House of Commons

Wednesday 2nd March 2011 Commons Chamber

Wednesday 2 March 2011

The House met at half-past Eleven o’clock

Prayers

Wednesday 2nd March 2011 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 2nd March 2011 Commons Chamber

The Minister for the Cabinet Office was asked—

[Amber Rudd (Hastings and Rye) (Con)]

1. In which regions the national citizen service will operate in the summer of 2011.

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

The pilots will be based in 190 different locations this summer and have a good geographical spread in regions across England. I am delighted to say that more than 11,000 16-year-olds will have the opportunity to take part.

[Amber Rudd]

My constituents and I are very much looking forward to the service arriving in Hastings and its environment. What are the arrangements for rolling the service out further; who will be in charge of fulfilment; and how can MPs get involved with it?

[Mr Hurd]

This year’s pilots involve areas represented by 400 MPs, so there are plenty of opportunities to get involved. I am delighted to say that Catch 22 and the Prince’s Trust are leading the pilots in East Sussex this year, and I very much hope that my hon. Friend will get involved because this provides a fantastic opportunity for young people in her area to participate in a very positive experience.

[Jon Trickett (Hemsworth) (Lab)]

Anything that taps the idealism of young people in the wider society is clearly to be welcomed; it is a good thing. These pilots, however, seem to be an inadequate response to the needs of 965,000 young people who are now out of work. The scheme itself was criticised, as the Minister will know, by the university of Strathclyde, so will he at least indicate the date by which the scheme will be made universal for all young people, as the Prime Minister promised before the election?

[Mr Hurd]

I am sorry that the hon. Gentleman appears to have such a downer on the scheme, which provides a hugely positive opportunity for young people in this country. We are testing it thoroughly on behalf of the taxpayer—there are 11,000 places this year and 30,000 next year—with a view to rolling it out, as he suggested, to make it more widely available and so compelling for all 16-year-olds that they will want to get involved in the future.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

2. What steps he plans to take to ensure that the big society bank has a social mission as part of its statutory remit.

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

In our social investment strategy, announced on 14 February, we set out that the big society bank will be an independent institution with a locked-in social mission and initial capital provided by the banks. Sir Ronald Cohen and Nick O’Donohoe are working with us and the banks to put forward a proposal on how best and most speedily to achieve that.

[Tom Blenkinsop]

As how the big society bank will be set up and the terms on which it will receive capital from UK banks are still unclear, will the Minister explain how he will guarantee the bank’s social mission and ensure that it does not become like other mainstream lenders?

[Mr Maude]

As I said, the social remit will be absolutely built into its mission; it is a crucial part of it, so it will be locked in. I have to say that criticism comes poorly from Labour Members who have talked about creating a social investment bank for many years. Frankly, on taking office last May, I expected to find well-prepared plans, but when I opened the file, I found it pretty much empty.

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

The Minister will know that I welcome the bank. What priorities will it have to fund projects associated with, and supporting, young people?

[Mr Maude]

That will be one of the bank’s priorities. The legislation allowing the money from dormant bank and building society accounts to be put into a social investment bank provides a priority for youth projects. As I say, this will be a serious priority. The bank will be able to provide wholesale funds into the already growing social investment market, for which there is a huge demand. We want to see much more money—including, over time, mainstream finance from the mainstream banks—being made available for this market.

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

We welcome the progress the Government have made in setting up the big society bank, and we note that it will be launched with £300 million-worth of capital at the end of this year. However, community projects also rely on revenue funding to support capital investment and according to estimates from the Association of Chief Executives of Voluntary Organisations, the total loss of revenue faced by civil society organisations will be at least £1.14 billion in the next financial year, rising to £3.1 billion a year by 2014-15. Does the Minister accept these figures and, if not, will he undertake to provide the Government’s own estimates of the revenue losses faced by community organisations over that period?

[Mr Maude]

The social investment bank planned by the last Government would have received a meagre £75 million of investment at best, and probably a great deal less than that.

I do not know whether the right hon. Lady noted what my right hon. Friend the Secretary of State for Communities and Local Government told the conference of the National Council for Voluntary Organisations yesterday. He said that the Government had “reasonable expectations” that local authorities would not impose greater cuts in their funding for community, social and voluntary organisations than they imposed on their in-house services, and that if authorities did not follow those “reasonable expectations”, he would contemplate making them statutory.

The fact is that we face the biggest budget deficit in the developed world. As a result of the legacy of the Government of whom the right hon. Lady was a prominent member, we are spending £4 for every £3 in revenue, and we cannot carry on like that. The necessity—and it is a necessity—to eradicate the structural deficit is something for which the right hon. Lady should bear her full share of responsibility.

[John Pugh (Southport) (LD)]

3. What assessment his Department has made of the potential efficiency savings from the use of teleconferencing.

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

Teleconferencing and video conferencing are a key part of our strategy to minimise travel in the civil service. Officials have been encouraged, indeed instructed, to use alternatives. Telephone calls can be quite helpful in that regard, when possible. So far, Departments have saved £50 million in the current financial year by avoiding travel, but by the better buying of travel services we have saved an additional £50 million. We are also reducing the cost of teleconferencing itself. We have opened up fresh discussions with major suppliers, and as a result of the Crown renegotiations that I have been overseeing, one of our suppliers has already offered a significant reduction in its audio conferencing tariffs.

[John Pugh]

I thank the Minister for that full answer, but will he make it a little fuller by telling me which Departments make good use of teleconferences and which do not, and why?

[Mr Maude]

That is a very good question, to which I do not have an immediate answer. I am prompted by the hon. Gentleman’s interest to look into the matter, and I will get back to him with some answers.

[Mr Tom Watson (West Bromwich East) (Lab)]

Teleconferencing provides a key opportunity for digital policy. The head of that policy in the Minister’s Department was appointed without a fair and open competition, as a former party staffer. That was one of 30 appointments revealed by freedom of information releases this week. Can the Minister tell me who those 30 people are and what they do?

[Mr Maude]

Of course I understand why the hon. Gentleman is so outraged by the idea of people with party affiliations fulfilling a public service vocation, because of course none of that ever happened under his party’s Government—a Government who, with the hon. Gentleman as one of the principal operators, distinguished themselves by their approach to cronyism.

I can tell the hon. Gentleman that anyone who has been appointed to a civil service role has passed all the appropriate tests, which, as he will know from his experience as a Minister in my Department, are extremely rigorous.

[Peter Aldous (Waveney) (Con)]

4. What progress his Department has made in establishing a big society bank.

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

5. What recent representations he has received on the big society bank; and if he will make a statement.

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

Sir Ronald Cohen and Nick O’Donohoe are working with us and with the banks to develop a proposal for the big society bank. As I have said, it will initially be capitalised by an investment from the mainstream banks. We are currently seeking to secure state aid approvals from the European Commission so that money from dormant bank and building society accounts can be directed towards the big society bank. Nothing along those lines had been done when the Government took office. In the meantime, we are working with the Big Lottery Fund to ensure that interim arrangements are in place by April, so that we can make early investments as soon as the first round of dormant bank account money becomes available in the summer.

[Peter Aldous]

Youth clubs such as the Metro, Boston Lodge and Colville House play an important role in my constituency. What guidance and financial assistance will be given to them, and to those operating new voluntary sector schemes whose aim is to take over the running of other local services such as crossing patrols and libraries, and when will that guidance and assistance be available?

[Mr Maude]

As my hon. Friend will know, a key part of our approach to public service reform will be encouraging voluntary and social enterprises to bid for the delivery of public services. They are being given a massive opportunity to develop different revenue streams and deliver public services in a responsive and agile way. The big society bank will deliver extra wholesale funding to the social investment market for start-up and development capital for such organisations. In the meantime, for some organisations the transition fund will provide bridging finance until those revenue streams become available.

[Miss McIntosh]

My question was about representations received, because there is a lot of interest in the big society bank in Thirsk, Malton and Filey, but there is also concern that if match funding is required, it will trigger the 2.5% referendum call on local government spending under the Localism Bill. Will this issue be addressed?

[Mr Maude]

I will look into that. The big society bank will provide private investment to bulk up the important social investment market. We have had numerous representations on this matter, most of them saying, “Please get on with it because we were very disappointed about waiting for so long for the last Government to do anything at all.”

[Chris Ruane (Vale of Clwyd) (Lab)]

Will the big society bank give grants as well as loans, and will the loans be set at commercial or preferential rates?

[Mr Maude]

The big society bank will not make grants. It is a bank, so it will make loans and provide investment capital for this important and growing sector. One of the problems in the social investment market has been that Futurebuilders was able to give both grants and loans, which was very distorting for the large and growing number of intermediaries in that market. The bank should be an investment organisation, not a giver of grants.

[Mark Durkan (Foyle) (SDLP)]

What steps have been taken to ensure that the big society bank will be relevant and accessible in all regions? Also, is it being impressed upon the banks that the coming arrival of the big society bank will not obviate their duty to show consideration and support for the third sector in the current challenging funding environment?

[Mr Maude]

I am grateful to the hon. Gentleman for that relevant question. The introduction of the big society bank certainly does not obviate the broader need to support voluntary and social enterprises, in the interests of local residents. The bank’s remit will be UK-wide. The money put in by the banks will be for UK purposes, but the money coming into the big society bank in due course from dormant bank accounts will be for England only, unless the devolved Administrations decide to put their share of that money into the big society bank, which I hope they will be encouraged to do.

[Rosie Cooper (West Lancashire) (Lab)]

6. What estimate he has made of the likely change in the number of jobs in the voluntary sector in the next three years.

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

Unfortunately, the sector cannot be immune from the cuts that are forced upon us, so of course there is concern about short-term job losses, but we firmly believe that there will be opportunities for the sector in the future, not least in delivering public services, and we are working very hard to make those opportunities real.

[Rosie Cooper]

I thank the Minister for that answer, but the National Association for Voluntary and Community Action estimates that 26,000 charity workers will lose their jobs in the face of the Government’s accelerated cuts to services. Does he agree with that estimate, and if not, will publish his own estimate of the job losses in the sector?

[Mr Hurd]

I do not recognise the basis of that estimate, but of course there is a challenge in the short term, and this Government are working very hard to try to help the sector manage through this period of transition. There is a very significant long-term opportunity for the sector to deliver more public services, to help people find more of a voice at the local level, and to benefit from the additional time and money we hope to encourage people to give as well as the social investment we are trying to encourage through the big society bank.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

I welcome the progress my hon. Friend is making in promoting and advancing the voluntary sector. [Interruption.] Will he compare that with the lacklustre performance of the last Labour Government?

[Mr Hurd]

I thank my hon. Friend for that question, and it was interesting to hear the chortles from those on the Opposition Benches. Of course there is absolutely no recognition among Labour Members of the necessity for these cuts after their Government’s absolutely shambolic stewardship of the economy over the past 13 years.

[Roberta Blackman-Woods (City of Durham) (Lab)]

Many in the voluntary and community sector are describing the transition fund, which was heavily over-subscribed and I believe is now closed, as a drop in the ocean compared with the tsunami of cuts facing the sector. Does the Minister not agree that he needs to do more to protect the voluntary sector from job cuts, especially at a time when he is asking it to do more?

[Mr Hurd]

I do not think any of my constituents would consider £100 million of taxpayers’ money to be a drop in the ocean. As the outgoing Labour Chief Secretary to the Treasury said, “There is no money,” yet we have found £100 million to try to help the most vulnerable organisations through a very difficult transition period. We wanted to get that assistance up and running as quickly as possible so the money could get out in as unbureaucratic way as possible, and I am very proud of what we have managed to achieve.

[John Glen (Salisbury) (Con)]

7. What steps he is taking to make Government procurement simpler for small and medium-sized enterprises.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

9. What steps he is taking to make Government procurement simpler for small and medium-sized enterprises.

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

11. What steps he is taking to make Government procurement simpler for small and medium-sized enterprises.

[Margot James (Stourbridge) (Con)]

12. What steps he is taking to make Government procurement simpler for small and medium-sized enterprises.

[The Minister of State, Cabinet Office (Mr Oliver Letwin)]

My hon. Friend the Member for Salisbury (John Glen) is right to ask this question. We attach a huge amount—

[Mr Speaker]

Order. I apologise for interrupting the right hon. Gentleman, but I think he seeks to group the question with a number of others: Nos. 9, 11 and 12.

[Mr Letwin]

I do indeed, Mr Speaker; I am very grateful to you.

My hon. Friend is absolutely right to ask this question because we attach a huge amount of importance to trying to open up contracts to small and medium-sized enterprises. We have launched the Contracts Finder website, which is of enormous advantage to them, and we are getting rid of vastly burdensome pre-qualification materials. Opposition Members may be interested to know that a document such as the one I am holding is what small and medium-sized enterprises had to fill out over and over again in pre-qualification. We are now reducing that and eliminating it in many cases.

[John Glen]

I thank my right hon. Friend for his reply. A business in my constituency offers a proven low-cost solution to helping individuals back to work, but it is finding it impossible to get access to Government. Can my right hon. Friend advise Gary Roberts of Cavendish Films how he can open a dialogue and ensure that these potential huge savings are given a fair hearing?

[Mr Letwin]

I would be delighted to welcome my hon. Friend and his constituents from Cavendish Films to discuss that very issue. The Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), has constructed the Work programme in a way that enables the main contractors to deal with the vast range of subcontractors on a payment-by-results basis, and I am sure there is plenty of opportunity for my hon. Friend’s constituents to be introduced to the participants in that programme.

[Alec Shelbrooke]

My constituency of Elmet and Rothwell has one of the lowest unemployment rates in the country, which is due mainly to a very successful SME base. Is the drive to procure from SMEs intended as a way of subsidising them, or is it the most efficient way for the Government to procure?

[Mr Letwin]

My hon. Friend raises another extremely important question. It is emphatically not the Government’s intention to subsidise small and medium-sized enterprises through the contracting process, but rather to enable Government to be more efficient by promoting the kind of innovation that SMEs so frequently bring to the work they do. Our feeling is that if we get locked into contracts merely with very large suppliers, we often lose that innovation, and we are determined to avoid that result.

[James Morris]

SMEs are vital to the black country economy. What is the Minister doing to ensure that small and medium-sized companies in places such as the black country can compete for Government contracts on a level playing field?

[Mr Letwin]

Again, that is an enormously important question. One of the purposes behind our move to spread contracting to SMEs is precisely to ensure that we do not get such an unbalanced economy. We want to reach out to firms that have the best propositions—often, small and medium-sized firms—in parts of the country where there are not major contractors who do much business with Government. We believe that that is a good way of helping to build the economies, and enterprise and innovation, in those areas of our country.

[Margot James]

Government procurement officers have been very risk-averse in the past and associate large companies with security. Does my right hon. Friend agree that a change in culture is required, as well as these excellent new policies?

[Mr Letwin]

In a word, yes. We are determined to achieve a change in culture, and the dictum that nobody ever got sacked for hiring IBM is one that my right hon. Friend the Minister for the Cabinet Office is putting to the test. We are determined to go for innovation and excellence, and we will do that on a wide scale. Looking at the figures for contracting, I see that we have already achieved an enormously wide spread in the past few months.

[Mr Speaker]

Order. There are really far too many noisy private conversations taking place in the Chamber. I want to hear the questions and, indeed, the good doctor’s answers.

[Hugh Bayley (York Central) (Lab)]

What proportion of Government contracts were won by small and medium-sized enterprises in Yorkshire, and what are the Government doing to ensure that small companies in the north of England get a proportionate share of Government contracts?

[Mr Letwin]

I will write to the hon. Gentleman with the figures for Yorkshire. I can tell him that we have set a presumption that all Government Departments will be moving towards 25% of contracts being in the hands of small and medium-sized enterprises, giving a vast range of opportunity not just in one part of the country but all parts of the country. Indeed, we intend to ensure that people throughout the country have ample opportunity to get into this market, which is why we are making it so much easier to participate.

[Anas Sarwar (Glasgow Central) (Lab)]

8. What assessment he has made of the progress of the work of the big society ministerial group.

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

The informal ministerial group on the big society and decentralisation supports progress across government on cross-cutting issues, such as the role of the voluntary community and social enterprise sector in public service delivery, the progress made in vanguard areas and the compact between the voluntary sector and the state.

[Mr Speaker]

Order. The House must come to order. This is very unfair on the Minister. He is offering the House an informative answer and it must be heard.

[Anas Sarwar]

Thank you, Mr Speaker. I also thank the Minister for his answer. Given that opinion polls show that the majority of the British people have not even heard of the big society and that the majority of those who have think it is just a cover-up for the cuts, does the Minister believe that the work of the ministerial group has been a resounding success? Does he not believe that Ministers’ time would be better spent doing credible work in their own Departments?

[Mr Maude]

I am sorry that the hon. Gentleman does not think that building a bigger, stronger and more cohesive society is worth while, particularly given that the role of the state is having to retrench severely as a result of the financial incontinence of the previous Government of the party that he supports. I am sorry to have to remind him that when the coalition Government took office his Government were spending £4 for every £3 in revenue and had the biggest budget deficit in the developed world. So less money is available and building a bigger, stronger society, which I would have thought he would support, is a very worthwhile exercise for not only the whole Government, but the whole of Parliament.

[Robert Halfon (Harlow) (Con)]

Will the ministerial group examine the role of the big society bank to see whether it can be run on national credit union lines, so that it can link up with local credit unions and ensure that the money cascades down to community groups at the grass-roots level?

[Mr Maude]

The social investment market has been growing in recent years but it needs additional wholesale funds, both from the big society bank and from freeing up the guidelines on investment by trustees of big philanthropic foundations. That will grow the social investment market significantly, and the credit union movement, which is extraordinarily important and has a very important social mission, can be an important partner in that progress.

[Alison McGovern (Wirral South) (Lab)]

Will the Minister or the “Secretary of State for the big society” have a quiet word with Wirral borough council, which has closed important care and respite homes too quickly in order to let the non-government sector fill the gap? That is giving the big society a bad name.

[Mr Maude]

I refer the hon. Lady to the remarks made by the Communities Secretary yesterday. We do believe in localism; we believe in local authorities being accountable, not to Whitehall, but to their own local residents. Each local authority has to justify its decisions but, as my right hon. Friend said yesterday, we have expectations that local authorities will not impose greater cuts on their funding for voluntary organisations than they do on their own costs. We would expect them to have regard to that.

[Mr Speaker]

Order. The House must come to order. We want to hear Joseph Johnson.

[Joseph Johnson (Orpington) (Con)]

10. What steps he is taking to reduce the risk of fraud in public sector procurement.

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

The National Fraud Authority estimates that £21 billion is lost to fraud in the public sector each year, on top of which there is a so far unquantified loss from error and from uncollected debt. It is estimated that £2.4 billion of that £21 billion is lost to procurement fraud, and that is unacceptable. The Prime Minister has asked me to chair a counter-fraud taskforce comprising members from government and private sector experts to tackle the issue. We are overseeing a series of pilots, including one on procurement, to drive forward ways to tackle public sector fraud, and we will report our findings in due course.

[Joseph Johnson]

I thank the Minister for that answer. That figure of £21 billion is truly shocking. Will the Minister update the House on progress towards developing a more robust methodology for quantifying how much taxpayers’ money is being wasted in this way?

[Mr Maude]

It is actually difficult to know exactly how much is being lost. The numbers are increasing each year, but that is largely because there is a better handle on the data. The quality of much Government data is lamentably poor and it is particularly difficult to obtain accurate figures on some procurement fraud, such as collusion or bid rigging. However, in one of the taskforce pilots, the Department for Transport is using data analytics to detect overpayments from the Department’s accounts payable systems. A similar exercise undertaken by the Home Office detected and recovered no less than £4 million in overpayments as a result of fraud or error.

[Mr Speaker]

I am obliged to the Minister.

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

13. How many valid bids the transition fund received.

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

There were just over 1,700 applications to the transition fund, which are currently being assessed by our delivery partner the BIG Fund. The first transition fund awards, totalling £1.7 million, were made on 15 February to 18 organisations and there will be hundreds more awards over the coming months.

[Anne Marie Morris]

Given the appetite for the transition fund, will the Prime Minister consider a new fund to enable even more civic societies that undertake such valuable work, such as Home-Start in Teignbridge, to continue to operate? Will he consider including smaller organisations in such a new fund?

[Mr Hurd]

I understand the question, but unfortunately we have no money to consider such an initiative. We had to take some very tough decisions on eligibility criteria for the first round and we are actively looking at ways to top that up, but we have no current plans for a second round.

The Prime Minister was asked—

[Gavin Barwell (Croydon Central) (Con)]

Q1. If he will list his official engagements for Wednesday 2 March.

[The Prime Minister (Mr David Cameron)]

I am sure the whole House will wish to join me in paying tribute to Private Dean Hutchinson from 9 Regiment the Royal Logistic Corps and Private Robert Wood from 17 Port and Maritime Regiment the Royal Logistic Corps. They were killed in a fire at Camp Bastion on Monday 14 February. Their service for the safety of the British people will not be forgotten and we send our deepest condolences to their families, friends and colleagues.

I am sure that the whole House will also wish to join me in sending our deepest sympathies to the people of New Zealand and to all those who lost loved ones, including, sadly, at least four British citizens, in the earthquake last week. We have sent two teams of experts to provide whatever assistance they can.

This morning I had meetings with ministerial colleagues and others, and in addition to my duties in the House I shall have further such meetings later today.

[Gavin Barwell]

I am sure that the whole House will, indeed, wish to associate itself with the Prime Minister’s remarks in relation both to our brave servicemen and to the people of New Zealand.

Despite the urgent need to reduce the deficit, the Government took the right decision not just to protect but to increase the overseas aid budget. What capacity does that give us to respond to the urgent humanitarian situation on the Libyan border?

[The Prime Minister]

My hon. Friend makes an important point, which is that in spite of the difficult decisions we have to take, it is right to keep increasing the aid budget. Sadly, what is happening on the Egyptian and Tunisian borders with Libya shows how important that decision is. As the UN Secretary-General, Ban Ki-moon, said last night, there are serious implications of a growing humanitarian crisis. The information is that some 162,000 people have crossed the land border so far. We have sent technical Department for International Development teams to both the borders and yesterday we flew in tents for 1,500 people and blankets for 36,000 people. I can tell the House that today we are launching a UK operation to airlift several thousand people back to Egypt from the Libyan-Tunisian border, with the first flight scheduled to leave the UK later today. It is vital to do this; those people should not be kept in transit camps if it is possible to take them back to their home. I am glad that Britain can play such an important part in doing that.

[Edward Miliband (Doncaster North) (Lab)]

May I join the Prime Minister in paying tribute to Private Dean Hutchinson from 9 Regiment the Royal Logistic Corps and Private Robert Wood from 17 Port and Maritime Regiment the Royal Logistic Corps? They both showed enormous heroism and courage in their service in Afghanistan and our thoughts are with their family and friends.

I also join the Prime Minister in passing on condolences and deepest sympathy to the victims of the New Zealand earthquake.

May I ask the Prime Minister about the situation in Libya, starting with the humanitarian crisis? I welcome the bilateral action being taken by the Government, including the steps that he has announced today and the visit of the International Development Secretary. May I ask what support the Prime Minister is also offering to multilateral organisations such as the World Food Programme and the United Nations High Commissioner for Refugees in dealing with what is, as the Prime Minister says, a growing refugee emergency on the Libyan border?

[The Prime Minister]

I thank the right hon. Gentleman for his question. In addition to the steps I announced about the airlift from the Tunisian border back to Egypt, there is also HMS York, which has now docked in Benghazi carrying a lot of medical and other supplies and will be able to help with the humanitarian mission. He asked specifically about helping the multilateral organisations. Obviously, we are in very close touch with them, particularly with OCHA—the United Nations Office for the Co-ordination of Humanitarian Affairs—and Valerie Amos. We are delighted that it is John Ging, whom many in the House will know from the UN and his excellent work in Palestine for UNRWA—the United Nations Relief and Works Agency—who will be co-ordinating that effort. We will remain in close contact with them as one of their lead partners and will do everything we can to help to co-ordinate this effort. We have the forward-basing of a lot of tents and other equipment in Dubai, which means that it is relatively close to the area. We will go on doing everything we can to ease the problems at the border and to make sure that this emergency does not turn into a crisis.

[Edward Miliband]

I thank the Prime Minister for that reply. I am sure he will keep the House updated. We both agreed on Monday that the international community must take all practical steps for a democratic outcome in Libya. On Monday, the Prime Minister floated the idea of a no-fly zone. On Tuesday, however, a number of foreign Governments distanced themselves from the idea. Can he clarify where that proposal now stands?

[The Prime Minister]

Our first priority as a country should, of course, be to evacuate our fellow countrymen from Libya. That process has gone well and there are very few who want to leave who are still in Libya. The second thing that we should do is put every available pressure on the Libyan regime. We have done that through travel bans, asset freezes and arms embargos, and we should keep on looking for other ways in which we can pressurise the regime.

We have just spoken about the humanitarian crisis, and the next steps that we must take to ease it. What I was saying on Monday and say again today is that I think it is the job of leaders in the western world in particular to prepare for all eventualities and all the things that might happen, particularly if Colonel Gaddafi unleashes more things on his own people. On those grounds, we should be and we are looking at plans for a no-fly zone. I was particularly heartened by what Secretary of State Clinton said—that a

“ no-fly zone is an option we are actively considering.”

These matters are being discussed in the North Atlantic Council this morning, and it is right that they are.

[Edward Miliband]

I emphasise to the Prime Minister, as I am sure he will agree, that there was a clear sense of unity in the international community over sanctions. Clearly, that is what we must strive for in any future decisions that we make. He will understand the concern in the country and the armed forces that after he spoke about the no-fly zone, the Government issued redundancy notices to thousands of Royal Air Force personnel. Can he reassure the House and the country that any increase in our military commitments that he is talking about, including in north Africa, can be met at a time when we are reducing capability?

[The Prime Minister]

I can give the right hon. Gentleman that assurance. Let me be clear. Of course, it is never easy to reduce the numbers in our armed forces, but this Government decided, quite rightly, to hold a strategic defence review because we had not had one for 12 years and we inherited a defence budget that was in a state of complete chaos. The background to the defence review is the enormous black hole in our nation’s finances, but the aim of the defence review is to make sure that we have flexible, well-equipped armed forces that are able to serve our national interests around the world. That is exactly what I believe they will be able to do.

[Penny Mordaunt (Portsmouth North) (Con)]

Q2. After Romford hospital, next on the waiting list for private finance initiative surgery should be Portsmouth’s Queen Alexandra hospital. Does my right hon. Friend agree that massive annual repayments and restrictive procurement practices are preventing best care from being delivered, and that the contract should go under the knife and the savings given to Portsmouth’s health economy, not Treasury coffers?

[The Prime Minister]

My hon. Friend makes a good point, which is that next to the Ministry of Defence budget, the other shambles that we inherited was the PFI programme. The public sector is going to be spending about £8 billion on PFI contracts just this year, so we must examine all those contracts for savings. Let me give my hon. Friend a couple of examples of the nonsense that we inherited under those contracts—[Interruption.] Opposition Members may not want to hear it: £333 to change a hospital light switch; £963 for a new TV aerial in a hospital. Some of the terms of the contracts are disgraceful and it is right that we look at them.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Q3. On the “Politics Show” of 13 February, Boris Johnson’s deputy mayor with responsibility for policing, Kit Malthouse, boasted that he would ensure that every safer neighbourhood team in every ward in London would keep its two police constables and three police community support officers, and that he had the power to guarantee that. However, police officers in Mitcham have already told my constituents that those teams have been merged and that every safer neighbourhood team has been reduced to one police officer. Who does the Prime Minister believe—the London Mayor or serving police officers?

[The Prime Minister]

It is worth listening to both serving and retired police officers. The hon. Lady might want to listen to Jan Berry, who for years led the Police Federation, who said:

“With unnecessary bureaucracy being added at every tier of policing from the local to the national . . . I estimate one third of effort”—

one third—

“is either over-engineered, duplicated or adds no additional value. This is unaffordable in the current climate and”

we need to give consideration to how we can realise savings in time and energy. As in so many areas, we inherited a police service completely inefficient and not properly managed by Labour.

[Mark Pawsey (Rugby) (Con)]

Q4. There is an independent committee that ensures that once they have left office, former Ministers act appropriately in their subsequent employment. It is reported that Lord Mandelson, Baroness Symons and Adam Ingram have worked for the Gaddafi regime. Will the Prime Minister ensure that these reports are thoroughly investigated?

[The Prime Minister]

My hon. Friend makes a good point, and I am sure that those ex-Ministers will want to refer themselves immediately to that committee so that their links can be looked into.

[Edward Miliband]

The Prime Minister and the Secretary of State for Communities and Local Government are adamant that there is no need for cuts in local authority front-line services. Can he therefore explain why Conservative-run Bromley council is shutting 13 of its 16 children’s centres?

[The Prime Minister]

Yes, we have made reductions in local government grant, because frankly we inherited a complete mess in the nation’s finances. What we have done is ask every single local authority to make public every single bit of spending they do so that members of the public can make sure that they are cutting bureaucracy, cutting councillor allowances and cutting pay, rather than cutting services. When the right hon. Gentleman gets to his feet, perhaps he can tell us why only one authority in the entire country, Labour-run Nottingham, refuses to do so.

[Edward Miliband]

You know he is losing the argument when he starts asking me the questions, Mr Speaker. Why are the cuts being made in Sure Start children’s centres? It is because the right hon. Gentleman is cutting the early years budget. The Department for Education’s own figures show an 11% cut between this year and next; and he is not just cutting the budget—he has removed the ring fence that protected it and kept those Sure Start centres open. We are getting used to the Prime Minister’s Question Time U-turn. We have seen it on school sport, housing benefit and, most recently, on forests. He has the capacity to ditch a policy and dump a colleague in it, so when he returns to the Dispatch Box, why does he not dump this policy too and reinstate the Sure Start ring fence?

[The Prime Minister]

In a minute, he is going to give me a lesson on family loyalty. Let me say this to the right hon. Gentleman: he comes here every week and says that he opposes the defence cuts, opposes changes in the Home Office and opposes any changes to local government, yet in four weeks’ time his own cuts programme, the Darling programme, comes into place, with £14 billion of cuts, which is only £2 billion less than we propose. It is about time he got off his opportunistic bandwagon and started producing some policies of his own.

[Edward Miliband]

This is a guy who has made his career out of opportunism knocks. Remember what he said at the election: he was strongly committed to Sure Start; he would improve Sure Start; and if anyone suggested otherwise, it was an absolute disgrace. As children’s centres face closure, people know that he has got it in his power to stop it happening by reinforcing that Sure Start ring fence. He is the Prime Minister; it might not have looked like it last week, but why does he not get a grip?

[The Prime Minister]

What we are doing for children in this country is funding education for two-year-olds for the first time, putting money into the pupil premium—something the right hon. Gentleman did not do for 13 years—and making sure that money is focused on the most disadvantaged. That is what is actually happening. When the party opposite looks at his performance—[Interruption.]

[Mr Speaker]

Order. Let us have a bit of order in the House. I want to get to the bottom of the Order Paper and the House needs to help in that process.

[The Prime Minister]

The money for Sure Start is there, so centres do not have to close. [Interruption.] Yes, and I think that when the Opposition consider the right hon. Gentleman’s performance it could be time for a bit of “Brother, where art thou?”

[Mr Roger Gale (North Thanet) (Con)]

Recently, eight Members from both Houses of Parliament met, in Islamabad, Mr Shahbaz Bhatti. This morning, we learned that Mr Bhatti, on his way to work, was murdered. Mr Bhatti was a man committed to peace and multi-faith reconciliation. Will my right hon. Friend send through the high commission our condolences to the Pakistani Government and to his family, and will he restate our belief that there is no place for that kind of action anywhere in a democratic world?

[The Prime Minister]

I think my hon. Friend speaks for the whole House and, I am sure, the whole country. It was absolutely shocking to hear the news this morning about that Minister, who was a Christian minister in Pakistan, being killed in that way—absolutely brutal and unacceptable. It shows what a huge problem we have in our world with intolerance, and what my hon. Friend says is absolutely right. I will send not only our condolences, but our clearest possible message to the Government and people of Pakistan that that is simply unacceptable.

[Stephen Timms (East Ham) (Lab)]

Q5. Two weeks ago, the Prime Minister gave the House some figures to criticise the flexible new deal. I thought they sounded a bit odd, so I asked the Library to check, and its response states: “This is a misleading interpretation of the statistics.”The Library points out that the Department for Work and Pensions website warns directly against interpreting the figures in the way the Prime Minister interpreted them. In future, can he get someone to check his figures before he gives them to the House?

[The Prime Minister]

I can assure the right hon. Gentleman that the figures were properly checked, and I shall write him a letter outlining not only the figures for the flexible new deal, which so many people know was just a revolving door for young people who needed employment, but the figures for the future jobs fund, which cost five times as much as many other programmes.

[John Glen (Salisbury) (Con)]

Q6. With the police using 2,000 different IT systems employing 5,000 staff, is it not time for this Government to start reforming police practices, so that more resources can be devoted to fighting crime on the front line?

[The Prime Minister]

My hon. Friend makes an extremely important point. The British police are incredibly brave and professional, and all of us see how hard they work in our communities, but they are let down by a system that has far too many officers in back-office roles, in HR and in IT, and not on the streets. That is what needs to change, along with some of the working practices that, frankly, are not actually modern and up to date. We need to make sure that that happens so that we keep the maximum number of police on the front line in our communities.

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

Q7. The armed forces have our total support and admiration, and traditionally they would have looked to a Conservative Government, whether in good economic times or bad, to defend them as they defend us. Given the deplorable treatment that they are currently receiving, whether by e-mail or hard copy, what plans does the Prime Minister have to restore faith in government?

[The Prime Minister]

Everyone in the House appreciates that our armed forces are among the most brave and professional anywhere in the world, and we can be incredibly proud of what they do. In terms of making sure that we look after them, the Government have introduced a doubling of the operational allowance for all those serving in Afghanistan; we are the first Government in history to introduce a pupil premium so that the children of service personnel get extra money when they go to school; we are making sure that rest and recuperation leave is properly formed; and we are writing out the military covenant and properly referencing it in law. The most important thing of all is to have a defence review and to make sure that our forces are fit for the future.

To all those who express concern, I make this point: at the end of that defence review, we will have the fourth largest military budget in the world; some of the most capable weapons that any air force in the world could have; the new Type 45 destroyers; our nuclear deterrent; and a superbly professional Army. That is what we want in this country, and that is what this Government will support.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

Q8. Will the Prime Minister join me in encouraging schools in my constituency and right across the country to get involved in the Tenner Tycoon school business competition, which encourages enterprise and is running this month?

[The Prime Minister]

Yes, it sounds like an excellent scheme. There is a lot that we should do to encourage business and enterprise to go into our schools to encourage young people to think about a career in starting up a business, in small business and in enterprise. That is a very important part of a rounded education.

[Sheila Gilmore (Edinburgh East) (Lab)]

Q9. On Sunday, a woman asked me what politicians were going to do for people like her, as she had been waiting for a disability living allowance appeal for 11 months. Given the roll-out of the employment support allowance and the proposals for more reviews and more assessments in DLA, what plans does the Prime Minister have for expanding the Tribunals Service, and has this been fully costed in his welfare reforms?

[The Prime Minister]

This House will obviously have a lot of opportunity to debate the Welfare Reform Bill, which is one of the most complex and detailed pieces of legislation on reforming our welfare system. On DLA specifically, what we are looking for, in terms of the gateway, is to make sure that people have a proper assessment for DLA, because there are too many cases where people need it and do not get it and, regrettably, some cases where people do not need it and do get it, and we need to put that right.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

While we must clearly do everything that we can to help the non-Libyans who are seeking to get out of that country, may we hope that the Libyans will be allowed to determine the fate of Colonel Gaddafi?

[The Prime Minister]

I very much hope that they do. We should support and say how much we admire those brave people who are standing up in their own country asking for greater freedoms and greater democracy—for things that we take for granted in our own country. What has been striking is that although many said that any sort of rebellion like this would be extremist, or Islamist, or tribal, it is none of those things; it is a revolt by the people, who want to have greater democracy in their country.

[Graeme Morrice (Livingston) (Lab)]

Q10. Last week, Save the Children published research showing that 1.6 million children are living in severe poverty in the United Kingdom, yet this week the Government have failed to include low-income families in the warm home discount scheme for rebates on their energy bills. Will the Prime Minister meet Save the Children on this critical issue and ask the Chancellor to publish an emergency plan to tackle severe child poverty in the Budget and the child poverty strategy later this month?

[The Prime Minister]

I do see Save the Children regularly. It is an excellent organisation in terms of the work that it does overseas and the pressure that it rightly brings to bear here in this country. What we have done in trying to help with child poverty is to make sure that we massively increase the child tax credit. That is what we have done in the Budget and in the spending round to make sure that while we are making difficult decisions, child poverty has not increased.

[Gareth Johnson (Dartford) (Con)]

Q11. The Prime Minister will know that for years the welfare state has been too easily abused. Can he therefore assure this House that in future the welfare state will act as a safety net for the unfortunate and not as a way of life for the workshy?

[The Prime Minister]

What this Government are doing—and it is a historic reform—is making sure that the welfare state always means that it is worth while someone being in work and worth while someone working more. That is what universal credit is all about, and it will make a huge difference to welfare in this country.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

Q12. Many of the poorest and most disadvantaged children in my constituency will not be included in the pupil premium because their parents are still waiting for their immigration status to be settled and therefore have no access to funds and are not eligible for free school meals. Will the Prime Minister ask his Ministers to meet me and other Members in constituencies like mine to discuss a way to capture these children to ensure that our schools are not underfunded?

[The Prime Minister]

The hon. Lady makes an important point. When we established the pupil premium, we had a number of discussions to try to work out the best basis to put it on. In the short term, the free school meals indicator was the best basis. However, I am very happy to arrange a meeting between her and my right hon. Friend the Education Secretary to see what we can do to make sure that we really are targeting those most in need. There may be opportunities, perhaps not this year but in the future, to make sure that the pupil premium is helping those who most need it.

[Stephen Williams (Bristol West) (LD)]

Yesterday, the Secretary of State for Transport made a most welcome announcement on the electrification of the Great Western main line to Bristol, Cardiff and the south Wales valleys, including the fact that the jobs producing those trains will be in the north-east of England. Does not this show that the coalition Government not only have a strategy for growth but that that vision for growth is both high-tech and green?

[The Prime Minister]

The hon. Gentleman makes a very good point. In 13 years, the previous Government never electrified the west coast main line out to Cardiff. We have managed to announce it within nine months. He is absolutely right. The good news is not just the electrification of the line to Cardiff, but the new factory in Newton Aycliffe that will build the trains and that we are pressing ahead with High Speed 2.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Q13. Does the Prime Minister think he was right to tell journalists on a plane that the United Kingdom is paying bribes to Libya, and does he agree with the Foreign Office’s assessment that he was “loose-tongued and reckless”?

[The Prime Minister]

I am, of course, very grateful for that question. The point I would make is that in getting people out of Libya, we did have to pay some facilitation payments for the services in the airport. As the hon. Gentleman says, I am sure that those were entirely proper.

[Mr Philip Hollobone (Kettering) (Con)]

Q14. The Royal British Legion has welcomed the Prime Minister’s personal commitment to a new military covenant being enshrined in the law of the land, but it has made it clear that it does not accept that the Government’s proposals for an annual armed forces covenant report honour that promise. Will he work constructively with the Royal British Legion to agree a definition of the military covenant that can be enshrined in legislation?

[The Prime Minister]

I am very happy to work with the Royal British Legion. It is one of the most important and hard-working organisations in our country. Not only does it do a great job in lobbying for the armed forces, it does a brilliant job in looking after former service personnel in all our constituencies. I am happy to have that conversation. However, I want to ensure not only that we reference the covenant properly in law, but that we regularly debate, improve and enhance it, partly through debates in this House.

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

I thank the Prime Minister and the Secretary of State for Northern Ireland for their work in securing an extra £200 million for the Police Service of Northern Ireland to combat the dissident terrorist threat. That will undoubtedly save lives and prevent the creation of further victims. On victims, given our campaign for compensation for the victims of Libyan state-sponsored IRA terrorism, will the Prime Minister give an assurance that before the normalisation of relations with Libya under any new regime, the outstanding matter of compensation will be addressed by the Government, not least through the use of Gaddafi assets seized in Britain?

[The Prime Minister]

First, I thank the right hon. Gentleman for what he said about the additional funding for the police in Northern Ireland. It is absolutely vital that we work hard with its Administration to ensure that the security situation there is as good as it can be. On what he said about compensation from the Libyans to victims of IRA terror, an FCO-led unit is still working on that issue and it is vital that it continues to go on doing that. It is an ingenious idea to use the frozen assets in that way. Having sought advice, those assets really belong to the Libyan people. The whole problem with Libya is that it is a rich country with poor people. We can see that in the extensive assets that have been frozen. Those assets belong to the Libyan people first and foremost.

[Mark Lancaster (Milton Keynes North) (Con)]

Q15. Milton Keynes council has been praised for its commitment to publishing all expenditure of more than £500, ensuring that local residents can see exactly how their council tax money is being spent. What message will the Prime Minister give to other local authorities that seem determined to keep their residents firmly in the dark?

[The Prime Minister]

My hon. Friend makes an extremely good point. I know that the Labour party is embarrassed about this, because we now have transparency from every single council in the country apart from one that is controlled by the Labour party—Nottingham—which will not tell us where it is spending its money. I want every single person in our country, every single Member of Parliament and all councillors to be able to ensure that the money is going on services and not on salaries, bureaucracy and allowances. That is the pressure at a time of austerity and of difficult national decisions. How typical it is of Labour just to try to cover it all up.

[Richard Burden (Birmingham, Northfield) (Lab)]

In response to a question from me in December, the Secretary of State for Communities and Local Government expressed himself as “delighted” with the level of cuts faced by Birmingham. Yesterday, Birmingham city council cut £212 million from its budget, hitting care for the elderly and the disabled, and youth services. Does the Prime Minister share his Communities Secretary’s delight or does he think that Birmingham is going too far, too fast?

[The Prime Minister]

Every council in the country is having to make difficult decisions about reducing their spending. When we look at what is actually happening to Government grants, we see that in most cases, they are going back to the levels that we had in 2007, 2006 or, in some cases, even 2009. Everyone has to take part in this, and I would just remind the hon. Gentleman that the reason this is being done is because his party made a complete mess of the economy.

[Mr Robert Buckland (South Swindon) (Con)]

At a time when prices at the petrol pumps are going up and up, will the Government do all that they can to ease the pressure on hard-pressed motorists?

[The Prime Minister]

My hon. Friend makes an extremely good point. I know how difficult it is for motorists, and particularly for small businesses and families, when they are filling up at the pumps and paying more than £1.30 a litre. As we have said, we will look at the fact that extra revenue comes to the Treasury when there is a higher oil price, and will see whether we can share some of the benefit of that with the motorist. That is something that Labour never did in all its time in government, and it ought to be reminded of the fact that it announced four increases in fuel duty last year, three of which were due to come in after the election.

[Rachel Reeves (Leeds West) (Lab)]

The £90 million of cuts to the budget of Leeds city council means that Bramley baths in my constituency will have its hours cut so that school children will not be able to swim there any more. How does that fit with the Government’s ambition for school sports and for the Olympic legacy for Leeds?

[The Prime Minister]

We do want to see a proper legacy come out of the Olympics. That is why we are funding the Olympics properly and why we have made it very clear that the extra money will be made available for school sport. But, if we look at education funding, we can see that funding per pupil is not being reduced. Because of difficult decisions being made elsewhere, which Labour has never supported, we are maintaining per-pupil funding for students throughout our country. That is the right decision, and it is one that the hon. Lady should get behind.

[Gordon Birtwistle (Burnley) (LD)]

When Colonel Gaddafi is finally removed, is the Prime Minister confident—[Interruption]—that an interim Government can be found to prevent the country from falling into anarchy?

[The Prime Minister]

I would advise my hon. Friend to ignore the voices from the Opposition. They are just furious at the fact that he liberated a long-held Labour seat. He makes a very good point. One of the things that we are doing, currently and in the coming days, is making contact with the opposition in Benghazi to ensure that we have good contacts with them so that we can help to bring about a peaceful transition in Libya.

[Mr Speaker]

Order. We come to the urgent question. Will right hon. and hon. Members who are not staying for this business but are leaving do so quickly and quietly so that the exchanges on the urgent question can take place properly?

Petition

Wednesday 2nd March 2011 Commons Chamber

Stephen Williams (Bristol West) (LD)

- Hansard - - Excerpts

This petition was presented to me after a visit to the Catch 22 project in the Barton Hill area of my constituency, which is the most deprived ward in the city of Bristol, and one of the most deprived wards in the south of England.

The petition states:

The Petition of residents of Bristol,

Declares that, after nine years of working with the families and young people of East Central Bristol, there is now a real risk that the East Bristol Youth Inclusion Programme will not have its funding renewed; and notes that the Petitioners believe that this cut will have a negative impact, not just on local young people, but also on the wider community.

The Petitioners therefore request that the House of Commons urge the Government to ensure that money for preventative work remains ring-fenced, so that young people can be given the necessary support to remain out of the youth justice system, and live fulfilling and empowered lives.

