Westminster Hall

Wednesday 4th May 2011 Westminster Hall

Wednesday 4 May 2011

[Mr Alan Meale in the Chair]

Family Policy

Wednesday 4th May 2011 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Dunne.)

09:30

[Jessica Lee (Erewash) (Con)]

It is a pleasure to serve under your chairmanship this morning, Mr Meale, and I am delighted to have secured this important and wide-reaching debate on family policy.

I will begin by reflecting on the royal wedding last Friday. There are, of course, many joyful moments on which to reflect, but I want to focus on the prayer that their Royal Highnesses the Duke and Duchess of Cambridge prepared in advance of their special day. It is telling that before going on to give thanks for their marriage and expressing their wish to serve others, in the first sentence of the prayer they thanked God for their respective families.

The value of the first relationships that we develop, and the care afforded to us by our first carers and family unit, plays a key role in the formation of the years ahead. For the avoidance of doubt, I am not suggesting that one needs to marry into royalty or luxury to value the importance of family and stability—far from it. That prayer reflects the wishes and aspirations of thousands of newlyweds up and down the country, and it was a valuable statement to make.

Since the coalition Government were formed nearly a year ago, there has been a focus on commissioning reports to examine how to tackle child poverty and how to best assist children and families in the important early years development. Most notable are the reports by the right hon. Member for Birkenhead (Mr Field), which looks at the foundation years, and that of the hon. Member for Nottingham North (Mr Allen) on early intervention. The report by Dame Clare Tickell presents her results on the evidence regarding the foundation years. Professor Eileen Munro has examined child protection procedures, and David Norgrove has published an interim report on the Family Justice Review. Most of those reports are at the interim stage, but they have already provided a detailed and highly informative overview for how to approach the complex issue of assisting families, particularly in the early years.

It is important to mention the valuable role played by the voluntary sector in supporting and caring for families. That role varies from national charities and organisations, such as Action for Children or Barnardo’s, to small local organisations that provide niche help and assistance. That work is underpinned by the vision and aspirations of, among others, my right hon. Friend the Secretary of State for Work and Pensions. He has sought to get to grips with the reasons behind the cycles of poverty in the UK, and he has looked at how best to improve the lives of the most disadvantaged people.

Such an aspiration cannot be achieved by central Government alone, and I believe that we need to empower the most disadvantaged people to make sustained changes and to aspire for their children. The complexities of family breakdown, drug and alcohol misuse, personal debt and educational failure have created long-standing problems for many families. The benefit reforms proposed and implemented by the coalition Government will make work pay, so that providing and taking responsibility for children, and the creation of a work ethic, will hopefully move some families away from those generations of people who did not feel equipped to work. Such people should be equipped with the skills and self- esteem that they require to move into work. I hope that this debate will pull together some of the strands that run through those different reports, and give hon. Members the opportunity to contribute their own views and experiences.

The contribution of the report into foundation years by the right hon. Member for Birkenhead is an excellent place to start such a debate. The report confirms the importance of the early years, and presents evidence to show how critical those years can be in determining the likely outcomes for children as they move into adulthood. Essentially, it proposes to place equal emphasis on the first five years—the foundation years—of a child’s life, as on the primary and secondary sections of a child’s education and development. It is a plan for long-term investment—not only financial investment but investment in services and skills—so as to achieve long-term results and improvements.

The proposal to set life chance indicators to support work undertaken during the foundation years is a bold step, and such indicators would help the Government to understand how investment in the early years is bearing fruit. The right hon. Gentleman seeks ring-fencing for some services, but the report makes it clear that that is not simply a request for funds. Trying to help the most disadvantaged children is not a new approach taken by the coalition Government, because previous Governments have also aspired to tackle that complex issue. The previous Labour Government set a target of abolishing child poverty by 2020, but in my view their approach ignored the long-term complexities behind cycles of poverty. The policy of child tax credits was never going to be a sufficient step towards resolving the social and economic problems for the next generation.

We need a structure where help for the foundation years can be accessed by those most in need. The proposals in the report for Sure Start centres to be refocused make great sense. In my constituency, Erewash, we are blessed with excellent Sure Start centres, and the staff and volunteers work with families and provide a great service to everyone who comes through the doors. Commissioning children’s centres and making them places where child benefit forms can be collected or parenting classes accessed are just some of the proposals aimed at making such centres attractive. In other countries, parenting classes are often a given, and it is part of the culture to undertake them when a new baby arrives. I want to see a shift in culture in the UK to make parenting classes fun and become the norm.

