bill contains good news for councils about their ability to exert more control over assets and share community assets with local people. My local authority is involving the private sector. Peterborough’s core front-line services, such as street cleaning, recycling, grounds maintenance and household waste, will be handled by a preferred bidder, Enterprise Managed Services Ltd. That is an example of a local authority that is innovating, and that has in recent years been thinking hard, with a business transformation team, to prepare for less than benign financial circumstances.
I was an Opposition Front-Bench spokesman on Communities and Local Government, and I want to think about areas that could have been examined, but were not. Fire control was an utter shambles. The predecessor of the hon. Member for Sheffield South East as Chair of the Select Committee, the sometimes fearsome Dr Starkey, was pretty straightforward and robust in her analysis. It was a financial, management and political disaster on many levels. It was bad. Now, because the Government have bravely picked up the baton of dealing with that issue, local authorities are being forced to think in innovative ways. They were doing that before, anyway. I visited Wiltshire and Swindon fire authority, in the constituency of my hon. Friend the Member for North Swindon (Justin Tomlinson), 18 months ago. The authority was already working with Vosper Thornycroft and with Avon and Gloucestershire on such things as premises, training and vehicle maintenance. The CSR will, I believe, be a catalytic change, so that fire authorities can do that. It will spread throughout payroll, human resources, senior management training and that kind of thing, and we will all agree with that.
One of my responsibilities in opposition was to think about the Thames Gateway. If ever there was an alphabet soup of shambolic mismanagement, it was that—100 separate bodies receiving grant funding, and about 120 statutory consultees. It was the Schleswig-Holstein question of local government. Anyone who understood the Thames Gateway was either mad or dead. I was neither, and did not understand it. That is now being subsumed into mainstream funding.
I want to talk about tax increment financing. One of my criticisms of the Government is that although they talk about it, they are not as yet persuading their Treasury colleagues to buy into the concept of supporting it practically. For want of a better expression, invest to save: with a little bit here there will, further along the line, be a lot. That will be a catalyst for building local economic regeneration and renaissance. I am still not convinced that the Treasury is fully committed to that, in the same way it was, incidentally, to other initiatives of the Labour Government in the previous Parliament.
I have already talked about ring-fencing and the general need for fiscal consolidation. I believe that the issue of targets and ring-fencing gives an important message to local government that we believe in localism. The power of general competence is an enormously important message to local government about civic renaissance, civic pride and putting local people in the driving seat. I am mindful of the fact that the Labour Government promised that in 1997. For some reason—I do not know why—it was not delivered. I think we can all agree that trusting local authorities, which is what the enactment of the power of local competence will achieve, will give councils of all parties that strong and powerful message. I suspect that in the next two or three years there may be a few more councils of the party of the hon. Member for Sheffield South East than of mine—but no names, no pack drill.
Of course the Bill also contains a duty to co-operate on infrastructure. That is important for a facilitation of strategic partnerships with primary care trusts and other larger and smaller local authorities. There are local authorities in west London sharing chief executives, and some smaller local authorities—South Holland, and one in Leicestershire, but I forget which—are also doing so, with a significant revenue effect.
Mr Jackson
I am happy to give way to my hon. Friend, who has great experience in local government.
Bob Blackman
Does my hon. Friend agree that, although the sharing of services and offices is being talked about adequately, what is not being put forward or debated is the question of councils coming together to use their buying power in the market, rather than getting into a reverse auction in which they compete to buy services, and must pay more than they would otherwise have to?
Mr Jackson
My hon. Friend makes an astute point. In fairness, one interesting success—my hon. Friend the Minister may not agree—was the Firebuy initiative. It was mixed, admittedly, but the model was that, in the procurement of equipment for the fire service—whether helmets, appliances or other kit—instead of the authorities making 46 pitches and carrying out 46 tests and experiments, there were economies of scale and purchasing power. It never quite worked, but I think it was on the right track. No doubt the Minister will consider my words when he thinks about the future of Firebuy. However, my hon. Friend the Member for Harrow East (Bob Blackman) is right that that side of local government function has not worked as well as it could and should.
Local government makes a massive impact in local economies in terms of people who work for local government and people who contract with local government. In fairness to the present Government, throwing open the contracting process, the tender process and the purchasing process in terms of who makes the decisions and what value judgments they make on what they are buying is being looked at by the Minister of State, Department for Communities and Local Government, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), and by others, including, I think, my right hon. Friend the Minister for the Cabinet Office and Paymaster General, to revolutionise transparency and openness in local government, so that we know why it costs £400 for every 1,000 wheelie bins in Reigate and Banstead but in Windsor it costs only £250. People have every right to know that in this age of transparency. After all, if they know how many toilet rolls that the Member of Parliament for wherever is buying for his office, they should certainly know about and care about how their money is being spent on key services, although God help the concept of the Independent Parliamentary Standards Authority being involved in purchasing in local government.
Mr Jackson
We could rely on it, though, to have a very well paid communications officer to explain to us why that was the case.
I am also slightly worried about community budgets in relation to early interventions. We need to roll that out across the country. There are substantial issues of economic and social deprivation in many parts of the country. Sixteen projects is good, but we need to draw on the lessons from the work by my right hon. Friend the Secretary of State for Work and Pensions and by the hon. Member for Nottingham North (Mr Allen) on early interventions. The hon. Member for Nottingham East (Chris Leslie) will know that his colleague has done a fantastic job in raising the profile of early interventions. We need to take forward some of the work that he has done.
Following on from that, we should be cognisant of the work that the Dilnot commission is doing on social care, because that will inform the Government’s position with regard to the £2 billion boost to social care funding. We are sitting on a demographic time bomb. There are things that we need to be doing in preparing for the number of over-85s doubling in the next 20 years, for instance. Ministers need to be working across Departments to ensure that those demographic changes are reviewed and reflected in the grant, particularly for personal social services.
As for social housing, the hon. Member for Sheffield South East and I have had a rather party political debate. To be fair, I pay tribute to the right hon. Member for Don Valley (Caroline Flint), who issued the rallying cry about tenure. She was royally slapped down by most people in the Labour party, but she was brave enough to mention tenure reform while in government. We must have that debate, as my hon. Friend the Member for Meon Valley (George Hollingbery) said, because it cannot be right that those who need housing most are not necessarily the ones who are prioritised, because of the existing tenure culture.
I see things in a very positive way, because I think that the linking of market values—80% of market values—to the provision of social housing will create significantly greater income streams for registered social landlords, to deliver not just social rented properties but intermediate housing, particularly key worker housing, which is very important in my constituency, and shared equity housing. So many local authorities and so many cities and towns in our country, particularly in the south and midlands, face the issue of the huge disparity between what working people can afford and the price and availability of mortgages.
This is a side issue, but I really hope that the Financial Services Authority keeps in mind the needs of first-time buyers and the availability of mortgages in its mortgage market review. I pay tribute to my right hon. Friend the Minister for Housing and Local Government, who met representatives of the FSA the other day to make the point that it should not be unduly prescriptive and prevent young people in particular from getting on the housing ladder. Developers and house builders are a major part of all our local economies, and for the sake of the country, we need that market to improve.
That is obviously part of the comprehensive spending review, but I will resist the temptation to meander down the path of having a full-blown debate on housing. We are not a million miles apart in many respects, although we have had some disputes about housing benefit and related issues.
It is a pretty stark statistic that in 1970, about 20% of people who lived in social housing were not in paid work, whereas now the figure is not far off 70%. It cannot be right that in the sixth biggest economy in the world, we are embedding welfare dependency in social housing. We need to break up the mono-tenure culture of social housing, because to leave millions of families, including millions of children, in the twilight world of welfare dependency and poor housing is immoral. That is why, if the Government do nothing else, they must tackle welfare dependency, poor housing and the other, related issues.
We need to have a bigger debate, and I hope that the Select Committee looks at the bigger debate, about the fiscal autonomy of local government. A very interesting document was produced not that long ago by the TaxPayers Alliance. It is not always friendly to Members of Parliament, I have to say, but it does produce some very good documents, and one was about the fact that we are the most centralised country, as between central and local government, in the developed world. Well under 20% of local authorities’ revenues come from taxes that they raise themselves locally; the average for Britain’s G7 competitors is more than 60%. This is the key point: the countries with the most efficient public sectors are all much less centralised than the United Kingdom. According to the European Central Bank, the United States, Australia, Japan and Switzerland enjoy an average efficiency lead over Britain of 20%. If Britain could match that efficiency level, spending could be cut by £140 billion with no diminution in the standard of public services.
The Treasury needs to consider that challenge. If we are not just talking, going through the motions, shadow-boxing and engaging in rhetoric about localism, trust and a renaissance of local government, we need to be thinking in the local government review about providing real power in terms of asset-backed vehicles, tax income and financing and other fiscal measures—for instance, the issuance of municipal bonds for bridges, community centres, street lighting and so on.
I do not always agree with my local authority on everything, but it has set up an asset-backed vehicle called the Peterborough development partnership, because it realised what the position was. Mine is a new city, and the Peterborough development corporation ceased in 1988. We simply cannot refresh and renovate all our infrastructure, which was built between 1968 and 1988 by the Peterborough development corporation, without accessing private capital through an asset-backed vehicle. It is vital for the Treasury to understand that and to make the requisite changes in policy in the course of this Parliament.
To finish, may I say a little about the big society? It constitutes a great opportunity and a paradigm shift for local authorities. I draw the House’s attention to a project in my constituency that is not necessarily linked closely to local government, but is nevertheless an exemplar: the St Giles Trust social impact bond at Peterborough prison. The charities involved will receive 46% of the indicative revenue funding to keep a prisoner in prison for a year if they keep that prisoner away from recidivism for a whole year. That is a good example because it gives a fiscal incentive for the charities to do that and it is good for society and good for the prisoners. We need to think more about such initiatives.
An example more closely linked to local government is that of Sandwell Community Caring Trust in the west midlands. That charitable trust has significantly reduced, for instance, staff sickness and the cost of delivering personal and social care, particularly to elderly people. It has been so successful that in 2008 it won the contract from Torbay unitary authority to do its social care. The trust is using the assets in the public realm to deliver more cheaply than local government. I do not see that it is a challenge for local government to work with such organisations; it is a question of square pegs for square holes. Local government is better at some things than others.
I pay tribute to my hon. Friend the Member for Dover (Charlie Elphicke) and his people’s port campaign in his constituency. It is an example of something that was going to slip from local and national control to an international consortium, which would have had little feedback from and interaction with people who care about the local area and the regeneration of the port of Dover, and in the long term, about the viability of that economy and that town. It helps to have Vera Lynn launching your campaign. I think she can sing better than my hon. Friend. That campaign is an example of people working together along the model of the big society.