And the Petitioners remain, etc.

[P000891]

Armed Forces (Redundancies)

Wednesday 2nd March 2011 Commons Chamber

12:32

[Mr Jim Murphy (East Renfrewshire) (Lab)]

(Urgent Question): To ask the Secretary of State for Defence if he will make a statement on redundancies in the armed forces.

[The Secretary of State for Defence (Dr Liam Fox)]

On 19 October last year, in the strategic defence and security review, the Government announced reductions in the size of the armed forces, reducing the Army by 7,000, the RAF by 5,000 and the Navy by 5,000. This was to reshape the armed forces for Future Force 2020 and also to respond to the budgetary pressures resulting from the need to reduce the inherited deficit and deal with the black hole in the Ministry of Defence’s finances.

Following the announcement, normal procedure for proceeding with the redundancies was followed. Let me briefly describe this. The armed forces modelled the manpower that they needed for Future Force 2020 and consulted their own people on the best methods and time scales for achieving that. The families federations have been kept fully informed. Yesterday’s announcements were simply part of that process. Following yesterday’s announcement of the RAF programme, the Army and Navy will follow on 4 April with their programmes. The Army and RAF will give individuals notice that they will be made redundant on 1 September, followed by the Navy on 30 September. The exact timing of further tranches has not yet been decided.

Afghanistan is the Government’s defence main effort. Decisions in the SDSR were therefore weighted towards the protection of capability for the mission in Afghanistan, which, as the Prime Minister has said, will see us transition to full Afghan lead in 2014.

Redundancy is never a painless process, whether in the armed forces or elsewhere, and it is sad to see committed and patriotic men and women lose their jobs. But in that process, it is essential that they are made fully aware of the options available and the time scales involved, which means that a timetable needs to be adhered to, for the sake of themselves and their families. It would simply be wrong to alter that timetable for the convenience of the Government. Personnel were expecting the announcement this week, and to delay it for political expediency would have been to betray their trust. Difficult though it may be, under this Government political convenience will not be the final arbiter of our decisions.

[Mr Murphy]

I start by associating myself with the Prime Minister’s condolences regarding Private Dean Hutchinson and Private Robert Wood.

This is the second time in recent weeks that the Secretary of State has had to come to Parliament in this way. Surely it is not too much to ask that when he is making announcements about 11,000 armed forces redundancies he should volunteer to come here, and not have to be summoned to appear.

Yesterday there was a written ministerial statement, which contained a fraction of the information that was briefed to the media. Some will think that that was because, on the day when the Government were discussing a no-fly zone over Libya, they did not want to defend in the Commons the 2,700 redundancies in the RAF—but I think it is more serious than that. In November the Secretary of State said at the Dispatch Box:

“no one currently serving in Afghanistan, or on notice to deploy, will face compulsory redundancy.”—[Official Report, 8 November 2010; Vol. 518, c. 13.]

I always try to give the Secretary of State the benefit of the doubt, as he knows, so I believed him. More importantly, the armed forces and their families believed him. In making that promise he gave his word, and in breaking his pledge he is playing with words.

Why did the Ministry of Defence brief the media yet keep Parliament in the dark? How many people who have served in Afghanistan will be made redundant, and will the Secretary of State repeat his guarantee that no one currently serving in Afghanistan will be sacked on their return? Unless he can answer those questions and give that guarantee, it is disgraceful that some of our forces taking on the Taliban today will be welcomed home as heroes by the public, and sacked by their Government.

[Dr Fox]

First, as I have just explained to the House, this is not a new announcement but simply procedure following on from the announcements made in the SDSR. Secondly, the right hon. Gentleman is correct to say that this is the second time that we have had an urgent question on this subject, and I noticed that when the Opposition last had the opportunity to ask a question, they were not asking for details about these particular schemes but wanted to talk about e-mails and other peripheral issues. For them suddenly to come forward with a new-found interest in this particular issue strikes me as the most sad and cynical opportunism.

I have repeatedly made it clear that we have compulsory redundancy schemes in the armed forces because we need to maintain the rank structure and skills base required. When compulsory redundancies are announced, they will not affect those in receipt of the operational allowance, those within six months of deploying or those on post-operational tour leave, as I made clear in the House.

[Bob Russell (Colchester) (LD)]

Sadly, the Prime Minister and the Leader of the Opposition have to refer to the fallen on occasions. As we speak, a military funeral is taking place at St Peter’s church in Colchester, so the statement that we have been given is very important.

The Secretary of State has twice now given the House assurances that members of 16 Air Assault Brigade from my constituency serving in Afghanistan will not be made compulsorily redundant. Does he agree, however, that the manner in which the Ministry of Defence is handling matters causes concern not only to serving personnel in Afghanistan but to their families back home?

[Dr Fox]

The processes being followed are those that the armed forces would normally follow when setting out redundancies. There is never a good time to announce redundancies. It is particularly politically difficult when our armed forces are in combat in Afghanistan. However, if we are to keep faith with our personnel, we must follow the timetables that we have set out for them. It would be easy to delay announcements at the inconvenience of our service personnel simply for the convenience for politicians. That is entirely the wrong way to proceed.

[Angus Robertson (Moray) (SNP)]

The Secretary of State knows that Moray is the most defence-dependent constituency in the UK, that a great many people at RAF Lossiemouth and RAF Kinloss have just learned that they are to be made redundant, and that 14 Squadron has just returned from Afghanistan, had a homecoming parade, and is now being disbanded early. Does he understand that that bad news is compounded by the delayed decision and announcement about the future of RAF Lossiemouth?

[Dr Fox]

At the risk of repeating and repeating myself, I say that the hon. Gentleman makes the point well about the basing review. It will report when we have decided on the best balance across the United Kingdom for the wider interests of UK defence.

[Mark Lancaster (Milton Keynes North) (Con)]

What impact will the reviews have on the current terms of reference for the review of the reserves?

[Dr Fox]

The review of reserves continues, looking at the financial and capability implications and the wider footprint. It is not directly affected by the results, but on implementation, we would of course have to take into account the shape of the armed forces resulting from the SDSR decisions.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

The Secretary of State is trying to tell us that all the decisions spring from his strategic defence review—but is that true? He did not tell us about the cuts to the Tornado when he cut the Harrier. When the Prime Minister told us that he would protect the infantry, he did not tell us that he would cut the Royal Marines. The Secretary of State, many other Members and I know that decisions are still being made on further cuts in the Ministry of Defence. He criticised us for not having a strategic defence review, but it is becoming increasingly apparent that we still have not had one. He must open up the decision and take some proper, publicly accountable strategic decisions about the shape of our armed forces.

[Dr Fox]

If I may correct one minor inaccuracy, I said that we had decided to cut 17,000 jobs in the armed forces. In fact, the work that the armed forces carried out means that the figure is considerably smaller. Instead of 7,000, it is 5,000 for the Army; instead of 5,000, it is 3,300 for the Navy.

Of course, the budgetary pressures continue. As any Labour politician knows, the previous Government left Ministry of Defence finances in an absolute shambles. The problem will not be tackled overnight.

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

No one should doubt my right hon. Friend’s commitment to the welfare of our armed services, but there is a concern that the resources devoted to the Ministry of Defence are top-heavy relative to our troops on the ground. Will he remind the House of the measures that he is taking to ensure that the Ministry of Defence is streamlined?

[Dr Fox]

It is worth remembering when we discuss those matters that although we have had reductions of some 11,000 in the armed forces, we are looking at reductions of 25,000 in the civil service to bring the MOD into a much better and more efficient shape and to help control the budget. My hon. Friend is correct that we will also look at rank structure to ensure that we are not making reductions in the more junior ranks while maintaining those at a higher level in the armed forces.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

Will the Secretary of State tell the House what the cost to the Department of the redundancy payments in his announcement will be?

[Dr Fox]

I am not able to give that figure yet, because the armed forces themselves have not decided which posts will be lost. When we can provide a figure to the House, we will certainly do so.

[Patrick Mercer (Newark) (Con)]

I know how angry the nonsense in the Army a couple of weeks ago, when sergeant-majors and warrant officers were sacked by e-mail, made the Secretary of State. Newark, my constituency, will feel the effect of the RAF redundancies, in particular. Will my right hon. Friend assure me that there will be no further such nonsense when the next announcements are made?

[Dr Fox]

What I set out today is the correct procedure that should be followed. What we discussed on a previous occasion is what happens when it is not followed. It would have been easy for the Government to say, “We will not go ahead with this programme this week; we will not have those face-to-face interviews with the personnel concerned because it is politically inconvenient for us at this time.” That would be the wrong way to proceed. We have a duty of care to those who are being made redundant to ensure that processes and timetables are followed, and that they and their families get the maximum certainty in the circumstances.

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

I am sure that the Secretary of State draws no pleasure from this painful process, but further to the point made by the hon. Member for Moray (Angus Robertson), I and many others struggle to understand why the redundancies are not included in a single package with the base closure programme in July. Would it not have made more sense to do this in a more joined-up way?

[Dr Fox]

Work will always be ongoing. As well as the basing review, we have the Army returning from Germany and reform of the procurement process, on which I last week set out some additional measures. This is an ongoing process and there will be second and third order changes as a result of the SDSR for some time to come. The Department requires huge downsizing—it has an inherited budgetary deficit of £38 billion—and we cannot expect to do that overnight. Had we done things more quickly, I would no doubt have been accused of rushing the base review as well.

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

In the past when we have managed headcount through redundancies, we have also turned off the tap on recruitment and training, with disastrous long-standing consequences. Will my right hon. Friend assure me that we will continue to try to attract the highest-quality young people to our armed forces and to train them properly?

[Dr Fox]

We will continue to recruit the highest calibre possible. Some reductions in redundancies have been achieved by slowing down the number of those coming into the armed forces, but we cannot avoid redundancies through that process, because we need to continue to recruit, not least for the campaign in Afghanistan.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

In the light of the Secretary of State’s announcement that 170 trainee pilots will not be retained by the RAF, will he say how much it costs to train such a pilot in the first place?

[Dr Fox]

I am not sure that that figure is available, but I will try to find out. It is important that when we are unable to continue training, we will offer those concerned alternative careers inside the RAF where possible. However, it is inevitable that if we reduce the number of aircraft, we will have a reduced requirement for pilots. Those trainees will not continue to the end of their traineeship because there has been a reduction in the size of the aircraft fleet, which, as I said, is a necessary part of the spending reductions required to bring the budget into balance. We did not create that budget; we inherited it.

[Claire Perry (Devizes) (Con)]

My constituency is home to most of the Salisbury plain garrison towns. We will wait with eager anticipation to see the final numbers in September, but can the Secretary of State assure the House, first, that those who are injured in the line of duty will not be in the first line for redundancies, and secondly, that we will do all we can to support those who leave the armed forces in moving into other roles, particularly in teaching and in mentoring young children?

[Dr Fox]

My hon. Friend makes two very important points. First, clearly, when those who have been injured are still recovering, there will be no question of redundancy. Secondly, it makes a great deal of sense to encourage such mentoring programmes. We often hear that young people do not have sufficient role models, and getting people from the armed forces into our schools will provide young people with the sort of role models that will be of real value to them.

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

Can the Secretary of State repeat his previous pledge that no member of the armed forces who is currently serving in Afghanistan will be made redundant?

[Dr Fox]

When we finally get to the point when redundancies are announced—that is some way off yet—nobody who is in pre-deployment training, or deployed and in receipt of the operational allowance, or recovering from injuries sustained on operations, or on post-operational leave, will be made compulsorily redundant.

[Elizabeth Truss (South West Norfolk) (Con)]

It is sad news that 13 Squadron at RAF Marham is to be disbanded, although I understand that this will not lead to automatic redundancies. Further to earlier questions about the basing review, which the Secretary of State has said will be announced in the spring or summer, can he confirm that it will not only cover the short term and the Tornado, but look at where the joint strike fighter will be based, to provide long-term security for the armed forces personnel in my constituency?

[Dr Fox]

The basing review, when it is announced, will examine what we require in line with Future Force 2020 and the strategy set out in the SDSR, and it is only appropriate that it should do so. It is much better that we should have a clearly set out aim-point of 2020 and be working towards that. Given the shambolic budget and the deficit that we inherited, we all recognised that we would not be able to make changes overnight. In 10 months we have gone quite far in returning that budgetary imbalance to a more sustainable position, and we intend to do the same with the basing review.

[Clive Efford (Eltham) (Lab)]

The scale and pace of the cuts that the coalition has decided to implement go far deeper and faster than is necessary to deal with the deficit. Can the Secretary of State say whether those cuts are permanent?

[Dr Fox]

The fact is that there has not been even a hint of an apology from the Opposition about the appalling situation that they left behind. Nobody on the Government Benches came into politics to see cuts in our armed forces; they were forced on us by the utter incompetence of the Government who went before us. I also noticed that in the question asked earlier by the right hon. Member for East Renfrewshire (Mr Murphy), there was no hint of what Labour policy is, or what the Opposition might do to reverse any of the cuts.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

Will any of the changes affect our ability to assist in any potential no-fly agreement over Libya?

[Dr Fox]

As of this moment the changes are being considered—they will be announced later in the year—so obviously none will impact on any short-term decision about a no-fly zone in Libya.

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

At a time of enormous uncertainty—not just about Libya, but about the middle east and northern Africa—does the Secretary of State agree that making long-term strategic reductions in our capabilities for short-term cost reasons will hearten the Taliban and encourage their resurgence in future years, in the knowledge that we are in disarray over piecemeal successive cuts to our strategic capability?

[Dr Fox]

The idea that these are short-term cuts for short-term reasons beggars belief. Next year we will spend more on debt interest than on defence, the Foreign Office and aid put together. Even if we eliminate the deficit in this Parliament, the debt interest will still go up, so future generations will still be living with the legacy of Labour’s economic incompetence. This is not something short term; this is long-term pain imposed on the British people by the economic incompetence of another socialist Government.

[Dan Byles (North Warwickshire) (Con)]

The Secretary of State will be aware that Defence Medical Services have for some time struggled to maintain the correct numbers of certain clinical specialists. Can he assure the House that any potential reduction in size of Defence Medical Services will not jeopardise its ability to grow and retain those key clinical personnel?

[Dr Fox]

It is a key point that we have those appropriate personnel. Indeed, in the review of the reserves, which has already been mentioned, I am particularly concerned to ensure that we retain full access to medical specialties. However, although we may be saturated in terms of secondary care, there is still scope to improve the primary care offered in the armed forces through the reserves.

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

What assurances can the Secretary of State give senior military personnel who have expressed their opinion on this matter that, following the announcement of the decisions, we will have the capability to deal with the potential threat in the near future?

[Dr Fox]

The hon. Gentleman asks a good question—and as I have explained, that is why we have compulsory redundancies in the armed forces. We cannot simply accept the people who volunteer for redundancy, because we have a duty to maintain the rank structure and the appropriate skills. That is why we will allow people to volunteer for the scheme, but ultimately we may not be able to accept all who volunteer, and may have compulsory redundancies elsewhere instead. It is for the very reason that the hon. Gentleman raises—because we have to maintain the skills and structures involved—that we have a compulsory scheme in statute in this country.

[Jason McCartney (Colne Valley) (Con)]

As a former RAF officer who took advantage of a previous redundancy scheme, I was pleased to visit 1466 Air Cadet Squadron in Holmfirth recently. Many of the young people there aspire to serve in the Royal Air Force. They are the potential brave servicemen and women of the future, so will the Secretary of State confirm that we will keep their morale up?

[Dr Fox]

It is always worth pointing out to those who wish to have a career in the armed forces that there is a bright future for them. Under Future Force 2020, not only will Britain have the fourth biggest defence budget in the world, but the RAF will see the number of Typhoons grow and the introduction of the new joint strike fighter, and we will also upgrade our lift capability through the introduction of the A400M. I would certainly encourage anyone who wants to continue with their careers to do so, but I also warn Opposition Members that playing politics with redundancies or other issues that have a clear impact on morale is extremely dangerous.

[Nick Smith (Blaenau Gwent) (Lab)]

Yesterday the Secretary of State tabled a statement outlining his plans for members of the armed forces and their redundancies. He told the House that nobody preparing to deploy in Afghanistan, serving in Afghanistan or recently returned from Afghanistan would be made redundant. Within minutes the media were reporting that this was not the case. He seems to be dodging the issue today, so will he now repeat that exact pledge on the Floor of the House?

[Dr Fox]

I will say it for the third time in the House, although I should say to the hon. Gentleman that I can only explain it to him; I cannot understand it for him. At the point where any compulsory redundancies are made—that will be some time later in the year, as I have made clear in the timetable already set out by the armed forces—no one serving in Afghanistan in receipt of the operational allowance, no one preparing to go there, nobody on post-deployment leave and nobody who is recovering will be made compulsorily redundant.

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

Can my right hon. Friend explain why 2 Tornado Squadron was earmarked for removal from service this week?

[Dr Fox]

The squadrons that were removed from service were not covered by the SDSR announcement; what happened was the result of the previous Government’s decision in the 2009 planning round, which is now being implemented.

[Anas Sarwar (Glasgow Central) (Lab)]

We must not forget that 11,000 of our bravest men and women have lost their jobs because of the Secretary of State’s decision. Many of them, and their families, watching or listening will find his tone rather distasteful and smug at this time. We must remember that they are men and women who risk their lives every day in defence of this great country. They deserve a lot more respect than they are being shown in the Secretary of State’s answers.

[Dr Fox]

Clearly we are going to disagree on our approach, because what the hon. Gentleman calls smug, I would call angry. We are very angry indeed that we were left with a £38 billion hole in the Ministry of Defence and a massive national deficit, the interest payments on which are bigger than our defence budget. We are angry, but we are absolutely determined to get the situation under control, and then we will urge the British people never again to elect such an economically incompetent Government as the previous one.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

My right hon. Friend was kind enough to write to me yesterday following his statement, knowing that RAF Cranwell is in my constituency. All serving RAF personnel in my constituency well understand the £38 billion hole that we were left with by the last Government. However, RAF Cranwell is considered the home of the Royal Air Force. Can he give me an assurance today that it will always be considered the home of the Royal Air Force?

[Dr Fox]

That is the tide of history, and nothing I could say or do would change it. However, I reiterate to my hon. and learned Friend that we must go through the proper processes where redundancies are concerned. We must stick to the timetables concerned, because that is part of our duty of care to the men and women who serve in our armed forces. We cannot have arbitrary dates set to suit a political timetable, at the expense of our armed forces. That would be quite wrong.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

I understood from yesterday’s statement that 170 RAF trainee pilots would not be retained. In his response to my hon. Friend the Member for Barrow and Furness (John Woodcock), the Secretary of State seemed to imply that they would be redeployed in the RAF. Can he confirm whether we are talking about cuts, with those pilots leaving the RAF, or whether they will be used for something else?

[Dr Fox]

I am grateful to the hon. Lady. The reductions are a consequence of reducing the number of aircraft in the RAF, so there is also a reduction in the number of pilots needed, and therefore a reduction in the number of pilots in training. If alternative employment within the RAF can be found for those individuals, we will attempt to provide it.

[Mr Philip Hollobone (Kettering) (Con)]

Will the Secretary of State be kind enough to outline the terms of a typical redundancy package? What is the reserve liability for those unfortunate enough to be made redundant?

[Dr Fox]

Because there is such a wide range of individuals who might be leaving the armed forces, it is difficult to say what a typical package would be. It will also range across the three services, as well as depending on seniority. I will attempt to get for my hon. Friend an indication of what the numbers might look like, although I cannot guarantee that will be able to do so with any great accuracy.

[Ian Paisley (North Antrim) (DUP)]

The Secretary of State’s commitment to armed services personnel who will be deployed in the future is welcome. However, does that commitment extend to armed service personnel currently deployed in Afghanistan, such as the Royal Irish Regiment, and what consultation will the right hon. Gentleman carry out with the regional representatives of those armed forces personnel?

[Dr Fox]

In looking at their personnel, the armed forces will want to consider a range of issues, not least which personnel they want to retain and which personnel they might accept for compulsory redundancy. If the hon. Gentleman wishes to raise any specific issues with any of the service chiefs, I am sure that they would be happy to listen to his representations.

[Stephen Mosley (City of Chester) (Con)]

Has my right hon. Friend given any consideration to providing extra support for personnel made redundant, to help them move out of the military and secure jobs in alternative employment?

[Dr Fox]

As I said some time ago in the House, it takes time to transform a civilian into a member of the armed forces, and it takes time to transform a member of the armed forces back into a civilian. It is absolutely necessary to give our full support to all individuals who are leaving. We have set out some particular programmes relating, for example, to those who could move into teaching or mentoring, and we will continue to look at how many programmes we can bring in to ensure that the transition back to civilian life is as smooth and productive as possible.

[David Rutley (Macclesfield) (Con)]

I am staggered by the short memories of Labour Members about the scale of the economic challenges facing the country and the Department as a result of the incompetence of the last Government. Will my right hon. Friend tell us whether other trusted allies are also realigning their military forces in the light of economic challenges and changing strategic priorities?

[Dr Fox]

All countries need to continue to do so. The fact that the United Kingdom, with the world’s fourth biggest defence budget—still above 2% of GDP spend, which is our NATO commitment—has been able to do so, and to announce investment in programmes ranging from our submarine programme, our lift capability and our fast jets while making changes to Army structure, is a testament to the skills in our armed forces. Notwithstanding the horrendous financial situation that we inherited from the previous Government, the skills of our armed forces are contributing hugely to our ability to reach a path in 2020 whereby this country can hold its head high on defence.

[Mr Speaker]

I must thank the Secretary of State and all right hon. and hon. Members for their succinctness, which enabled every colleague who wanted to take part in these exchanges to do so.

bill presented

Wednesday 2nd March 2011 Commons Chamber

Prevention of Terrorism Bill

Presentation and First Reading (Standing Order No. 57)

Mr William Cash presented a Bill to make provision about the prevention of terrorism.

Bill read the First time; to be read a Second time on Friday 10 June, and to be printed (Bill 158).

Medical Insurance (Pensioner Tax Relief)

Wednesday 2nd March 2011 Commons Chamber

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

13:04

[Sir Paul Beresford (Mole Valley) (Con)]

I beg to move,

That leave be given to bring in a Bill to provide for tax relief on medical insurance premiums for people above a certain age; and for connected purposes.

As a very part-time dentist, I must declare a possible interest, although I cannot quite see the link, and I had better also put in for a prospective interest, given that I age day by day and pension age might come upon me.

As in much of the south-east, life expectancy in Surrey is somewhat higher than the England mean. The average male life expectancy in England is about 78 and it is 82 for females. In Surrey, it is about 82 and 86 respectively. Additionally, the proportion of people aged 65 and over in my Mole Valley constituency is about 20% or slightly more—one in five.

Speaking as someone with a professional interest in health and as an MP observing my constituents’ health, it is obvious to me that longevity brings with it a high demand for health care and large demands on the health services, especially cardiac, carcinoma and orthopaedic services. A plane load of Surrey Saga tourists would really set the airport metal detectors buzzing as they passed through with their hip and knee replacements.

The Mole Valley constituency is served by three good NHS hospitals: the East Surrey, the Royal, and the Epsom. These hospitals have expanded in certain health areas to meet the increasing demand for elderly health treatment. The best example is the Epsom hospital special orthopaedic unit that carries out more than 3,000 hip and knee replacements annually—and the number is increasing. Almost all those 3,000-plus are elderly people from surrounding areas, including my constituency. Local medical problems have been looked at, but there has also been a call for an enhanced and enlarged cardiac unit at Epsom as part of the retention and refurbishment of the NHS hospital.

I provide those two examples as they represent a sample of the increased health demands for NHS health care that come predominantly from the over-65s. This is not special or specific to Mole Valley or to Surrey, but to a greater or lesser degree is nationwide for the 65-plus age group. In addition to being served by those three hospitals, my elderly constituents are served by private hospital services. Some are relatively local, but others demand travel to London and beyond.

Approximately 12.5% of the UK population are covered by private health insurance. Approximately 70% of that cover is corporate, leaving about 30% of it individual. At retirement, many people may wish to take over their corporate private health insurance, but the personal cost of course becomes a factor. Additionally, many who have personally funded their health insurance might not feel able to do so when a regular personal income is merely pension or savings. This means that, as the over-65s’ need for health care increases, individuals will increasingly turn to the NHS and absorb the facilities they would not have taken if they had been covered by their health insurance at a private hospital.

Before March 1997 when tax relief was available to the over-60s, it was estimated that tax relief was paid in respect of 400,000 contracts to cover 600,000 individuals. Over a seven-year period from 1990, tax relief for the over-60s cost £560 million. However, that included a period when the relief applied across all taxpayer rates. In 1994, this was reduced to apply to the basic rate tax only. Unlike my proposal, the relief started at 60, not 65, which affected the call on the taxpayer. The Western Provident Association estimated that 40% of pensioners would discontinue their private health insurance when the cut came into force in 1997. Which? reported in 2002 that private health insurance coverage was lowest for the high-demand 65-plus age group.

Those who choose to have personally funded private health insurance pay twice for their health—in premiums and tax. As I have already stated, this applies to 30% of those insured, as corporate payments cover 70%. However, it would be safe to assume that nigh on 100% of those aged 65 or more are personally funding their health insurance. It is their choice and, for many, it might mean sacrificing other things that affect their lifestyle.

My Bill would allow basic rate tax relief for pensioners at 65 and above, with the age rising as and when the pensionable age increases. It would encourage people either to keep their health insurance or to take out health insurance just as they reach the period in their life when demand can be expected to increase. If they did not have or ceased their insurance, they would add to the call on the national health service. The Bill in no way degrades my or their respect for the NHS, but is intended to take some of the load, in numbers and cost, off our tax-paid national health service. As the UK population’s life expectancy increases and as the wonders of medical research improve our pensioners’ life expectancy and well-being, this would provide an incentive for more people to choose not only to pay their taxes to support the NHS, but to use health insurance to take an increasing load off our NHS to the benefit of others.

Question put and agreed to.

Ordered,

That Sir Paul Beresford, Gavin Barwell, Mr Christopher Chope, Mr Geoffrey Cox, Mr Oliver Heald and Mr Gary Streeter present the Bill.

Sir Paul Beresford accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 18 March, and to be printed (Bill 157).

Estimates Day

Wednesday 2nd March 2011 Commons Chamber

[2nd Allotted Day]

suppmentary estimates 2010-11

Wednesday 2nd March 2011 Commons Chamber

department for education

Wednesday 2nd March 2011 Commons Chamber

Sure Start Children’s Centres

Wednesday 2nd March 2011 Commons Chamber

[Relevant documents: The Fifth Report from the Children, Schools and Families Committee, Session 2009-10, Sure Start Children’s Centres, HC 130, and the Government response, Fourth Special Report from the Education Committee, Session 2010-11, HC 768.]

Motion made, and Question proposed,

That, for the year ending with 31 March 2011, for expenditure by the Department for Education—

(1) further resources, not exceeding £240,806,000, be authorised for use as set out in Spring Supplementary Estimates 2010-11, HC 790,

(2) a further sum, not exceeding £66,354,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and

(3) limits as so set out be set on appropriations in aid.—(Stephen Crabb.)

[Mr Speaker]

The debate will be initiated, or led—opened: I will use a neutral term—by the Chair of the Select Committee on Education, Mr Graham Stuart.

13:10

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Thank you, Mr Speaker. It is a pleasure to take part in a debate which will, I hope, rise above semantics. I do not know whether “initiation” is a partial word or not; I suppose it depends very much on what ceremonies one has undergone earlier in life.

This debate takes place in the context of a crisis of confidence in our education system and, more broadly—if I may pick a few headings at random—in our society’s ability to raise children so that they achieve, enjoy life, are safe and healthy, make a contribution, and go on to prosper. The PISA—programme for international student assessment—tables to which the Government frequently refer indicate that, on a comparative basis, this country’s performance has declined.

The first 10 years of the last Government, between 1997 and 2007, preceded the credit crunch. I should it put on record, in my party’s interests, that the period of solid economic growth between those years had begun in 1992. During that period, the number of young people aged 16 to 24—pick your age range—who were not in employment, education or training remained about level, but once the credit crunch arrived it spiralled up, and now as many as 1 million young people may not be in apprenticeships, at college, at school or in a job. That is a pretty tragic situation.

I have always believed that those who seek a crude proxy to measure the effectiveness of an education system should consider not so much the outcomes of those who go to Oxbridge—important though that is—or those who go to universities in general as the number of young people who end up as NEETs. We engage in an annual argument about whether exams are becoming easier, and how we are placed in comparative terms. I used to point out to Labour Ministers in the Select Committee that existed under the last Government that the system of which education forms a part was intended to deliver Every Child Matters outcomes, and to ensure that young people were able to go on to prosper in life. They cannot do that—and, indeed, they are signally failing to do it—if they end up as NEETs.

As I have said, those who seek the best proxy to measure the effectiveness of society’s systems for bringing up children—which, I suppose, include families—should consider the number of NEETs. That number is at a record high, and we need to tackle it. However, we are also concerned about social mobility, and the fact that our record on teenage pregnancy, fatherless households, drug use and other issues connected with social breakdown and social failure is not good in comparison with the records of other European countries.

The intellectual running under the new Conservative-Liberal Democrat coalition Government seems, ironically enough, to be being made largely by current and former Labour Members of Parliament. I am pleased to see that the right hon. Member for Birkenhead (Mr Field) is present. Whether we cite the Field report, the Allen report on early intervention or Alan Milburn’s report on social mobility, it is clear that a huge amount of work is being done, which indicates a general consensus in the House that we should try to become more effective.

The Select Committee produced its report as the Labour Government moved towards their target for full service delivery, which was at least 3,500 centres. I believe that there are now more than 3,600. Having initially established children’s centres in the most deprived parts of the country, the Government wanted to ensure that they existed in every part of the country. While it is fair to say that they wanted to provide a universal service, their rationale for taking Sure Start everywhere was the need to reach the poorest and most disadvantaged children in areas that were not themselves generally disadvantaged. They recognised that if they focused only on the most disadvantaged areas, many children elsewhere would be missed out.

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

Will the hon. Gentleman give way?

[Mr Stuart]

I will happily give way to my predecessor as Chair of the Select Committee.

[Mr Sheerman]

May I ask the hon. Gentleman to think again about what he has said? According to evidence given to the Select Committee, most children from deprived backgrounds lived outside the 500 most challenging wards in the country. That was the point: more young people with deprived backgrounds lived outside than inside the targeted areas.

[Mr Stuart]

The hon. Gentleman is, of course, right, and if I suggested otherwise I did not mean to. I meant to say that the main driver was not the need to provide a universal service, but the need to reach poor children wherever they were. In rural constituencies such as mine, which may in general contain high levels of wealth, there are still many people from poorer families. The aim was to provide a universal service that would reach those people, but the Committee concluded that the policy had not been as effective as we should have liked it to be.

I hope that we shall learn from Ministers today about their vision of the future of children’s centres. We know that the Government agree on the importance of early intervention, and we know that they see an important role for children’s centres within that. We also know that they have rolled funding for children’s centres into the early intervention grant. They say that they are providing enough funds to keep all the existing children’s centres open, but they have not insisted that local authorities do so. Moreover, the larger fund in which they have included the funds for children’s centres has itself been reduced this year from about £2.7 billion to £2.4 billion, and from 1 April it will be 10.9% lower than the 2010-11 notional figure.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Will my hon. Friend congratulate authorities such as Medway, which has 19 Sure Start centres—seven of which are in my constituency—and has agreed to keep all of them open? That clearly demonstrates that it is not inevitable that Sure Start centres will close. I should declare an interest: I am a sitting Medway councillor.

[Mr Stuart]

I am happy to congratulate my hon. Friend’s council on adopting what it considers to be the most effective way of delivering the improvements that we so desperately want for young people. However, the number of NEETs has been rising, and research suggests that the outcomes from children’s centres so far are not what we would wish them to be.

We have heard about the bundling of funds and the relaxation of ring-fencing. Ministers are still saying that every Sure Start or other children’s centre should be able to stay open, but “should be able to stay open” and “will stay open” are two separate concepts. I should like to know from Ministers, and indeed from Opposition spokesmen, whether they are fixated on the importance of maintaining buildings from which services of varying quality emanate. Is that the be-all and end-all, or are we prepared to give local authorities the power to decide how best to provide early intervention, which may well be through a rationalisation of children’s centres? I do not know whether the Front-Bench teams think that the buildings are the be-all and end-all and that any reduction from 3,600 will be a disaster for our young people, or that local authorities should be allowed to think for themselves and tailor local solutions to local needs. I would like a clearer steer from both Front-Bench teams so that we have a better idea of where we are going.

[Mr Andy Slaughter (Hammersmith) (Lab)]

In the last Parliament, the hon. Gentleman and I served together on the Select Committee and I respect his opinion. He has touched on the key question. The Government are cutting the funding to my local authority by about 13% and they say that leaves enough money to keep the network open, but the local authority is cutting by 45%, which clearly will not leave enough, so the majority of centres will close. In such a situation should the Government intervene or should there be localism at its purest, and if the local authority wants to close down most of the centres should it be allowed to do so?

[Mr Stuart]

The hon. Gentleman is right to pose this question about the right response, and we need a clearer steer. While making claims about localism, will the Government in fact quietly put pressure on councils and say, “You must keep these centres open”? I recognise why the hon. Gentleman says the last Government put all these things in place and the new Government are threatening to dismantle them while denying doing so, as that is an understandable line to take in opposition, but rationalising these centres could be the right thing to do. It could be that, after sober analysis and assessment of the needs of its local community, a local authority decides that its children’s centre buildings are not working well enough and it cannot get the teams to deliver in the right way but thinks it will be able to find a better way of providing these services. I would like to know how fixated we are going to be on children’s centres per se, rather than on delivering the outcomes for young people.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

rose—

[Mr Stuart]

Perhaps the hon. Lady, who is her party’s Front-Bench representative, will explain the Labour party’s position on that.

[Mrs Hodgson]

I am grateful to the hon. Gentleman for giving way. I too served on the Select Committee with him in the last Parliament, and I think he is doing a sterling job as Chair of the new Select Committee. I am also pleased that we are having this debate today.

I can assure the hon. Gentleman that the Opposition are not fixated on the buildings. Our priority is that the provision should still exist. We still believe it should be a universal provision targeted on those most in need. It is not about the buildings; it is about ensuring that there is a service within them. When the Sure Start children’s centres were first introduced the aim was that everybody would be within a pushchair push of one of them. If a local authority decides to have just one or two such centres, people are not going to be within a pushchair push of their nearest one, and they will therefore not be used by those who need them most.

[Mr Stuart]

I thank the hon. Lady for her intervention. She makes a fair point, but service delivery is the key and there is enormous variation in that between children’s centres across the country. In the last Parliament, the National Audit Office investigated the cost-effectiveness of centres at our behest, and it concluded that

“it remains very difficult to examine and compare centres’ cost effectiveness.”

It also said:

“Where we have been able to calculate unit costs we found wide variations. Together with other evidence this suggests that there is still scope for improving cost effectiveness.”

That suggests that there could be savings. The Government reasonably say that reductions in budget should not necessarily lead to closures. Children’s centres could, perhaps, be improved and operate on a lower budget.

The NAO also said:

“There is qualitative evidence of improvement; for example, some local authorities and centres are developing and implementing means of managing children’s centres to make more effective use of skills and resources. And most centres and local authorities have made substantial improvements in their monitoring of performance since our 2006 report.”

There is progress, therefore.

I ask the Minister to set out the Government’s vision, and explain to what extent they wish the existing infrastructure to be maintained, or whether, in the spirit of localism and the tailoring of services to meet local needs, they want local authorities to make up their own minds, which might lead to great discrepancies. It could certainly lead to the loss of a national entitlement to children’s centres, but that might be an improvement. A true localist looking at the analysis of the results so far may conclude that a more localised and differentiated approach would be better.

I went on a Select Committee trip to Finland two weeks ago. Learning lessons from Finland is hard, and I know my predecessor as Chair of the Select Committee, the hon. Member for Huddersfield (Mr Sheerman), hated any mention of Finland. I do not think he ever explained why, but I guess it was because of the difficulty of applying its experiences and contexts to our experiences and contexts. There was one thing I did learn from Finland, however. Someone in its central department of education said, “We’ve been trying to achieve a particular outcome, but although we’ve been working at it for 10 years, we haven’t really made as much progress as we want, so we’re going to work harder and carry on trying to make it happen.” That is very different from the way things are done in our country, where, typically, 18 months into a new initiative new Ministers arrive and throw it overboard because they decide it does not work, and they stop doing the long, hard, grinding work that leads to the improvement of existing services.

I would hate the groundwork that has been done by children’s centres across the country to be dismantled, not because they are universally successful but because it takes a long, hard slog to improve performance and management, to bring on more leaders, and to learn what certificates they should sit for so that we have higher quality staff who can identify the areas that are brilliant and share that practice, and identify the areas that are poor and need to be challenged. I would rather we did that than what this country seems to do, which is just throw everything up in the air again when a new set of Ministers come into office.

[Nic Dakin (Scunthorpe) (Lab)]

The hon. Gentleman is making a powerful case. One of the Select Committee conclusions is:

“Children’s centres are a substantial investment with a sound rationale, and it is vital that this investment is allowed to bear fruit over the long term.”

The hon. Gentleman is reminding us of the necessity to consider the long term. The long term is even longer than 10 years, as he rightly points out, so now is not the time to fiddle with this provision.

[Mr Stuart]

It is certainly a time to fiddle with it. There is ample room for improvement, but it would be a shame if these centres were inadvertently dismantled before what they could deliver had been properly thought through. I certainly agree with the hon. Gentleman about that.

I also want the Minister to say whether there are any incentives in place for local authorities to ensure that they focus on changing the life chances of young children, because all too often people will pay lip service and say, “Of course we’re on board with this.” I am reminded of another Select Committee trip, this time to the Netherlands in the last Parliament. The Dutch changed the way local authorities were financed in respect of young people’s services. I think they froze the money from central Government so that if there was a spike in youth unemployment and so forth, local authorities would be at serious financial risk, but if they addressed such matters, they would be much better off. As a result, local authorities stopped just processing young people and putting the financial claim for that into the centre. Instead they became locally responsible for the financial consequences of young people remaining as NEETs. I believe—the previous Select Committee Chairman will put me right if I am wrong—that they more than halved the number of NEETs over the years.

If there are incentives for local authorities that are real and that bite and that mean they take this issue incredibly seriously and focus on it, that would give me more confidence than even the maintenance of the centres. If I felt that local authorities were driven by a desire to grasp this agenda and make a difference to their young people’s lives and one of them told me it was closing some of its children’s centres, I would find that more encouraging than watching, in this time of fiscal retrenchment, centres close apparently because they were especially local and apparently because things would then get better.

[Ms Karen Buck (Westminster North) (Lab)]

The hon. Gentleman is making a very powerful case, as always. On local authorities and incentives, I wonder whether he shares my concern that some authorities may do what it looks as though my local authority is doing. Westminster city council is trying to keep the children’s centres open so it can avoid the controversy attached to closing a building, but it is slashing outreach and drop-in services and other services that actually work and that are provided from within the bricks and mortar of those buildings. That is likely to have an even worse impact on children’s outcomes.

[Mr Speaker]

Order. Just before the Chairman of the Select Committee responds to that intervention, I want to make the point that, although there is no time limit on Back-Bench speeches and the House is listening attentively and with respect to the Chairman of the Select Committee, I know that he will want to take account of the substantial interest in making contributions to the debate, and I am keen that everyone who wishes to speak should have the chance to do so. I know that the hon. Gentleman will tactfully take account of my gentle ministration.

[Mr Stuart]

I am grateful to you, Mr Speaker, for that gentle and quite proper intervention—and those who wish to speak will be even more grateful.

The hon. Member for Westminster North (Ms Buck) is right. We need to ensure that the resources are used for the best purposes, not political purposes—not in order to make it look as though something has been protected, or to avoid embarrassment, but to help to look after the most vulnerable children for the long term. That is what we must all hope for.

[Mr Sheerman]

Will the hon. Gentleman give way?

[Mr Stuart]

I am minded to follow your advice, Mr Speaker—

[Mr Sheerman]

Will the hon. Gentleman give way just on that point?

[Mr Stuart]

I will.

[Mr Sheerman]

I intervene only because the hon. Gentleman, who is a good friend of mine, mentioned Finland and has now moved on to Holland. It is true that, although I like the Finns, I do not think that many lessons can be learned from their experience. However, he did not give the full picture of the core of the Dutch answer to NEETS, which is very successful: in Holland people cannot draw benefit until they are 27 unless they are training and learning the Dutch language.

[Mr Stuart]

I believe that that measure was originally introduced by the mayor of Rotterdam, who picked the 27 threshold. It was about creating incentives at a local level in order to tackle the root of the problem. The hon. Gentleman, as befits a previous Select Committee Chairman, tries again to correct me by pointing out that I did not necessarily give the full story.

Will Ministers explain the rationale for the things included in the early intervention grant? I should like to understand how they hold together. Will they take us through the finances of the grant in some detail, and tell the House whether the Government have acted on the Select Committee report recommendation that they pull together all the funding that goes into Sure Start children’s centres? How much will come through health visitors? Also, can Ministers tell us more about health visitors? One of the most important things that children’s centres can do is be more effective in outreach. The National Audit Office and the Durham university study found that, in fact, children’s centres were not as effective in that respect as they could be. The growth in health visitors could play a major part in creating a more effective outreach service that identifies such children earlier and gets them the services and support they need, so that they are school-ready.

Mindful, as ever, of your ministrations, Mr Speaker, I shall sit down.

13:32

[Mr Frank Field (Birkenhead) (Lab)]

I wish to make three short points in this debate, so that my colleagues can get in. I am sure that many of them will register their worries about the future of the Sure Start networks. I am fortunate, as our local authority clearly is not going to make any decisions until after the local elections, so I speak as one of those whose Sure Start network is currently intact.

Although it is very important that such concerns are registered, I should like to contribute to raising the spirit of the debate and our hopes for what foundation years can achieve. Indeed, some of my hon. Friends will make the point that that makes the closure of Sure Starts an even more important issue, not less important. We now have enough information to know that, if we want to make a major difference to the life chances of children, particularly poorer children, we need to do it very early on and not think that that will happen automatically in primary, secondary, further or higher education. These are the most crucial years if we are to make a difference.

Two pieces of information that I gathered together when writing the report on foundation years staggered me and knocked me sideways. One was the longitudinal study that looked at outcomes for young children, thanks to which we now know where such children end up in their late twenties. It showed that, probably at the age of three but certainly by five, the die of life is set for most children. Of course, after that age, the most brilliant parents, schools and teachers can make some difference for individuals, but it is very difficult to make a class difference for whole groups of our constituents. So if we are to be serious about whatever we spend, we need, over time, to redistribute resources from further education and from secondary and primary schools into the foundation years, not in a gigantic or absurd way, but in a way that recognises that building up this budget requires knowledge and expertise. We should note the Select Committee Chairman’s plea that we learn from what we are currently doing and add to our success, rather than knocking that sideways and jumping into the latest obscure way to extend life chances.

The second piece of information concerns an area in Birkenhead that has had Sure Start for 10 years. I asked the head of a really good school what 10 things he wanted from children attending school on their first day. What skills did he need? He shared this exercise with his teachers and with other schools, and not only in the Birkenhead area. There were some stunning replies. The schools would like the children to know their own names; to know the word “stop”, because that can hint at danger for them. They would like them to learn to sit still, so they can begin playing properly and by that learn; to learn how to take off certain items of clothing; to learn how to hold a crayon; to know what a book is and how to open it the right way.

This is not a school in Birkenhead that is one the most “challenged”, as we must euphemistically call it. It is a school where, 20 years ago, I first learned that mums would lie about their addresses to get their children into a better school than they would otherwise be allocated. While lying is of course wrong, I could not but have a sneaking admiration for those mothers who were acting in this way, and who knew in a ration-book economy what little chance they had to choose the best services for their children. So although this is not the most challenged school, even after Sure Start—in fact, it was one of the first Sure Starts in the country and has been operating for 10 years—we were still finding children who were highly unprepared for school.

In the light of those two pieces of information from the report, we know that the die is cast for all too many children by the age of five, and that something quite troubling is going on in many areas in our constituencies, where children are nurtured in an arbitrary and random way. I see young people in Birkenhead who are so un-nurtured by their parents that I wonder whether I would survive if I were subjected to the things they are exposed to.

That information underscores the importance of this debate, and in that context I want to make a plea for Sure Start, but not because I disagree with the view that it should be radically reformed, which is an issue I will deal with in a moment. Sure Start already has some extraordinary advantages. It is a brand name. None of the parents whom I spoke to in the various areas I visited throughout the country in undertaking this inquiry told me that this is a service for poor people that stigmatises them. If anything, some of the more bushy-tailed parents who might well not have used the centres were actually there, knowing what a good service Sure Start was providing for children and wanting it for their own. It would be appalling if that brand name were destroyed or damaged in any way.

[Bill Esterson (Sefton Central) (Lab)]

My right hon. Friend is making an incredibly important point about the lack of stigma attached to Sure Start, and about access for families from many different backgrounds. At the Thornton children’s centre in Crosby, families from a deprived estate and from a less deprived estate all come together. In fact, more than 700 families use that centre, and one of its many huge benefits has been families getting together, mixing, meeting new friends and building relationships that would be severely damaged if the centre closed.

