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Oral Answers to Questions
(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Bill Esterson (Sefton Central) (Lab)
1. What assessment he has made of the effects on the economy of the trade in mortgage-backed securities and collateralised debt obligations.
The Chancellor of the Exchequer (Mr George Osborne)
The rapid increase in mortgage-backed securities and collateralised debt obligations contributed to a build-up of excessive and unstable levels of private debt in the UK in the years running up to the financial crisis. Although we would wish to see a properly regulated securitisation market reopened to help with lending, this must happen under a much more effective supervision regime. That is why we are abolishing the failed tripartite system and have restored to the Bank of England the responsibility for monitoring overall levels of debt in the economy. We have already established a new Financial Policy Committee to assess risks to the stability of the system, such as the emergence of excessive debt.
Bill Esterson
Although I accept the analysis in the first half of the right hon. Gentleman’s answer, I wonder whether the fact that financial services companies donated 51% of all funds to the Conservative party has led to a conflict of interests that prevents adequate regulation.
Mr Osborne
I think that I pointed out in an earlier exchange that an ex-Lehman Brothers and RBS banker contributed to the leadership campaign of the shadow Chancellor, so if the hon. Member for Sefton Central (Bill Esterson) wants to make that point again, and if you would allow, Mr Speaker, perhaps he could intervene.
Sir Peter Tapsell (Louth and Horncastle) (Con)
Does the Chancellor agree, as I do, with the Governor of the Bank of England in asserting that if we are to avoid another banking crisis in this country, we must have a complete separation between commercial and investment banks, which of course create these collateralised debt obligations?
Mr Osborne
If my hon. Friend will allow me, I will keep my personal views on this matter private while we await the publication of the independent commission that has been set up to look at this issue, and which I, the Business Secretary and the whole House will have to consider. It is producing its interim report in April, and will produce a final report in September. Let us remember that the commission was set up by this Government to ask the difficult questions of the kind that he is asking, because we are determined not to repeat the mistakes of the past.
Sheila Gilmore (Edinburgh East) (Lab)
2. If he will bring forward proposals for a scheme to provide looked-after children with a savings account or trust fund funded by contributions from the Exchequer; and if he will make a statement.
The Chancellor of the Exchequer (Mr George Osborne)
In October, the Government announced that we will create a new tax-free children’s savings account to be known as the junior ISA. We expect the accounts to be available from this autumn, and will be setting out details of how they will work next week. As the hon. Lady and the right hon. Member for Wythenshawe and Sale East (Paul Goggins), who is my constituency neighbour, will know, Barnardo’s and Action for Children have proposed that these accounts be used to support saving for looked-after children. I know that these children face particular challenges, and I can tell the House that the Department for Education will work with others to make the necessary funding available to ensure that we can provide the support that they deserve. We will work with charities and interested parties to develop detailed proposals funded by the Government, so that junior ISAs can best support these children.
Sheila Gilmore
There were warm words on this last summer when the child trust funds were abolished, and there are warms words now, but will the Chancellor tell us when such a savings scheme, backed by the Government, will be introduced for looked-after children?
Mr Osborne
I have just announced the money for the scheme that the hon. Lady asked me about, and we will now engage with Barnardo’s and Action for Children. I have seen their report, “On Our Own Two Feet”, and we will provide the funding to make the scheme a reality for looked-after children.
Mr Edward Timpson (Crewe and Nantwich) (Con)
As chairman of the all-party group on looked-after children and care leavers, I warmly welcome my right hon. Friend’s announcement today. Is he aware that the proposal has widespread cross-party support? The fact that the Government have listened to all representations and taken steps to make provision for the most vulnerable children in our society is extremely welcome.
Mr Osborne
I thank my hon. Friend for those words of support. I know that he has personal experience, through the work his family have done with children in care, of the contribution that society can make to helping these children. Frankly, all Governments have struggled to provide a decent level of care for the children to whom we owe the greatest obligation. As I said, I will engage with interested Members of Parliament, particularly my constituency neighbour, the right hon. Member for Wythenshawe and Sale East, and the two charities that produced the report to make this a reality and get it up and running as soon as possible.
Mr David Hanson (Delyn) (Lab)
May I remind the Chancellor that he broke his original election promise—a promise he made in the general election and ripped up on 3 January—to provide a trust fund for the poorest third of families? I welcome his announcement today, but we will look at the detail. We pushed on this issue in Committee on the abolition of the child trust fund Bill, and my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) has pushed outside that Committee. We welcome this announcement, but can the Chancellor say what that contribution will be and, given that this is a Department for Education issue, as he has said, whether the provision will extend to Scotland, Wales and Northern Ireland, as the trust fund originally did?
Mr Osborne
First, of course we will ensure that the scheme is available across the UK, although the exact design has to be determined with the charities. I have listened to the case made not so much by those on the Opposition Front Bench—if the right hon. Gentleman does not mind my saying so—but by the right hon. Member for Wythenshawe and Sale East and the two charities concerned. The sum of money involved will be around £5 million.
Paul Goggins (Wythenshawe and Sale East) (Lab)
There is a bit of good neighbourliness breaking out on the eve of the Budget. I welcome the announcement that the Chancellor has made this afternoon. Three quarters of young people leaving care do so with no savings whatever, yet they are expected to be almost totally self-reliant. As ever, the devil will be in the detail, but I am certainly prepared to work with the charities and his Ministers to ensure that we get a scheme that is effective in giving support to care leavers.
Mr Osborne
I thank the right hon. Gentleman for his support—we are one big happy coalition on this issue. I will ask Treasury officials to engage with him so that we get this right. We have to work in a way that is not bureaucratic, but gets money to those who really need it. Having looked at the issue, I think perhaps the best route is to work closely with the charities that know the sector best. Let us work together and make the scheme work.
Albert Owen (Ynys Môn) (Lab)
3. If he will estimate the revenue to the Exchequer attributable to receipts from the increase in the standard rate of value added tax on road fuel.
Vernon Coaker (Gedling) (Lab)
5. If he will estimate the revenue to the Exchequer attributable to receipts from the increase in the standard rate of value added tax on road fuel.
The Economic Secretary to the Treasury (Justine Greening)
The VAT forecast is estimated on an aggregate basis, as registered traders are not required to record in their VAT return the type of goods or services on which VAT has been collected.
Albert Owen
I agree with the Prime Minister that VAT is a regressive tax that hits the poorest hardest. Today’s figures show that the rise has also pushed up inflation, hitting people in their pockets and at the pumps. Will the Treasury team look again at the VAT rise on fuel—which is hurting motorists, hauliers, businesses and families across the country—and reverse it?
Justine Greening
I welcome the hon. Gentleman’s concern for motorists. However, I note that when the VAT rise passed through Parliament on 13 July 2010, he did not vote against it. I assure him that the Government are looking at what we can do to support motorists, hauliers and businesses with the cost of fuel, but I have to say that his party’s proposal on VAT is illegal, unworkable and unfunded.
Vernon Coaker
Does the Minister agree with the Transport Secretary—who, on the “Daily Politics” show on 2 March, dismissed the rise in VAT as a spurious argument—or does she agree with my constituents that by adding £1.35 to the cost of filling up a 50-litre tank with fuel, the VAT rise is the wrong tax at the wrong time?
Justine Greening
Perhaps the hon. Gentleman should talk to his former Prime Minister, Tony Blair, or the right hon. Member for Edinburgh South West (Mr Darling), the former Chancellor, who both said that our decision to raise VAT was necessary to tackle the huge deficit that was left by his party. Again, if he is so concerned about the VAT rise, how come he did not vote against it last July?
Michael Fallon (Sevenoaks) (Con)
Will my hon. Friend confirm that the Government inherited plans for six increases in fuel duty from their predecessor, four of which have yet to come into effect? Of all the groups of people who are quite reasonably concerned about the increasing cost of fuel, surely the least qualified is the Labour party.
Justine Greening
My hon. Friend is absolutely right. In fact, the previous Government introduced 12 duty rises during their time in office. As he pointed out, they also legislated for a further six rises, bringing in the fuel duty escalator, and these would have been on top of inflation rises. It was absolutely amazing to see the Labour party table a motion last week bemoaning the amount of tax that motorists are paying, when they legislated for all—
Mr Speaker
Order. I am grateful to the Minister, but we must concentrate on the policy of the Government.
Stephen Williams (Bristol West) (LD)
I am sure that the Chancellor will respond to the concerns of the motorist tomorrow in a fiscally responsible and environmentally sustainable way, but does the Minister agree that road fuel duty is a blunt instrument for taxing motoring, and that what we need in the long run is a more flexible, market-oriented mechanism for taxing road use?
Justine Greening
Obviously, my hon. Friend has his ideas about how he would like to see motorists being taxed in relation to the environment. He will be aware that the way in which vehicle excise duty is structured encourages motorists to purchase and use cars with lower emissions.
Ms Angela Eagle (Wallasey) (Lab)
On the day that diesel prices have hit a new high and inflation has jumped higher still, making the squeeze on living standards even worse, why do not the Government admit that they got it wrong on VAT and give struggling working people some much-needed support by reversing the Tory VAT rise on petrol, which would take 3p off the price of a litre? Just do it!
Justine Greening
The hon. Lady says, “Just do it!”, but she should know that that is simply not legally possible. She fully understands that. The reason that the Opposition are talking about that is that the fuel duty rises that are coming through were legislated for by Labour, so they are desperately looking for something to say about an issue that they themselves created. She knows that her policy on the VAT rise is illegal, totally unworkable and completely unfunded. Labour wants to take seven years to support motorists; we want to see what we can do to support them now.
Charlie Elphicke (Dover) (Con)
Will the Minister tell us by how much duty has risen in recent years, and whether the person who put the duty up is in the House today?
Justine Greening
When the Labour Government came to power in 1997, fuel duty was 36.86p per litre. By the time they left office, it had risen to 57.19p per litre. As I am sure my hon. Friend is aware, one of the architects of those tax rises was then the chief economic adviser to the Treasury; he is now the shadow Chancellor.
Lindsay Roy (Glenrothes) (Lab)
4. What assessment he has made of the effect on levels of employment of the increase in the standard rate of value added tax.
Mike Gapes (Ilford South) (Lab/Co-op)
8. What assessment he has made of the effect on levels of employment of the increase in the standard rate of value added tax.
The Chief Secretary to the Treasury (Danny Alexander)
The Government have taken urgent and unavoidable action to tackle the deficit and to put the public finances on a sustainable footing. That is essential for jobs and growth. Raising the standard rate of VAT is an important element of the plan and, in November, the Office for Budget Responsibility’s forecast, which took full account of the VAT increase, was for total employment to rise by 1.1 million in 2015.
Lindsay Roy
I thank the Minister for that answer. Will he tell us what impact the VAT rise has had so far on himself and his family?
Danny Alexander
The VAT rise of course leads to increased prices in the shops, and that affects everyone in the House.
Mike Gapes
The Chief Secretary to the Treasury had a meeting—a crisis meeting, according to The Daily Telegraph—with senior retailers a few weeks ago. Was there any discussion of the impact of the VAT rise at that meeting?
Danny Alexander
I did indeed meet senior retailers from the British Retail Consortium and we discussed a whole range of issues in a private meeting. If the hon. Gentleman is interested in the consortium’s views, he should listen to what its director general said on 20 October, the day of the spending review. He said that delays in public expenditure cuts
“would just store up more pain for later, risking increased borrowing costs, higher taxes and more job losses.”
Alec Shelbrooke (Elmet and Rothwell) (Con)
Which does my right hon. Friend think is the lesser evil: a rise in VAT that does not apply to food or children’s clothes, or taking almost 1 million of the lowest paid workers out of income tax altogether?
Danny Alexander
I certainly think that our Government have got their priorities right when it comes to lifting the burden of income tax on low-income workers. The increase in the personal allowance by £1,000, which will come into effect in April this year, will ensure that 880,000 low-income workers will no longer pay income tax. Furthermore, 23 million basic rate taxpayers will see a tax cut of £200 next year.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
Has my right hon. Friend considered the letter sent to him by the chair of the tourism group of the Sutherland Partnership, which outlined the importance of tourism for employment in the area and the barriers that VAT is creating, particularly in relation to road fuel? Is there anything that the Government can do to mitigate that effect?
Danny Alexander
I have seen that letter and, as a fellow highland MP, I am fully aware of the impact that high fuel prices have on families and individuals. We have already taken steps to deliver a 5p duty discount to island communities, and I hope that we will be able to do what we can tomorrow, but that will be a matter for the Chancellor to announce in the Budget statement.
Andrew Stephenson (Pendle) (Con)
7. What fiscal measures he has taken to support economic growth in the manufacturing sector.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
12. What fiscal measures he has taken to support economic growth in the manufacturing sector.
The Chancellor of the Exchequer (Mr George Osborne)
Manufacturing is now expanding after years of contraction. In order to support it, the June Budget contained four reductions in the main rate of corporation tax and a cut in the small companies rate from 21% to 20%. The manufacturing sector is expected to gain over £250 million annually when the package is fully implemented. We have committed ourselves to 75,000 more apprenticeships and nine university-based centres for manufacturing. Tomorrow’s Budget will set out further details of the Government’s plan for sustainable, private sector-led, balanced growth.
Andrew Stephenson
On Friday I visited Kirk Environmental, a company in Nelson that specialises in turning waste into electricity and usable biogas. It is experiencing rapid sales growth internationally, is recruiting more locally, and is at the forefront of the United Kingdom’s transition to a low-carbon economy. What incentives is my right hon. Friend providing to encourage such companies to invest more in Pendle and in the United Kingdom?
Mr Osborne
As I am sure my hon. Friend knows, in the spending review we allocated £860 million to the new renewable heat incentive, and earlier this month, in the House, my right hon. Friend the Secretary of State for Energy and Climate Change announced the introduction of the first phase of the scheme. It provides financial incentives to support a range of technologies and fuels, including those involving the use of biogas. I hope that that will help excellent companies such as Kirk in my hon. Friend’s constituency.
Stephen Metcalfe
Does the Chancellor regret the fact that manufacturing declined by 50% under the last Government? What plans has he to reverse that trend as we rebalance our economy, so that companies actually start to make things again in the United Kingdom, as they are already doing in South Basildon and East Thurrock?
Mr Osborne
My hon. Friend is right. The share of manufacturing in our economy halved during the years of the Labour Government. However, there is good news today: the CBI industrial trends survey shows that total order books are growing for the first time in three years. We are determined to move from an unbalanced economy that placed all the bets on the City of London to an economy that grows across the regions and in all sectors.
Mr Andrew Love (Edmonton) (Lab/Co-op)
The trade-weighted exchange rate has fallen by 20% in the last few years. Manufacturing has not increased as much as we expected, and there are even worse figures for the investment industry. What is the Chancellor doing to ensure that we gain the advantages of that exchange rate depreciation?
Mr Osborne
I do not know why Opposition Members want to talk down the British economy. What the chief economist at the CBI said contrasts with the hon. Gentleman’s remarks about manufacturing. The chief economist said:
“The outlook for UK manufacturing output growth is very encouraging.”
We are going to support manufacturing. We have the corporation tax cut that I announced in last June’s Budget, and we have the new centres for innovation and manufacturing. We are going to help manufacturing, whereas Labour shrank manufacturing.
Barbara Keeley (Worsley and Eccles South) (Lab)
Talking of making things, a small manufacturing firm in my constituency is investing in the development of a new engine. If it moved into production, hundreds of jobs would be created in the 15th most deprived area in the country. Will the Chancellor tell us why the Government have cut Labour’s investment allowances, which would be just the thing to help and support a small and vital manufacturer like the one in my constituency?
Mr Osborne
Manufacturers, including the one to which the hon. Lady has referred, benefit to the tune of £250 million from the reductions in corporation tax that we announced in the June Budget. That is what we have done to support British industry. As I have said, under the Labour Government British industry shrank: while the share of the economy taken by financial services grew by a third, the manufacturing share halved.
George Freeman (Mid Norfolk) (Con)
Does my right hon. Friend agree that, as we see signs that business confidence in the economy is being restored, tomorrow’s Budget presents a key opportunity to support the high-technology entrepreneurs who put their own wealth at risk in starting the businesses of tomorrow?
Mr Osborne
Yes, we will support enterprise and innovation in tomorrow’s Budget, but my hon. Friend will have to be patient and wait until then to hear about the precise measures that are involved.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Manufacturers up and down the country and the whole House are awaiting the Chancellor’s long-delayed growth strategy to be published tomorrow, but I have a copy of that document with me today. It says:
“Growth comes first for this Government”
and that their strategy will
“underpin private confidence, investment and job creation.”
The Chancellor has no need to worry however, as I will not be handing this document to the press. I read it last night and, frankly, there is nothing in it worth leaking. Has this document been audited by the Office for Budget Responsibility? Is the Chancellor really clear that getting rid of maternity and paternity rights and enterprise zones will boost jobs and growth in our economy? Is this going to be enough to stop the Budget growth forecast tomorrow being downgraded for this year and next?
Mr Osborne
I am not sure that that is the document in question—but if the right hon. Gentleman hands it over, I will have a look—because we are not getting rid of maternity and paternity rights, so I do not know where he got that from. Besides, I have a copy of his document, and it contains all the spending commitments he has been making. If he cannot control his own Front-Bench colleagues, how on earth is he going to control the nation’s finances?
Ed Balls
Is this really the best the right hon. Gentleman can do? I bet he will have Treasury officials scrabbling around all afternoon trying to deliver a further 1p cut in corporation tax tomorrow and a further tax cut for the banks. Let us wait and see. The fact is that a year ago inflation was low and unemployment was falling, and a year on, as we see today, inflation is up to 4.4% and borrowing is higher than a year ago, not to mention unemployment. If the Chancellor will not listen to me, will he listen to his colleague who said:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”?
The Business Secretary was right. Why will the Chancellor not listen?
Mr Osborne
The right hon. Gentleman really needs to brush up on his question practice, but let me say this to him: the idea that we were somehow left a fantastic economy by the Labour party is quite the most ludicrous claim in the country, and the only reason he makes it is because he was responsible for the economic mess that left this country on the brink of bankruptcy.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
One of this country’s great manufacturing success stories is world-leading subsea engineering that has grown up on the back of investment in the North sea oil and gas industry, based in my constituency but working throughout the United Kingdom. What reassurance can the Chancellor give my constituents that the Government will build on their constructive relationship to ensure a fiscal regime that maximises investment in North sea oil and gas production and exploration and that boosts the manufacturing that supports that?
Mr Osborne
Of course we want to ensure that we prolong the life of the North sea fields. One area on which we can work with the industry is ensuring greater certainty about decommissioning costs and about the tax regime that was operated under previous Governments and how that will apply over the next 10 years. I hope to work with the industry on that.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
9. If he will review the pace of proposed reductions in public expenditure to take into account GDP figures for the fourth quarter of 2010.
The Chief Secretary to the Treasury (Danny Alexander)
I welcome the hon. Lady to the House. The short answer to her question is no. Of course, growth in the final quarter of last year was disappointing, but, as we always said, the recovery in the early stages would be choppy. Deficit reduction is the essential precondition for growth, and the OBR’s November forecast stated that we would see growth in every year of the forecast.
Debbie Abrahams
Will the Chief Secretary explain to my constituents who are either unemployed or facing redundancy how his Government’s catastrophic economic policy is in the interests of the country? Clearly, we are not all in this together.
Danny Alexander
I hope the hon. Lady will take the opportunity to explain to her constituents that it is the legacy of the previous Labour Government that has caused the enormous mess and all the problems in our economy. They left us with the largest Budget deficit in Europe, and one of the largest in the world. Countries in our position have to take the sort of action we have taken, or risk being in a much deeper mess. If that is what she is advocating, I suggest she tells her constituents.
Margot James (Stourbridge) (Con)
We are spending £120 million a day on debt interest—£1 billion by the end of next week. How many representations has my right hon. Friend received from reputable international and national organisations advising him to slow the pace of deficit reduction?
Danny Alexander
None. The hon. Lady will be aware of the report that the OECD published last week, which strongly endorsed our plans. Its general secretary, Angel Gurría, said that the fiscal position we inherited was “clearly unsustainable” and that the
“consolidation measures and plans that the”—
Government—
“have put in place were therefore vital.”
I agree with that.
Chris Leslie (Nottingham East) (Lab/Co-op)
Today’s inflation figures show a sharp leap in the retail prices index to 5.5%, the highest level in 20 years. That hits not only living standards, but public service expenditure plans. Is the Chief Secretary sticking to the coalition agreement guarantee of real-terms growth for the NHS in each year or is he resolutely sticking to his plan A, regardless of economic realities?
Danny Alexander
We are sticking to the spending plans that we set out in the spending review, and that is the right thing to do. Of course I understand that inflation has an effect on people’s living standards, which is why it is particularly important to emphasise the increase in the personal income tax threshold—£1,000 extra on the threshold—that comes into force this April, which will put £200 back into the pockets of hard-working people in this country. That is the action this Government are taking to help people through these difficult times.
Stephen Phillips (Sleaford and North Hykeham) (Con)
10. By what date he expects revenue to the Exchequer to match levels of public expenditure.
The Financial Secretary to the Treasury (Mr Mark Hoban)
Excluding capital expenditure, the Office for Budget Responsibility forecasts revenue to exceed current expenditure by 2015-16. This is further evidence that this Government believe that the country should live within its means.
Stephen Phillips
I am grateful to my hon. Friend for that answer. The shadow Chancellor was reported as saying in Saturday’s The Daily Telegraph:
“The idea that Labour profligacy caused the crisis is utter tosh.”
Does my hon. Friend agree that the only tosh to be seen in that statement is the suggestion that Labour had not created the mess we are in? Is it not the case, as the CBI has said, that the previous Government’s target of balancing the budget by 2018 was set too far off to—
Mr Speaker
Order. We are asking about current policy, and some of these questions are simply—[Interruption.] Order. We have got the gist.
Mr Hoban
My hon. and learned Friend is absolutely right, and a number of organisations, both at home and abroad, have criticised the lack of ambition of the previous Chancellor’s plans. That is why the Obama Administration, the International Monetary Fund, the OECD, the Institute for Fiscal Studies, the CBI, the Governor of the Bank of England, 35 leaders of British businesses, the European Commission, the World Bank, three major credit rating agencies and the world’s biggest bond trader have been backing our plans—the only person the shadow Chancellor can find to back his is The Guardian.
Tony Lloyd (Manchester Central) (Lab)
Public expenditure is to be matched by revenue in 2015, but has the Treasury made any estimate of the amount of growth and employment that will have been forgone by these policies of making too-deep cuts too quickly?
Stephen Hammond (Wimbledon) (Con)
Does my hon. Friend agree that real progress on growth has to be made through not only matching expenditure, but cutting the deficit, and that the OECD says that the only way we will get future growth is by ensuring that the deficit plans are continued and this Government pursue their policy?
Mr Hoban
My hon. Friend is absolutely right. The OECD is one of a number of organisations that have supported our plans. The IMF has said:
“The government’s strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainability.”
That theme continues to come across from international organisations, which demonstrates that we are on the right track to get this economy growing again and ensure that Britain continues to live within its means after a decade of a Labour Government who maxed out on the nation’s credit cards.
Helen Goodman (Bishop Auckland) (Lab)
11. If he will (a) prepare and (b) publish an assessment of the relative effect of his forthcoming budget on women, families and ethnic minorities.
The Exchequer Secretary to the Treasury (Mr David Gauke)
Consistent with the approach taken at the June Budget, the Government will publish analysis on the Budget’s overall impact on households across the income and expenditure distributions in the Red Book. The Budget is an overall statement of economic policy containing a wide range of measures, and it is not possible to make a robust assessment of its overall impact on specific groups.
Helen Goodman
I am surprised by that answer. Since the general election, the Government have made 17 distinct cuts to tax credits and child benefit, which are paid to women. Tomorrow, the Chancellor will announce increases in personal allowances, which will benefit millions more men than women. Does the Minister think it is fair that money should be taken from women to give it to men?
Claire Perry (Devizes) (Con)
Is the Minister aware of my freedom of information request from last September which found that the previous Government never carried out an equalities impact assessment—not in the March Budget, the December pre-Budget report or the March 2010 Budget? They never did it either.
Mr Speaker
Order. I am sorry but I must repeat, and I hope that the message will be heeded, that questions must be about the policy of the current Government.
Mary Macleod (Brentford and Isleworth) (Con)
Does my hon. Friend agree that raising the income tax threshold, protecting spending on the NHS and increasing spending on social care will definitely benefit women?
Kerry McCarthy (Bristol East) (Lab)
The Chancellor chose to hit women three times as hard as men in his Budget last year and now, as living costs rise and the public sector is slashed, he wants to hit them yet again by changing the rules around maternity and paternity leave and flexible working in small companies. Is it really women whom the Prime Minister has in mind when he talks about taking on the enemies of enterprise, and can the Minister reassure the House that it will not be women who bear the brunt of tomorrow’s Budget?
Amber Rudd (Hastings and Rye) (Con)
Does the Minister agree that the fact that we are not cutting the NHS will really support women because they are so often carers in their family and it is so important that we support them in that important role?
Anas Sarwar (Glasgow Central) (Lab)
13. What assessment he has made of the effect on road fuel prices of the increase in the standard rate of value added tax.
The Exchequer Secretary to the Treasury (Mr David Gauke)
How much of the rise in the standard rate of VAT is passed on to consumers is a commercial decision for retailers.
Anas Sarwar
I thank the Minister for that answer. Treasury Ministers are very wrong to suggest that the calls to scrap the VAT increase on fuel is illegal and unworkable. There is precedent for it: the French President recently got a derogation from EU laws for French restaurants. Will this Government stand up for UK families who have been hard hit by the rise in fuel costs and look for derogation powers on fuel duty?