The Minister will no doubt refer to the Localism Bill, in which we will see on Monday the right to challenge, to take over assets and encouragement for communities to run what the local authority may not want, or have the financial resources, to run. That is the bigger picture about tackling the concept of asset inequality, because, whether we like it or not, too few people control assets. I am very proud to say that my party ameliorated that in the 1980s with the right to buy, which was a wealth transfer to ordinary working people of assets to give them control over their lives. It was one of the best policies, if not the best, ever put forward by a radical, free-market supporting Government in this country. It gave people, and their children, a stake in their futures and their communities. I will never resile from the fact that it was positive. I see that and the growth of mutualism as positive developments in the Localism Bill. This Government, in many respects, is most radical on those issues, as with their welfare changes.
I am delighted to participate in this debate. The Opposition need to move on from the paradigm that more money will deliver better services. They need to understand that that model has been tested to destruction. There is a new model. It is important to take the best of what has been done before, under both Governments, but principally to trust local people in our communities and their elected representatives. They have the capacity and the commitment to deliver the goods for local communities now and in future.
John Robertson (in the Chair)
Order. Before we go any further, may I say that the two contributions we have had have been somewhat lengthy—well over half an hour in each case? If that were the case for the next few speakers, they would be all who would be allowed to speak. Would Members please look at the time? I intend to call the reply from the Committee at quarter to 5 and then the summing-ups. You have an hour between you, so you can work out how long you should speak for.
Chris Leslie (Nottingham East) (Lab/Co-op)
I shall be extremely brief, Mr Robertson, not least because I gather that a Division in the House is expected shortly. I respect the hon. Member for Peterborough (Mr Jackson) in many ways for his contribution, but he may need to look again at his “glass half full” strategy. I suspect that if he has been drinking anything, it will have been the poison in that glass, which has, perhaps, tainted his bloodstream and given him a false sense that local government can skip off into the sunset and cope with a mere wrinkle in its financial settlements. I am afraid that the veneer of normality affecting local government as a result of the spending review he describes masks an enormous near-Armageddon scenario facing local public services, particularly in my constituency in Nottingham.
It is especially cruel that this finance policy should be cloaked in the guise of localism. As a localist, I find it difficult to see anything being devolved other than the axe slashing at public services. I would almost prefer it if the Secretary of State and the Chancellor of the Exchequer were simply to admit straight and up front that they are shifting the burden of public expenditure reductions to local authorities because that way they can get away with the harshness of the impact on public services more effectively. That the Government pretend that this is within the paradigm of localism shocks me.
First, I want to comment, from the Nottingham perspective, on the brutally regressive nature of the settlement for my constituents. It is appalling that the debasing of area-based grant and the abolition of the neighbourhood renewal fund will see a cut of more than £55 million affecting my city. If we roll in any number of other changes, such as the £4 million cut in the concessionary fares grant, the reduction, even with some of the social care uplift, is about 16.5% in one financial year. That is the loss of a phenomenal amount of money for that community.
Chris Leslie
Indeed, which brings me to my second point—more quickly than perhaps I wanted, but it will help the debate. In Nottingham, the Supporting People budget in particular is falling from £22.3 million to £12.4 million. In correspondence the Minister said, “Well, you can’t really tell what’s happening to Supporting People because we’ve rolled it into a formula grant as part of our localism strategy”. However, we can discern in the formula grant from the fifth block— “Grants Rolled in Using Tailored Distribution”—that the amount of money is falling, and it is the fifth largest reduction in England. Nottingham has some of the highest levels of vulnerability, homelessness, teenage pregnancies, alcoholism—any number of problems that the Supporting People budget should be going towards—so it is incomprehensible that the formula should be skewed in a way that hits our city with the fifth greatest reduction.
Thirdly, we should look more generally at the specific grants. I have to challenge the Minister to justify, if he can, the table of statistics that has come from his Department, which the Library has confirmed. It shows that when it comes to the allocation of specific grants, the most deprived local authorities—the most deprived decile, which is the top 10% of deprivation—will see a minus 12% settlement, but the wealthiest 10% of local authorities will see a growth in their specific grants of 24%. By any measure, a dispassionate observer would say that that is a regressive settlement. Hearing this spinology is a real kick in the teeth for vulnerable communities—trying to pretend that this is a progressive settlement, that everything is rosy in the garden and they should just go for a few more efficiencies or shared services. I am afraid that this is far beyond the good work that many local authorities, of all political parties, have been doing to improve local government and make it more efficient. In the past 10 years, local authorities have been the sector of public services that has driven the most efficiencies—far beyond those delivered by central Government. There is no recognition of that in the settlement—quite the opposite. They have been slapped in the face by the Secretary of State and it will be very surprising if some local authorities do not have severe difficulties setting their budgets.
There are other issues about the fire service in Nottinghamshire having to cut 36 fire engines to 30. There are big issues of safety and other questions within the Department for Communities and Local Government budget, but I have made the simple points that I wanted to make. This is a regressive settlement. It is the harshest in history, and I hope the Minister will at least admit that, rather than trying to cloak the arrangement in the localism on which we should all be trying to agree.
George Hollingbery (Meon Valley) (Con)
I will attempt not to repeat points made earlier, in the interests of time.
There is no getting away from the fact that this matter must be considered in the context of the overall Government settlement, the overall level of spending across Government and the spending plans that we inherited from the previous Government. There was much muttering from the right hon. Member for Tottenham (Mr Lammy) earlier about how this was wrong, irrelevant and did not matter. The simple fact is that the right hon. Member for Edinburgh South West (Mr Darling) announced spending cuts of 20% in the Budget in March last year. The spending cuts announced by the Chancellor this fiscal year are 19%.
If we are to change the settlements for local government, if we are to change the timings—which are as important as the amounts, because a pound saved this year is one saved next and the year after—the Opposition have to make some effort to tell us what they would cut instead. I am a local government specialist; it is my area of expertise, if I have any at all. I spent 11 years in local government and very much believe in the worth of local government to local people. I understand that there are other services out there that will be cut if we get improvements. A simple question to the Opposition: what will they be? Here comes an answer.
Mr David Lammy (Tottenham) (Lab)
May I remind the hon. Gentleman that this is a Back-Bench occasion? I know that he understands economics and will appreciate that in seeking to deal with our deficit, the pace at which we deal with it is pertinent, but so is the nature of the tax take. Therefore, there are decisions on tax about which Back Benchers would rightly want to make their views known. The position in relation to the banking levy is felt strongly by the Opposition. It is disingenuous to caricature this as solely a debate about cuts.
George Hollingbery
Plainly, this is not a debate only about cuts, and plainly it is an occasion for Back-Bench contributions. It should centre on the evidence given to the Select Committee. Those points were raised in the Select Committee, which is why I refer to them. I notice that the right hon. Gentleman did not answer the question; he did not seek to identify what else he would change. That is fair enough; he is not obliged to do so. However, I posed the question and it was not answered.
The Department has led from the front, and it is right to identify that. The hon. Member for Sheffield South East (Mr Betts), the Chair of the Committee, talked about a 68% reduction in spending within the Department. We have had a small debate this afternoon about whether that is the right number. I understand the point he made about the Department needing to identify exactly what money is being transferred down, such that the figure drops from 68% to 33%. In evidence to the Select Committee, the Secretary of State was adamant that it was 33%, and I think that at this stage we must take that as given. The number of directors general is being cut from six to three; and the number of directors from 26 to 20 in the current year and 16 in the following year. That is a Department leading by example, and we should applaud that.
Considerable efforts have been made in the settlement to protect the most vulnerable authorities. Plainly, those authorities that receive the most grant are those that represent the most vulnerable people. It is a truism that in times of cuts and grants to local government, those that receive the most are likely to see the biggest cuts. We have to admit that that is the case. That is bound to be the case in absolute terms. The Minister for Housing and Local Government admitted such in his evidence. However, the Administration bent over backwards to try to mitigate the effect of those cuts. They would have been very much worse if mechanisms had not been put in place to damp the effects. We saw the new banded floors, the adjustment of the relative need formula and, of course, £85 million of transitional funding.
While there is a correlation in the graph produced by the Scrutiny Unit that shows that some of the most deprived areas will see the biggest cuts, the effect was hugely reduced by the actions that were taken. I do not think that in the circumstances the Government had any alternative but to reduce spending. Therefore, there was always going to be that effect. However, they have done as much as they possibly could to mitigate that effect.
Justin Tomlinson
Does my hon. Friend agree that not all cuts are bad? Those on fixed incomes or facing a pay freeze would welcome plans to freeze council tax and cut out any potential rises.
George Hollingbery
Of course I agree with that. There are plans, as Members will know, to freeze council tax in the current year, and money has been provided to do so. There are also many innovations that can be moved forward. It is a terrible cliché, but necessity is the mother of invention, and I hear a lot of extremely exciting plans to save money across local councils. I will return to those in a moment.
In evidence to the Select Committee the Minister for Housing and Local Government said:
“If most of your funding comes from the Government, rather than from other sources as a local authority, even if you take the most extreme measures, which we've taken by increasing the deprivation index and doing all those other things—three specific steps—you still end up in a position where spending power is reduced more in areas where the primary source of function is the taxpayer.”
The Government admit that that is the case and huge efforts have been made to try to get round it. There is recognition of that in other parts of Government. The national insurance contribution holiday for small business start-ups applies to those areas of the country where there is more deprivation. Areas in the east and the south-east are specifically excluded from the NIC holiday. Therefore, we would expect to see a growth in new businesses in those areas that receive that stimulation. That is a substantial budget that should not be ignored.
To return to some of my local councils: Hampshire country council has lost £45 million of formula grant in distribution changes since 2003-04. Evidence to the Select Committee has shown that the grant per head in the south-east is about £375, and £700 or thereabouts in the north-east. Those of us who know about local government will understand that that is right. There should be less funding in the south-east. We are a wealthier part of the world, and that is to be expected. However, Hampshire will lose another £71 million of grant in the current year. To hear the leader of Manchester city council talking today about his cuts in budget as representing
“re-distribution of money from Manchester to more affluent areas”
in the south, beggars belief.
George Hollingbery
It is particularly galling that the leader of Manchester city council should say that. If we look at the raw figures we can see that Manchester is receiving £354 million this year for 480,000 citizens, whereas Hampshire is receiving £185 million for 1.3 million citizens. Although there are deprived areas of the country that need more money, we must look at scale.