[Mr Field]

I agree with that. As my hon. Friend says, this is partly about the brand image and about people thinking that going to Sure Start centres is almost a right of citizenship that we do not want to destroy. I am sorry that my hon. Friend the Member for Westminster North (Ms Buck) has momentarily left the Chamber because I would have argued with her about the balance between limiting what Sure Start centres do so that we can keep the structure going and cutting the number of centres so that we can maintain the whole range of services that they provide. My judgment is that the balance ought to favour keeping the structure. However, as the Minister knows from the report, I am very anxious about how we reform Sure Start, and I now wish to discuss that.

In reforming Sure Start, it is crucial to keep its universal provision; it does not have to be the most expensive or the most upmarket, but the report on the foundation years suggests that it is important that all parents use Sure Start centres at some stage. We suggested that such a centre would be the place where someone picks up their child benefit form—they would not be able to get it from anywhere else—and where they can register the birth of their child. It might be the place where people who are not of any faith take their child for an initiation ceremony to welcome them into the wider community. It is possible to maintain universal services without adding greatly to the costs, and a universal service has a chance of reaching the parents who need most support to make them even more successful as parents.

The Sure Start centres should be taken back to what my right hon. Friends the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) and for Dulwich and West Norwood (Tessa Jowell) originally envisaged, which was that there would, of course, be a universal approach, but the vast majority of the expenditure, time, effort and love of Sure Start should go to those families who need most help, not to the parents with sharp elbows that get them to the front of every queue. The Minister and I spoke at a conference for children earlier today, and I was pleased to hear her say that the Government will examine payment by results seriously, as that would help to achieve that objective.

One of the results we want is children to be ready for school. We do not want primary schools trying to make up for what has not taken place in the first four to five years of life and secondary schools trying to make up for what primary schools have not been able to achieve because they themselves have been doing a rescue operation. I hope that the Government will carefully consider the objectives for Sure Start children’s centres or whatever we call them. I also hope that the Government will build up payment by results around those outcomes.

The last point I wish to make is that I hope that the Government will encourage people to think outside the box about who should run Sure Start centres. A couple of weeks ago, I asked the heads of primary and secondary schools in Birkenhead and the chairs of governors to meet so that we could discuss whether we should bid to run our Sure Start centres. Although we hope that the Government’s payment-by-results approach will bear fruit, we need to think much more imaginatively about incorporating the Sure Start children’s centres into what will be a much more seamless operation to ensure that we break down inequalities for the poorest children. Although it is right to emphasise the worries of those on both sides of the House about the future of Sure Start centres, both in terms of buildings and the services that they provide, I hope that we will get a clear steer from the Government about the reforms that they will be announcing by the end of this month. I hope that those will cover the points about keeping this service universal and about doing so while targeting that service, and that one way of doing so is to experiment with payment by results.

Finally, I wish to commend to the Government that outside providers wanting to take a collective but non-state view about these services should be encouraged to bid for them, so that every child in the country is ready to start their first day at primary school and is ready for that great experience.

13:44

[Andrea Leadsom (South Northamptonshire) (Con)]

It is a huge pleasure to follow the right hon. Member for Birkenhead (Mr Field). I feel at least as passionately as he does about the need for early intervention and about the need to support the youngest in our society, and I wish to use this speech to press for far more evaluation of what works. I absolutely agree with the right hon. Gentleman, who I am pleased to call a friend, on the need for children’s centres to be far more at the heart of children’s services generally. I absolutely agree with his suggestion that people should go to such a centre to register for child benefit and for initiation ceremonies to welcome their child into the world. Such things are all crucial to ensuring that Sure Start children’s centres are at the heart of everything to do with infants and their families—that is incredibly important. I welcome the Government’s intention to introduce far more health visitors, because that will strengthen the ability of children’s centres to meet local needs.

I also congratulate my hon. Friend the Member for Beverley and Holderness (Mr Stuart) on his words and on his recommendation that the Government think carefully about whether we want this to be a purely localist agenda or whether there needs to be some universal, centrally driven remedy on children’s centres. I believe that localism is key, because local communities know best how to deal with the issues in their area, and I wish to talk a little about my experience of Sure Start.

[Mr Frank Field]

The hon. Lady talks about the importance of localism, but one of the report’s recommendations is that central Government ought to say that Sure Start ought to buy in more services from outside organisations. There is a balance to be struck between allowing local bodies to do anything, which might just be to keep things as they are, and an approach that engages some of the best organisations, which so far have not got much of a look in from Sure Start funding.

[Andrea Leadsom]

The right hon. Gentleman is absolutely right. As I said at the outset, I wish to make a plea for better evaluation of what works. My hope, although not my direction, is that more Sure Start children’s centres would therefore follow best practice.

From 2001 to 2009, I was chairman of the Oxford Parent Infant Project—OXPIP—which is a children’s charity operating around Oxfordshire. In the past year, it has become co-located with the Rose Hill Sure Start children’s centre. When I first became its chairman, OXPIP helped families who were struggling to bond with their newborn babies and provided psychotherapeutic support for families who were simply desperate. I am talking about people who are perhaps suicidal or about to harm their baby, who are desperately depressed and who simply cannot cope. OXPIP helps those parents to get over that, to build a secure attachment with their babies and to move on confident of being loving parents as part of a loving family. OXPIP’s results have been truly astonishing and there is a desperate need to evaluate quantitatively the work of such organisations, so that such best practice can become widespread in children’s centres.

In 2001, the Rose Hill Sure Start children’s centre was just starting out, as was OXPIP, and in those days it was all about creating a large building and it had a large budget. It was focused on outreach and putting lots of resources into play. My hon. Friend the Member for Beverley and Holderness made the good point that it has taken a lot of time to get children’s centres to the point where they are really effective, they know what works and they know where the best value for money lies, so it would be a great shame now to try to form any sort of revolution in children’s centres and end up throwing away all the good stuff that has come out of that long term of experience.

In those early days, OXPIP was a charity with very little funding, no statutory money whatever and only the money it could raise through its own efforts. We were successful in getting a significant and ballooning lottery grant, so we had three years of ever-rising income from which we could build on our platform. The sad fact was that the Sure Start children’s centre would not even cover the cost of providing a service. It wanted to engage OXPIP’s services, but only at a flat rate that did not reflect the true cost of providing it. We therefore had a ridiculous scenario in which a charity that was living hand to mouth and was totally dependent, in the early days, on the good will of volunteers was subsidising a Sure Start children’s centre that had a huge budget and that did not seem to understand that OXPIP’s work really defined what Sure Start was all about—providing children with a sure start in life.

From that day to this, 10 years on, we have gone from strength to strength. As I have said, in the last year OXPIP has co-located with the Sure Start children’s centre, and that has been a complete success story. They have many different approaches regarding the different backgrounds of the many diverse nationalities and cultures found in Oxford. They provide support to fathers, mothers, grandparents, foster parents and adoptive parents, and many different services. Now that OXPIP, of which I remain a trustee, is co-located with Sure Start, we can focus on providing psychotherapeutic support for families who are really in difficulty. That has worked very well. I wanted to share that experience with hon. Members because I feel that Sure Start children’s centres have come a very long way and it is terribly important that the Government seek to improve on that and to provide more evidence about what works best, rather than interfering with and possibly damaging it.

[Stephen Lloyd (Eastbourne) (LD)]

I concur with much of what my hon. Friend and other hon. Members on both sides have said about Sure Start being a tremendous success. It is now bedding down and although I have some anxieties about local authority flexibility, I think it is broadly going in the right direction. One thing I am particularly pleased about is the increased entitlement to 15 hours a week for all three and four-year-olds. My view—I think that everyone who has spoken so far has said this—is that the more children from disadvantaged areas we catch early the better and that the entitlement for all three and four-year-olds will make a real difference. Does my hon. Friend agree?

[Andrea Leadsom]

I thank my hon. Friend for that timely remark. I was going to resist the temptation to talk about early infant brain development, but I shall just spend 30 seconds on it now. I absolutely agree with him, but I feel that the money should be focused on nought to two-year-olds for the simple reason that a baby’s brain development is at its peak rate at between six and 18 months. That is when the frontal cortex grows as a result of a secure attachment to a loving carer. That loving attachment enables that part of the brain to put on a healthy growth spurt, giving the child the capacity for lifelong mental health even before they are a toddler. In the absence of such an attachment, intervention when the child is three or four is too late, so I absolutely agree that the extra money for the early years is important, but I think it is coming in too late and I would rather it was focused on the nought to two-year-olds to support families at a time when the outcomes for their baby matters so desperately. Once a baby reaches two years old, that opportunity is significantly reduced, so anything we do after that is already too late.

[Bill Esterson]

The hon. Lady makes a very good point about the brain development of young children, which is made very strongly in the report of my hon. Friend the Member for Nottingham North (Mr Allen), as I am sure she is aware. Given the point that she and others are making about the importance of Sure Start and early intervention generally, will she comment on the impact of removing ring-fencing? In Sefton, there is a 12.9% cut, as there is in the constituency of my hon. Friend the Member for Hammersmith (Mr Slaughter) in the borough of Hammersmith. The impact of that, along with all the other huge cuts, particularly in inner cities, has made it very difficult for councils to protect these services. Will she comment on the link between that and the need to protect services centrally if we are seriously to have a national strategy on protecting Sure Start and on early intervention?

[Andrea Leadsom]

Yes, I thank the hon. Gentleman for his comments. I am a firm believer in localism. My experience of Sure Start centres is that they evolve in a way that suits their community, and it is for county councils to support that need as necessary in their community. I am not a big fan of centralism or, indeed, of ring-fencing for that very reason, so I share his concern about the decisions that councils may be taking to cut those services, which I very much regret. Having said that, there is enormous room for improvement in Sure Start children’s centres, which could become more effective. Those centres need to focus strongly on that because otherwise the incentive for councils to continue to fund them at current levels simply will not be there.

That brings me to my final point, which is about the call for better evaluation. OXPIP, the charity that I have been closely associated with for many years, has always had rave reviews from social services, health visitors, GPs and families in Oxfordshire, where it operates, but we have not been able to have a random control trial, which is the gold standard in quantitative evaluation because of the ethics of intervening with one group but not another. What about the outcomes for the group of families whom we know are in difficulty but do not help? The ethics around this issue mean that quantitative evaluation is a problem. If the Government are to do anything to help Sure Start children’s centres to make the right decisions and to make progress in the most effective areas, they need to put resources into serious studies about how effective different early intervention programmes are. I strongly support the work of the hon. Member for Nottingham North (Mr Allen) in looking into those issues and in trying to evaluate which programmes are more helpful than others.

[Ben Gummer (Ipswich) (Con)]

I completely agree with my hon. Friend. I have been spending a lot of time in primary schools in my constituency in the past 10 months and reception teachers have told me time and again that they can almost tell which Sure Start centres are doing good work and which are not really adding much value. However, that is the extent of their knowledge because the evidence is anecdotal. We really need some proper evidence so that Sure Start centres can be evaluated and best practice can be spread.

[Andrea Leadsom]

That is exactly right. County councils and directors of children’s services are very aware of the potential value of Sure Start children’s centres. My director of children’s services in Northamptonshire would love to get even more value out of them and would welcome better research showing what would work better, rather than having to go it alone in those areas.

Let me conclude with a small plug. I plan to launch a pilot scheme in 2011 for a Northamptonshire parent infant project that will mirror what OXPIP has been doing so successfully for 13 years in Oxfordshire. Working closely with children’s centres in Northamptonshire, I hope to show, prove, demonstrate, document and evaluate the value of really early intervention services in making a real difference to the quality of families’ lives.

13:58

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

It is a pleasure to follow the excellent speech of the hon. Member for South Northamptonshire (Andrea Leadsom). I was strongly tempted to intervene at the critical point near the end of her speech when she put her finger on the real problem of localism—when she talked about the pilot that did not go ahead because of the ethics of intervening with one group but not another. The issue we are debating directly concerns children’s centres and the information that flowed from an inquiry of the Select Committee on Children, Schools and Families when I chaired it. That inquiry went back to March 2010 and I think that you might even have given evidence to it, Madam Deputy Speaker, wearing a different hat. Central to today’s discussion is whether we should have a service that guarantees certain things for every poor child in the country or whether we should leave it up to the randomness that comes when different councils with different majorities or no majority, which may lack funding and which may be urban, suburban or rural, are left to take those decisions. I come from an old-fashioned school of thought, which I hope will come back into fashion, that believes in giving guarantees to every child in the country.

Let me take the House back briefly to when I became the Chair of the Select Committee, 10 years ago. The very first inquiry was into early years. We were the first Select Committee ever to hire a psychologist, because we wanted to understand the development of a child’s brain. Everything that has been said in the debate touches exactly on that.

We were lucky enough to engage three special advisers to the Committee, led by Kathy Sylva, the wonderful former head of children’s services in Oxfordshire. Kathy Sylva did that original research showing that by 22 months a child’s brain has developed to such an extent that it is extremely difficult to compensate later for lack of stimulation during those 22 months. Members in all parts of the House—no party political points here—understand that early years intervention is critical. We must also agree that there have been some difficulties since we produced our report last March. Such a time lapse is a great advantage, because we are able to see what has happened.

Many of the 3,500 Sure Start children’s centres are new and had only just been completed when we finished our report, just before the general election. Some were older, but all centres need time to put down roots. When we are experimenting with social policy, especially in such an important area, we must bear it in mind that children’s centres need time to respond to the local community and to change their shape and nature as demands on them are made and they become better known by good professionals working in the community. There is no doubt that the maturation process is important. As all of us in the educational world know, with the best intentions, it is difficult when national policies are rolled out.

Pilots may show that something works excellently on a small scale. I have been reflecting on that. One of the few times that I failed to get a witness to come before the Select Committee was when we asked Jamie Oliver. By the time we got through his press and publicity machine, his managers and his agents, we gave up trying to get him, even to speak about school meals. We did a school meals investigation before Jamie Oliver had made his programme. Tonight there will be a Jamie Oliver programme on television about his ideal school.

I learned a lesson last summer. I took my daughter, who at that time was heavily pregnant with twin boys, and my wife to a Jamie Oliver restaurant in Kingston, and it was one of the most disappointing meals that I have ever had. I had eaten in his restaurant Fifteen and I would recommend it to anyone. It is a flagship restaurant and was a wonderful experience, but when the Jamie Oliver offer is rolled out around the country, we see the difficulties that I found in Kingston upon Thames in the summer, as we have in education when we roll out children’s centres. The pilot looks wonderful and we think we can roll it out in 100 or even 500 centres. The reason our Government moved from 500 Sure Start centres to 3,500 was that most of the poor families in our country live outside the 500 poorest wards.

[Andrea Leadsom]

Surely that is an argument for localism in the case of children’s centres.

[Mr Sheerman]

Sorry, I disagree. It is a call for greater management. When an idea is rolled out and franchised, it is essential to ensure that there is a set of standards, that people know that they are expected to reach those standards, and that those standards are delivered. May I point the hon. Lady to the remarkable work of Lord Baker when he was Secretary of State? He picked up the challenge of Jim Callaghan’s Oxford speech to Ruskin, in which Callaghan said that we needed an inspectorate to check on quality, testing and assessment to find out how children were progressing, and a national curriculum. Jim Callaghan never did anything about it, because he did not have a majority or any money. Ten years later Ken Baker did it. He knew that we had to be able to deliver nationally to a national standard.

[Tracey Crouch (Chatham and Aylesford) (Con)]

The hon. Gentleman is making a case for a franchised system like McDonald’s or any other burger chain, not for Sure Start centres. I have some excellent Sure Start centres in my constituency in the most deprived areas, precisely where they should be, but the programmes offered there would not work in other parts of my constituency.

[Mr Sheerman]

I take the hon. Lady’s point. We can disagree on that.

Let me get down to what worries me. Our report—which, if my memory serves me right, the present Chairman of the Education Committee voted against—suggested that children’s centres should be maintained. We made some helpful comments. I want to spend a little time on the Government’s response. Paragraph after paragraph, they keep saying how wonderful our report is, but when I look at their response in detail, I am worried about some of their reasons for agreeing with it.

We can all agree that evidence-based policy is good policy, and this policy of ours was the purest example of that. In all my 10 years as Chair of the Select Committee, with some wonderful colleagues—many of us turn up at debates such as this—the best policies that we saw were those based on evidence, and of all the policies in those 10 years, the clearest evidence was on early years intervention and redirecting expenditure to the early years. People carelessly think that we spend a lot of money on early years, but that is not the case. How much we spend increases as a child gets older. All the evidence shows that we have got it the wrong way round. My hon. Friend the Member for Slough (Fiona Mactaggart) often made that case, and made it to you, Madam Deputy Speaker. The money should be piled in during the early years, for the reasons that the House has heard this afternoon.

What worries me about the Government’s response to our report is whether the commitment is still there. It is all very well having the commitment, but without the money and the resources, children’s centres will start to go. My right hon. Friend the Member for Birkenhead (Mr Field) said that his council had not yet made up its mind. I have it on good authority that my local authority, Kirklees, in which Huddersfield sits as the jewel in the crown, is reducing the number of children’s centres from 35 to 17.

[Bill Esterson]

Sefton council proposed reducing the number of children’s centres from 19 to seven, but I am pleased to say that, in the face of huge opposition from the hundreds of families who use the centres, it is reconsidering. My hon. Friend makes his point about the link between policy and the money made available. We could comment on manifesto pledges. I am sure he would agree that it is only by Government guaranteeing that the money is available and that it will be spent on children’s centres that there is any hope of achieving the aims set out in the Select Committee report.

[Mr Sheerman]

Indeed. I hope my own local authority will change its mind under pressure from those who use the excellent children’s centres in my patch. I am sure that throughout the country there will be a large number of closures of children’s centres. That will be a disgrace, because I know what good work children’s centres are doing.

May I take up a remark made by my right hon. Friend the Member for Birkenhead? He visits schools and sees how important the first two years are. I used to boast that I visited more schools than any other MP, and I am trying to keep up that track record. When I visit urban schools I see the difficulties that he has identified, measured against the 10 things that children should be able to do. I visit schools with fantastic heads and children’s centres with fantastic leaders who improve children’s behaviour and performance enormously, but 40% of the children will not be in those primary schools in a year because of the churn in our schools. We do not discuss that enough.

How can children be stimulated when in many of our major towns and cities they live in totally mobile populations? It is not the old-style poverty of the coalfields and shipyards, but the poverty of churn and change. In so many of our constituencies, heads and Sure Start leaders do not know which children will come through their doors in just a few weeks, which is a real problem. However, they do know that children will often have no one at home who speaks English to support them in learning our language. When those children go home, the television will not be in English. Sometimes, because of political correctness, we turn away from the reality of what is happening in our schools.

I fear that, as the world changes and the middle east turns itself upside down, for example, even higher rates of migration will result in even higher rates of change in our schools. I am not against migration and hold no extreme views on the matter, as everyone who knows me would acknowledge, but I know that our children’s centres and primary schools in urban areas are at the front line of that change. We cannot carry on asking teachers, heads and Sure Start leaders to cope with the increasing churn and turmoil resulting from the number of new children, so few of whom have a command of English, or indeed of many of the standard requirements that we expect in schools and children’s centres. We all pick up on that point but sometimes ignore it. We ask professionals to do a job, but not all children live in the leafy suburbs or the countryside.

[Stephen Lloyd]

That is an important and well-made point, but does the hon. Gentleman not agree that the additional investment for increasing the number of health visitors to 4,200 is surely a good thing for a number of reasons, not least the important issue that he has addressed?

[Mr Sheerman]

I am pleased that the hon. Gentleman made that intervention, because I was moving on to the funding of health visitors. I am not entirely sure or comfortable about when that money will come in, because I had heard that it is not yet and that it might be in 2012; there is nothing in black and white. I would be pleased if a member of the ministerial team would let us know during the debate whether the funding is coming and whether it is from the health budget, as one Minister has told me. If that is true, it will be a real plus for the overall budget and to be welcomed.

Where the health visitors are based is also important, and I hope that they will be concentrated in children’s centres. Some of us will remember hearing the head of the Royal College of General Practitioners say in evidence to the Select Committee that half its members did not know what a children’s centre was and that the other half thought that it was just competition for health visitors. Integration and working together are important.

It is also important to consider the revolutionary step at the heart of children’s centres, which has been missed out of the debate so far. The revolutionary step is that they view a child holistically. A child is not a child with a bit of educational difficulty here and a bit of early stimulation there, or with a little health problem here and language difficulties there. The beauty of children’s centres is that a child gets all that support and evaluation in one place. Parents do not have to push a pram all over town to go to one clinic for a certain service and somewhere else for another, as my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) said. The fact is that providing a holistic service for a child delivers the best chance of giving that child the environment in which they can thrive.

While the Committee was conducting that inquiry, we were looking at young people who were not in education, employment or training. When we went to Holland, we found the Dutch experience particularly interesting, because they also looked at young people holistically. They have centres where young people can have a health evaluation and an aptitude evaluation, where employers and colleges are represented and there are seminar rooms for people who had been NEETs before gaining employment. Those centres provide an all-purpose focus for young people. When we are talking about people’s lives, it is that holistic approach that seems to work, and I recommend that what we do in children’s centres should be transferred to that older age group, as stated in our report on NEETs. Local authorities have moved in that direction, and some examples in the UK have been extremely successful.

[Bill Esterson]

Will my hon. Friend give way?

[Mr Sheerman]

Not for the moment.

Many of the responses to the Committee’s report have made much play of the big society. I must confess that I actually like the idea of a big society, but I am slightly resentful of it, because I think that the Conservatives stole it from Labour—[Interruption.] I say that in a good-natured way to ensure that Conservative Members are still awake. In fact, we all believe in the big society. I believed in it even when Mrs Thatcher said that there was no such thing as society, so I have a long-term commitment to it. Throughout my whole political life I have involved myself in starting social enterprises as part of that big society, because I think that that is how our society should develop.

My worry about the big society is that it is often linked to the idea that everything should be done by volunteers. I am a little suspicious when people argue that things can be done by volunteers, because the best analysis and professional research suggests some problems with that. I refer the Minister to an interesting article—she might already know it—published in 2006 by Professor Alison Wolf, who is about to publish a report produced for the Government on 14 to 19-year-olds. As the Minister will know, Professor Wolf’s daughter, Rachel Wolf, is in charge of the free schools movement and her son, Martin Wolf, is a senior influence at the Financial Times. I listen carefully to Alison Wolf, and her 2006 article stated that the real problem with volunteering in this country is that it has been dying—first, because of the decline of organised religion, and secondly, because women now work in demanding jobs. Both men and women work in our country.

Professor Wolf also noted that the research suggesting that there is a lot of volunteering left in our communities is poor because it is based on opinion polls, and people tell fibs about how much they put back into the community when they are asked in such polls. If members of a pilot group are asked to keep a diary, the results show that the average time a person gives to volunteering is four minutes a day. If we are to base children’s centres and the big society on all of us volunteering for four minutes a day, we will still need a hell of a lot of good professionals to provide quality health and children’s care.

I shall also briefly touch on something that was central to the Government’s critique of our inquiry—the idea that we would no longer need so many hours. One absolutely fantastic thing about children’s centres in the most deprived areas was that they had to stay open 10 hours a day, 48 weeks a year. The document before me clearly states that that is now finished as an obligation and does not need to delivered. We all know that that is true, because it is in the response to the Select Committee’s report, and, in the hard-pressed and most deprived communities throughout our land, it represents the withdrawal of a guarantee that really meant something and will be sorely missed.

I do not know what my right hon. Friend the Member for Birkenhead, who wrote his own report, would say about that withdrawal. I do not remember hearing whether he was conscious of it when he wrote his report, and I do not know whether he thinks that the fairness premium will counter-balance it, but nobody knows how the premium will work, when people will receive it or who will benefit from it.

At the heart of my concerns about the response to the Select Committee’s report is the fact that localism has become an excuse for saying, “We don’t have the confidence or the courage to say that we believe that there must be a reduction in the number of children’s centres or the services they provide, so we are going to pass it on to local authorities.” The Government must know, however, that local authorities, in straitened times with much smaller budgets, are going to cut back on children’s centres.

This Government—any Government—have a responsibility for knowing that some policies are so fundamental to the welfare of our people that we and they cannot afford to give up the guarantee and say, “Oh, I’m terribly sorry. We believe in children’s centres, in a full service and in the early stimulation of children, but unfortunately those naughty people up there in Oxford, down there in Surrey or up there in the north-east happen to be short of money and it is all their responsibility.” No one can shuffle away from such responsibility. If children’s centres are cut back or cease to exist as fully integrated models, the buck stops with the Government. I hope that all parties in the House recognise that.

There is a very real problem with the final piece of evidence in the Government’s response to the Select Committee report. I was very fond of evidence-based policy, as you know Madam Deputy Speaker. On page 3 of the Government’s response, they say:

“The Government agrees with the recommendation—high quality provision leads to better outcomes for children and families. Research evidence shows that it is the quality of support which makes the difference for children's outcomes, particularly for disadvantaged children. That is why, where children's centres are providing early education and care, it should be led by either an Early Years Professional or a Qualified Teacher to ensure quality and provide expert input to the activities and services on offer.”

Do we all agree with that? I am looking at the ministerial team. Do we agree? Can I have a nod? [Interruption.] I am not going to get a nod, because they know that page 6 says:

“It is crucial that children's centres in disadvantaged areas continue to offer high-quality early education and care to support vulnerable and disadvantaged families. However, since we have removed the requirement for children's centres in disadvantaged areas to provide full day care, we do not want to be as prescriptive as the previous Government in expecting them to employ both a Qualified Teacher and an Early Years Professional. Therefore, we have removed this requirement.”

The Minister responsible for schools became very fond of one little bit of evidence in Clackmannanshire, when he was converted to synthetic phonics, but all the evidence, not just one piece in a relatively obscure part of the United Kingdom—

[Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)]

Scotland!

[Mr Sheerman]

No, Clackmannanshire.

One inquiry swept the Minister away to the world of synthetic phonics, and he has been there ever since, but in fact much research shows that a qualified teacher or an early years professional in an early years setting makes a substantial difference to outcomes, and this Government are taking that away.

[The Minister of State, Department for Education (Sarah Teather)]

We are not taking that requirement away; we are taking away the requirement for both professionals.

[Mr Sheerman]

That is good information, but if I take the two responses together I find that the requirement is substantially weakened.

[Sarah Teather]

rose—

[The Parliamentary Under-Secretary of State for Education (Tim Loughton)]

He hasn’t read it.

[Sarah Teather]

Yes, I fear that the hon. Gentleman probably has not read all the document.

Part of the problem is that in some areas—[Interruption.] If the hon. Gentleman lets me finish, then he can shout at me. In some areas, we find that there is no need for full day care, and if there is no need, we end up subsidising full day-care places, which is not sensible. We should put that money into the evidence-based programmes that make the difference, to which the hon. Member for South Northamptonshire (Andrea Leadsom) referred. That is where the money must go, and that is why we have taken away the requirement for full day care. There is no requirement for both professionals, but there will need to be one.

[Mr Sheerman]

I am sorry, but it is unkind of Ministers to suggest that I have not read the document. From a close reading of it, I have explained how those two paragraphs do not make sense. Taking away the commitments to 10 hours a day and to 48 weeks a year substantially weakens the overall offer.

Now that I have managed to get the Minister to the Dispatch Box, I wonder whether she will also tell us a little about the future mutualisation of children’s centres. The Select Committee said that it was in favour of variety and more community-responsive children’s centres. We certainly were not against diversity in the shape and nature of children’s centres throughout the country, but throwing into the response to our report something about the possibility of mutualisation, without really developing it, left us all rather puzzled. Can she enlighten us on mutualisation?

[Sarah Teather]

I shall pick up on those wider points when the hon. Gentleman sits down and I make my speech. I just wanted to make that clarification, but I am conscious that other Members want to speak and I am just prolonging his speech.

[Mr Sheerman]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. That is a good point. We do not want a discussion just between the Minister and the hon. Gentleman, even though it might be of interest to other Members. Other Members are waiting to speak.

[Mr Sheerman]

I would never be so churlish as to suggest that the hon. Lady has not read the document.

Ten years ago, when I became Chairman of the Select Committee, we produced a report on early years. I used to go to early years settings where people were employed for £1 an hour. There was a very poor core of professionals and many volunteers, and 10 years ago there was a lot of fuss because a Labour Government introduced the national minimum wage. People told us at our inquiry that that was the end of early years, because no one would be able to afford to pay the minimum wage. Over those 10 years, everything we saw taught us that the policies that increased the professionalism of the early years resource and staff were a fantastic investment—the sort of investment that our communities and our Government should make and be proud to make. Our original report made that point very clearly, and I still believe in what we said: the children’s centre network is highly valuable, and we destroy it or undermine it at our peril.

14:29

[Neil Carmichael (Stroud) (Con)]

Thank you, Madam Deputy Speaker, for allowing me to follow that very lengthy and detailed speech by the hon. Member for Huddersfield (Mr Sheerman).

This debate needs to cover several points, some of which were referred to by my hon. Friend the Member for Beverley and Holderness (Mr Stuart), the Chairman of the Education Committee. For example, unfortunately we have a huge number of NEETs in our country. That is a measure of the failure to deal with children in early years education in a proper and satisfactory way. Until we got into government, there was a failure to deal with the widening inequality gap—a damning indictment—and we have to tackle that.

I want to say a few words about resources. This debate is, to some extent, influenced by the fact that we are in a period of reductions in public expenditure, so it is worth noting that we spend almost 40 times as much paying interest on this country’s debt as we do on the subject that we are talking about. That puts our funding difficulties into perspective.

Of course, we have Sure Start facilities in my constituency—for example, Treetops in Dursley, which is first class. It is very important to ensure that Sure Start really does what the label says. The right hon. Member for Birkenhead (Mr Field) is right that it is a very good brand, and it does say something that is really encouraging—a sure start. However, we must be completely certain that that is exactly what happens. My hon. Friend the Member for South Northamptonshire (Andrea Leadsom) was right to talk about the importance of evaluation and ensuring that Sure Start works in every different area.

[Bill Esterson]

I want to give an example from personal experience. My own family were lucky enough to have access to a children’s centre some years ago when my son was three years old, and we certainly benefited as a family, but this is more about the other families who were from more disadvantaged backgrounds than ours. They clearly stated that in terms of opportunities and development, the differences between the younger children who had access to children’s centres and their older siblings were very noticeable within the same families, let alone on the same estates between different families. That evidence was very strong, and I could see it at first hand.

[Neil Carmichael]

I thank the hon. Gentleman for that intervention. I would say that that is the experience of Sure Start in one situation, but we need to be sure that all Sure Starts deliver high standards for all the children who attend.

I want to make two general points about Sure Start. First, there is the issue of localism, which has cropped up several times. The real need is to ensure that we shape our services for the needs that we find on the ground where we see the problems. It is therefore right that local authorities have more influence in allocating and shaping provision. This is the converse of the previous Government’s approach, which was always top down, telling everybody what it was important to do and ensuring they did it, but not taking into account people’s needs, especially local circumstances. That obsession with top-down control often means that people end up worrying too much about the structure and too little about those within it and the children needing to benefit from it.

Secondly, we are no longer ring-fencing funding. That is right, because it is important to have local accountability for the provision of services and to enable local authorities to make the decisions that they want to make. The way in which the Government are now funding Sure Start is the better way to ensure that these facilities can be more flexible and adaptable. I make the case for localism on those terms.

[Mr Graham Stuart]

I would like to pull together the point that my hon. Friend has just made and the point about evaluation. Does he agree that if we are to have a more localist approach, national Government need to ensure that evaluation takes place so that we have the data to see whether local authorities are making a difference to the school-readiness of children when they turn up? If we spend all this money and it does not make any difference, as the Durham studies have shown in too many cases involving poorer children, then we are spending money to no positive result.

[Neil Carmichael]

My hon. Friend is right. We need to be sure that we deliver the outcomes that we want. If we are obsessed with process, structures and all the rest, and not with outcomes and delivery, we are letting down the very children we aspire to help.

The Education Committee went on a trip to Finland, where there were some interesting points to note, one of which was schools’ involvement in more than just teaching the children. Schools always had social care provision and, in effect, district nurse provision, and there was proper, regular consultation between those providers and the teachers if there was a problem. That is well worth thinking about. It is important to consider other ways of doing things than simply the prescribed way from central Government. As I have often said, it is sensible to look at other systems, not necessarily to copy them completely, because that cannot be done effectively—there are too many obstructions such as different cultures and priorities—but to pick up ideas that can be transferred. I urge people to keep an open mind about that kind of arrangement.

Before we got to Finland, we were in Germany. There, too, I learned something, which was that the Germans have a different approach to NEETs, and they did not seem to have nearly as great a problem as we have had. They were taking relatively proactive measures to encourage young people to become involved in society at an early stage and to give them signposted ways into further education and employment. That is something that we could pick up on. There is a lot more detail that we could discuss about those trips that would be useful to the debate, but I mention those two examples.

The right hon. Member for Birkenhead was entirely right, and very moving, when he spoke about family structures where parents were sometimes unable to provide decent parenting for their children, and wondered whether he could have survived in certain circumstances. We must recognise that this is a very serious issue. We cannot, as a society, be happy when such comments can be made and readily accepted without question. We must concentrate on improving parenting—not in the case of all parents, obviously, but those with the biggest challenges and problems.

I met a lady in my constituency who is in charge of the Nationwide Community Learning Partnership, which focuses on providing strong and effective programmes for improving parenting. I urge the Minister to think very carefully about such programmes, which offer a way forward. That organisation is of a very high standard. It is based in the county of Gloucestershire but has functions across the country. I think that, allied to Sure Start activities, helping people in need of parenting skills is a way forward. I invite the Minister to meet the Nationwide Community Learning Partnership, because I think that it would bring something of value to the discussion.

We need to be more flexible and open-minded on this issue. We need to recognise that Sure Start has a strong role to play. It is sensible to have a localist and flexible approach to providing such support.

In this debate, it is worth remembering the role that the pupil premium will have in helping children. I do not think that it has yet been amplified, but I believe that it is an important way of getting financial support to the right place at the right time. The schools I have visited in my constituency that will receive a large amount of pupil premium recognise its value.

The Government’s decision to provide funding for two and three-year-olds is a big step in the right direction. As hon. Members have said, one can tell when children who need that support have received it and when they have not. To solve the problems of children in this category, it is logical that we must help them when it really matters, and it really matters at that young age.

This is an important debate. We have to be sure of the quality of the services that we provide. We need better evaluation and a wiser way of interpreting the data. We must capture the needs of local people and children in a much more intelligent way. To a large extent, that means trusting local authorities to do just that. It is right to have this debate at this time. There are a lot of challenges and we should not rest until the headline figures that I referred to at the beginning of my remarks come down much faster than they have done thus far.

14:43

[Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)]

I am delighted to have the opportunity to contribute to this debate. I give my apologies in advance in case the debate continues beyond 4 o’clock, because I am hoping to speak in Westminster Hall.

I agree with the hon. Member for Stroud (Neil Carmichael) about the importance of evaluation. There have been constructive speeches from Members from across the House. As my hon. Friend the Member for Huddersfield (Mr Sheerman) said, we have to start by looking at the evidence of what is working in our country and, as several hon. Members have said, what has and has not been successful in other parts of the world. Several hon. Members talked about the balance between having universal expectations of services in all parts of the country and local flexibility. I am a fan of local flexibility. The hon. Member for Stroud said that the situation must depend on the needs on the ground. I say to him gently that although that is true, meeting those needs on the ground depends on the resources being there. In the latter part of my speech, I will talk about the impact of the Government’s cuts to these grants on children’s centres and nursery provision in Liverpool.

I absolutely concur with the hon. Member for Beverley and Holderness (Mr Stuart) on the need to focus on those who are not in education, employment or training. Ultimately, the success or failure of Sure Start and other investment in early years will be assessed by whether we succeed in cracking the nut that all speakers have referred to: that so many people’s life chances are set before they go to primary school or even, as my right hon. Friend the Member for Birkenhead (Mr Field) said, before they enter a Sure Start children’s centre.

Before 1997, I had the privilege of working with my right hon. Friend the Member for Barking (Margaret Hodge), who is now Chair of the Public Accounts Committee. She was asked by the then Leader of the Opposition, Tony Blair, to develop a policy for early years. That ultimately became the Sure Start policy that was taken up in Government by my right hon. Friends the Members for Sheffield, Brightside and Hillsborough (Mr Blunkett) and for Dulwich and West Norwood (Tessa Jowell). Our approach then was very much the one that my hon. Friend the Member for Huddersfield set out. We looked at the evidence and at the examples of excellence from our own country. They did exist, but they were individual cases rather than occurring nationwide. Perhaps more importantly, we looked at the head start programme in the United States, which seemed to be having such a big impact on the life chances of children and young people from poorer communities, and at similar programmes in European countries.

My right hon. Friend the Member for Birkenhead has had to leave the Chamber, but his speech was an important contribution to the debate. In the latter part of my remarks I will focus, as I am sure will other Labour Members, on the impact of Government cuts, and in doing so we are saying that not everything in the garden is rosy. Of course some children’s centres are doing better and are more effective than others, but we need a proper quantitative and qualitative analysis of what is working so that lessons can be shared across the country.

[Mr Graham Stuart]

I believe it was the right hon. Member for Birkenhead (Mr Field) who had the courage to say that if one believes in early intervention, in the current financial situation one must reduce funding further up by taking money away from primary schools, secondary schools and colleges, and give it to early years. Does the hon. Gentleman therefore support the fact that two-year-olds will now have nursery education at a cost of more than £300 million, which perhaps reflects a redistribution from later school years by this Government?

[Stephen Twigg]

I welcome that element of what the Government have done. On its own, it would represent something of a redistribution. The trouble is that it exists alongside other changes that work in the opposite direction—principally the removal of the ring fence. The hon. Gentleman referred to the debate on ring-fencing. It has always struck me in debates about education and other public services that people tend to be against ring-fencing in general, but in favour of it in particular. We all want our favourite thing to be ring-fenced, but we do not like the general idea. The principle of moving away from central Government saying, “You must spend this funding on this, regardless of local circumstances,” is good. However, it is concerning in this instance, not least because it is happening in the context of cuts in many areas. With the best will in the world, it is very difficult for local authorities to maintain expenditure on early years with the ring fence removed, when they are having to make such big cuts in other areas of their budgets. I will come back to that point, but I urge the Government to think again about the proposal to remove the ring fence for this area of spending.

I think that the case for investment in this area is now accepted across the House. It can make such a difference to the life chances of all children, and in particular those from the poorest and most deprived areas with the greatest need. The formulation set out by my right hon. Friend the Member for Birkenhead is right: we want a universal service, but within that, we must focus without relenting, and without any apology, on the needs of those from the very poorest communities.

That brings me to the financial predicament that is being faced by local authorities of all parties up and down the country. There is no quarrel about the need for cuts, or about the fact that some of the cuts will affect children’s services, but our concern is that the scale, speed and distribution of those cuts, combined with the removal of the ring fence, will cause enormous damage.

[Tracey Crouch]

In the light of what the hon. Gentleman has just said, will he join me in congratulating Tory-led Medway council, which has had a difficult funding settlement, on keeping all its Sure Start centres open, including the All Saints centre in Chatham and the Kingfisher centre in Princes Park?

[Stephen Twigg]

It is very welcome to hear of any authority that has managed to keep all its centres open despite these financial circumstances. We heard earlier, during Prime Minister’s questions, about another Conservative authority, Bromley, which is closing the vast majority of its children’s centres. The impact is clearly being experienced in different ways in different parts of the country, so I welcome the fact that Medway has managed to keep its centres open. I am not sure whether my welcoming that will make much of a newspaper headline in the hon. Lady’s constituency, but her news is nevertheless welcome.

[Mrs Hodgson]

My hon. Friend the Member for Westminster North (Ms Buck) has talked about the services that the centres will provide. Does my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) not agree that it is all very well keeping the buildings open, but that that will not be much use if the services have been scaled back to a point at which they are unrecognisable?

[Stephen Twigg]

My hon. Friend is absolutely right. I am not familiar with the details of what has happened in Medway, so I do not know whether that has happened there, but that is precisely what is happening in other parts of the country, as my hon. Friend the Member for Westminster North (Ms Buck) has said. In Liverpool, the day nurseries attached to two of the centres in my constituency, at Croxteth and Knotty Ash, are closing down. Keeping centres open is an important indicator, but it is not the only one. What matters is what goes on inside the centres and the services and outreach that they provide.

Liverpool city council is seeing the greatest cuts of any authority in England. Birmingham council, a Conservative-Liberal Democrat council, has produced a fascinating graph showing the relationship between the cuts in Government grant and the average level of need in an authority. There is a remarkable relationship between how deprived an area is and how big the grant cuts are. Liverpool is right up at the very top with the biggest cuts and the highest levels of deprivation. We accept the need for cuts, but we do not think that they need to go as far or as fast, and even if the quantum of cuts can be justified, their distribution between different authorities absolutely cannot be.

In that context, Liverpool city council, which has placed a strong emphasis on children’s services over the past decade under Liberal Democrat and now Labour control, is having to cut children’s centres. It is not cutting them on the same scale as Bromley, but, of our 26 centres, four are earmarked for closure, which is four more than I want to see. It is also four more than my hon. Friends the other Liverpool MPs want to see, and four more than all the parties on Liverpool city council want to see.

One of my first engagements as the new MP in West Derby last May was to attend the opening of the West Derby children’s centre. A week ago, I went back there to attend a meeting to discuss its proposed closure. It is heartbreaking for the children, the parents and the people working at the centre to see that fantastic new facility, which was created for that community, facing closure. Even at this late stage, I am working with people at the centre and councillors to consider every possible option for safeguarding it, even if it takes a different form in the future. My hon. Friend the Member for Huddersfield talked about mutualisation and social enterprise options. There might be options for at least some of the services at that children’s centre to be retained, but it would have been much better to keep the whole centre open. It opened only a year ago to provide all those services for the local community, and what is happening now is a direct consequence of Government cuts.

I also visited the Knotty Ash nursery last week, and I want to mention a woman whom I met there. Lisa Dempster is the mum of a child at the nursery, and she is happy for me to mention her. She left school when she was 16, which was 24 years ago. Throughout those 24 years, she has been in work. She has never claimed unemployment benefit, and she has paid her tax and her national insurance. She has two teenage children and a toddler. Both her teenagers want to go to university, so that they can get on in life. Her daughter, who is in the first year of the sixth form, is losing her education maintenance allowance this year, and her son, who starts sixth form this September, will not receive EMA at all. Her children are losing their bus passes, and they fear that they will face enormous debts in the future. On top of all that, her little one’s nursery place is going to be lost. She is a good example of someone who has been very badly let down by this combination of policies from the Government. The latest blow for her and her family is the closure of her local nursery.

I apologise again that I might not be here to listen to the Minister’s response to the debate, but I shall read the Hansard record. I urge her to think again, in two respects. First, I really believe that the ideal would be for the Government to re-impose the ring fence for Sure Start children’s centres. That is the best way for us to ensure that there is a universal entitlement, which goes hand in hand with local decisions about how that entitlement is implemented in each community. If she cannot agree to that today, or thereafter, I ask that she, her colleagues in the Department for Education, and particularly her colleagues in the Treasury and the Department for Communities and Local Government look again at the unfairness of the distribution of the cuts, which are hitting children’s centres in some of the most deprived areas of the country much harder than those elsewhere. All those who have contributed to the debate agree that Sure Start has achieved some amazing things over the past decade. We also all agree that a focus on the areas of greatest deprivation must be at the heart of Sure Start in the future. I fear, however, that the broader picture of the cuts will undermine all the Minister’s personal good intentions.

14:57

[Matthew Hancock (West Suffolk) (Con)]

I am grateful for the opportunity to speak in the debate today, and I am following a large number of Members who have spoken with great authority and understanding. I have listened with interest to the debate, but one thing seems to be missing. It is the big picture. The biggest impact of the money spent on children’s education, in terms of our ability to improve cognitive skills, is seen in the earlier years. There is now consensus not only in the academic literature but across the House that we need to target resources in that area, because that is where they have the biggest impact on child brain development. However, when we consider how the money is spent in the UK and across the world, we see that the inverse of that is happening. Excellent research has shown that the money going into post-16 education in the UK is 1.5 times the amount per head that is spent at primary level. The differential is even greater for the pre-school and under-twos provision that we have been discussing today.

We all recognise this historic anomaly, but the question is: what can we do about it in the context of the extremely tight public spending limits that are necessary, given the scale of the deficit? That is not an easy proposition. The analysis is easy, and the evidence all points the same way, but it is extremely difficult to achieve the practical and political ability to make that change, so that that money will go to children at the age at which it has the most impact.

I shall give two examples. The Government have made two proposals that will save money, because the evidence showed that the money being used did not have as much impact as it could have done elsewhere. They are politically difficult proposals. First, the Government have asked students to pay more of their tuition fees, and secondly, they are restructuring the EMA. At the moment 90% of those who receive it would have stayed in school anyway, so now the impact will be much greater. Those are both extremely politically sensitive changes, yet they are having exactly the impact that Members of all parties have called for.