Richard Graham (Gloucester) (Con)
In terms of the value for money of decisions taken by the Treasury, whether on road fuel tax or other things, does the Minister agree that one of the best value creations of this Government has been the increase in apprenticeships, which is widely appreciated around the country? Does he agree that apprenticeships are critical both to our growth strategy and to the reduction of youth—
Mr Speaker
Order. I am sorry, but that question suffers from the disadvantage that it bears absolutely no relation whatever to the question on the Order Paper.
Mr Peter Bone (Wellingborough) (Con)
May I suggest a much quicker way of changing the VAT rate without that being illegal—by pulling out of the European Union?
Mr Speaker
I have to say that that was not much better, but the Minister may have a go.
Mark Lancaster (Milton Keynes North) (Con)
14. What recent representations he has received on measures to reduce the budget deficit.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government have received a number of representations for the Budget referring to the need to reduce the budget deficit. In addition, the Government’s strategy has been endorsed by a number of organisations, including the OECD, which said in January that the Government should
“stay the course…The fiscal situation in the UK absolutely requires this approach”.
Mark Lancaster
The Government’s plan to eliminate the deficit by 2015 is in stark contrast to the Darling plan, which was simply to reduce it by half. What assessment has the Minister made of the likely impact of the Darling plan on the level of debt and the cost of servicing it?
Mr Hoban
If we had continued with the previous Government’s deficit reduction plan, debt would still be rising in 2015, not falling, meaning that we would have to spend an extra £3 billion in one year on debt interest while still having to make spending cuts. The lack of ambition in the previous Government’s plan put our credit rating at risk, thus threatening the prospect of higher interest rates and putting a brake on the recovery.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
When such representations were being made, was the Minister conscious of the effect that these cuts might have on young people in our country? Did he look at last week’s level of unemployment among young people? When will his Government do something for young people in this country?
Mr Hoban
The legacy left by the previous Government was that youth unemployment was continuing to rise. The other problem with which the Opposition left us was that our children and grandchildren would have to pick up the tab for Labour’s mismanagement of our economy. We need to get the deficit down to create the foundations for economic growth to ensure that more young people are back in work.
Duncan Hames (Chippenham) (LD)
The Chief Secretary to the Treasury has certainly received representations from me on such measures, including about the estimated loss to the Exchequer of more than £100 million due to tax avoidance through low value consignment relief on VAT. Will the Minister at least confirm that the Government’s conclusions on that will be shared with us in tomorrow’s Budget?
Mr Kevan Jones (North Durham) (Lab)
15. What recent assessment he has made of the effect on economic growth of the spending reductions set out in the June 2010 Budget.
Mr Geoffrey Robinson (Coventry North West) (Lab)
16. What recent assessment he has made of the effect on economic growth of the spending reductions set out in the June 2010 Budget.
The Economic Secretary to the Treasury (Justine Greening)
The independent Office for Budget Responsibility’s November economic and fiscal outlook takes into account the spending plans set out in the 2010 spending review. The hon. Gentlemen ask about a recent assessment, and I can tell them that the OBR will publish an updated forecast alongside tomorrow’s Budget.
Mr Jones
Durham university’s economic model shows that between 45,000 and 50,000 individuals will lose their jobs in the north-east of England as a direct result of public expenditure cuts, including 20,000 in the private sector. What message does the Minister have for those individuals and also for the 10.2% of the north-east population who find themselves unemployed?
Justine Greening
Coming from a Labour Member, given that unemployment rose during his party’s time in government, people will find that pretty hypocritical. The only way in which we will get sustainable jobs and a sustainable economy that is not as reliant on the public sector will be to carry out our deficit reduction plan. The hon. Gentleman will hear more about our growth review tomorrow.
Mr Robinson
Is not the Minister aware that all the independent indicators and forecasters suggest that there will be a sustained period of low growth below forecast, and that almost every single economic indicator is going in the wrong direction? Can she not therefore see that the Chancellor’s plan is simply not working? Why are the Government in denial about that?
Justine Greening
I simply do not agree. As we have heard, every independent forecaster is backing our fiscal consolidation plan. The hon. Gentleman talks about evidence, but the retail sales volume grew strongly in January. The Chartered Institute of Purchasing and Supply purchasing managers index grew faster in January than analysts expected, while manufacturing reached a record high. Only today, the CBI industrial sector survey says that orders are going up. Our economy is rebalancing over time, and although the hon. Gentleman says that there is no evidence for that, there is such evidence. There is job creation, and that is what we will need if we are to turn our public finances around.
Jacob Rees-Mogg (North East Somerset) (Con)
Is it not the case that the Government’s debt reduction plan is absolutely right, as we see in the gilt market and the country’s credit rating? Is it not also true that, throughout history, coalition and Conservative Governments clean up the economic mess left by socialists?
Justine Greening
My hon. Friend is right. The consequence of that economic mess is that Labour Governments always leave unemployment higher than when they came into office. It is always that that we seek to tackle. He is right that there is no alternative plan. We have heard about a defunct plan for VAT and petrol, but we have not heard from the Opposition any plan to tackle the deficit. They said they would have some thoughts. Clearly, they are totally thoughtless.
Sajid Javid (Bromsgrove) (Con)
The Government inherited the largest budget deficit of any major country, yet today the UK enjoys one of the lowest interest rates of any major country. Does the Minister have an explanation for that?
Justine Greening
My hon. Friend is right to point out that the previous Government maxed out the country’s credit card. Worse still, they want us to hand on those debts—their debts—to our children and grandchildren. The reason that we have been able to enjoy lower interest rates for our borrowing than countries such as Ireland is that the markets know that we have a plan to get our public finances back into shape. That is benefiting this country every day.
Tom Brake (Carshalton and Wallington) (LD)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability of the economy, promote growth and jobs, reform banking and manage the public finances so that Britain finally starts to live within her means.
Tom Brake
More than 1,500 people in Sutton will be taken out of paying income tax altogether from next month as a result of the increase in the tax threshold. What estimate has the Chancellor made of the number of people who will be taken out of paying tax altogether in 2015, when the tax threshold is increased to £10,000?
Mr Osborne
I think my hon. Friend is getting a little ahead of himself. The commitment is to a real-terms increase in the personal tax allowance in each and every year. People will have to wait for the Budget tomorrow. The increase of £1,000 in the personal tax allowance has taken 900,000 people of out of tax.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
T4. Writing in The Independent at the end of 2009, the then shadow Chancellor said:“If I become Chancellor, the Treasury will become a green ally, not a foe.”Will that pledge be reflected in tomorrow’s Budget?
Mike Freer (Finchley and Golders Green) (Con)
T2. The Financial Services Authority’s mortgage market review stated:“Our existing regulatory framework has been shown to be ineffective”and that“regulatory reform is needed to reduce the probability and severity of future financial crises”.Does the Minister agree?
The Financial Secretary to the Treasury (Mr Mark Hoban)
My hon. Friend is right. The mortgage market needs reform, but it needs stability as well, which is why I welcome the statement by the FSA today. It says that it will not introduce reforms this year and will take into account overall economic stability before it introduces any further changes. It has also made it clear that lenders should not pre-empt any conclusions from its review.
Bill Esterson (Sefton Central) (Lab)
T5. Can the Chancellor confirm that between 1990 and 1997 the proportion of tax paid on a litre of fuel rose from 59% to 75%? Can he also confirm that the proportion of tax paid then fell by more than 10% between 1997 and 2010?
Mr Osborne
What I can confirm is that Labour left us with six duty rises. Now they are wriggling desperately to find some excuse to get off the hook they put themselves on.
John Pugh (Southport) (LD)
T3. Can the Chancellor tell me when the Treasury’s detailed investigation of the feasibility of incorporating a general anti-avoidance rule in British tax law will conclude?
The Exchequer Secretary to the Treasury (Mr David Gauke)
My hon. Friend is right to highlight the matter. We have asked Graham Aaronson QC to undertake a study on the matter and he will report in the autumn.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
T6. Following the announcement last week by Lloyds of more job cuts, many of them in my constituency, to a work force who have showed total loyalty to the company, and as the Government own a large percentage of the company—a company that made more than £2 billion profit last year—will the Chancellor intervene to protect people’s jobs and livelihoods, and stop the constant drip-feed of job losses by Lloyds?
Mr Osborne
Of course we are concerned when people lose their jobs, including in the banking sector, but what Lloyds is undergoing is the process of merging HBOS with Lloyds bank, which was waved through by the previous Government.
Dr Julian Huppert (Cambridge) (LD)
T7. I have had the privilege of talking to the Chancellor about a charter for entrepreneurs that I drew up, based on discussions with entrepreneurs in and around Cambridge. I am sure he will not want to pre-empt what he will say tomorrow, but can he say that he has looked carefully at some of those issues, in particular reforming the enterprise investment scheme and enterprise management incentives, and making research and development tax credits easier for small companies?
Mr Osborne
I have a copy of the hon. Gentleman’s document here. He has some excellent ideas on promoting enterprise and entrepreneurs. He will have to wait until tomorrow to see how we respond to them.
Mr Geoffrey Robinson (Coventry North West) (Lab)
T8. Can the Chancellor not see that the figures —current and forecast—for inflation, unemployment, growth, borrowing and even the deficit are all way off his target? Can he not see that the plan is not working, or is it a sad case of him not wanting to see?
Mr Osborne
What I would say to the hon. Gentleman is this: we inherited a record budget deficit and there was no credible plan to deal with it. We put a plan in place and it is supported by the international community. The result of all this is that we have interest rates that are closer to Germany’s, despite having been left a deficit that is bigger than Portugal’s or Greece’s.
Mr Andrew Tyrie (Chichester) (Con)
Will the Chancellor make every effort to keep the House informed about the cost of our operations in Libya by providing an estimate at the earliest opportunity? Will he also tell us whether those costs will be funded from the Ministry of Defence budget or drawn from the Treasury reserve?
Mr Osborne
My hon. Friend alerted me to the fact that he might ask this question. The House will understand that it is too early to give a robust estimate of the costs of the operations in Libya, but I can say that they should be modest compared with some other operations, such as Afghanistan. The MOD’s initial view is that they will be in the order of tens of millions of pounds, not hundreds of millions. I can tell the House today that whatever they turn out to be, the additional costs of operations in Libya will be fully met from the reserve.
Mr Kevan Jones (North Durham) (Lab)
T9. The Chancellor said on Sunday that the present financial difficulties were the result of “a decade of overspending”, so can he tell the House why in July 2008, 11 years into a Labour Government, the then Leader of the Opposition, now the Prime Minister, told the CBI conference“we are sticking to Labour’s spending totals”?
Mr Osborne
What we did on coming into office was set out a credible plan to reduce the budget deficit that has moved this country out of the financial danger zone. One month ago, the shadow Chancellor told his entire Front-Bench team not to make any spending commitments, and after that they committed to more than £10 billion of spending commitments. They have opposed £50 billion of the cuts. It is completely incredible, and that is why they cannot find any reputable organisation in the world to agree with them.
Mr Douglas Carswell (Clacton) (Con)
How high would inflation need to be before we halted further quantitative easing, stopped printing money and raised interest rates?
Mr Osborne
The Bank of England’s Monetary Policy Committee is of course independent. It is set a target by the Chancellor, and I expect the Bank to pursue that target.
Graeme Morrice (Livingston) (Lab)
T10. Contact a Family and the Children’s Trust have been campaigning for a change to the current rule that suspends disability living allowance payments for children under 16 once they have spent 84 days in hospital. The cost of this is around £3 million, compared with the overall deficit reduction measures of £80 billion. As this is a financially driven measure, will the Chancellor undertake to discuss the funding issue with colleagues in the Department for Work and Pensions so that some of the most severely disabled and sick children and their families continue to receive the financial support required when they need it most?
The Chief Secretary to the Treasury (Danny Alexander)
The Secretary of State for Work and Pensions is bringing forward proposals to reform the disability living allowance system and replace it with a new personal independence payment. I am sure that he will have heard what the hon. Gentleman said and will be very happy to discuss the matter with him.
Greg Mulholland (Leeds North West) (LD)
The previous Government’s beer duty escalator was damaging to pubs, ill-considered and did not raise the revenue that it should have done. Considering that the Prime Minister has said that he wants this to be a pro-pub Government, will we get some good news for pubs tomorrow?
The Economic Secretary to the Treasury (Justine Greening)
The hon. Gentleman will have to wait until tomorrow’s Budget, but he will recognise that in the emergency Budget last year we left beer duty frozen.
Stewart Hosie (Dundee East) (SNP)
The Chancellor knows that the long-term solution to the spikes in fuel prices is a stabiliser or a regulator, and hopefully we will hear about that tomorrow. However, is he aware that the price rises in fuel over the past four of five weeks equate to an additional £1,000 a year for running every truck in the country? Does he not agree that that is hugely inflationary and utterly unsustainable?
Mr Osborne
Of course, the very sharp rise in the world oil price has posed a challenge to lots of economies—all but the oil-exporting economies. That is one of the headwinds currently facing the global economy. Specifically on fuel duty and other issues, the hon. Gentleman will have to wait for the Budget.
Andrea Leadsom (South Northamptonshire) (Con)
Will my right hon. Friend undertake very carefully to consider improving the diversification of financial services provision in the way that United Kingdom Financial Investments Ltd divests itself of taxpayers’ shareholdings in the banks?
Mr Osborne
I am very happy to consider a number of ideas that have been put forward, but we have not yet reached that stage. If we sold the bank shares today, we would still be making a loss as a nation. That is an indication of the scale of the banking crisis. When we come to put those banks back in the private sector, I am sure that there will be a healthy debate in this Parliament and elsewhere about how we treat the proceeds.
Andrew Gwynne (Denton and Reddish) (Lab)
Ministers will be aware that there is a sunset clause in the Debt Relief (Developing Countries) Act 2010, which comes into effect in June. Does the Treasury have a view about renewing this important landmark legislation, which tackles the worst abuses of vulture funds?
Jesse Norman (Hereford and South Herefordshire) (Con)
Is my right hon. Friend aware that the Governor of the Bank of England confirmed to me recently in the Treasury Committee that without the current austerity measures, our international borrowing rates would be some 3% higher?
Mr Osborne
Of course, the Governor of the Bank of England is one of many people who have pointed out that there was no credible plan when we came into office and that we have put a credible plan into place.
Mr Chuka Umunna (Streatham) (Lab)
The Chancellor and other Ministers have cited investor confidence as the reason why they cannot revise their original plan for fiscal consolidation, but Jonathan Portes, the immediate former chief economist at the Cabinet Office, said:
“This is not a justification, economic or otherwise, for”
not changing policy. He said that
“it relies on an odd view of market psychology, one that says markets have more confidence in governments that never adjust policy, even when it is sensible, from an economic perspective, to change course.”
Why is he wrong?
Mr Osborne
Our country’s credit rating was on negative watch when we came to office and as a country we did not have a credible plan to reduce the budget deficit. Since that plan has been put in place we have been able to see the effects because our market interest rates and our spreads over bunds have come down. We have interest rates that are closer to Germany’s despite, as I have said, having a budget deficit left to us that was higher than either Greece’s or Portugal’s.
Richard Harrington (Watford) (Con)
Would my right hon. Friend the Chancellor like to inform the House which organisations have made representations to him that the deficit should be halved over the course of this Parliament?
Ian Paisley (North Antrim) (DUP)
The Chancellor might know that my constituent, Jenifer Herald, employs 40 people in Northern Ireland in a number of Subway cafés. The chief executive officer of that company has written to the Chancellor to say that inconsistent VAT policies for toasted sandwiches are damaging the growth of that industry. Does the Minister intend to review how VAT applies to toasted sandwiches and does he, like me, want to get his toasted sandwiches at a reasonable price?
Mr Aidan Burley (Cannock Chase) (Con)
Is the Minister aware that according to the Institute for Fiscal Studies, if we only halve the deficit rather than close it completely over the lifetime of this Parliament, we will spend an extra £10 billion on interest? Does he think that that is money that would be better spent on schools and hospitals in this country rather than foreign investment bankers?
Mr Osborne
I certainly do. This country is spending £120 million a day on debt interest, which is now one of the largest items of Government spending. These are taxes we raise from people and money we borrow to pay debt interest. The truth about Labour’s plan is that it would mean billions of pounds more in debt interest—something that will become clear later in the Parliament.
Jim McGovern (Dundee West) (Lab)
I am sure the Chancellor and his Front-Bench colleagues will be aware of the recent Scottish Affairs Committee report on the computer games industry in the UK, which states that there are “compelling reasons” for introducing tax relief. Will he tell me, the House and people in my constituency, where the industry is very important, just what progress has been made?
Mr Gauke
That industry, like other industries, will benefit from the policies that we have introduced to ensure that we grow more strongly and have pro-business policies. On video games tax relief, we looked at it and did not feel that it achieved good value for money for the taxpayer.
Jessica Lee (Erewash) (Con)
May I welcome the recent visit by the entire Cabinet, including of course my right hon. Friend the Chancellor, to the city of Derby, near my constituency? Manufacturers and wealth creators have been waiting for a long time for some support in the east midlands, and I would be grateful if my right hon. Friend could set out what plans are in place to assist that important area.
Mr Osborne
At that meeting at Rolls-Royce, John Rose made a very compelling case for how little we had done as a country to support our manufacturing sector. We will set out policies tomorrow to assist, and we have already, as I said, put in place four annual reductions in the corporation tax. More broadly, we have to get away from a model of growth that was pursued over the last decade—based on excessive debt, and growth in one sector, the City of London, in one corner of the country, the south-east. We must have more balanced and sustainable growth in the future.
Ian Murray (Edinburgh South) (Lab)
Does the Chancellor of the Exchequer recall saying at the end of 2007:
“Today I can confirm for the first time that a Conservative Government will adopt these”—
Labour’s—
“spending totals…to…the year 2010-11”?
Does he regret calling the article, “Tories cutting services? That’s a pack of lies”?
Mr Osborne
We got into office in 2010-11, and we abandoned those spending plans for the years ahead.
Stephen Barclay (North East Cambridgeshire) (Con)
The Chancellor has a strong commitment to open and transparent government. Will he therefore ask his officials to look again at the number and value of special severance payments paid by foundation trusts, which must be reported to his Department but which his Department is not currently willing to disclose?
Danny Alexander
I should be very happy to look again at the matter and to talk to the hon. Gentleman about it.
Mr Speaker
Order. As usual, demand has exceeded supply, but I am afraid we must move on.
Petition
Mark Tami (Alyn and Deeside) (Lab)
The petition is of residents of Alyn and Deeside and neighbouring areas, totalling some 3,000 persons.
The petition states:
The Petition of residents of Alyn and Deeside,
Declares that Peter Jones, a 24-year-old former pupil of Alun School, Mold, died in hospital following an attack by Gafyn Thomas Denman, 21, who is from the Mold area; notes that Gafyn Thomas Denman was found guilty of manslaughter and was jailed for 40 months for an unprovoked attack; further notes that, at the time of sentencing, Judge Merfyn Hughes QC explained that his hands were tied by the sentencing guidelines in cases of “one-punch” manslaughter such as this.
The Petitioners therefore request that the House of Commons urges the Government to review sentencing guidelines for those convicted of manslaughter so that sentences can better reflect the severity of the offence.
And the Petitioners remain, etc.
[P000905]
Student Visas
(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for the Home Department (Mrs Theresa May)
The UK has a worldwide reputation for providing quality education to overseas students, and Britain is rightly the destination of choice for many people wishing to study abroad, but under the previous Government the student visa system became the symbol of a broken and abused immigration system. Labour claimed that it had capped unskilled immigration at zero, but it was happy just to sit back and watch as unskilled migrants abused the student route to come here. We had too many people coming here to work and not to study, we had too many foreign graduates staying on in the UK to work in unskilled jobs, and we had too many institutions selling immigration, not education.
We want to attract only the best and the brightest to Britain. We want high-quality international students to come here, we want them to study at genuine institutions whose primary purpose is providing a first-class education, and we want the best of them—and only the best of them—to stay on and work here after their studies are complete. That is exactly what we are doing across all the immigration routes: tightening up the system, tackling the abuse and supporting only the most economically beneficial migrants.
I have already announced and begun to implement our plans to limit economic migration—cutting the numbers by more than one fifth compared with last year. I will return to the House later this year with a consultation that will set out proposals to break the link between temporary migration and permanent settlement. I also intend to consult on changes to the family migration route. I will be bringing forward proposals to tackle sham marriages and other abuse, promote integration and reduce the burdens on the British taxpayer. We aim to reduce net migration from the hundreds of thousands back down to the tens of thousands.
The most significant migrant route to Britain is the student route, and we must take action there, too. Immigration by students has more than trebled in the past 10 years, and it is now far larger than immigration through the work or family routes. It is unsurprising that more and more overseas students are attracted by our world-renowned higher education institutions, but there has also been an increase in abuse in the private further education sector.
Students now make up the majority of non-EU migrants: including their dependants, they accounted for about two thirds of the visas issued last year under the points-based system. When Labour introduced the current system in 2009, almost a third more student visas were issued that year than the year before—an increase from 230,000 to 300,000. Numbers were so high that the UK Border Agency had to suspend student applications in some parts of the world because it could not cope with the demand, and much of that demand was simply not genuine. We have so-called students turning up at Heathrow airport who cannot answer basic questions in English or even describe what their course is about. One institution has an intake of 90% international students and asks only for GCSE-level qualifications to do a supposedly degree level course. Another college’s own sales agent actually helped a student to cheat in their entry exam. Legitimate colleges should still be able to recruit legitimate overseas students, but we need to stop the abuse and return some common sense to our student visa system.
The current system is based on a sponsorship regime that trusts educational institutions to assess the quality and ability of students, and puts the responsibility on the institution to ensure that the student is in fact studying and obeying the immigration rules. That trust has been well placed in some sectors: universities, independent schools and publicly funded further education colleges mostly take their sponsorship duties seriously and act responsibly. But some, particularly in the private FE sector and parts of the English language college sector, are not exercising the due diligence we expect. Those institutions make up the largest single group on the sponsor register. The sector is essentially unregulated; those institutions are not subject to a statutory system of education inspection and can offer any type of course they like. Although some of them are legitimate, for many their product is not an education, but immigration, together with the ability to work here.
It is absolutely clear that the current regime has failed to control immigration and failed to protect real students from poor-quality colleges. That is why the proposals I am announcing today are unashamedly targeted at the least trustworthy institutions. Our proposals protect the interests of our world-class universities, protect our leading independent schools and public FE colleges and, ultimately, are in the best interests of legitimate students.
In future, all sponsors will need to have been vetted by one of the approved inspectorates—Ofsted and its devolved equivalents, the Quality Assurance Agency or the relevant independent schools inspectorate—and all must become highly trusted sponsors. Once they achieve that status, private colleges offering quality, bona fide training programmes of genuine educational value will be able to continue to recruit legitimate international students. All current sponsors who do not meet the requirements will be allowed to stay on the register for a short period from April 2011. During that time they will be limited in the number of students they may sponsor. They will first have to apply for highly trusted sponsor status and accreditation. They will then be required to achieve highly trusted sponsor status no later than April 2012, and accreditation by the relevant agency by the end of 2012.
As well as cracking down on bogus colleges, we will crack down on bogus students. Students who want to come here should be able to speak English, to support themselves financially without taking paid employment, and to show that they are coming for study, not for work. So we will toughen up the entry requirements. First, we will strengthen the evidence that students need to demonstrate that they have the financial means to fend for themselves. Secondly, we will streamline the requirements for students from low-risk countries and prioritise resources on high-risk students. Thirdly, we will toughen up the rules on English language competence. Those coming to study at degree level will have to speak English at upper intermediate level; others will have to speak English at intermediate level. UKBA officers will be given the discretion to refuse entry to students who cannot speak English without an interpreter and who do not meet the required minimum standards. Let me be clear: you need to speak English to learn at our education establishments; if you can’t, we won’t give you a visa.
If someone is coming to the UK as a student, study should be their main purpose, not work. So we will end permission to work during term time for all students other than those at university and publicly funded FE colleges. Students at public sector FE colleges will be allowed to work for 10 hours per week in term time, and students at university for 20 hours per week. We will reduce the amount of work that can be done on work placement courses for non-university students from 50:50, as now, to two thirds study, one third work. At present, students on courses of six months or more can bring their dependants with them. In 2010, over 31,000 student dependants came here. We will remove this right for all but postgraduate students at universities and Government-sponsored students.
Coming to the UK to study for a course should, by definition, be a temporary step, so we will limit the amount of time that students can spend in the UK. Too many students who originally came here for short courses have been staying for years and years by changing courses, often without showing any tangible academic progress. We will limit the overall time that can be spent on a student visa to three years at lower levels, as now, and to five years at higher levels. There will be exceptions for longer courses such as medicine and veterinary science, and for PhD study, but no longer will students be able to stay here and switch from course to course to course.
We want the best international graduates to stay and contribute to the UK economy. However, the arrangements that we have been left with for students who graduate in the UK are far too generous. They are able to stay for two years, whether or not they find a job and regardless of the skill level of that job. In 2010, when one in 10 UK graduates were unemployed, 39,000 non-EU students with 8,000 dependants took advantage of that generosity.
We will therefore close the current post-study work route from April next year. In future, only graduates who have an offer of a skilled graduate-level job from an employer licensed by the UK Border Agency will be allowed to stay. Post-study migrants must be paid at least £20,000 or the appropriate rate for the occupation, as set out in the relevant code of practice, whichever is higher. That will prevent employers from recruiting migrants into skilled occupations but paying them less than the going rate. We estimate that had this measure been applied last year, it would have halved the numbers staying in the UK through this route. We will not impose a limit on that group next year, but we will keep the position under review. If the number of foreign students entering the labour market as post-study workers increases significantly and unexpectedly, we will ask the Migration Advisory Committee to look at how abuses can best be addressed. That would potentially include the introduction of a separate temporary limit on post-study workers.