I shall cut down my remarks quite considerably because a number of Members still wish to speak. Let me mention the plight of Winchester and of East Hampshire. I know that the Minister is aware of the issue of South Downs National Park funding and that he is meeting my hon. Friend the Member for East Hampshire (Damian Hinds) to talk about it. None the less, it is a difficult pill for East Hampshire to swallow. Hampshire county council, like many other councils from which the Committee has heard over the past weeks and months in our Localism Bill inquiry, is being very innovative and is undertaking an enormous amount of exciting work that will produce new ways of doing things across the piece.
It is interesting to consider what a reduction in service is. Is the closing of a library a reduction in service? It seems self-evident that it is. However, I am not entirely certain that it is. What if someone wants to run their library service in a different way? If they can close down libraries but, at the same time, provide a better service that offers more books to more people in the right place at the right time, is that a reduction in service? I am not entirely convinced that it is. There is a wider argument to be had here about what these changes may mean.
George Hollingbery
I understand the right hon. Gentleman’s point, but using a very large and poorly insulated building as a drop-in centre for elderly people seems a rather expensive way of providing social care. It is like providing post offices in rural locations as a social support network. If that is the service that the right hon. Gentleman wishes to provide, perhaps there is a different way of funding it that is cheaper and offers better value not only to the citizens in the area but to the people receiving the service. I am not being flippant. I genuinely understand the right hon. Gentleman’s point that such services provide wider benefits, but perhaps councils should think about how they provide their services.
The other day the leader of Hampshire county council made a useful point to me. Many councils make assumptions about what is important to local people. The leader was very clear that the council had to survey local people to find out what they wanted to see protected if reductions were required in front-line services. The results were very surprising. The obvious things that one would think were terribly important, such as roads, were not necessarily what people came up with. In fact—I welcome this—nearly everyone said that protecting services for the vulnerable was the thing that should be done up front and if that meant having a few more potholes, so be it.
I challenge councils to ensure that, when they reduce services, they understand what they are reducing and why, and find out whether their citizens think that they are the right things to reduce.
In November 2009, an article on the Total Place initiative in the Municipal Journal said that only 5% of all local spending was under the control of elected councils. So when we talk about substantial reductions in local services, through local councils, there is plainly some truth in it, but huge amounts more of Government spending go on in local areas than just what goes through local councils.
I will pass over the extensive evidence of innovation that we have had from councils across the country. As a Committee, we have been greatly encouraged by the fact that there is a lot of innovation. That will be further helped by the removal of ring-fencing, which will allow councils to spend more money in the way they see fit. Of course, the Localism Bill itself contains a large number of provisions that will make that easier, including the general power of competence, the community right to challenge, provisions for pay accountability, the transfer of community assets and the abolition of the standards board. Those are just a few measures in the Localism Bill that should help to reduce costs, increase flexibility and allow innovation.
In conclusion, this is a challenging time for local councils, and nobody who is interested in local government should pretend otherwise. Nevertheless, there are enormous opportunities out there to innovate. The ring fences have been removed and the gloves have been taken off for local councils; they can do things in different ways, but they must re-examine their services, look very carefully at what local people want and look innovatively at providing better services in newer ways that provide better value for money and are better tailored to their local areas.
Stephen Gilbert (St Austell and Newquay) (LD)
It is a pleasure to serve under your chairmanship for the first time, Mr Robertson. I will try to heed your earlier comments about brevity. It is clear to everyone here that local government has had one of the toughest settlements for many years. As we tackle the largest deficit in our peacetime history and face up to the legacy that has been left to this coalition Government, the sector will come under pressure. The hon. Member for Sheffield South East (Mr Betts) set out his perceptions of some of those concerns, but he failed to mention how big a role his party played in getting us into the position where some of these measures are necessary. There is no doubt that the settlement will be extremely challenging for local councils. However, there are some aspects of it that should be welcomed.
As my hon. Friend the Member for Peterborough (Mr Jackson) said, it is clear that the ministerial team has worked extremely hard to soften the impact of the inevitable impact of the spending reductions. Indeed the Department here in Whitehall is taking a significant budget hit, which will, no doubt, be keenly felt, but it is being done to ensure that as much money as possible can make it out to local authorities in the country. What is also welcome—the Chairman of the Select Committee acknowledged this—is the fact that £85 million of transitional funding will help the 37 authorities that would otherwise have seen sharp falls in their spending power.
Like most Members, I welcome the ending of the ring-fencing of most grants. I also welcome the new public health grant and the streamlining of other grant funding. The fact that there were more than 90 individual grants was clearly a symptom of the centralising, top-down, “Whitehall knows best” approach of the last Government. As a result of actions taken by this Government, councils will have more freedom to spend the money that they receive on the things that matter to the communities they represent, although clearly that will have to be done in the context of a very challenging funding settlement. It is my view—I hope it is shared by other Members in Westminster Hall today—not only that it is better that decision making happens at the most local level possible but that, in most cases, better decisions are taken at that level.
As my hon. Friend the Member for North Swindon (Justin Tomlinson) has already done, I welcome the Government’s commitment to a council tax freeze. The fact that £650 million has been made available by the coalition to achieve that freeze in councils that opt for it will take the pressure off many hard-working families who are struggling to make ends meet.
However, I would like to put on the record my concerns about the possible impact of the spending reductions on three areas, particularly in view of continued increases in cost pressures. Those areas are housing, adult social care and flood defences, all of which are key issues in my constituency of St Austell and Newquay and I am sure in many other constituencies.
I fundamentally believe that Governments of all political persuasions have failed on housing policy. Today, 1.8 million families in this country languish on social housing waiting lists. If the first duty of any Government is to protect their citizens, in my view the second duty is to ensure that people are able to access decent, secure accommodation at a price that they can afford. I therefore welcome the Government’s commitment to spend £4.5 billion on delivering 150,000 new affordable homes during the next four years, including £2 billion for the new affordable rent programme. Of course, that is not nearly enough but it is a vast improvement on recent years. Indeed, right hon. and hon. Members might be surprised to learn that this coalition Government will be the first Government to make a net addition of homes to the social housing sector since 1979. The reform of housing finance, to give financial independence to council landlords, is also a significant step forward. However, I share the concern that the hon. Member for Sheffield South East expressed—
Alison Seabeck
I acknowledge the hon. Gentleman’s point about net additions to social housing stock, but will he acknowledge that the reason there has been no net addition has been the right-to-buy policy? Under the last Conservative Administrations, twice the number of social homes were lost under that policy than were lost under Labour.
Stephen Gilbert
I thank the hon. Lady for her contribution. However, as she will know only too well, the reality is that under the last Labour Government there was a net loss of 43,000 social homes in 13 years. That is not a record to be proud of; it is a shameful record and I hope that she may be able to share some of the regret that her hon. Friend the hon. Member for Sheffield South East expressed when he said that he felt that the last Government had not gone far enough in tackling that problem. In fact, I was about to agree with the hon. Member for Sheffield South East again—I will try not to make a habit of it—by saying that I remain concerned that the Treasury will continue to retain 75% of receipts from future right-to-buy sales and I would appreciate it if the Minister could explain the thinking behind that approach.
I also want to take the opportunity to give a bit of a plug for the Department for Communities and Local Government. The Government’s consultation on housing ends on Monday and I encourage Members here today and those who may be watching these proceedings to make their views known.
On adult social care, we know that the transfer of learning disability funding from health care to social care is being achieved through the introduction of a specific grant. All other funding related to adult social care has been rolled into the formula grant, including Supporting People funding. Also, a welcome £l billion of extra funding for personal social services was announced in the spending review.
However, despite the measures that the coalition Government have taken to protect vulnerable people, Cornwall county council has decided to cut spending on Supporting People services by 40% and is pressing ahead with those cuts despite having healthy reserves. In addition to terminating several contracts completely, the council has written to providers of somewhere between 70 and 80 services, cutting the contract prices by 40%, and has given providers of the remaining 15 services to understand that they will be subject to similar cuts shortly. That is likely to lead to a massive hit for vital services that are provided to very vulnerable people, such as those provided by Cosgarne hall in St Austell, which is dedicated to the alleviation of homelessness among vulnerable and socially excluded people. Most of those services will find that hit difficult to absorb and some will find it impossible.
I do not pretend to be an expert in local government finance; indeed, I have yet to meet anybody who does pretend to be an expert in local government finance. [Laughter.] However, I have studied Robert Davies and Shehla Husain’s letter of 22 December on the DCLG website, which explains the workings of the formula grant in relation to the Supporting People grant; and the settlement figures. From that, it seems to be the case that the amount of formula grant that Cornwall will receive for 2011-12 that is attributable to the Supporting People programme will be somewhere between £13.8 million and £14.3 million, which is almost no change on the figure for 2010-11 of £14.2 million.
In that context, the cut of 40% by Cornwall county council is utterly disproportionate to the change that the coalition Government have made to the council’s funding. The savage cuts that the council are carrying out will deprive many hundreds of the most vulnerable people in Cornwall of the vital services on which they depend. I do not believe that that is fair. Indeed, it represents very short-sighted decision making, as money spent on supporting vulnerable people is likely to save money in the long run. Indeed, my right hon. Friend the Secretary of State has said on the record:
“Most sensible local authorities will come to the conclusion that every pound spent on Supporting People is probably going to save them five or six quid further down the line.”
I do not expect the Minister to respond to me today about whether I have correctly interpreted those figures; I stand ready to be corrected, because as I have said I am certainly not an expert in local government finance. However, I would appreciate it if he could take a look at the issue in Cornwall and drop me a line about it.
Finally, I want to mention flood defences. As Members will no doubt be aware, my constituency suffered from severe flooding just a few weeks ago. Following the Flood Water and Management Act 2010, a new grant of £20.9 million in 2011-12, rising to £36 million in 2012-13, will be paid to reflect the new responsibilities that have been given to local authorities. That is a welcome step forward. However, it seems that although the Government are giving with one hand they are taking away with the other. There will be a transfer away from the formula grant of £21.5 million in 2011-12 and £42 million in 2012-13, to reflect assumed savings on the maintenance of private sewers. From October this year, when the Act comes into force, those sewers will be the responsibility of utility companies.
The impact assessment for the draft Bill and the subsequent Act by the Department for Environment, Food and Rural Affairs calculated that local authorities spend more than £50 million a year on private sewers across various departments, including environmental health, technical services, building control, engineering, housing and planning. That assessment was based on a 2002 survey of only 12% of authorities, which supplied mainly estimated figures, which at the time even DEFRA advised should be used only as a guide. No local authority that I have been in contact with recognises the figures that have been used in DEFRA’s calculations or agrees that their authority is spending anything like the assumed cost. There is very little clarity about DEFRA’s base data or the methodology used to assess current costs.