In an era of rising budgets it may be easy to put more and more focus on increasing spending at the lower end of the age distribution. In an era of very tight finances, however, it is difficult to redistribute and retarget money from the older end, especially post-16, where the evidence shows that the impact on cognitive ability is the smallest, to under-fives, for whom the evidence shows it is biggest. However, this Government are doing it. Members of all parties ought to recognise how difficult it is to make that change in the context of the very tight public finances.

That supports the strength of the Government’s position, which I applaud, of keeping the early intervention grant flat in cash terms in the forthcoming period. Protecting money for early intervention, in the context of the current spending conditions, is an achievement for which the Minister ought to be applauded.

We then come to the argument about how that money is spent and where the cuts are falling. I did a bit of research and found 27 councils across the country that are managing to keep all their Sure Start centres open despite the difficult public finances. Of those, 24 are run by the Conservative party and three are Conservative-Liberal Democrat coalitions.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Can the hon. Gentleman tell the House what percentage cuts those councils are receiving compared with the 4.4% average cut to local authority budgets?

[Matthew Hancock]

Absolutely. My own county council, Suffolk, did not do very well in the distribution of the local authority grant, but because it is making savings in back-office costs, re-engineering how it delivers services, reducing the cost of services and being flexible in how it delivers them, it is able to keep its centres open. I absolutely take the hon. Lady’s point, and the crucial point is that councils ought to be making savings in the back office and re-engineering their services to protect front-line services, as Suffolk is doing.

[Mr Slaughter]

I will try to keep this non-party political, but since the hon. Gentleman makes that point, I will ask him the same question that I asked the Chair of the Education Committee. If councils are closing most of their Sure Start centres, should we just shrug and say, “Well, that’s a matter for localism”, or, given what the hon. Gentleman has said, should the Minister take an interest?

[Matthew Hancock]

There is of course a statutory amount of Sure Start provision that must be in place, as I am sure the Minister will spell out in more detail. The question is whether services can be provided in a way that delivers better value for money, through savings in the back office. I recently chaired a report on councils’ ability to save money and deliver services better by bringing together the delivery of local services. Reference was made earlier in the debate to the fact that when that has been done, it has not only saved money but actually improved services. The right hon. Member for Birkenhead (Mr Field) talked about Sure Start centres that also have health and social services, so that they are a one-stop shop. Those are exactly the sort of innovative solutions that we need to examine.

One example of a council that is doing that extremely well is local to the hon. Member for Hammersmith (Mr Slaughter). Hammersmith council, and others across the country, are saving money by changing how services are delivered. That is far better than cutting front-line services, and I commend that approach. I mention that not to make a party political point but to argue that by allowing local councils on the ground to spend money in the way that they see fit, with the flexibility to deliver early intervention as best they can, we allow innovation and improvements in delivery instead of the attitude that the man in Whitehall knows best, which top-down provision and tight ring-fencing bring.

[Mr Slaughter]

The theory sounds fine, but the practice is different. I am trying not to be party political, but let us say that a council decides it is going to cut the Sure Start budget by about half and close most of its centres. That cannot be dressed up as back-office services, and for many children, the essential services with which they are currently provided will not be there. Should that be a matter for the Government to take an interest in?

[Matthew Hancock]

That is why it is important to have a specified national minimum level of provision, and then allow councils to ensure that they meet—and, one hopes, exceed—that level. The reason for allowing local innovation and flexibility with a national minimum level is to enable different approaches to be taken in different places, so that best practice can emerge. That lets local councils and people deliver in the way that is most helpful and appropriate to local people, but it is also about ensuring that instead of a centralised, bureaucratic system, we have a local system that responds to local need.

We heard earlier from the hon. Member for Huddersfield (Mr Sheerman) that we need better management, but we have had a centralised system for years. As a member of the Public Accounts Committee I am obviously well aware of National Audit Office reports, and, sad to say, the NAO found that the amount of formal child care among the most disadvantaged fell between 2004 and 2008. Instead of leading to more provision for those people, the centralised approach actually led to less, so let us try a different way.

[Andrea Leadsom]

Does my hon. Friend agree that if we had too centralised a system, we would lose the excellent work of many voluntary sector organisations in specific areas, such as the charity with which I have been involved in Oxfordshire, OXPIP? We would not have the opportunity to introduce local services to meet local needs.

[Matthew Hancock]

I listened with great interest to my hon. Friend’s passionate argument earlier, which made exactly that case. Local innovation and a local ability to respond to local events, with a national set of standards that must be met, allow money to be spent better.

I come to the central reason why I support that approach—the fact that it is about outcomes, not inputs. Tight ring-fencing is all about ensuring that the inputs go to a certain area. I understand as well as anybody how easy it is to get a headline out of writing that x million pounds is going to such and such a project—but what matters to people on the ground is not the amount of money poured in at the top, but the outcomes delivered at the bottom. The ability to improve value for public money, get better outcomes and have innovative social groups, such as the one that my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) mentioned, is, given the extremely tight fiscal environment, vital. I therefore applaud the Government’s approach in loosening ring-fencing while retaining minimum standards to allow flourishing local innovation and improve the value that we get for the hard-earned taxpayers’ money that we spend on their behalf.

In the context of spending more money on early years, and thus getting better outcomes, I also applaud the free entitlement to 15 hours of early years education for the most disadvantaged two-year-olds. That is another example of managing to get money from the older part of the age range to the younger part. I also strongly applaud the desire for increased qualifications in the work force and better leadership, especially through the National College for Leadership of Schools and Children’s Services, to ensure that we get more highly talented people into the work.

Of course, I welcome the 4,200 extra health visitors, targeted at very young age groups. I think we can all agree that the reduction in the number of health visitors in the past few years was a mistake. Reversing that and ensuring that there is universal coverage, and more health visitors, is very valuable.

[Mr Sheerman]

The hon. Gentleman made a good point. As soon as I realised that he was a member of the Public Accounts Committee I took great notice of his words. However, early years professionals and a qualified teacher will not be required even in the children’s centres that have full-day provision. Surely, if he believes in professionalism in the work force, he deplores that. On a visit on Friday, I found that people are giving up on the early years qualification, because they feel that it is no longer valued and will not be funded after 2012.

[Matthew Hancock]

It is important to have highly qualified people, but again, I would not make that mandatory for a centre because many people are highly qualified to work in and deliver early years education, but do not have the specific qualification. If people in, for example, the charity with which my hon. Friend the Member for South Northamptonshire is closely involved do not have that qualification because they have come to it through a different route, I would not want to put a barrier in their way. That does not mean that we should not have more professionally qualified people.

[Mr Sheerman]

Is the hon. Gentleman saying that it is okay for unqualified people to provide the professionalism in Sure Start centres? That seems to be happening in the schools sector—in free schools—recently. Do qualifications mean nothing in the profession any longer, according to the Government?

[Matthew Hancock]

Of course qualifications are meaningful, but does the hon. Gentleman claim that no person without the formal paper qualification is up to the job? I do not think so. Of course, a qualification is part of someone’s resumé and experience, but we should not be so bureaucratic about the piece of paper. We should look at the person’s ability and qualifications through their history.

[Andrea Leadsom]

I thank my hon. Friend for giving way again. On qualifications, in the charity with which I am involved there are people with PhDs in psychotherapy, and paediatricians, who have decided to move to working with the very young. It is nonsense to say that having a specific piece of paper uniquely qualifies someone to support early years.

[Matthew Hancock]

I agree wholeheartedly.

There is a consensus—I am glad that there is—about the need to focus resources on early years. There is much more difficulty with actually doing that, and several people will the ends without willing the means. I regret it when the subject becomes a political football, because almost all of us agree about the ends. Before the election, the right hon. and learned Member for Camberwell and Peckham (Ms Harman) went to Ipswich and said that Sure Start centres would be closed there. However, they are all open. It was a mistake to make that prediction, and she should withdraw it. Similarly, it is a mistake for the Labour party to argue that the amount of cash for the early intervention grant is falling when it is being kept flat. We should work together to achieve the ends, about which we all agree, in the difficult circumstances that the Government did not bring about, to ensure that we serve our children best and improve their life chances, cognitive abilities, skills and happiness. We should not create a political football, saying that we agree about the ends while disagreeing on the means to achieve them.

15:15

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

To close a building in a community can rob it of a useful resource, but to close a children’s centre robs a community of something far more precious—its future. We have heard many contributions about the value of Sure Start and our children’s centres, and differing opinions about the extent to which they have been successful, but there has been general consensus that the Sure Start programme has been a success and ensured that children get the right start in life.

I have visited all the children’s centres in my constituency and been struck by the many stories of the parents and grandparents who take their young ones to them, and have benefited from them more than from many other services that our local authorities provide.

I will be party political in my speech: Conservatives are robbing families in my constituency of the chance of a better future. As my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) said, it is a matter of record that the city of Liverpool has the greatest need but is getting the biggest cuts. To those who need the most will come the least. My first question to Government Front Benchers who are present—and to Treasury Ministers who are not—is to ask what they have against the children of my constituency. [Interruption.] Yes, it is.

At least the House and the country can see what the Government’s priorities are. As my hon. Friend the Member for Liverpool, West Derby said, even if Liverpool had the average level of local authority cuts, my city would get £26 million more than it currently receives—enough to save the Sure Start centres at Childwall and Woolton, and Church and Mossley Hill, which are today threatened with closure.

[Claire Perry (Devizes) (Con)]

Will the hon. Lady give way?

[Luciana Berger]

No, I will not give way to the hon. Lady, who has only just joined the debate. I have been here for two hours.

If we take out the money allocated to Liverpool schools, Ministers have decided to cut the money for children and families by 35%. In the city with the greatest need, more than a third of the budget for children and families is being shed.

We all support efficiency and back-office cost savings, but I asked the Minister in a named day question on 15 February what the average back-office costs for a Sure Start centre are. I am still waiting for a response.

[Matthew Hancock]

I am puzzled; I hope I will not be shocked. I know that Liverpool council’s total spending power is falling by 15% over two years in real terms. The hon. Lady has just claimed that spending on children’s services is falling by 35%. Is it true that Liverpool council—

[Mr Graham Stuart]

A Labour council.

[Matthew Hancock]

Is it run by the Labour party? Is it true that that council is cutting children’s services by so much more than the total overall cut?

[Luciana Berger]

The grants to children, which are not allocated to schools, are being cut by 35% in Liverpool by the Government. [Interruption.]

[Karl Turner (Kingston upon Hull East) (Lab)]

By the Government, not the council. It is no good Conservative Members shaking their heads.

[Luciana Berger]

Let me get back to my point about back-office costs. How much can be saved in back-office costs from a Sure Start centre that has a part-time co-ordinator and one receptionist? I asked that question because of the heartbreak and concern that this matter is causing parents and grandparents in my constituency, and I want to share the strength of their feelings with the House. I have received many letters and e-mails in recent days, as I am sure other right hon. and hon. Members have. These are the voices of the communities who do not feel that they are “all in this together”, and the voices of parents who feel that they have been singled out for attack.

Wendy told me:

“I was devastated to hear that my local children’s Sure Start centre at Woolton and Childwall is in the pipeline for closure. As a new mum I have found the centre to be extremely supportive and a vital service for the community. The staff have always been brilliant and extremely informative. It is also a great opportunity to meet other parents.”

Kate said:

“Sure Start have responded well to the local needs. They recognised the presence of a number of families with twins locally, and promptly provided specific twin baby classes and a multiple birth support group. It is hard to express how important these groups are. As a family with twins, you are excluded from some other activities (e.g. swimming) and simply struggle to take your babies to anything that is not well set up to cope with twins. And yet, as a mother at home with multiples, your need to get out and stimulate the kids is even greater. Our local Sure Start centre is a haven for us!”

Helen wrote:

“The children’s centres are important in our communities and help to give our children the best possible start in life”;

and Emma wrote:

“the staff at Church and Mossley Hill Sure Start are some of the most skilled and committed I have ever met (and I have more than 10 years’ experience working in education). Church and Mossley Hill Sure Start is an over-subscribed, thriving hub of support for parents and babies in south Liverpool…Church & Mossley Hill Sure Start has already built up strong and lasting links in the short time that it has been running.”

My inbox and letter bag have been swamped by many more messages like those.

[The Secretary of State for Education (Michael Gove)]

I should like first to take this opportunity to apologise for the delay in the answer to the hon. Lady’s named day question; I will investigate that on her behalf.

The hon. Lady is making a powerful case, and I join her in praising the hard work and dedication of the staff whom she has rightly praised. However, as she will be aware, funding for Sure Start children’s centres is distributed through the early intervention grant, which is calculated on a formula basis to take account of rural sparseness, need and—particularly—deprivation, according to working tax credit data. Obviously, we want to ensure that that formula is improved if necessary. Does she have practical suggestions for how the early intervention grant should change to ensure that the communities most in need receive what they deserve?

[Luciana Berger]

I thank the Secretary of State for his intervention. The cabinet lead for education in Liverpool, Councillor Jane Corbett, about whom I shall say more, has spent many an hour with local education practitioners, members of the community and Sure Start staff to talk to them about what can be done. I would welcome the opportunity to join representatives from Liverpool to meet the Secretary of State to discuss that.

[Michael Gove]

I am sorry to intervene again, and I am grateful to the hon. Lady for allowing me to do so. I am looking forward to visiting Liverpool on 28 March, and I am sure that I can extend the itinerary that the hon. Member for Liverpool, West Derby (Stephen Twigg) is shaping for me so that I have time to talk to the people concerned.

[Luciana Berger]

I look forward to the Secretary of State’s forthcoming visit to Liverpool.

From many pieces of correspondence with families in my constituency, I have learned that they cannot understand why, when they play by the rules—many are in work and paying their taxes—their most prized and precious asset is the among the first to come under the axe. Councillor Jane Corbett, whom I mentioned—she is Liverpool council’s education and children’s services cabinet member—spoke for so many in our community when she said:

“The Government is showing complete contempt for the youngest children in Liverpool by putting forward these politically motivated cuts. I cannot believe the lack of concern for children and families in Liverpool.”

Liverpool people have a strong sense of fairness. They know that the Government are not treating them fairly, and they will not forget it. If the Government want a big society, they need not look much further than the Sure Start centres at Childwall and Woolton, and at Church and Mossley Hill.

[Mr Graham Stuart]

The hon. Lady was just asked how she would like the deficit impacts to be dealt with on a local authority basis, and said that she would welcome a meeting. However, if there were a Labour Government, how would the money have been divided up? Undoubtedly, under a Labour Government, there would have been pain in children’s services, as in other areas, just as under a coalition.

[Luciana Berger]

I will come to what needs to happen in the final part of my speech.

To go back to my previous point, the Government seek a big society, but we already have that—in the two Sure Starts that are under threat of closure. We have committed staff, engaged parents and fantastic children. However, if we are looking for a big betrayal of children’s hopes and futures, we need look not much further than those on the Government Benches.

My hon. Friends have spoken previously about pledges that were made before the election, and I want to repeat those in this debate, because those important points have not been made today. The day before the election, the Prime Minister said:

“Yes, we back Sure Start. It’s a disgrace that Gordon Brown has been trying to frighten people about this. He’s the Prime Minister of this country but he’s been scaring people about something that really matters. Not only do we back Sure Start, but we will improve it.”

Also on the day before the election, the Deputy Prime Minister said:

“Sure Start is one of the best things the last government has done and I want all these centres to stay open.”

On behalf of all parents and children in the communities in my constituency who today depend on Sure Start in these challenging times, and those who will depend on it in future, I urge the Government, the Prime Minister and the Deputy Prime Minister to honour the pledges that they made the day before the election. As my right hon. Friend the Leader of the Opposition said earlier to the Prime Minister, it is not too late to ring-fence the money to save our Sure Starts.

15:19

[Mr Andy Slaughter (Hammersmith) (Lab)]

I have raised the cuts in Sure Start provision in my constituency with the Minister on a number of occasions, but I make no apology for raising the matter again today. She will accept that this is serious and that I am very concerned. They are the most substantial cuts in public services so far in Hammersmith—from what I have heard today, there are some horrific stories from around the country—and the cuts in my constituency are the largest proportionately anywhere, in that nine of 15 centres will close.

When the Minister responds to the debate, I want her to answer this question, which I have put to the Chair of the Education Committee and others. What is the proper role of the Government in local authorities that do not do what the Government say they should do? Given all the talk of localism, and the fact that the Government are happy to intervene when they think that councils are not clearing snow quickly enough or emptying bins often enough—[Interruption.] I am directing my comments to the Minister, who I hoped would listen to them, but apparently she will not—[Interruption.] I will pause, if you do not mind, Madam Deputy Speaker, until the Minister pays attention, given that I am asking her a direct and specific question. She persists in talking to her colleagues and not listening, which is somewhat discourteous. I am talking about the majority of services for the under-fives in my constituency being cut by her Government, so she could at least have the courtesy to listen to my comments.

[Sarah Teather]

I sincerely apologise for not listening to the hon. Gentleman—I was trying to hear when this debate was going to wind up and when I would begin my speech—but he now has my full concentration.

[Mr Slaughter]

I am grateful for that. The Minister has said in previous debates that she has concerns about what is happening in Hammersmith. Her view—she has expressed it both in answer to parliamentary questions and in debate—is that there is sufficient money in the early intervention grant to preserve the network of Sure Start centres. I am sure she will repeat that view today, in spite of a cut of about 13% coming from central Government—certainly my Conservative council has said that the cut in Sure Start funding through the early intervention grant is 12.9%.

Given that we are talking about what are already pretty lean organisations, as my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) said, we could argue about whether even a 13% cut can sustain the current professional network. However, the Minister has set out her stall on that, so I will address the issue locally, because even on the basis of the cut of about 45% that we are facing—a cut that has been revised slightly downwards—the preservation of Sure Start in Hammersmith is demonstrably unsustainable.

Without going into too much detail, there are one or two points from my local examples that bear analysis, because similar things may be happening elsewhere in the country.

[Mrs Hodgson]

Before my hon. Friend moves on, I would like to get some clarity on the assertion, which we keep hearing, that the early intervention grant is being protected in cash terms. When we look at the technical note, which I continually refer to—I even carry it round in my handbag, to have it handy at every opportunity—we see a £311 million in-year cut for 2010-11. It looks as though the grant is being protected in cash terms, but a £311 million in-year cut is being taken off the bottom, so it is not protected in cash terms at all. When we bear that in mind, we see that we are talking about a 20% cut over three years.

[Mr Slaughter]

Indeed, and with a 13% cut in the first year for my area. However, if my hon. Friend does not mind, I want to leave her and the Minister to debate that point, which is a valid one. We heard a disingenuous speech by the hon. Member for West Suffolk (Matthew Hancock), who implied that there was no need to make cuts of that order and that the Government were in some way protecting Sure Start. On the figures that my hon. Friend has given, that is not true around the country. However, if she does not mind, I will leave that point because, from my perspective, we would be grateful for a 13% cut—if I can put it that way—rather than what is actually happening.

[Gordon Birtwistle (Burnley) (LD)]

Will the hon. Gentleman expand on this 45% cut? It has been said that the cut adds up to 15% over three years, so has he not got it the wrong way round? It is not 15 multiplied by three; it is 15 divided by three. Could he expand on how he has got to 45%?

[Mr Slaughter]

If the hon. Gentleman bears with me, I am sure that he will get the point that I am coming to, but, in essence, because the money is not ring-fenced, my local authority has voluntarily chosen, in the face of what it says is a 13% cut from the Government, to make a 45% cut in the first year. That came about in the following way, which bears some analysis.

[Karl Turner]

It seems that the temptation for Government Members is to say that councils are making decisions for political effect, but that is simply not true. My Lib Dem local authority settled its budget last Thursday, and the cut to Sure Start children’s centres was huge—something like more than 50%. That was certainly not done for political effect, because as a Lib Dem council it was already very concerned about the prospect of annihilation at the May elections.

[Mr Slaughter]

I am grateful to my hon. Friend, but I shall now try to make some progress.

On or about 27 December—a time when we are all assiduously reading Government and council documents—my local authority published a report on family support, indicating what funding would be available over the next financial year. The report addressed Sure Start—not directly, but obliquely—first by rubbishing Sure Start provision, saying that although the centres were

“clearly popular with families, and seem likely to have some preventive impact, we have much less clear evidence about the degree of impact this has—including on the ultimate number of children falling into child protection”,

and that

“early studies showed no clear evidence of impact on early school results”.

That might come as a surprise to Members on both sides of the House, given that we heard my hon. Friend the Member for Liverpool, Wavertree earlier quoting the Prime Minister and Deputy Prime Minister—certainly before the election—expressing their strong support for Sure Start. However, those rather vague and grudging comments were used as the basis for reducing Sure Start funding by over 50%, with the council report saying:

“However, it is not likely under this scenario that LBHF could continue to directly fund more than 6 Children’s centre teams. In any case we would no longer seek to directly run centres”,

adding that it aimed

“to maintain some provision at most centres, through small amounts of pump-priming funding.”

In the financial section of the report, however, no money whatever was provided for such pump priming; money was provided simply to keep the remaining six centres open.

Perhaps unsurprisingly, by the time report came to committee and was due to be dealt with on 10 January, there was what might be called “a row on the town” in that a large number of people were concerned about it and turned up at the meeting. Indeed, my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) was one of them, so she might want to comment further in her own speech. At that meeting, the authority, faced with great popular disapproval, told people that they had misunderstood the position as no centres were going to be closed, and had misunderstood that the decision had already been taken as consultation was about to be launched. That is what we were told. That would have sounded quite good, save for the fact that the report was then passed in its entirety, including the 50% cut to the budget. We were in the peculiar position of being told one thing when a decision had been taken that was entirely contrary to it. The situation became even more complicated when, later in the same week and rushed out in response to public demand and other factors, a consultation paper was published, with an extra £19,000 slipped in, which turned out to be the pump-priming money—the £19,000 that was going to the Sure Start centres under threat of closure.

Leaving aside the fact that this was shambolic, chaotic and no way to run anything, let alone a local authority, we need to reflect on the reasons for this process of decision making. There were three. The first was connected to public relations. By putting £19,000 into centres that previously had no money at all, the authority could say to the general public and the media, who by this time were taking a strong interest in the issue, that it was not closing the Sure Start centres. Secondly, the consultation was done quite successfully, but it confused the parents and users of those centres, who were told that the centres were not closing but staying open as a result of this £19,000. Thirdly, and perhaps most importantly, somebody had bothered to look at the regulations, so a scrutiny report was published at the same time, making the observation:

“Local authorities have duties under the Childcare Act 2006 to consult before opening, closing or significantly changing children’s centres, and to secure sufficient provision to meet local need”.

The authority realised that it would be subject to judicial review if the consultation process did not happen. I suspect that it will still be subject to judicial review because consulting after the decision has been made is not the best option.

[Mrs Hodgson]

I read that same paragraph in a copy of a letter from the hon. Member for Mid Dorset and North Poole (Annette Brooke), which was a response to a letter to the Minister of State, Department for Education, the hon. Member for Brent Central (Sarah Teather), from the all-party Sure Start group. I was curious because I thought it sounded like closing the stable door after the horse had bolted. Once the budget cut has been made, the consultation does not matter, because if the consultation showed that people wanted to keep the centres, where would the money come—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We need much shorter interventions, as there are more Members wishing to participate in the debate.

[Mr Slaughter]

The whole situation is clearly nonsense. The belated process of consultation closed on Monday 28 February, but the budget for the year was decided at the budget council meeting on 23 February. Nobody is fooled by this, and I suspect that the divisional court will also not be fooled by it when it comes to look at the decision-making process over Sure Start in Hammersmith and Fulham.

There is a fourth reason for the last-minute change of heart, whereby no money suddenly became £19,000. Another paragraph of the later report said:

“We understand that there is no expectation of claw back of capital spend on children’s centres”—

that is, by the Department for Education—

“unless the buildings are no longer used for the services for under fives and their families. We are confident that the proposal outlined above will satisfy DfE requirements.”

So one of the officers said that if the grant was withdrawn as intended and as decided, the Minister of State would come round, not to see what wonderful work had been done but to take back the buildings that had subsequently closed.

Two centres are closing in the ward where I live, in a substantial area of deprivation. About a minute’s walk from my home is Wendell Park children’s centre. A number of parents whose children attend the centre were at the seminar held this morning by the shadow Secretary of State for Education, my right hon. Friend the Member for Leigh (Andy Burnham), and I met them afterwards. They are campaigning to keep their centre open, and they are under no illusion—

[Michael Gove]

Will the hon. Gentleman give way?

[Mr Slaughter]

No, I will not give way to the Secretary of State, at least not at the moment. If he wishes to participate in debates such as this, perhaps he should be present from the beginning. Given that when I have tried to raise this and other education issues in my constituency with him over the past few weeks his replies have been flippant and have not addressed those issues, I am in no particular hurry to hear his views on this subject. I may give way to him if I have time at the end.

[Michael Gove]

Forget it. [Laughter.]

[Mr Slaughter]

I may give way later.

[Michael Gove]

I was only trying to be helpful.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I think that we had better continue with the debate.

[Mr Slaughter]

I think that I should sometimes say what I feel in these debates.

As I was saying, the Wendell Park parents whom I saw this morning were under no illusion that reducing a budget of £250,000 to £19,000 meant anything other than that the centre would be closed. Cathnor Park children’s centre, which is about half a mile from where I live and which currently has a budget of £473,000, is also to have a budget of £19,000 in the future. The 100 parents who turned up to a meeting at that centre two weeks ago—which none of the Conservative councillors could be bothered to attend—are similarly under no illusion about what is happening. Notwithstanding the weasel words that we have heard from certain Government Members, what is happening is that children’s centres are closing, their budgets are being withdrawn, the centre is being withdrawn and 45% of funding is being withdrawn. That is the future of Sure Start in my constituency.

Does the Minister of State take any responsibility for what is happening? I understand the rhetoric about localism, but I also understand that if we are to take seriously what the Government said before the election—that they support Sure Start and want the network to be maintained—and if local authorities, of any political complexion but in this instance my Conservative-run council, are cutting budgets by almost 50% and reducing the service by more than half in terms of the number of centres that remain open, the Government have a clear duty to intervene.

Although its budget has already been set, it is still possible for Hammersmith and Fulham to look for resources within the funds that have been allocated. This is a council that spends several million pounds on publicity. It would not be difficult for it to find enough resources to keep the Sure Start centres open, albeit at a reduced level for the time being. At present, all the centres that face closure are considering how they can save money, examining business plans and looking at ways of maintaining the service, but people should not insult our intelligence by claiming that although there is no budget and no service, centres are somehow being preserved because buildings are still standing—if they are not also withdrawn by the Government.

I ask the Minister of State to address directly an issue that she has already addressed obliquely. What is she going to do about local authorities which, despite what they have heard Ministers say about Government policy on Sure Start, persist in shutting down what ought to be a national service of which we should be proud—as I thought we all were—because they do not consider it to be a local priority?

15:45

[Steve Rotheram (Liverpool, Walton) (Lab)]

I am delighted to follow my hon. Friends the Members for Liverpool, Wavertree (Luciana Berger) and for Liverpool, West Derby (Stephen Twigg) in speaking in this important debate. The fact that three Labour MPs representing Liverpool constituencies have contributed shows the depth of feeling in our city about the issue under discussion.

In a move designed to detoxify the Tory brand and cultivate cuddly, compassionate Conservatism—allegedly big on children and the family—the current Prime Minister told Tory acolytes back in 2009:

“Sure Start will stay, and we’ll improve it.”

Actions speak louder than words, however. Eighteen months and one election later, 250 children’s centres are due to close nationwide and some 2,000 will be forced to reduce their services. Sure Start as we know it looks set neither to “stay” nor “improve”. This is another example of Cleggism, if one was needed: saying one thing, but doing another.

[Mr Graham Stuart]

Will the hon. Gentleman give way?

[Steve Rotheram]

No, not just yet.

It is glaringly obvious that the Government do not understand the holistic nature of the Sure Start children’s centres—their qualitative as well as their quantitative value. Yes, they are about providing a co-ordinated range of practical facilities and services, but, equally importantly, they are also about offering social and emotional encouragement and support, often to parents living in some of the most disaffected, marginalised and hard-to-reach communities in the land.

Sure Start children’s centres do not cater only for the most disadvantaged—whom our Cabinet of multi-millionaires clearly finds so tiresome. They also support hard-working low and middle-income families. Ministers would do well to remember that. Isolation, chaos and dysfunction are both causes and symptoms of family deprivation and marginalisation, and are not the preserve of the least well-off.

I fully acknowledge that the children’s centre programme, which is still in its infancy, is far from perfect. The quality of provision is sometimes patchy, there is room for standardisation and improvement, and although all the indications are good, it is much too early to evaluate the benefits fully.

[Claire Perry]

First, may I apologise for joining the debate late? I was attending a Justice Committee meeting.

I agree with the hon. Gentleman about the need for these centres, but Wiltshire has had a 25% cut in its revenue support grant yet not a single centre is closing—and no library is closing either, so why is Liverpool choosing to shut its centres? This is a matter for the local council, not central Government.

[Steve Rotheram]

You just don’t get it, do you? I do not know what the settlement is in your area. [Interruption.] Well, let me tell you that the total settlement in Liverpool is—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Members must address each other through the Chair.

[Steve Rotheram]

I apologise, Mr Deputy Speaker. To address the hon. Lady’s point, Liverpool is the most deprived area in the country—I have said that before in the Chamber—and it is facing the biggest cuts not just in the policy area under discussion, but in all areas. I invite both the hon. Lady and the Secretary of State for Education to come and see my constituency. It is not only in the most deprived area in the country; it is one of the most deprived constituencies in the most deprived area in the country.

[Stephen Twigg]

As my hon. Friend has said, Liverpool is the authority with the greatest need. Does he agree that Liverpool city council is to be commended for focusing its cuts first and foremost on back-office functions, halving the number of senior managers, cutting the chief executive’s pay and reducing bureaucracy, yet even after that it has had to make service cuts?

[Steve Rotheram]

I thank my hon. Friend and fellow Liverpool Member of Parliament for the points he makes. I should perhaps put on record the fact that until May I am still a Liverpool city councillor, so I understand the difficult decisions those councillors are having to make. This is an open book: anybody can come to Liverpool and have a look at the situation we face—councillors’ unenviable task of going through the budget and trying to decide which services to cut.

We are often told by Government Members that we are “deficit deniers”. That is the mantra that everybody uses when they come to the Dispatch Box—the Prime Minister did it again today. If they do not think we should be cutting children’s centres or any other service in Liverpool, they should tell us what they think we should be cutting. It is their Government who have slashed funding to our city right across the board. We have been hit the hardest, yet we are the most deprived. [Interruption.] What was that? I am sorry, Mr Deputy Speaker, I thought somebody on the Government Back Benches said something.

[Luciana Berger]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We will have less noise from the Back Benches, unless it is an intervention. I have two people standing. Steve Rotheram, I do not know whether you are giving way. I call Luciana Berger.

[Luciana Berger]

Did my hon. Friend see the report on BBC news only the other evening in which an independent efficiency expert, Colm Reilly from PA Consulting, singled out Liverpool city council for the work it had done to make £70 million of efficiency savings so far, with £30 million to come in the next couple of months? He said that, despite all these efficiency savings, there was no way that Liverpool city council could protect the front line.

[Steve Rotheram]

My hon. Friend is of course right, and Colm Reilly was not the only one to say that. The Secretary of State for Communities and Local Government praised Liverpool city council for its efforts to come up with a budget, given the circumstances it finds itself in.

As I said, the indications are good, but it is much too early fully to evaluate all the benefits of Sure Start. That is precisely why we should be giving it a fair chance to bed in, rather than hobbling it before it has barely taken off.

[Bill Esterson]

I add my own congratulations to Liverpool city council for the way in which it has tackled the almost impossible task of managing the budget and protecting Sure Start and other key preventive services. I use this opportunity to call on Sefton council, which has its budget meeting tomorrow night, to follow Liverpool’s lead in protecting Sure Start and other vital services.

[Steve Rotheram]

As we have heard, the Government and certain Members just do not get any of this, but actually, Liverpool city council does get it. It is much maligned of late by the Con-Dems, of course, but, no thanks to the coalition, and despite an 18% cut to its early intervention grant, from which Sure Start funding must now be drawn, it has managed to secure the future of 22 of its centres and will work hard through its consultation process to find ways of avoiding the closure of the four that are threatened, which my hon. Friend the Member for Liverpool, West Derby referred to earlier.

However, this is no vindication of the Government’s approach, as unfortunately, service reductions are inevitable. City-wide, under-fives and their families will suffer as a consequence and, needless to say, Liverpool city council has been forced by the Government into the iniquitous position of having to take from Peter to give to Paul. Shuffling reduced resources has inevitably meant that protecting children’s centres has come at the price of other vital services.

I am particularly concerned about the broader, vaguer proposal tucked away in the coalition agreement to introduce payment by results into the Sure Start equation. Market forces bring with them risks, competition and inconsistency. People such as the hon. Member for West Suffolk (Matthew Hancock) may disagree, but in my book there is no place for any of those in the delivery of services to children and young families.

All this would of course be all well and good if the Government could present a reasoned, evidence-based case for change, but as usual they cannot. In fact, in their arrogance they appear to have gone out of their way stubbornly to ignore popular opinion and expert advice, proffered well in advance of their budget deliberations.

[Mr Graham Stuart]

The evidence that we need to change the system of accountability is available, both from the National Audit Office and from Durham university, whose team analysed primary schools and the young people attending them over seven or eight years. It found that the readiness for school of young people from the poorest families was not improving, despite all the expenditure by the previous Government. Therefore, moving to payment by results, so that local authorities and children’s centre staff are absolutely focused on transforming the life chances of children, is precisely what we need to be doing, and I think the hon. Gentleman should think again.

[Steve Rotheram]

What a bizarre argument. Saying that an area such as Liverpool, which is among the most deprived, is having its money reduced and that that will somehow result in improved services to the groups that the hon. Gentleman is talking about is bizarre. As we have heard, almost a year ago the Children, Schools and Families Committee, as the Select Committee was known then, published a progress report on Sure Start children’s centres, having conducted a lengthy inquiry involving dozens of expert witnesses and practitioners—apparently, Jamie Oliver was the only one to turn down this fantastic opportunity. The Committee’s analysis was rigorous and measured, and it was firmly rooted in common sense and fairness. Three of its recommendations are worth highlighting again today.

First, the Committee warned that any reduction of funding

“would undermine the programme to an unacceptable degree and jeopardise the long-term gains from early intervention… we would not wish authorities to be bequeathed an underfunded statutory duty.”

[Mr Sheerman]

May I help my hon. Friend, because he has just taken an intervention from the Chairman of the current Select Committee? I have read the Government’s response to our original response and it states:

“We are aware that Durham University published a report recently which suggested that Government investment in Sure Start had not delivered improvements in early language and numeracy development. We do not share that view—the 2010 Foundation Stage Profile results showed that the proportion of young children achieving a good level of development had increased by 4 percentage points compared to 2009”.

We must therefore balance what the Government actually said against what some people think they said.

[Steve Rotheram]

My hon. Friend is absolutely right to make that point.

Secondly, the Committee urged the Government to give the programme time to bear fruit, given that even the oldest tranche of centres was only about six years old at that stage. The Committee said:

“It would be catastrophic if Children’s Centres were not afforded long-term policy stability and security of funding while evaluation is ongoing.”

Thirdly, the Committee categorically urged against the removal of ring-fencing, saying:

“We consider that it would be unwise to remove the ring-fence around Children’s Centres funding in the short or medium term; putting Centres at the mercy of local vicissitudes would risk radically different models and levels of service developing across the country, with differences out of proportion to the variation in community needs.”

Some Tory Members served on that Committee, so this was a cross-party report.

[Bill Esterson]

I received a letter from the chair of the governors at the St William of York Catholic primary school. They also manage the Thornton children’s centre in Crosby and they tell me that they have seen a marked improvement in the school readiness of the children who attend the centre and whose families use it compared with that of those who do not. That kind of evidence is as important as what is in the Select Committee report or elsewhere. It puts the record straight in respect of what the Chairman of the Select Committee said.

[Steve Rotheram]

Of course evidence, anecdotal or otherwise, is always a useful tool.

The Government’s response to the Committee’s recommendations was to rush headlong into decisions, to cut funding and to remove the said ring-fencing. In short, the response was to dismiss entirely the logical, considered advice of those best placed to offer it, who included some of their own Members. I know that the Prime Minister is not a man for detail, but you know a policy is truly shambolic when even the Prime Minister fluffs his own case and defence. On 9 February, he arrogantly told the House: “On Sure Start, the budget is going up from £2,212 million to £2,297 million. The budget is going up. That is what is happening,” but that was downright wrong. Not only did he confuse the Sure Start budget with the broader early intervention grant in which it is being subsumed, but he used 2012-13 figures. The EIG is being cut this year by 11%—down from £2,482 million to £2,212 million. So the numbers were out, the dates were out and the argument was out. What hope for our children in the face of such cavalier amateurism?

The key to Sure Start programmes lies in the name, but thanks to the coalition’s cynically calculated decision to pass a poisoned chalice on to local authorities in the guise of localism, millions of babies and toddlers are now set to miss out on the sure start in life they might otherwise have enjoyed. I truly wonder how the Ministers responsible—fathers all—can sleep soundly at night.

16:01

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

I thank the Chair of the Education Committee for securing this timely debate. We served together on the Children, Schools and Families Committee in the previous Parliament and he is already making a name for himself. Although I am very grateful to him for securing the debate, I doubt that the Minister will be quite so grateful given the opportunity it has created for colleagues to air their experiences of the impact on the front line of the decisions that she and the Secretary of State have taken about funding and the removal of ring-fencing.

The debate is timely for several reasons, but primarily because many local authorities are taking decisions that they do not particularly want to take on the future of children’s centres. That is especially true of Liverpool. Contrary to some of the disgraceful comments that have been made in the past week and even in this debate, those decisions are not politically motivated. Liverpool is having to take them because of the terrible settlement it has received, which is one of the worst in the country even though it is the most deprived local authority in the country.

The debate is also timely because it fortuitously follows a seminar on Sure Start that was hosted in Parliament this morning by my right hon. Friend the Member for Leigh (Andy Burnham), as well as the 4Children conference at which the Minister of State and my right hon. Friend the Member for Birkenhead (Mr Field), who is not in his place, also spoke. I understand that she thanked them this morning for their constructive criticism, so I hope that she will take my remarks in the same spirit.

If the Minister had been able to come to the seminar, I am sure she would have found it very useful. We heard from a number of parents and others involved in children’s centres about what services mean to them and their communities and about the impact that budget cuts could have and are having. We heard from everyone, including some of the Minister’s colleagues, whom we were pleased came along. We heard, as we have heard in this debate, about the difference that good children’s centres can make to the lives of children and parents. We heard from Willie Wilson, whose children attend the Pen Green centre in Corby. He told us how being involved in its Sunday dads group had helped him to overcome his mental health issues and how much his children enjoyed using the centre. He said:

“Everything good in my life in the last five years has been down to Pen Green Children’s Centre”.

Those sentiments were echoed by a young mum who told us how her local centre had helped her and others to get over post-natal depression. Pen Green is facing big cuts to its funding and might have to cut services. I understand that the Minister’s colleague, the hon. Member for Corby (Ms Bagshawe), has said that that will happen over her dead body. I do not know whether the Minister just caught that but I think the Secretary of State did and I hope that they will talk to the hon. Lady about that, as such comments are not necessary.

The panel at the seminar agreed with something that the Minister will have heard at her engagement this morning: the ring fence to Sure Start funding is key to the stability of the service on the front line. It also agreed that it is no good keeping centres open if they are not providing a good quality service.

We learn, as we have today from Hammersmith and Fulham, the Prime Minister’s favourite council, that centres that are apparently being kept open will have to survive on a budget of £19,000 a year. No doubt the Minister will agree that that will not go far. It is hardly enough to pay for a caretaker, let alone the running costs and a work force. If we want good results from centres, they need the funding and the stability of funding to employ qualified staff and provide quality services. Cuts and the removal of ring-fencing will not help.

The Minister has been conspicuous by her absence from the past two meetings of the all-party Sure Start group, although we were pleased that the Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton) was present. The hon. Lady recently got round to replying to a letter sent from the group in December, to which I referred earlier. Given the Minister’s absence from the meeting as she was ill, I was surprised to receive, during the meeting, a Google alert informing me that she had published a local media release that very afternoon criticising her local Labour council in Brent for closing or downgrading

“10 out of 20 children’s centres”.

Apart from that not being strictly true—I have checked—I thought it was a bit rich that the hon. Lady should be criticising her local council, which is having to deal with a real-terms cut to its budget for early intervention of almost £10 million over three years, or 18%, according to figures that I have from the Library. That is a cut that she handed to the council, and a decision that she made. She even had the sense of humour in that press release to portray that as a rather good deal. I doubt whether many of her constituents will see it that way, even if Brent council manages to protect the majority of front-line services.

We keep hearing the refrain that there is enough money in the early intervention grant to maintain the children’s centre network. We heard it from the Prime Minister earlier, and a couple of weeks ago he even said that funding for that grant is going up. Both those statements are misleading to the public. The early intervention grant might be increasing by a small amount between 2011-12 and 2012-13, but from the baseline—the budget that councils originally had for services that will now be provided by that fund—there is a significant cut. The EIG covers more than 20 other funding streams, as well as children’s centres, and according to the Department’s publications it is being cut by a total of almost £1.4 billion over three years in cash terms. In real terms, Commons Library research shows that that will be more like 18%, with the worst-hit areas seeing cumulative cuts of more than 22%.

Funding for children’s centres is not ring-fenced within the early intervention grant, which itself is not ring-fenced from the rest of the local authority’s budget, so there is nothing to stop that money being used to fund things entirely separate from what it is supposed to be for. There is therefore no way in which the Minister can realistically tell us today that she is protecting Sure Start. She will call it localism, no doubt, but I call it naiveté in the extreme. Why be a Minister if all she can do is cross her fingers and hope for the best?

I am sure that very few local authorities want to cut budgets for children’s centres or other early intervention schemes, but given the scale of the cuts to their budgets across the board, many of them will have no choice. If not children’s centres, do they cut breaks for disabled children, programmes to combat teen pregnancy, family intervention or targeted mental health in schools, all of which save money in the long term, which is the purpose of early intervention projects? We all know the old adage about a stitch in time saving nine. In short, cutting early intervention funding is ill thought out and will create long-term problems for the sake of short-term savings.

[Mr Graham Stuart]

I am grateful to the hon. Lady, all the more so after her kind words. It is early days and, as I said in my remarks, I hope we do not see the dismantling of a service that is still embryonic. It is not about buildings or budgets, but about outcomes. How does she think we can best ensure that it delivers the outcomes we want? Would she support a movement to payment by results, for instance?

[Mrs Hodgson]

I would support a return to the ring fence, if not for the whole early intervention grant, then specifically for the Sure Start element within it. [Interruption.] The hon. Gentleman wanted my opinion and I have given it. The proposals are also contrary to the considered views of the Select Committee, which he now chairs, of my right hon. Friend the Member for Birkenhead and of my hon. Friend the Member for Nottingham North (Mr Allen).

The Minister of State seems to be continually distracted and keeps missing important points I am making. She has already had to ask the Secretary of State about my comment on the hon. Member for Corby, and I would not like her to miss anything else I say.

As I said, my right hon. Friend the Member for Birkenhead and my hon. Friend the Member for Nottingham North, whose opinions the Minister actively sought, have both championed the prioritisation of early intervention schemes such as children’s centres.

[Michael Gove]

The hon. Lady says that she would ring-fence funding for Sure Start but has not made it clear that she would increase the early intervention grant. The right hon. Member for Morley and Outwood (Ed Balls) has recently proposed a tax cut by not going ahead with the VAT increase on fuel. If she would ring-fence Sure Start and cut taxes on fuel at the same time, where would the money come from to support the other important services that she was generous enough to list earlier?

[Mrs Hodgson]

As I am sure the Secretary of State is aware, I am not shadow Chancellor; my right hon. Friend the Member for Morley and Outwood (Ed Balls) is. I will not be tempted to go outside my remit—[Interruption.] All I have said is that I would ring-fence the Sure Start element within the early intervention budget, as the leader of the Opposition said today. We have heard the Secretary of State say so many times that he has given councils enough money to maintain their current network of children’s centres—that comes from a direct quote—so if they have enough money within the early intervention grant, why should we be afraid to ring-fence the Sure Start element in it? It is not a spending commitment.

[Michael Gove]

The hon. Lady was kind enough to mention earlier that by her own calculation ring-fencing Sure Start within the current early intervention grant envelope would mean that other services would have to go. How will she protect those other services? Will she raise taxes, cut spending elsewhere or, as she said earlier, simply cross her fingers and hope for the best?

[Mrs Hodgson]

It is Ministers who are crossing their fingers and hoping for the best, not me. By making that comment, the Secretary of State has admitted that the early intervention grant is not big enough for the sum of its parts and that all 22 funding streams that feed into it cannot all be met. He has made that admission on the Floor of the House, and I am sure that Opposition colleagues are grateful for it.