As we restrict the post-study work route, we will ensure that innovative student entrepreneurs who are creating wealth can stay in the UK to pursue their ideas. The message to the brightest and the best students around the globe is clear: Britain’s world-class universities remain open for business.
We recognise the need to implement these changes in a staged manner that minimises disruption to education providers and students. We will therefore implement the measures in three stages, starting with new rules, which will be laid by the end of this month. I will publish the full details shortly.
The package of measures that I have outlined today is expected to reduce the number of student visas by between 70,000 and 80,000—a reduction of more than 25%—and it will increase the outflow of foreign students after they have concluded their studies. There will be a proper system of accreditation to root out bogus colleges; tough new rules on English language skills, financial guarantees, working rights and dependants, to root out bogus students; and new restrictions on post-study work to make sure that all but the very best return home after study. This package will stop bogus students studying meaningless courses at fake colleges, protect our world-class institutions, stop the abuse that became all too common under Labour, and restore some sanity to our student visa system. I commend this statement to the House.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
I thank the Home Secretary for the half-hour’s advance sight of her statement, as has become the form for the Home Office. Helpfully, however, we were, of course, able to read about the main changes in the newspapers this morning. As has become the form for this Government, we were also able to read opposing stories in opposing newspapers. The Business Secretary briefed the Financial Times that the policy had been completely changed so that he could support universities in expanding the number of their foreign students; the Home Secretary promised The Sun that the policy meant slashing foreign student numbers. Different policies for different papers, policies changing all over the place, and an unseemly row at the heart of the Government—such is the chaos at the centre of the Government’s immigration policy for students.
The Home Secretary is right to say that migration makes an important contribution to our economy, the strength of our business and our vibrant society. She is also right to say that migration needs to be properly controlled to sustain social cohesion and an effective labour market. She will recognise the importance of the higher and further education sector to the British economy. Non-EU students contribute an estimated £5 billion to the UK economy, support thousands of jobs in teaching and related areas, and make education an extremely important export industry. It is important that we recognise that economic value in providing workable migration policies. She will know that the Home Affairs Committee stated in its important report that it
“would caution against measures which could be detrimental to a thriving, successful industry.”
Does she recognise, too, that CentreForum has said that moves to tighten the restrictions on overseas students will risk nearly 12,000 jobs in education and another 12,000 in the wider economy?
Some of the damage has already been done. Anecdotally, some universities are already noticing a significant drop in applications from foreign students as a result of the signals being sent out by the Home Secretary’s consultation. Does she believe that the 80,000 drop in student visas to which she has referred will consist entirely of visas for bogus students on bogus courses, or does she believe that some legitimate students, too, will be put off as a result of the measures that she has announced?
We agree that we should not tolerate bogus colleges and fake students. People who want to come to this country need to play by the rules. That is why the Labour Government introduced a system of highly trusted sponsors through our respected universities, and we support measures that will build on that, so long as they are introduced in a workable way. It is also why we closed 140 bogus colleges.
Can the Home Secretary tell the House how the UKBA is going to increase its checks on colleges and students when it is facing staff cuts of 9,000?
What is the Home Secretary’s position now on pre- degree courses? In the consultation she said that she would introduce substantial restrictions on pre-degree level courses being covered by tier 4 visas, but there was silence from her on that issue in her statement today. Can she confirm that she has now ditched that proposal to remove pre-degree level courses?
We also agree that there should be appropriate restrictions on students’ employment. It is welcome that the Home Secretary has taken into account some of the evidence about the international competitiveness of UK higher education, but she put that into the context of trying to help youth unemployment. Is not the truth that her figures will mean restricting post-study work permits for non-EU students by about 19,000 at a time when youth unemployment is nearer 1 million? If she were serious about tackling youth unemployment she might be talking to the Chancellor about reversing some of his cuts, and reinstating the future jobs fund. Is not the truth that this policy is not about youth unemployment or bogus courses, but about hitting higher education because she cannot meet her promise to cut net migration to tens of thousands over the course of this Parliament?
What is now the Government’s policy towards foreign students studying bona fide courses at legitimate institutions? Does the Home Secretary want their number to increase or fall? The Business Secretary has said of the higher education sector:
“It’s an export industry; we want to grow it.”
But the Home Secretary has said that she wants the numbers cut. The Business Secretary wants more foreign students, and she wants fewer. If Britain’s major universities and colleges, faced with nearly £3 billion of cuts, decide to expand their courses and double the number of legitimate foreign students paying full fees in order to subsidise British students, will she support them or not? If they increase their legitimate students by 80,000, will she support them or not?
Finally, will the Home Secretary tell the House what the position is on student visitor visas, which she did not mention? Will she confirm that although she is restricting tier 4 student visas, in December she increased the number of students and courses eligible for student visitor visas? Will she confirm that under that visa, people can still apply for non-degree courses that are not run by highly trusted sponsors and do not have any minimum language requirement? Will she confirm that she has done nothing to prevent an increase of perhaps 80,000 in student visitor visas, and will she admit that the people on those visas will not be included in the net migration figures? Does that not expose the real con at the heart of her policy? Although she is making restrictions in one area, she is increasing the student visitor visas in another area that does not count towards her net migration targets.
The Home Secretary promised that she would put an end to non-EU students working once they had finished their course: the plan is ditched. She promised that she would put an end to non-EU applicants taking courses that were not degrees: that plan is ditched. She promised a new border police force, and that is still on the Conservative party website, but instead the Government have cut 5,000 staff from the UK Border Agency.
Time and time again policies are switched backwards and forwards, and in the end, it is all because the Home Secretary knows she cannot meet the promise that she made to cut migration numbers to the tens of thousands by the end of this Parliament. Is that still her target, will she still deliver it by the end of this Parliament, and is it not time she made policies that are in the interests of British universities, the British economy and a sensible, controlled migration policy, rather than taking risks with an important export industry for the sake of promises she knows she cannot keep?
Mrs May
I have to say that I am incredibly disappointed by the right hon. Lady’s response—but to be fair to her, there was one bright spark in it: she actually gave a statement on Labour’s immigration policy, which she has failed to do for two months. She said that the Labour party agreed that migration should be properly controlled. Sadly, however, in every other statement that the Opposition have made, be it in response to this announcement or the announcement on curbing the number of non-EU economic migrants, they have refused to support the measures that will bring about that proper control. We see that policy approach from the Labour party in relation to other things as well, such as public spending. The Opposition say they want to do something, but do not support anything that would enable it to be done.
The right hon. Lady made an amazing series of statements and asked an amazing series of questions. It would have helped her if she had actually listened to my statement and looked at it properly before she responded. She asked me whether it is still our aim to reduce net migration from the hundreds of thousands to the tens of thousands, but as Hansard will confirm, the answer to that was on page 3 of the text of my statement. The very sentence I used was, “We aim to reduce net migration from the hundreds of thousands back down to the tens of thousands.” I said that in my statement; she did not need to bother with that question.
Let me go through the right hon. Lady’s other points. I find it difficult to take some of her statements. She said that the previous Labour Government targeted bogus colleges, but listening to her, one would have thought that immigration was fine under the previous Government—that it was controlled, and there were no problems with abuse of the student visa system. I could take such things from her a little better if the number of student visas had not increased by a third to 300,000 when the Labour Government closed tier 3 of the points-based system. They were not controlling the student visa system or immigration at all. Because of their lack of control, the most recent figures show net migration of over 200,000 in the last year. Far from Labour controlling that, it was going up under the previous Government.
There are one or two other facts that the right hon. Lady might like to reconsider. She claims that 9,000 staff have been cut in the UKBA, but that is not the correct figure; the correct figure is around 5,000. She said that the Government were not going to do anything about courses below degree level. The whole point of the private FE college sector is that it offers courses below degree level. We intend to remove the bogus courses, colleges and students so that we can do what her Government failed to do: deal with and control immigration.
The right hon. Lady made a lot of statements about the importance of universities to the UK. Yes, universities are an important part of the UK economy. That is precisely why the measures that I have introduced take great pains to ensure that we protect universities. We are protecting universities, our independent school sector and public sector FE colleges, and we are ensuring that those who want to come here as legitimate students on legitimate courses of study at legitimate institutions can do so. We are doing what she failed to do: we are cracking down on the abuse.
Mr Speaker
Order. A great many hon. and right hon. Members are seeking to catch my eye. I should like to accommodate everyone who has an interest, but brevity is vital if I am to have any realistic chance of doing so.
Mr Graham Brady (Altrincham and Sale West) (Con)
Thank you, Mr Speaker. I have an unremunerated interest as a governor of Manchester Metropolitan university.
Will my right hon. Friend clarify two points? First, what is her view of students progressing from courses on English for academic purposes to degree courses? Secondly, what about those progressing from proper undergraduate degree qualifications to postgraduate courses within the same or other British universities?
Mrs May
I thank my hon. Friend for his question, because it enables me to clarify a point about students who currently do so-called pathway courses for English language. One of the points made clear to us by the university sector was that it often has arrangements with colleges to allow students without the required level of English to come and learn it at a pathway college and then progress to university. They will be able to continue to do so, but the students entering the college must be sponsored by the university. The university’s highly trusted sponsor status will cover those students, and undergraduates who wish to progress to postgraduate studies will be able to do so. Our requirement for progression is that it is clear that academic progression is taking place, and obviously moving on to postgraduate study is exactly that.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
As a lifelong expert in hyperbole, I advise the Home Secretary to ease off on it in the message to undergraduate and postgraduate students across the world. Some £25 million will be lost to the university of Sheffield and Sheffield Hallam university from legitimate overseas students in the coming year. Will she promise the House that in taking the necessary tough measures in one area she will change the hyperbole and send the message to legitimate students across the world that they are welcome in the United Kingdom?
Mrs May
As I said in my statement, the message to the brightest and best students around the globe is clear: Britain’s world-class universities remain open for business. However, as I have said to the university sector, we need to work together to ensure that that positive message is the one given, not the negative one given by the shadow Home Secretary.
Nicola Blackwood (Oxford West and Abingdon) (Con)
I welcome the Home Secretary’s statement, particularly on the retention of a reformed post-study work route, on which I was especially keen. Given her estimate that the reforms will lead to about 80,000 fewer student migrants, does she believe that our world-class universities, such as the two excellent universities in my constituency, will still be able to recruit the brightest and the best, which is what our economy so urgently needs?
Mrs May
I thank my hon. Friend for her question, and for the considerable interest that she takes in the university sector. I can assure her that the proposals we have introduced today will ensure that universities are protected and will continue to be able to attract the brightest and best students from across the world.
Mr Frank Field (Birkenhead) (Lab)
I welcome the Home Secretary’s statement, particularly on behalf of my unemployed constituents who are desperate to find work. Given that the numbers coming in and leaving the country are crucial to the whole debate, when will she be able to come to the House and announce a system for border controls that counts people in and counts them out again?
Mrs May
I thank the right hon. Gentleman for his question. This is an issue in which he has taken a long-standing interest. I will give two answers to his question. The e-Borders system, which is being put in place, is partly working at the moment; complete application will come in 2015. In the next couple of months we will also make proposals on settlement, in which I know he has taken a particular interest.
Tom Brake (Carshalton and Wallington) (LD)
Does the Home Secretary agree that higher education in the UK is world class, and that our top institutions should remain open for business to genuine students, but that bogus colleges, which provide nothing more than an excuse for entry into the UK, should be forced to close their doors promptly?
Mrs May
My hon. Friend is absolutely right. The package that we have introduced today will protect our universities, which provide a world-class education. Students should want to come here for that quality of education, and we need to crack down on bogus colleges. It gives the UK a bad name when people see that they can come here supposedly as students but not get a proper education.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
It is estimated that the loss of income to higher education resulting from the Government’s current policies on the issuance—or non-issuance—of tier 4 permits for pre-university pathway courses is costing higher education an enormous amount of money. I waited in vain during the Home Secretary’s statement for clarification on the position pending the announcements. Will she make it clear whether tier 4 applicants can now come here to do pre-university pathway courses?
Mrs May
The hon. Gentleman is correct: I did not mention that in my statement; I referred to it in response to my hon. Friend the Member for Altrincham and Sale West (Mr Brady). Pathway courses for students without the correct level of English to enable them to study at university will continue, but the student will need to be sponsored by the university concerned—the highly trusted sponsor.
Mr Mark Field (Cities of London and Westminster) (Con)
In recent years I have been on the advisory board of the London School of Commerce.
I want to ask the Home Secretary about post-study work, as did my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood). I have slight reservations. Given the excellence of our offering and the idea that we will get some phenomenally innovative students from across the globe who will go back as ambassadors for this country, has any research been done in the Home Office showing that we might lose some of those students to places such as the United States or Australia, or are we confident that the changes will have no such adverse impact?
Mrs May
I am happy to tell my hon. Friend that there is no evidence that that will be the upshot. Our system is similar to those in operation elsewhere. It is wrong to say that the United States has a formal post-study work route; it does not. There are some abilities for people to stay and do some work in the United States, but they are different. Indeed, in some ways our requirements will continue to be less tough than those in countries such as Australia.
Keith Vaz (Leicester East) (Lab)
I thank the Home Secretary for keeping to her promise to publish her proposals after the Select Committee on Home Affairs had published its report last week. I hope that she found the report helpful. There is much to welcome in her statement—we recommended action on bogus colleges, reform of the post-study route and better accreditation—but will she look at the two most important recommendations, on whether students are migrants if they come here genuinely to study and then to leave, and on the issue of data? Unless we have proper data, we can make only flawed policy.
Mrs May
Obviously one is always looking to improve the quality of the evidence on which policy can be based. As for whether students are migrants, we use the internationally accepted United Nations definition of “migrant”, which is somebody coming to stay for over 12 months.
Mr James Clappison (Hertsmere) (Con)
I warmly welcome the package that the Home Secretary has announced today and her determination to tackle the problem of bogus colleges and bogus students, which the Home Affairs Committee has been warning about for a long time, but on which no action had been taken. She has announced that she will return a measure of independence to entry clearance officers, which is welcome. Will she consider returning to them—as recommended by the Home Affairs Committee and Migrationwatch—the wider discretion that was removed under the points-based system, which would be in the interests of both facilitating genuine students and keeping out bogus students?
Mrs May
Having spoken to UK Border Agency officers at points of entry, I am conscious of the frustration that they have felt at not having the discretion to deal with people whom they have plainly seen were not coming here as bona fide students, so I am pleased to restore a degree of discretion to them. My hon. Friend tempts me to go further than that, but that is not a path down which I intend to go at the moment. There were some issues raised about the greater degree of discretion available previously, but we are constantly looking at our immigration system and the way in which UKBA officers operate.
Andrew Miller (Ellesmere Port and Neston) (Lab)
I welcome the continuation of the notion of trusted status among the universities. When the Home Secretary finesses the rules, will she ensure sufficient scope for universities to take into account the realities of the circumstances that face them? In some areas of science and engineering, students come here with weak English but amazing skills and the ability to learn very quickly. Equally, some post-doctoral or postgraduate students come here with spouses who do not speak English. Will she ensure that universities have the capacity to deal with all those complex cases?
Mrs May
We have already introduced some English language requirements for people coming here to marry somebody in the UK, but the English language requirement relates to the postgraduate student who will be at university, not to a spouse entering as the dependant. It has been put to me that there are potentially a small number of cases of people who are extremely bright, but who do not have the correct level of English. My answer to that is twofold. First, it will be open to those people to go through a pathway course to the university. However, secondly, we will retain a small margin of flexibility where academic registrars have an individual student who is particularly brilliant but whose English they do not think will improve to the necessary level within the time scale required.
Nicholas Soames (Mid Sussex) (Con)
May I congratulate the Home Secretary and her Minister of State on this important and long overdue measure to put right years of neglect in the system? After the system has had time to settle down, will she consult the Migration Advisory Committee and ask for any recommendations it might have on how to tighten up on bogus students?
Mrs May
I thank my hon. Friend for his welcome for the statement. We are asking the Migration Advisory Committee generally to look annually at the immigration arrangements that we are putting in place, but it will be consulted, as I made clear in my statement, if we find that the number of students staying on for post-study work rises unexpectedly and significantly. We would ask the MAC to look into such a situation and to determine whether any abuse was taking place, and that could include the possibility of a limit.
Pete Wishart (Perth and North Perthshire) (SNP)
Will the Home Secretary tell us what the tone has been of the representations that she has received on this issue from the Scottish universities and the Scottish Government? What have they said about the funding issues and about the competitive situation? The Home Secretary knows that we do not have a fixation with immigration in Scotland; in fact, we are experiencing a structural fall in population numbers. We also have no evidence of bogus colleges. Will she consider an exemption for Scotland, so that any unforeseen consequences of her announcement today do not impact on our universities north of the border?
Mrs May
During the consultation, we had discussions with the Scottish Government and the Secretary of State for Scotland. He and I spoke about the concerns that Scottish universities had raised with him, one of which related to students who had an entrepreneurial idea and wished to stay on to launch a business. That is why we are ensuring that, within the post-study work rules, there will be a possibility to protect student entrepreneurs.
Lorraine Fullbrook (South Ribble) (Con)
The shadow Home Secretary claimed last month that, under the points system, “a lot of progress” was being made. Will my right hon. Friend assess the progress that Labour made in controlling migration?
Mrs May
I thank my hon. Friend for her question. The answer is a very short one, because Labour did not make any progress in controlling migration, as we saw from the fact that it closed tier 3 of the points-based system, as though that would have some magic result for immigration, and all that happened was that the number of student visas went up instead.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Given that a substantial segment of the economy of the city of Manchester depends on the success of its world-class universities, one of which occupies the biggest campus in western Europe, and that those universities have already begun to cut courses as a result of other Government policies, can the right hon. Lady assure Manchester that her policies will not irrevocably damage the city’s economy, which is already suffering dreadfully under this Government?
Simon Hughes (Bermondsey and Old Southwark) (LD)
I thank the Home Secretary and her Cabinet colleagues for listening to the representations of the university communities. As the questions of exit visas and bogus colleges and the success of our students and universities are a continuing matter of concern for the growth of the British economy, will my right hon. Friend and the Business Secretary undertake to report back annually to Parliament on this matter, to ensure that the successful import of academics into this country can continue?
Mrs May
I can assure my right hon. Friend that we will be giving regular reports to Parliament on what we are doing on the immigration system. People will also be able to see what is happening with other aspects of the system, as I have said; I shall be coming back to Parliament to discuss those as well. I am absolutely clear that what the coalition Government have announced today will ensure that our universities can continue to attract students from across the world and to provide world-class education.
Joan Ruddock (Lewisham, Deptford) (Lab)
Some of the brightest and best international students attend Trinity Laban, the dance and music conservatoire in my constituency. Will students who wish to progress from undergraduate to postgraduate studies have to return home to obtain visas, and will students be able to work in this country if they are offered a job paying less than £20,000 a year, which is possible? Many have international careers ahead of them.
Mrs May
Let me deal with the right hon. Lady’s second question first. A code of conduct will be agreed between the UKBA and the Department for Business, Innovation and Skills—obviously the Home Office will look at it as well—and will set out the requirements for the post-study work route. I outlined those requirements briefly in my statement, but it will be necessary to consider particular sorts of occupation and the appropriate rates applying to them. As for the right hon. Lady’s first point, no, those students will not be required to return home.
Mr David Evennett (Bexleyheath and Crayford) (Con)
I warmly welcome my right hon. Friend’s statement, and congratulate her on her approach. Can she assure me that she will be tough and allow only legitimate institutions on to the highly trusted sponsor list? That would of course benefit us in the United Kingdom, but we must also be fair to students who come to the UK to study.
Mrs May
My hon. Friend has made an extremely important point. It will not benefit the UK if people throughout the world who have received the message that they can come here and be given an education end up in a bogus college. We will certainly be tough on highly trusted sponsor status. We will ensure that there is proper accreditation in terms of the educational qualifications and educational standard that colleges must offer, while the UKBA will look into whether they are observing immigration rules.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
What level of English language qualification will be required for students attending English language schools? I understand from the proposals that even students taking short courses will require an intermediate-level qualification. If that is the case, will it not prove damaging to many genuine colleges that make an important contribution to the economy in our constituencies?
Mrs May
The requirements will be B2 for university-level study and B1 for below degree-level study, so there will be a B1 requirement for the pathway courses. As the hon. Gentleman will know—this enables me to answer a question asked earlier by the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) —we are piloting a system enabling student visitor visas to remain valid for 11 months. The right hon. Lady appeared to suggest that they were included in the migration figures, but they are not.
Mrs May
They are not included in the migration figures, and they are therefore not covered by my statement. However, as the hon. Gentleman will probably know from discussions in which he has engaged in the past with, among others, the Minister for Immigration the requirements of the English language colleges were of particular concern to us, and we have dealt with that by piloting the extension of the visitor visas.
Dr Julian Huppert (Cambridge) (LD)
I declare an interest as a member of the university of Cambridge, one of the three excellent universities in my constituency.
I welcome the changes that the Home Secretary has announced, because the original proposals in the consultation would have caused a great deal of harm to much of our education industry. I was interested to hear what she said about student entrepreneurs. How will that system operate? Will it form part of the post-study work system, and will it apply only to new applicants? Will we be telling students who came here expecting a particular set of post-study work rules that they will be changed while they are in the middle of their studies?
Mrs May
We will make absolutely clear when the new post-study work route proposals will be implemented. Students will have reached various stages in their courses, but there will be a specific point at which the post-study work route requirement is introduced. Those who are already studying in the UK and may have expected to stay will still be able to stay, provided that they obtain graduate-level jobs. It is the qualification level for the jobs that will change.
As for the arrangements for student entrepreneurs, we are considering how best to position them in the immigration system. I hinted earlier that they might form part of the post-study work route, but we might consider other routes. The intention is to enable a student who is graduating from university and who has a first-class idea to set up a business and put that idea into practice, and I think it right for us to do so.
Roberta Blackman-Woods (City of Durham) (Lab)
I understand the right hon. Lady’s concern to reduce abuse in the visa system, but what is she doing to ensure that the measures announced today do not simply send a message to bona fide students applying to legitimate institutions that they are not welcome, especially as that would create huge problems for our excellent universities and colleges?
Mrs May
What I am doing at every possible opportunity is saying that our universities are still open for business to overseas students. I have said at every stage, both throughout the statement and in response to a number of questions, that the whole point of what we are proposing is to protect the universities while dealing with the bogus colleges. I think that is the right approach, and I hope it meets with agreement across the entire House.
Mr Brian Binley (Northampton South) (Con)
I welcome the general thrust of the statement, and my constituents will be delighted to hear about it. I particularly welcome the statement that Britain’s universities are open for business to the brightest and best, but I must tell the Home Secretary that that perception does not hold good in China. In fact, the Chinese think we are closed for business. What specific measures will the Home Secretary take to improve that situation?
Mrs May
I thank my hon. Friend for his opening comment, but I do not think that there is any reduction in the number of applications from Chinese students wanting to come to the UK. However, as I have said in answer to a number of other questions, we are absolutely clear about the purpose of what we are announcing today, and I have talked with the university sector about the responsibility that it also has for ensuring that the message is given that UK universities are open for business.
Pamela Nash (Airdrie and Shotts) (Lab)
Which criteria will the Home Office use to differentiate low-risk and high-risk origin countries, and will they change as a result of today’s announcements?
Mr Rob Wilson (Reading East) (Con)
I also welcome the Home Secretary’s statement, as will my constituents. She will be aware of the recent Home Affairs Committee report, which noted from the evidence taken that the student visa system was likely to remain leaky until an effective method of counting students in and out of the country was established. She has already said something about that to the right hon. Member for Birkenhead (Mr Field), but can she say a little more?
Mrs May
There are various aspects of that particular issue, of course. In addition to the response I gave to the right hon. Gentleman on the e-Borders system, I might add that the UK Border Agency will, as part of its assessment of whether institutions can become highly trusted sponsors, examine whether they ensure that their students go home after their period of study. That is another way in which we will try to ensure that the issue is addressed.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
I serve on the external board of Birmingham university’s business school and I must tell the Home Secretary that both Birmingham university and Aston university are experiencing a reduction in the number of applications, so her message is not being heard. May I challenge her a little further on post-study work? Is she working with business schools on that, because they have very specific requirements, and if we lose sight of them, we will harm ourselves greatly?
Mrs May
We have been discussing with business and the university sector what might be the appropriate criteria for the post-study work route, and the message both those sectors have given me loud and clear is that if international students graduating from UK universities are to go into a job, that should be a graduate-level job.
Mark Reckless (Rochester and Strood) (Con)
Three months ago, the Home Secretary proposed closing the post-study work route, expressing concerns that it was adding to graduate unemployment. Will she explain to unemployed graduates in my constituency why she now says that foreign students can stay on, so long as they take a graduate job earning at least £20,000 a year?
Mrs May
We have looked at the balance of interests among universities, the UK economy, businesses and, of course, those currently resident in the UK who are graduating from UK universities and looking for jobs. That is why we have not said that graduates can stay on under the terms of the current post-study work route, which allows them to stay on and go into unskilled jobs or stay on and not be in employment. We think it is right that the brightest and best should have an opportunity to stay here for a limited period of time, but they must be in a skilled graduate-level job. We have been absolutely clear, however, that if the numbers unexpectedly or significantly increase, we will ask the Migration Advisory Committee to look at how we can ensure that abuses do not continue—if that is happening—and that could include limiting the numbers.
Tony Lloyd (Manchester Central) (Lab)
The Home Secretary will get support—not least from me—for her previous answer, because it is important to get that balance right. Will she clarify something for me? One of the things involved in the post-study work route that she has described is a system of UK Border Agency licensing. If that is to exist, will those who operate it be properly trained and will they operate with proper flexibility? That has not always been the case in the past. Does she recognise the point made by my right hon. Friend the Member for Lewisham, Deptford (Joan Ruddock) that for some graduate professions, such as the performing arts and dance, the £20,000 limit could be impossible to attain in post-study work?