Mr Robertson, you might wonder—indeed, you might wonder quite rightly—why I am mentioning that assessment in a debate about the Department for Communities and Local Government, but there is a clear implication for local government funding in the future. I hope that the Minister will ask his colleagues at DEFRA to revisit the survey of costs to authorities, in order to get a better picture. In my constituency, we have quite clearly seen that the first responsive organisation is the local authority and we must ensure that it has the tools and resources not only to deal with floods after they have happened but hopefully to prevent them.
To conclude, there is no doubt that local government will face a challenging period now and in the next couple of years and it is more important than ever that this Government live up to their rhetoric on localism. I urge my hon. Friend the Minister to take heed of some of the concerns about front-loading of the proposed reductions and to look with vigour at the potential savings from place-based budgeting. There is much to welcome in the Government’s approach to the funding settlement and the broader localism agenda, which in my view will finally take Whitehall out of the town hall. However, I for one am anxious that we get that approach right, both for local authorities and for the vulnerable people that they represent.
James Morris (Halesowen and Rowley Regis) (Con)
It is a pleasure to speak before you for the first time, Mr Robertson. As a member of the Select Committee on Communities and Local Government, I welcome the opportunity to speak in this important debate. In the spirit in which the hon. Member for Sheffield South East (Mr Betts) started the debate, I will reflect on some of the important realities of the settlement for local government.
As other hon. Members have said, this is clearly a challenging time for local government. I represent a seat in the metropolitan west midlands that straddles the Dudley and Sandwell metropolitan boroughs, and I know that both those local authorities are having to make difficult decisions about their budgets and priorities. There is no way around that. However, as other hon. Members have also said, the environment might be challenging but it is not unexpectedly so. Even if a Labour Government had been elected, significant cuts in local government expenditure would have had to be made. That is a point of context that must be made in order to inject some reality into the implications of the comprehensive spending review and its impact on the DCLG and local government. The spending review has presented the Department with a difficult series of choices; there is no way around that. The spending review and some of the evidence that we in the Committee have gathered raise interesting questions and present opportunities for local government.
Over the past 20 years, there has been an obsession with top-down performance management in local government. We must now move forward into an age of innovation and collaboration. One perhaps unintended consequence of the CSR is that it has focused attention on the funding relationship between central and local government, which we must examine rigorously, as it is clearly important.
The scale of the fiscal consolidation that the Government are undertaking and its impact on DCLG and local government has produced some welcome and important initiatives. Other hon. Members have discussed the removal of ring-fencing, which is a significant change to the financing of local government. The previous Labour Administration can be considered as a game of two halves. The first half involved a Prescottian vision of regionalisation and central control. The second involved an acknowledgment—other hon. Members have mentioned this; it is not a time to be particularly partisan—that that was the wrong approach and that we needed to move toward more flexibility in grant funding. Now we need to move forward to the next stage in that flexibility. It is not a trivial but a major change in the relationship between central and local government and in funding.
One consequence of the CSR is that a fundamental review has been necessary of the Department’s costs. A 33% reduction in DCLG administrative costs has been announced, which reflects the changing balance of priorities. If we are moving toward a more localist future, DCLG must examine its central costs to see where administrative overheads and costs can be transferred out to the front line. That is an important recognition of the changing balance between central and local government.
As the hon. Member for Sheffield South East said, it is useful, practical and a positive move forward to view local authority funding in terms of the totality of local authority spending power rather than focusing merely on the totality of the formula grant. That way, we will get a true picture, especially considering some of the new grants coming forward into local government, such as in public health and adult social care. At least we will begin to get a sensible picture and a recognition that considering such spending power is a much more rigorous and important way to examine the total funding of local authorities.
Other Members have discussed funding for Supporting People. That funding has been relatively protected within the CSR. It has also been devolved. Again, that is part of a radical change. Central Government are giving local authorities much more discretion to understand the nature of their local communities and make decisions accordingly, which is to be welcomed.
One thing that has emerged from the Committee’s deliberations—I stress this to the Minister; I have raised this point before on the Floor of the House—is that everybody who has observed local government, including me in my previous role as chief executive of Localis, the local government think-tank, would agree that the grant distribution process for local government is opaque and fundamentally flawed. Discrepancies arise not just between metropolitan boroughs, counties and shires but between metropolitan boroughs themselves. Nobody understands how it works. There are always disputes and special pleading. I welcome the efforts made to ensure that fairness is built into the settlement through banding and transitional funding, but however much we try to mitigate it, it does not change the fact that the process of grant allocation needs fundamental reform. We need a more independent and transparent process, and I hope that will emerge from the Government’s review of local government resources and finance. It is fundamental to the future of local government.
The financial crisis and the tough decisions taken in the CSR create an opportunity. Crises are often catalysts for change in systems, whether biological, evolutionary or political and economic. That is no less true for local government today. The current pressure on local government, which we all acknowledge, is providing a catalyst for change. Across the political spectrum, local authorities the length and breadth of the country are taking seriously the challenge of a new environment in which innovation, particularly financial innovation, is central.
Alison Seabeck
The hon. Gentleman is making a thoughtful and well-informed speech. However, he mentioned innovation. Does he not share the concerns of Baroness Eaton? She said today:
“Local government will have to make cuts this year of around £2 billion more than we originally anticipated. This stifles the opportunities for innovation”.
James Morris
I do not agree. Baroness Eaton is obviously doing her job on behalf of the Local Government Association, and she is doing it well, but I know from my experience as a business entrepreneur that having one’s feet against the fire is a profound stimulus for innovation and transformative change.
The hon. Member for Sheffield South East said rather dismissively that a few local authorities getting together to share back-office services would not get us far. I agree that that will not plug the whole gap in certain contexts, but we must take the idea of shared services seriously. In my constituency, we are beginning to see partnership working across the political spectrum really deliver efficiencies and change, for example through new commissioning structures in local government. That must be the future, where local government does not take the role of the service delivery arm, but instead takes on more of a commissioning role. We need to look at new funding arrangements.
Mr Betts
The hon. Gentleman described my earlier comment as dismissive, but that was not my intention. I welcome savings that can genuinely come from sharing back-office services or chief executives where appropriate, but it might not be appropriate in all circumstances. Indeed, the same is true of sharing services not only between local authorities, but between local authorities and other public sector bodies. My point was that I do not believe that could fill a 9% gap in the spending power of an authority, which is also the point that the LGA is trying to make. The Minister said that no cuts in front-line services were necessary because all the savings could be found by sharing services; I was disputing that.
James Morris
I do not want to get into a debate on the definition of a front-line service, but I take the hon. Gentleman’s point. Once we have gone through the period of retrenchment that is necessary to get the country back on a stable footing, the essential challenge in local government will be to maximise the potential for collaboration, efficiency and shared services. That could be through innovative relationships not only within local government, but importantly, across the whole spectrum of local public services. I urge the Minister to take forward the idea of community budgeting and the previous Government’s work on Total Place, which I welcome, because my perception is that sharing the totality of public spending and of public services in the next wave of local government could deliver cost reductions and a much higher level of service.
The Committee reflected on a variety of evidence presented to us. It is a tough settlement, but one that presents a series of interesting questions and opportunities. It is a tough time for local government, but tough times produce change for local government, and many would argue that it is necessary change. The hon. Member for Sheffield South East touted the figure of 80% increases in local government spending under the previous Labour Government. It could be argued that public sector organisations need periods of retrenchment during which they can examine how their processes are operating. We might be looking at a period of necessary change in local government during a tough period of fiscal retrenchment across the economy.
Bob Blackman (Harrow East) (Con)
I will bear in mind your earlier remarks about brevity, Mr Robertson, and as this is the first time I have spoken under your chairmanship, I suspect that that will be measured the next time I speak under you. I do not wish to repeat what Members have said already, but I think that we cannot consider this year’s local government grant settlement in isolation; it is not a one-year issue. We must look at it in the context of previous years and experiences.
I ran local authority finances for a considerable time before entering the House and have served in a position in which we received from a Labour Government drastically lower levels of grant, way below the rate of inflation and pegged every year for three years. Of the 32 London boroughs, 23 were on the floor and were receiving half the level of inflation year on year. That meant that local government had to be efficient and clear about how it would obtain its finances and run its services.
The previous Government often said to local government, “We’ll give you a new duty and ring-fence the money.” Slowly but surely, the money for the basic services was starved and the new duties and services were ring-fenced. The rationale was that the Government wanted to ensure that the money was spent in the areas where they dictated it should be spent. It was a centralised approach to running local government. Local authorities got used to area-based grants, which could be spent only on certain services, and to performance level grants, which could be spent only if performance against a complex series of assessments was achieved. I am delighted that in the current settlement, and, I hope, in further measures that the DCLG team takes, all that will be swept away. The ring-fencing will be removed so that local authorities will have the opportunity to determine local priorities.
An example from my experience that I would like to use is that of working neighbourhood funds. In the London borough of Brent, we set up and used the money specifically for the purpose of ensuring that unemployed people in Brent got jobs, and we were so successful that there was a reduction in unemployment. However, at the height of the recession the previous Government decided to remove all the money. A borough that had been successful and used the money appropriately lost the funding at a time when it was desperately needed, while those boroughs that had not succeeded continued to receive it—a great reward for our success. Actually, it was a great reward for failure elsewhere. There is a key issue that experience from local government has shown to be true.
As several Members have said, every local authority in the country knew that following the general election, regardless of which party won, there would virtually be a public sector recession and that everyone would have to plan for reductions in expenditure. The two authorities that I know well—the one I used to serve in and the one that I have the privilege to represent part of in this House—had planned for a 10% reduction every year for the next four years, but fortunately they will not have to suffer that under the wise settlement that the Government have brought forward. I would say to any authority that did not put plans in place for expenditure reductions that have come down the line that it is no good complaining now, because they did not plan for a future that was almost certain. Local government must transform itself and the services it provides and look at doing things radically different from how they have always done them.
As has been alluded to, that is a direct challenge to many local government officers, but it is important to remember that that is part and parcel of the challenge that has been set down by central Government. I do have concerns, however, for example on what the London borough of Harrow is doing. It has decided to reduce its voluntary sector funding by 30%, decimating the people who deliver services for vulnerable people. It is an easy cut to make, but a short-sighted one, because the people who are being cared for by voluntary services will get worse more quickly and throw themselves on the local authority much earlier, which will be more expensive. It is a foolish way to approach the cuts.