My friends who have had children often describe the sudden sense of responsibility that they felt when they first held their newborn child. As godparent to three young children, I have only to take care of the enjoyable stuff such as presents and day trips and so on, which is great fun. We know, however, that babies do not arrive with an instruction manual, and the shock of suddenly providing for another human being can be overwhelming. Indeed, that shock can be overwhelming for well-supported, financially secure and well-educated parents, so it is easy to see how a parent who, for example, is struggling with their finances, has an unreliable partner, lacks a good family support network or has no knowledge of where to access help could suddenly fall apart. We must reach out and help those parents. We need more health visitors and easily accessible support for parents. If we can provide the right support from the outset, the prospects for children in the future will be much improved.

The report by the hon. Member for Nottingham North sits neatly with the work on foundation years. He has been an advocate of the theory and practice of early intervention work for many years, and we are all grateful for his first report on that subject. The forward to the report reiterates a point that I have made from the outset: the call for early intervention is about not only asking for money but the impact of social disruption, the effect of fractured lives and the sadness of broken families.

The introduction to the hon. Gentleman’s report contains the startling fact that a child’s development score at 22 months is an accurate indicator of educational outcomes at the age of 26. Other indicators in the report show how depression in adult women can often be traced back to their childhood experiences, and how adult criminal activity in men can be a reflection of their formative years. In my view, such facts only increase the need to look at long-term strategies for how we support families with young children, and how we structure support for those vital early years. The use of early intervention work to nip in the bud any struggles or problems faced by families has to be a goal for the future.

The work of Dame Clare Tickell includes data collated from various providers, schools and voluntary organisations. She has considered how best to implement measures to support the foundation years. It is one thing to identify the early years as an area that we need to assist. What we really need to do is to ensure that the work that is undertaken is correct. A question was asked about the most important skills that young children—pre- school children—should learn. Of the 1,184 responses, 81% listed helping to build good personal, social and emotional skills as the highest priority, with developing communication, speaking and listening skills coming a close second. Those are notable responses, as they are just the skills that could be monitored through early intervention work and assessed as part of a foundation years programme.

Another conclusion in the report was about the enthusiasm among professionals to speak, with permission of course, to other professionals involved with families, such as health visitors and support workers, which would very much assist work with families. It, too, is a significant theme and threads through to the steps that we take, but need to improve, in working with the most vulnerable children in society and those at risk of harm.

I come now to the important topic of child protection and support for the most vulnerable families. There is a need to tackle delays in the system and to ensure that the important work that social workers undertake is valued and respected. That is long overdue. My mother was a children’s nurse for about 40 years—probably longer than that—and her role would be considered a front-line role. That would also be the case for nursing staff in accident and emergency departments in particular. Similarly, the role of a child protection social worker, stepping into the unknown in people’s homes, is front-line work and needs to be recognised as such. I am a family lawyer, and most if not all of the social workers with whom I have worked over the years have been subject to verbal abuse and physical assaults. They have to walk into homes where there are alcoholic parents or drug misuse with not a clue about what will happen on the other side of the door. That is not a role to be taken lightly. The reason for dwelling on those experiences is that we need to structure children’s services correctly, so that they can best support the vulnerable children for whose care and well-being they are responsible, which is no small responsibility. Professor Munro set out in the conclusions to her report the need to reduce bureaucracy for social work teams and how we can better structure working practices in children’s services.

I want to champion the role of the voluntary sector in supporting local children’s services. In my constituency of Erewash in Derbyshire, we have an excellent Home-Start organisation, with which I have been honoured and delighted to be closely involved. It provides valuable support for mums, who are often young, who need advice and guidance—it is a supporter. It usually involves an older figure to whom they can turn for advice without fear of judgment or criticism. Such volunteers do not step on the toes of children’s services when they perform their statutory duties. I would object to any suggestion that by supporting the voluntary sector, we are trying to take statutory roles away from government. We are not trying to do that; we are trying to embrace the voluntary sector, support it and give it the voice that it needs. Such volunteers add to the much-needed fabric of a support network for inexperienced parents. I support Home-Start in Erewash and throughout the country, and I support the many other similar organisations.