Mrs May
I am happy to say to the hon. Gentleman that we are not creating a new process at the UKBA; it already has such a process for tier 2 of the points-based system. The UKBA is used to operating the system and to discussing with business and others the appropriate codes of conduct and measures within those codes, in order to ensure that people stay on in the right level of job. The UKBA is well used to employing a degree of flexibility in dealing with occupations that do not fit into a more stereotypical approach in terms of levels of salary.
Pauline Latham (Mid Derbyshire) (Con)
May I welcome the Home Secretary’s decision to ensure that all sponsors will now need to be accredited by the relevant body and become highly trusted sponsors? Can she confirm that that will also apply to universities and in particular to the university of Derby in my constituency?
Mrs May
Yes, I am happy to say to my hon. Friend that universities are highly trusted sponsors and will need to continue to be so. As they are audited by the Quality Assurance Agency for Higher Education, they fall into that definition, as I set out in my statement. I would expect our universities to continue to be highly trusted sponsors.
Paul Blomfield (Sheffield Central) (Lab)
I welcome the Home Secretary’s recognition of the importance of the post-study work route as a significant part of this country’s attractiveness to international students compared with our competitor countries, but I fear that her proposed changes will not go far enough in convincing potential students that this country really is open for business. Would it not be better to take the advice of the vice-chancellors of both the Sheffield universities in my constituency, which is that we should simply exempt highly trusted sponsor institutions from any changes to the post-study work arrangements?
Mrs May
As I said in response to an earlier question, both the universities sector and the business sector have indicated in my discussions with them that they think it is right that the post-study work route should allow to stay on only those individuals who are going into graduate-level jobs. The hon. Gentleman says that the post-study work route is an important attraction for international students in deciding to study in the UK. Frankly, what should attract international students to the UK is the quality of education provided by our universities.
Mr Robin Walker (Worcester) (Con)
The Home Secretary is absolutely right to crack down on bogus colleges, which are at the heart of this problem, and I welcome her assurance that legitimate colleges can continue to attract legitimate students. One such highly trusted institution in my constituency is the university of Worcester. How will she ensure that highly trusted universities of that sort can continue to attract the best and can benefit from these changes overall?
Mrs May
First, as I have just said, I expect the universities to continue to retain their highly trusted sponsor status and therefore to be open to attract individuals to come from overseas to study at them. Many universities have done a very good job of advertising themselves and promoting the quality of education that they can offer. It is for the universities and for us to be absolutely clear in saying to people that our universities remain open for business and provide a first-class education.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Liverpool’s three universities attract approximately £66.6 million in gross income from international students. That income is a significant driver for Liverpool’s economy and is absolutely vital at a time when university funding is being so drastically cut. Will the Home Secretary please expand on what the tougher entry requirements for demonstrating international students’ financial means will be and can she guarantee that the proposals will not prevent genuine students from coming to study in Liverpool?
Mrs May
The proposals will not prevent genuine students from coming to study, but we do need to look at things such as documents provided by banks to ensure that they are genuine institutions that are genuinely backing up the financial claims being made by individuals who come here to study. It is in nobody’s interests to allow people to use documents that are not legitimate when they apply for a student visa to come to the UK. As regards the three universities in Liverpool, as I have made absolutely clear, they will continue to be able to attract international students.
Mr Stewart Jackson (Peterborough) (Con)
I congratulate the Home Secretary on facing down some of the hysterical hyperbole from the Opposition, parts of the media and parts of the further and higher education sector. On English proficiency and integration, will she please work with our colleagues across government to address the very specific issue of the hundreds of millions of pounds spent by British taxpayers on translation and interpretation services—a non-statutory duty—and to reduce such expenditure in these financially straitened times?
Mrs May
My hon. Friend is taking me down a road that goes beyond the Home Office’s area of responsibility, large though that is. I fully accept the thrust of his comment about the importance of people being able to speak English, which is precisely why we introduced a requirement last year that those who come here to marry or join a partner should be able to speak English to a particular standard.
Ian Paisley (North Antrim) (DUP)
I welcome much of the sentiment in the Minister’s statement. Will she facilitate a meeting with representatives of Queen’s university Belfast and the Royal Victoria hospital? They provide many opportunities for students to come and learn about medicine and then to go into those teaching institutions and provide services to many of our patients in Northern Ireland.
Stephen Mosley (City of Chester) (Con)
One popular scam involves students deliberately failing their examinations repeatedly in order to retake them and hence prolong their stay in the UK. What action is my right hon. Friend proposing to tackle such scams?
Mrs May
I referred in my statement to students who stay on and move from course to course but I had not got as far as those who deliberately, as my hon. Friend suggests, fail their exams. There will be a time limit on how long someone can stay in the UK—three years for a below degree-level course. The limit will be extended for postgraduate studies and to accommodate those who are doing medicine and longer courses, but there will be a limit on the number of times that someone can try that ruse.
Mr David Nuttall (Bury North) (Con)
One in five of the students granted a student visa in 2004 was still here in 2009. Will my right hon. Friend please confirm whether the measures in her statement will end that type of abuse of the system?
Roger Williams (Brecon and Radnorshire) (LD)
Universities across Wales will welcome today’s statement, particularly as the right hon. Lady has been able to address so many of their concerns. Will she commit to maintaining the dialogue with the vice-chancellors that has proved so productive over the past couple of months so that we can ensure that the proposals deliver in the way that they are intended?
Mr Marcus Jones (Nuneaton) (Con)
I strongly welcome the Secretary of State’s statement, particularly as I have learned that in one private college there was no classroom tuition whatever and there were so-called work placements up to 280 miles from the college. Does she agree that it is important that student visa holders should be studying and not working?
Stephen Hammond (Wimbledon) (Con)
I congratulate my right hon. Friend on her statement, which will be warmly welcomed by the legitimate private language college sector throughout the country. There are a number of such legitimate colleges in Wimbledon, so will she outline the changes that she expects that they will need to make to comply with her statement?
Mrs May
A process will be set out for those legitimate colleges by the UK Border Agency. It will be necessary that they apply for highly trusted sponsor status and for accreditation, and we will set out the time limit for that application process soon. They will need to receive highly trusted sponsor status by April 2012 and educational accreditation by the end of 2012.
Mr Aidan Burley (Cannock Chase) (Con)
Last and hopefully not least, I am sure that I am not the only Member of the House who is astonished by how widespread the abuse of the student visa system has become. May I ask the Home Secretary whether our policy to reduce net migration from hundreds of thousands to tens of thousands is supported by the shadow Home Secretary?
Points of Order
Mr John Spellar (Warley) (Lab)
On a point of order, Mr Speaker. Have you received any communication from Vodafone to explain its poor network coverage in the Westminster area since last Friday? Fortunately, I am on another network, but other Members are experiencing irregular reception and failing to get Rapide messages, which is quite unacceptable. Are you able to do anything about the situation, which is highly disruptive to the work of the House and its Members?
Mr Speaker
I fear that that is not a point of order and that the right hon. Gentleman perhaps entertains unrealistic expectations of my powers, although I take his point in the constructive spirit in which he volunteered his remarks. I have received no communication from Vodafone on this important matter. However, I think that I am right in saying that it would be of interest to the Department for Business, Innovation and Skills, representatives of which, I hope, will get to hear of what he said.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
On a point of order, Mr Speaker. During Treasury questions, the shadow Chancellor of the Exchequer, the right hon. Member for Morley and Outwood (Ed Balls), brandished what he claimed to be a leaked copy of a Government document due to be published tomorrow. Is it in order for Government documents that have been obtained illicitly to be brought into the Chamber or, indeed, to be referred to?
Mr Speaker
I am grateful to the hon. Lady both for her point of order and her courtesy in giving me advance notice of it. Not only was that courteous, but it gave me the chance to look into the matter, as she would wish. “Erskine May” is helpful on the subject, and I quote from page 443 for the benefit of the hon. Lady and the House:
“There is no rule to prevent Members not connected with the government from citing documents in their possession, both public and private, which are not before the House, even though the House will not be able to form a correct judgment from partial extracts.”
Whether or not, in the words of the late Lord Birkenhead, we are any the wiser, I hope that we are at least, as a result, somewhat better informed.
Miss Anne McIntosh (Thirsk and Malton) (Con)
On a point of order, Mr Speaker. You are the custodian and guardian of the courtesies and conventions of the House, so I would be most grateful for your guidance on a matter of which I have given you advance notice. Is it not customary for an hon. Member to inform another Member in advance of a visit to their constituency? Was it sufficient, for example, for the shadow Secretary of State for Environment, Food and Rural Affairs simply to announce at DEFRA questions that she intended to visit, for political reasons, a forest in my area? Would it not have been normal for her to write in advance to inform me of the matter? I am sure that this was an oversight on her part, but your guidance would be most helpful.
Mr Speaker
I am grateful to the hon. Lady for her point of order. The answer is that if a Member is visiting the constituency of another Member on official or public business, it is courteous for them to notify that other Member of their intention to visit, preferably reasonably in advance. This convention has been breached on both sides of the House, and I hope not to have continually to make the point that it is really a matter of elementary courtesy that we should adhere to this convention.
If there are no further points of order, we come to the ten-minute rule motion, for which the hon. Member for South Northamptonshire (Andrea Leadsom) has been patiently waiting. May I appeal that Members who are leaving the Chamber do so quickly and quietly so that these important matters can be addressed?
Dangerous and Reckless Cycling (Offences)
Andrea Leadsom (South Northamptonshire) (Con)
I beg to move,
That leave be given to bring in a Bill creating new offences of causing death or serious injury through dangerous or reckless cycling; to make provision regarding minimum sentencing and fines for those convicted of such offences; and for connected purposes.
I am a keen cyclist and I heartily support the many people who leave their cars at home and cycle to work and school. Over the last few years, there has been an upsurge in cycling, which is a great way to keep fit and healthy and a green initiative that I fully welcome. Let me be clear from the beginning that it is not my intention to criminalise cyclists or to discourage people from using their bikes.
In fact, in the vast majority of cases, it is the cyclists themselves who are the victims on our roads when they are killed or injured by motorists who simply fail to spot them. The penalties for dangerous or careless driving for motorists are as they should be—very strict. Occasionally, however, it is the cyclist who injures or kills while riding their bike, and this is the area I want to address today. At the moment, the punishment for cyclists falls far short of the crime, and I believe we need to update the law so that all road users are equally protected and take equal responsibility for their actions.
I want to tell the House the tragic story of Rhiannon Bennett, the beloved daughter of Michael and Diana Bennett, who was knocked down and killed by a cyclist in your constituency of Buckingham, Mr Speaker. I am grateful that you are presiding over this ten-minute rule Bill. I know that you are aware of this case, Mr Speaker, and that you have been very sympathetic to Rhiannon’s family, for which I also know they are grateful.
In April 2007, Rhiannon Bennett was walking with friends on the pavement near her home. She was 17 years old. A cyclist approached the group at speed, jumping from the road to cut across the pavement, yelling “Move, I’m not stopping!”. He was travelling so fast that the group had no time to react. He hit Rhiannon, knocking her over and smashing her head against the kerb. She was rushed to hospital with severe head injuries, but she died six days later.
It is not possible fully to explain the grief that Rhiannon’s parents, Michael and Diana feel—but the pain did not end there. They had to sit in Aylesbury magistrates court at the trial of the cyclist, a man who lived just around the corner from them, and hear the verdict of the court. He was convicted by the magistrates of dangerous cycling and his punishment was a fine of £2,200. There was no prison sentence. Mr and Mrs Bennett did not just lose their daughter; they had to go through the pain of discovering that their daughter’s reckless killing did not merit a prison sentence. We should just imagine what would happen if a motorist drove on to a pavement and killed a teenager. If the driver had walked away with only a fine, there would have been a national outcry.
The police and the Crown Prosecution Service had an alternative to the dangerous cycling charge. The Offences Against the Person Act 1861 carries a section on “drivers of carriages injuring persons by furious driving”. It declares:
“Whosoever, having the charge of any carriage or vehicle, shall by wanton or furious driving or racing, or other wilful misconduct, or by wilful neglect, do or cause to be done any bodily harm to any person whatsoever, shall be guilty of a misdemeanour, and being convicted thereof shall be liable, at the discretion of the court, to be imprisoned for any term not exceeding two years, with or without hard labour.”
The Act is still in force, but for obvious reasons it is little used. It was developed to deal with the century during which horses pulled carriages and coaches, and is now completely out of date. From what little information I have found on it, this law is rarely, if ever, invoked. In any case, the CPS found that the charge of dangerous cycling was the most appropriate in Rhiannon’s case. There are other offences, such as manslaughter and grievous bodily harm, that could theoretically be used against a cyclist, but these are also rarely appropriate in the case of road accidents.
What is needed is an offence that fills the gap in the law and provides a charge that reflects the seriousness and the consequences of a cyclist’s actions. In other words, an updated law is required so that cyclists can be charged with similar offences and given similar punishments to those that motorists currently face. For a motorist, causing death by dangerous driving carries a penalty of one to 14 years in prison; causing death by careless or inconsiderate driving carries a penalty of up to five years in prison. We need to give justice to the small number of pedestrians killed each year by dangerous cycling, by applying similar penalties to those that exist for causing death by dangerous driving and causing death by careless or inconsiderate driving.
It is worth making it clear that the cyclist who killed Rhiannon Bennett was most definitely found guilty of a crime. The problem of achieving justice arose because there simply is no charge that is appropriate to the crime. The Crown Prosecution Service even acknowledged this when it stated:
“The real problem is the fact that as yet there is no offence of causing death by dangerous cycling.”
The cyclist responsible for the death of Rhiannon Bennett was convicted of dangerous cycling and fined £2,200. His bicycle was worth an estimated £6,000, almost three times the amount of his fine. I have not met anyone who considers this to be fair punishment for someone found guilty of a crime in which a young girl died. There need to be a charge and an offence that reflect the reality of what is happening on our roads and pavements in the 21st century.
The idea of creating a new law to deal with this problem was last considered in 2005 by the Ministry of Justice, which decided that no such law was required at that time. Six years later, with the growing number of bikes on our roads, more and more cycle lanes being introduced and the introduction of excellent schemes that I take advantage of myself, such as the cycle hire scheme in London, we need to look at the matter again, and I ask the House to support the Bill.
Question put and agreed to.
Ordered,
That Andrea Leadsom, Amber Rudd, Dan Byles, Damian Hinds, Mark Lancaster, Harriett Baldwin, Mary Macleod, Chris Heaton-Harris and Margot James present the Bill.
Andrea Leadsom accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 4 November 2011, and to be printed. (Bill 168).
Budget Responsibility and National Audit Bill [Lords]
(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move amendment 1, page 1, line 13, at end insert—
‘(d) the Treasury’s objectives in relation to economic policy and policy for the advancement of jobs and growth in the UK economy.
(e) the means by which the Treasury’s objectives in relation to economic policy will be attained (“the growth mandate”).’.
Mr Speaker
With this it will be convenient to discuss the following:
Amendment 3, in clause 4, page 2, line 20, at end insert
‘and the impact of Treasury policy on jobs and economic growth’.
Amendment 4, page 2, line 26, at end insert—
‘(c) an assessment of the extent to which the growth mandate has been, or is likely to be, achieved and the impact on employment and economic growth within all regions and nations of the United Kingdom.’.
Chris Leslie
It is fitting that we are discussing the Bill the day before the Budget. I understand that there are particular reasons, which the Minister will no doubt explain to the House, why the Bill needs to receive Royal Assent this evening, before we reach Budget day, so I am conscious that the ministerial clock is ticking. I pay tribute to the Public Bill Committee, whose members scrutinised the Bill in what I regard as sufficient detail.
Essentially, the first half of the Bill sets out the establishment of the Office for Budget Responsibility, and the second half makes a series of changes to the National Audit Office governance arrangements. It is fair to say that the Committee spent less time on the second half of the Bill, as the House had previously scrutinised many of those measures, but for various reasons that legislation was not included in the wash-up before the last general election. Most of our attention today will focus on the OBR.
Clause 1 relates not specifically to the OBR, but to the creation of a charter for budget responsibility. As we know, the Government have their reasons and rationale for making this set of legislative proposals. It was notable in Committee that Members were quizzical about why the charter for budget responsibility has been quite narrowly defined and why the OBR’s duties are similarly quite controlled and slimline. My view is that any realistic definition of budget responsibility must take account of the impact on jobs and growth of the wider economy and Treasury decisions on fiscal policy, particularly in the current context.
We know that Her Majesty’s Treasury is currently grappling to acquire a growth strategy, some of which might have been left on a number of photocopiers around the building before Treasury questions, although I have not been party to the memo that my right hon. Friend the shadow Chancellor picked up—I will try to get hold of him later to see what was in it. Clearly, the real economy has clashed with the Government’s plan A, which they have refused to depart from, which meant that in the fourth quarter of 2010, as GDP figures show, the economy went into reverse and shrank. The Chancellor blames the wrong kind of snow, but evidently the Government’s approach to fiscal policy has created circumstances that have not only put the brakes on economic growth, but unfortunately seem to have put it into reverse.
When we debated clauses 1 and 4 in Committee, Members felt that it was important to try to challenge the notion that we should somehow have an Office for Budget Responsibility that confines itself to fiscal, deficit and debt issues, to the exclusion of other equally important indices drawn from the wider economy.
Mr Mark Field (Cities of London and Westminster) (Con)
The course of events that the hon. Gentleman describes is surely a tribute to the independence of the advisory body—the OBR—during its first phase following last June’s Budget, but does he not share my concern that if it were to have the increased powers, it would cease to be advisory and independent, which it should be, and in some way would become a challenge to Treasury policy? It is correct that it has relatively limited powers, but above all those powers should remain independent and advisory to the Treasury.
Chris Leslie
I understand the hon. Gentleman’s point about creating a third institution when it should be Parliament’s job to challenge the Executive and the Treasury on their policies. The point we want to make through the amendments is essentially that, simply to have a fiscal mandate in the charter for budget responsibility is inadequate. We feel that it is important to have a growth mandate to supplement the fiscal mandate in the charter and, more than that, that the Office for Budget Responsibility should also have a duty to assess the impact of the Treasury’s policies on the real economy, on employment and on growth. I do not think that that necessarily sets the office’s face against or in juxtaposition to the Treasury—it would simply give it absolute clarity that it had the right and appropriate remit to consider those wider real economic effects.
Mr Field
But there is already a clear monetary mandate in the hands of the Bank of England. Surely a growth mandate along the lines that the hon. Gentleman suggests would muddy the waters, if not necessarily between the Treasury and the OBR, then between the Bank and the OBR?
Chris Leslie
Perhaps this is where I differ from the hon. Gentleman. I think that a slightly dry and narrow focus on the accountancy issues in the draft charter for budget responsibility, as well as a monetary policy focus at the Bank of England and in the charter, with no or scant focus on the real economy—economic growth, employment and some of those very important issues that affect all our constituents—would be a deficiency in the role of the OBR.
Mr William Cash (Stone) (Con)
The shadow Minister and I took part in a debate the other day that goes to the heart of these questions. Does he not agree that although fiscal policy is regarded—with qualifications as the result of the motion the Government put before the House the other day—as exclusively a matter for the House of Commons, unfortunately and disastrously, European economic governance affects the question of growth and the issues that go with it? Does he not agree that his proposals would be overtaken by the proposals that are going through the European Union?
Chris Leslie
I understand where the hon. Gentleman is coming from. I hope that he would acknowledge that we have tried to table a constructive set of amendments because we do not believe that a purely fiscal mandate for the Treasury or the OBR is wide enough. His view is that growth and fiscal policy will also be influenced from beyond these shores and especially by European Union policy. That may well be true.
Mr Cash
I do not wish to correct so much as to advise the hon. Gentleman that my position is exactly the opposite. Fiscal policy remains in this House and should do so, despite what the Government did the other day, and economic growth should also be determined here and not in other arenas. In the Public Bill Committee, he referred to judicial authority as a result of the interpretation of the statutory duties imposed in this place. Does he really want the Supreme Court to apply its determination of its ultimate supremacy over both fiscal policy and economic growth?
Chris Leslie
No, I do not. That was one reason why we raised this issue in Committee. The Bill sets out tests on the responsibilities of the OBR and the Treasury yet there was not really an adequate response from the Minister about the justiciability of those tests. For example, the Minister gave no cut-and-dried answer to the question of a member of the public who might wish to sue the OBR on its efficiency or effectiveness, what sort of legal process that might entail and where it would eventually go. The hon. Gentleman makes an important point.
In a cynical moment in Committee, I raised an eyebrow about the fact that 10 clauses are necessary to establish the OBR. I queried whether we needed 10 clauses to do that. The Bill contains a number of embellishments that, in a more sceptical moment, made me suspect that it was slightly padded out to make it appear to be a grander piece of legislation when a couple of clauses and a schedule would probably have done the trick. Perhaps I was unfairly cynical.
Kelvin Hopkins (Luton North) (Lab)
The hon. Member for Cities of London and Westminster (Mr Field) draws a useful parallel with monetary policy and the Bank of England, but in reality the bank’s Monetary Policy Committee currently interprets its remit flexibly because of the state of the economy. If the committee interpreted its remit rigidly, it would raise interest rates, because inflation is above the target level. It is not doing so, however, because it is sensibly looking at the wider interests of the economy.
Chris Leslie
My hon. Friend is entirely correct, and I am glad that the Bank of England is being flexible, but absolutely, if such mandates are set out rigidly in legislation, as the mandate is before us, and if they are interpreted as they currently are, it is hardly any wonder that the Treasury has a blinkered view of the economy and is obsessively—some might say, fetishistically—focused on deficit reduction and debt to the exclusion of almost any other facet of the economy. What we need right now is a flexible approach to economic policy which can take account of environmental and external facts, jobs and growth, and those are the issues we are raising today.
John Mann (Bassetlaw) (Lab)
I thank my hon. Friend for giving way on the point about flexibility. Where does he think the 2% inflation target, set for the Bank of England, should be, not least in the context of the Japanese economic crisis, with the pressures on US dollars and the insurance industry, and with the potential for rapidly growing inflation, which might require the 2% figure to be reconsidered imminently?
Chris Leslie
Of course, those issues are in the hands of the Chancellor. He has a Budget tomorrow, and I do not know whether he is thinking of revising his monetary policy mandate, but I would be very surprised if he were. My hon. Friend will notice, however, because I know he follows the small print of the Budget and of financial documents, that in the small print the Treasury has chosen for its GDP deflator, when it comes to public expenditure, an inflation rate of 1.9%, which is slightly at odds with the fact that the retail prices index is 5.5%. Again, the cynic in me would suggest that the Treasury has chosen that approach, because to do otherwise would blow a hole in the middle of the Government’s financial plans.
John Mann
I thank my hon. Friend for generously giving way a second time. The reason for exploring the issue is in this “charter”—this grandiose term—set out before Parliament. Chancellors might change their point of view, perhaps sensibly, if they look at the real economy, but how hamstrung will a Chancellor be in the future if some back-dated charter has been agreed but is itself too restrictive and requires change? Is not the measure before us rather a stranglehold—purely presentational—that could come to haunt this or future Chancellors?
Chris Leslie
My hon. Friend suggests that the measure is phantom paraphernalia, enrobing the creation of the Office for Budget Responsibility simply to give it a sense of grand importance, and in fact it could have deleterious consequences. That is certainly one crucial reason why we felt it important to table the amendment, stating that at the very least there should be a broader set of mandates within the charter, and that a growth mandate would be especially important.
Chris Leslie
Before I give way to the hon. Gentleman, I just want to point out that in Committee we debated the remit of the Office for Budget Responsibility and whether it should be broader and take account of wider economic and social policies. So, for example, we tested out the notion of whether the OBR could have responsibility for assessing the impact of Treasury policy on child poverty, or whether it should have responsibility for assessing the impartiality of the local government finance settlement.
One promise in the Conservative party’s localism paper, which came out before the general election, was to have the Audit Commission undertake an independent test of whether there was impartiality in the settlement. That has been dropped subsequently.
Chris Leslie
It has been dropped, and that is indeed something that we should come back to at another point.
This time, on Report, we thought, “Let’s look as strategically as anybody could possibly want to,” and having a growth mandate—a responsibility for growth and employment—and assessing the impact of Treasury policy seemed quite unobjectionable, at least to me when tabling the amendment.
Mr Field
It would probably be unwise for these provisions to be too wide. The credibility of inflation targeting would be undermined if the target were to be changed even on an irregular basis, if at all. As the hon. Member for Luton North (Kelvin Hopkins) said, the remit of the Bank of England covers not only inflation targeting but the greater interests of the overall economy. The latter remit is less well known than the former, but it is the reason interest rates have stayed at a very low level given the high levels of RPI and CPI that we are experiencing.
Chris Leslie
I would recommend that all hon. Members take a look at the draft charter for budget responsibility, which has several interesting facets. I have no doubt that the Minister will explain, in layman’s terms, what is meant by a
“rolling, five-year forecast period”
in relation to the cyclically adjusted current balance. Some hon. Members might find it difficult to envisage how that rolling forecast will operate in principle. Many of us can understand the concept of a fixed year or a fixed date against which a set of targets are to be judged, but if the horizon shifts continually, that is different. It would be interesting to hear the Minister explain that when she responds.
Mr Cash
I am sure that the hon. Gentleman also has in mind clause 6(3), which imposes the following obligation:
“The Office must, in the performance of its duty…act consistently with any guidance included in the Charter”.
As he well knows, I am rather particular about the words used in legislation. I like to know, first, what they mean and, secondly, what their consequence would be; I do not think that is unreasonable. I worry about the extent to which he would effectively be taking away from this House or, for that matter, from the Minister, any responsibility whatsoever for any aspect of the running of the macro economy. I have sympathy with his objective, but I am worried about how it fits into the framework of these provisions.