[Bill Esterson]

Surely the point is more about what the Government should be advising local councils to do. Will the Government now come clean and give guidance to local councils on which services they should protect in the early intervention grant and the other restricted Government grants that go to local government, or will they continue to say that it is nothing to do with them and down to local councils?

[Mrs Hodgson]

That is a key point, and I am sure that the Minister will refer to it in her closing remarks.

The Minister has said on several occasions that she wants children’s centres to be paid by results. That does not necessarily seem a bad thing, until it is considered that, nine times out of 10, improving results will need up-front funds, or at least guaranteed budgets. I completely accept that we need to ensure the best value for taxpayers’ money and that outcomes are what matter, but if payment by results means holding significant chunks of money back from budgets, centres will have to concentrate more on managing their funding, which detracts from the quality of service they can provide with reduced funds.

I hope that the Minister will be able to tell us something about payment by results. In the letter to the hon. Member for Mid Dorset and North Poole (Annette Brooke), which I referred to earlier, the Minister said that she would do so in early 2011. Now, when I look at a calendar, I see that it is definitely early 2011. It is actually March 2011, so I look forward to hearing about payment by results.

The Minister will no doubt tell us that that funding is targeted at those who need it most, but Library research shows the opposite. The brunt of the cuts to the early intervention grants seem to be borne by local authorities with the greatest number of children living in poverty, as my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) just said with regard to Liverpool city council. Local authorities such as Knowsley, Sefton, Wirral and Sunderland, which covers my constituency, are all in the top 10 for cumulative cuts, while authorities such as Cambridgeshire, Richmond upon Thames and Hampshire—all sounding leafy and suburban—are among those that come off best. Can the Minister explain the difference between her words and actions?

There is so much more that I would like to say, but I want to hear from the Minister. To echo the former chief executive of the Daycare Trust, in speaking to the Select Committee, Sure Start

“has been not just a step in the right direction but thousands of steps”.

Every closure, every child whose provision deteriorates, every parent who misses out on the help to improve their parenting, and every early years professional forced to abandon the sector because the jobs have disappeared represents another step backwards from the creation of a society in which every child has the best possible start in life.

I should like to believe that the Minister and her colleagues think the same, but in so many other areas the warm words that we heard before the election, from the Prime Minister, the Deputy Prime Minister and others, and since have not matched the actions of this Tory-led Government. Promises to protect Sure Start have been broken—plain and simple broken promises. Cash-starved councils are being forced to make unpalatable decisions that look set to deprive many thousands of families of the services that they value highly and, in many cases, rely upon, because of a decision that the Minister and her colleagues have made.

[The Lord Commissioner of Her Majesty's Treasury (James Duddridge)]

Two minutes over.

[Mrs Hodgson]

I did give way a number of times to Government Front Benchers.

Not only that, but many areas with the greatest need are seeing the biggest cuts. The rhetoric does not match the reality, so the Minister needs to make a decision: she should either be honest about her failure to protect children’s centres or take action to make good her words.

16:17

[The Minister of State, Department for Education (Sarah Teather)]

I thank my hon. Friend the Member for Beverley and Holderness (Mr Stuart), the whole Select Committee and, indeed, the previous Chair of the Select Committee, the hon. Member for Huddersfield (Mr Sheerman), for the important report that we are debating today, and for giving the House the opportunity to discuss the future of Sure Start children’s centres.

The report has been timely and helpful as the Government develop their approach to early years. The debate has on the whole been very good and constructive, with focused speeches about the future direction of policy, but the report demonstrates the extent of the all-party support for children’s centres as vital hubs of excellence in delivering integrated services to families, particularly those who most need support and advice. I have listened with interest to Members, and I shall try to address as many issues and concerns as I possibly can, as well as picking up on the key areas of our response to the Select Committee report. I am mindful, however, that I now have very little time left in which to speak.

The start of the debate was particularly important, because the right hon. Member for Birkenhead (Mr Field) reminded us why we are debating the matter. Early years are the foundation for life. High-quality early intervention has the potential to turn around life chances, and poor experiences in early years, such as those to which the hon. Member for South Northamptonshire (Andrea Leadsom) referred, can actually change the physical nature of the brain. The failure to develop relationships of attachment can affect a child for ever, not just in the first few years of life. That is precisely why the Government have prioritised spending in this area, as the hon. Member for West Suffolk (Matthew Hancock) discussed.

I was struck by the comments of the hon. Member for Washington and Sunderland West (Mrs Hodgson) about the importance of Sure Start in providing other support for families, not just for children. Let me be clear about this from the start. The coalition Government see Sure Start as vital to their work on social mobility: it is a key priority. Sure Start has proved itself to be a programme that has the capacity to be life-changing, and we want to build on its success. The Chair of the Select Committee said that he hoped we were not going to rip everything up. That is exactly what we are not doing. We are building on the good aspects of Sure Start, but, as the right hon. Member for Birkenhead said, trying to develop it to ensure that we focus, particularly with more evidence-based programmes, on the families and children who need our support most. We believe that the best way to do this is through greater local decision making and accountability, more involvement of organisations that have proven expertise in service delivery, and, specifically, more use of evidence-based programmes.

Our response to the Committee’s report clearly states that, in our view, the main purpose of children’s centres is to ensure that families get help when they need it and to tackle issues early to prevent costly problems from emerging later. We want children’s centres to provide the foundation for stronger early joined-up working offering universal services for all families and targeted services focused on the neediest of those families.

Several hon. Members spoke about the need for evaluations, so let me pick up on a few of those points. The Government have commissioned an evaluation of Sure Start children’s centres in England that runs until 2016 alongside the national evaluation of Sure Start, which is evaluating a wide range of children’s centres. A report on the cost-effectiveness of the earlier Sure Start local programmes will be published later this year. I hope that that will be very useful information, for which the Chair of the Select Committee, in particular, asked.

The introduction of payment by results will incentivise better local evaluation of the impact of centres on children’s outcomes. In response to the hon. Member for Liverpool, Walton (Steve Rotheram) and the Opposition spokesperson, I point out that when we begin trialling payment by results, some additional money will be going in to help us to do that. We will then learn from those trials to find the most effective way to roll out payment by results in future to ensure that we can incentivise children’s outcomes.

[Mrs Hodgson]

Will the Minister give way?

[Sarah Teather]

I am afraid that I cannot answer the hon. Lady’s question at the moment.

Children’s centres are a priority for us, so we have ensured that there is enough money in the system to maintain the network of Sure Start children’s centres through the early intervention grant, or EIG. The spending review announced that funding for Sure Start children’s centres would be maintained in cash terms, including new investment from the Department of Health for 4,200 health visitors to work alongside outreach and family support workers. I understand that many in the sector are concerned about the removal of ring-fencing. However, this is not about a lack of priority for the sector; on the contrary, it is a recognition of its growing strength and maturity.

The removal of the ring fence is not taking place in a vacuum. Across the piece, this Government are removing ring fences in many areas because we believe that the right way to make decisions is to trust people on the ground to decide how best to prioritise funding. In that way, we get much better decision making.

[Mr Graham Stuart]

Will the Minister give way?

[Bill Esterson]

rose—

[Sarah Teather]

I give way first to the Chair of the Select Committee and then to the hon. Gentleman.

[Mr Stuart]

The Minister said that the budget will be protected in cash terms, including the funding from the Department of Health for 4,200 health visitors. Will she spell out precisely what sums are coming from where and when they will be appearing in the budget?

[Sarah Teather]

I do not want to spell out exactly which bits of the EIG go to what, because I want local authorities to make decisions on the ground about the best ways to do that. As the hon. Gentleman says, the money for health visitors comes from the Department of Health. I will write to him to provide some information about that, because I do not have it here with me. However, I do not want to—

[Bill Esterson]

rose—

[Sarah Teather]

I will give way in a moment; let me answer one point at a time. The hon. Gentleman should not get too excited.

I do not want to spell out the details, particularly because when finances are tight there is an even bigger onus on us to ensure that we provide flexibility for local decision making. I do not think that we will get better decisions if I try to drive all this from Whitehall. We will get better decisions if local authorities can look at their provision and work out how they can best rationalise it based on local need.

[Bill Esterson]

I say to the Minister that I do get excited about protecting services on which families in my constituency depend. She made the point about local decision making, but there is a difference between making decisions on how to deliver the detail of services and deciding whether to deliver those services. That is the crucial issue in relation to ring-fencing. I call on her again to reconsider the decision on ring-fencing so that councils have to deliver services, even if they can decide how to deliver them.

[Sarah Teather]

I will not reconsider the decision on ring-fencing because I believe that it is the correct decision. As I was trying to say before I took the interventions, this is not taking place in a vacuum. Payment by results will ensure that we focus much more on outcomes. As the hon. Member for West Suffolk powerfully put it, the problem with ring-fencing is that it focuses on inputs. I do not think that it is inputs that generate outcomes. We have to try to drive behaviour to focus on the outcomes.

[Matthew Hancock]

Does the Minister accept that in my area of Suffolk the removal of the ring fence has allowed the council to work up much more innovative solutions and to integrate different services? It can provide better solutions by bringing the delivery of services closer together, as the right hon. Member for Birkenhead (Mr Field) said, and get better value for money. I therefore strongly applaud the Minister’s decision not to put the ring fence back in place.

[Sarah Teather]

I absolutely agree. The point is that local authorities ought to have the freedom to decide whether they want to integrate these services with their youth provision. I want them to make better use of what are often fantastic assets, which are not always fully utilised. If we provide flexibility for local authorities, they will have the opportunity to do that.

[Mr Sheerman]

On a related point, a thread that runs through all the reports of the previous Select Committee is the importance of the professional qualification for early years professionals, and of paying and training those professionals well. There is some unhappiness at the moment because it seems that the early years qualification will be brushed aside. Will the Minister reassure us that that is not the case?

[Sarah Teather]

I am not sure that I understand the hon. Gentleman’s point. We are in the process of co-producing a policy statement with the Department of Health and the sector on the vision for early years and on how we will drive forward a number of changes. In particular, it will deal with quality, which I spoke about this morning at the 4Children conference. The questions include whether the existing qualifications are fit for purpose, whether we should change them and whether we should ensure that there is a greater focus on child development. We are considering those matters at the moment and we will publish the policy statement later this year. Quality is key, which is why we have asked the National College for Leadership of Schools and Children’s Services to focus on the quality of leadership in children’s centres. Children’s centres have the potential to drive forward quality, not just in their centre, but in much of the early years provision in their area. They have a great deal of potential.

I only have about four minutes left, which will make it difficult to respond to all the questions that have come up. I want to deal with one point that was raised by Labour Members, and in particular by the hon. Member for Liverpool, Wavertree (Luciana Berger). She made a number of allegations about cuts being made in proportion to need. I simply dispute her point. In fact, we used the previous Government’s funding formula to allocate most of the money in the EIG. As she will be aware, the formula

“is based on the under 5 population, weighted to reflect deprivation (based on Working Tax Credits data), rurality and the Education area cost adjustment.

Also,

“Some of the EIG has been allocated according to a youth formula. This is based on population numbers, educational attainment at Key Stage 2 and 3 and GCSE, numbers of young people not in education, employment or training…and the Education area cost adjustment.”

It simply is not fair to say that we have chosen to target cuts at areas with the greatest need—that is quite offensive. I appreciate that some hon. Members have made speeches today in order to defend councils of their own political colour, which I can understand. I also acknowledge that things are extremely difficult for many councils at the moment. I am not saying that it is easy to run a council, any more than it is easy to run the country at the moment, given the parlous state of our finances.

Many local authorities are making sensible decisions—to cluster Sure Start children’s centres and to merge back-office functions, for example. They are looking innovatively at how they can bring services together to make the best use of the assets available. We have heard from a number of hon. Members whose local authorities are managing to prioritise not only children’s centre buildings but the services that are being provided in them, to ensure that they always focus on children’s outcomes, which is absolutely vital.

The hon. Member for Hammersmith (Mr Slaughter) asked some specific questions about what the Government are doing. I have made it clear to local authorities that this issue is a priority—so much so that they have been complaining that I have placed a moral ring fence around children’s centres. We have made it clear in the guidance that local authorities have a duty to consult properly, and we have drawn their attention to the fact that, if they are using an asset for a purpose for which it is not funded, the Department is obliged to consider whether to claw back some of the money involved. I am sure that the hon. Gentleman is using all those arguments in his discussions with his local council.

I was hoping to say a little about the vision for Sure Start children’s centres but, unfortunately, everyone else has spoken for so long that I have only about a minute left. Flexibility is key, and targeting the neediest families is an absolute priority for the Government, as is focusing on evidence-based programmes and making use of the reports produced for us by the right hon. Member for Birkenhead and the hon. Member for Nottingham North (Mr Allen). We also want services to be brought together much more effectively, which is why we are working so closely with the Department of Health on our vision for children’s centres. I am pleased that we shall have so many more health visitors on track. Many of them will be placed in Sure Start children’s centres, and all of them will have strong links with their local centres. That is vital. Evidence shows that if health services are closely involved, the neediest families can be reached.

I was hoping to go on to speak about mutuals and the voluntary sector, but it is now 4.32, and I have to sit down. If hon. Members would like to hear more from me in future, they might want to restrain their speeches just a little. This has been an extremely useful debate, however, and I want to thank all hon. Members for their contributions.

Question deferred (Standing Order No. 54(4).

HM Revenue and Customs

Wednesday 2nd March 2011 Commons Chamber

[Relevant documents: The uncorrected oral evidence taken by the Treasury Sub-committee on 19 January, HC 731-i, and 8 February, HC 731-ii; the oral evidence taken by the Treasury Committee on 15 September 2010, HC 479; the Seventh Report from the Treasury Committee, Session 2009-10, Administration and Expenditure of the Chancellor’s Departments, 2008-09, HC 156, and the Government response, Cm 7917; and the Eighth Report from the Treasury Committee, Session 2006-07, The Efficiency Programme in the Chancellor’s Departments, HC 483, and the Government response, First Special Report from the Treasury Committee, Session 2007-08, HC 62.]

Motion made, and Question proposed,

That, for the year ending with 31 March 2011, for expenditure by HM Revenue and Customs—

(1) further resources, not exceeding £303,044,000, be authorised for use as set out in Spring Supplementary Estimates 2010-11, HC 790,

(2) a further sum, not exceeding £547,861,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and

(3) limits as so set out be set on appropriations in aid.—(James Duddridge.)

16:33

[Mr Andrew Tyrie (Chichester) (Con)]

I am glad that the request of the Select Committee on the Treasury to hold this debate on HMRC’s estimates has been accepted. I am conscious that I am speaking on behalf of a large number of colleagues from right across the House, many of whom cannot be here today, who have spoken to me about the problems that their constituents are experiencing with HMRC. I am also speaking on behalf of hundreds of thousands of taxpayers who have encountered difficulties and feel that they have nowhere to turn. I am delighted that the Chairman of the Treasury Sub-Committee, the hon. Member for Leeds East (Mr Mudie), will follow me in the debate. He has done an excellent job in focusing the Sub-Committee on these problems and, in so doing, has built on the work done by the Sub-Committee in the previous Parliament under the chairmanship of my hon. Friend the Member for Sevenoaks (Michael Fallon). I should like to take this opportunity to thank my hon. Friend for his hard work.

“Ten years ago the Inland Revenue had the reputation of being one of the best run Departments in Whitehall. Today HMRC’s reputation is in tatters as one disaster has followed another.”

Those are not my words but the considered conclusions of the Chartered Institute of Taxation in written evidence to the Treasury Committee. I have a stack of similar evidence from other qualified bodies and people, and they are all variations on the same theme—HMRC is close to being a failing institution in some areas.

[Andrea Leadsom (South Northamptonshire) (Con)]

Does my hon. Friend agree that the Treasury Committee has heard much evidence from representatives of businesses who say that dealing with HMRC is now costing enterprises significantly more of their profit and income? Matters that used to take a few hours now seem to take literally months to resolve.

[Mr Tyrie]

I agree completely, and the next sentence of what I intended to say was to be along the lines of asking what the situation means for small business men. They are not experts in tax, they just want to get on with their job. We must constantly bear in mind the fact that when HMRC gets things wrong, its mistake can be a catastrophe for the taxpayer on the other end of the experience.

I want to tell the story of one such business man who has written to me, who wants to remain anonymous. His business was the subject of an HMRC investigation, and when it found no irregularities, it started an investigation into his personal tax affairs. As he says in his letter to me, “They investigated everything”, even challenging a gift of £15 to a nephew. He had the impression that the local tax office felt it had to find something, having invested so much time in his case. All that went on for five years—it was like being on trial for five years. Finally, a very senior manager at HMRC saw sense and transferred the case to another tax office, and a week later that small business man had an apology.

However, like so many similar cases, it is not a matter of “all’s well that ends well”. The collateral damage has been huge. That business man’s accountant estimates that his business has lost £7 million in the time and effort of handling the case, and on top of that the stress involved in such an experience would have been crippling for many people. It is not just that individual who has lost out but all those who depend on his business for their livelihood and all those who might have had jobs in it had it been able to concentrate on expansion rather than fending off HMRC. One case does not prove anything, but the sheer scale of complaints now pouring into MPs’ postbags suggests something.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

Is my hon. Friend aware that HMRC is going to write off all open cases from 2007-08, which equate to just under £1 billion? It wants to sort out the overpayments, which of course affect the person whom he mentioned. The problem is that, under the four-year rule it is not sure how it can do so. Can he help me on that point?

[Mr Tyrie]

My hon. Friend makes a point that I was intending to make, and he makes it very fully. Because I want to give other people the opportunity to speak, I will not elaborate on it.

I wish to say a further word about HMRC as an institution. It has a very difficult job. Nobody likes the taxman, and it is easy to kick HMRC. I have no doubt that most people there are struggling to protect the revenue fairly and trying hard to do a reasonable job. Doing that job requires a strong sense of collegiality and loyalty to the ethic of the institution. When I was an adviser in the Treasury in the ’80s, I had a lot of contact with people in both the Inland Revenue and Customs and Excise, and I thought that they were the salt of the earth. They were immensely dedicated to their jobs and civil servants of the best sort. One had no doubt that they were a highly motivated group of people, or that morale was high.

What about now? The Cabinet Secretary runs an annual staff survey, which has been going on for many years. It shows that HMRC has the lowest morale of any Government Department. Some 25% of staff want to leave as soon as possible or within a year, and only 15% believe that the department motivates them to do their best. Only 12% say that the department is well managed, and the survey goes on with a similar litany. There is some good news, which relates to what I said a moment ago. The job content is still considered interesting by three quarters of staff, and more than three quarters say that they can rely on their colleagues. There is still some collegiality. Even that will not last unless we start to put right what has gone wrong. HMRC will become dysfunctional unless action is taken to bring to an end the string of disasters that has befallen it.

Let me give some examples. Last September, the Government were forced to announce that up to 6 million taxpayers were to receive letters informing them that they had paid the wrong amount of tax through PAYE. That had been caused largely by the introduction of a new computer system, which was simply not up and running in time, and it provoked a powerful Public Accounts Committee report, which detailed the failures. There was the matter of the incorrect PAYE notices in January 2010. That provoked even more critical treatment in the PAC report. Then there are the phone call response times—try ringing HMRC. The National Audit Office found that in 2008-09 only 57% of call attempts were answered. That disastrous performance declined even further for a time, before recovering recently. I could give other examples.

What is the root cause of the problems? Some clues probably come from that survey of staff morale. It shows that the collapse of morale appears to have coincided with the merger. I know that the survey on morale began in that form only at the time of the merger, but it charts a decline from then. I believe that the merger was probably a mistake, and I said, from the Front Bench at the time, that merging two institutions with such different cultures was unlikely to be worth the candle. However, now that the merger has occurred, I am equally clear that unscrambling it would also be risky.

In any case, the department is reorganising itself. It is moving from a regional structure, with customer contact based on local offices, to a centralised model. We have heard that before. The experience of the banks with that centralised model, whereby they got rid of Captain Mainwaring, was distinctly mixed. However, the die is cast on the move to a centralised model and, in HMRC’s case, the performance of the new centralised model is not entirely disastrous. Its figures suggest that overall customer satisfaction was 73% in September 2010.

The key question must be whether that reorganisation can be completed while cutting so many more staff. The hon. Member for Leeds East will consider that issue. I hope that it will be completed, but it would be the triumph of hope over experience, if we consider the history of other Whitehall Departments and their reorganisations.

Of course, the large firms with which HMRC engages will not feel the effects of the reorganisation. They will continue to receive a good service. They provide most of the tax yield, and I understand why HMRC devotes so many resources to focusing on them. However, I worry greatly about the small firms—those least able to absorb the turbulence whenever HMRC reorganises itself. I worry particularly that, while HMRC may make savings, it will merely shift the burden of administration to taxpayers and their accountants in small businesses. The effect on the whole economy will not be neutral. It is not a matter of £1 spent in HMRC transferred to the private sector—it may be worse than that, eroding overall business efficiency and bringing downward pressure on GDP.

In a recent evidence session, I asked the Institute of Directors and the main bodies representing the accountants to start to estimate a full compliance cost for firms that deal with HMRC. It has never been done before and it is not easy work. However, we must have at least some core figures to enable us to monitor over time the full compliance burden placed on firms by HMRC. There is no point—absolutely no point—in creating a leaner HMRC at the price of massive compliance costs in the private sector. My challenge to the institutions that represent the private sector is to find that true cost of compliance. I also want to allude to some challenges for the department and the Government.

First, all the evidence that the Treasury Committee has seen suggests that HMRC needs to communicate better with taxpayers—it must find ways of giving clearer and more accurate answers to reasonable queries, and to give those answers quickly. Secondly, it is vital that staff have the training and experience that they need to work with taxpayers. There is no earthly point in a call-centre culture that is based entirely on read-outs from computer scripts.

Thirdly, we need to consider incentives as well as penalties as a means of encouraging the right amount of tax to be paid. Some argue that HMRC should consider a general disclosure facility to encourage the disclosure of previously undeclared tax. We need to reflect on that. There is a risk with amnesties, which is the road down which that proposal goes, but it needs to be looked at.

Fourthly, we must accept that with PAYE coming under increasing pressure as more people develop a variety of sources of income rather than rely on employment from a single source, further changes to PAYE will inevitably be necessary, as well as the coming introduction of real-time information. Those changes must be made extremely carefully if we are not to have yet another major road crash, such as we have seen in the past few years.

I should like to end by offering one crucial, big challenge to the Government. Much that is wrong with how HMRC operates is not its fault, and nor is it the fault of taxpayers. Rather, it is the fault of us—legislators. Successive Governments have put ever more complex legislation on the statute book. In 2009, a leading legal database found that the UK had the longest tax code in the world. That is a charter for accountants and for evasion opportunities. Length means more complexity, and complexity means higher costs for all of us. In evidence to the Treasury Committee, the IOD told us that KPMG estimated the total cost to the UK economy of running the tax system at 0.4% of GDP. I wager that that is an underestimation, as I alluded to a moment ago.

My challenge to the Government is that we must have tax reform. I was struck by a point made in a discussion paper in the Mirrlees review on tax administration, which begins:

“Most of modern tax theory…completely ignores administration and enforcement. The policy formation process is not much better, too often addressing implementation only after reform has been determined”.

Of course, administration should be an integral part of the decision-making process, but in recent years, tax policy formulation has been travelling in the opposite direction. The 2004 O’Donnell report resulted in most decisions on tax policy being taken in the Treasury, with implementation done by HMRC. It is widely held that the policy-making function in HMRC has gradually been downgraded, but we must reverse that. I urge the Government to return to a situation in which there is much greater creative tension between HMRC and the Treasury on policy formulation. If we do not do so, there will be more episodes in which the implementation of policy—delivery—mysteriously turns out to have an unexpectedly high cost or to be unacceptably complex.

In that respect, I very much welcome the creation of the Office of Tax Simplification. However, that will not be enough. We must have better policy and a simpler tax system that gives greater certainty and stability. I hope that the forthcoming Budget will point the way on that. Business and the self-employed in particular are crying out for such measures. We need a series of tax-reforming and simplifying Budgets. In the long run, everyone will gain: HMRC will have a better system to manage, taxpayers will have something that they can understand and the UK economy will have a tax system that creates opportunities for better long-run performance.

The tax system loses the respect of taxpayers, however grudging, when it becomes as complex as the one that it looks as if we are developing. Once we have arrived at that point, the country has a big problem. We will be on the slippery slope towards wide-scale evasion and an erosion of the tax base. I will not name the EU countries that are on that slippery slope, but there are quite a number, and we all know which they are. It is partly with that in mind that the Treasury Committee has launched an inquiry into the principles of tax policy that are needed for such reform. We will be reporting shortly. If we in the UK get those principles right, many of the problems that we have heard about today will diminish, and a more prosperous economy and stable society can result.

16:50

[Mr George Mudie (Leeds East) (Lab)]

I thank the hon. Member for Chichester (Mr Tyrie) for his kind remarks. When Lord McFall left the Treasury Committee, no one thought its work could be kept at the same level, but I think that it has improved—that is, if one can improve on Lord McFall’s performance. As Chairman, the hon. Gentleman has already gained the respect—even the fear, I think—of witnesses appearing before the Committee, which is a good sign. He also serves a useful purpose for me, because when I go on one of my northern, regional rants, he will translate it for the southern gentlemen before us, and I sometimes get an answer.

As expected, the hon. Gentleman has dealt with this issue on a policy level that I could not match. I take a more pragmatic view towards the department, because although there is an argument for having a look at policy—tax definitely needs simplifying—we should not necessarily do things at that level to suit a vehicle that is dysfunctional; rather, we should ensure that the vehicle is functional. At the moment, I fear that the department is in a disappointing state. To give some background, we on the Treasury Committee, and on the Treasury Sub- Committee under the hon. Member for Sevenoaks (Michael Fallon), see HMRC every year, and we have had one or two inquiries over the years. In 2006, the Committee published a report on the efficiency programme. We identified concerns that reductions in the headcount were leading to falling service standards, and we made certain recommendations. We have returned to that issue in our current inquiry—we are halfway through it—into the same subject as this debate, and we have sadly discovered that nothing has been done along those lines. Indeed, in our 2009 review of administration and expenditure in the Chancellor’s Department, we noted

“a 7% increase in total recorded customer complaints”.

We asked HMRC to square that with its submission that strong progress had been made.

[Mr Liddell-Grainger]

The latest figure from HMRC is that complaints have gone up by 33% in the last two years, so the hon. Gentleman’s figures are a bit light.

[Mr Mudie]

They probably are, but the report that I am quoting is a couple of years old.

The other thing that we highlighted—the hon. Member for Chichester referred to this—were the dire results for HMRC of a cross-government staff survey. We expressed deep concern about employee engagement at HMRC and its effect on performance, along with the severely low morale, which has been referred to. What that amounts to is this. The problem could be a passing phenomenon, but it is not. It has been consistent for a number of years and it has to be faced up to. What are the reasons for it? We cannot move away from that dismal performance without accepting that severe staff cuts in the department are a major—if not the major—contributory factor. The work force has gone down by 30% since 2005. There might be some excuse in that the merging of two departments—Customs and Excise and the Inland Revenue—provides scope for rationalisation, but not for losing 30% of the staff. There is worry that with the spending review, another £2 billion might be taken out—or £3 billion, with £900 million going back. In addition to seeing those 30,000 jobs, another £2 billion is to be taken out of its resources, and we cannot anticipate a better performance in the years ahead.

[Tony Cunningham (Workington) (Lab)]

I am hearing rumours that some people threatened with redundancy are earning £20,000 to £25,000 a year, yet the work they do saves the Treasury hundreds of thousands of pounds a year. Surely that does not make any sense either?

[Mr Mudie]

That is a well-accepted fact. To be fair, the £900 million is an acceptance of what my hon. Friend says. Theoretically or on paper, this money is going back to bring in £7 billion-worth of tax that has not been collected for one reason or another. I would like the Minister to deal with the phasing of that £7 billion. As usual with the Treasury, this can be read any way. I know that we culminate with this £7 billion, but what are the targets for the years ahead?

The computer has also contributed to demoralisation in the Department. It is not just the computer, but the man in Whitehall who thinks that the computer is the answer, because pressing a button produces something and it does not argue back. As we have discovered elsewhere in government, that simply does not work under any circumstances. The Revenue saw the computer as an answer to its problems with the budget cuts and thought that the staff could be taken out. They were removed before the computer was up and running, before it became operational and proved to be defective. That is why we had the debacle at Christmas 18 months ago of millions of taxpayers receiving an unexpected and largely unwelcome envelope. I grant that some might have been welcome, but they were mostly unwelcome.

The 30,000 jobs are gone, but I have yet to mention the merger. It was particularly important for staff morale, because at the same time this brilliant Department—I suppose it was the Treasury—brought in McKinsey to do its thinking, and it ended up adopting a French model of “départements”. There were 36 such departments inside the organisation, which meant no joining together of the two departments with their great traditions and ethos, and no welding together of the best bits from both. Instead, the departments were broken up—everybody was broken up—and there were no lines of accountability or anything like that. It was a complete shambles. Steps have been taken to put that right, but some of the damage persists, which is another contributory factor. That is what has happened. It is not possible to take out 30,000 people, have a merger or reorganisation, load in additional work and duties and expect it all to work. It is not working; something has to be done about it.

The hon. Member for Chichester touched on the issue of taxpayers. When the new computer came in, as usual somebody in Whitehall said, “It is wonderful to have this computer in London, so we can shut some offices”—and they gaily did so. On paper that meant saving staff, costs and so forth. The trouble is that tax is a very complicated issue. The best of us—I say this because I am among them—simply cannot handle tax and the details relating to it. Two or three years ago I decided that my accountant was too expensive, and took over the job of filling in the forms myself. In the first year, I received £300 back; in the second year I was charged £1,500. Now I am back with my accountant.

The difficulties involved in dealing with tax are a fact of life. The closure of tax offices has been a disaster, along with the cuts in working hours and days. We have reached a stage in public life, at both local authority and national levels, when call centres may seem to be the answer but are really—I suspect—a way of placing a brick wall between the decision-makers and the public. They can be helpful when dealing with ordinary questions, but are often unhelpful when it comes to detailed matters such as tax. That is especially true when they are talking to the elderly and those for whom English is a second language. I am reminded of confused.com: call centres are unhelpful to anyone who is confused.

[Guto Bebb (Aberconwy) (Con)]

The closure of tax offices is an important issue in north Wales. I hate to be parochial, but I represent an area in which about 20% of the working population are self-employed. The need for self-employment is paramount in north Wales, because the economy is so fragile that unless we create our own job opportunities, we cannot work at all. Unfortunately, over the past few years we have seen the downgrading of the Porthmadog, Bangor and Colwyn Bay tax offices. The 20% of the working population who are self-employed must now travel to Wrexham and even over the border to be served, which is a big problem. As the hon. Gentleman has pointed out, when a small business is forced to use an accountant because it is unable to talk to—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We must have short interventions.

[Mr Mudie]

I am sorry that you stopped the hon. Gentleman, Mr Deputy Speaker, because his was a better speech than mine. I do not think that he needed to use the word “parochial”, or even to apologise if he thought that he was being parochial. In fact, he was being regional. Here in London, it is assumed that any region above Watford can be written off. The hon. Gentleman has made an extremely valid point.

I know that my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), who is sitting behind me, is a strong supporter of tax office staff. However, I agree with the Chairman of the Select Committee about the number of telephone calls that are not answered. At one stage, the figure was 43%. One of the professional witnesses who gave evidence to the Committee said that an HMRC tax manager had been in his office and observed that it took 12 minutes for a call to be answered and seven minutes simply to change a tax code. That simple transaction took 20 minutes. That is a witness’s statement, and a very good one. I am sure that the Minister has read all the evidence given to the Committee, and has noted that that particular witness described his experiences brilliantly.

[Mr Liddell-Grainger]

The hon. Gentleman is well aware that the two companies charged with this task by the Government, Capgemini and Accenture, have been at it for a decade. The system that they were asked to use a decade ago is not the system that they use now and is not capable of doing the job, although it is starting to throw up problems that we saw a couple of years ago. Does the hon. Gentleman agree that both companies’ contracts should be upgraded to a level that is appropriate to the 21st century?

[Mr Mudie]

That is an interesting point.

I am using up time rapidly, but let me mention in passing another feature of call centres. Telephoning 0845 numbers can be very expensive for pensioners—indeed, for everyone. The fact that people have to hold on for so long does not help, but in any case it is not the right way to decide complex matters. It is best for people to deal with those face to face. The best people in the whole business are the agents, as they are the professionals. They take the frustration and get angry about it—and they have given good evidence. The ordinary individuals are in the worst position, however. The professionals get used to things and can get on with other tasks, yet, as the professionals said, those who are not represented get the worst deal, and with office closures, cutting hours, and relying increasingly on telephone calls, e-mails and letters, the whole system knocks out a fair number of the population. That is what is happening. Plenty of Members want to speak, and they will spell out their constituents’ experiences.

Does the system need to be improved and will it be improved? I do not think it will, first because it goes against the grain—I will explain that. Sadly, every time witnesses from HMRC have appeared before us, they have been in a state of denial. If someone has a problem, there is no chance of their dealing with it unless they own up to it and accept it. I sympathise with them in a way, however. The hon. Member for Chichester said we are to blame and that is true; we are to blame, in particular the Ministers. It is hard for a civil servant to go before a Select Committee and say, “Yeah, I admit it; we can’t do this because we don’t have the people.”

We look for loyalty and a straight bat from civil servants, but the way we are doing things is not generally the best way to get a real dialogue. Therefore, when we have them before us in a couple of weeks, I am not sure that Dame Lesley will do anything other than give us the Geoff Boycott treatment, or even do a Pietersen and knock us out of the ground a couple of times. Because she and the management are in this state of denial, I cannot see things happening unless the Minister takes some steps. I really do think this comes down to staff and resources. Unless they are in place, we cannot load new jobs on.

Finally, let me describe a few points that should push the Minister to want to have a fresh look at resources. One of them is to do with what the Chairman of the Select Committee said about the integrity and reputation of the system, and real tax compliance in this country. If we frustrate and ignore people, and make it difficult for them to get explanations, one way or another, non-compliance will grow. There will be increasing disrespect for the system and the people in it, and a growing feeling that they are not here to help. The tax inspectors and staff are adamant that they are here to help however, and that has always been my experience at that level—when we can get to speak to someone, they are helpful.

If something is not done and we treat people in this way, they will respond in a manner that I think is natural, which is to say, “Get on with it”—I almost said “Sod it”—and “I am not complying.”

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We cannot say “Sod it.” I am sure the hon. Gentleman will withdraw that.

[Mr Mudie]

Well, I did withdraw it; I said I will not use the phrase “Sod it.”

I have made points about management being in denial and non-compliance. The next point is more current. We live in a time of austerity. It is a hard time and people’s wages and homes are being affected, yet the public are reading about Barclays paying £190 million on billions of pounds of profit, and about Vodafone being willing to pay £3 billion or £4 billion and having that available to pay to the Inland Revenue, but the Inland Revenue accepting £1.3 billion. This big multinational company is getting away with paying that amount of tax at a time when we are closing vital public services. We see Mr Green paying his wife through Monaco. In last Sunday’s papers, we read about a man with reputed wealth of £47 million being forced by someone he sacked to confess that he pays no tax at all because of the trust his father set up. Such stories are starting to resonate among ordinary people.

The Governor of the Bank of England came before the Treasury Committee yesterday, and at one stage in the evidence session he accepted that the anger we have witnessed in the past couple of years is nothing compared to what might happen when we see the real cuts, which are starting now. Last year, we talked a lot about cuts, but they amounted to only £6 billion. However, in Leeds recently, people invaded the council chamber when the budget was being fixed. There were people outside in wheelchairs whose benefits were being cut. Cuts were made to housing benefit. Students and trade unionists were also there. Some 1,000 jobs there are to go.

I genuinely say to the Government that a dangerous situation is brewing. A very affluent lady in America said, “Tax? That’s just for the little people.” That belief is starting to take hold in this country, as a lot of evidence shows. We need to get the tax people working properly. The tax gap is reckoned to be between £40 billion and £120 billion. We would not have these cuts if everybody paid their tax in a responsible fashion. That issue needs to be tackled, yet right now thousands of tax staff are being given their cards, when they could be dealing with it.

I want to finish by being helpful to the Minister. Another computer program is wending its way through the Department that has a crucial bearing on the Minister’s future. It deals with real-time initiatives and has very strict deadlines. It is for not only the Treasury but the Department for Work and Pensions, and it is a crucial factor in delivering the universal credit. I know that Treasury Ministers are very anxious to get universal credit in. To judge by past performance with computer systems, I wish the Minister luck. However, let me mark his card in this debate: all the signs from the Department are that, unless he gets a real grip and has a serious word with the Chancellor, that deadline will not be met. We are talking about not just one Whitehall Department negotiating a contract, but two, and when you put two Departments together, that leads, I fear, to trouble.

As an old friend of the Minister—we have worked together on the Treasury Committee and on other matters—I would not like that contract to be lost on his watch, and that is the third, and perhaps most compelling reason why he should do something about this problem.

17:15

[Ian Swales (Redcar) (LD)]

I speak as a member of the Public Accounts Committee, which has held a number of hearings with Her Majesty’s Revenue and Customs over the past few months. HMRC collects about £440 billion, but its estimate of the tax gap—the amount it thinks it could collect compared with what it actually collects—is £42 billion. Others, notably public sector trade unions, have produced even more ambitious estimates of that gap, putting it as high as £120 billion, although a lot of those numbers are more controversial. To put those figures in context, the entire cost of running HMRC is less than £4 billion.

As we have heard, huge systems changes and headcount reductions have taken place in recent years, and they have led to poor morale. As my hon. Friend the Member for Chichester (Mr Tyrie) said, HMRC came a lamentable 96th out of 96 on staff morale in the previous civil service staff survey. It also came 95th, 95th and 94th on “Leadership and Management of Change”, “Understanding My Work” and “Learning and Development” respectively. Those are shocking statistics.

I recently visited an HMRC office close to me to meet groups of staff, and their comments confirmed the survey’s findings. Despite being generally low paid and having their job security and pensions under threat, they did not even mention those issues. They talked not only about pride in the service, and their experience and professionalism, but about their frustration at the chaos they could see all around them and, above all, about the “process as seen” mentality. It means that they have mindlessly to process data they know to be wrong. Examples of that can be as simple as not being able to use data from a P60 where they have been omitted from a tax return, which leads to erroneous tax bills or refunds. In the private sector the mantra “Get it right first time” has been around for at least 30 years.

In the same staff survey, damning verdicts were given under almost every heading, as we have heard. Only 13% of staff gave a positive response to the statement, “I feel HMRC as a whole is managed well”, and only 12% agreed with the statement, “Overall I have confidence in the decisions made by HMRC’s senior managers”. Despite those shocking results, the results on other headings still showed that the staff have the appetite and drive to do a good job, so they remain a very good resource for sorting the situation out. It appears that rock-bottom morale and a lack of faith in the management is blighting the department, but that the majority of staff are still interested, engaged and proud of their work.

As has been well reported in the media and in this place, the changes in HMRC have led to chaotic services being provided to clients, and the huge burden of work has led to a higher level of write-offs. For example, just increasing the threshold for claims from £50 to £300 for the past two years has led to the loss of £160 million in revenue. Moreover, each year local caseworkers refer some 4,000 cases of suspected serious evasion to specialised teams for investigation, but the centralised referral system has not been used consistently across the department, despite being mandatory. In 2008-09 just 20% of referrals were taken up by investigation teams, with the rest being returned to the originating officer to pursue.

The department does not analyse the reasons for rejection, which would help to judge the quality of referrals, nor does it know the result of returning those cases to the originating officer. Not only does that lead to caseworkers becoming disillusioned by the low rate at which referrals are taken up, but it has a serious knock-on effect on the tax gap. The average time taken to complete dealing with a case of serious fraud in 2009-10 was 25 months, whereas the internal target is 18 months. Some 75% of cases exceeded that target, and a substantial number took more than three years to deal with. Of course some cases are more complex than others and will take a lot longer to investigate, but it is clear that the department needs to improve the speed and efficiency of investigations in future, to increase the number of cases and bring in more revenue. Inefficiency is clearly causing revenue to be lost.

New structures, such as the penalty regime in force for tax returns relating to the past two years, have been blighted by recurring top-down problems. The new regime was designed to set tougher penalty rates for deliberate errors. It is obviously good practice that such penalties should be recovered promptly, but the department does not routinely monitor whether they have been collected. An analysis revealed that it could not trace payments for 27% of the outstanding tax due on completed civil investigations of fraud. Of the £58 million that could be traced, only 84% had actually been collected. The Treasury is therefore losing tax not only through evasion and legal avoidance but through systematic inefficiency in HMRC. This lends credence to the statistic mentioned earlier that only 13% of staff feel they are managed well. Given that the total cost of HMRC is less than 1% of what it collects, it should not be treated like a normal spending department—judged partly, at the moment, by its ability to slash costs.

[Mr David Ruffley (Bury St Edmunds) (Con)]

Given his experience on the Public Accounts Committee, what is my hon. Friend’s view of HMRC’s claim that it made £1.1 billion-worth of pure efficiency savings between 2005 and 2009-10 without any negative impact on performance? Is that a credible claim?

[Ian Swales]

I can express a personal opinion, which relates to what I was just saying: we should not judge efficiency savings at HMRC without reference to the tax that is collected. We cannot judge it simply according to headcount reductions and those sorts of changes.

[Mr Liddell-Grainger]

Is my hon. Friend aware that 194 million national insurance accounts are not rectifiable even though they are scanned twice a year? HMRC does not even know how much money is in those accounts. Does he think that that is equally a problem, in that the morale has gone because people do not understand what is going on within the system?

[Ian Swales]

Judging by the evidence that the PAC received, there seems to be a lack of control over the trail of cases. All the changes have resulted in less focus on individual companies and taxpayers. I certainly recognise that sort of story.

There should be a constant watch in HMRC on the business case for investment in it. I welcomed the announcement of £900 million in extra funds to address avoidance, but I remind the House that it is targeted at collecting £7 billion, although the tax gap is £42 billion even according to HMRC’s estimates. How have we arrived at the figure of £900 million, and how do we know it is the right amount? As a taxpayer, I would be happy to invest any extra money that could be proved to produce a positive return.

The department has recognised that it has lacked detailed information on the costs and returns of different types of enforcement activity. At present it does not know the costs of, or returns on, civil investigations, or the point at which further investment in a particular type of activity would produce diminishing returns. It is therefore very difficult for it to decide how best to deploy its resources. Its management and senior officials need to show strong leadership and pay close attention to the morale of staff if those problems are to be overcome. The headcount at HMRC should not be reduced further until efficient new systems and ways of working are properly established. The department urgently needs to manage its resources effectively to optimise the tax take. The current system is obviously not working effectively for people either inside or outside HMRC. At a time such as this, when everyone across the country is having to tighten their belt, it is unacceptable that HMRC is failing to collect such a large amount of money through inefficiency and mismanagement. I urge the department and the Government to put this right.

17:23

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

We are discussing the administration of Her Majesty’s Revenue and Customs, and I should declare a constituency interest because Cumbernauld HMRC is one of the largest tax offices in the country. It is a strategic site, and the largest employer in my constituency. As this debate shows, HMRC is equally important for the Government, who must collect tax more effectively if they are to be successful in their economic and financial objectives.

I should like to address a few issues regarding HMRC’s effectiveness, many of which were touched on in the thoughtful contributions of the hon. Member for Chichester (Mr Tyrie), my hon. Friend the hon. Member for Leeds East (Mr Mudie) and, most recently, the hon. Member for Redcar (Ian Swales). In my view, two things are necessary if HMRC is to be as effective as possible. First, it must be properly resourced, and I endorse the final words of the hon. Member for Redcar about the wisdom of getting HMRC sorted out before moving to a programme of further cost cutting.

Secondly—this relates to observations that have already been made—HMRC must have well-organised and highly motivated staff. I am concerned that that will not be the case in the future, not only because of the cuts that the Government are making in HMRC’s budget, but because of how they are being implemented. Together, the cuts and their implementation are having serious effects on the morale of HMRC staff in Cumbernauld and elsewhere. Simply put, HMRC staff know that cuts are being made, but do not know yet where they will fall.

HMRC received a tough settlement in the comprehensive spending review. The settlement mandates overall resource savings of 15% and efficiency savings of 25%. Those cuts were announced in October, as Members in all parts of the House are well aware, but we have yet to receive any confirmation from the Government of how HMRC is to be restructured.

[Kelvin Hopkins (Luton North) (Lab)]

Is it not the case that every additional tax officer collects many times their own salary, and that if we want to collect more revenue and make HMRC a more profitable organisation, we need more staff, not fewer?

[Gregg McClymont]

My hon. Friend makes a good point. There is a problem of short-term savings at the cost of long-term benefits—what we might call a false economy. I shall come to that.

We have not had any confirmation from the Government of how HMRC is to be restructured. We do not know which services to the public will go, or which services will be changed. We do not know yet which jobs will go. Before Christmas I asked the Treasury Whip about the future of HMRC jobs in Cumbernauld in a Back-Bench debate. The Treasury Whip suggested to me that the Cumbernauld jobs were safe. I understand that as it is a strategic site, its situation is different from that of some of the smaller call centres and the like. I urged the Treasury Whip to share the information that proved this to be the case: it has not yet been forthcoming, for good reason.