In Derbyshire, we also have an excellent scheme, which has been rolled out through the county council, for a volunteering passport. After training, volunteers can be awarded the passport as a sign of their commitment and experience, and they can then go forward to assist families. Again, it is often young mothers who need a friendly face and some guidance on parenting skills. The scheme is a success, and it reduces bureaucracy. It could easily be incorporated in new and different projects across the county—indeed, I would like to see it rolled out across the country.

For too long, patterns of abuse and neglect have been passed down the generations in families involved with social services. To link back to the earlier reports, it is often the lack of early intervention work that leaves a vulnerable family without support in the home, which can escalate to emergency situations and then to the statutory involvement of social services. That is not how social workers wish to work with families and, most importantly, it is very damaging for children. Sadly, by that stage, the level of harm to children can be so great that their attachment to their parents and siblings is irreparably damaged and beyond repair, despite attempts to weave the family back together.

An additional factor in this rather depressing scenario is the structure of the family justice system. The family justice system is served by hard-working people who have often worked in it for many years and who have a passion for, and a commitment to, supporting vulnerable families. However, there are long delays in cases being heard and problems with the availability of experts and court time. David Norgrove has been commissioned to tackle those problems head-on, and he has provided a detailed interim report. The proposal to create a free-standing family justice system is well argued and evidenced in the report. It is important, because the current delays impact on planning for a child. If a baby of, say, six months is taken into foster care, it can be a further nine months or so before decisions are made about their future. The baby will therefore have lived more than half their life with an uncertain future. That matters, because it is at that stage that babies and young children are forming important attachments to their carers. Any disruption to their placement and delay in forming those attachments impact on the long-term prospects for young children. That takes us back to the concerns raised in the report by the right hon. Member for Birkenhead on the foundation years. To help the most vulnerable and damaged children in our society, we simply must speed up the decision making and court processes for them.

Finally, I come to the outcomes for looked-after children, which have also, sadly, remained poor. That has been the situation for many years. It was my privilege the other week to meet some young people from Cardiff who had travelled to Westminster. They were all children in foster care. One teenager told me that she had been through nine foster care placements in the past two years and that she did not think that that was fair. I did not hesitate in agreeing with her and saying that if I had been through so many placement changes in such a short time, I would be angry and upset with the system. Fortunately, that young person has now hit it off with an excellent support worker and has a focus and ambitions for the future. She knows where she wants to go. But what about the thousands of other young people who are—rightly—angry and upset? I applaud the Government’s steps to improve the adoption numbers in the UK and the wish to cut out political correctness and delays in approving matches for adoption. We must do that, because a whole generation of children on care orders depend on it.

My reason for initiating the debate is so that the Minister can, I hope, assist us all by responding to it and bringing together the threads of all these different and important reports. For any reforming Government who have recently come to power, there are many issues to tackle. We have all seen what the new Government have had to deal with in relation to the financial situation, reforming welfare benefits, foreign policy and so on, but to me, there is nothing more important than how we deal with young people and families. That takes me back to my opening comments. The Duke and Duchess of Cambridge recognised the point in their thoughtful prayer, which they set out before they were married. For any person who wants to get on in life, the love and support of a family is the most important foundation. Our duty as parliamentarians is to help as many young people as possible to have a stable and supportive start in life.

09:48

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

It is a pleasure to speak under your chairmanship, Mr Meale. I congratulate most warmly my hon. Friend the Member for Erewash (Jessica Lee) on securing the debate and on her excellent introduction to this very important subject. I am pleased that so many hon. Members have come along this morning to take part.

We know that the country faces a very severe financial crisis and we are reminded almost daily of the huge challenges that we face internationally in the middle east and elsewhere. However, the crisis facing family life is the most serious of all the issues facing this country. I do not say that lightly, because the data on family breakdown are extremely alarming. The most recent analysis from the Office for National Statistics in the millennium cohort study shows that 48% of all children born today will not grow up with both parents. It is alarming that nearly one in two children born today will experience some form of family breakdown, because although single parents do heroic and fantastic work on many occasions, and I give them all the credit they deserve for performing a tough role, the data show that outcomes for children overall across the country—obviously, there are exceptions—are much less good than when two parents stay together.