Chris Leslie
I would not want the hon. Gentleman to misunderstand the point of our amendment. It would, in essence, ensure that the charter for budget responsibility had a wide enough definition to give the new Office for Budget Responsibility, if it is indeed an independent body, more latitude to look across the wider set of economic indices and make its analysis and assessment of the impact of the Treasury’s policy on the ground—in the real world and the real economy—instead of looking merely at the desiccated issue of deficit reduction.
Stewart Hosie (Dundee East) (SNP)
I understand why the hon. Gentleman wants this provision, and I am not unsupportive. I am worried that he would conflate the work of the OBR with that of the Financial Policy Committee. We should remember that the FPC is charged with looking at the macro economy, which may well mean looking beyond monetary policy—the responsibility of the Monetary Policy Committee—and the macro-prudential. It might be able to look at the other aspects that he is expecting the OBR to look at, and that could muddy the waters even further. Does he see the potential for conflict between the OBR, with the role that he wants to set, and the FPC, with the role it is likely to have?
Chris Leslie
I understand where the hon. Gentleman is coming from. As I understand it, however, the Government, in creating the Financial Policy Committee at the Bank of England, propose to give it a particular responsibility for macro-prudential regulation. That is quite different from the role of the OBR, which, as an analytical and assessing independent body, will have a duty to provide comment and analysis on, and a degree of scrutiny of, the proposals of the Treasury and, more narrowly, the Treasury’s policy in relation to the accounting aspects of fiscal policy alone. If we are to have an Office for Budget Responsibility—or, as some hon. Members have suggested, the equivalent of the Congressional Budget Office, with some kind of parliamentary Budget office, which we will discuss later—it must be an independent body, so it must have the indisputable right to comment on the Treasury’s policies writ large on macro-economic and fiscal policy. I do not feel that there is necessarily a conflict with the Government proposals on changing financial services regulation, although we have not yet seen their proposals, and we do not really know what powers they intend to vest with the Bank of England on macro-prudential regulation. We will come to that another day.
I will explain why I think it is important that we focus on the concept of a growth mandate. It is not something that was just dreamed up by the Opposition. The Engineering Employers Federation has also called for a growth mandate to supplement the fiscal mandate in the charter for budget responsibility and in the Budget. It states that a growth mandate would
“send a powerful signal to business in the forthcoming Budget that government has a clear strategy to address the barriers to growth”
and calls for
“a Parliament long programme to deliver on it.”
Terry Scuoler, the chief executive of the EEF, has said that a growth mandate should be introduced to
“report on the progress at each Budget in the same way it does with the Fiscal Mandate.”
The EEF also states that
“like the Fiscal Mandate, the Growth Mandate should span the lifetime of a parliament with each subsequent Budget and policy announcement showing further incremental progress.”
The EEF makes a good point about the impact on the industries that it represents, which are in the real economy. Ultimately, that is what matters to our constituents.
Kelvin Hopkins
In line with that, would it not be sensible to ensure that the members of the OBR, when they are appointed, represent a range of views? The Monetary Policy Committee has hawks and doves, who have widely differing views on what should happen to interest rates. Equally, there ought to be voices in the OBR putting the case for the real economy, as well as simply for the Budget.
Chris Leslie
That is absolutely right. The Government have given the concession to the Treasury Committee that it can hold pre-appointment hearings for three of the five members of the OBR board. That is, of course, welcome.
Chris Leslie
We debated that point in the Public Bill Committee. Having consulted the Treasury Committee Chair subsequently, I understand that it has to weigh up how much time it has for such matters versus other things. That may well be a matter for the Treasury Committee to revisit. I urge it to ask for the ability to appoint all five members, not least because the two non-executive members who will not have a pre-appointment hearing are essentially appointed by the Chancellor of the Exchequer. To ensure their impartiality beyond doubt, it would seem necessary for the Treasury Committee to have the right, if it saw fit, to scrutinise all five.
John Mann
As a member of the Treasury Committee, I wholeheartedly back the principle that all five members should be scrutinised appropriately, not least because of the point that my hon. Friend the Member for Luton North (Kelvin Hopkins) made about ensuring that there is the maximum possible specialist input, including from the labour market, in the decision making. Let us scrutinise all five.
Chris Leslie
I look forward very much to those pre-appointment hearings and the reports of them. It is important to have people who understand the real economy. That is the gist of our amendments. We are worried about these matters.
Chris Leslie
If the hon. Gentleman will allow me, I will make a little progress, because I want to ensure that other Members have the chance to comment in this debate.
One reason we feel it necessary to put the concept of a growth mandate in the charter for budget responsibility is our anxiety that the current Chancellor of the Exchequer and Treasury are slightly blinkered when it comes to growth and employment. We know that in all probability, the Chancellor will announce tomorrow that the OBR is to downgrade the growth forecast. [Hon. Members: “No!”] Yes, my hon. Friends may be shocked at that piece of advance news, but apparently it says on the front page of the Financial Times today that the growth forecast for 2011 will be downgraded from 2.1% to 1.8%. The British Chambers of Commerce has also downgraded its 2011 gross domestic product forecast and is now expecting GDP growth of only 1.5%, down from a forecast of 1.9%. Other consensus forecasters are moving in the same direction.
Ian Murray (Edinburgh South) (Lab)
Will my hon. Friend explain to the House, and particularly to us new Members, whether the OBR has reduced its forecast at any other time in the past year?
Chris Leslie
It is a one-way journey, unfortunately. The OBR started with high expectations of growth soon after the general election, and at every stage at which it has made adjustments, the spiral of the economy’s growth prospects has descended.
Thomas Docherty (Dunfermline and West Fife) (Lab)
Like the Lib Dem poll rating.
Chris Leslie
Possibly, but in a more tragic and important way that affects real lives and real people. It does not really matter what happens to the Liberal Democrat poll rating, but growth falling behind and diminishing as unemployment rises is a really important issue in the real world.
Stewart Hosie
May I bring the hon. Gentleman back to the amendment for a second? I am sure he is not suggesting that the OBR should have any role in setting the fiscal mandate. I understand why he wants the consideration of growth to be part of its mandate, but the Treasury Committee stated that the OBR’s commentary function
“should be one of informing public debate through disseminating better understanding of fiscal policy and long-term economic trends, identifying possible risks”
and so on. Those long-term trends would inevitably include growth. Although none of us would want the OBR to comment on individual policy measures, even the Government’s response—I certainly do not defend them—states that the OBR would be
“examining and reporting on…the long-term impact of the Government’s decisions.”
Again, that would include their impact on growth. Does the OBR not already have the ability that he is looking to give it?
Chris Leslie
I suspect that the Economic Secretary will make that point in her retort, when she eloquently resists all amendments, as is her usual pattern of behaviour. However, it is not clear enough that growth and employment are matters that the OBR can comment on and analyse. I absolutely would not want to give it the power to determine the mandate, but the Treasury should be big enough and ugly enough to withstand commentary from such an independent body.
Mr Cash
May we park that matter for now, without in any way undermining the hon. Gentleman’s main point about judicial authority? What he said in the Public Bill Committee was completely right—if we impose a statutory duty, we have to accept that the courts will adjudicate.
That is important enough, but how would the hon. Gentleman reconcile clause 6(3), which states:
“The Office must, in the performance of its duty…act consistently with any guidance”
under the charter with, for example, European directives that will emerge under the 2020 strategy? Under his proposals, which would prevail?
Chris Leslie
The growth mandate that we are suggesting would be a responsibility of the Treasury, not of the OBR, but it would give the OBR a duty to have regard to whatever else was in the charter. Simply inserting the fact that the Treasury had to follow a growth mandate would give the OBR the right to comment on the Treasury’s performance in respect of that mandate. Whether there are European or other influences on the Treasury’s policies and performance is a debate for another time, I suspect.
Chris Leslie
I am quite sure that there are influences, but we tabled the amendment to draw out answers to some of these questions.
John Mann
One statistic that is not currently provided by the OBR is its projection of the number of new employees entering the country from abroad, including from within the EU. The amendment might mean that the OBR must provide that statistic, which is important in social and economic policy. At the moment, the OBR gives only a general figure from which we cannot deduce, without more detailed and hidden questioning, precisely how many new jobs come from abroad. My understanding is that currently, 700,000 to 800,000 of the new jobs being created will involve EU migrants. What does my hon. Friend say to that?
Chris Leslie
If the OBR is to do an adequate and holistic job in commenting on economic prospects, it surely needs the clear and explicit right to comment on employment policy, growth policy and so forth. My hon. Friend is absolutely right to raise the issue of employment and jobs. The most recent figures show that the jobseeker’s allowance claimant rate is 8% of the population, which is a 17-year high, and a prediction of 2.6 million unemployed. Again, that is likely to be revised upwards by the OBR when it comments on the forthcoming Budget.
My constituency, Nottingham East, symbolically passed the 10% claimant count rate, which is a very depressing milestone. For those reasons, and because long-term unemployment is increasing so quickly—it is up 24% in the last year—and more than one in five young people between the ages of 16 and 24 are out of work and on the dole, surely we need the charter for budget responsibility to include a growth mandate, and for the OBR to have the ability to assess the impact of the Treasury’s polices on jobs and growth.
Geraint Davies (Swansea West) (Lab/Co-op)
The Bill states:
“It is the duty of the Office to examine and report on the sustainability of the public finances.”
The sustainability of public finances involves three factors: tax, spend and growth. In tomorrow’s Budget, the Chancellor is expected to say, “This is a Budget for growth with very little change in tax and spend,” but it would be remarkable and ridiculous if two massive parts of the sustainability of public finances were not properly accommodated within the OBR.
Chris Leslie
My hon. Friend is absolutely right. It would be such a pity if this edifice—the OBR—did not scrutinise the things that the Government know they are vulnerable on, and on which their policies are deficient. The Government do not have a strategy for growth and jobs, and we need the OBR to be able to expose that. Growth has a number of drivers—
Chris Leslie
I will not, if my hon. Friend will allow me, because I want to focus on what the OBR needs to take account of.
The Economic Secretary to the Treasury (Justine Greening)
I have been listening to the hon. Gentleman for a while, but I want to draw his attention to the OBR’s economic and fiscal outlook, which was published in November last year. I do not know whether he has looked at that, because it contains 50 pages that consider the forecasting issues about which Opposition Members are raising concerns. I thought I would mention that because I get the impression from what he is saying that he has not read it.
Chris Leslie
Quite the contrary. Perhaps that was published in the free phase when the OBR, untrammelled by legislation and existing in the ether, as it currently does—we are post-hoc legislating now—had its moment of freedom when it could comment on such things. If the Bill locks the OBR into a narrow band of responsibilities and duties, it is reasonable to worry that it will be limited to commenting on a certain number of aspects. I accept absolutely that, as the Minister says, fiscal policy is affected by growth, and that therefore the OBR has an implicit right to comment, but that has not been made clear enough, which is a sign that she still does not understand the centrality of growth and employment policy to what the Treasury should be pursuing.
Kelvin Hopkins
My hon. Friend is right to focus on the importance of flexibility and the ability to deal with the problems he has described in his constituency. However, the hon. Member for Stone (Mr Cash) made a useful point about the EU’s arrangements, under which a completely independent central bank with no democratic controls sets interest rates that might or might not be appropriate for different nations. There are Maastricht rules and a rigid currency that cannot be flexed by countries that need to do so. Our situation is so much better because we have preserved a degree of flexibility so that we can manage our economy in the interests of our people.
Chris Leslie
Indeed, and we should pay tribute to the previous Prime Minister for maintaining and establishing those freedoms and that independence. However, you would rule me out of order, Mr Speaker, if we departed too much from the amendments.
A growth mandate is necessary on the four principal components of growth. The Government’s strategy on consumer spending is falling apart by the day. The nationwide consumer confidence index published this week showed a record low among the general public. One reason consumers are losing confidence is the possibility of VAT going to 20%. Real disposal incomes are falling back to the 2008 level, and median income is falling more than at any time since the 1980s. John Lewis reported falls in sales last week, Debenhams is saying that trading conditions are tough, credit levels are contracting, and from April onwards, of course, some of the tax credit changes and other changes will take money out of the pockets of consumers. We know therefore that on the consumer spending components of growth the Government have already lost control of a decent growth strategy.
On business investment, banks are still slow to lend to high-growth businesses. More than 20% of commercial real estate loans are in default or in breach of their covenants, and the much-trumpeted national insurance holiday that Ministers offered to new start-up businesses has not been taken up to the extent predicted by Ministers, owing to the complexities they have imposed on the arrangements. The Government’s growth strategy currently seems to depend on a number of odd assumptions, including that it is the fault of employee rights, which need to be eroded to boost growth. That is the kernel of their growth strategy.
On planning law, the Government are sometimes localist and sometimes not; sometimes they devolve powers but sometimes they do not want to give certain powers to councils. Their approach on planning is confused. Will they relax Sunday trading laws? There is speculation all over the place. There is even confusion over business rates. The Minister’s colleagues in HMRC have issued 40 different consultations, discussion documents, updates and responses on tax changes since the previous Budget, which, as many businesses complain, brings uncertainty and confusion. And to cap it all, with the abolition of the regional development agencies, they have created these local enterprise partnerships, with no clarity about their role or budget. We will see tomorrow about the enterprise zones, but on business investment the growth strategy is very deficient.
The Government are relying totally on an export-driven miracle to be the salvation of their growth strategy, yet if the Treasury predictions are correct we would need the highest export growth every year for the next three years, which last occurred in 1974, I think. That means, for example, that our exports to the USA would have to triple or our exports to China would have to grow twentyfold. That is not a growth strategy, but a prayer for a miracle.
To cap it all, we know what is happening with public sector expenditure. The rush to reduce the deficit so deep and so fast is causing great harm to the growth prospects of the economy and taking out a number of posts, particularly in parts of the country that are least resilient.
Amendment 3 would add to the Office for Budget Responsibility’s duties the requirement to assess the impact of Treasury policy on jobs and economic growth. Defining responsibility as such a purist, accountancy-type concept is to take a slightly dry and aloof approach, which seems to us irresponsible, given the real-world impact on people, jobs and society. We need to ensure that the OBR is a more rounded organisation that is grounded in the real economy, not just a narrow, bean-counting institution that looks at statistics or just one aspect of economic policy. It needs to be strategic, predictive, competent and authoritative, and it can do that only by having a duty to analyse the Treasury’s impact across the board. That would be one way of creating longer-term sustainability for the Office for Budget Responsibility, beyond the Government’s current plans for deficit reduction.
Amendment 4 would give the OBR a duty to assess the impact of growth in our regions and nations. We know that the Government’s spending cuts are hitting less prosperous parts of the country disproportionately. The disparities in our economy are growing as a result of the Government’s policies, and clearly that is harmful. Indeed, we saw that in the unemployment statistics this week, for example, with 27,000 more people made redundant in the west midlands and 8% unemployment in my region of the east midlands.
Stewart Hosie
We have indeed seen unemployment statistics, which show unemployment in Scotland falling for three months in a row, employment rising for three months in a row and construction up massively, specifically because of decisions taken by the Scottish Government to re-profile capital expenditure. How would the OBR relate, for example, to the Scottish Government on the different routes that they had taken over the same period? How would that technically work?
Chris Leslie
If the OBR could explicitly comment on employment and growth policy, it would be able to look at the different tactics employed in the economic policies of the different regions and nations. If there were good or poor policies in different corners of the country, the OBR would be able to analyse and pass comment on them.
Stewart Hosie
The hon. Gentleman is being generous in giving way, but I am quite keen to probe on this issue. What he has said makes perfect logical sense, but at that point the OBR would be commenting not on UK policy, but on regional or national policy. If it were commenting on a micro-policy, rather than policy at the UK level, would that not put it in difficult political territory?
Chris Leslie
If a policy were having a significantly adverse effect on jobs, such as some of the policies pursued by the current, Tory-led Government, it would be useful to have an independent, authoritative budget office to comment on that and to flag it up—to put out a red alert, as it were—as something that parliamentarians ought to comment on. I would not have a problem with that level of commentary. We should be big enough to cope with that level of challenge, audit and scrutiny. We would not be giving the OBR any power to make decisions; the point is simply to shine a spotlight on Treasury and Government policies.
Chris Leslie
If my hon. Friend will allow me, I will not give way. I have been speaking for rather a long time and I want to stop, but hon. Members may wish to make their own comments individually.
Clearly we need a proper growth strategy, but a growth mandate would also help. We need to start focusing on future growth industries and maximising our comparative advantage. We need to cast forward with a growth strategy not just for a decade, but for several decades. We need to focus on skills and, yes, a fiscal strategy, but we also need to focus on job creation, and a growth mandate with the clarity for the OBR to make its own assessments would certainly be a step in the right direction.
Mr Cash
Some time before the general election, as the financial crisis was developing—particularly in relation to the banks—there was a certain amount of talk about the idea being put forward by the then Opposition for an office for budget responsibility. I remember participating in some of those debates, and saying that I thought that it was an extremely good idea to have a much clearer picture of how we organised our finances. However, at that time the true level of debt was not being revealed by the then Government. We had reason to believe that the actual amount of debt was very different from what was being put forward. That had significant repercussions for the question of how we should deal with it. The OBR, or whatever else was going to be put in place, would have had to deal with the reality of the debt.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman knows what I am going to say. I do not want to spoil what he is going to say on Third Reading, so it might be better if he stuck to the subject of the amendments. That would be more useful to us at this stage.
Mr Cash
I am very glad to be able to follow that advice. In order for the provisions contained in the amendments to be inserted in the Bill, it is essential for the House to be aware of the implications of judicial authority, the assertions of the Supreme Court in that context, and the sovereignty of Parliament. There is, for example, the question of fiscal policy and the charter, which is set out in clause 1(2) and to which the question of economic growth and job creation would be added by the amendments. Clause 6(3) states:
“The Office must, in the performance of its duty under section 4, act consistently with any guidance included in the Charter by virtue of this section.”
I am deeply worried about the legal status of the charter in this context.
As for fiscal policy, I remind the House that the other day, probably for the first time since 1640—Pym and Hampden and all that—the Government passed a motion saying that we were only primarily responsible for it. I voted against the motion—as did my hon. Friend the Member for Bury North (Mr Nuttall) and a number of others—but the whole House should have voted against it, because in fact we are exclusively responsible for fiscal policy, and that is what the Bill is supposed to be based on.
What worries me particularly is the inconsistency with fundamental questions that are in the background, involving the primacy of European law, sovereignty and judicial authority. I need make no further points, because in a nutshell, if those issues cannot be reconciled with what is in the Bill, and if the duties of the Office for Budget Responsibility are to examine and report on the sustainability of the public finances, to prepare “fiscal and economic forecasts”, to make assessments and analyse sustainability, and to act consistently with the charter as a matter of law, we are surely entitled to ask: which law will prevail?
Obviously, I agree with all the ideas that are being presented. We all want an efficient economy, we all want jobs and we all want growth. We cannot survive without growth, and we cannot generate the revenues to pay for the public sector without that growth in the private sector. What worries me is that all those ideas are being imposed through a Bill, rather than through the judgment of Ministers who are accountable to the House of Commons, and should not be required to refer back to the judicial authority of the courts or the alleged primacy of the European Union.
I fear that we are embarking on one of those Lewis Carroll-type situations. I am reminded of “The Hunting of the Snark”. Members may recall the phraseology. We know that we want it, we know it is there, but the question is, what is it going to do? I have a serious problem with the Bill for that reason. I fear that we are engaged in a process of wishful thinking rather than achievement, and that we are being locked into a withdrawal from parliamentary accountability—and, as some Members may know by now, I regard that as the ultimate test of our democratic system.
Ian Murray
It is a pleasure to follow the hon. Member for Stone (Mr Cash). At the end of his contribution he referred to wishful thinking. Labour Members certainly think the Chancellor’s gamble with the UK economy is wishful thinking. The recent reduction in GDP came as a shock to everyone, and serves to highlight some of the wishful thinking indulged in by those on the Treasury Bench.
I think that everyone supports the establishment of the Office for Budget Responsibility. One of the best measures taken by the Labour Government was the courageous step of making the Bank of England independent. We have all seen the benefits of that, in good times as well as bad, as it can now make decisions for the benefit of the economy, rather than the benefit of the Government.
In the establishment in law of the OBR, the Bill should focus on more than just deficit and debt issues. Clause 1(1) states that the Treasury must look at
“the formulation and implementation of fiscal policy and policy for the management of the National Debt.”
That narrow focus takes us away from what we need most, which is economic growth. It does not even give the OBR the ability to take account of various specific objectives the Government may want to achieve, such as on child poverty or unemployment, or in terms of the impact on the economy of decisions made by the Chancellor and his team.
Justine Greening
To reassure the hon. Gentleman, may I point out that the OBR is free to consider the impact of any Government policy on the sustainability of the public finances? It therefore does have the discretion to conduct analysis that it may think necessary to assess whether the public finances are in a sustainable state.
Ian Murray
I am grateful to the Economic Secretary. As I have said previously in the House, she is one of the more capable Ministers, but she does occasionally fail to see the wood for the trees, and I would point out to her that the OBR’s remit is purely fiscal, and its fiscal forecasting may not always take into account what is happening on the ground in all the local communities that we represent.
That brings me neatly to my next point, which is about independent forecasting. That is certainly no panacea, nor is it a substitute for the judgments made about the public finances by the Chancellor and Prime Minister. We need to be able to hold the Government to account on the accuracy of the forecasts and the consequences of the judgments and choices that they make. The Conservatives have repeatedly claimed that the Labour Government fiddled the figures, but that is not borne out by the statistics published by the Library. In all the years before the crash, in only two years did the growth forecasts fall below the range that the Treasury had published, so the Treasury was dealing with those issues. The Government are wrong if they believe that the OBR would have prevented a crisis, or that it will protect us from the consequences of some of what in my view are the Chancellor’s misjudgments.
Stephen Williams (Bristol West) (LD)
If the OBR is such a good idea, why did the previous Government not introduce it during their 13 years in office? But leaving that aside, will the hon. Gentleman concede that if we had had an office for Budget responsibility in the last Parliament, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) would have found it much harder to dismiss warnings about the economy overheating, because those would have come from an independent office such as that created by this Bill?
Ian Murray
I am grateful to my hon. Friend; I get on very well with the hon. Gentleman, so I consider him to be my hon. Friend—
Ian Murray
That may not please every Labour Member, but nobody is objecting to the setting up of the OBR. My point is about the previous Government’s record: in only two years did the growth forecast fall below the range that the Treasury had published. I am not claiming that the OBR does not do sterling work.
That last intervention brings me neatly to my point about what the OBR has been able to do. It serves as a strong antidote to the propaganda about the figures that we have been hearing from the Government. The OBR said that because of the actions of the Labour Government, the deficit in 2009-10 was more than £20 billion less than had been expected. It also said that under the Tory-led Government’s plans there would be 110,000 more people on the dole by the end of this Parliament than would have been the case under Labour’s plans. Those are the OBR’s figures, which is why I am so delighted that it was set up—the hon. Member for Bristol West (Stephen Williams) can check the figures if he wishes. The OBR forecasts based on Labour’s plans until the election were that the economy would grow by 2.6% in 2011, whereas the figure under this Government spirals down to 2.1%—and even that may be reduced when the Chancellor speaks at the Dispatch Box tomorrow. So the OBR has been a good antidote to the propaganda that we have heard from those on the Government Benches.
Andrew Bridgen (North West Leicestershire) (Con)
I welcome the fact that the OBR is in place. Does the hon. Gentleman think that if it had been formed back in 1997, it would have advised the Labour Government against increasing the national debt by a stonking £74.9 billion in the boom years between 1997 and 2004?
Ian Murray
One would have thought that the three interventions I have taken were scripted across the Chamber, because the hon. Gentleman leads me to the second point in this part of my speech. I was talking about the deficit and the national debt, so let us dispel some of the propaganda in the OBR’s reports. He is welcome to read both them and the fantastic summary of performance indicators in the economy that the Library has produced. This point shows why it is incredibly important that the OBR should examine a wider set of figures, rather than just fiscal and national debt. Public sector net debt was down to 36.5% of gross domestic product in 2007-08, compared with the 42.5% that was inherited in 1996-97. Most of that borrowing was to do with financing capital investment, and not day-to-day expenditure as the Conservatives claim.
Stewart Hosie
Unfortunately that is not quite true, because the bulk of the capital expenditure took place through the private finance initiative. If memory serves, the outstanding balance on the credit card for that is £200 billion—of which, under the Labour Government, two thirds was off the balance sheet.
Ian Murray
The figures are there for people to see. I am delighted that we have had a contribution from the hon. Member for Dundee East (Stewart Hosie) on this subject, because in the past four years of Scottish National party government not one brick has been laid to build new infrastructure in Scotland. They have refused even to set up anything to do with building public infrastructure.
Mr. Deputy Speaker (Mr Lindsay Hoyle)
Order. We are not going to be drawn into the party politics of Scotland. Let us stick to the amendment.
Ian Murray
Thank you, Mr Deputy Speaker. I will resist the temptation to have another go at the Scottish National party in the Chamber, and will take your guidance.
I shall finish on two quick points. First, the level of borrowing before the financial crisis did not cause the recession. Every country in the world was affected, so it does not take a rocket scientist to work out that it was a worldwide financial crisis. The coalition Government’s propaganda—
Ian Murray
I may just carry on, as I know you are trying to get through the speakers, Mr Deputy Speaker.
The coalition would have us believe that the previous Government were responsible for the economic crisis in, to name but a few countries, Germany, France, the US, Japan, Greece, Portugal, Spain, Italy, Iceland, and that member of the arc of prosperity, Ireland.