In the other London boroughs—we see this right across the piece—proposals are being made to close libraries, day-care centres and various other services on which vulnerable people depend. With regard to library services, I take the view that libraries are more than just places where books are provided; there are computers there and facilities for vulnerable and deprived people who need the space to study in. When I was leader of the London borough of Brent, I remember being dubious about our plan to open a library on a Sunday for the first time, but there were queues of students at the door at 9 o’clock in the morning because they wanted to study. I say to every local authority that they should not cut such services, even though they seem to be easy cuts to make. They should examine other things before doing that.
Mr Lammy
The hon. Gentleman and I agree on many things, particularly our choice of football club. He is firmly on the centre ground, and I appreciate the manner in which he puts his remarks. Does he agree, when he makes his points as well as he has, that too severe cuts to crucial services could lead to huge costs downstream for local communities? I am thinking of policing costs, social exclusion, and cohesion. From his experience in Brent, he will understand where I am going.
Bob Blackman
I thank the right hon. Gentleman for that intervention. I agree that there is concern about the level of reduction taking place in local government funding. I recognise that that is a key concern, and also that it is possibly more front-loaded than other areas of Government expenditure. However, one of the things that has happened in areas of greater deprivation is that over previous years they have gained substantially in central Government funding and grant. That is why it is difficult to make comparisons year on year. They gained far more by having deprivation. Actually, studies show that deprivation has not reduced as a result of central Government funding, so has that been a good thing or not?
Naturally, as the Government have decided to change the formula and grant regime, areas of greater deprivation are experiencing greater reductions. That is, of course, a serious concern to local authorities that are experiencing it. However, certainly in my experience, the plan was there that that would happen. If they have not planned for it, they have been short-sighted, and that is serious.
In the time that I have available, I wish to mention a series of concerns, the first of which is about the suggestion of capitalising redundancies and some services. I was a great proponent of capitalisation—I thought that it was an excellent way of doing things—until the prudential borrowing regime came in. I urge caution, because if one capitalises expenditure, all one is doing is borrowing. One must fund that borrowing on the revenue account, which will probably lead to a huge amount of cost in the future, year on year, for a one-off payment. That is not a good plan of action at all, particularly at a time when we know that local authority funding will be reduced over a four-year period.
My second concern is about the consequences for the voluntary sector. It is easy for local authorities to reduce the voluntary sector slightly—it will not impact on the core services that they provide. Actually, that is a short-sighted view. I urge local authorities across the country to ensure that they safeguard voluntary sector services that are coping with the weak and vulnerable, and doing it cost-effectively. I suspect that in future years that very same voluntary sector will be crucial to delivery of services in the big society that we all support.
The next area of concern is visible services. There is an obvious thing that is often missed. Having been in local government for a long time, I know that when it comes to reductions, local government officers always come forward with what can only be described as the bleeding stumps. It is easy to say to councillors who want to reduce funding that they have to close this day centre, close this library, do this, do that. Never does one hear from local government officers, “Actually, we will reduce staffing by 10% in the administration area.” I am not one of those who says that just by merging services and joining forces with another local authority the gap will be bridged, but at a time of great challenge, all those areas have to be examined and challenged, before one looks at the visible services on which the public rely.
The overwhelming majority of people who work in local authorities are on relatively low salaries and wages, and we should ensure that they are supported. However, over the past 10 years, there has been an absolute explosion in salary levels for local government officers, chief officers in particular. I, for one, am sick to death of reading almost weekly of a local authority chief executive or chief officer departing from one job with a golden goodbye only to walk into another local authority to do a similar job on a hugely increased salary. The excuse made for that across local government is that they have to pay more to attract the best people. I have no problem with rewarding experienced people who do a good job, but that has gone much too far in local authorities. Now is the time to examine those salaries, and I applaud local authorities that are reducing salaries rather than increasing them.
Mr Stewart Jackson
On that point, Manchester city council, which is by no means the largest bottom-tier authority in the country, has already been mentioned. Its chief executive earns £90,000 more than the Prime Minister. Does that situation not point to the fact that my hon. Friend’s comments are absolutely right?
Bob Blackman
I thank my hon. Friend for that intervention. I have not done a study on all these things, but I reckon that virtually every chief executive of every metropolitan authority is probably earning more than the Prime Minister, and that is a serious concern. Is it right? There has to be a measure, because all the chief officers and those below take their lead from the chief executive. That is clearly a concern.
I also ask the Minister to consider seriously the fact that local authorities desperately want certainty over funding. I understand why the settlement this year is difficult, but I have had experience of a three-year funding settlement. Even though it was not too good, one was at least certain about what one would get. Planning for the future is all important, so a long-term settlement that gives local authorities knowledge about the funding they will receive for a multiple of years is something that we absolutely should put in place.
Other hon. Members have mentioned new sources of funding. I am afraid that I do not agree with the hon. Member for Sheffield South East (Mr Betts) on returning the setting of business rates to local authorities. I can imagine nothing worse for business people—they would quake in their shoes—than allowing people at town halls, civic centres and so on to set business rates that potentially could put them out of business in a big way. However, we have to move away from just Government grants, the council tax and the share of business rates as sources of income. We must accept the concept that we need other sources of money, and an attractive way of consulting people on what those sources should be.
We must also examine the Barnett formula, which has been in operation since the 1970s. The Labour Government did not do anything about it, nor did the previous Conservative Government. Lord Barnett, who set it up, has probably forgotten how it was developed. My hon. Friend the Member for Croydon Central (Gavin Barwell) has done a study of local authority funding over several years. It is bizarre how the formula grant has changed inappropriately—this is not a partisan point or a matter for authorities of particular political control. There must be a complete review of all the different indices for the formula so that funding is seen to be fair and understandable. At present, I do not believe that anyone could possibly understand it.
David Mowat (Warrington South) (Con)
My hon. Friend mentioned the Barnett formula, and Lord Barnett’s view on it. He does actually have a view on it, which he made clear at the House of Lords Select Committee on the Barnett Formula. His view is that it should be replaced by a formula that is much more needs-based than the current one. The consequence of the current formula is revenue misallocation in the order of £4 billion per year. That is £4 billion that does not come to the English regions but goes to Scotland and enables it to pay for things that we cannot have.
Bob Blackman
I welcome that intervention.
I also want to mention buying power, to which I referred in an intervention. I would also ask people to look at the creative use of reserves. In the London borough of Harrow in 2006, the outgoing Labour administration set a reserves level of £1 million, with unidentified savings of some £3 million. I would challenge that as an almost illegal budget, but it was allowed through under the processes. Across the country, there are some authorities that have huge reserves and others that do not have any. My view on reserves and balances is that they are money taken from the taxpayer almost as a form of theft, because they are not used for the benefit of services but are stored up for a rainy day.
Finally, there must be a fundamental review of housing finance in this country; the current proposals do not go far enough. We have to make it much easier for registered social landlords and other people to borrow money to build houses, to ensure that we get the properties that we need and homes for people.
To summarise, I have put forward a series of concerns and issues that are challenges for both local authorities and our ministerial team.
Mr David Lammy (Tottenham) (Lab)
I am grateful to the Backbench Business Committee for granting this debate, and I want to associate much of what I say with the comments of my hon. Friend the Member for Sheffield South East (Mr Betts), who is a good friend. I agree with a lot of what Members from all parties present have said, and I do not want to phrase my remarks in too partisan a way.
I want to talk about the impact of the cuts on the very poorest communities in the country, particularly those in London. As the MP for Tottenham, I know something about the issue. What has just been said about the sensitivity around cutting services for the most vulnerable too fast and too deeply is important, because there could be huge social consequences. I hope hon. Members understand that it is hugely important to talk about these matters and to reflect on the history of my constituency.
In representing Tottenham, I represent London’s second poorest constituency. Cuts on this scale will have a huge effect, and there are authorities that are worried not just about the nature of innovation and about back offices and how they share services to make the savings, but about the profound effect on statutory services. Some of those services cut to the heart of the centrality of the kind of civilised democracy that we have to be. In relation to the London borough of Haringey, I am particularly worried that the front-loading of the cuts means that its financial settlement represents a far greater reduction than was expected. We have heard some comments about the preparation that councils could make for the changes, but there are authorities across the country that could not have imagined the scale of the in-year savings that they are being expected to make. Haringey’s funding shortfall for this next year requires it to find £46 million of savings, and a further £41 million over the next two years. The loss comes on the back of the ending of the local authority reward grant, and of the funds from the Department for Work and Pensions for the future jobs fund and from the £2 million in the school development grant.
On the subject of the future jobs fund, my constituency has the highest unemployment in London. A debate is taking place outside the House on a bid for the Olympic stadium, which might involve the Tottenham Hotspur football club leaving the Northumberland Park ward in my constituency. The ward has the highest unemployment in London, and the biggest private employer might be about to leave. Who will pick up the mess if that happens? It will be Haringey council, who will have to step in to provide for the very poorest. Concern for the poorest is not unique to one party; it should be something that we all share. I make my remarks not in a partisan way, but simply to say that we have to think very carefully about the effects of the cuts as they are felt on the ground, and that is particularly important for a local authority that has seen some of the most significant failures in the protection of vulnerable children.
Over the past two years, Haringey has focused on securing improvements to its safeguarding children services, following the death of Peter Connelly and the widely reported problems with the safeguarding of vulnerable children. That has led, however, to Haringey becoming a borough in which 1.2% of all children under the age of 18 are in care—a huge 40% increase since March 2008. In December 2010—just last month—600 children were looked after by the local authority, and our rate per 10,000 was 123. Those figures represent a very high number of young people, and there is a cost attached to them, in particular if we are to ensure that children in care do not continue to come out of care with dire prospects in relation to social mobility, education and all the things that we have seen in this country’s past. There is now a real concern that because of the huge effort to deal with the consequences of the Baby P and Victoria Climbié cases, the cuts will reduce Haringey council’s ability to properly provide the statutory services that the country rightly expects.
I think it is right to say, and the figures will be published shortly, that the increase in the numbers of children in care is not just in the borough that has had the scrutiny—Haringey. All Members, certainly those who represent large conurbations, have experienced constituents coming to them and saying, “My children have been taken into care.” We get both sides of the story, and we have seen an increase in the case load. When we see the figures very shortly, I think that right across the country we will recognise the huge consequences of that story from just two years ago.
George Hollingbery
The right hon. Gentleman makes a powerful and emotional case for the needs in his constituency and throughout his two boroughs. I have enormous respect and great admiration for that. But does he agree that in other areas of the country, which are more prosperous and where budgets are lower, the people who are being helped by those budgets are the poorest in those areas, and that the cuts are felt equally throughout the country whether or not there is more money going to a certain area?