Subsequent questions for written answer revealed that the Government cannot give any such undertaking until HMRC publishes its business plan. It is better for HMRC to take its time and get its business plan right than to get it wrong in a rush, but that has consequences. It seems that the business plan will not appear before April. The delay and the mixed messages do not make tax officers’ jobs any easier. Clearly, the increased anxiety can damage morale.

We have heard about the situation from the hon. Member for Chichester and others. It is not surprising in those circumstances, and also given the nature of the job, that in a recent survey only 11% of HMRC employees felt that change in the organisation was well managed. HMRC employees in Cumbernauld are now just as uncertain about their future as they were when the programme of cuts was first announced in October. Such uncertainty has an impact on staff morale, and thus on productivity and performance. More fundamentally—this goes to the point raised in an intervention by my hon. Friend the Member for Luton North (Kelvin Hopkins)—I suspect that the cuts to HMRC’s budget may well prove to be a false economy. Short-term savings at HMRC could reduce the Government’s ability to maximize tax revenue in the long run.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman, like many others in the Chamber, was at the presentation to Members of Parliament by HMRC staff last year. At that presentation, HMRC staff indicated that they were aware of revenue that the tax bodies were not collecting. Their message was clear: more staff, more tax revenue; fewer staff, less tax revenue. Does the hon. Gentleman agree that the Government should consider the false “savings” that they will make in this year, against the tax income that they could generate instead?

[Gregg McClymont]

I thank the hon. Gentleman for that observation. Clearly, this is a complex issue and there will be reasonable arguments on both sides, but it seems to me that it is a job in which morale is particularly important. I intend to refer later to the psychology of being a tax officer, which pertains to his point about raising more revenue.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

I want to make an observation based on a recent conversation I had with a tax expert. When the Government looked at the overall staffing reductions in HMRC as a consequence of the spending review, it became absolutely clear to all that the gaps in their ability to raise taxes were such that they would need to put something back, and that is the explanation for the £900 million.

[Gregg McClymont]

I thank my hon. Friend for that information. As a member of the Treasury Committee, he is well known for his interest and expertise in this area. What he said sounds not only plausible, but likely.

I am suggesting that short-term savings in HMRC could reduce the Government’s ability to maximise tax revenue in the long run. They reduce the likelihood that HMRC will be able to attract and retain the talent necessary to administer complex systems and crack down on fraud, and the hon. Member for Chichester and my hon. Friend the Member for Leeds East alluded to that aspect of the argument. It seems to me that there is a danger not only that revenue will be lost to the Government, as has been made clear in previous contributions, but that reducing services to the public means that the costs will be passed on to the public and to businesses, particularly small businesses. If HMRC is harder to contact or slower to rectify errors, costs for the public and business will increase. The hon. Member for Chichester eloquently set out the dangers for small businesses of this process of HMRC reform or cutbacks, or whatever we call it. It is clear to me that those costs will disproportionately harm those with the least resources.

[Mr Liddell-Grainger]

Is the hon. Gentleman aware that the Revenue has just been fined £1.6 million for sloppy data handling and processing? When people asked why that had been a problem, they were told that it was too expensive to find out what the problem was. The hon. Gentleman is right. Is the problem due to a lack of skills, a lack of training or a lack of people? It must be one of the three, or perhaps all three.

[Gregg McClymont]

The hon. Gentleman makes a good point. My suspicion is that it will be a combination of all three. I will come to the skilling aspect, which it seems to me is important alongside the issue of number. If the costs are passed on to taxpayers, I suggest that they will fall disproportionately on those with the least resources—small businesses and poorer taxpayers.

To allude to a point made by my hon. Friend the Member for Leeds East, pensioners and other vulnerable groups will have to pay to phone 0845 numbers and will struggle to get through. Beyond the financial cost, there is the psychological anxiety caused by respectable working men and women having to worry that the taxman feels that they are not following the law. The psychological burden on vulnerable groups is worth considering alongside the burdens on businesses and other organisations.

I will focus for a moment on small businesses, although I will not take long as the hon. Member for Chichester somewhat shot my fox on this point. It is clearly okay for the big boys in business and the big organisations that can afford the finest tax accountants money can buy, but for small businesses every minute spent on administration, doing a tax return or conversing with HMRC is a minute less spent running their businesses. Usually, small businesses have much less slack to operate with. As the saying goes, “Time is money”, and any shifting of the burden back on to the taxpayer is likely to be deleterious in the extreme to small businesses and vulnerable groups.

Several Members have referred to efficiency and effectiveness, and that brings me back to staff morale, because staff motivation is particularly important in such a profession—the efficient and effective collection of taxes on behalf of the taxpayer. Inevitably, many of the savings that the Government wish to make will be made through redundancies and restructuring, but the Government approach that package of restructuring and redundancies in the context of an HMRC where staff motivation and industrial relations are already fairly poor.

The figures from the capability review that the Cabinet Office published in 2009 have been quoted, and, as we know, HMRC was the subject of heavy criticism. The review found that only one quarter of HMRC staff, compared with 61% of senior civil servants, were proud to work for the department. Perhaps senior civil servants are not the best comparator for HMRC staff, but 25% satisfaction is not very impressive. The survey also found that only 11% of staff—the hon. Member for Chichester said 12%; I am prepared to meet him halfway and say 11.5%—and 17% of senior civil servants felt that change was well managed in HMRC.

I worry that the combination of low staff morale, which the Government inherited but are contributing to, and further funding cuts might be a perfect storm that leads to more problems at HMRC. After all, if we think about it for a moment, we find that enforcing the payment of tax is not necessarily an easy job. No one likes paying tax, and HMRC staff—disproportionately, I suspect—deal with people who are particularly unhappy about the tax return with which they have been presented.

Staff in my constituency would have been greatly reassured and better able to serve the public if HMRC and the Government had worked together sooner to develop an implementation plan for cost savings, so anything that could be done to reduce the anxiety that they have felt for a reasonably lengthy period would be very welcome. It would reduce the worrying gap between the announcement of cuts and people’s knowledge of where they will fall. Anxiety among staff—particularly given the job that they do—is bound to undermine their effectiveness in serving the taxpayer and the public more widely. Given the importance to our country of effective tax collection, I urge the Government to do everything they can to reduce that anxiety.

My final observation touches on several contributions to the debate. As I have suggested, tax collection is not always an easy or, at times, pleasant job. People do not generally like paying tax, and in a profession such as tax collection, esprit de corps—a sense of public service and duty—is especially important. Previous Governments were not blameless in this respect, but this Government must be careful that, in the quest for short-term savings, they do not further damage the thread of professionalism, duty and pride in the job, without which an efficient tax collection system is unlikely to be possible.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

The hon. Gentleman is absolutely right about the importance of morale at HMRC. As we discovered from testimony to the Treasury Committee, which Members discussed earlier, HMRC has gone from being a flagship Government department to almost dysfunctional on some metrics. One area in which it is dysfunctional is morale. Does he share my view that the nature of the cuts that have been made over the past decade and the very poorly handled merger with Customs and Excise have been most to blame for the crisis of morale at HMRC and the decline in its reputation?

[Gregg McClymont]

I thank the hon. Gentleman for his observations. I was very interested in what the hon. Member for Chichester said about the merger. I come to that subject with little background knowledge, and I intend to do some reading on it, because at face value it seems to be a plausible reason for some of the problems that HMRC now faces.

[Mr Love]

Taking on board the point just made by the hon. Member for Hertfordshire, should that not be a further argument that now is not the time to be asking for further reductions in manpower? Because of the difficulties of the merger and the problems that it created, we should be trying to retain the expertise that already exists in HMRC.

[Gregg McClymont]

My hon. Friend makes a powerful point. If we do indeed have an organisation that is dysfunctional, to use the hon. Gentleman’s term, there is clearly a question about whether the way to approach managing such an organisation is to engage in severe cutbacks.

[Jesse Norman]

I have a simple point of information for the House, which is that my constituency is Hereford and South Herefordshire, not Hertfordshire. Although Hertfordshire is undoubtedly a place of great glories—sadly, with due deference to my hon. Friend the Exchequer Secretary, only very slightly secondary to the qualities of my own constituency—the two should certainly not be confused.

[Gregg McClymont]

Now that the hon. Gentleman has provided that important point of information, I will conclude with a final observation that pertains to his previous intervention and that of my hon. Friend the Member for Edmonton (Mr Love).

Only with a cadre of well-paid, trained and skilled staff who enjoy a status commensurate with the important job they do will a more effective, efficient and productive HMRC become possible, and those staff have to be the foundation stone as we go forward through this decade. Does the Minister think we have that cadre as things stand?

[Mr Ruffley]

The return from the autumn survey of civil service staff at HMRC says that 14% think that the organisation inspires them to do their best in the job and 12% that it motivates them to help to achieve its objectives. Can the hon. Gentleman say, from his constituency experience in Cumbernauld, whether any work has been done with the senior management there? It seems on the basis of these figures that there is a problem with motivating and inspiring the work force.

[Gregg McClymont]

I thank the hon. Gentleman for that intervention. I am not able to give him a definitive answer, but I have met the senior management at Cumbernauld, who struck me as dedicated and professional, and its work force.

We need to take a—I hesitate to use the word “holistic”—panoramic view of the functions of HMRC. One can always make reforms and efficiencies, which, compartmentalised, seem to save money, but in fact, in the broadest possible context, will be a false economy and a short-term saving at the cost of a long-term sense of professionalism. I suspect that someone doing the job of tax collector needs a sense of pride in their job because at times there will be ups and downs during the course of the day.

17:44

[Priti Patel (Witham) (Con)]

I welcome the opportunity to discuss the work of Her Majesty’s Revenue and Customs. I pay tribute to the Treasury Committee for its work in scrutinising that organisation and for the many helpful inquiries it undertakes.

I have a particular interest in the administration and effectiveness of HMRC, because it is clear to me and to many residents and businesses in my constituency that it is a failing organisation that all too often treats people and businesses in the most appalling fashion. I have endeavoured to raise these points before in the House, but have had the misfortune to be unsuccessful in the ballot for Adjournment debates. I am pleased that I can now put these matters on the record in the House. I should add that I am immensely grateful to the Exchequer Secretary, who has faced a deluge of correspondence from me regarding the numerous cases in which my constituents have felt harshly treated by HMRC. I thank him for meeting me earlier this year to discuss the numerous complaints and concerns about the administration and processes of HMRC.

We are all aware of the highly publicised issues associated with HMRC, which range from problems with PAYE and tax credits to lost child benefit discs. Many hon. Members have touched on those areas. As constituency MPs, we see at first hand in our surgeries and in the letters we receive the distress and sheer misery that these mistakes and errors cause. I am exasperated by the extent and seriousness of the cases, and by the level of distress among the constituents who have come to me. Such constituents usually come to us in desperation, after experiencing tremendous difficulties in communicating with HMRC and in getting answers from it. They are the human victims of HMRC. I will draw to the House’s attention some of the cases that I have come across in my 10-month tenure as a Member of Parliament.

First, my constituent Mr Philip Wright has an ongoing dispute with HMRC that dates back to 1999, in the days of the Inland Revenue. It relates to employment and tax status in the construction industry—a notoriously complex matter. Six years later, in 2005, the case was heard before Colchester general commissioners, who ruled in Mr Wright’s favour. Despite that, HMRC refused to let the matter rest and appealed on the grounds that the general commissioners had misdirected themselves. The case has since gone from one tribunal to another, including a sitting two years ago at which neither Mr Wright nor his representative could be present. There have been suggestions of irregularity in the process, and HMRC appears to be making it as difficult as possible for Mr Wright.

It is now 2011 and the case is still ongoing. The cost to HMRC of pursuing the case his spiralled out of control and has gone well above the claim that it has against my constituent. I saw Mr Wright on Saturday in my surgery and the stress of the case has clearly had a devastating impact on his health and emotional well-being. I urge senior HMRC officials who are paying attention to this debate to reflect on this case.

Another distressing case in which HMRC has gone after a local business in a thoroughly disproportionate way came to my attention just this week. A firm in Witham sent its VAT payments to HMRC two weeks late because there was a delay in it receiving a payment from a customer. Instead of exercising a dose of common sense, HMRC is pursuing the firm for a surcharge of almost £5,500 on a VAT bill of about £36,000. Of course there are rules about paying taxes, but at a time when so many businesses are struggling, it seems thoroughly inflexible of HMRC to target such small businesses, especially when they have paid their taxes in full. I get the impression that officials are waiting like vultures to target their prey when they are at their weakest. The effect on businesses of that approach, as many hon. Members have said, is to put jobs and prosperity at risk. A £5,500 surcharge might seem like small pickings for HMRC, but for most businesses in my constituency, where 80% of the local jobs are in SMEs, such a sum could enable somebody to be employed or a financial investment made in the business. The instruments of government should be helping business and the private sector, not causing such unnecessary burdens and distress. I have written to HMRC this week about these cases, and I hope that, among the 70,000 people it employs, there are enough who will have enough common sense to do the right thing.

I have come across other cases in which businesses have suffered at the hands of HMRC. One business that was applying for VAT exemption encountered nothing but excessive delays. Another case, which landed on my desk in June last year, alarms me no end. A local business received what I would describe as a generic letter from HMRC on 1 June, stating that the business was £64,000 in arrears. The letter stated that that sum had to be repaid by 14 June, even though it arrived only on 1 June. That is a significant sum of money. During that 14-day window, my constituent made a number of attempts to contact HMRC about the issue, but no one would return any calls. It was not until I intervened that HMRC finally replied. Its inability to return calls, its automated actions and its generic letters cannot be justified. It would be a shock to anyone’s system to receive a notification of that nature.

[Mr Love]

I want to take up the point made by the hon. Member for Chichester (Mr Tyrie) about the shift in compliance costs from HMRC not only to small businesses but to individuals and large businesses. As that shift is already catalogued as having happened in recent years, does the hon. Lady think that the implications of the comprehensive spending review are that small businesses will have to meet even greater compliance costs in future?

[Priti Patel]

I do not, actually. Many other measures came out of the comprehensive spending review and last year’s Budget that will help small businesses to further their interests and, we hope, grow their businesses as well.

I come from a small business background—my parents have a small business—and I am stunned by the attitude and the bureaucracy associated with HMRC. Its lack of accountability is also deeply disturbing for all our constituents. I have had constituents in my surgery who have been reduced to tears when describing their own personal experiences and the distress that HMRC has caused them. In one case, a couple who had separated were having endless complications with their tax credit awards, and the wife was receiving demands from HMRC for the repayment of overpaid credits. In another, problems were caused by HMRC’s delay in processing the correct levels of tax credit for a constituent because—surprise, surprise!—HMRC had made mistakes with the information that it held on her, and my constituent subsequently had to supply it with a great deal of additional paperwork and ID. That involved a lengthy and inconvenient process.

I should like to draw the House’s attention to another tax credit case. It concerns a couple who received overpayments as a result of HMRC’s mistakes. HMRC even gave my constituents a reward of £35 in recognition of that. However, the errors mean that that family are now being pursued for a range of repayments and are undergoing another lengthy and bureaucratic process, even though they have done nothing wrong. Make no mistake, HMRC is effectively still persecuting them and treating them like criminals.

In all those cases, and many others, my constituents have endeavoured to do the right thing, and there has been no evidence of any attempt to avoid paying taxes or to mislead HMRC. However, due to an overly complicated tax system and what seems to be endemic incompetence at HMRC, my constituents, and, as we have heard today, many others, have suffered. My constituents feel that HMRC, with the full force of the state behind it, is effectively bullying them and persecuting the disadvantaged, the weak and the powerless, and that it fails to realise the worry, stress, anxiety and misery that its errors cause the businesses and individuals who are threatened. Those unreasonable actions defy common sense and undermine how HMRC operates and the tax system.

[Charlie Elphicke (Dover) (Con)]

When my hon. Friend takes up cases with HMRC, does she find that they are suddenly sorted out extraordinarily quickly?

[Priti Patel]

I wish that the answer was yes, but unfortunately it is no. As with all large organisations, I am staggered by how long it takes to get a response. I am the one chasing up cases on behalf of constituents months after a complaint has been made.

That brings me on to accountability. Despite the fact that I have taken up every single constituency case directly with HMRC’s chief executive, she has yet to respond personally on any case I have written to her about. It seems that there is a lack of transparency in HMRC. I should also point out that it has an organogram that reaches about 45 pages, which tells me that it is a substantial bureaucracy, but there seems to be no manager for common sense in the organisation. I urge it to start seeing common sense.

In my view, that bureaucracy adds weight to my constituents’ impression that HMRC is an unwieldy, unaccountable organisation that seems effectively to be a law unto itself and never to take responsibility for its errors. I have concluded that that is its practice because it does not feel it has to do so. All too often, officials seem to hide behind complex rules and leave businesses and families having to pursue lengthy appeal processes, whether through the adjudicator, the tribunal, the ombudsman or the courts. Clearly, that puts those who feel that they have suffered an injustice at a significant disadvantage. In many cases, people do not want to go through a lengthy and perhaps costly process to seek a resolution. When they do pursue a matter, those who are unable to seek legal help are left to pitch up with their own amateur efforts against the professional force that is HMRC’s bureaucracy.

I make those criticisms and comments not to attack or damage HMRC but because I want it to make drastic improvements in the service it provides to the British taxpayer. I draw my remarks to a conclusion by congratulating the Treasury Committee on its ongoing and important investigations into HMRC. I praise the Exchequer Secretary for the attention he has given my constituents’ cases, and I wish him luck and all the best in the challenge ahead of him.

17:58

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

I congratulate the hon. Member for Witham (Priti Patel) on her creativity in using an estimates debate to get so many constituency cases addressed. Following her critique of HMRC, I say to her that the buck stops here in Parliament.

I am not a member of the honourable fellowship of the Public Accounts Committee or the Treasury Committee. I was a member of a Select Committee back in 1997, I believe, when the Labour Whips, in a fleeting moment of jocularity, put me on the Deregulation Committee. I sought to change it to the Reregulation Committee, and we parted company soon after. I believe that my hon. Friend the Member for Leeds East (Mr Mudie) was in the Whips Office at that time, but I do not bear grudges.

I attended the debate on the legislation that founded HMRC. The House was relatively empty, and I believe that I was one of the few Members who tabled amendments on Report. At that time, a number of us were concerned about whether the merger was appropriate. We were also concerned about a trend that started immediately when the merger happened, when 3,000 job cuts were announced. Soon after that, 12,000 more were announced. I do not know of any organisation—public or private—that could have survived the treatment that HMRC received in recent years, including recent months.

When the merger happened, there were 104,000 staff. Since then, there have been 30,000 job cuts. We are now down to 75,000 staff. The £2 billion cuts as part of the comprehensive spending review amount to another 11,500 job cuts. I appreciate that the Government have put back £917 million to tackle tax evasion and avoidance, but cutting £2 billion and putting £900 million back seems like a ricochet policy rather than a planned approach to reform, as many Members have suggested.

I want to follow on from the points that the hon. Member for Chichester (Mr Tyrie) made. I chair the parliamentary PCS trade union group, an informal group of Members of all political parties. It enables us to meet the trade unionists who represent HMRC staff—the tax inspectors. Reference has been made to the briefings that have been given in recent months. That has educated us about the role that the staff play and what they have had to endure. It is not just the job cuts; 200 local tax offices have also been cut. We have now been told that there is a radical reduction in the opening hours of the walk-in tax inquiry centres. The point was made that, in some parts of the country, there are no local tax offices and vast gaps. The worst example is Wick in Scotland, where there is nothing in the vicinity and nowhere to transfer the redundant staff to ensure that they are retained in the service.

My hon. Friend the Member for Luton North (Kelvin Hopkins) made the point that for every tax official appointed, £685,000 is gained in tax income that is generated.

[Ian Swales]

Does the hon. Gentleman agree that a walk-in centre that is open only a couple of days a week and staffed by somebody who knows nothing about tax, and whose main role is to note details or direct people to telephones, is not a good walk-in centre?

[John McDonnell]

Yes. In recent years and from the time of the initial legislation, there has been almost a Dutch auction between Front Benchers competing to see who could cut more jobs from HMRC. We tried to point that out. My hon. Friend the Member for Leeds East gave a good example of how not to do a tax return. Some people need a face-to-face discussion about their tax affairs and that cannot be done through a call-centre mentality.

Some Members have pointed out that the evidence on call centres is fairly appalling. The pressure on call centres has mounted. Let me give some statistics for the record. Calls were up 20% from 2009-10 to 2010-11. Call attempts were up 100% from 2009-2010 to 2010-11. Engaged and busy tones played were up from seven to 35 minutes. One can see why that tune—“Greensleeves” or whatever it is—pushes some people right over the edge if they have to listen to it for 35 minutes. The current contact directorate performance prediction for 2010-11 is that only 40% to 50% of call attempts will be answered.

[Kelvin Hopkins]

I agree strongly with my hon. Friend. Together with the cuts in staffing, which have put extra pressure on staff, and de-professionalisation, will my hon. Friend mention the relatively low pay with which many tax office staff have to cope?

[John McDonnell]

We once prided ourselves on an effective and efficient tax delivery service through tax collection, and the job of tax inspector was one to which people aspired. We have undermined that through the de-professionalisation of the service, the way in which staff are treated and pay.

My hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) has direct experience, having met large numbers of his constituents who work in that tax office. The problem is not just the numbers of staff or how some of the services have been downgraded; it is the fact that the redundancy payments of people who are being laid off as a result of the recent cuts are being cut by up to two thirds. In addition, their pensions are now threatened by the change from the retail prices index to the consumer prices index.

Of course, that spells disaster for many people in planning their careers and their futures, so it is no wonder that the statistics on morale are so appalling—and morale is getting worse, not better. Staff were asked whether the changes were usually for the better, but fewer than one in 10 answered yes, meaning that they hold out no hope for the future.

Staff have been treated appallingly by management over a period too. Some Members were in the House when we debated the introduction of the lean system to HMRC, which was lifted straight from the Toyota car factories. That system produced the first strike in the history of HMRC in Scotland, because of how staff felt they were being treated. Hon. Members have learned that members of staff describe the imposition of the new attendance management system as draconian. One said that HMRC management seems to be

“more interested in finding ways to justify dismissing staff to get the numbers down as this is cheaper than redundancy rather than staff welfare and delivery of good customer service.”

The fact that professional staff have those sorts of opinions is an indication that something is wrong.

Staff are also concerned about elements of privatisation, such as the increasing role of private debt collection agencies in pursuing tax debts of under £10,000, and the conduct of private companies that do not have the expertise that HMRC has developed over the years in door-to-door collection. There are real concerns about not only office closures but the disbanding of whole HMRC business streams, which is reducing expertise and damaging service delivery.

[Kelvin Hopkins]

One feature of privatisation and the call centre culture is that it destroys the public service ethos. As my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) said earlier, the public service ethos is vital in an important job such as tax collection.

[John McDonnell]

I fully agree, and we have painted a picture this afternoon of the impact of a combination of job reductions, cuts in redundancy pay and the threats of cuts to pensions, which my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East described as a perfect storm. The message from those on the front line of tax collection is that HMRC is in a perilous situation. I hope from here on in that those voices will be heard and that we will consider a more systematic approach to HMRC reform.

Hon. Members have been told that access to face-to-face inquiry services has been significantly reduced, which is extremely worrying. Let me put on record what a number of tax inspectors have said about that. They say:

“Those offices that remain open”

after the 200 closures

“are having their enquiry centre opening hours significantly reduced. In some case these offices are due to be opened for only two or three days”—

maximum—

“rather than the five days a week they currently open for.”

There is also concern about the disbanding of the complex personal return team in March 2009. Many thousands of the top UK taxpayers no longer have the services of a dedicated case owner and customer relationship manager. Thirty-five thousand taxpayers whose tax affairs were handled by that dedicated team—a highly trained, professional team—are now dealt with in the wider HMRC network. There is a view that the skills are therefore not available or not dedicated in the most effective way to increase tax revenues.

In conclusion, I have heard figures bandied about for how much tax is avoided or evaded, and therefore should be collected. They range from the internal estimate of £46 billion up to £120 billion. A number of us have worked with Richard Murphy and John Christensen of the Tax Justice Network over the past five to eight years to try to highlight the issue. Until recently it was not taken up or reported particularly effectively by the media, so I pay tribute to UK Uncut—a group of individuals who have come together spontaneously, taken information from the tax justice campaign and mobilised direct action, which, whatever Members think of it, has been incredibly effective in raising the issue up the political agenda. As a result of campaigning by the Tax Justice Network, UK Uncut and others, and as people are experiencing the cuts and moving from abstraction to reality in their communities, as my hon. Friend the Member for Leeds East said, they are now asking the question: why are we not collecting this tax? It is due not just to a lack of political will—although there is a tax reform issue that needs to be addressed—but to the way in which we have treated HMRC over the years, undermining its ability to collect those taxes.

[Charlie Elphicke]

I agree with the hon. Gentleman that everyone should pay their fair share of tax, but I strongly disagree with—indeed, I would condemn—any endorsement in this place of direct action that has the effect of shutting down businesses for a day, at a time when jobs and money are hard enough to come by for people in this country because of the Labour party’s recession.

[John McDonnell]

Jobs would be more protected if companies and rich people paid their taxes. If there is £120 billion out there that should be paid, then it should be paid, and if it takes direct action to force action on that, I support that direct action. Indeed, I have participated in it and will do so in future.

Now that the issue has become so pertinent to our constituents, to the country’s financial affairs and to trying to tackle the deficit, my view is that if we continue to hamstring HMRC in the way that it has been since 2005, we will undermine its ability to operate effectively. If we continue with the job cuts experienced in recent years, and with those as a result of the comprehensive spending review, we will destroy that public service ethos, as my hon. Friend the Member for Luton North said, undermining the organisation that we have been so proud of over the past two centuries for its effectiveness in ensuring a fair and just taxation system. I urge the Minister to put in place a consultative process, consulting the unions and the staff on a reform programme for HMRC, so that it can once again do its job effectively.

18:12

[Charlie Elphicke (Dover) (Con)]

This is an important debate, because the evidence shows that businesses and people do better when taxes are simple and certain. Anyone who knows anything about business will know that people in business have to plan. They have to know where they stand and what the tax regime will be. That regime has to be as simple as possible, so that people can understand it and get their heads round it. That is fundamental to the consistency of the rule of law and the framework that enables business to thrive.

It is the same for individuals. I could tell hon. Members about the number of people who come to my surgery who have been stressed out of their minds by demands for £2,000 in tax that they simply do not have. That kind of demand weighs on them, giving them the gravest possible concern and taking over their lives, as they wonder how they will manage to make ends meet. I tend to intervene in those cases, because I can write to Dame Lesley, although I have to say that my experience has not been entirely the same as that of my hon. Friend the Member for Witham (Priti Patel). I have found the Revenue quite helpful in giving people time to pay and helping them to understand that they can do so through their coding notice. Nevertheless, things should not be like that. We have heard time and again that the Revenue did not used to be like that. It is only in recent years that it has gone that way.

It is important that everyone in this country should pay their fair share of taxes, and that includes business. However, we also need to be careful not to make up phoney figures for the tax gap and make wild claims that it is £150 billion a year, when the Revenue itself has said clearly that it is no more than £40 billion.

I take issue with the hon. Member for Hayes and Harlington (John McDonnell), who is still in his place, when he says that it is somehow acceptable to have direct action campaigns against business for the amount of money that it might or might not owe. It is unacceptable to close down a business for a day and deny the people who work on the shop floor—people who are often not well paid—the chance to earn their living and go about their business in their ordinary way in their ordinary lives. It is wrong to do that, and in some cases taking part in such direct action campaigns amounts to a criminal offence, so I urge all Members not to take action that unlawfully impedes business, particularly if it is of a criminal nature.

I am a member not of the Treasury Committee or the Public Accounts Committee, but of the lowly Public Administration Committee, in which we look at paper clips and try to reflect on how administration can be improved. Looking at the careful and thoughtful work done by the Treasury Committee before the election, it is quite clear that the number of customer complaints has risen dramatically. It now stands at 87,179, so I ask where those complaints and problems are. That is how to deal with the issues arising. Call centre issues are important—the fact that we cannot eyeball someone or get our phone calls answered quickly. Complaints about office processing have risen by 38%, while complaints about online services have risen by an astonishing 181%. It is logical to focus on where the complaints arise and where the problems need to be dealt with.

Let me deal with the call centre issues. We know that 43% of phone calls were simply not answered in 2008-09—[Interruption.] That is a huge number of calls, as my hon. Friend the Member for Witham interjects from a sedentary position. We also know that 35% were not answered last year. That does not tell us how long it took to answer the calls that were answered. Oral evidence to the Treasury Committee suggested that it could be as long as 12 minutes—an extraordinary situation. One person providing evidence said that if he took 12 minutes to answer his phone calls, he would not be in business for long. There is clearly an issue about the efficiency and quality of call centres that needs to be looked at.

I do not condemn HMRC, as many of its officers and officials have worked very hard, but I do condemn the previous Government for using the expertise of these wretched consultants time and again to answer all their problems, instead of using the expertise that existed within two institutions with long, proud and successful histories.

I hope that the Exchequer Secretary who comes on deck at this moment will realise on the one hand that he is fortunate, as he cannot do any worse than his predecessors, but on the other hand that he faces a challenge and should take care not to sit on deck while the orchestra is playing and the water is flooding in through holes down below. I hope that he will be assiduous in looking at the issues and trying to sort out the administrative, policy and leadership issues in HMRC today—including the matter of political leadership.

I say that because the staff survey suggests that staff feel pretty wretched. We have heard that time and again, and no one seems to think that the HMRC is well managed. No one has much confidence in anyone and no one feels energised to go the extra mile. Most people do not have that much confidence in their line managers, but they have an awful lot more confidence in them than they do in the top leadership of the entire institution. It is pretty clear, then, that we need to focus on providing the political leadership and the organisational and managerial leadership to make HMRC a better place and, above all, to make it feel better about itself.

We also need to sort out the information technology. It is clear from the Treasury Committee report that, under the previous Government, IT was an unmitigated disaster. I have to describe the response from this Government, who had only just come to office, as Panglossian. It was one of the poorest responses that I have ever seen. I do not blame the Minister, because this was back in June when the Government had only just been formed, but I urge him to take much greater control. I hope that he will take the policy side of his Department by the scruff of the neck.

Commenting on the disaster of the call centres, the Government’s response was that

“six of the seven indicators have improved from baseline and therefore exceeds HMT’s definition of ‘strong progress’.”

The Government seemed to suggest that everything was just marvellous. They went on about how wonderful the call centre answering record was, and I do not think that that is acceptable. The Government do not seem to have been in touch with the reality of the situation.

When asked about the disaster of morale, the Government went into management-speak worthy of the former director-general of the BBC. They talked of creating

“a working environment which motivates and develops our people to give of their best and take pride”.

Whenever we hear mission statements of that kind, we have a sinking feeling that the consultants have crept in through the back door and started to charge a lot of money and ruin an organisation. I hope that the emphasis will change, and that the Government will instead say, “We are going to inspire people, and give them back their sense of pride and responsibility at ground-floor level.” That will enable those people to make real advances and exercise responsibility at every level, rather than returning to the dreadful tick-box culture that has grown up over the past 10 years.

As for IT, we know that it is a disaster. The Exchequer Secretary had to come to the House in the autumn and say that it was a disaster. I must say that he was very forthright and honest with the House, and dealt with the situation superbly. The earlier Panglossian response had been:

“The robustness of HMRC’s IT systems continues to improve, however the scale of the operation, and the amount of legacy systems, is such that this is a journey of continuous improvement and not overnight change.”

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

From “ghastly” to “poor”.

[Charlie Elphicke]

Indeed.

I believe that the Exchequer Secretary is a very fine Minister who will, in time, become one of the ablest Ministers to have graced this or any Government. Let me end my speech by urging him to grab this issue by the scruff of the neck. I urge him not to knock the officers of HMRC who work so hard but to inspire them, make them feel better about themselves, and allow them to take charge and do really well—to provide a great call centre service, a great online service, and the great service in general that HMRC used to provide before it was ruined, particularly in the last decade.

18:22

[Kelvin Hopkins (Luton North) (Lab)]

I shall speak very briefly.

I agree with much of what was said by the hon. Member for Dover (Charlie Elphicke). I especially agree with what he said about the need not to demoralise the staff of HMRC any further, but to put the blame where it truly lies—with the Treasury. My experience has led me to believe that the Treasury is the most stupid of all our Departments, and I say that advisedly.

I had my earliest experience of the Treasury and HMRC when I first entered Parliament and visited a local VAT office. There were splendid people there who were doing a good job, but they said, “We have not enough staff to collect all the tax.” They said, very modestly, “Every tax inspector collects at least five times his or her salary. What we really need is a few more inspectors.” I wrote to the Treasury, as one does, suggesting that because they were collecting more than their own salaries, employing more of them would bring in more revenue. I thought that that was a wonderful idea. The letter that I received from the Treasury, however, was one of the most vacuous, stupid letters that I have ever received from a Government Department. It said, “We are trying to reduce costs by minimising staff.” An eight-year-old child would have seen the illogicality of that. Obviously, cutting staff would cut revenue by far more than the salaries that would have been paid to those staff.

I have not changed my mind about the Treasury since then. I would add that managing the economy has not been one of its great successes either. I hope that one day I shall be challenged by the Treasury—by Ministers, or even by senior civil servants—to justify my accusation. That letter read like a thin press release rather than a proper, intelligent letter from a Department.

I subsequently raised the matter with union members. Along with my hon. Friend the Member for Hayes and Harlington (John McDonnell), I am a member of the union support group. They said that inspectors dealing with income tax and corporation tax raise sums that are many times greater than their salaries—five times is just a modest amount for VAT inspectors, and it is much more for other forms of taxation: the Vodafone scandal involved billions of pounds, for example. HMRC cannot collect enough tax simply because it does not have the resources to do so. It has been demoralised and de-professionalised. I have had many private conversations with senior tax officers, so I know what the problems are.

My next point might not be popular with my party colleagues. Against my better judgment, the previous Government arranged for HMRC to hand out benefits as well as collecting taxes. They gave it the job of handing out credits, but in my view benefits should be handed out by a Department specialising in that, namely the Department for Work and Pensions. No other country in Europe has three major Government Departments handing out means-tested benefits— I have checked that. Housing benefit is paid by the Department for Communities and Local Government, tax credits are paid by the Treasury and other benefits are paid through the DWP. Why not have one Department responsible for handling benefits, especially as each is means-tested, they all overlap and the people who receive them and therefore have to deal with these complex, means-tested benefits are often the elderly and people who might not be the most able? These benefits should be handled by sympathetic, professional staff who can deal with all of them in one place. Part of the problem is that the people who currently do this job have been landed with it.

These two tasks are completely incompatible. Taxation is collected on an annual basis; most taxes are paid yearly, and some of us fill in tax returns while for most PAYE, or pay-as-you-earn, is collected automatically. Benefits change throughout the year, however. Those who claim benefits are often people whose circumstances change almost by the week. They might be in and out of work and their pay rates change so they are either entitled to a credit or not. The situation is immensely complex, therefore. It was stupid to hand that responsibility to HMRC, and I opposed the move. I have stated before in the Chamber that we should have one Department responsible for handing out benefits and another responsible for collecting taxation. The two roles are completely incompatible. I stand by that position, and I hope that one day a Government will be more sensible and will start to unify the handing out of benefits in one Department.

I have met many tax staff, both senior tax officers and the basic back-room staff. All of them complain that they are demoralised and overworked, and that there are too few staff. The less senior staff are very poorly paid, too. If we are going to have a good HMRC for the long term, we must re-professionalise it, and provide enough staff and make sure they are properly paid, and we must take away the nonsense of them handing out benefits as well as collecting taxes.

My message is simple, and I hope it goes home and is thought about, even if it is not acted on immediately.

18:28

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I speak in this important debate both as a member of the Treasury Committee and on behalf of my constituents.

We have heard about the prestige of the Revenue historically, and about the effects of the merger with Customs and Excise, and the hon. Member for Luton North (Kelvin Hopkins) just talked about its transformation into a benefits agency, and made a good point on that.

Although there has been a lot of discussion of costs, this problem is not just about cost cutting. It is also about a failed model of public service delivery, which is at least as important. To illustrate that, let me describe the situation we have found in Hereford. The tax office in Hereford was closed a couple of years ago with the loss of 90 skilled jobs, despite local protests, with which I was closely involved. We are talking about a high-quality employer in a county that is not a high-wage part of the country. That was a grievous loss to the local economy, and in my view a rather unnecessary one, as I will argue.

My second point concerns a local company—I will not name it—working in the area of defence, a small enterprise exporting very successfully. That business presented some concerns about the coding of its exports to the Revenue, and was then appalled to have HMRC take up residence, conducting a kind of fishing expedition through its accounts, which resulted in the Revenue demanding a substantial payment for tax allegedly not received. In turn, that involved huge amounts of time being taken on, and attention being paid to, dealing with this complaint against a very small but rather successful business.

These two points illustrate the effect of the transfer of compliance costs, which has been widely noted, from the Revenue to the people and SMEs it deals with. We have had the loss of a local presence through the tax office, and its replacement by a call-centre mentality that is often incompetent and impossible for the public to deal with.

[Guto Bebb]

On IT systems and call centres, is my hon. Friend aware that the current system is not compliant with HMRC’s own Welsh language policy and is also contrary to the Welsh Language Act 1993? As a result, I have constituents who are unable to deal with the tax authorities through the medium of their own language because the offices have been closed, or because the call centre or online service is not available through the medium of Welsh.

[Jesse Norman]

I was not aware of that and I thank my hon. Friend for his remark. Of course, historically, Welsh speakers on the other side of the border were very welcome to come to Hereford to have these issues solved, but unfortunately that option does not exist now.

The point is that it is not simply an issue of the cost cutting that has taken place over the past 10 years; the whole model of public service delivery has relocated that service away from local people and back to call centres, as we have heard. That has happened under the influence of a mentality bred by the consulting firms. In particular, one picks out McKinsey, which did a substantial piece of work for HMRC some time ago. This, I am afraid, has been the method by which this mistaken conception of public service delivery has been promulgated. Services, instead of being brought closer to people, have been removed from them. A use of technology that could have assisted the ordinary man and woman and small businesses in dealing with their tax affairs has ended up impeding them, and that has been a terrible and costly shame.

I would direct the current management of HMRC to what systems theory calls “failure demand”. Failure demand is not the cost of delivering a service, but the cost on the rest of the system when people fail to deliver a service. Failure demand in the Revenue has gone through the roof in the last decade, and the statistic we have heard about the length of time people spend on the telephone dealing with Revenue and Customs is a very precise quantification of this increase in failure demand. Essentially, instead of thinking of the costs on the system as a whole, the Revenue has been pushed into pursuing the lowest unit cost, which has encumbered the whole.

There is a parallel in the manufacturing industry. Historically, General Motors ran a production line and if a substandard car was on it, it would be removed from the line and the line was allowed to continue. The result was that these “lemons”, as they were called, built up over time and required a substantial amount of time to fix. However, the system itself never got any better because every time there was a problem, the lemon—the bad car—was removed from the production line. The Toyota approach was entirely different. Every time there was a problem with a car, the entire production line stopped. One can imagine the result: enormous pain for a time, followed by a dramatic improvement in quality and a dramatic fall in costs, because the system was no longer tolerant of failure.

At the moment, for the reasons we have described, HMRC has a system that is massively and very unhappily tolerant of failure. The Government are picking up this mess and will be seeking to make something of it over five years—I hope they will be doing so over 10 years. I encourage them to address not merely the issue of boosting the tax collection rates, but the failed model of public service delivery that underlies the Revenue and so many of our other public services. The Conservative party is committed to improving public services and this is a very good place to start.

[Mr Deputy Speaker (Mr Nigel Evans)]

The wind-ups will begin at 6.40 pm.

18:35

[Mark Durkan (Foyle) (SDLP)]

I am pleased to follow the hon. Member for Hereford and South Herefordshire (Jesse Norman), who made some salient points, reflecting the insight that he has secured as a member of the Treasury Committee. I pay tribute to him and his colleagues on that Committee for the work they have done, which has helped to inform this debate, as have the many representations that we are all making.

I wish to highlight a couple of dimensions relating to HMRC’s performance and organisational structure as they particularly affect my constituency and my part of Northern Ireland. Before I do so, I wish to endorse a point made by other hon. Members by saying that I am not making these complaints to target or criticise HMRC staff, who are dealing with huge demands on them. They are trying to cope with a system that has been changed around them, and has been made much more inadequate and much more confusing for them. The system causes stress and anxiety to them, as well as to the many public customers with whom they are dealing.

For staff, the situation has been a bit like driving at night with people coming at them at full beam and as soon as they recover from one at full beam, someone else comes along. Changes have been made in the organisational structure, then in the management and then, as the hon. Member for Luton North (Kelvin Hopkins) said, in the staff work load. They have, probably rightly, had to deal with matters such as the minimum wage; child benefit issues have been absorbed on to the tax side, which has meant that issues have arisen for staff in Northern Ireland; and then they have had to deal with the whole issue of tax credits.

I particularly wish to discuss tax credits and the impact on Northern Ireland and, in particular, on my border constituency. Many people live on one side of the border and work on the other. No matter whether they live in the Irish Republic and work in Northern Ireland or vice versa, their circumstances may mean that they have to deal with the tax office for tax credits and, indeed, for child benefit. Under European Union rules, child benefit is paid according to where someone is employed, not according to where they or the child lives—it is a bizarre rule, but it is there and it adds to the complications. Rather than have tax credits in Northern Ireland administered in Northern Ireland, all that administrative work was taken over to England, perhaps for specialisation.

Included in that work were the issues relating to cross-border tax credits. Every case of every cross-border worker is treated as complex and goes to the complex cases unit in Washington. Other hon. Members have mentioned the difficulty of getting in touch with HMRC, but these people, be they in Donegal, Derry or other parts of Northern Ireland, have real difficulty getting in touch. When they manage to do so, or when their accountants or their employers’ people get in touch, they are told things such as, “Northern Ireland is not in the EU, so what are you talking to us about?” They are not even being told that Northern Ireland is not in the UK; they are being told that Northern Ireland is not in the EU.

These people also have to deal with the relevant officials of the Irish Republic, and the relevant department there is centralised in Letterkenny, only 20 miles from my house and from a tax office in Derry. Rather than all the liaison taking place between officials who are 20 miles apart and who can meet, the cases are dealt with on a completely remote basis, with an office in Letterkenny in the Irish Republic and an office in Washington in England. Can things be exchanged over the internet? No, they cannot, because data protection rules say that things have to be transmitted in documentary form, and letters get mis-sent. Letters that contain people’s details and that are meant to go to the Irish Republic end up going in envelopes that are fit only for UK delivery and so do not get delivered for months. Letters that are going to constituents in Northern Ireland, or to others in the Irish Republic who come to me, end up going completely astray too. There is a simple answer to that—make sure that if cross-border cases are not processed in Northern Ireland, there should at least be a liaison office or front office in Derry, in Northern Ireland, that people can go to where someone deals with their case and they are not left crying and in distress, which is how many people come to me when they have been referred by accountants who will no longer touch tax credit cases involving cross-border workers. Employers are very distressed for their workers as well, but there is a simple answer.

18:40

[Mr David Hanson (Delyn) (Lab)]

I thank right hon. and hon. Members across the Chamber for their contributions to the debate, particularly the Chairman of the Treasury Committee—the hon. Member for Chichester (Mr Tyrie)—and my hon. Friend the Member for Leeds East (Mr Mudie), who chairs the Sub-Committee. I begin by placing on the record the value of the work of Her Majesty’s Revenue and Customs. Clearly, it has faced significant challenges, which have been mentioned by hon. Members across the House, not least of which was the merger and the implications of bringing two big organisations together to deliver a large public service. However, as someone once said, we are where we are, and I want to look to the future and some of the challenges, rather than revisit old territory.

Between HMRC’s formation in April 2005 and March 2010, it collected £2,188 billion in tax and paid out £157 billion in benefits. That is a big operation by any standards, and its functions relating to tax credits, taxation, child benefit, child trust fund endowments, the national minimum wage, which my hon. Friend the Member for Foyle (Mark Durkan) has mentioned, and the supervision of a range of money laundering regulations are key issues that are impacting on the Government as a customer, in relation to raising taxation, and on members of the public as customers. I understand that, as the hon. Member for Witham (Priti Patel) has pointed out, there are many areas in which that interface causes severe frustration and difficulties in relation to customer service. The service to both the customer and the recipient, including the Government, needs to be improved in those areas.

A key thread of today’s debate has been the level of service, especially outward-facing service. We need to reconsider how to improve the response of the service to members of the public who engage with it. That includes not only phone responses, which the hon. Member for Redcar (Ian Swales) mentioned, letter responses and complaints procedures, but the whole issue of how the public interface with the service, how they use it to help them to pay their taxes in an effective way, and how difficulties are resolved. People should expect a level of public service and should know what that level of service is, and we in the House, both in opposition and in government, should look at how we can help to support that. There are real problems here, and if the Minister dealt with the strategy to help improve the service to the public, so that there was clarity and transparency about the issues that hon. Members have raised in connection with what the public should receive, I would welcome that.