Finally, I want to give a human story and show why there is a need for a growth factor mandate at the OBR. On Sunday in my constituency I met a family who raised the spectre of what the Government’s changes mean for them and the problems that they face as a result. The OBR reflects these issues in the figures it produces, but not in terms of growth. That family gave me a list, which follows on from a list given to me by someone at Her Majesty’s Revenue and Customs: they have listed the cost of all the changes to their family budget, which amount to a loss of £4,000 a year. One member of the family earns just into the upper tax bracket, and his partner works part-time and tends to look after the children. When the national insurance increase and the child benefit cut—because he is a higher tax bracket earner—are taken into account as well as the increase in VAT and pension contributions, the overall consumer prices index increase to pensions, his public sector pay freeze, the extra cost of fuel going into the car, the increase in utility bills, food inflation and general inflation in the economy, it all has a rather hard-hitting effect on the family budget. That is why I think the amendments are sensible, and why the OBR needs a growth mandate to get the Chancellor out of a hole—because he does not have a plan B, and it does not really look as if he has a plan A, either.
John Mann
I shall speak solely to the excellent amendment that my hon. Friend the Member for Nottingham East (Chris Leslie) so eloquently put forward. In doing so, I shall argue why it is in the Government’s interests to accept the amendment. I am certain that by the end of my speech the Minister will wish to accept it and will accede by nodding that she will do so.
The amendment is a pro-Government amendment and would be pro-Government whoever was in government, because unlike the usual party-politicking that we tend to get on Report, particularly early on, the amendment is a highly pragmatic and practical amendment to a process that, as the Government stated when they set up the OBR, was itself meant to be independent, practical and pragmatic. The shame is that we could be in a Public Bill Committee given the paucity of the number of Members present to debate this rather important Bill and an area of the economy that is the most fundamental issue that we face, along with every other Parliament in the world. I know we will not have a green Budget tomorrow, but today the green Benches are largely empty of hon. Members ready to participate in and listen to the debate. That is an indictment of the confidence that Back Benchers from both halves of the coalition have in their Government's economic policies on the verge of the Chancellor’s second Budget.
We have an opportunity to shape the independent analysis that will sit alongside this and all future Budgets, including when, at some stage, the coalition parties are in opposition—although I appreciate that the Liberals are, in essence, already in opposition. It is extraordinary that so few of them are present. If I were a Liberal now—I never will be, but if I were—I would be thinking, “Here is an opportunity, with this amendment, to try to have a smidgen of influence over this tawdry Government.” That smidgen of influence is entirely lacking now, because the Liberals are nothing more than lapdogs to the Tories’ economic policies.
I shall illustrate my point with two examples, the first of which concerns the labour market and issues such as immigration and why it is so relevant to what the OBR is not doing and, I believe, will not do in its report that will be presented with the Budget tomorrow. When assessing job creation, it is essential from a Treasury and from a social policy point of view to ascertain precisely what new jobs there are. In doing so, work should not be broken down to the micro-level of particular kinds of jobs, as policy makers do not need to know that. However, they do need to know about the people who have entered the labour market and were not in it before. If it is projected that just over 1 million jobs will be created in this Parliament, it makes a world of difference if those jobs are taken by young people coming into our economy from the accession countries of eastern Europe, perhaps on a temporary basis, to participate in those elements of growth in our economy rather than being taken by the domestically resident, unemployed, underemployed, retired or partially retired population.
The economics of this issue are as important to decision making as the social policy side, which I am sure all hon. Members will recognise is very important. If the majority of jobs being created are semi-permanent, service sector-based jobs in the south-east, particularly in London, and if they are filled by people from overseas, there will be economic and social consequences. One economic consequence will be an overheating of the London and south-east economies.
The failure to take that into account in economic planning was by far the biggest fault line under the previous Labour Government. It is foolhardy of the current Government, with the cheering on the Conservative Back Benches that there has been, to do exactly the same thing given that a tool has been created that would allow that objective analysis—if it were allowed to do that job. If the OBR’s report tomorrow gives a breakdown of where jobs are coming from, how many are in the south-east and London, and how many are new jobs going to people coming into the country for the first time, that will give us far greater certainty about the economic and social consequences. Some of those economic consequences, as well as social consequences, will be an overheated housing market in London and the south-east, which has previously been an impediment to certain forms of growth and to those who have wished to get into the labour market but have not been able to do so.
Stewart Hosie
The hon. Gentleman makes an interesting point about the nature of employment, but I am not sure whether the growth mandate to which amendment 1 refers would help. There were years under Labour in which there was net growth, but the Labour Government still managed to lose 1 million manufacturing jobs in those years—this was before the recession—and I am not sure how the growth mandate would have helped to inform us that we had lost those jobs, given that net growth was being identified and, presumably, reported on, as it would be by the OBR.
John Mann
We, like other countries in the western world, are losing manufacturing jobs because of our refusal to deal with Chinese imports and the consumer myth of buying ever cheaper from China. The inherent trade imbalances and problems that accrue as a result will come back to haunt us, and while I know that the Government will want to allocate time to discuss that vital subject in the near future, it is slightly outside our present debate.
The hon. Gentleman is partly right and partly wrong. While it would be wrong to discuss policy issues relating to the economy now, if the statistics had been broken down at that time to allow his assessment to be made more accurately, it is rational to assume that the situation could have been debated more regularly and in a more informed way. That might have had a positive impact for Opposition Members such as him as well as Labour Back Benchers. Indeed, such information might also have informed the previous Government’s policy making, which explains why amendment 1 is in the Government’s favour.
We need to know about job creation and what jobs are available not only in London and the south-east, but in other parts of the United Kingdom. I have talked about immigration, but there is an equally vital factor for economic and social policy: the blurring, albeit for rational reasons, of retirement age. We have to consider early retirement, late retirement and the retirement age itself, as well as the vital question of pensions. Some employers in areas such as mine have deliberately targeted getting the over-60s back into employment. That is perfectly rational, and it is good for those people, for the social economy and, perhaps, for the economy overall. We need the information, however; not because that is a bad thing, but because we need to know whether the new jobs in our regions and constituencies are getting those people who are deemed to be retired into the labour market, as opposed to people who are not working—whether they want to work or not. If we are to crack the problem of those who choose not to work, or who are incapable of getting work—again, the rational employer goes for the person with work history—such understanding will be vital to our economic and social policy. I put it to hon. Members that the rational employer is far more likely to employ a 67-year-old with an excellent work history who is re-entering the labour market, perhaps in a part-time job, than a 57-year-old who has been unemployed for 10 years.
The decisions taken by employers and those individuals who wish to re-enter the labour market are not necessarily matters for us, but the consequences of their decisions are important to us, and especially to economic policy making. An understanding of the precise breakdown of new jobs and job losses is fundamental to economic policy making. Several of the economic assumptions that can be made about consumer behaviour, pensioners and wage demands flow from such analysis. That is why, as a slight aside, it would be foolhardy not to give the Treasury Committee a role in all five OBR appointments, because such a role would ensure that if a Chancellor were so foolish as to skew the appointment process towards people with a certain mindset or from a certain discipline in economics, as opposed to trying to achieve a balance, that Chancellor could be corrected through appropriate cross-party decision making. I am talking about any Chancellor—the present one, whoever replaces him in future reshuffles and our Chancellor, when we are in power. It is vital that there is an evidence base that stands independent of the Government so that we can all decide how to vote on the various measures that the Government bring forward. How can we possibly make an informed decision otherwise, except by political instinct, which is important but insufficient compared with having all the information?
I am therefore puzzled by why the Government are not leaping to thank my hon. Friend the Member for Nottingham East for tabling the amendment. Labour Members might see the fact that his approach would help out such a Tory Government as somewhat treacherous, but this is clearly the new politics. It is coalition gone mad when a Labour Front Bencher is putting forward a proposal that would help Conservative Back Benchers, the handful—a tiny number—of Liberals who are anywhere near government and the Government themselves.
Let me give another example about policy making. Who knows what will be determined about petrol policy tomorrow, but that is a good example of something that should be covered by the OBR’s analysis. We need to know what has happened, including in the past, so that we can assess the impact of VAT on petrol, as well as on petrol duty, and the changes to petrol duty itself. The Chancellor might decide not to cut the price of petrol and yet not to increase it further, even though the price paid by drivers such as myself has gone up by ten quid since he became Chancellor. If he decides not to increase the price further, we will need to see a breakdown of the relevant information. We could go back through history, although I can guarantee that such a consideration will not be in the report that the OBR produces tomorrow. I could assist the office, however, because I have statistics that demonstrate that 70% of the existing tax on petrol was brought in by Conservative Chancellors since 1973. One might ask why Conservative Chancellors pick on the motorist to such an extent, but that is a debate for tomorrow rather than today, although I know that you, Mr Deputy Speaker, and others in the rural community will want to know why that is the case.
The point, in the context of the amendment, is that we must know precisely what is going on. I imagine that Conservative Back Benchers would be shocked to find out that Conservative Chancellors are responsible, as of today, for 70% of the tax on petrol. If the OBR had the mandate, however, those statistics could be laid out for us at every Budget and the pressure would be on. The pressure would, of course, be on Labour if the reverse had been the case and Labour Chancellors such as my right hon. Friends the Members for Kirkcaldy and Cowdenbeath (Mr Brown) and for Edinburgh South West (Mr Darling) had been responsible for the rise.
Andrew Bridgen
I applaud the hon. Gentleman’s honesty in saying that Conservative Chancellors are responsible, because there is no doubt that Labour Chancellors have been extremely irresponsible. [Interruption.]
John Mann
I struggle with the humour, Mr Deputy Speaker.
The facts cannot be hidden. The facts about immigration cannot be hidden because they can be rooted out. My point is that the facts should be there and they should be presented. The facts on the semi-retired, part-retired, would-be-retired, past-retired and those back in the labour market are not there, but they would help with some of our social policy making and, I repeat, are vital to our economic policy making.
When it comes to the price of petrol and the level of tax on it, I imagine that some Greens and others—there are not many Green Members, of course—would see those statistics as important for social policy. As I have said, however, I am mainly interested in economic policy. I am interested in knowing about the impact in my area on small businesses as well as the larger businesses that rely on vehicles. I used to rely on vehicles when I had my own small family business, driving lorries across Europe. We know how much it costs to fill up, but as a new MP entering Parliament in 2001, I would have been interested in challenging Labour Chancellors over what they were going to do with the historic tax on fuel that had been imposed by their Conservative predecessors, particularly between 1979 when it was 6.6p and 1997 when it was about 45p—the biggest increase in petrol duty anywhere in the world. I appreciate that statistics can be embarrassing to Governments.
Stephen Williams
The hon. Gentleman objects to taxes on fuel—we hear a lot from many Labour Members about their objections to different tax rises by this and previous Governments—so where does he think that the tax burden should fall, given that billions of pounds are raised by fuel duties?
John Mann
I will have to resist—not because I am not keen to respond, but because I see immediately that Mr Deputy Speaker does not want me to stray into taxation policy. This is about the statistics, and the statistics are fascinating when we know that Labour Chancellors have put up petrol duty so little in comparison with Conservative Chancellors. We know why: it is because we are on the side of industry and of business. We have not said that enough; we have not been proud enough to say it, and we need to say it far more.
When it comes to economic decision making and the ability to have comparators, the statistics are vital. That is why I emphasise that, in essence, amendment 1 is a pro-Government amendment. I predict that, at tomorrow’s Budget, the Office for Budget Responsibility will not provide such analysis. It is wrong that it will fail to do so, but its excuse will be that it does not have a mandate. We have an opportunity to put that right. I look to the Minister to nod to show that she is going to accept this excellent amendment in order to strengthen decision making and to be on the side of the motorist and those who want a proper debate on the labour market and jobs in this country. I commend the amendment to the House.
Geraint Davies
The amendment is essentially about making growth a centrepiece of the Office for Budget Responsibility—for very obvious reasons. The OBR’s remit, as set out in clause 4, is to
“report on the sustainability of the public finances”.
That sustainability consists of tax, expenditure and growth. We are not saying that the OBR makes no implicit consideration of growth, but that growth needs to be made a much more central part of the information available for our deliberations.
Justine Greening
Clause 5(1) states:
“The Office has complete discretion in the performance of its duty under section 4”.
Does the hon. Gentleman think that that is somehow insufficient to provide the OBR with the absolute discretion it needs to do any analysis it wants to fulfil the main duty he mentioned?
Geraint Davies
Having complete discretion is useful, but the word discretion means that something remains a matter of discretion—these things do not have to be done. The OBR has the discretion to go around looking at whatever it likes, but the amendment is saying something different—that the centrepiece of our economic future is economic growth. That has belatedly been recognised by the Chancellor, as we will see in tomorrow’s Budget, when he will say, “I have done all the tax and spend, but, oh no, everything is going wrong because growth is going down the chute, so I had better belatedly do something about it.” The previous Government had sent us on a trajectory of positive growth, albeit that it was a fragile recovery after a financial crisis. The Chancellor has seen that we are going into negativity, so he has scratched his head and realised that growth has something to do with the public finances.
We have been lambasted by Conservative Members who say that the deficit is terrible and Labour left the cupboard bare. They conveniently forget that, as reported by all the economic forecasters, including the Institute for Fiscal Studies, two thirds of the £84 billion deficit came from the international financial crisis. That was not Labour’s fault. When Conservative Members suggest, “Oh, well, we should have had more regulation”, they seem to forget that when we created the Financial Services Authority to introduce more regulation, they said they wanted self-regulation and complained about red tape. In fact, it would have been much worse had it not been for the Labour Government. Furthermore, that regulatory hole in the armoury was commonplace across the globe. That is why Governments in Greece, America, Spain and elsewhere have had problems dealing with the financial deficits they inherited. Obviously, we were more vulnerable to sub-prime debt, as we know because the financial sector is larger in Britain.
Let us get away from the myths about why we have the deficit and deal with the challenge of how to get rid of it. We get rid of it by striking a proper balance between growth, making savings over time and ensuring that the bankers pay their fair share. It is convenient for the Conservatives to say that there is only one way of achieving the task. Instead of having a balanced approach to maximising growth, making the bankers pay their fair share and making credible savings that are realistic over time and would halve the deficit in four years, Conservative Members say, “No. We don’t want to halve the deficit in four years; we want to get rid of it in four years, and we do not want to use growth or involve the bankers. The bankers are our mates after all, so they can have some more money. What we will do is make the cuts twice as fast in just one way—through savaging public sector jobs and services.”
Then, remarkably, growth starts to recede so that the sums no longer add up, as there is obviously an interrelationship between private sector growth and public sector funding. Thus they suddenly realise that they have to do something about growth. The amendment is about recognising that the centrepiece of macro-economic planning and fiscal responsibility is growth. It is all very well for the Minister to say, “Oh well, the OBR will have absolute discretion; it can look at growth if it likes, but if it doesn’t want to, it doesn’t have to.” That is the problem; its eye is off the ball. We need to get the finances in proper balance without destroying communities, which is what Labour Members stand for.
Stewart Hosie
If I may take the hon. Gentleman back, he mentioned Greece and banking regulation. Can he explain to the House how the failure of Greek banking regulation had anything to do with the sovereign debt crisis, and what on earth the amendment, which is about a growth mandate, has to do with that?
Geraint Davies
I will try and speak more slowly. My point was that the international financial crisis affected all countries’ debt, not least that of Greece. Obviously, it has its own banking system, underneath the European Central Bank. There was a common cause for many of the deficit problems around the globe. It was not uniquely Labour’s fault, as the Government make out. The amendment seeks to clarify the factors that are generating the fiscal future, including growth.
Justine Greening
The hon. Gentleman keeps talking about the deficit as though it was something that descended upon us. The bottom line is that the UK had a structural deficit. That means that his Government were spending more money on public services than was being generated in taxation, even in the good years, so we were never going to be in a position to start paying off any of our debts, which is why the markets got so concerned about continuing to lend to us. That is a structural deficit, and it is a fact, even if the shadow Chancellor will not accept it, and that is why we have to have a deficit reduction plan in place.
Mr Deputy Speaker (Mr Nigel Evans)
Order. This is a fascinating debate, but not for today. If we could get back to the specifics of the amendments before us, perhaps we could make some progress.
Geraint Davies
I am grateful for your advice, Mr Deputy Speaker, and for the Minister’s intervention. In a way, her intervention makes the case for having growth at the centre of the OBR. I am sure that when she reads her words, which I appreciate were spoken with some emotion and anger, she will wish that she had picked them more carefully.
When we look at the facts and strip out the impact of the international financial crisis, which is about £84 billion in terms of our structural deficit, there was a residual deficit, to which the hon. Lady refers. There was an excess of expenditure over income, but that was taken into account in future planning. There was a savings plan from the previous Chancellor, as she knows, to cut the deficit in half in four years. That was not exclusively reliant on cutting public services and jobs. Rather, it relied on stimulating growth.
The OBR’s estimates of growth have been downgraded. Those higher levels—2.6%—would have provided more fuel to get the deficit down. I recall that the projected deficit in the pre-Budget report was £30 billion less than had been predicted previously. In other words, growth had been occurring faster than was thought. Now it is growing less fast—in fact, it is growing negatively.
Justine Greening
Just on the off-chance, I wonder whether the hon. Gentleman would be able to set out what the £14 billion of cuts were that his party was planning to start in April.
Mr Deputy Speaker (Mr Nigel Evans)
Order. We are going much wider than the amendments. Could we please confine our comments from now on to the amendments before us?
Geraint Davies
The point I was making before I was distracted was why there should be growth in the OBR. What were the previous Government’s plans to get the deficit down? That is what the hon. Lady asked. It is important to recognise that the plans that we had were largely growth plans, which will now not be taken up. I shall give one simple example.
The Government said, “We’ll cut some expenditure. We’ll cut the regional development agencies.” So there I was, going to speak to UK Trade and Industry which, as Members know, is the marketing operation for Britain abroad, about encouraging inward investment and trade with foreign countries. I was talking to UKTI in Germany, as it happens—
Geraint Davies
No, in Welsh. I was in Dusseldorf, talking on behalf of the Welsh Affairs Committee. This is relevant, Mr Deputy Speaker. UKTI had been marketing Britain, and various German companies had been saying, for example, “We want to invest in a food and drinks factory. We want these skills and this site, and ideally these grants and these communications.” That would have been put on a computer platform and pulled down by regional development agencies to encourage inward investment. I asked what was happening now, and was told, “All these bids are coming forward for creating jobs in the UK, and the RDAs are not pulling them down because they have been abolished.”
That is a simple example of how the cuts in administration and red tape are stopping quality jobs being created in Britain. The cuts undermine growth and are false economics. To answer the question about where we would cut the deficit, Labour would reduce the deficit by encouraging growth and jobs. I was talking to a business man last week in Swansea. He said, “I run a business. Why are the Government always talking about cuts? If I was making a loss and wanted to cut my costs, I would not sell my tools. Yes, I’d keep my costs down, but I’d invest in sales.” The Government’s position is like paying off the mortgage by selling the furniture, rather than getting a job. That is ludicrous.
That is why growth as the centrepiece of the Office for Budget Responsibility is so important. To release the entrepreneurial spirit and focus it on export-driven growth is the primary aim of Labour, but not of Government Members, who have let down business.
Stewart Hosie
I am trying to understand the amendment. To have a growth mandate in the OBR would have allowed it to explain precisely where the £57 billion of cuts every year under Labour from 2013-14 onwards would have come from. Is that correct? The growth mandate would have explained where the £57 billion of fiscal consolidation would have come from. Is that correct?
Chris Ruane
No. The hon. Member for Dundee East (Stewart Hosie) is listening too slowly.
Geraint Davies
There was never any suggestion that the OBR could miraculously conjure up the optimum strategy, which has not even been launched by the Opposition, to solve the deficit problem more effectively. The Government are struggling with a one-string bow. They said, “We’ll get the deficit down by sacking everyone quickly,” forgetting that that would grind growth into the ground. We need to evaluate the changes in policy and particularly cuts in growth-creating capacity.
The problem might not be RDAs. It might be that we are undermining the capacity of our universities to ensure that the most able students are not deterred from going and that they become future growth generators and entrepreneurs. It might be the failure to provide connectivity between industry and universities to ensure that good ideas are commercialised and that there are opportunities for clusters of SMEs around universities. There are lots of ideas that can be calibrated for their impact on the public accounts. This move is an attempt to refocus all our minds on the importance of engines for growth, instead of cutting the legs away from the players.
Stephen Williams
Given that the hon. Gentleman wants growth-led manufacturing and university clusters, does he welcome the announcement made last week by the Business Secretary and the Deputy Prime Minister of technology and innovation centres around the country, including the composites centre in Bristol?
Mr Deputy Speaker (Mr Nigel Evans)
Order. We seem to be skiing off-piste every time there is an intervention and trying to tempt Mr Davies on to territory that is not relevant to the amendment.
Geraint Davies
I am grateful for your guidance, Mr Deputy Speaker, because I would not want to be tempted in the least. I will resist temptation.
The focus of the amendment is very much on the important area of growth. As I have mentioned, the important opportunity is to refocus our entrepreneurial activity on export-driven growth. For example, in the Budget tomorrow the Chancellor might announce tax breaks for investment in small and medium-sized enterprises, which I would welcome. I do not think that he will, because he does not particularly care about SMEs; he will just say something about not giving mothers and fathers rights to see their children. The fact is that, with regard to the engines of growth, the liquidity has been taken out by the banks, which are just rebalancing their balance sheets. They should be pressurised into providing the fuel to allow the entrepreneurial engine to move forward, because so many companies have full balance sheets but no cash flow because the banks are letting them down.
It would also be a good idea to have a tax break for investment in SMEs in order to push things forward, as that way people could put in their own money and it would produce a better rate of return from the point of view of the business and venture capitalists. I do not think for one moment that the Chancellor will announce such a tax break—he does not have the imagination—but if he did, that could be factored into the growth figures for the OBR, because obviously the money we would spend on the tax break would be recovered from business growth, particularly if it was targeted at export-driven, high-quality manufacturing.
Andrew Bridgen
Does the hon. Gentleman believe that the OBR, had it existed before the financial crisis, would have been able to tell the previous Government that much of the growth they were claiming was actually a mirage? That growth was driven by a Government who were spending more than they were gaining in taxes and so creating a deficit. To pick up on a point made by the hon. Member for Bassetlaw (John Mann), they were also exporting manufacturing jobs to the far east and importing cheap goods, which was having a deflationary effect on our economy, allowing interest rates to be kept artificially low and feeding a housing bubble that was getting ever bigger. When it burst, that was when it all happened.
Geraint Davies
I am glad that the hon. Gentleman is wearing a badge saying that he has a GCSE in economics, but I doubt it.
On a serious point, I have already accepted that prior to the financial crisis there was a marginal deficit to be confronted, and it was going to be confronted through growth initiatives. We have since had the financial crisis, and the important thing now is to move forward with ideas for investing in growth. Clearly, there are big questions on tax and spend and where those will be deployed. Many new ideas might emerge in the Budget, such as a windfall tax on the energy giants, whose profit margins have suddenly increased by 38% because they did not adjust their prices when costs changed and so ripped off Britain’s consumers. That is obviously a legacy of the previous Conservative Government’s privatisation and the lack of controls.
There is money available to invest in growth and services and to close the deficit gap. The point about the amendment is that we must put growth centre stage, as that will enable us to move forward in a balanced way, rather than in the narrowly defined way that the Government prescribe. With those thoughts, I will give other Members the chance to make their own unique contributions.
Chris Evans (Islwyn) (Lab/Co-op)
After the epic speeches from my hon. Friends the Members for Bassetlaw (John Mann), for Swansea West (Geraint Davies) and for Edinburgh South (Ian Murray), I will keep my comments succinct and tight, and I will try to keep to the amendment.
The most important thing about the amendment is that growth is key and that there must be some plan for growth. It is all very well saying, as many Members have, that there is no plan B, but it seems to me that there is no plan A. There is no rationale for a plan A or a plan B. It is important to know what that rationale will be. We need to know how the Government reach their decisions.
I am going to say something quite shocking: I do not believe that the majority of people in this country care about the deficit. Government Members can call me a deficit denier all they want, but I believe that when people are sitting around their kitchen tables at night they are most concerned about their jobs, their borrowing, their mortgages and their houses. That is what keeps them awake at night, not the deficit. Yes, the deficit is important.
Mr Marcus Jones (Nuneaton) (Con)
Does the hon. Gentleman think that people such as me who are parents of young children do not worry about the deficit and the legacy that the Labour Government left their children and mine?
Chris Evans
If I was in the hon. Gentleman’s position, I would be more worried about whether I will have a job in four or five years’ time. That is what most people are concerned about, but they are concerned about what will happen in six month’s time—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I will tell Members what I am concerned about: no one is talking to the specific amendments before us. If it is at all possible for you, Mr Evans, to mention the amendments now and again, that really would be very useful.
Chris Evans
Thank you for your advice, Mr Deputy Speaker—I have not been here very long.
Getting back to the amendment, it is important that we have the rationale for growth and know how the Government reach their decisions. We cannot talk about this in the microcosm of a dry subject of forecasts. We cannot debate forecasts in this House; we can only debate judgments on how the Government arrive at those policies.
Geraint Davies
The hon. Member for Nuneaton (Mr Jones) mentioned his children. Surely the important point about growth and the amendment is that if we invest in his children, in their education and in the opportunity to go cost-effectively to university, to add value and to promote future growth, that is the future they can look forward to. That is why his children are probably a bit disappointed that he supported the increase in tuition fees. Let us have growth.
Chris Evans
I totally agree. If I may digress a little from the amendment, it is all very well paying off the deficit, but if there is no economy at the end of it we can forget about it all and worry about all our futures. I have tried to keep my comments brief and say in closing that I support the amendment because we need to know how the Government arrive at their decisions so that this House can properly scrutinise them.
Justine Greening
I am pleased to have the opportunity finally to respond to some of the points that have been made and to the amendments that have been tabled. It is important to say first that I very much welcome the contribution that Members not only in this House but in the other place have made to get the Bill to its current stage. Despite the debate we have had on growth, which of course is important, I think that there is broad support across the Chamber, as there was in the other place, for what the OBR is intended to do and for setting up such an office that can work effectively.