Mr Lammy
I do not want to disagree with the hon. Gentleman, except to say that all local authorities have fundamental statutory services that they must provide. Children are in care in every local authority throughout the country, and local authorities cannot scrimp on services for those young people, and young people at risk of harm. Having seen that acutely in my constituency, I want to impress on the Minister—I do not expect a response on this––the need to look carefully at the situation in the London borough of Haringey and other local authorities, to ensure that the means to provide those services and the pressures of front-loading do not militate against those very high standards that they are rightly now being set.
I hope that the Minister appreciates––he will be familiar with the issues, but they have not been raised today––that as I represent an outer-London authority, it is right for me to raise the serious concerns that exist about homelessness and its costs, and about the decision that has been made on housing benefit, and the costs that are flowing from it. The London borough of Haringey also has the highest homelessness rate in London, with 5,000 people on the register as I speak. The consequences of the decision on housing benefit are already being seen in relation to where people are now being housed by local authorities such as Westminster and Camden, who are already saying, on the record, that they are now placing 70% of their homeless people in outer-London boroughs. That brings real pressure at a time of cuts, and it is not clear where those funds will come from.
I do not want to put this in unnecessarily extreme language, but I am deeply worried about excessive overcrowding in constituencies such as mine. One sees it in other European countries, and I do not want to see it on that scale in the city of London. These are statutory services that local authorities must provide, never mind the libraries and support for the voluntary sector, and it is not clear to my local authority how this will pan out, and where the funding will come from to meet these statutory obligations. Will the Minister say something about that, and about his liaison with his colleagues at the Department for Work and Pensions, given that it is they who have landed him, in part, with the problem?
A point has been made about the voluntary sector. I am deeply concerned about some of the services that are offered in cities such as London that involve close liaison with the Metropolitan police and mental health in particular. There are some very excluded communities in this country; there are young men in this country who present as extremely vulnerable, who are subject to extreme views. I might say that once upon a time, I was one of those young men. When I was growing up under a previous Conservative Administration, when things were tough and there were real pressures between the police and the local community, Neil Kinnock spoke to me sufficiently to keep me in the mainstream, and I was not seduced by some of the extremism that was around.
I hope the Minister appreciates that some of the services that fund some of the voluntary sector in constituencies such as mine, working in youth services and liaising with the Metropolitan police––the hon. Member for Harrow East (Bob Blackman), who has experience of Brent, will be familiar with such services––are absolutely crucial. The funding for a Turkish liaison officer who is working with some of those involved in the extreme gangland criminality that we are seeing in parts of that community is being cut. That funding, which came from the local authority, is no longer there to support that work with the police. I am very concerned about the consequences of that. Will the Minister reflect on other parts of the DCLG empire, and what that means for social cohesion?
John Robertson (in the Chair)
Order. Before the hon. Gentleman intervenes, I must ask the right hon. Member for Tottenham (Mr Lammy) to bring his comments to a conclusion.
Mr Jackson
Perhaps I could be so bold as to say that what kept the right hon. Gentleman on the straight and narrow was being educated at one of the best schools in the country—the King’s school, Peterborough. Looking more positively at some of the changes that are about to take place, I believe that they will encourage faith and community groups into the public square to take on work and to work collaboratively with local authorities to tackle very difficult social issues, such as social exclusion, deprivation, homelessness and drug misuse. They have not done that hitherto because there has been an element of institutionalisation in those groups.
Mr Lammy
I am grateful for all the help that I received in the city of Peterborough. It is a great city, but the hon. Gentleman will know too that it is a city with tremendous challenges, partly for the following reason. There are communities in Peterborough, as in mine, that do not have the necessary capacity. I am therefore very nervous about the springing up of wells in the “big society” and the expected support. Money must come from somewhere, which is why I spoke as I did.
I am grateful for the time that I have been allocated, Mr Robertson. I wanted to make three central points and I have done so.
Alison Seabeck (Plymouth, Moor View) (Lab)
It is a pleasure to speak under your chairmanship, Mr Robertson. To avoid misunderstandings, I should draw the Chamber’s attention to the entry in the Register of Members’ Financial Interests for the right hon. Member for Greenwich and Woolwich (Mr Raynsford), who is my partner.
I thank the right hon. Member for Tottenham (Mr Lammy) for seeking this debate, and the Backbench Business Committee for agreeing to allocate time for this extremely important matter. I commend the work of the Select Committee on Communities and Local Government, and the members of that Committee who have contributed today.
The debate has been wide ranging and well timed on the day when Manchester city council has had to announce 2,000 redundancies on the back of 1,400 job losses in Greater Manchester police as a result of the Conservative Government’s decisions—they made the decisions. We have been reminded all too clearly of the immediate relevance of the cuts to people’s lives, and to families throughout the country who will be watching the post every day for redundancy letters as the result of the cuts brought forward. I fear that Manchester will be the first of similar stories, which are tragic for the individuals and hard-working families involved.
George Hollingbery
Will the hon. Lady confirm that all the redundancies announced in Manchester today are voluntary, and that none is compulsory?
Alison Seabeck
Manchester city council said that it will try to achieve voluntary redundancies, but even those may be hard to bear, as I am sure the hon. Gentleman will agree. Manchester is one of the best performing councils in the country, despite being the fourth most deprived, and for years has worked to increase efficiency and to share back-office work with other local authorities throughout the region.
My hon. Friend the Member for Sheffield South East (Mr Betts), Chair of the Communities and Local Government Committee, made, as ever, a well-informed and well-argued opening speech in which he highlighted comments made during the evidence session. The Committee was clearly as bemused as local authorities are about the reasons and logic behind the CLG taking a 28% hit overall. I suspect that comments made by the Secretary of State, in which he indicated that he was prepared to pass on the pain to local councils, have never been gainsaid and I would be interested to know whether the Minister is willing to do that today.
My hon. Friend also raised the issue of business rates, and that was followed up by the hon. Member for Harrow East (Bob Blackman). If that policy is pursued, there is clearly a question about whether there should be some sort of redistribution. We also heard contributions from the hon. Members for Peterborough (Mr Jackson), for Halesowen and Rowley Regis (James Morris), for North Swindon (Justin Tomlinson), and for Meon Valley (George Hollingbery). They all showed experience, expertise and interest, and provided a thoughtful consideration of the difficult challenges faced by authorities across the country. There is clearly cross-party concern in some areas, and the Labour party would like to see further exploration of those issues. In some areas, however, the gulf between the parties is huge and difficult to cross.
The hon. Member for Harrow East spoke about the redistribution of reserves, and I would be interested to hear the Minister’s comments on that idea. My colleague from the south-west, the hon. Member for St Austell and Newquay (Stephen Gilbert), said that he wanted Whitehall out of the town hall. That is a good sound bite, but his speech was slightly contradictory. He sought direct interference from the Minister in what Cornwall county council is doing with the Supporting People programme. He cannot have it both ways.
Alison Seabeck
I will not give way at the moment; I may return to the hon. Gentleman later. He also raised genuine concerns about the future cost implications for CLG of the private sewer network. I urge the Minister to look at that; I thoroughly support what the hon. Gentleman was saying. Costs are coming.
My hon. Friend the Member for Nottingham East (Chris Leslie), who is sadly no longer in his place, touched on the Supporting People programme. He must wonder what the Secretary of State was thinking when he said during the evidence session:
“I’m glad you have noticed that we have protected Supporting People.”
That is clearly not the case in Nottingham.
The comments of my right hon. Friend the Member for Tottenham (Mr Lammy) reflected a deep understanding of his constituency and the people he represents. Having lived in Tottenham and worked in Tottenham high road for many years during the 1970s, I understand the area well. His point about the importance of local authority services to community cohesion cannot be ignored.
In the negotiations between Whitehall Departments and the Treasury, the Secretary of State simply did not step up to the crease on behalf of local services and the Government funds on which local people depend. Rather than try to work with councils, he tried to squeeze himself into the club with the Prime Minister and Chancellor by settling early, irrespective of the consequences on local services. [Interruption.]
Let me explain for the benefit of Hansard that there are chuckles in the room. That may be for the image of the Secretary of State squeezing himself in anywhere. However, I do not believe that he is interested in hearing what local councils think. Perhaps the Minister can tell us how many local authorities the Secretary of State has visited since taking on the job—I think it was five; just five out of hundreds. The cuts being brought forward to local councils are greater than in almost any other area of government. It is a shame that the Secretary of State did not take time out to listen to the concerns of local councils.
For months we were told by the Secretary of State and his ministerial colleagues that there would be no front-loading of cuts to local services; we were told that the Labour party was scaremongering. Shortly before Christmas, we saw the figures from the Minister’s Department, and contrary to all the claims, the cuts were front-loaded. That will impact on front-line services. Although local authorities had pleaded for the cuts to be spread across the period of the comprehensive spending review in a way that would allow for the preservation of some services with a delivery model adapted to fit the funding cuts, there was only the cold reality of front-loading. That will see services halted, not transformed.
As I have mentioned, we heard from Baroness Eaton. She is a loyal member of the Conservative party and an experienced local government leader. She said:
“Local councils knew the cuts were coming”—
—that is true whether a Labour or a Tory Government were elected, and that point has been made by other hon. Members today—
“and had planned prudently to reduce spending over the coming years. We cut more than £l billion from our budgets in the middle of last year, rolled up our sleeves and got on with the job.”
That is what one would expect from local authorities.
“But the unexpected severity of the cuts that will have to be made this year will put many councils in an unprecedented and difficult position.”
The Government are beholden to revisit that matter before coming to any final decisions on funding and they should consider those comments carefully.
The Secretary of State does not even seem to acknowledge the difficulties faced by local authorities from front-loading. He sees it as a virtue, despite the comments from Baroness Eaton. It appears that no one was listening to local people and their representatives. The Secretary of State said:
“I think that the amount of front-loading, as it exists—there is a fair bit this year and a fair bit next year—is very important to encourage local government to deal with this whole question of restructuring.”
It is important that we remind ourselves what cuts to local services mean, and my right hon. Friend the Member for Tottenham made that point extremely well. The impact will be on adult social care for the elderly, day care centres, child protection, fostering and adoption, children’s centres, the quality of local housing and a host of other areas. The cuts will result in real damage to the levels of service that people rightly believe they deserve when they pay their council tax.
It would be wrong to say that only the Labour party opposes the cuts—we have a coalition of our own against the measures. The Conservative leader of Bury council said:
“it is almost impossible to absorb such vast figures in the time that we have available”
and it is on the time and speed of what is being proposed that the Labour party most disagrees with the Government.