HMRC’s main customer remains the Government. It is a tax-collecting agency and it needs to perform that function effectively and efficiently. It is important to maximise revenue flows and to improve compliance. One of the key issues in today’s debate has been how to raise those issues in a positive way to ensure that we take forward tax collection to maximise the available tax-take in a fair and effective way. To do that, we need a dedicated work force with good morale; hon. Members have touched on the changes and the fact that staff morale in the service has been low. To bring about those changes effective leadership is required from the Minister, which I am sure he will give, and from the staff who lead the organisation, focusing on HMRC’s core objectives of delivering services to the public and to the Government. A key issue in that regard, which was touched on by my hon. Friend the Member for Leeds East in particular, is that in a time of global recession and public spending challenges, we need to ensure there is fair and effective taxation and compliance in relation to the taxation issues in our community at large.

One of the key themes in today’s debate, which was reflected by my hon. Friends the Members for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) and for Hayes and Harlington (John McDonnell), is how we manage effective tax compliance and revenue collection at a time when, by the Minister’s own admission, he is reducing HMRC’s settlement by 15% overall as part of the efficiency savings that he seeks to make. Despite the fact that he is investing £917 million in tax collection and compliance, the £2 billion cut in the service causes concern.

My hon. Friend the Member for Luton North (Kelvin Hopkins), on a topic that he has raised in the Chamber on many occasions, drew attention to the fact that the PCS and the Association of Revenue and Customs believe that the compliance figure for each officer amounts to a yield of about £650,000. There are many opportunities for the Minister to enhance compliance in the future. Like my hon. Friends, I am concerned that the 25% potential efficiency savings and the £2 billion cut in the budget will result in job losses, which will equate to revenue losses and lower morale among the staff whom my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East represents, and staff elsewhere, as my hon. Friend the Member for Hayes and Harlington mentioned.

I want to hear from the Minister, in the time he has at his disposal, how he expects those efficiency savings of £2 billion to be made, over and above the £917 million that he has put in place to support revenue collection. I want to hear an answer to the question from my hon. Friend the Member for Leeds East: how much of the money that will be raised by the extra £917 million is to be collected before the 2013-14 deadline, given that the Minister said that he expects to raise an extra £7 billion by that time? I want to hear from him about the service that HMRC will provide. With that £2 billion reduction, I worry that service issues identified by the hon. Members for Witham, for Dover (Charlie Elphicke) and Hereford and South Herefordshire (Jesse Norman) will be exacerbated as a result of insufficient legal resources for litigation, lower response times, increased compliance costs and more difficulties in delivering the efficient service that we all seek.

The Minister needs to give the House an account of his future strategy for the effective collection of revenue by HMRC. We saw last year, with the PAYE debacle in which 1.4 million people were asked to make up an underpayment worth about £2 billion, that the service impacts on everybody’s life, as has been pointed out by Members speaking about their own constituency experiences. Mistakes that are made, from child tax credits to tax demands, cause stress and worry. The efficiency of the organisation is desirable not just because it is a public service, but because of its effect on people’s day-to-day life.

I want to hear from the Minister how he expects to manage revenue collection and compliance over the next few years, and how he intends, with officials, to improve the service and sharpen its focus at a time of reduced resources. Those who work in the service care as much as we do about it, and about its future direction. The trade unions have emphasised to me the need to invest in training and support for tax professionals, the need to ensure that we have an effective deterrent against non-compliance, and the need for measures to reduce the tax gap and ensure that we provide a service to customers out there who are our constituents.

I think that we have a clear role to look at where we have come from and to focus HMRC on its core business, which is providing a service to the public and raising the revenue that we seek to spend. I simply put down as a marker for the Minister the fact that the Opposition will be watching carefully to see how his efficiency savings either hit or support that public service and revenue collection. HMRC’s role is key to helping us fund the public services that we all want, and it is his job to ensure that it does so in the most efficient way possible.

18:50

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

We have had a valuable debate, and I congratulate my hon. Friend the Member for Chichester (Mr Tyrie), the Chair of the Treasury Committee. We have had the benefit of his expertise and that of other Committee members, including my old friend, the hon. Member for Leeds East (Mr Mudie) and my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman). We also heard from a member of the Public Accounts Committee, my hon. Friend the Member for Redcar (Ian Swales).

We have heard about the experiences of the constituents of my hon. Friend the Member for Witham (Priti Patel) and had the benefit of the considerable tax expertise of my hon. Friend the Member for Dover (Charlie Elphicke). We have heard about some of the difficulties of a border area from the hon. Member for Foyle (Mark Durkan) and also heard from the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), whose constituency has the largest tax office in the UK. We have also heard from the hon. Members for Luton North (Kelvin Hopkins) and for Hayes and Harlington (John McDonnell), who both have a long-standing interest in the matter.

There is clearly a consensus across the House that HMRC is a hugely important organisation that has a valuable role to play through the service it provides to taxpayers and tax credit claimants and its contribution in dealing with the difficulties in the public finances. We have heard articulated a widespread concern about a number of aspects of its performance. As the hon. Member for Leeds East pointed out, that has been a consistent concern for a number of years. We have heard a little about some of the causes of the problems. The hon. Member for Hayes and Harlington, among others, talked about the difficulties of the merger, and my hon. Friends the Members for Chichester and for Dover talked about tax complexity. The hon. Member for Luton North talked about the challenges created by the introduction of tax credits and HMRC’s responsibility in that area. Those issues have contributed to a number of the problems.

In the time available, I will touch on the various issues that have been raised. A number of Members mentioned staff morale. The survey numbers are pretty shocking, as HMRC does very poorly on that. My hon. Friend the Member for Chichester referred to HMRC staff as the salt of the earth, and talked about their dedication. I visit a lot of HMRC offices and find that the staff are very dedicated and committed to their jobs. The problem is that they do not feel a strong connection with HMCR or the sense of loyalty and affection to the organisation that they might, but there is a desire to do their jobs very well.

There is sometimes a feeling that HMRC staff are kicked around a bit and that some of the criticism is unfair—happily, I can exclude all Members who have participated in the debate from that charge. To be balanced and fair to HMRC, we should acknowledge some of its successes. Just over a month ago, for example, they successfully dealt with a record number of self-assessments by the self-assessment deadline.

[Nicholas Soames (Mid Sussex) (Con)]

I wholly support what the Minister is saying. It strikes me that what HMRC staff need most is to feel valued, because they do an extraordinarily important job for this country.

[Mr Gauke]

My hon. Friend is absolutely right, and it is right for us to put that point on the record.

On PAYE reform, there is no doubt that there were real problems with the introduction of the national insurance and PAYE service—NPS—computer system. The system does improve how PAYE works, but last year we saw significant problems with tax codes. So far this year we are more than halfway through the tax code process, and it seems to be going well, but these are still relatively early days. There has been a concern about the introduction of NPS, and a considerable concern about the end-of-year reconciliation process. PAYE has always involved an end-of-year reconciliation, but the numbers revealed in September were shocking. We have enormous sympathy with those who face an unexpected tax bill, and we want to do everything we can to ensure that they are treated fairly and sympathetically.

The fundamental problem is that the PAYE system has failed to keep up with changes in working patterns: people tend to move jobs more often, and they often have more than one source of income. We are taking steps to address that by introducing real-time information to the tax system, and we believe that that can address the real causes of the problem. I am aware of the concerns that the hon. Member for Leeds East raised about the timetable, and we are looking closely to ensure that we can deliver to it.

My hon. Friend the Member for Dover was entirely right to mention contact centres and their slow responses. The current service is not good enough, and in the long term we will solve that by getting things right first time and ensuring that the tax system is simpler so that people do not need to phone up. As a temporary measure, however, HMRC will employ between April and September—a particularly busy time for HMRC—1,000 additional contact centre advisers to ensure that we see an improvement in performance.

Several Members raised the issue of the tax gap. The £42 billion figure that HMRC produced—the other figures that have been thrown around lack credibility—is a big number, and although it compares well internationally we are determined to do what we can to bring it down. The figure is made up of several factors, including the hidden economy, written-off debt and so on, and there will always be a tax gap, but we are determined to reduce it.

That brings me to the spending review. Let me be very clear: during the usual communications that take place between Opposition spokesmen and senior civil servants in the run-up to a general election, we said to HMRC, “If you have proposals for areas where additional expenditure could result in substantially increased yield, we want to look at them,” because all too often the previous Government did not listen or even attempt to address that matter.

We were very pleased when HMRC came up with proposals for spending £900 million over the course of the spending review period, and it believes that that could really deliver. I cannot supply the full profile, but by the end of that period HMRC should be raising an additional £7 billion as a consequence of strengthening its compliance capacity, increasing the number of people working in compliance and enforcement, and tackling tax evasion. That is an important step to take.

We have had a useful and valuable discussion within a wide-ranging and interesting debate about an incredibly important issue. Across the House, we recognise that HMRC is a very important organisation. It is right to focus its efforts, as the right hon. Member for Delyn (Mr Hanson) said, on collecting taxes and getting the yield in, and that is what we are doing.

We recognise that savings have to be delivered, that services have to be maintained, that performance must be improved and that revenues must be increased to help tackle our nation’s record deficit. We are determined that HMRC will deliver, and that by the end of the Parliament it will be a far better department, and one that is more efficient, cost-effective and better tailored to the needs of modern Britain.

Question deferred (Standing Order No. 54(4)).

19:00

The Deputy Speaker put the deferred Questions (Standing Order No. 54(4)).

suppmentary estimates 2010-11

Wednesday 2nd March 2011 Commons Chamber

Department for Education

Resolved,

That, for the year ending with 31 March 2011, for expenditure by the Department for Education—

(1) further resources, not exceeding £240,806,000, be authorised for use as set out in Spring Supplementary Estimates 2010-11, HC 790,

(2) a further sum, not exceeding £66,354,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and

(3) limits as so set out be set on appropriations in aid.

HM Revenue and Customs

Resolved,

That, for the year ending with 31 March 2011, for expenditure by HM Revenue and Customs—

(1) further resources, not exceeding £303,044,000, be authorised for use as set out in Spring Supplementary Estimates 2010-11, HC 790,

(2) a further sum, not exceeding £547,861,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and

(3) limits as so set out be set on appropriations in aid.

The Deputy Speaker then put the Questions on the outstanding Estimates (Standing Order No. 55).

ESTIMATES, 2010-11 (NAVY) VOTE A

Resolved,

That, during the year ending with 31 March 2011, modifications in the maximum numbers in the Reserve Naval and Marines Forces set out in Supplementary Votes A 2010-11, HC 777, be usbauthorised for the purposes of Part 1 of the Reserve Forces Act 1996.—(Mr Goodwill.)

ESTIMATES, 2010-11 (ARMY) VOTE A

Resolved,

That, during the year ending with 31 March 2011, modifications in the maximum numbers in the Reserve Land Forces set out in Supplementary Votes A 2010-11, HC 777, be authorised for the purposes of Part 1 of the Reserve Forces Act 1996.—(Mr Goodwill.)

ESTIMATES, 2011-12 (NAVY) VOTE A

Resolved,

That, during the year ending with 31 March 2012, a number not exceeding 42,550 all ranks be maintained for Naval Service and that numbers in the Reserve Naval and Marines Forces be authorised for the purposes of Parts 1, 3, 4 and 5 of the Reserve Forces Act 1996 up to the maximum numbers set out in Votes A 2011-12, HC 769.—(Mr Goodwill.)

ESTIMATES, 2011-12 (ARMY) VOTE A

Resolved,

That, during the year ending with 31 March 2012, a number not exceeding 124,270 all ranks be maintained for Army Service and that numbers in the Reserve Land Forces be authorised for the purposes of Parts 1, 3, 4 and 5 of the Reserve Forces Act 1996 up to the maximum numbers set out in Votes A 2011-12, HC 769.—(Mr Goodwill.)

ESTIMATES, 2011-12 (AIR) VOTE A

Resolved,

That, during the year ending with 31 March 2012, a number not exceeding 44,730 all ranks be maintained for Air Force Service and that numbers in the Reserve Air Forces be authorised for the purposes of Parts 1, 3, 4 and 5 of the Reserve Forces Act 1996 up to the maximum numbers set out in Votes A 2011-12, HC 769.—(Mr Goodwill.)

ESTIMATES, EXCESSES, 2009-10

Resolved,

That, for the year that ended with 31 March 2010—

(1) resources, not exceeding £747,000, be authorised for use to make good excesses of certain resources for defence and civil services as set out in Statement of Excesses 2009-10, HC 791, and

(2) a sum, not exceeding £318,000, be granted to Her Majesty out of the Consolidated Fund to make good excesses of certain grants for defence and civil services as so set out.—(Mr Goodwill.)

SUPPLEMENTARY ESTIMATES, 2010-11

Resolved,

That, for the year ending with 31 March 2011—

(1) further resources, not exceeding £35,218,080,000, be authorised for defence and civil services as set out in Spring Supplementary Estimates 2010-11, HC 790,

(2) a further sum, not exceeding £7,577,185,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs of defence and civil services as so set out, and

(3) limits as so set out be set on appropriations in aid.—(Mr Goodwill.)

Ordered, That a Bill be brought in upon the foregoing Resolutions;

That the Chairman of Ways and Means, Mr Chancellor of the Exchequer, Danny Alexander, Mr David Gauke, Justine Greening and Mr Mark Hoban bring in the Bill.

Consolidated Fund (Appropriation) (No. 2) Bill

Presentation and First Reading

Mr Mark Hoban accordingly presented a Bill to authorise the use of resources for the service of the years ending with 31 March 2010 and 31 March 2011 and to apply certain sums out of the Consolidated Fund to the service of the years ending with 31 March 2010 and 31 March 2011; and to appropriate the supply authorised in this Session of Parliament for the service of the years ending with 31 March 2010 and 31 March 2011.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 153).

Deferred Divisions

Motion made, and Question put forthwith (Standing Order No. 41A(3)),

That, at this day’s sitting, Standing Order No. 41A (Deferred divisions) shall not apply to the Motion in the name of Secretary Theresa May relating to Prevention and Suppression of Terrorism.—(Mr Goodwill.)

Question agreed to.

Prevention and Suppression of Terrorism

Wednesday 2nd March 2011 Commons Chamber

[Relevant document: Eighth Report from the Joint Committee on Human Rights, Renewal of Control Orders Legislation 2011, HC 838.]

19:02

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

I beg to move,

That the draft Prevention of Terrorism Act 2005 (Continuance in Force of Sections 1 to 9) Order 2011, which was laid before this House on 3 February, be approved.

The purpose of the order before the House is to renew sections 1 to 9 of the Prevention of Terrorism Act 2005 pending their repeal and replacement with an alternative regime. These sections expire after one year unless renewed by order, subject to affirmative resolution in both Houses. The effect of this order will be to maintain the control order powers until the end of 31 December 2011. As the Home Secretary said to the House on 26 January, this limited renewal is to allow us to bring forward the legislation introducing a replacement system.

I would like briefly to set out the context for the proposal before the House. As the Prime Minister has said, the threat to the UK from international terrorism is as serious as we have faced at any time. It is assessed by the joint terrorism analysis centre to be “severe”. A number of significant terrorist plots have been uncovered over the past year. Recent trials and investigations show that terrorist networks are continuing to plan and attempt to carry out attacks. That threat will not diminish at any point soon.

Against this background, and given our commitment to redress the balance in our counter-terrorism powers, the Government conducted a review of counter-terrorism and security powers which considered the necessity, effectiveness and proportionality of control orders.

[Jeremy Corbyn (Islington North) (Lab)]

Have any of the people whom the Minister is concerned about—who may or may not be plotting terrorist attacks—at any time been subject to a control order or considered for a control order?

[James Brokenshire]

The hon. Gentleman will appreciate that it is not appropriate for me to comment on such sensitive security issues. I can tell him that the review we undertook underlined that the Government’s absolute priority must be to prosecute suspected terrorists in open court. Measures that impose restrictions on suspected terrorists who have not been convicted in open court should be our last resort. As far as possible, given the need to protect the public, any restrictions should support the primary objective of prosecution.

The review concluded that for the foreseeable future, there is likely to continue to be a small number of people who pose a real threat to our security, but who, despite our best efforts, cannot be prosecuted or, in the case of foreign nationals, deported. As at 10 December 2010, eight individuals were subject to control orders. Our reluctant assessment is that there will continue to be a need for a mechanism to protect the public from the threat that such individuals pose. Lord Carlile reached the same conclusion in his most recent and last independent report on control orders. Consequently, he and the other statutory consultees support the proposal to renew the control order powers. I am sure that hon. Members from all parts of the House will join me in thanking Lord Carlile for his work over the past 10 years.

The review also concluded that it is possible to move to a system that will protect the public but be less intrusive and have more clearly and tightly defined restrictions. In particular, the two-year maximum time limit clearly demonstrates that these are targeted, temporary measures. It will be possible to impose a further measure only if there is evidence of new terrorism-related activity after the original measure was imposed. Measures will have to meet the evidential test of reasonable belief that a person is or has been involved in terrorism-related activity. That is higher than the test of reasonable suspicion of such involvement in the control orders regime. The police will be under a strengthened legal duty to inform the Home Secretary about an ongoing review of a person’s conduct with a view to bringing a prosecution. A more flexible overnight residence requirement will replace the current curfew arrangements.

[Dr Julian Huppert (Cambridge) (LD)]

I thank the Minister for giving way; he is being very generous so far and we will see how this goes. Will he clarify how the new residence requirement is different from the existing arrangements? In her comments to the Home Affairs Committee, the Minister for Security, Baroness Neville-Jones, was less than clear on that point.

[James Brokenshire]

I know that this issue was of interest to the Home Affairs Committee. As the Minister for Security made clear in her evidence, the normal overnight residence requirement will be for between eight and 10 hours. She has written to the Committee to set out that as at 10 December 2010, the longest curfew under a control order was for 14 hours, which was in place in two cases. Of the remaining curfews, one was for 13 hours, three were for 12 hours, one for 10 hours and one for eight hours. Therefore, at least six of the eight individuals will be confined to their residence for a shorter period than they are currently. The Minister for Security has made that point clear.

It is worth stressing some of the other relevant issues. Forcible relocation to other parts of the country will be ended. Geographical boundaries will be replaced with a power to impose much more tightly defined exclusions from particular places. There will be no power to exclude someone from, for example, an entire London borough. Individuals will have greater freedom of communication, including access to a mobile phone and a home computer with internet access, subject to certain conditions such as providing passwords. They will have greater freedom to associate—for example, there will be no blanket restrictions on visitors or meetings. Individuals will only be prohibited from associating with people who may facilitate terrorism-related activity. They will be free to work and study, subject again to the restrictions necessary to protect the public. These changes will allow the individual to continue to lead a normal life so far as is possible, subject only to the restrictions necessary to prevent or disrupt involvement in terrorism-related activity.

The more limited restrictions that may be imposed may facilitate further investigation, as well as preventing terrorism-related activities. The new regime will also be accompanied by an increase in funding for the police and the Security Service, to enhance their investigative capabilities. The Government intend to bring forward legislation to that effect shortly. The legislation must be properly prepared and properly scrutinised by the House. In the meantime, we are clear that it would be irresponsible to allow the current regime to lapse in the absence of alternative measures and while the investigative capabilities of the law enforcement and security agencies are being developed.

It is important to underline that control orders remain legally viable and although they are, in our judgment, imperfect, they have had some success in protecting the public. We are satisfied that the current control order powers and the order before us today are proportionate and fully compliant with the European convention on human rights, and that, pending the introduction of their replacement, it is essential that these powers continue to be available in order to protect the public.

[Mr William Cash (Stone) (Con)]

I should like my hon. Friend to take note of the observation made by a former Home Secretary, Charles Clarke:

“The principal responsibility of the judiciary is to justice and to the liberty of the citizen properly carried through, but not to the security of the nation.”

Is my hon. Friend also aware of my Prevention of Terrorism Bill, which I introduced today? The object of the Bill is simply to disapply the Human Rights Act 1998 in respect of these matters in order to ensure that we maintain habeas corpus, due process and fair trial, even in the case of alleged suspects.

[James Brokenshire]

I am aware that my hon. Friend has introduced a Bill, although it would not strictly apply in the context of this debate on control orders and the new proposals that we are seeking to introduce, given that his Bill applies to provisions allowing for detention. That means that it would not affect these measures, because they do not allow for detention. I note that he has sought to introduce his Bill, but I do not think it is directly relevant to this debate.

[Jeremy Corbyn]

Is the Minister aware that the objection that many of us have to the principle of control orders is that they are effectively a form of Executive control and not subject to judicial review in the normal way? What we need is criminal law to deal with criminals, rather than Executive fiat to deal with people about whom the Security Service might or might not have suspicions.

[James Brokenshire]

I certainly hear the point that the hon. Gentleman is making. As I have already stressed, our preference is always to bring prosecutions and to bring people before the criminal law. I must also highlight my previous comment on the compliance with the ECHR of the provisions before us. These measures are always used only as a last resort.

We are currently preparing legislation to introduce the replacement system. I am anxious that the passage of that legislation should follow due process, and that it should be subject to the intense scrutiny that I know Members of this House and the other place will rightly bring to bear on it. Hon. Members will understand that these are complex issues, and I am sure that they will share my desire to ensure that we get the new provisions right. While the process is under way, it would not be responsible for us to leave a gap in public protection between the repeal of control orders and the introduction of the replacement regime. Our intention is that there should be a safe and managed transition to the new system. This means that, until the new system is introduced, we need to retain the full range of control order powers. The alternative would be to allow individuals who pose a threat to the public to go freely about their terrorism-related activities for the remainder of the year.

This is the last occasion on which the House will be asked to renew these powers. The Government will shortly bring forward a more targeted and focused regime to protect the public. Before the transition to that new regime is complete, the risk to the public would be grave indeed were control order powers not renewed. I therefore ask the House to approve the renewal of those powers for the transitional period.

19:15

[Mr Gerry Sutcliffe (Bradford South) (Lab)]

As the Minister said, the threat level to our country remains at “severe”, and the threat of terrorism is never far away. We are a high-profile country that will be holding high-profile events this year and next, so there cannot and should not be any room for complacency.

We should congratulate and thank our security services and police on their co-ordinated work in keeping us all safe. They do a tremendous job, and we know of the plots that have been foiled in the recent period. It is our duty in the House to provide them with the tools and procedures that they need to do their job effectively. Sometimes, that means walking the difficult line between balancing individual freedom and collective safety, with the rights of the wider community sometimes outweighing the rights of the individual. Control orders have been the tool for that.

As has been said, in an ideal world we would not wish to use control orders. It would be greatly preferable if our criminal justice system could deal with terrorists who wished us harm. However, as previous Home Secretaries and Ministers have said, control orders have become a necessary evil. Until an alternative comes forward that gives the same level of protection, we have to accept that.

As the Minister said, this is the sixth annual review of control orders since the power was introduced in the Prevention of Terrorism Act 2005. The order before us provides for the continuation of the power to make a control order against an individual when the Secretary of State has

“reasonable grounds for suspecting that the individual is or has been involved in terrorism-related activity”

and considers it necessary to impose obligations on that individual for the purpose of protecting members of the public from the risk of terrorism. That has to be the major priority for any Government.

Lord Carlile, who was the independent reviewer of terrorism, said in a previous report that one person subject to a control order was

“a dangerous terrorist who would re-engage with terrorism the moment he could.”

That is the type of person we are dealing with. I add my congratulations to Lord Carlile on his nine years in the job. He did a tremendous job, and I know that it challenged his political views on control orders and other terrorism-related matters.

The original intention behind control orders was to deal with foreign terrorists who could not be deported or prosecuted. As the Minister said, eight people are under control orders at the moment, and some of those orders have been made since the coalition Government came to power. As I understand it—he may be able to confirm this or otherwise—the current control orders are all on UK citizens as opposed to foreign nationals.

Yesterday, the Home Secretary announced in the Protection of Freedoms Bill what we see as a weakening of anti-terror legislation. We have also seen the ridiculous situation of the order on 28-day detention being allowed to lapse without the draft emergency legislation being in place. That legislation has now been published, but as yet we do not know when we will discuss it. There may be a difficulty if it is introduced when the House is not sitting and there needs to be a recall of Parliament for us to scrutinise it.

As the Minister said, the Home Secretary wants to repeal control orders, as she said in her statement to the House on 26 January following the belated counter-terrorism review. She said that too much of the 2005 Act was “excessive and unnecessary”, but she and the Minister have admitted that for the foreseeable future there are likely to be a small number of people who pose a real threat to our security but who cannot currently be prosecuted or deported.

We need to know whether the replacement for control orders will be weaker and whether it will protect the country as it should. We would like to hear from the Minister what evidence came from the security services and the police about the new regime that he and the Home Secretary want to introduce. There is a suspicion on our side that it is a political fix to get the Deputy Prime Minister out of a mess, and that it has to do with the reality of being in government as opposed to the rhetoric of Opposition. I say that because the Home Secretary and the Prime Minister realised, on the advice of the security services and the police, that there are dangerous people out there, whom we must tackle. I hope that the new regime is evidence-based, and I will be interested in any evidence that the security forces and the police publish about their viewpoints.

If the Minister is able to respond to the debate in the time available, will he react to the House of Lords Joint Committee report and its recommendations on the scrutiny of the new proposals?

[Richard Fuller (Bedford) (Con)]

Some of us recognise that control orders are the jewel in the crown of the previous Government’s authoritarian legislation. The hon. Gentleman said that we are discussing the sixth annual renewal. Does he believe that the existing rules on control orders—that necessary evil—are perfect? If not, did he ever vote them down on the five other occasions they were discussed?

[Mr Sutcliffe]

No. The hon. Gentleman makes a fair point. As I said, every time the matter has been discussed, the Minister of the day has said that it is a difficult matter, and that we much prefer to get to the point of prosecution so that the criminal justice system deals with it. However, as Lord Carlile, who was the independent regulator, found, there are circumstances for which the criminal justice system cannot cater in that way.

[Richard Fuller]

I greatly appreciate the hon. Gentleman’s giving way again. He used the word “weaker”, but a change in the law could be perceived as an improvement rather than a weakening. We should be careful when we use such words because they can have different meanings in different contexts.

[Mr Sutcliffe]

I take the point, but that relates to the parliamentary scrutiny of the new proposals, and perhaps I will deal later with how we can consider that further.

Counter-terrorism policy has to be built on evidence and on advice from the security services and the police, not political fixes. That is important because Members of Parliament do not get the detail of exactly what has occurred. We get the independent reviewer’s report, but we do not get the information about what has happened. Usually the Home Secretary, sometimes on Privy Council advice, gives briefings to the Opposition. When we discuss the new regime, that might be a way forward to work together to try to ensure that we understand what exactly is happening on the ground.

The Minister referred to the replacement legislation in discussing what the Home Secretary said on 26 January. She asked the independent commissioner, David Anderson, to pay particular attention to the new measures in his first report. That is fine, but the Minister used the word “shortly”, which was a favourite of mine when I was a Minister, and means any time between now and a given date a long time in the future. When does the Minister expect the proposed legislation to be available so that we can discuss the various issues that we face?

I particularly want to debate the difference between a curfew and an overnight residence requirement. The Minister mentioned a possible difference in hours, but we will see how we go.

The legislative proposals need to be scrutinised. The new control order regime pays particular attention to surveillance and we are told that sufficient finance will be available for the resource-intensive proposal to the police and the security services. Will the Minister confirm that it will be new money? How will the continuation of the current control order regime deal with the financial cuts that the police and the security services face? How much will the police budget for counter-terrorism be? How will a cut in that budget affect control orders? Is there any likelihood of needing to increase the number of control orders as prisoners detained under counter-terrorism measures are released and returned to our streets? Has any assessment been made of the possible increases in the need for control orders? Another issue that was raised the last time we debated control orders was the cost to the Exchequer arising from legal challenges made by controlees. Will the Minister inform us of those costs?

All hon. Members recognise that the safety and security of the public are difficult issues. We have long-held traditions of individual rights and freedoms, but as I said, given the world that we live in, there is a difficult balance to achieve. Evidence-based policy is vital, and we should err on the side of caution when it comes to the safety of the public. The Opposition will obviously support the extension of the orders this evening. We look forward to the new legislation on how we work and scrutinise what happens. We hope to reach a consensus that meets the requirements of individual freedoms while putting the safety of our country to the fore.

19:25

[Patrick Mercer (Newark) (Con)]

It is a pleasure to follow the hon. Member for Bradford South (Mr Sutcliffe). Many of his comments, and his support for the Government, were not unexpected.

I sometimes wonder how much time we consume in the House of Commons dealing with apparently insignificant affairs. For instance, having had a grand total of—I think—nearly 30 individuals under control orders at one stage, we are now down to eight, so we find ourselves devoting many minutes, if not hours, of parliamentary time discussing the fate of eight individuals. That is important. However, what concerns me most is that the previous Government imposed control orders that are fundamentally wrong, misapplied and undemocratic—they are fundamentally a help to our enemies—but did not seem particularly bothered when individuals who were subject to them under the previous regime absconded or escaped.

That is the point. I pay huge tribute, as the hon. Gentleman did, not only to the work of Lord Carlile, but to the work of our security services, who have foiled or plain put off any number of extremely dangerous plots. However, the fact remains that although the eight individuals about whom we are speaking today are not numerous, they are a totem for our enemies.

[Jeremy Corbyn]

I am interested in the hon. Gentleman’s opinions, but, as the Minister said earlier, there are no charges against those eight individuals, and there is apparently no possibility of deporting the foreign nationals involved. Does the hon. Gentleman share my concern that the House will vote through Executive orders that control and change people’s lives entirely when no criminal charges have been laid against them?

[Patrick Mercer]

The hon. Gentleman’s intervention is helpful and timely, and I completely agree with him. The difficulty is that we are detaining those individuals undemocratically and improperly, which plays directly into the hands of our enemies.

Our foes—be they Islamist fundamentalists, direct action groups or animal rights groups, Irish individuals or whatever—all understand the power of propaganda. The one thing at which they are good is broadcasting their word. They understand that the spoken, the written and the broadcast word are more powerful than any bullet or bomb.

Before Christmas there was a series of events, with which I shall not detain the House, involving a serious plot against western Europe—a core al-Qaeda plot—that both failed and was foiled. To replace that failure in the eyes of the public, an extraordinarily ill-thought-through plot was mounted from Yemen involving ink cartridge containers on a certain number of aircraft—cartridges that, frankly, were unlikely ever to explode. However, for very little effort, our enemies dominated the media for four complete days at the end of October last year, making the point that terrorism had not gone away and that they still intended to terrorise people. They did so without killing or injuring anyone, and with very little effort on their part.

The point is that with control orders we continue to aid and abet our enemies in exactly those methods of operation. First and foremost, we fought Nazism, communism and Irish republicanism without having to resort to any of those methods, because we were a democratic nation fighting on democratic principles against non-democratic enemies.

[Jacob Rees-Mogg (North East Somerset) (Con)]

I agree with a great deal of what my hon. Friend is saying, but we did intern people in the last war and we did have extraordinary regulations—regulation 18B—to lock up people who were deemed to be a threat to the state, so I think it is fair to have extraordinary regulations for relatively small numbers.

[Patrick Mercer]

I am most grateful to my hon. Friend. He is absolutely right: of course we interned people in the last war, and we also carried out the disastrous policy of internment in Northern Ireland in the ’70s. I was not there at the time, but I was there in the follow-up to that policy, which was literally disastrous, not only in countering terrorism, but in aiding and abetting the recruitment of our foes in the battle with the Irish Republican Army that lay ahead. However, I hope that my hon. Friend does not mind if I do not go into that in too much detail.

If we retain the powers indefinitely and continue to treat that small number of people in that way, we will pass the most important tool that we can to our foes. We will be saying to our enemies: “Please understand that without letting off any bombs or killing any policemen, soldiers or civilians, you have achieved exactly what you want to achieve. In other words, you have destabilised our democracy. Without raising a finger, you have done exactly what you wanted to do: you have changed the way we live our lives.” That is not right. I celebrate the changes that the Home Secretary announced earlier. Without doubt, there have been some improvements. For instance, of the three measures for which I have long argued, and for which I shall continue to argue—the ability to question after charge, the use of intercept evidence and plea bargaining—one has been accepted. One is better than nothing—it is an improvement—but we must understand that our abiding aim is to get those individuals into court on a legitimate charge and with a legitimate trial, and to uphold the principle that they are innocent until proven guilty.

We have other methods of dealing with criminals. I am sure that, like me, the House remembers how a previous Prime Minister made it a point of principle that Irish republican terrorists, and indeed Protestant paramilitaries, should not be treated as they wished to be—that is, as soldiers—but as mere common criminals.

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

I am following the hon. Gentleman carefully, but will he correct his reference to “Protestant paramilitaries”, by perhaps describing them as loyalists or so-called loyalists? His use of the word “Protestant” in this context is not correct.

[Patrick Mercer]

The right hon. Gentleman is quite right. I am afraid that I am a victim of my own experience. He is absolutely right that the term is outdated. It was one that we used in the many tours that I served in Northern Ireland, but it is both wrong and probably insensitive, and I apologise.

Whatever stamp of terrorist we were facing in Northern Ireland, that terrorist was deemed to be a criminal. There are methods that we can use to handle those criminals. They are not soldiers; they are criminals. Therefore, surely it is up to us to deal with them in the same way, using the rules of bail along with other methods that we use to surveille those of whom we are suspicious. We do not need to take these individuals’ liberties away from them.

There are two points behind that idea. The first is that it is improper and undemocratic; the second is that it is plain damn silly. If we say to someone, “We are interested in you; we are surveilling you; we are keeping you under observation”, we immediately fail to harvest the intelligence that those individuals can give us. Not all of them are terribly clever, although some are, and many of them are very foolish, which is why they have fallen under suspicion in the first place. Foolishness, of course, should be aided and abetted by the security services because foolishness provides us with further clues and further evidence.

I will not detain the House further. Despite my instincts, I will certainly support the Government tonight on the basis that I understand that future legislation needs time to mature and to be properly formulated. The fact remains that I hope that the Home Secretary and her Ministers will look most carefully at what is proposed so that in the future we will deal with our enemies not only in a democratic and proper way, but in a thoroughly practical one.

19:36

[Jeremy Corbyn (Islington North) (Lab)]

I am grateful for being called to speak and I am sorry that it looks as though there are not enough Members present to call a Division later. I personally believe that these are very serious matters and I have opposed control orders in the previous Parliament as well as in this one, so at least I have the benefit of consistency on this matter.

I oppose control orders not because I have any truck with those who wish to set off bombs in the cities of this or any other country. Indeed, my borough lost more lives on 7/7 than any other London borough, and attending those funerals because of what happened on that day is not easily forgotten. My concern is that Parliament is again voting through provisions that give extraordinary powers to a Secretary of State, who is able to impose a control order on an individual without recourse to a due process of law.

As the Minister said, these are people against whom no criminal charge could be brought and they cannot be deported, presumably because of the lack of convention applicability in the countries to which they might be deported. We do not know, of course, who these eight individuals are. I think that for Parliament to give such powers to any Secretary of State is an abdication of our responsibility for two reasons. First, the separation of judicial and political functions is central to the constitution and very important. We are not a court; we cannot put people on trial. We can pass laws, and it is for the courts to deal with them in a separate place. Secondly, if by this process we deny individuals access to any judicial process whatever and people are restricted and to some extent detained by Executive decision, that bypasses both ourselves as a Parliament and the independence of the courts. We should think very carefully about that.

We are apparently dealing with eight individual cases and I have no idea who those eight people are. I do not propose to discuss any of those cases; that is not the point. The point is one of principle relating to what we as a Parliament are doing. If this measure is part of the war on terror, I ask Members to remember what the hon. Member for Newark (Patrick Mercer) just said about the experience of internment in Northern Ireland. Indeed, for that matter, there is also the case of internment at the start of the second world war, when a large number of Jewish people were detained on the basis that they had German relatives. Of course they had German relatives: they had fled from Nazi Germany and came to this country to escape fascism, only to be promptly detained as suspects of fascism. I suspect that they found that experience deeply troubling and that it did not leave them for the rest of their lives. We need to reflect carefully on that.

If an individual has an order placed against them, their movements, their liberties and their life opportunities will obviously be restricted. If an employer knows about it, as he probably will, the person concerned will be unlikely to keep his job. I suspect that many universities will be very reluctant to allow students in that position to remain there, and might refuse outright. The lives of such people are seriously harmed in many other ways

Is this a fair thing to do? If there is evidence that an individual is manufacturing a bomb, planning to put a bomb on a plane, or planning to kill civilians for no obvious reason—indeed, to kill civilians in any circumstances—let a criminal charge be brought against them. We should bear it in mind that in Northern Ireland, internment became a recruiting sergeant for the IRA.

Let us look at the issue on a wider scale. Let us consider the hundreds of thousands of young people who are wasting their lives away in refugee camps in Gaza, Lebanon, Jordan, Syria, and many other parts of the middle east. Do they feel that they have a democratic choice? Do they feel that they have a democratic right for the rest of their lives? No. They see the rest of the world vicariously, through television screens and computers. Does their experience make them respect a democratic process? Does it give them choices and opportunities? No. It is the breeding ground for irrational acts of criminal violence against civilians.

The House cannot solve all those problems, but we can at least make two contributions. First, we can try to bring about peace and justice processes throughout the region concerned. Secondly, we can ensure that in this country we defend the democracy of an elected Parliament, defend the independence of the judiciary, do not allow Ministers to have powers to detain individuals without recourse to the courts or to an individual hearing, and allow such individuals to know what the charges against them are. We would condemn many other societies in which someone can visit an individual and say, “You are under suspicion; you are under arrest; you are under control”, and I think that we should be very cautious indeed about passing a law allowing that in the House of Commons.

[Rehman Chishti (Gillingham and Rainham) (Con)]

The hon. Gentleman says that the accused should be allowed to know what the charge is. That brings into play the concept of special advocates who are given evidence behind closed doors and cannot take instructions from the accused, and hence the concept of not being given a fair hearing. On that basis, does the hon. Gentleman agree that the process involving special advocates should be reviewed, and that the concept of a fair hearing at which the accused can be given a chance to comment on the evidence must be right?

[Jeremy Corbyn]

I more or less entirely agree with the hon. Gentleman. The Special Immigration Appeals Commission courts involve that concept of the special advocate who does not know—or, rather, may well know but cannot share with his client, the defendant—what the charges are against that person, and how the defence is to be mounted. Franz Kafka wrote about such circumstances extensively and with great passion. It is possible that descendants of Franz Kafka are working away in the Ministry of Justice, the Home Office or some grubby basement somewhere.

We are talking about the creation of a miasma of untrustworthy or untrustable sources. There might be a case against an individual, but that individual does not know what it is. His advocate might know what it is, but cannot tell him and can say only, “Do not worry—I will try and get you off. You want to know what you are charged with? Oh, I cannot tell you that.” Hello? Let us get real. If we believe in a proper judicial process, let us practise a proper judicial process.

I feel very reluctant to support any anti-terror law that departs from the principle that anyone who has been charged must know what the charge is, must be able to defend himself against that charge, and must be either found guilty or acquitted, depending on what evidence is presented and what the court decides at the end of the process. That principle, surely, is the best defence of a free society. Departing from it weakens a free society and damages all of us.

It is disappointing that the Chairman of the Joint Committee on Human Rights, my hon. Friend the Member for Aberavon (Dr Francis), is not present to comment on its report. I want to make three brief points about the summary. The Committee calls on the Government to

“urgently review all existing control orders to ensure they are compatible with the findings”,

but it was not clear to me from the Minister’s earlier contribution whether that had happened, so perhaps he will tell us in summing up.

One of the other Select Committee recommendations was:

“The Director of Public Prosecutions should be asked to consider whether a criminal investigation is justified in relation to each of the eight individuals subject to existing control orders”.

Again, I am not clear whether that has happened. I apologise if I missed something the Minister said, but I would be grateful if he would say what has happened in that respect.

The Select Committee also said:

“We do not accept the Government’s reasons for not providing this opportunity”—

for pre-legislative scrutiny—

“and recommend that it be published and made available to Parliament”.

If the Government have measures to introduce on control orders or anti-terror in general, that is clearly an important and major piece of legislation. This House has slowly and reluctantly dragged itself from the 18th century into the 19th and the 20th, and although we have not reached the 21st yet, we do have a process of pre-legislative scrutiny. Therefore, I think a Bill should be published as early as possible so that the House can thoroughly examine it and we can have a serious debate on it before it reaches the light of day. These are serious and important issues. We are talking not about just eight individuals’ lives, but the whole principle of a democratic and free society.

We put in place control orders, secret courts, special advocates and all kinds of special measures, and we have a Security Service that is not public and that is unaccountable. We also have charges that are unknown against individuals who do not know what the charges against them are. That creates a rather unpleasant Kafkaesque secrecy surrounding our society and our lives. It does not make us any safer, and it does not make the world any safer; actually, it contributes to making the world a more dangerous and precarious place.

I hope the Minister understands both my reasons for making these points and why many of us hold these views. It is reasonable and fine for him or the Secretary of State to ask for opinions and views from the security services and the police; of course they should ask for their views. They should also, however, ask for the views of the judiciary, advocates, civil liberties groups and the people who spend their whole lives trying to defend the civil liberties of all of us. Their views are equally legitimate and important.

19:47

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

It is a pleasure to follow the hon. Member for Islington North (Jeremy Corbyn), who has consistently held his views on this issue over many years. I have a lot of sympathy with what he has said. It is also a pleasure to follow the hon. Member for Newark (Patrick Mercer), for whose views I also have much sympathy.

I want to comment on a point made by the hon. Member for Bradford South (Mr Sutcliffe). I know he is an honourable man, but he made an unfortunate comment which I suspect was down to an over-enthusiastic, wet-behind-the-ears political novice who is working in his office at present, who got a quote from the Labour agents’ handbook suggesting that the coalition Government’s proposal is some kind of political stitch-up for the benefit of the Deputy Prime Minister. That was an unfortunate comment, and it demeans the hon. Gentleman, because it has no credibility whatever. To suggest that the coalition Government would put the country’s security at risk is extremely regrettable, and I wish he had not made that remark.

I would prefer it if this debate did not have to take place, but I realise that we cannot allow control orders to lapse without anything in their place. I therefore welcome the fact that this is a temporary renewal, and that, as the Minister said, this will be the last occasion of its kind. We have a very clear milestone—31 December this year—by which the alternative arrangements need to be in place.

[Mr Cash]

Does the hon. Gentleman agree that in order to have effective and just alternative arrangements, they must be pivoted on habeas corpus, fair trial and due process, and any substitute within the framework of human rights legislation would simply not be workable?

[Tom Brake]

I thank the hon. Gentleman for that intervention, which he has made a number of times over the past couple of days. I certainly agree with him that any process must be heavily based on a judicial process; indeed, that is central to this debate.

It also gives me some reassurance that, where the coalition was able to take immediate action, such as on the 14-day provision, such action was indeed taken. Since this debate last took place, I have met—a couple of months ago—someone who was the subject of a control order that had been quashed. That happened because, eventually, some of the evidence held against this controlee had to be released. One of the apparently most convincing pieces of evidence held against him was that, when he was on the top deck of a bus with his son, he had stood up and turned in such a way that the camera could not see him, and therefore he had clearly been given counter-surveillance training.

That person set out precisely what his experience had been. He was at home when, all of a sudden, a large number of police officers came through the door. He was told, “We are now going to relocate you. No, you can’t call a lawyer. We are going to relocate you to a part of the country you’ve not been to before. That doesn’t matter—that is where you are going.” He was then subject to conditions which meant that going out to work was not a possibility—doing that is not possible for someone who has to be back in their residence perhaps three hours after leaving it. If they live in a place that is already some distance from the town where they work, no sooner have they got there than they have to come back. They can therefore forget working, going to university and so on.

That experience led that person to have a breakdown and to abscond, because he could not take the pressure of the control order he was subjected to. As I said, it was eventually quashed, because when some of the evidence against him was produced, it was considered not terribly convincing.

There was one very regrettable aspect of the review process. The hon. Member for Islington North rightly talked about the other organisations that should be consulted as part of this process. It is very clear that one group of people who were not consulted as part of the process was controlees who subsequently had their control orders quashed. In order to get an appreciation of the effectiveness of this measure, what alternatives could be put in place and whether, psychologically speaking, this is a good way to move people away from terrorism—if that is what they are inclined to pursue—it would have been sensible as part of the review process to sit down and listen to some of these people’s stories. However, that has not happened. That omission needs to be addressed in any ongoing process of examining the new legislation, and I hope it will be.

Whatever the alternative measure is, it clearly has to be a qualitative improvement from a civil liberties perspective—and, indeed, from a security perspective—on what was there before. It has to put the onus on prosecution rather than containment. All too often, as is acknowledged, one of the purposes of control orders is to contain people for long enough for them to lose track of the people whom they had had contact with in the context of terrorist activity, so in many respects it is simply a containment process. People are kept for as long as it takes for them to lose track or lose interest—or, indeed, grow up—and therefore not pursue that line of action. Therefore, the focus was not on trying to prosecute people and that was a mistake. I hope that the proposed terrorism prevention and investigation measures—TPIMs—will ensure that prosecution is very much at the heart of what happens. Lord MacDonald has set out clearly how that process could work and how a limited process of a couple of years could be allowed for such a prosecution to take place, and the Government will need to examine that very carefully.