All the amendments relate to growth, so perhaps we have stared the debate that will no doubt continue tomorrow after the Budget. We believe that economic growth and job creation are absolutely vital, and Members will see tomorrow that that is a core part of the Budget. I agree with many of the comments that have been made about why we need to see growth as part of the Budget. I want to take the time to clarify some points that have been raised.
The debate so far has been about policy and strategy, but the OBR is not a policy-making body; it is there is look at the forecasting and produce the official forecast for the UK Government. It is precisely not intended to make policy. One of the things we have been very careful to do in setting out how the clauses and the charter work is ensure that the OBR’s independence, impartiality and transparency, which are also vital, are not compromised.
Geraint Davies
Having said that, will the hon. Lady accept that some of the OBR’s responsibility should be to forecast what it regards as the impact of policy changes from the Chancellor? For example, if he was to announce suddenly that he will let the private sector deliver public services so that entrepreneurial capacity will be taken out of export-driven growth and put into making easy money out of monopoly-provided public services, would it not be right for the OBR to say, “Hold on, that capacity has gone over there so our growth will go down”?
Justine Greening
I hope I can provide some clarification. The OBR has the freedom to consider the impact of policies on sustainable public finances, including employment policies. If the hon. Gentleman looks at some of the forecasts the OBR has already made, he will see forecasts for employment, average earnings, ILO unemployment, the percentage of the claimant count and, of course, growth. Hon. Members talked about the OBR’s assessment of growth and what it will show over the coming years. The OBR is already producing an awful lot of the analysis that hon. Members want to see, but it is fair to say that today’s debate will—I hope—be of interest to the OBR in understanding what information and analysis it might feel it needs to provide to convey what it wants to, which is some assessment of the economic growth forecast for this country.
Let us be clear that the duty of the OBR is very clear and is set out in clause 4. It should examine and report on the sustainability of public finances but, as hon. Members have said, Government policy clearly impacts on that. By definition, the OBR will consider how policy impacts on the sustainability of public finances.
John Mann
From what the Minister is saying, I presume that if the OBR—or even the Treasury Committee, but the OBR in particular—were to say that it was unable to provide the analysis that it would like to because it was not sufficiently resourced, that would be seen as a serious question for the Government to address.
Justine Greening
The hon. Gentleman will be aware through his role as a member of the Treasury Committee that when the chair of the OBR, Robert Chote, was asked whether he felt it was sufficiently resourced he said he felt it was. The hon. Gentleman will also be aware that one reason we have carved out sufficient money not just for this year but for the whole spending review period, which will be reported on separately, is to ensure that the OBR understands that it is sufficiently resourced not just for this year but for the years ahead, so that it has that certainty about its resource base to do the work it needs to do.
John Mann
That is a vital point, because Robert Chote was speaking as the first permanent employee. Others are now employed by the OBR who might have different perspectives and priorities. There is a critical question: if the OBR feels restrained by resources, will that become a politically contentious issue as regards objective statistics? Presumably, in such a case, if the OBR was kicking up about being unable to provide the detail in independent statistics, the Government would regard it as vital to address that resource need.
Justine Greening
I can go back to the reply I just gave the hon. Gentleman. The charter and the Bill clearly set out the OBR’s duties and Sir Alan Budd, as the interim chair, produced his report and talked about what he thought that the duties of the OBR should be, about its resourcing and about how it should be run. Of course, we reflected many of those comments as we introduced this Bill to set up the OBR. If we take that together with the fact that the permanent chair, Robert Chote, has said that he does not feel that there will be an issue with resourcing, we can be relatively confident that the OBR will be adequately resourced to fulfil the duties clearly set out in the Bill.
Let me turn briefly to the amendments. They all concern growth and the problem is that they start to stray into the OBR’s becoming bound up in policy rather than analysis. Amendment 1 would require the charter to include the Government’s economic policy objectives and the means by which that objective would be attained—what has been called a growth mandate. The charter, however, is a fiscal policy document that transparently sets out the fiscal policy framework. The purpose of the charter, the OBR and the Bill is to create the fiscal policy framework that supports the Government’s delivery of our fiscal policy objectives. Rightly, the charter focuses on fiscal policy issues, as was the case with the previous Government’s code for fiscal stability.
Geraint Davies
In conversation with the Institute for Fiscal Studies, I asked various questions about growth and its calculations and it was pointed out to me that the IFS was in essence made up of micro-economists who were aggregating up to deliver predictions about Government fiscal outputs. I respect what the hon. Lady is saying, but it seems to me that she is basically saying that the OBR will be doing something very similar. It is very easy to make such predictions if we say, “Assuming that everybody is still employed, that we have taxed them this and that they spend that, this will happen.” What is more difficult is to model the impact of individual policies in a Budget on growth and hence on the public finances. The hon. Lady is giving us some reassurances, but I think the point of our amendment was to push her to say that this would become a priority for the OBR so that we could have a richer understanding of the growth scenarios in the future. I appreciate that some of that is done, but we want more.
Justine Greening
Ultimately, a key clause—I think clause 5—sets out that it is at the OBR’s discretion to decide how to carry out its duty. A fundamental building block of the OBR’s credibility is its independence. I assure the hon. Gentleman that the risks he mentions, such as the concern that the OBR might not carry out robust analysis, are mitigated by other safeguards in the Bill. For example, one duty of the OBR will be to produce a report on the accuracy and robustness of its forecasting. As he will be aware, there are also non-executive directors who will be there on a day-to-day basis to challenge how effectively the OBR works and every five years, at a minimum, there will have to be a completely external peer review of the OBR’s workings.
I think we have managed to strike a balance by setting up the OBR in the way I have described—on the one hand by giving it independence, so it has that key element of credibility, and on the other by including some safeguards, in terms of its structure, its management and the review, so that, if for some reason it does not produce the quality of forecast that we need, those safeguards will be in place to ensure that we tackle the issue. Let us not forget that the OBR is accountable not just to Parliament, but to the Chancellor, because it produces the official forecasts.
Finally, amendment 4 suggests another new related role for the OBR, which as we have heard would be to assess the Government’s growth mandate. As I said in response to amendment 1, the Government seek to achieve their economic policy objectives through a range of policy tools and frameworks, not just through fiscal policy, but the OBR has been established to increase the credibility of the Government’s economic and fiscal forecasts and to hold the Government to account for their economic and fiscal policies.
That highly valuable role is recognised by a wide range of domestic and international commentators. The hon. Member for Swansea West mentioned the Institute for Fiscal Studies, and it warmly welcomed the establishment of the OBR, which, through its role, has already provided forecasts of key economic variables. In its November report, the OBR set out forecasts for the next five years, covering a range of key macro-economic variables, such as GDP and its forecast growth, inflation, employment, average earnings, unemployment and the output gap. In addition, the OBR will have the freedom to consider the impact of Government policy on economic growth and employment within our regions and nations, and in line with its main duty. I therefore consider all the amendments to be unnecessary, and I hope I have addressed the issues that hon. Members have raised.
Mr Cash
I do not want to put my hon. Friend on the spot, but I am troubled by a motion that the Government tabled in relation to a European document. I have an idea that they did not really mean to do so, but I just want to make the situation completely clear. The motion said that the Government and the House of Commons were only primarily responsible for fiscal matters and direct taxation. Will the Minister be kind enough to get that out of the way, so that we might now know that they are exclusively and solely, not merely primarily, responsible?
Justine Greening
I do remember the motion to which my hon. Friend refers. We were trying to be very clear, as he will be aware, and no doubt deeply unhappy, that some aspects of our fiscal and taxation system—for example, VAT—are set in relation to a broader pan-European directive. As we have discovered, that is one reason why the Opposition’s policy on reducing VAT on fuel alone is simply illegal, and I hope I can reassure him that we were trying to be very clear that it is primarily the UK Parliament that takes those decisions.
Perhaps I can reassure the rest of the House that growth is already an integral part of this Government’s approach to turning around our country’s public finances and economic fortunes. I understand why the amendments have been tabled, but they are unnecessary.
Chris Leslie
I am grateful to the Minister for her generosity in at least admitting that our debate and amendments will be of interest to the Office for Budget Responsibility. Indeed, I hope that is the case. We have tried our best on many occasions, and my hon. Friends the Members for Bassetlaw (John Mann), for Swansea West (Geraint Davies), for Edinburgh South (Ian Murray) and for Islwyn (Chris Evans) in particular have in plain terms tried to impress upon the Treasury Minister our anxiety that the Chancellor, in his blinkered obsession with hasty deficit reduction, risks harming the wider society and economy, particularly when it comes to jobs and economic growth. We have said that on several occasions, and it was important to reiterate the point today.
I understand, however, that the Minister has explained that the implied terms of the Bill do, indeed, allow for the OBR to focus on economic growth and employment matters. The Opposition hope that the OBR, at least, will do so, even if there is a deficiency in the Government’s strategy on the matter. We will no doubt debate those questions more, in terms of substantive policies, over the coming days.
The Opposition feel that fiscal policy cannot be looked at in isolation from economic growth, because the two are inextricably linked, and we will continue to make that point, even if Ministers seek to separate them. For the time being, however, I do not feel it appropriate to push the amendment to a vote, so I am happy to withdraw it. I think the Minister has heard the point. My hon. Friend the Member for Bassetlaw has accused me of tabling pro-Government amendments, and for that reason alone I should take them off the Table, given that we have other matters that the House will want to consider on Report. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2
Annual Budget documents
Chris Leslie
I beg to move amendment 2, page 2, line 14, at end add—
‘(5) The Treasury must place in the House of Commons Library the costing methods and assumptions underpinning all revenue implications and projections of each Budget announcement.’.
Mr Deputy Speaker (Mr Nigel Evans)
With this it will be convenient to discuss amendment 6, in clause 8, page 3, line 29, at end insert ‘subsequently’.
May I remind the House that by contrast with the amendments in the previous group, which were very narrow, these amendments are very, very, very narrow? I do not want Members to consider that a challenge to see how long they can make a speech on the amendments. May I also remind the House that we have several days ahead of us when we will be able to talk about the economy, growth, jobs, taxation—and they start tomorrow?
Chris Leslie
It is early, Mr Deputy Speaker, but I understand your point about the ticking clock.
Amendment 2 seeks to require the Treasury to place in the Library the costing methods, models and assumptions that underpin all the revenue projections, implications, yield estimates and so forth from each Budget announcement. Hon. Members will know that the Red Book produced at each Budget contains a number of costing projections, and there is always a fantastic table somewhere towards the end of the document which gives a sense of the revenue gains or losses, depending on each tax or public spending measure in the Budget.
In Committee, it became clear that the Office for Budget Responsibility will have the right to gain some insight into the detailed methodologies that the Treasury uses to underpin the assumptions and costings. The methodologies are therefore publishable, because they can be transferred to the OBR, and all that amendment 2 seeks to do is to share them with the wider world, and in particular with Parliament, because if hon. Members are to scrutinise effectively the assumptions on which the Chancellor makes various decisions, the methodologies and costings used to underpin those calculations should be transparent.
In order to support full and proper scrutiny, and to ensure that we can debate those Budget decisions effectively, we think it a reasonable request that the Treasury should place those costings and methodologies in the Library. It would be inconsistent, given the Prime Minister’s protestations about
“a new generation that understands and believes in openness, transparency, accountability”,
for those models not to be in the public domain. We should not have to rely on freedom of information requests to elicit such information from the Treasury; if the OBR has it, so should Parliament. The amendment is very simple, and we should not simply have to have faith to trust the Chancellor’s judgments. If we are to have such transparency, we should all be able to see right through to the methodologies, and perhaps to challenge and test them.
Amendment 6, on a different matter, seeks to ensure that the OBR, when it does publish its reports, gives those changes to Parliament first. If hon. Members look in the Bill, they will see a simple clause that states:
“The Office must—
publish the report,
lay it before Parliament, and
send a copy of it”—
I am not sure whether it is to be sent first class—
“to the Treasury.”
All our amendment seeks to do is to place the word “subsequently” after the words “Parliament, and”. In other words, Parliament should have those reports first and the Treasury should get them subsequently—although I do not particularly mind if it gets them at the same time.
Stewart Hosie
Amendment 2 calls for the OBR’s reports to be published. The Treasury Committee said:
“The OBR should have discretion in the models it uses in drawing up its forecasts. It is a matter for the organisation itself as to whether it is content to use is the Treasury models, or wishes to make changes. Whatever course the OBR takes, there would be benefits in it being as transparent as possible about the models it uses.”
I assume that that would also include the assumptions that underpin those models. The Government’s response was positive. They said that they would
“provide the OBR with full access to Treasury and other forecasting models, as well as support to scrutinise and develop these models.”
Again, I assume that that means the assumptions that underpin the Treasury models and whatever other modelling it wishes to undertake. The hon. Member for Nottingham East (Chris Leslie) said that the OBR could take those models and assumptions from the Treasury, and he is absolutely right about that.
The OBR currently publishes a number of assumptions. For example, the impact multipliers were included in the June 2010 report, showing the one-for-one impact of capital expenditure cuts. Reports at the time of the Labour Government published assumptions about oil prices, and North sea corporation tax and petroleum revenue tax was used to calculate those yields. Given that several such assumptions are already published, and that the OBR can take all those assumptions, models and changes and create new ones, does it have the discretion to publish what it sees fit? Would it not be better to have a guarantee from the Minister that it will not unnecessarily withhold assumptions where it is important for us all to have transparency? Instead of the Treasury putting the material in the Library, we should ensure that the OBR has the ability to do that, so that we have the information and can come to a proper, reasoned view on whether we believe its figures.
That is a simple question, and I am sure that the answer is yes; I certainly hope so. There is no reason why we should not have that transparency so that we can all guarantee the efficacy of the reports that the OBR produces.
Justine Greening
On amendment 2, the Government are committed to increasing transparency in public life. That transparency is essential to good fiscal policy, as the hon. Member for Dundee East (Stewart Hosie) said. In fact, the Government already provide the costing methods and assumptions for policy proposals. Those were made available in policy costings documents at the last Budget and spending review, and copies were made available to the House. That is a step change in transparency in fiscal policy making. Specifically in relation to the OBR, the additional transparency referred to in the amendment is already required by the statutory charter for budget responsibility, which says at paragraph 3.9:
“The Budget Report shall provide, at a minimum: an explanation and costing of the impact of all significant fiscal policy measures introduced by the Government since the last Budget and an explanation of the methodology used to cost the fiscal impact of each of those measures”.
In relation to the Bill, I draw the hon. Gentleman’s attention to clause 4(6), which explicitly refers to the OBR’s reports being clear in explaining the factors that it took into account when preparing the report—not only the assumptions that he mentioned but the main risks that it considered to be relevant. So there is a safeguard not only in the charter but in the Bill to ensure that there is transparency about how the official forecasts have been arrived at.
On amendment 6, the OBR is accountable to Parliament in order to enhance Parliament’s ability to hold the Government to account for fiscal policy. The OBR’s forecasts and analysis will be laid directly before the House. The budget responsibility committee will be appointed with the consent of the Treasury Committee, and will be available for scrutiny. There will be separate reporting to Parliament of the OBR’s expenditure, and, as many Members have already discovered, relevant written questions will be answered by the OBR. The OBR is also accountable to the Chancellor, reflecting its role in producing the official forecast, which will form the basis of the Chancellor’s Budget decisions.
Herein lies the challenge to Labour Members. The OBR will provide the Government with timely access to the information necessary to reach policy decisions ahead of fiscal policy events. The Treasury Committee recognised that in its report last year, when it said:
“Involvement In the Budget process necessarily involves close contact between the Treasury and the OBR”.
Close working also means that the OBR has access to all Government information to ensure that its conclusions reflect the most accurate and up-to-date information. It is therefore right that the OBR provides the Government with pre-release access to its forecast in order to ensure the accuracy of both it and the Budget documents, which are published simultaneously.
It is also right that there is transparency in the approach to the sharing of information. The OBR has chosen to follow the well-established pre-release practices put in place by the Office for National Statistics. I can assure the House that this arrangement does not compromise the OBR’s independence. It is an approach that has worked well for the ONS. The OBR has been transparent about when reports have been shared. It confirmed in its November “Economic and fiscal outlook”:
“We have come under no pressure from ministers, advisers or officials to change any of our conclusions.”
The OBR’s access to Government information distinguishes it from other UK forecasting organisations, and ensures that the Chancellor and Parliament are provided with the most up-to-date information regarding the latest UK economy and public finance figures.
I understand the rationale behind amendment 6. However, given the practicalities of the OBR’s accountability to the Chancellor and its role in producing the official forecasts, we feel that it is better for it to act on its own decision to follow the ONS pre-release guidelines. I will resist both amendments.
Chris Leslie
I am getting used to the hon. Lady’s resistance to our amendments. One day we will persuade her to accept even the smallest, most generous Opposition amendment, but perhaps not to this Bill.
I understand the points that the hon. Lady made about amendment 2 and costings. I know that there have been attempts to broaden access. If and when we hit obstacles or refusal to publish, we will come back to her to try to get more information into the public domain. However, I accept that she is committed to a particular direction of travel, so we shall not press the amendment.
On amendment 6, the Minister seems to understand that several members of the Public Bill Committee might have hoped for an Office for Budget Responsibility that looked more akin to the Congressional Budget Office or a parliamentary budget office, and was a little bit closer to the legislature and less cosy with the Executive. She knows why we want that. If the OBR places absolute primacy on its independence and impartiality, we must surely move away from any perceived suspicion that it is too close to or cosy with the Executive of the day.
We know that there is due to be a review of the OBR within a number of years. How that review will take place is a bit of a moot point, but we will come to that in due course. The Economic Secretary understands that we will be watching carefully for circumstances in which the OBR is too close to the Chancellor of the Exchequer. It is vital for it to remain distant from, and impartial between, the political parties. It must also have a good dialogue with Parliament.
Those are the important points that we wanted to make, and we know that the OBR will be listening to this debate. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Third Reading
Queen’s consent signified.
Justine Greening
I beg to move, That the Bill be now read the Third time.
As we have heard, this is an important Bill. It puts the new Office for Budget Responsibility on a statutory footing, and puts in place reforms to the corporate governance of the National Audit Office.
As part of a new and enhanced fiscal framework, the OBR is being established to make independent assessments of the public finances and the economy. For the first time the judgments underpinning the official forecast will be determined by independent experts, not Treasury Ministers. Since the coalition was formed last year, every official forecast for the economy and the public finances has been produced by the independent OBR. When the Chancellor presents his Budget tomorrow, it will be accompanied by the OBR’s official forecast. The establishment of the OBR has been welcomed by the International Monetary Fund and the OECD.
The main duty of the OBR, as we have heard, is to examine and report on the sustainability of the public finances. The Bill makes it explicit that the OBR has complete discretion over how it carries out its statutory duties. That is a broad remit. It is not limited to forecasting, but the OBR will be required, as a minimum, to produce economic and fiscal forecasts at least twice a year; make an assessment of the likelihood of the Government meeting their fiscal mandate alongside those forecasts; publish a sustainability report at least once a year; and publish a report on the accuracy of its forecasts at least once a year.
The OBR must perform its duty objectively, transparently, impartially and on the basis of Government policy. Those principles will protect independence and ensure that there is a clear separation between analysis and policy making. Analysis is rightly the domain of the OBR, but policy making is the responsibility of publicly elected Ministers.
The charter for budget responsibility will set out further details on the OBR’s remit. A full draft was published in November, and a final version will be laid before Parliament once the Bill has come into force. The OBR will report directly to Parliament on the public finances. The budget responsibility committee will be available for Select Committee scrutiny. The OBR’s forecasts and analysis will be laid before the House. On funding, there will be separate reporting of the OBR’s expenditure in the estimate that the Treasury presents to Parliament. In addition, the OBR will be able to submit an additional memorandum, alongside that of the Treasury. As we have heard, written questions will be passed to the OBR to be responded to. All those measures will enhance the ability of Parliament and the public to hold the Government to account for their fiscal policy.
The OBR will have its own legal identity, and will be a civil service employer, to allow appropriately skilled staff to move easily to and from the OBR. The OBR’s executive responsibilities will be led by the three-person budget responsibility committee. Its members will be appointed by the Chancellor, and the Bill provides the Treasury Committee with a veto over their appointment and dismissal. The Chancellor has said that he is giving the Treasury Committee that veto to ensure that there is no doubt that the individuals leading the OBR are independent and have the support and approval of the Treasury Committee. All staff will report to the chair of the OBR, and that person will control the hiring and firing of staff. To provide support and constructive challenge, there will be at least two non-executive members. Advertisements for those members will be issued shortly, so that they can be in place before the summer recess.
Part 2 of the Bill modernises the governance of the National Audit Office. It will strengthen the resilience and integrity of that body, which is best placed to assess the Government’s use of public funds at this time of fiscal constraint. It builds on the recommendations of the all-party Public Accounts Commission’s 15th report and has commanded support on all sides of this House. The provisions passed through the House in substantially the same form in the previous Parliament, when they were considered as part of the previous Government’s Constitutional Reform and Governance Act 2010, just before the election.
The Bill has benefited from much parliamentary scrutiny. Before it was introduced, the Treasury Committee produced a detailed inquiry into these matters. I am pleased to say that the Bill is very much in line with the recommendations made in that report. I thank the Committee for the interest it has taken. When the Bill was introduced in the other place it received extensive debate. The Government tabled a number of amendments to bolster the OBR’s remit and to enhance the arrangements for the scrutiny of its work, which were welcomed.
Finally, the Bill has been debated at length in this House. I thank all hon. Members who have spoken and participated, in particular the Opposition spokesmen, the hon. Members for Bristol East (Kerry McCarthy) and for Nottingham East (Chris Leslie). I hope that hon. Members will agree that even though we have not reached a meeting of minds on some of the detail, there is much more on which we agree in principle.
The Bill is a key part of the Government’s fiscal reforms. It will provide an independent assessment of the public finances and the economy, with official forecasts from independent experts, not Treasury Ministers. The Bill will provide a strong institutional foundation for the future through the OBR, and I commend it to the House.
Kerry McCarthy (Bristol East) (Lab)
The Opposition support the Bill. It has been debated at length in the other place and in this House on Second Reading, in Committee and—perhaps at greater length than some of us anticipated—on Report today.
Not much has been said during the passage of the Bill about part 2, which relates to the National Audit Office. That is not least because it implements the measures that were introduced in the Constitutional Reform and Governance Act 2010. It is fair to say that there is widespread agreement on part 2.
As was clear in previous proceedings, there is similarly common agreement on the creation of the Office for Budget Responsibility and on placing it on a statutory footing. We did, however, table a number of amendments in Committee to challenge some of the details of how the OBR will function, as one would expect from the Opposition. In particular, we addressed the concern that has been expressed inside and outside this House that the OBR may not turn out to be sufficiently independent from the Government. For the public to have confidence in the OBR, it has to be seen to be independent. That is why we proposed measures that would have made it more accountable to the House and measures that would have increased the role of the Treasury Committee. We also wanted to ensure that the division between the Treasury and the OBR in terms of staffing and premises was enshrined in law. We are grateful for the assurances that the Economic Secretary gave in Committee on those points. We also welcome her promise that substantive details of the contact between OBR staff and the Minister’s special advisers and private office staff will be published.
We were also concerned about the potential overlap between the OBR’s responsibilities and the Bank of England’s economic forecasts. We therefore proposed that the Bill provide for a memorandum of understanding to ensure that there was clarity from the outset for all parties. I urge the Economic Secretary to ensure that the memorandum is subject to proper scrutiny in this House. I hope that the OBR and the Bank of England will in time formally agree their working relationship.
We consider that a crucial way to secure the independence of the OBR is to ensure transparency in its funding so that the budget responsibility committee is not at the mercy of the Treasury and vulnerable to the whim of the Chancellor. Comparisons with other countries were made earlier. In Canada, the Parliamentary Budget Officer published two critical reports of the Government in its first year. It is difficult to divorce that from the fact that its budget was frozen, despite promises that it would be increased by a third. Some people would say that that was not a coincidence.
Likewise, Sweden has a similar organisation to the OBR in its Fiscal Policy Council, which reported that its resources were not sufficient to enable it to carry out its remit properly. In response, the Minister for Finance suggested that the council’s budget be cut. We obviously want to avoid a situation like that, and we have received assurances from the Economic Secretary that the OBR’s funding is secure for the next five years. We very much welcome that.
Much of the OBR’s decisions and remit will be based on the charter, so it is disappointing that we have not had the opportunity to scrutinise the revised charter today alongside the Bill given that it is so central to the OBR. The Economic Secretary has assured us that it will be published promptly after Royal Assent, which we expect in no time at all, so we look forward to a full debate on the charter in the Chamber before too long.
Although we support the principle of the OBR and the Bill, we have reservations about how the OBR will work in practice. A major concern is the Treasury’s insular conception of economic policy and sustainability, which seemingly allows it to focus narrowly on the deficit and to ignore the consequences of its own policies. Rising unemployment, rising inflation, as seen in today’s figures, and falling growth are not sustainable and cannot be ignored, so we hoped that the Government would allow the OBR the latitude to take into account those crucial determinants for the long-term recovery, even if the Treasury will not. Unfortunately our amendments were rejected, so we could not enshrine that in the Bill, but we hope that a truly independent OBR will include those matters in its remit. The House may well return to the definition of “sustainability” and the issue of intergenerational fairness when we come to debate the revised charter.
During Labour’s last Budget, the present Prime Minister was fond of claiming that our growth forecasts did not match those of the independent experts. In fact, they were consistently much more reliable than he made out. He concluded:
“What we need is a proper independent office of Budget responsibility, which we would set up to set independent forecasts and to keep the Chancellor honest.”—[Official Report, 24 March 2010; Vol. 508, c. 268.]