The Liberal Democrat former leader of Liverpool city council, one of the most deprived local authorities that will be among the hardest hit by the Government proposal, said of Ministers:
“Either they really do not know how serious the situation is that they have created...or they are deliberately trying to distract attention from the problems that they have created.”
I ask the Minister: which is it?
As a result of initiatives by the previous Government, including Total Place where there were benefits of joint procurement, councils of all political colourings are already sharing back office functions. They are cutting executive posts and looking at executive pay. We all expect them to do that in the current circumstances. However, if every local authority cuts the post of chief executive and of every member of senior management, the money that would raise would not scratch the surface when set against the cuts that the Government demand from local councils. The argument about executive pay is valid; many councils have already addressed that and others will follow. However, when set against the lack of action on bankers’ bonuses, the Government lose all credibility.
The situation in Manchester that has dominated the news today will be replicated. Ministers should stop taking the public for fools and come clean about exactly what the cuts will mean to local services. They must stop trying to wind up the public into believing that this is all about the salaries at the top—the public are not stupid and will see through that smokescreen. Once the cuts start to appear, they will know that it is not simply a question of executive pay.
The CLG response to the CSR has been weak in terms of the fight to protect services for the most vulnerable. The way that the cuts have been distributed across local authorities is unfair, and the way that they have been front-loaded is reckless. I look forward to the Minister’s response.
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
It is a pleasure to serve under your chairmanship, Mr Robertson, and I will endeavour to encompass as much of this interesting, well-informed and wide-ranging debate as I can in the time available. I congratulate the Back-Bench Committee on selecting and nominating this subject for debate, and the Chairman of the Communities and Local Government Committee, the hon. Member for Sheffield South East (Mr Betts), on the thoughtful way in which he introduced it. He and I do not always agree about everything, but I never doubt his knowledge and interest in local government. I also pay tribute to that Committee; it does great work and a number of hon. Members who sit on it have spoken today.
Perhaps I can deal briefly with the background and then with some of the specifics in the contributions. I will not seek to make a lengthy issue of the economic background, save to say that it is the reality that no one can escape. In relation to the more partisan comments that were made, I have to say that it gives pleasure to no Government of any kind to find that they have to reduce the spending available for various services. However, as has been observed and, I think, accepted in varying degrees on both sides of the House, it was trailed well to everyone in local government and to the public that sadly, whatever the outcome of the general election, the country’s financial circumstances meant that reductions in public spending would be necessary.
When the coalition Government came to office and saw the extent of the problem, they concluded, rightly, that swift action was necessary to reduce the deficit. Otherwise, there were real risks to the economic health of the country and to the country’s international credibility. If that were not tackled and there were a serious economic downturn, which was a real risk, it would be an even greater threat to public services in the long term. A destroyed economy would make it all the harder to deliver the public services that we all want.
There may be a difference between us, but I say to those Opposition Members who criticise the speed and scale of the steps that we have taken that it behoves them—as they are, I regret to have to say, primarily responsible for the mess—to say what they would have done instead. Simply to criticise the Government, who are doing something that is starting to turn things around, is, in the circumstances, not good enough.
We have had to deal with the situation that confronted local government in a way that was fair and proportionate. I want to set the record straight on one or two matters that were raised. First, in relation to the settlement for local government as a whole and the picture compared to the rest of Whitehall, it is important to make it clear that against the 2010-11 baseline, the Department for Communities and Local Government will be making savings of some 33% on resource, but we will also be moving some £6.7 billion into formula grant. That is money that we are ceding to local authorities.
I think that it is some of those differences in the figures that produced the difference in the figures that the hon. Member for Sheffield South East was calculating. He referred to a 68% cut in the CLG budget. No, that is the combined total reduction in resource and capital funding by 2014-15. The resource funding was reduced by 33%, but we have chosen to devolve extra money by putting it into formula grant, rather than keeping it in the Department. So we have passed money down, within a tight settlement, to local government as a whole. In fact, our departmental resource support for local government will reduce by 22% compared with 33% for CLG as a whole, so we are protecting local government as opposed to the central Government elements of our spend. Similarly, although we have had to reduce capital support to local government, that reduces by a lower percentage than is the case for the CLG’s central departmental expenditure limit—the DEL, as it is called.
Against that background, we have endeavoured to support important programmes. We are putting £6.5 billion into the Supporting People programme. That constitutes a reduction of only 12% compared with the CLG’s 33% resource reduction overall. That is why my right hon. Friend the Secretary of State was right to tell the Select Committee that we had sought, in the circumstances, to protect Supporting People.
We have sought to make the settlement itself more progressive. I shall come to the imperfections of the formula in a minute, but within the formula that we have, we have increased the weighting given to the needs element to 83%. That is an increase from where it was before and will help more deprived authorities. Also, a number of authorities with significant problems faced the loss of the working neighbourhoods fund, which the previous Government set up but were terminating because it was a three-year programme. The present Government, recognising the difficulty, set up the transitional grant that has been referred to by hon. Members, so we have helped to cushion the loss of the WNF that the previous Government proposed to impose. Therefore, it cannot be said that we have not sought to be fair in the circumstances.
The hon. Member for Nottingham East (Chris Leslie), who is no longer in his place, made some comments about fairness and referred to the House of Commons Library paper. I am afraid that that paper was quoted selectively. The analysis also said:
“Excluding London, northern regions will receive more grant per head than their southern counterparts”.
It confirmed that formula grant per head in the north-east is, at £696, approaching double that in the south-east, which is £374, and that reductions in formula grant for the north-east and north-west were “clearly less” than those in the south-east and the eastern regions. Therefore, it cannot be said that the Government have sought unfairly to discriminate against areas where, we accept, there are difficulties. I hope that that puts some of the comments in context.
Let me deal with a couple of other points raised by the hon. Member for Sheffield South East. He specifically asked about business rates exceeding formula grant by 2013-14. For reasons that I shall come to, by 2013-14 the landscape will indeed look very different as a result of the local government resource review. As he knows, the review will consider allowing local authorities to retain business rates, and obviously we shall have to look at that in the context of the implications for resource equalisation and redistribution. There is a legal obligation to redistribute the business rate, and we do not intend to change that. The assumption was made that there would be a sudden pot of money and that there was no change to what the Government were doing. That is not the case: we have already announced our intention to make a change.
We are making the change because, as was pointed out in the powerful and impressive speeches of my hon. Friends the Members for Peterborough (Mr Jackson), for Meon Valley (George Hollingbery), for Halesowen and Rowley Regis (James Morris), for St Austell and Newquay (Stephen Gilbert) and for Harrow East (Bob Blackman), the formula no longer works. They all queued up, rightly, to say that.
We have recognised that there is a need for significant change to the formula and, rather than beating about the bush, we have established a local government resource review. I expect that the consultation documents will be sent out before the end of this month. We hope to do it from January through to June, and central to it is enabling local authorities to retain the business rates that they collect. Of course, there would also be an incentive for them to grow their tax base by growing their business rate base. That would enable us to rethink the operation of grant. Formula grant would no longer be operating in the same system. I totally accept the point made by hon. Members that in those reforms, it is crucial that we find something that is much more transparent than the Schleswig-Holstein question. Actually, this issue probably makes the Schleswig-Holstein question seem comparatively simple. So that is what we are doing.
Mr Betts
I hope that the Minister responds specifically to this question; it is an important one. Is he saying that when the Government go out to consultation on a new method of funding for local government, including local authorities keeping their business rate, they will also deal with the question of how, in that context, redistribution in terms of need and resources can also be achieved?
Robert Neill
It is intended to be a comprehensive review of local government resource. We shall have to consider all those issues. The hon. Gentleman will have to wait for the document itself. He will understand why I cannot go into detail; I am sure that we shall be laying a statement before the House about the content of the document. However, it is intended to be a comprehensive review of the resource, and I hope that the hon. Gentleman will be satisfied with what he sees in terms of its parameters. I know that the Select Committee will certainly want to discuss with the Department the way in which we carry the review forward, and we will welcome that. Against that background, the Government have sought to achieve a balance.
I accept the points made by my hon. Friends: we must be prepared to be a little less conservative with a small c in our approach to delivering local services. I do not think that small c conservatism is generally found on this side of the Chamber at the moment. Local authorities have worked hard to produce efficiencies—I accept that—but it is clear that yet more can be done. For example, the CBI has pointed out the considerable further savings that could be made by local authorities banding together to use their procurement powers. Baroness Eaton and her colleagues are up for doing that, and I am sure they will. It is not a question of chief executive pay, for example, closing the funding gap, but at times such as these, it is not illegitimate for the Government to say that if we have to prioritise, the message that pay sends is important. It is fair and proper to look at these matters in that context.
I take on board the important points made by my hon. Friend the Member for Harrow East, who was my old comrade-in-arms in the London Assembly. Given the Mayor we had, “comrade” was probably appropriate from time to time. I also agree with a comrade from the opposite side of the London Assembly, the right hon. Member for Tottenham (Mr Lammy), about support for the voluntary sector. It is hugely important, which is why the Secretary of State has repeatedly said that in these difficult times it is important that local councils do not fall back on the usual suspects in their approach to reductions, such as salami-slicing. They get rid of the voluntary sector grants first because they are the easiest, but often it is those voluntary sector groups that deliver public services in the most imaginative and innovative manner. That is where remuneration comes in and is why we are increasing transparency for the public over remuneration in the Localism Bill—that is the right way.
I hope that a director or chief executive on a six-figure salary signing off a report for a council recommending cutting a six-figure grant from voluntary groups will not feel entirely comfortable in doing so when looking at their comparative positions. That is a legitimate point in the context of this debate. We will all have to constrain expenditure that is not directed at the front line. That is not to rubbish the work done in local government, but it is right to accept that people are surprised when they see the salary inflation at that level; people are right to question whether that is the best way to spend the money. That is how the Department has looked forward.
We are, of course, keen to assist local authorities to grow their economies and to rebalance them. That is why, as well as the Supporting People programme, to which I have already referred, we are spending more than £2 billion on the decent homes programme, and continuing to support the disabled facilities grant and to facilitate the passage of the vulnerable into work in the community. The regional growth fund of £1.4 billion taken together with the local enterprise partnerships, set up with business and local councils as key partners, affords an opportunity to refocus economies. We seek to align that regional growth with the equal sum in the European regional development fund. Work is being done to channel such resource as we can afford into areas that will make the most difference.
References were made to housing funding and the benefit changes. It is worth remembering that even with the changes, a third of homes in London will remain affordable. About 17,000 households may be affected, but the choice they will be left with is no different to the choice that the low-waged who are not on benefits face. We cannot continue with a situation in which expenditure on housing benefits has risen from £14 billion to £21 billion. It is about getting the balance right. Of course, we will continue to liaise with our colleagues in the Department for Work and Pensions on those issues.