There has been a view across academics, policy makers and journalists that Governments cannot really go near this issue and that although they can build schools, run a health service, maintain decent roads and try to promote economic growth, they cannot or should not get involved in the issue of family life, even though that is the most important to many of our constituents, as my hon. Friend said. I want to challenge that contention because if we go about this in the right way, we can make a significant contribution to preventing family breakdown and strengthening family life.

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

The hon. Gentleman is elaborating on the severe problems that family breakdowns cause society. Does he share my concern that the financial cost of such breakdowns is in excess of £40 billion, according to statistics from last year? Whatever investment the Government put in is worth while if it can address that fundamental problem, which will otherwise be with society for generations to come.

[Andrew Selous]

I am most grateful to the hon. Gentleman for raising that point, and he is absolutely right. The recent study by the Relationships Foundation put the cost of family breakdown at £42 billion. In a recent speech, the Secretary of State for Work and Pensions put it at between £20 billion and £40 billion per annum. Whatever the figure, we can all agree that it is massive, and if we can reduce it, there will be many better uses to which the money could be put in our constituencies; indeed, we could also reduce taxes. I am grateful to the hon. Gentleman for putting that point so firmly on the record.

As I said, success or failure in marriage and relationships is not merely a matter of luck. Nor do people in a troubled marriage or relationship have just two options—to stay together and be miserable or to split up. That is absolutely and emphatically not the case, and I want to spend the rest of my time explaining why. I also want to praise the Government for some of the things they have done recently and to commend the Minister for some of the excellent initiatives she has introduced. I will perhaps also outline some of the areas where we can go a little faster and a little further to match the scale of the problem.

I praise the recent funding from the Department for Education for a range of relationship support initiatives, from Relate to Care for the Family and its Let’s Stick Together project, which I am particularly keen on. I commend the Minister for that excellent start, which is an early down-payment on the coalition’s promise to take this issue seriously. I also commend the Secretary of State for Work and Pensions, who has committed his Department to recognising marriage in its data and analysis. Under the previous Government, the issue was just wiped off the piece, and we could not look at the data on it. I am not talking about tax, which the Minister and I will disagree on as far as marriage is concerned, but about having an honest analysis of the data. Such an analysis is a good thing, and we should just see what the data say. That is a significant issue.

I want to comment a little on the funding that the Minister has given Care for the Family to roll out the Let’s Stick Together course. People ask what we can do about family breakdown, and this course is really practical. It is run by health visitors up and down the country for new parents, whatever type of relationship they are in. It takes an hour or so. Often, it is run by new parents who have recently done the course. It gives some of the basics about how to have a healthy, strong and happy relationship or marriage that will last. The early feedback is very positive and suggests that the course is well received. Surely, it is better to give people the tools, support and skills to make a success of their relationships than to come round and sort things out afterwards, when everything has gone wrong. In Bristol, where the course has been trialled, it now reaches nearly 30% of new mothers, and there has been very positive feedback. I commend Harry Benson of the Bristol community family trust, in particular, for the pioneering work that the trust has done. I also commend Bristol health visitors for the enthusiasm with which they have picked up the course. If that can be done in Bristol, why can it not be done in every other great city, and in every market town, village and rural area, in our country, because this really matters?

I hope that we will see a little more support from registrars for marriage preparation. Two thirds of all weddings take place in registry offices, but registrars do not offer good enough signposting towards the marriage preparation that is available from local and community groups. That is an obvious thing we could do, it would not cost any money and it would lead to better outcomes. What do we have to fear? What is there to prevent us from doing that? I hope that we can go further and faster on that.

At the moment, all our local authorities are preparing local child poverty strategies. I welcome that exciting development, which is taking place alongside the Government’s excellent work nationally to reduce child poverty. We can see different and pioneering initiatives at the local level, and I hope that strengthening families will be a key part of what local authorities look at. From the early evidence I have seen of some child poverty strategies, however, I am not convinced that that is yet the case. I know that we are all localists now, and that we are not really in the business of telling our local authorities what to do, but an emphasis on strengthening families would be enormously helpful and useful, given that a child who grows up with one parent rather than two is twice as likely to grow up in poverty as one whose parents stay together. I therefore hope that strengthening families will be an aspect of local child poverty strategies and that authorities will work with the community and voluntary sector. There is a community family trust in my constituency, which could do this work very well with my local authority, and that would be helpful.