I agree with the present Prime Minister, for once, about the need for that, but as is so often the case, the reality does not match his rhetoric. Now we have the OBR, but its independence has been undermined by the release of favourable figures in time for a recent Prime Minister’s Question Time.
Moreover, the British Chambers of Commerce has described the OBR’s growth forecasts as “too optimistic”, and despite the Prime Minister’s concern that official forecasts should match those of independent experts, it seems that other independent experts disagree with the Government’s independent experts. In February, the consensus forecast for 2011 was 1.9% growth, which was downgraded to 1.8% in March, whereas the OBR forecast was a more optimistic 2.1%. The discrepancy increases for next year’s forecast. The consensus forecast is 2.1%, compared with the OBR figure of 2.6%, which it has already had to downgrade once thanks to the Government’s policies.
The differences between the OBR and consensus forecasts could be critical. The Institute for Fiscal Studies, which the Government seem to respect on the occasions when it says anything favourable about their policies, has reported that they will fail to achieve their fiscal mandate to
“achieve cyclically-adjusted current budget balance by the end of the rolling, five-year forecast horizon”
if growth does not meet the OBR’s central economic forecast. Whether the Chancellor will achieve his fiscal mandate is clearly in the balance, and although he may use the OBR figures, it would be a great mistake if we held the OBR responsible for whether he fulfils that mandate. Only the Treasury can determine that.
Fundamentally, and finally, we have to remember that the Bill places no enforceable obligations on the Chancellor for responsible fiscal policy. The OBR can report on the state of the economy, and its analysis will no doubt be very valuable, provided it is genuinely independent. However, the Government already have a track record of ignoring expert advice and indisputable evidence that their policies are failing.
The British Medical Association and almost every health organisation that we care to think of warned against the Health Secretary’s reckless experiment with the national health service, but with the Prime Minister’s full backing, he ignored the evidence and carried on regardless. The IFS published independent research proving that the Government’s June Budget and comprehensive spending review would disproportionately hurt women and children and the most vulnerable people in our big society, but the Chancellor ignored the evidence and carried on regardless.
The Office for National Statistics reported that unemployment had reached a 17-year high and that youth unemployment was at its highest level ever, and the OBR itself reported that the Tory-Liberal Democrat plans would mean 110,000 more people on the dole by the end of this Parliament, but did the Chancellor and the Secretary of State for Work and Pensions review their policies in the light of that evidence? No, they ignored the evidence and carried on regardless.
The OBR downgraded growth forecasts after the coalition’s emergency Budget, and again as a result of its comprehensive spending review, and the economy contracted by 0.6% in the last quarter of 2010, proving that the Government’s policies had undermined the economic recovery, but the Chancellor ignored the evidence and blamed it on the snow. The question for the House is whether we can do enough to secure the status of the OBR so that ideologically driven Ministers cannot just disregard its reports.
Kerry McCarthy
No, I am just drawing to a close.
I urge the Minister to ensure that the principles of objectivity, transparency and impartiality are respected, particularly when she lays the revised charter before the House. Most importantly, we seek assurances that Ministers will actually listen to the evidence provided by the OBR and respond accordingly.
When the Chancellor came to office, unemployment was falling, growth was predicted at 2.3% for this year, inflation was lower and falling, and borrowing had come in £20 billion lower than was forecast in 2009. I do not need to tell the House again how the Chancellor has reversed that recovery, but that is the context in which we must consider the role of the OBR. The office is intended to report on responsibility, but it cannot guarantee responsibility. That is the Chancellor’s role, and it is about time he realised it.
Stephen Williams
This is a short but very important Bill which I hope will change the conduct of economic debates. Of course, we have a Budget and days of economic debate starting tomorrow. I do not know whether the former Prime Minister and Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), is going to be with us in person, but I am sure that his parliamentary ghost will be with us as we remember Budgets from previous years. We remember his earlier Budgets and his close relationship with Prudence, and we remember that after the 2001 general election was safely out of the way, spending soared. So began the structural deficit, long before the intervention of the banking crisis.
I remember listening to those Budgets, autumn statements and pre-Budget reports year after year, both in a professional environment before I became a Member of Parliament and, from 2005, as an MP. I remember listening to the then Chancellor’s reports of rosy growth and nirvana ahead of us. We heard a bit more of that today from my neighbour, the hon. Member for Bristol East (Kerry McCarthy). One would swear that the current Government had inherited a golden legacy in May 2010 rather than the catastrophic public finances that we are actually having to cope with.
Mark Tami (Alyn and Deeside) (Lab)
Does the hon. Gentleman recall that at the time, the Liberal Democrats were attacking the Government by saying that they were not spending enough, not that they were spending too much?
Stephen Williams
I recall very well that from 2001 onwards I and my colleagues, whether candidates or Members of Parliament, were saying that the Government should spend more on health and education, but we actually said where the money was going to come from. It may not have been popular, and it did not lead to great electoral success in 2001, but we said it should come from an increase in taxation, not from building up a structural deficit over the next six years.
We all remember the Budgets back then—they were essentially a combination of forecasting, policy, boasting and spin. That is why the OBR is so welcome. In the Budget tomorrow, the Government will take political responsibility for the difficult decisions that we have to make. I welcome that, and I welcome the scrutiny of it. It will be based on a separation of forecasting by independent experts and policy making by elected politicians.
There will certainly be no scope for boasting, and I think it will be some time yet before the coalition Government can take credit for rescuing this country from the dire economic circumstances in which we find ourselves. I cannot promise a complete absence of spin—that would be asking too much of all of us—but we will have a Budget based on independent forecasts and sound political judgment, and it will be a better Budget for that.
Mr Andrew Tyrie (Chichester) (Con)
The Chancellor took a major step by handing responsibility for fiscal forecasting to an independent body, and he took an equally bold step by asking it produce a long-term assessment of the strength of the public finances. He could have opted for a validation model, and instead he has gone for something much more adventurous.
The first inquiry of any significance that the Treasury Committee undertook after it was reformed at the start of this Parliament was on this subject. Rather than wait for the Government to come forward with a draft Bill, we took the initiative and tried to make some suggestions on how we thought it should look. We set eight criteria as minimum requirements for the new body, which for the most part the Government met. I thank the Treasury team for their co-operation in doing what they could to accommodate the Committee’s points.
Absolutely crucial to the success of the new body will be its credibility on independence. To achieve that, some new, groundbreaking arrangements have been made in the relationship between parliamentary Committees and the Executive. The Bill establishes a statutory veto for the Treasury Committee over the appointment of the chairman and executive members of the OBR. This is the first time that a Select Committee has been given such a veto over public appointments, which reflects the importance of cross-party parliamentary oversight of the OBR’s work, and the need for people of the highest calibre and independence to take on the job of running the OBR.
The Treasury Committee has already held its first appointment hearings for the OBR committee, and endorsed the appointments of Robert Chote, Stephen Nickell and Graham Parker. We also welcomed the appointment of two non-executive members. We were particular eager that there should be non-exec oversight of the work of the executives. The non-execs will provide an important check to ensure that the OBR lives up to its requirement to act transparently, objectively and independently.
Non-execs provide an opportunity for two-way traffic. If the OBR chairman becomes a patsy, they have a good chance of alerting the Treasury Committee at an early stage. If the Chancellor or the Treasury lean on the chairman too much, the non-execs offer a first line of defence. If the OBR chairman gets carried away and starts to offer a running commentary beyond his brief on the overall conduct of fiscal policy, the non-execs, as a first port of call, can say, “Steady on.”
The Committee looked carefully at how the OBR’s success ought to be measured. Economic forecasting is an imprecise art, and success on that cannot necessarily tell us much. To be seen as successful, the OBR must provide clear, impartial forecasts and a commentary that improves public debate on the key issues. It must guard against optimism and pessimism, and above all, it must avoid being drawn into political controversy. The Treasury Committee will monitor how the OBR fulfils those performance criteria. We will watch carefully and speak up if we feel that the OBR is not doing its job properly.
Of course, ultimately and simply, the OBR will be judged on the quality of its publications and its responsiveness to reasonable requests from Parliament or the Government for information or work. A few weeks ago, I wrote on behalf of the Treasury Committee to the OBR chairman to seek further information on the treatment of privatisation receipts in the accounts. Frankly, I was not encouraged by his reply. These are early days, and I very much hope that there is more responsiveness to future requests.
In two ways, the Government did not fully implement the Treasury Committee’s recommendations. The Committee asked that an independent group accountable to Parliament be set up after five years to review the OBR’s work. We said that among other things, that group should examine whether the model for the forecasting body chosen by the Chancellor was the right one in the light of experience. To make that judgment, the group would need to examine both the validation model and the much more independent model—the fully independent model—implied by the Congressional Budget Office in the United States. I think, and the Committee concluded, that judging which model is best should be done after a period of experience of the OBR’s work, which is why we suggested the five-year review. I urge the Government to agree, on a non-statutory basis, that the five-year review should report directly to Parliament rather than to the Government via the non-executives, as the legislation currently envisages.
One other proposal in the Treasury Committee report is that the OBR should retain the ability to assess the robustness of the fiscal plans of major political parties in the run-up to an election. That would enhance the quality of debate and take us forward from the world of claim and counter-claim on Labour tax bombshells and Tory stealth cuts and so on, which often leave the public perplexed and do not necessarily move the debate forward much. Although the Bill does not rule that out, it strongly discourages such a role.
I understand the OBR’s reluctance to get involved in anything that could prejudice its appearance of independence, but I hope the door is not completely closed to the idea. Public understanding of what is at stake in elections could be enhanced by the OBR’s involvement. Furthermore, the need for such scrutiny might make parties more careful with their claims and improve their pre-election proposals. I hope we can return to that idea when the OBR’s reputation for independence has been firmly established after a run of years—that could also form part of the five-year review to which I alluded.
Overall, the Treasury Committee was greatly heartened by the degree of engagement from the Government and from the Opposition over the creation of the OBR. That demonstrates that the Select Committee corridor can influence policy rather than just offer critiques of it, which I hope marks a way ahead for improving legislation more widely.
Question put and agreed to.
Bill accordingly read the Third time and passed, with an amendment.
Sentencing Guidelines (Manslaughter)
Mark Tami (Alyn and Deeside) (Lab)
The petition is of residents of Alyn and Deeside and neighbouring areas, totalling some 3,000 persons.
The petition states:
The Petition of residents of Alyn and Deeside,
Declares that Peter Jones, a 24-year-old former pupil of Alun School, Mold, died in hospital following an attack by Gafyn Thomas Denman, 21, who is from the Mold area; notes that Gafyn Thomas Denman was found guilty of manslaughter and was jailed for 40 months for an unprovoked attack; further notes that, at the time of sentencing, Judge Merfyn Hughes QC explained that his hands were tied by the sentencing guidelines in cases of “one-punch” manslaughter such as this.
The Petitioners therefore request that the House of Commons urges the Government to review sentencing guidelines for those convicted of manslaughter so that sentences can better reflect the severity of the offence.
And the Petitioners remain, etc.
[P000905]
Driving Test Centres (Closure)
(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
I am very pleased to have secured this important debate on behalf of my constituents in Cumnock and Girvan. I will shortly present to the House a petition signed by thousands of local people who are against the closure of driving test centres there. A pattern is being repeated throughout the length and breadth of the country, with dozens of closures over the last two years. Many closures have happened without any consultation with those directly affected or the local community. As many hon. Members have said, including those who signed early-day motion 1294, which is in the name of the hon. Member for Angus (Mr Weir), such closures are against the Government’s own policy of localism.
The overall policy of the Driving Standards Agency has national implications. The proposed closure of the Cardiff office will involve a loss of 70 to 80 jobs. Union members in the DSA already have very low morale resulting from pay restraint, and attacks on redundancy terms and possibly pensions. There is now a commitment to strike action following a ballot of union members. Are the closures driven by a rationalisation programme, which is referred to in documents that, I believe, have been leaked into the public domain? Those documents mention a wish to move from 350 to 400 current testing locations, not all of which are full time, to about 150 main centres. Alternatively, does the rationalisation of test centres into a network of multi-purpose test centres make a more attractive package for a future privatisation?
The Minister’s public statements appear to indicate that his plan is to take testing to the customer by sending examiners to casual hire locations to deliver tests. He talks about testing from libraries, community centres and the like, but in many parts of the country these facilities are being closed as well. There are potential problems with, for example, operating out of supermarkets in terms of what facilities may or may not be made available, dedicated parking slots, suitable test routes and whether there would be too much congestion in and around retail parks for the tests to be uniform and fair. Having said that, if this leads to an appetite to revisit the closure decisions in Cumnock and Girvan, I will welcome it, and I intend to raise practical ways in which this could be done.
I would like to concentrate my remarks on the two centres in my constituency and the resultant loss of local service. Both are in rural areas, both are only too familiar with the never-ending withdrawal of local services and both have suffered from structural changes. In Cumnock, the closure of deep mining devastates the community to this day, and in Girvan, which is a seaside town, there has been a downturn in tourism as people have increasingly taken holidays abroad. Both town centres have been decimated and are in need of urgent regeneration, and in the case of Girvan even the local swimming pool has closed.
It would be difficult to overstate the strength of local feeling in both these communities at what they see as continual neglect and particularly a lack of understanding and empathy about what it is like living in a rural area and the difficulties of accessing services. However, given that it is my privilege to represent both communities, I am also very much aware of their resilience and ability to look at constructive solutions to problems.
I want to highlight my disappointment at how these closures were handled in my constituency. There was a consultation process of some four weeks basically over the Christmas holiday period, which was totally inadequate and frankly reprehensible. There was never any intention in my view to acknowledge—far less to listen to—local opinion. I hope that the Minister will feel able to redress that situation this evening. I am proud of the representations both communities have made, and I congratulate them, including those who took the time and trouble to collect signatures for a substantial local petition with the help of local Labour councillors.
What response did they get to their representations? On 3 December 2010, Mr Jonathan Hall from the Driving Standards Agency corporate correspondence unit replied to Girvan community council:
“Decisions on the number, location and size of centres must therefore take into account affordability, existing levels of demand and the Agency’s service level travel-distance criteria, where most customers travel no more than 7, 20 or 30 miles to their nearest test centre, depending on the population density of the area.”
How does that tie in with localism? I will go on to say why I think those distances are unreasonable in these two specific cases.
I will also challenge other comments made by DSA corporate services and by the Minister, but before that I would like to highlight a number of questions and points made to me by local people. In areas where local jobs and small businesses are struggling already, the livelihoods of local driving instructors are now under threat. Whatever the DSA says about a full licence allowing a person to drive on any public road, not simply those on which a person was trained or tested, the reality is that most people prefer, at least for some of the time, to practise near a test centre. Those in Ayr and surrounding areas will still be able to do this, while those in the rural area will not. I believe this is discrimination as well as a diminution of rural services, as I have already stated.
For reasons of familiarity, people will not want to take their lessons in areas where they are not sitting their test. To take a driving test on an unfamiliar route is an extra problem for any learner driver. If that is not the case, why do instructors make a point of taking their customers to streets they know are part of the test runs in their area? If learners know the route of their driving test and have driven it numerous times with a driving instructor, they are surely much more likely to pass the test. Driving instructors in the rural areas in my constituency will lose business to those in Ayr. Girvan, for example, had a driving test centre in the town for more than 60 years. It can take 45 minutes to drive to Ayr, which is a fact I am very familiar with because I do it often. Having a driving lesson and another 45 minutes to drive home can come to two and a half hours for an hour’s lesson. Taking public transport to lessons with a local driving instructor in Ayr is not unproblematic, because transport is often not that frequent and adds to cost. For that very reason it is essential for many people in these rural areas to drive for access to education and employment.
The DSA is obviously unaware of the logistics around Cumnock and Girvan and has taken the decision to close the facility purely on a theoretical basis of mileage. Many rural villagers already need to travel some distance to get to Cumnock or Girvan in the first place. As one constituent told me:
“My local test centre is Girvan, but I live a further 15 miles away and the total mileage I would have to travel to the Ayr Driving Test Centre is 37 and a half miles.”
I want to say a word about the new Ayr multi-purpose test centre, which is to serve Cumnock and Girvan following these closures. I welcome the new facility and lobbied the then Government to make sure it went ahead. It is great to have a new super-duper facility in any area, but it should not be at the expense of services to rural areas, especially when there are other ways of cutting costs. The DSA conducted 789 tests at Cumnock and 268 at Girvan in the last financial year. I think that I have made it clear that the decision should not just be about numbers, but it is recognised in both these communities that driving tests being conducted in the areas could be less frequent. However, can the Minister confirm that the same examiner passes through Girvan once each week to go to Stranraer?
Surely a common-sense solution could be found here. Both communities have suggestions for maintaining a reduced service at little cost in accommodation. East Ayrshire council has unanimously agreed, on a cross-party basis, that it will look at offering the premises it owns in Cumnock at a peppercorn rent. Girvan community council has acknowledged that there is no need for an examiner every week given the numbers, but that every four to six weeks would suffice. I said earlier that these communities are proactively seeking a solution, rather than just talking about it. Will the Minister be prepared, as the Prime Minister has done in other cases, to look at this again, given the good will there is to seek an agreement?
My worry about what is being done by the DSA is that in rural Scotland, the test demand may not be sufficient to justify a proper test centre. However, these people pay the same fee as those in more populous parts, so why should they get a lesser service? All this, as I have tried to indicate, could add to the costs of learning to drive and increase the problem of unlicensed driving, which has road safety implications and will impede the economic development of areas already hard hit by the current economic situation. I look forward to the Minister’s reply, which I know will be followed closely by my constituents, and I hope that he can suggest a positive way forward.
The Parliamentary Under-Secretary of State for Transport (Mike Penning)
I pay tribute to the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) for securing this debate. I am sorry but I am not responsible for swimming pools or libraries in her constituency—I believe it is a devolved issue that she needs to take up with the Scottish Parliament. However, I understand where she is coming from.
I was surprised to hear that the hon. Lady was campaigning so hard for the Ayr centre. What Ministers should have said at the time to the hon. Lady was that if the plans went ahead, there would closures in her constituency at the other centres, given the capacity that the Ayr centre was designed to have. That is a fact, and given the capacity of what was designed, that is exactly what is happening. If I had been the Minister, I would not have gone ahead with a programme of that size in Ayr, because—I agree with her on this—it is taking away a service from her constituency. I know that she has heard me speak before on this subject; indeed, she extensively quoted my views on where tests should be. They should be in the community—they should be a service to the community that the Driving Standards Agency provides, not a Soviet-style system that makes everybody come to us.
Mike Penning
If the hon. Lady does not mind, I will continue. It is unusual to give way in an Adjournment debate, because of the limited time we have.
I understand the concerns that have been raised, particularly by driving instructors, and I will try to deal with them. There are some big issues that we need to deal with, not least the many people who go out with someone who they think is a licensed and qualified driving instructor, but who is not actually qualified. That is an issue that I am taking up with the industry. It is wrong that people pay good money and in good faith, thinking that they have a fully qualified instructor, when what they have is someone who is just trained. Not all driving schools allow that, but it is allowable under the existing legislation, which I will look at carefully.
The hon. Lady is absolutely right about the service that is provided, within reason, in the kind of urban and rural communities that she and I serve. I accept that hers is a much larger rural community than mine, but I have many parts of the beautiful Chilterns in my constituency. I see lots of learner drivers, particularly at the weekend, learning how to drive on rural roads—as well as on urban roads—because that is a skill that they need to adjust to as they learn to drive.
We have reformed the test quite extensively in the short period in which I have been the Minister. One of the reforms that I have introduced is to ensure that instructors do not know exactly what the route is, because people can learn a route, but does that teach them to drive? The purpose of the test is to give people skills so that they can enjoy driving on the road, while at the same time ensuring that others are safe. What currently happens—the hon. Lady is absolutely right about this—is that instructors know exactly what the routes are, within reason. They take people round and round the circuit in their lessons, so that when they take their tests, they normally go along one of three or four routes, which they probably know back to front. We will stop the routes being published. We will develop new routes, so that instructors will not know what the likely routes are.
It is a testament to the hon. Lady’s understanding of her constituents’ needs that, as well as putting a petition together, the local authorities and the community have come together to look carefully at what the service provision needs to be and how it can be delivered. As she knows, neither I nor this Government is fixated on bricks and mortar. What I am interested in is the service being delivered to the community. I am not sure that the Public and Commercial Services Union is fully on board with that, but I am sure that we will get there eventually, because what it wants to do is the same as what I want to do, which is to provide a service to the community.
The previous Government’s policy was to implement a closure programme. I have suspended the closure programme while we address the question of how we can deliver facilities and tests to communities. I cannot go back on the campaign that the hon. Lady said she was so in favour of, but the new Ayr centre is now in place. It has a rather large capacity—much greater than the needs of Ayr—and was designed so that other areas would close their facilities, which would then come into a hub. I will not repeat myself too much, but I would not have done that, and it does not fit with this Government’s ideas of how we should deliver the service.
However, what I am doing—I have asked my officials to proceed with this, and they have already started—is speaking to local stakeholders, including councils in the areas where closures are taking place, to see whether we can deliver a service in the hon. Lady’s community that is not about bricks and mortar, but about tests being given. In two areas we are looking at delivering around 1,300 tests in the average year, with about 80% in one centre and 20% in the other. She is absolutely right that the figures suggest that we could send a tester every day—or every other day—to do one test, or we could bring the tests together in a package and have a tester arrive every four to six weeks. My figures indicate that it would be closer to every four weeks, particularly in certain parts of the year, when there tend to be more tests than in others.
It is crucial that the community understand that the service is for them. I know that my officials have been talking to the chief executive of the local authority about how we can facilitate that, which is something that the hon. Lady mentioned. As she is aware, in one case we were using a hotel in her constituency as a headquarters before we got a hub centre. I do not mind if it is in a hotel or a supermarket; indeed, if the libraries in her constituency stay open, I do not mind if it is based in one of their car parks or in a civic centre.
It is crucial that the service should be delivered locally, although let us remember that this is not all about the instructors. I stupidly sat next to my daughters on several occasions when the L plates were up, and it was the most frightening experience known to man—for them, I should stress, not for me. This debate is not all about instructors, but there is an industry out there and I am conscious of their needs. If everything is done in Ayr, there will perhaps be an issue with people looking to the Ayr driving schools rather than their local schools. I do not want everything done in Ayr; I want it done in the hon. Lady’s constituency. We are working hard to ensure that localism is delivered, because people pay for a service and they are entitled to it.
Let me quickly touch on some of the other changes to the test, which is vital to the hon. Lady’s constituents. I do not think that the test in its present form delivers what it is intended to, which is not a group of people who can pass a test, but people who have the skills that allow them—this is particularly true for young people—the freedom to enjoy the road while at the same protecting others. I have already said that we will ban the publication of routes, so that when people leave the test centre, the Sainsbury’s car park or the local council offices, they will not know exactly where they are going to go—clearly they will have to go left or right, but they will not know exactly where they will go after that.
At the same time, people who are learning need the skills for when they do not have someone sat next to them, as a companion or guide, or as someone telling them when they have done something wrong. Therefore, we are introducing a part of the test where people will be asked to go from one place to another without being told how to. They will have to find a route themselves by reading the road signs. Some people have said that they are concerned about this, and have asked whether people will fail their test if they go in the wrong direction. No, they will not; it is how they react to making a mistake that is crucial when we are trying to teach them how to be good drivers.
We have a massive issue in the whole of this great nation of ours with young drivers. That is one of the reasons their insurance premiums are so high. With two daughters, I am proud to say that lady drivers—and particularly younger lady drivers—are much safer than boy drivers. Indeed, 17 to 25-year-old girls are some four times safer than 17 to 25-year-old boys. We must work together to ensure that they have the skills that they need to go forward. One of the proposals that we have made is for qualified driving instructors to be able to use roads that learners do not usually use, particularly motorways. It seems ludicrous that someone can pass their test with someone else sitting next to them, then leave the test centre—perhaps the instructor will have taken someone else out on another test, in another car—and be legally allowed, on their own, to drive for the first time ever at 70 mph on a motorway. Frankly, they will probably be petrified—I know I was very frightened when I first went on a motorway, and I know my daughters were as well.
We are therefore looking at giving fully qualified instructors the ability to teach enhanced skills, including post-test. Indeed, a lot of work is being done with the Institute of Advanced Motorists, the AA and the RAC on what skills we can give people when they have passed their test, so that they face less of a liability in their insurance. That is the sort of steer and guidance that we need from the DSA and Government. It is not about regulating, but about giving people the skills that they need.
The hon. Lady asked me for an assurance that we will bring testing to her community. Yes, we will, and we will do it as soon as we can. Pilots have already started around the country. I hope that the union will support what is being done, because it will protect jobs rather than cause them to be lost. We will need people, albeit that they will not be sitting in a building. I remember the vicar of the first church I went to in my constituency saying to me, “It’s not about buildings, Mike. It’s about people. That is what the Church means.” The same applies to services in the community.
We need to deliver this much-needed service in the community, so that people can have the skills that they need—and at cost, so that they can afford them. In a rural community, passing the driving test is one of the great freedoms that we can give to young people. We need the skills to do that, and we need to bring that service to them at no extra cost to them. That is crucial. Buildings cost a lot of money. The hon. Lady mentioned a peppercorn rent, but in some cases, there might be no rent involved at all. Some commercial organisations might welcome the footfall that would come to them while people were waiting to take their test, if their location became known as the test centre.
I have an open mind on who should deliver these services. As I have said, discussions are going on in the hon. Lady’s constituency with her local authority, and I am more than happy to share with her after the debate the information on who we have been talking to. Perhaps she also has ideas about who we should talk to. We will deliver driving tests in the community, where they should be, rather than a huge distance away, which was the previous Government’s policy. I have inherited that policy, but I will not continue with it.
Madam Deputy Speaker (Dawn Primarolo)
I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
National Insurance Contributions Act 2011
Budget Responsibility and National Audit Act 2011.
Question put, That this House do now adjourn.
Question agreed to.