I see that time is creeping round, and I know that my hon. Friends raised other specific points. With your permission, Mr Robertson, I will respond to them by letter. Detailed matters, such as private sewers, are probably best dealt with in that manner.
Written Ministerial Statements
(13 years, 11 months ago)
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Default Retirement Age
(13 years, 11 months ago)
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
The Government confirm that they will remove the default retirement age (DRA) so that people have more choice when to stop working. Currently the DRA enables employers to make staff retire at 65 regardless of their circumstances, but we believe that the rules must change as people are living longer, healthier lives.
Ministers have decided to proceed with the plan, set out in their consultation document published on 29 July, to phase out the DRA between 6 April and 1 October 2011. The Government’s written response to the consultation on the issue is being published today, alongside new guidance to help businesses adapt.
The Government will help employers adapt to the change. Steps we are taking include:
working with ACAS (Advisory, Conciliation and Arbitration Service) on new comprehensive guidance being published today;
publishing today new age positive guidance setting out how many employers manage without fixed retirement ages and benefit from the employment and retention of older workers;
removing the administrative burden of statutory retirement procedures. With the removal of the DRA, there is no reason to keep employees “right to request” working beyond retirement or for employers to give them a minimum of six months notice of retirement;
introducing an exception so that there are not unintended consequences for employers that currently offer group risk insured benefits (such as income protection, life assurance, sickness and accident insurance, including private medical cover). This is in response to concerns raised during consultation that removal of the DRA could put these schemes at risk.
Transitional arrangements are being put in place so that, from 6 April 2011, employers will not be able to issue any notifications for compulsory retirement using the DRA procedure. Between 6 April and 1 October, only people who were notified before 6 April, and whose retirement date is before 1 October can be compulsorily retired using the DRA. After 1 October, employers will not be able to use the DRA to compulsorily retire employees.
Although we are removing the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it.
The measure is one of the steps we are taking to help encourage people to work for longer against the backdrop of demographic change. Others include raising the state pension age to 66 faster than currently scheduled and re-establishing the link between earnings and the basic state pension.
Fire and Rescue Control Services (England)
(13 years, 11 months ago)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
Today the Government are publishing a consultation on the future of fire and rescue control services in England. This follows the closure of the FiReControl project, announced in my statement to the House of 20 December 2010, Official Report, columns 141-42WS.
Local fire and rescue authorities have a statutory duty to answer emergency calls and mobilise resources. They have continued to fulfil this duty, and have been funded to do so, during the lifetime of the project and, consequently, the closure of the project poses no risk to public safety.
This Government believe that the fire and rescue community is best placed to decide the future of their control services. No solution will be imposed. The consultation reviews the legacy assets from the project, as well as lessons learnt, and encourages the sector to make best use of these in their future plans, for the benefit of both the taxpayer and local communities.
The consultation discusses whether the original aims of the project—improving efficiency, national resilience and the technology available to fire and rescue services—are still valid and, if so, how they might be achieved now. It also considers the principles on which available funding should be distributed. The role of central government, if any, is also considered.
A copy of the consultation document is available on the Department for Communities and Local Government website. Copies have been placed in the Libraries of both Houses. Responses are requested by 8 April 2011.
Forensic Science Regulator
(13 years, 11 months ago)
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The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
I am today announcing the arrangements I have put in place to continue the post of forensic science regulator. The post was first announced in July 2007 following which Mr Andrew Rennison was appointed in February 2008 on a three-year term. His role is to advise Government and the criminal justice system on quality standards in the provision of forensic science. This involves identifying the requirement for new or improved quality standards; providing advice and guidance so that providers, including commercial laboratories and the police, will be able to demonstrate compliance with common standards; and ensuring that satisfactory arrangements exist to provide assurance and monitoring of the standards.
I am pleased to say that Andrew Rennison has agreed to a second term as the forensic science regulator, assisting us in our commitment to the continued provision of effective forensic science services. He has plans to work with stakeholders to develop and maintain the quality of forensic science services across all forensic processes from the supply of equipment used at crime scenes, the examination of scenes, the collection and storage of exhibits, the sampling from and analysis of exhibits, and the reporting of forensic science evidence.
An important aspect of this work is to ensure that quality standards for forensic science continue to be regulated and that the forensic science regulator plays a central and independent role in co-ordinated work with the Home Office, the police and other stakeholders.
Prison Capacity Management
(13 years, 11 months ago)
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The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
We are continuing to expand the prison estate and construction of new prisons is under way at Belmarsh West and Featherstone 2. The prison population has been growing but has not grown as fast as previously projected. As a result there is scope to reduce overall capacity. We are committed to accommodate all those sentenced to custody by the courts and the decisions of the courts will determine the future level of the prison population and capacity.
I am therefore announcing plans to close two prisons and change the use of a third to an immigration removal centre holding immigration detainees on behalf of the UK Border Agency (UKBA).
The conditions at HMP Lancaster Castle and HMP Ashwell are well known. HMP Lancaster Castle is housed in a medieval castle and while staff at the establishment have done an admirable job and must be commended, the building places severe limitations and restrictions on their ability to deliver the requirements of a modern prison service. Two thirds of the accommodation at HMP Ashwell is out of use, and the estimated refurbishment costs mean that it would not be financially viable to rebuild the site to the standards required.
HMP Lancaster Castle and HMP Ashwell will therefore close. A range of options for staff at these sites is being developed, including redeployment to neighbouring establishments and a voluntary exit scheme. Prisoners will be moved to other establishments appropriate to their security category
A third prison, HMP Morton Hall, will close and then reopen as an immigration removal centre, holding immigration detainees on behalf of UKBA. The prison will continue to be managed by the National Offender Management Service but under the terms of a service level agreement with UKBA. The women who are currently held in HMP Morton Hall will be moved to other sites within the estate. These moves will be managed carefully by NOMS to ensure that they are completed safely.
Work to effect these changes will start immediately.
The changes outlined in this statement will reduce our current capacity by 849 places. This can be safely managed within existing operational capacity, while maintaining our ability to cope with any increase in population. On Friday 7 January the prison population stood at 82,991 with useable operational capacity at 87,936.
We remain committed to hold those offenders sentenced to custody by the courts but we cannot afford to maintain inefficient and costly places that are not actually required given the capacity now available within the prison estate as a whole. These changes are an important step in our strategy to provide a secure and modern, fit for purpose prison estate, while improving efficiency and value for money.
Parliament (Joint Departments) Act 2007
(13 years, 11 months ago)
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The Leader of the House of Commons (Sir George Young)
I am today publishing Cm 7998 “Post-Legislative Assessment of the Parliament (Joint Departments) Act 2007” as part of the post-legislative scrutiny process detailed in the document “Post-legislative Scrutiny—The Government’s Approach” (Cm 7320).
The Parliament (Joint Department) Act 2007 was intended to create a framework for the employment of staff in Joint Departments of both Houses of Parliament, bearing in mind that neither the House of Commons (Administration) Act 1978 nor the Parliamentary Corporate Bodies Act 1992 made such provision.
The legislation was designed to facilitate the creation of PICT (Parliamentary Information and Communications Technology) as the first such Joint Department, but also to put in place an enabling mechanism for the future. There was no specific intention that there should be more Joint Departments, but the issue remains under review while the Administration of both Houses consider ways in which resources might be used more economically.
Having consulted officials in both Houses and Parliamentary Counsel, I have assessed that the Act has worked well to date and no difficulties have arisen that were not anticipated and dealt with in the drafting.
Part 3 of the Equality Act (Ships and Hovercraft)
(13 years, 11 months ago)
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The Parliamentary Under-Secretary of State for Transport (Mike Penning)
I am today publishing a consultation document which sets out the Government’s proposals for implementing part 3 of the Equality Act 2010 in respect of ships and hovercraft.
Part 3 of the Equality Act 2010 deals with discrimination, victimisation and harassment in the provision of services and the exercise of public functions. Bringing clarity and uniformity to anti-discrimination legislation as it applies to transporting people by ship or hovercraft and a service provided on such vessels is necessary as the scope and the territorial application of such legislation is far from clear. People receiving services onboard ships and hovercraft should, as far as it is reasonable to do so, have the same protection as they would on land.
Nevertheless, discrimination onboard ships and hovercraft is not reported as being a significant problem. So the intended policy approach is to maintain, as far as it is reasonable to do so, the protection which already exists against both direct and indirect discrimination, harassment and victimisation but to make the scope and extent of the legislation much simpler and clearer. Anti-discrimination legislation, in respect of the protected characteristic of disability, will however be strengthened in relation to ships and hovercraft when the EU regulation on the rights of passengers travelling by sea and inland waterway comes into force in the UK.
This consultation will assist Government in determining how part 3 is to apply to ships and hovercraft in relation to the actual service of transporting people and the provision of services onboard such vessels as well as those matters relating to performance of a public function in so far as it relates to disability discrimination.
The Government seek interested parties’ views on the proposals. The consultation document and the impact assessment are available on the Department for Transport’s website. Copies of these documents have been placed in the Libraries of both Houses.
Child Maintenance
(13 years, 11 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)
I am pleased to announce today the publication of “Strengthening families, promoting parental responsibility: the future of child maintenance”. This Green Paper sets out our vision to empower and enable parents to take responsibility for the welfare of their children through reform of the child maintenance system. We recognise that for families, parental separation is an emotional time. The existing system, courts and maintenance, can lead to entrenched division at a time when parents, more than ever, need to come together to put the welfare of their children first. The present system can make it difficult to come to agreements on some of the practical and important issues such as financial support for children. This reform is focused on better support for families to enable them to more easily reach their own family-based arrangements.
It can be difficult for separating families to navigate the support available to them during and after separation. There is no obvious path for families to follow especially around issues of money. We will work with other Government Departments and service providers to put in place a more integrated path.
We believe families should be supported to come to their own arrangements and feel empowered to make fully informed choices. The Green Paper sets out our proposed reform of the statutory system based on these principles and building on the reforms outlined in the Henshaw report.
The proposed reform continues the plan to introduce a new, more efficient, statutory child maintenance system, develops the ideas in the Henshaw review and the Child Maintenance and Other Payments Act 2008 to charge for the services provided by the future statutory service after it is introduced and also includes implementation of a gateway to access the statutory system. The reforms recognise that the most vulnerable parents will need special support and consideration, particularly those who have suffered domestic violence.
We believe our proposals can deliver major benefits though supporting parents to come to their own family-based arrangements or for those who choose the new statutory system.
I welcome your contribution to this important piece of reform to the child maintenance system.