My hon. Friend talked about the importance of parenting courses, and I completely agree with her. The additional point I would make is that internationally peer-reviewed academic work, particularly from Professors Cowan and Cowan at the university of Berkeley in California, shows that parenting work is even more successful if the relationship between the two parents can be enhanced at the same time. Where parenting work is being done and there are two parents, let us also strengthen the couple’s relationship. We could usefully do that, and it would not cost us any more money where parenting work was already being done. That would lead to better results.

We can also do more in our schools. I recognise that our school curriculum is completely packed, and whenever anyone tells me that they want to add something to it, I ask them what they want to take out. However we do have assemblies in our schools, and teachers and head teachers are often looking for material to present. There is very good material around. Care for the Family has its evaluation material. There is also an excellent charity called Explore, which is based in Hampshire. I have met both, and they have really excellent material, which is welcomed by students in schools. It speaks to children in a language they understand and tries to give them some of the skills and support they need to make a success of adult relationships when they leave school. We could do more work on that.

My final suggestion to the Minister before I sit down, as many colleagues want to speak, is not to ignore what we can do in prisons. That might seem an odd area to mention; however, strengthening the relationships of prisoners is important. It is not a fuzzy thing to do, akin to giving prisoners televisions in their cells. The academic evidence tells us that prisoners who have a strong relationship to return to after they leave prison are 35% less likely to reoffend when they come out. If their relationship breaks down while they are in prison, they are 40% more likely to reoffend. Why does that matter? Because you and I, Mr Meale, are less likely to have our back door kicked in on a Saturday night, or our car radio stolen, if we can support the relationships of prisoners. We might not immediately think of that when we discuss family policy, but it is important.

Once again, I congratulate my hon. Friend. I look forward to hearing the Minister’s response; I commend her for the excellent start her Department has made. However, I would say it is a massive challenge. If we are to make Britain the country we all want to see, we need to go a little further and faster in this area.

10:01

[Jim Shannon (Strangford) (DUP)]

I, too, congratulate the hon. Member for Erewash (Jessica Lee) on raising the subject. All of us believe that family values are important; I certainly do as an elected representative. They are the core of society, and it is important that they are in place. That is the thrust of what was said by the hon. Lady and the hon. Member for South West Bedfordshire (Andrew Selous). I missed the beginning of the hon. Lady’s contribution, but I understand that she mentioned Kate and William’s marriage as an important example. That was also important for me: it was not just the pageant, the grandness of the occasion and that 2 billion people around the world watched; it was that it was about two young people in love. That is the core of the marriage relationship. They are two ordinary people, if one takes away all the grandness of last Friday.

I have a couple of points to make about marriage. In correspondence that we all received as elected representatives, the Secretary of State for Work and Pensions and the Prime Minister clearly stated that family values are important to them. They intended to take action to help, which I would welcome. I will return to that later, but I am conscious that others want to speak, so I will not deliberate for too long.

I have one of those long-suffering wives who from the beginning realised that the guy was going to be away most of the time, and that she would have to look after the family, which is what happened. The role of the lady is important in any marriage. Ultimately, they run the household and look after the children. That bond between mother and child is stronger—perhaps more than it should be—than the one between the father and child. Statistics indicate that 90% of those in a married relationship are happy, and a similar percentage of those cohabiting are also happy. That is an indication that lots of people are committed to the married or cohabiting relationship.

It is not just about the relationship between the mother and father; it is also about the families and the time they spend with their children. The only mealtime I spend with my children is on a Sunday. There is an indication that families should eat together on a more regular basis. A family eating together three times a week provides that strong bond for a marital relationship.

My comments focus on the marriage relationship and the need to build upon it, and the need for Government to play a role. Words are all very well, but actions are needed to back them up, and I want to see that happen. If my wife is watching, she would probably say that that man is talking about love and romance, and wondering whether that is the man she married. I hope it is, but maybe we do not always show our emotions in the way that we should.

Will the Minister indicate the progress of the Conservative promise of a tax break for married couples? I do not think that we should base marriage on finance alone. People do not get married because of a house, car or good job; I hope people always marry for love. The Conservatives and the coalition have clearly stated that they wish to bring in a tax break for married couples, so I want to hear from the Minister where that features in the process. We heard the suggestion discussed a lot in June and July last year but not much since. In Hungary, it has been proposed that families should be allowed an extra vote on behalf of their children. I am not saying that we should do that here, but I am interested to see what we are doing to assist families with a tax break.