As has been mentioned, further clarification is needed on curfews. As we know, a curfew does not stop someone doing what they want to do—that is also the view of Lord MacDonald. To replace a curfew with a shorter curfew is not the right course of action. A curfew, be it for 12 or 10 hours, is still a curfew and we need to examine the alternatives. For example, we might need to consider carefully a system where someone nominates a place of residence where they will be and has to give advance notice if they are going to be somewhere else on a particular day or week. We must not simply replace a curfew with a shorter curfew.

As I have stated, the judicial process has to be at the heart of the arrangement. Liberty has produced a useful crib sheet listing what applied under control orders and what will apply under TPIMs. I suspect that Liberty welcomes half the changes, although perhaps feels that more clarification is needed on a quarter of them. For example, control orders are renewed annually, but we need to know whether there will be a renewal process for TPIMs, as opposed to a permanent arrangement. As we have heard, there are question marks over the future of special advocates—perhaps that process could be changed—and, as I have said, we also need more clarification about exactly what is proposed on curfews. On some areas, particularly the judicial nature of the process, Liberty has severe reservations, as do I. I will certainly welcome anything that we can do to move this process into a court-based environment, rather than an Executive one, as will other Members who have spoken in this debate.

Clearly this is a crucial piece of legislation. There is a no alternative for us tonight; we cannot do anything but renew it, and that is entirely the right course of action. We have until the end of the year to flesh out what the alternative will be and to address some of these fundamental civil liberties considerations that require further clarification. I hope that we will see some substantial improvements from a civil liberties perspective, if not tonight, certainly as the draft legislation is developed, so that we can get rid of control orders and replace them with something with which I and others who are concerned about civil liberties will feel comfortable.

19:58

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

Having listened to much of this debate, I find that I come to it from a completely different perspective from most, because I know the importance of facing the reality of terrorism. Many in this House have lived in the safety and quiet of their own home, but for 25 years of my life I lived totally under police protection. I could not drive on my own—I never drove in those 25 years. I had to be taken from A to B in a police car in the presence of the police because of terrorism. That was so even when some Members from my side of the Irish sea were playing along with those who were threatening people within the United Kingdom.

This debate is important, because it goes right to the heart of the solemn duty that is placed on a democratically elected Parliament and Government, which is to provide the protection and security of their people. The effect of the order will be to maintain the power set out under the 2005 Act and to allow the Government to exercise the use of control orders to tackle any severe threat from suspected international terrorists in particular.

We are living in a dangerous world. Let us realise that there are people in our society, within the UK, who live and breathe terrorism. They live to destroy and bring havoc upon the law-abiding people of the UK. I speak from experience, as IRA terrorists wreaked havoc on Northern Ireland for more than 30 years. I have spoken in many debates in the Chamber over the years, pointing out that various Governments have sought to appease terrorists, leaving the innocent population to endure grievous suffering and pain.

Tonight, hon. Members have spoken, no doubt with sincerity, about the withdrawal of people’s rights and ability to move around, but my family have been denied such rights for the past 35 years. For 25 years, my wife was denied having her husband travel with her, but nobody seems concerned that elected representatives in the UK were forced into an intolerable situation or that those people inflicted that situation on our families. Many of my children grew up without their father being able to travel in the car with them. They grew up under a continuous threat and behind bulletproof windows and doors. That is how we lived our lives in Northern Ireland. I wish that hon. Members could live in the real world when they talk about these issues. That was the reality in Northern Ireland. Many people were happy to play along with Gaddafi whenever he was arming the Provisional IRA. They were lauding and applauding him, saying what a wonderful person he was, but of course they want to jump ship now because that does not really suit the international scene.

I am sure that no hon. Member desires to have these Prevention of Terrorism Act 2005 measures continued for one second more than is necessary, but necessity prevails and we have a duty to grant the Government the powers that are essential to deal with the threat. I remember travelling by aeroplane across the Irish sea whenever there was a bomb threat. I know what it is to land on the ground—thankfully safely—and immediately be evacuated from the plane, going down the chute, because of a bomb threat. There is nothing glorious about terrorism and I suggest that the House should be more concerned about innocent, law-abiding people than they sometimes seem to be about terrorists and their rights.

Sadly, there are those in the community who pose a real threat to public safety and unfortunately they cannot always be prosecuted or deported if they are foreign nationals. Such people not only pose a significant potential threat but seek to undermine the very fabric and stability of our society. There are those who suggest that if there is not sufficient evidence to prove such persons guilty of a crime they should not be detained even though they are perceived to pose a serious threat. I do not accept that argument. The burden of proof means that the high level of evidence needed to gain a successful prosecution may not always be available, but the Government have vital information and intelligence showing that those persons pose a serious threat to the safety of people residing in the UK. There has to be a series of measures available to those in authority who are charged with the important responsibility of providing safety and security for the people of the UK.

It is easy for some in society, and even in this House, to condemn the availability of such measures, but when something goes tragically wrong they are often the same people who readily criticise those in authority for not acting swiftly enough and who even call for heads to roll should mistakes have been made. It is very easy to sit on the sidelines and be an armchair general without having to make a life-or-death decision, but I suggest that Ministers will be faced with that reality in future as Ministers in the House now have been faced with that responsibility of high office.

We cannot stand idly by and let a potential threat go unchecked. Perhaps it is important for us and for me tonight to pay tribute to all those within the police, the armed forces and the intelligence services who are actively engaged daily in seeking to keep us safe. The House owes them a great debt of gratitude, and I wish to put that on the record.

Control orders are used only for a relatively small number of individuals and although this may not be ideal, in my humble opinion and without apology, I believe it is preferable to allowing terrorists to endanger the general public. Members have laid great emphasis on the fact that eight people were under detention orders. One successful terrorist—not eight—can leave a whole city, a whole community, a whole country in grief and wreak havoc upon family after family.

It is not my wish to detain the House any further. I support the Government in their desire to have a valuable tool available to be employed when necessary. My right hon. and hon. Friends and I will carefully examine what the coalition Government intend as a replacement.

20:06

[Mr Dominic Raab (Esher and Walton) (Con)]

It is a privilege to speak in the debate and to follow the hon. Member for South Antrim (Dr McCrea). I welcome the outcome of the counter-terrorism review. Ministers have been decisive in scaling back some of the more draconian aspects of the previous Government’s authoritarian legislation, such as pre-charge detention and stop-and-search powers, and by tightening regulations in relation to surveillance.

The contentious debate that we are having on control orders should not obscure this welcome sea change in the overall approach. The tide is turning, and I commend the Minister for helping to bring about that change. Likewise, I recognise that Ministers are committed to substantial reform of the control order regime. The new powers will be significantly less offensive to basic principles of British justice than what we have now, but each half-step in the right direction raises the question of why we are not scrapping them altogether.

Under the regime that we are reviewing, the Home Secretary must have “reasonable grounds to suspect” an individual’s involvement in terrorist-related activity before imposing a control order. Now the threshold will be raised to “reasonable belief”. No one can deny that that is progress, but it still allows the equivalent of a criminal penalty to be imposed without a criminal conviction. There is no getting around that. It undermines the most basic principle of our justice system: innocent until proven guilty.

The two-year limit is a welcome recognition that a person not convicted of a crime should not be subject to intrusive restrictions indefinitely, but the orders are renewable, or they will be, which in the same breath undermines this element of the reforms. The fact that under the new system an order can be renewed if someone is engaged in further, different, terrorist activity while subject to its restrictions speaks volumes about the frailty of control orders as a means of public protection. I recognise that curfews are an improvement of sorts on virtual house arrest, a feature of the current regime, but as Lord Macdonald said in his report, curfews are still “disproportionate, unnecessary and objectionable”.

Control orders are an affront to British liberty and justice, but—I make this point to the hon. Member for South Antrim—their relevance as a security measure for dealing with a threat on which we all agree is at best minimal. My hon. Friend the Member for Newark (Patrick Mercer) put it more eloquently. There are eight control orders in force. On the best numeric assessment, there are 4,000 terrorist suspects in this country. Use of the orders against that rising threat has halved. Overall, 15% have absconded. Between 2006 and 2009, £16 million was spent on the regime. That is without factoring in court costs or policing.

The new regime is intended to strengthen the duty to consider prosecuting controlees, but Lord Macdonald pointed out clearly and categorically that control orders are not just a poor substitute, but make prosecution more difficult. He said that the regime is

“an impediment to prosecution… controls may be imposed that precisely prevent those very activities that are apt to result in the discovery of evidence fit for prosecution, conviction and imprisonment”.

With that in mind, the House should note that the number of terrorists convicted in the past three years has not just fallen, but plummeted. The number of convictions has fallen off a cliff edge—90% in three years, according to the October statistics. Control orders cannot reverse that trend. As Lord Macdonald said, they just get in the way.

What is being done to address this pretty fundamental failing in the counter-terrorism strategy that the coalition Government, to be fair, have inherited? What is being done on plea bargaining, prosecutorial policy and intercept evidence? The Home Secretary has indicated that the review on lifting the ban on intercept will continue. Both Lord Macdonald and the current Director of Public Prosecutions, Keir Starmer, support lifting the ban. They say that it can be made to work effectively, as in virtually every other country in the world. However, Liberty has described the Government’s efforts—I think it is a reference to official efforts—to grasp this important reform as “lethargic”. Prosecution is vital. It is not some quaint commitment to legal tradition. In relation to the home-grown threat, suspects cannot be deported, so prosecution and incarceration is the only way to protect the public.

[Mr Dodds]

I am very interested in what the hon. Gentleman is saying and his emphasis on prosecution and incarceration. He will remember that his party and the Labour party, and indeed the House, voted to release terrorist prisoners who had been duly prosecuted and imprisoned for lengthy periods of time. It was decided that they should be let out, free from the severe punishment that had been meted out to them. That was a decision of this House. Does he now regret the decision to take that course of action, given what he has said about prosecution?

[Mr Raab]

The right hon. Gentleman makes a valid point. In fairness, that was in the context of an overall conflict resolution settlement. I was not a Member of the House at the time, but I pay deference to an important and valid point.

[Richard Fuller]

On my hon. Friend’s point about the critical importance of prosecution, is he aware that many of the conditions that apply to control orders also apply to immigration bail conditions: relocation, restriction on communication and tagging, all without any charge and imposed indefinitely? Does he agree that it will be an omission if those restrictions in the conditions are not also considered for change in the review?

[Mr Raab]

My hon. Friend makes a valid point and is absolutely right that those restrictions should be considered.

My hon. Friend the Member for Newark made an important point about the significance of measures that we consider in this House. The political heat that the debate on control orders has generated over a number of years bears scant resemblance to their relevance as a security measure. In fact, that distracts us from grappling with a growing prosecutorial deficit, which in my view is one of the major problems we face.

There are other vital reforms that we should be grappling with but are not because of the political lightning rod of control orders. Most notably in my view, we should be reforming the Human Rights Act 1998 so that we can deport criminals and terrorist suspects more readily. I want to be clear that we would not necessarily deport them to face torture—I do not support that—but there has been an expansion in article 8 cases, which prevents deportation when it might disrupt family life; I currently have a constituency case dealing with that. That is a bridge too far and a result of judicial legislation. Some changes to the Human Rights Act would restore some balance in that respect.

The increasing fetters on deportation mean that we are importing risk, which is one reason why the previous Government resorted to so much authoritarian legislation in the first place. In deference to this Government, I welcome the fact that they are expediting the review on the Human Rights Act and the case for a Bill of Rights. That is an important piece of work and it should not end up in the long grass.

I support the Minister in his efforts, but I struggle to see the case for keeping alive this broken control order regime to limp on indefinitely when there is so much else that we can and should be doing to deport and prosecute those who threaten our country with terrorism.

20:15

[Dr Julian Huppert (Cambridge) (LD)]

Thank you very much, Mr Speaker, for calling me in this important debate. As we consider control orders and counter-terrorism, it is important to think of the context in which we make these decisions. It is a time of unprecedented flux in the middle east and in north Africa, and what we are seeing there is nothing less than the wholehearted pursuit of liberty. None of us can imagine what it must have been like to be part of the Egyptian revolution in Tahrir square, and none of us has experienced the oppression that Libyan protestors are currently suffering.

All of us are privileged to live in a country where, by and large, freedom has been established and protected for many generations, but it has been clear to many of us for a while that those cherished rights and freedoms have been under attack. The previous Government used the uncertainty created by terrorist atrocities to carry out a widespread squeeze on civil liberties, and they shamefully used fear as a political and electoral weapon. Even their party’s leader, who is not particularly given to making statements about the dubious legacy left to this Government by new Labour, admits that they “seemed too casual” about civil liberties. He has not yet overcome his vagueness and set out a new and generally liberal path, although I hope that he will, and he certainly has not told either shadow Home Secretary whom he has so far appointed.

The coalition Government, however, are making progress—slow but steady progress—in their attempt to regain a better balance between security and liberty, and the counter-terrorism review was an important part of that programme. I am privileged to be a member of the Joint Committee on Human Rights, and I was involved in writing its report on control orders, which I hope Members have read. Along with the Committee, I welcome the review’s conclusion that the current control order regime, which Labour put in place, is too intrusive and fails to demonstrate a commitment to the priority of criminal investigation.

Terrorism prevention and investigation measures are a step forward, and the system is different and better, although it is certainly not perfect, because, as many Members have already said, extra-judicial processes are simply not the right way to proceed. It is a shame that we do not yet have the replacement, and it is a shame of timing that we are not in a position to ditch control orders completely and pass the legislation on TPIMs. That is what I would like, and I have made that point in a number of places in the House. In fact, we should go further. We already have the concept of bail for people who have not yet been convicted of a crime, and that is the model we should use, not the control order regime. I hope that we continue with that thread.

I am concerned about what will happen in the next nine months if we agree to the order tonight. It seems illogical for the Government to ignore their own assessment of the weaknesses of the control order regime, but that is what is happening. A number of points have been made about Lord Macdonald’s suggestion that the Director of Public Prosecutions should have a role in criminal investigation. I hope that the Minister will respond to that point, which others have made, and that he will be asked to look at each current controlee’s case to see what is the right thing to do.

I am also concerned—in timing and in practice—about the Government’s plan to make emergency legislation available for a stricter version of control orders, which would be introduced in an unforeseen emergency. Lord Macdonald described to the Joint Committee how huge such a disaster would have to be, and the Government say that they will share a draft of the legislation only with those on the Opposition Front Bench. That is wrong. The number of Members who are neither in the Government nor part of the Opposition Front Bench, but who would be interested in seeing such legislation, is very high. We would like to see it, and it should be scrutinised.

I find it hard to imagine what the need would be, but, if there ever were a need, I would like to know that Parliament had thought in the fullness of time about how the legislation would work, and had not made a rushed decision after a huge number of bombs had already gone off. I hope the Government will agree to let all Members see the legislation and go through the same process that they are going through for their emergency legislation on 28 days’ detention.

There are a number of concerns about TPIMs in detail, and I have had the privilege of talking to people in the Home Office and raised the matter with the Prime Minister and the Home Secretary. On the measured transition that the Minister described, we know that the review described relocation as too intrusive and inimical to the possibility of prosecution. Will the Minister commit to leaving unused the power for relocation in control orders between now and the new TPIMs regime?

Similarly, can we shorten the curfew periods in control orders as we head towards the new TPIMs regime? I hope that we do not introduce just a shorter curfew. To me, an overnight residence requirement involves a requirement to live somewhere normally, and if I live somewhere normally that means I am typically there between 1 am and 3 am, that I am often there earlier or later, and that sometimes I will get up early and sometimes arrive home late. That, not a shortened curfew, is an ordinary residence requirement.

I hope that the Home Secretary will thoroughly review the current controlees to see how we can bring the regime into line with what we aim for in TPIMs, and as a first step towards getting rid of the whole system. I look forward to the Minister’s comments and hope he will be able to reassure the many of us who wish to see even greater steps away from the abhorrent nature of control orders.

[Mr Cash]

rose—

[Mr Speaker]

Order. Let me point out that I intend to give the Minister a 10-minute winding-up speech, so the hon. Gentleman has a brief opportunity to contribute if he so wishes.

20:19

[Mr William Cash (Stone) (Con)]

I am extremely grateful to you, Mr Speaker, as ever.

Having listened with great interest to hon. Members’ speeches, I think it is perfectly possible to reconcile them all. With reference to the excellent speech by the hon. Member for South Antrim (Dr McCrea), the whole question of the realities of terrorism has to be dealt with in relation to whether people should, as the hon. Member for Islington North (Jeremy Corbyn) suggested, be given a proper trial. That is what I keep insisting on in my interventions, as I did in the debate that took place yesterday. These are the real freedoms. At the same time, I entirely agree with my hon. Friend the Member for Esher and Walton (Mr Raab), who makes extremely valuable contributions to these debates, and my hon. Friend the Member for Newark (Patrick Mercer). I also pay tribute to the hon. Member for Cambridge (Dr Huppert), which may surprise him a little.

All these things can be reconciled if, as the essence of my Bill on the prevention of terrorism proposes, we take out the overhanging shadow of the human rights legislation against which our legislation is constantly being tested. It is simple. We did not have a problem in the days when we ourselves decided on matters such as habeas corpus, fair trial and due process. It is not beyond the wit of our Parliament—in fact, it is the duty of our Parliament—to make proposals that meet all the different requirements. That can be done by sitting down, drafting a Bill, sending it to Committee and coming up with a reconciliation of all those different questions under one simple principle, to which the hon. Member for Islington North rightly referred—that people should be guaranteed the proper justice to which they are entitled when they are confronted with an accusation, whether they are suspected terrorists or serious criminals of a different order.

There may be a public emergency, which can be defined in various ways, in which it is absolutely essential that the Secretary of State, not the courts, should make the decisions, because ultimately the security of the nation has to be prescribed, as Lord Hoffmann clearly stated in a case called Rehman. Following that important judgment he was somewhat criticised by those who want to see a much more relaxed arrangement. National security has to be decided by Secretaries of State not by the judiciary, and once those decisions have been taken, the manner in which the legislation is interpreted by the courts follows.

I leave the argument at that point. We have a review. Let us stick to simple principles. Let us be sure that we give justice even to suspected terrorists, but not at the expense of the security of the state.

20:23

[James Brokenshire]

I thank all right hon. and hon. Members for their contributions to this measured, considered and useful debate on a range of issues relating to combating and preventing terrorism. I, too, would like to put on record my thanks to the police service and the security services for all that they do in keeping us safe, keeping our constituents safe and keeping our country safe.

I will seek to address as many of the points raised as I can in the time available to me. I thank the hon. Member for Bradford South (Mr Sutcliffe) for the support that he is giving to the renewal of this order on a temporary basis until the end of this year. I hope, notwithstanding his comments, that he may be minded to support the important measures that we will introduce on TPIMs. We think that those measures are an important step in bringing forward measures that are less intrusive, with more clearly and tightly defined restrictions. I note that the hon. Gentleman sought to have some political fun, but the serious point is that the review of our terrorism and security powers was about trying to do the right thing for our country, for its security and for our civil liberties. The Prime Minister has made it clear that we will not do anything that puts our national security at risk.

The hon. Gentleman made a number of other points. As for the timing, we will try to introduce the replacement legislation at the earliest opportunity, but we want to get the technical issues right; he will appreciate the legal issues. It is therefore important that we make the revised proposals at the appropriate time after that work is concluded. I reiterate what I said in my opening speech: we want to ensure that there is proper scrutiny by this House of the provisions. He will recall that the provisions on control orders were brought forward in an expedited fashion, and perhaps did not receive such scrutiny and investigation. We believe it is important that that should take place.

[Jeremy Corbyn]

Does that include pre-legislative scrutiny of the proposed Bill?

[James Brokenshire]

The Bill will be brought forward and scrutinised in the usual way. I think that the hon. Gentleman may be referring to the draft Bill on the enhanced TPIM provisions, which the hon. Member for Bradford South highlighted. When this matter was raised with Baroness Neville-Jones by the Joint Committee on Human Rights, she said that she would take it away and give it further consideration. We are considering it further.

Hon. Members have asked whether the Security Service is content with the outcome of the review. The Security Service played a full role in the review and provided it with all the facts and assessments required. The director general of the Security Service told the Home Secretary that he was content that the replacement measures and mitigations balanced the risk of the abolition of control orders. I note that the Joint Committee sought the publication of a summary of the views of various agencies and organisations. Again, Baroness Neville-Jones undertook to consider whether such a summary could be produced, but noted that some of the contributors to the review would have views on whether they wished all their evidence and views to be made public, and that it would be necessary to consult on that. We are considering that position further in the light of those statements.

I thank the hon. Member for South Antrim (Dr McCrea) for his impassioned and very personal contribution to the debate. Anyone who was here and who listened to it will have felt his comments keenly. The threat from Northern Ireland-related terrorism is significant, and it is vital for the UK’s terrorism legislation framework to be capable of dealing with it. Evidence from Northern Ireland was taken account of as part of the review, and the Home Secretary has discussed the review several times with the Secretary of State for Northern Ireland. I assure the hon. Gentleman that we take security in Northern Ireland extremely seriously. I know that the Minister of State, Northern Ireland Office, who is on the Front Bench, would endorse that view in relation to the work of his Department.

I have been asked about cost. The control orders regime cost the Home Office £12.5 million between 2006 and 2010. We will provide sufficient new money for the Security Service and the police to take the mitigating actions that they have identified as necessary.

Other points have been made about the Joint Committee report published this morning. Quarterly reviews are undertaken of the conduct of individuals who may be subject to control orders, the prospects of prosecution and the prospects of gathering evidence that could be used to prosecute. Those are formally reviewed by the relevant authorities on a quarterly basis. This issue is examined further and followed through in that way. I reiterate that it is our priority to get individuals into court on appropriate charges. That is the commitment that the Government have always made.

Some questions were asked about special advocates. As part of the counter-terrorism review, we received a contribution from the special advocates. On 6 July 2010, as part of the package of measures on detainees, the Prime Minister announced a Green Paper on the use of intelligence in judicial proceedings. This will aim to develop a framework for ensuring full judicial and non-judicial scrutiny of intelligence and wider national security activities in line with the Government’s commitments to individual rights and the rule of law, and to protecting national security properly. The Green Paper will need to include consideration of the key concerns that have been expressed about the operation of the special advocate system. We will ensure that the system remains compatible with human rights. We will consider this matter along with the Committee’s other recommendations, and we will respond formally to its report in due course.

Some questions were raised about the use of intercept as evidence. There is an ongoing programme of work on assessing the likely balance of advantage, cost and risk involved in a legally viable model for the use of intercept as evidence, compared with the present approach. Our intention is to provide a report back to Parliament during the summer.

This has been an important debate. We are replacing the control orders with a new, less intrusive, more focused system of terrorism prevention and investigation measures, but we wish to see a safe and managed transition to the new system. This means that, until the new system is in place, we need to retain the control order powers in order to avoid a gap in protection for the public, which is clearly the primary role of the Government. I therefore hope that the House will support the motion.

20:32

One and a half hours having elapsed since the commencement of proceedings on the motion, the Speaker put the Question (Standing Order No. 16(1)).

Question agreed to.

Resolved,

That the draft Prevention of Terrorism At 2005 (Continuance in Force of Sections 1 to 9) Order 2011, which was laid before the House on 3 February, be approved.

Business without Debate

Wednesday 2nd March 2011 Commons Chamber

delegated legislation

Wednesday 2nd March 2011 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Environmental Protection

That the draft Offshore Petroleum Activities (Oil Pollution Prevention and Control) (Amendment) Regulations 2011, which were laid before this House on 10 January, be approved.—(Jeremy Wright.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

That the draft Offshore Chemicals (Amendment) Regulations 2011, which were laid before this House on 10 January, be approved.—(Jeremy Wright.)

Question agreed to.

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Audit Policy

That this House takes note of European Union Document No. 15274/10 and Addendum, relating to a Commission Green Paper on Audit Policy—Lessons from the Crisis; and supports the Government’s approach to work closely with the European Commission to deliver an effective framework for audit as part of a corporate governance regime and to promote national solutions to these issues, where appropriate, rather than seeking legislation at EU level.—(Jeremy Wright.)

Question agreed to.

Youth Inclusion Programme (Bristol)

Wednesday 2nd March 2011 Commons Chamber

20:33

[Stephen Williams (Bristol West) (LD)]

This petition was presented to me after a visit to the Catch 22 project in the Barton Hill area of my constituency, which is the most deprived ward in the city of Bristol, and one of the most deprived wards in the south of England.

The petition states:

The Petition of residents of Bristol,

Declares that, after nine years of working with the families and young people of East Central Bristol, there is now a real risk that the East Bristol Youth Inclusion Programme will not have its funding renewed; and notes that the Petitioners believe that this cut will have a negative impact, not just on local young people, but also on the wider community.

The Petitioners therefore request that the House of Commons urge the Government to ensure that money for preventative work remains ring-fenced, so that young people can be given the necessary support to remain out of the youth justice system, and live fulfilling and empowered lives.

And the Petitioners remain, etc.

[P000891]

Trawlermen’s Pensions

Wednesday 2nd March 2011 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Jeremy Wright.)

20:34

[Alan Johnson (Kingston upon Hull West and Hessle) (Lab)]

The purpose of the debate is to bring to the attention of the House and the Minister a scandal involving the maladministration of a pension scheme that has left thousands of distant water trawlermen who reached retirement age up to 30 years ago without a penny of the pension to which they contributed, and thousands more unlikely to receive their pension in future. I am pleased to be joined this evening by hon. Members who represent port constituencies, such as my hon. Friend the Member for Tynemouth (Mr Campbell), the hon. Member for Banff and Buchan (Dr Whiteford) and my hon. Friends the Members for Kingston upon Hull North (Diana Johnson), for Kingston upon Hull East (Karl Turner), for Scunthorpe (Nic Dakin) and for Great Grimsby (Austin Mitchell).

I shall set the context. Distant water trawlermen worked in the most arduous and hazardous occupation imaginable, working 18-hour shifts in Arctic waters where temperatures could fall as low as 40° below freezing. In 150 years of distant water trawling from Hull, which was exclusively a distant water port and the biggest in the world, 900 ships were lost at sea—that is six a year—and 6,000 trawlermen were killed. The mortality rate was 14 times higher than in coal mining.

When the industry collapsed as a result of the agreement between Britain and Iceland that ended the so-called cod wars in 1976, a Government Minister, from the Dispatch Box, promised the men compensation, retraining and redeployment. They received nothing. Classified as casual workers, they were thrown on the scrap heap. While the trawler owners were paid millions of pounds in decommissioning grants, not a brass farthing was paid to the trawlermen themselves. That injustice was belatedly rectified by the compensation scheme that the previous Government introduced in 2000, although one aspect of it is still outstanding, and my hon. Friend the Member for Great Grimsby and I have referred it to the parliamentary ombudsman.

As we worked with the ex-trawlermen to achieve that compensation, a number of them referred to a pension scheme that operated in the industry. Some men over 50 had been allowed to commute their pension to a one-off payment, to alleviate the hardship that they suffered as the industry collapsed, but many men said that they could not remember receiving anything from the scheme, even though they were now well beyond pensionable age.

I ascertained that there was indeed a fishermen’s pension scheme, which had been established on 1 April 1961 by a trust deed made on 19 December 1960 between British Trawlers Federation Ltd and Lowndes Associated Pensions Ltd. The scheme was compulsory for those coming into the industry after the date of its introduction. It was a contributory scheme, with the men originally paying sixpence per sea day and the employer ninepence. I add that that is old pence, as a few Members will not remember the conversion to decimal currency, so those sums were 2.5p and 4p respectively. Contributions to the scheme ceased in 1979, and benefits ceased to accrue. The benefits accrued up to the date of discontinuance were secured by a group deferred annuity contract underwritten by Norwich Union, which is now Aviva. Capital Cranfield became the trustee when it acquired Lowndes in April 2000.

Having established those facts, I wrote to Aviva in 2006 to find out whether any pensions remained unpaid. My impression was that there might be about 100 such cases. By 2007, I had discovered the full horror story of a scheme in which few records had been kept and no efforts had been made to track down the men whose pensions were due. More than 4,500 trawlermen from Hull, Grimsby, Aberdeen, Fleetwood, Milford Haven and North Shields had reached pensionable age from the 1980s onwards without receiving the pension that they were due. About a quarter of them were from Hull.

The reason for that disgraceful maladministration was that the only record kept of members was their surname, initials and date of birth. There was no record of the men’s national insurance numbers, their addresses or any other pertinent information by which they could be traced. There had been no attempt to rectify the situation and nobody in the communities affected was alerted to the problem, least of all the MPs. The unpaid pensions simply remained in the fund while many of the men affected lived out their old age in penury.

Aviva, the insurer, had been paying benefits—or more accurately not paying benefits—without the intervention of the trustees since 1986, at the request of the then trustee, Sedgwick Noble Lowndes, which, as I said, is now part of Capital Cranfield. That in itself seems a strange arrangement and one that neither party should have allowed.

As well as the 4,500 men who had reached pensionable age, there were 8,879 still below 65 with little prospect of receiving their money as they became eligible. Since I wrote to the then Secretary of State for Work and Pensions and the Pensions Regulator in January 2007 to alert them to the scandal, a great deal of effort has gone into finding the missing fishermen.

Aviva has worked with local MPs on the Find the Fisherman campaign, which we agreed should run for two years. At the end of that time, in October 2009, Members of Parliament met Aviva and Capital Cranfield to take stock. Aviva, in its briefing note for this debate, talks about unclaimed assets being “common across the industry” and, after setting out details of the Find the Fisherman campaign, states that “some members remain unpaid”.

For “some”, read 6,837. That is the figure that we were given for the men who had not been—and probably never would be—traced at the end of the campaign. That is more than half the scheme membership. Perhaps the Minister will tell me whether he believes that that level of unclaimed assets is at all “common across the industry”.

With my hon. Friends the Members for Great Grimsby and for Aberdeen North (Mr Doran) and my former hon. Friends the Members for Cleethorpes and for Blackpool, North and Fleetwood, who also attended the meeting with Aviva and Capital Cranfield in October 2009, I put forward proposals that would allow the schemes to be wound up fairly.

First, we would need to agree how to distribute the surplus in the scheme coffers. At that time it was £2 million, although I heard this morning that Capital Cranfield is saying it is £1.3 million. The disparity has yet to be explained to us.

Secondly, provision needs to be made for unidentified beneficiaries who may come forward in future. Thirdly, we sought payment to the 50-odd families for whom payment is disputed. Those are cases in which Aviva says that the money has been paid, usually in the 1980s, but it has no proof of payment and the families are adamant that it was never received.

In that respect, let me explain how the payment system worked as described by the chief executive of Aviva in a letter to one of my constituents:

“When an employer wanted to claim a pension on behalf of one of his employees he would make an application to the Royal National Mission”—

the seaman’s mission—

“who acted as an intermediary and would in turn apply to Norwich Union on behalf of the employer. Norwich Union would verify the details against the policy and authorise a payment to be made to the Mission who would then pay the employer so they are able to pass the money on to the individual fisherman”.

He goes on:

“I appreciate this will appear unnecessarily complex but, rightly or wrongly, this is how payments were settled in the past”.

I think that we would all agree that it was “wrongly”.

A scheme with no national insurance numbers and no addresses relied on trawler owners, who were gradually disappearing as the industry was in terminal decline, to go through the seaman’s mission—which incidentally informed Norwich Union, as it was then, 12 years ago that it did not have the resources to undertake this work—to give cheques to men who in the main did not have bank accounts.

[Jim Shannon (Strangford) (DUP)]

From my knowledge of the fishing industry and how it works, I would say that sometimes fishing organisations that represent the people have a record of their membership. I am sure that that has been checked, but if not, it may be a method, even at this late stage, of getting a wee bit more information.

[Alan Johnson]

I appreciate the hon. Gentleman’s suggestion. He is right—records are kept. We have looked at all those possible avenues, including the DWP’s tracing arrangements and the former Department of Trade and Industry’s records of trawlermen. We have exhausted every avenue to try to find those men.

Perhaps the Minister will understand why we say, given the convoluted way in which the payments were made, that the benefit of considerable doubt in disputed cases should rest with the men and their families.

Our final proposal concerns recompense. We feel strongly that some compensation should be paid to the men and/or their communities for the appalling way in which the scheme has been administered.

The trustees and the insurers had a financial and moral responsibility to scheme members, which they failed to fulfil. The way this scheme operated would have shamed an office sweepstake organiser. The fact that the men whose interests they should have safeguarded did one of the most difficult and dangerous jobs imaginable, and in the main spent their old age scraping for every penny while money that could have eased their plight was never paid to them, adds to the sense of injustice within those proud communities.

Since October 2009, we have been fortunate to have the services of a pensions expert from Thompsons solicitors working pro bono on our behalf to try to bring the arrangements discussed then to a successful conclusion. Seventeen months later, there has been little progress, and no further approaches to the port MPs by Aviva or Capital Cranfield to resolve the outstanding issues.

In the absence of any ex-trawlermen or anyone from the affected communities among the trustees, I believe it is incumbent on Aviva-Capital Cranfield to seek the approval of the port MPs for the final arrangements to wind up these schemes. Perhaps the Minister will tell us to whom those are companies answerable. I understand that they are proposing to agree their own fees for the wind up—the money will come from the scheme. There must surely be some external oversight of those arrangements.

The port MPs wish to meet the Minister to explore the issues surrounding that scheme and smaller associated schemes in more detail, and we think that it would be beneficial to have the Pensions Regulator present. Surely he must have a role in ensuring that the schemes are wound up in an orderly and timely fashion, with the interests of the members properly protected.

We seek from the Minister nothing beyond his understanding of how badly this scheme has been administered and his assistance in bringing this long saga to a conclusion that is acceptable to port MPs, as virtually the only remaining representatives of those fishing communities. We seek no public money and no taxpayer contributions.

Finally, I ask the House to imagine the outcry there would be if thousands of bankers, civil servants, or even former MPs had been treated in such a way. That would be a huge story that we would be following regularly in the national media. This has been an almost silent scandal, but this evening’s debate will, I hope, bring it to the attention of a wider audience in the quest for justice for communities who contributed so much, sacrificed so many and yet were treated so abysmally.

20:47

[Austin Mitchell (Great Grimsby) (Lab)]

I congratulate my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) on securing this debate and on the fight he has put up, and indeed initiated, on behalf of the fishermen. Icelandic fishing finished in 1976, and the middle water fishing that went out of Grimsby finished in the ’80s with the laying up of the cat class British United Trawlers vessels, and the industry has been in abeyance as a powerful force since. It is a tragedy and a scandal that this matter has not been cleared up, so many years after the death of the distant water fishing industry. We are also still fighting for compensation for fishermen who did not receive it under the two schemes operated by the Labour Government.

The fact is that the pension scheme was appalling. It was badly administered and badly run, and the fishermen were treated with total contempt by the owners. The owners had to set up a scheme, but set up the meanest scheme possible. It was run inadequately first of all by Lowndes, which became Noble Lowndes. It then passed in a series of shuffles to General Accident, and finished up with Norwich Union, which promptly changed its name to Aviva.

My attempts to grapple with the problem began in the early ’80s. Some people were allowed to withdraw their pensions, but some were refused. I took up some of the more difficult cases with the Office for Pensions Administration, which investigated the scheme and found that the records were in an appalling state. The company did not know to whom it was due to pay pensions. It had no records of their addresses or dependants, and it made no attempt to contact them to say that there was money to be collected on their behalf. It was not until pressure was brought to bear by my right hon. Friend, working with the fishing port MPs, that we got a response. To be fair, Norwich Union, and subsequently Aviva, has done its best to contact those concerned, working with the mission and the port MPs, and putting adverts in local papers. A large number of people have come forward to make claims, but, as my right hon. Friend has said, there remains a substantial number who have not been found who are still owed money—substantial sums in some cases; small sums in most cases—by the scheme.

The time has come for the scheme to be wound up and for the Minister to exercise whatever power he has. It is time for the company, working with the fishing port MPs, to wind up the scheme. We have decided that the money could best be paid to fishing charities, to support fishing families in desperate need. That would be a fair use of it. However, after all this time, the company owes us the decency of adding a substantial sum in compensation to the sums already in scheme to be wound up, because here we are, after 34 years, still arguing for justice for the fisherman. That could have happened to no other section of our society. It is appalling that we have to do this, but let us now get it done. Let us get this monstrous scheme wound up.

20:51

[The Minister of State, Department for Work and Pensions (Steve Webb)]

It is common courtesy, simply as a matter of routine, to congratulate the Member who has secured a debate, but in this case I sincerely congratulate the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), because he has a track record of campaigning on this issue over a number of years. I looked at some of the articles on his website, and I recognise that he and other right hon. and hon. Members have done an important service to their constituents and the trawlermen. He spoke powerfully and evocatively about the lives that they led and their quite proper demand for justice.

I pay tribute to the right hon. Gentleman for that work and for, as he said, giving a voice to what has to some extent been a silent campaign. I must admit that when the titled “Trawlermen’s pensions” came out of the hat, I raised an eyebrow and wondered what the subject was. As I have read up on the issue and as my officials have provided me with briefings, I have been quite startled by, as has been said, the shoddy record keeping of the various schemes right from the beginning. It seems incredible to think that a pension scheme could have just a name, an initial and a date of birth—for example, “Smith, J., 1920”, or whatever. It just seems hopeless.

It was clearly a different world back then. We did not have the Pensions Regulator, a pensions ombudsman, the Pensions Advisory Service or the pension tracing service. A lot of those institutions have come about partly to ensure that such situations do not arise again. I want to talk predominantly about the trawlermen and their situation this evening, but I should also say that good record keeping in company pension schemes has not completely gone away as an issue. Even this year, the regulator has been doing more work to ensure that schemes keep proper records. I would like to use this opportunity to reiterate the vital importance both of schemes keeping proper records—something that the trawlermen’s case demonstrates—and, if records are not in order, of doing something now to put them in order to avoid a recurrence of anything similar.

Let me draw together where we are now and where we go from here. I recognise that in the limited time available I might not be able to cover all the detail that I would like to, so let me say that I would be more than happy to meet the right hon. Gentleman and his colleagues to discuss how we might take matters further, although I do have an update for him of where we have progressed things in the interim.

We are talking about five schemes, all of which are now administered by Aviva. One confusing aspect of this situation is that the schemes have traded under different names at different times. The principal scheme is the fishermen’s pension scheme, which had around £1.3 million of assets as of June 2010, as the right hon. Gentleman said—obviously these things fluctuate—and around 4,800 remaining members, but there are four others: the Fleetwood fishermen’s scheme, the Scottish trawler fishermen’s pension scheme, the Fairtry pension scheme and the Hull fish merchants’ pension scheme. The right hon. Gentleman talked about tuppence-ha’penny and fourpence going in, but what is unusual about those schemes is that, essentially, the amounts coming from them are in many cases not pensions at all, but lump sums of, say, £300 or £400. This leads to confusion about where some of the money has gone. If someone was told that they were paid a pension but they said that they were not, it would be obvious and easy to decide, but on the whole we are talking not about pensions but about a right to a small amount relative to a lifetime of pension receipt. In the past, those amounts were often paid as lump sums.

[Alan Johnson]

I am grateful to the Minister for giving way and for agreeing to a meeting. The amounts involved average £600, and, as with any average, many of the amounts are higher. The people involved did not have bank accounts, and when the battle rages about disputed payments—there are about 53 cases—it is important to recognise that fact. One of my constituents, unusually, had a bank account in the 1980s and he was able absolutely to prove his case. Aviva said it had sent the money via the seaman’s mission and the employer so that it eventually ended with him, but he was able to prove from his bank account that the money had not arrived. In the one case where there is any proof, we can see that it clearly supported the side of the trawlermen and their families. That is why we say that people should be given the benefit of the doubt.

[Steve Webb]

One issue that I know has been suggested to the right hon. Gentleman in the past, but as far as I am aware has not so far been taken up—he will correct me if I am wrong—is how far the pensions ombudsman could be used for this purpose. There are issues of cases being out of time, but it might be worth considering whether the pensions ombudsman can provide a route to resolve some of the disputed cases. It is an issue that we could discuss further.

The right hon. Member for Kingston upon Hull West and the hon. Member for Great Grimsby (Austin Mitchell) stressed the need to wind the schemes up as soon as possible. One problem has been the absence of trustees and the difficulty of tracking people down. I asked my officials to speak to the Pensions Regulator on that very subject. As the former Secretary of State will know, the regulator is operationally independent of the Department and therefore cannot be told what to do by me, although I am sure that he is doing his best for the trawlermen.

We spoke to the Pensions Regulator’s office today to find out the latest information and to try to ensure that things move forward as quickly as possible. The regulator confirmed that he expects Capital Cranfield to be appointed to the other three schemes where it is not already the trustee. I understand that the appointments are imminent. Capital Cranfield will be in a position to resolve issues quickly, and I certainly hope that it will do so.

I should add, given that the hon. Member for Great Grimsby asked about costs and charges, that Capital Cranfield has confirmed that it is willing to take on the trusteeship of the additional schemes at no charge. The regulator is taking all urgent steps to get the trustees in place quickly—within weeks. I hope that getting those trustees in place and getting the schemes dealt with by a single trustee will represent an important step forward. My impression from the briefing provided by Capital Cranfield is that the lessons learned from the biggest scheme can be applied quickly across all schemes to bring these matters to a satisfactory conclusion.

The decision about what should happen to the balance of the funds is important. The right hon. Gentleman will appreciate that this issue is governed by a number of factors—fundamentally, trust law and tax law. There are formidable barriers to taking money from a pension fund under trust law for which tax relief and so forth is given. There is quite a web—if you will pardon the phrase, Mr Speaker—of complex legislation surrounding the use of that money for an entirely laudable purpose, but one that is different from the trust’s original purpose. I believe that Capital Cranfield has looked at that option and I know that the right hon. Gentleman is in dialogue with it. I would be happy to discuss it further with him when we meet, but I place on record the fact that there is a significant barrier to that approach.

Very much prompted by the right hon. Gentleman’s efforts, Aviva undertook the Find a Fisherman exercise. I understand that one further exercise is being undertaken to try to track down those who might not have made claims. This uses a service known as Assets Reunited and it is used to track down any people not already found. It is a dwindling exercise, but I am pleased to hear that this ongoing effort is being made.

The right hon. Gentleman asked to whom the companies involved are answerable. There is a sequence. They are answerable initially to the members of the scheme, who have some representation—typically they are represented by the trustees, although the position varies—and are then answerable to the regulator. The regulator is becoming very involved, and I welcome the work that it has already done. In the event of maladministration, that is where the pensions ombudsman comes in. I should be happy to discuss with Opposition Members the scope for involving the ombudsman, particularly in the disputed cases.

I understand that the overall sum that we are discussing is about £1.7 million across the five schemes, and, as we have heard, there are between 6,500 and 7,000 untraced members. Given that the record keeping was so poor, it is not surprising—although entirely to be condemned—that it has been impossible to trace half the members involved. It is reasonable to assume that, thanks to the efforts of the Pensions Regulator to improve record keeping, the failure to find members will not be repeated on the same scale. As I have said, the problem does not occur as much in large, well-run schemes, but one of the features of pension funds is a very long tail. In many very small schemes record keeping may not be particularly good, and problems not dissimilar to this may well have arisen in other schemes. As was pointed out by the hon. Member for Great Grimsby, over a period the assets of the schemes and member records have passed through various companies owing to corporate amalgamations and acquisitions, which has increased the difficulty of tracking people down and finding out what has happened to the money.

Capital Cranfield has expressed the hope that matters will be pretty close to resolution by, certainly, the end of this year. I know that the right hon. Member for Kingston upon Hull West and Hessle has been involved in the issue for about four years, but these schemes were set up 50 years ago, and it has been a long saga. I entirely agree with the right hon. Gentleman that the sooner we can resolve the matter and convey the money to the people who should have it, the better.

There is also the question of the balance of the fund. I shall leave aside for the moment the idea of an alternative charitable or other use. In the normal sequence of events, part of the balance would be used to buy a deferred annuity for any deferred member who might no longer be a trawlerman—presumably that applies to pretty much all of them now—and who had not yet reached pension age within the scheme: in other words, to buy a product that would match the pension promise made to that scheme member. That would be the first call on the funds, but a second possibility would be the purchase of an insurance policy. If new members turned up after the scheme had been wound up, the policy would pay out and they could also make a claim.

If, after all that, there was a surplus in the fund, it would be a matter for the trustees and the administrators to consider how the money is allocated. I understand that the most straightforward option available—although it is a matter for them, not for me—is to allocate the money to the people who are still members of the scheme. One of the questions that I have asked when we have discussed the matter in the Department is whether it would be possible to pay it to the people who had received the lump sum some years ago, but in many cases that money was paid and those people cannot be traced.

I congratulate the right hon. Member for Kingston upon Hull West and Hessle on raising an important issue of injustice. I am happy to commit myself to working with him and with the Pensions Regulator to try to bring the matter to a satisfactory conclusion.

Question put and agreed to.

21:03

House adjourned.