My final point is about breaking up. The hon. Member for South West Bedfordshire hit on the fact that not every marital relationship works out. We all have friends who tried hard but the relationship fell down. That happens. We must have a process in place to ensure that those who experience marital break-up can survive and get by. I hope the Minster will state whether there should be a mediation process. I believe that there should be. Should both parties be committed to that mediation process? Yes, they should. That has perhaps been overlooked. It is all too easy, when a relationship falls down, to walk away and leave it. It is almost a part of the disposable society: the car breaks down, get a new car; household appliances break down, get a new one; the marriage breaks down, move on.

[Jessica Lee]

Does the hon. Gentleman agree that although families sometimes break down, it is at that point that the parents need to put the interests of their children first and foremost, and set aside their own differences, for the well-being and the future of those children? To emphasise that, the Government have taken various steps in welfare benefit reforms, as well as through the Department for Education.

[Jim Shannon]

A lot of things are being done. I am not saying that things are not being done; they are. I suggest that there are some things we can do but have not been. There is an indication that, with the removal of legal aid, people contemplating divorce or separation might decide to do a quickie and get it over. That means that they would not go through the process. As the hon. Lady has said, children who are clearly part of the relationship are pushed aside and forgotten. Will the Minister indicate where mediation should be in the process?

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

Does the hon. Gentleman agree that, in the unhappy circumstance of a breakdown, the emphasis should be on relationship repair, keeping people out of courts and moving on in a much more civilised, less expensive way?

[Jim Shannon]

I agree wholeheartedly with the hon. Lady. Sometimes, when relationships have fallen down, anger comes to the fore. I feel mediation provides a method for focus, strategy and drive in the direction that she has mentioned. That would be good. It is much better in every case to have mediation rather than battles in court—or out of court, and battles everywhere else. I would like to see mediation from that point of view as well.

Mr Justice Coleridge of the Family Division has said that

“almost all of society’s…ills can be traced directly to the collapse of the family life”.

The judge deals with such problems each and every day, and he has knowledge and experience of family breakdowns. He also referred to a

“never ending carnival of human misery.”

We have to move on from that.

We need more commitment from people outside the marriage to make the marital relationship work. We need a commitment to young families, to children and to doing the things that are important. We all have to work at it. We cannot say, “It’s great to do that.” We have to work at it and try to make it happen. We need tax breaks from the coalition Government and an indication of how they might work. We also need mediation. If we have that, there is a chance of people holding on to their relationships, which will ensure that families and children are helped.

Again, I congratulate the hon. Member for Erewash on introducing the debate. It is a good and timely debate, especially as the whole nation is thinking about that special marriage last Friday.

10:11

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

I congratulate my hon. Friend the Member for Erewash (Jessica Lee) on securing this important debate.

The family is a fundamental and vital tool in holding society together. It can provide security, stability and commitment. In the family we learn how to give, how to share, we learn how to be kind and how to care, and we learn how to build relationships. However, the family has been and continues to be badly neglected as an institution, notwithstanding the fact that it is a key element in dealing with issues such as gun crime, knife crime, teenage pregnancy, truancy and antisocial behaviour. The Government need to do everything they can to support and protect the family.

[Mr David Burrowes (Enfield, Southgate) (Con)]

My hon. Friend puts the matter in its proper context, referring to issues such as antisocial behaviour and gun crime. Would she commend the work of Barry and Margaret Mizen following the tragic murder of their son Jimmy? They helped to set up Families United because they wanted to channel their grief into the positive energy of trying to support such families, that being the best way of dealing with those very deep issues.

[Mrs Grant]

I am happy to commend that special initiative, and the bravery of the individuals affected.

Since the general election, some good and positive family policies have been announced; they include underpinning Sure Start, more health visitors, flexible working and parental leave. However, much more is needed.

I was a legal aid family lawyer for 23 years—I am giving away my age—prior to becoming a Member of Parliament. I declare an interest, in that during those years I saw a relentless rise in family breakdowns. As the hon. Member for Strangford (Jim Shannon) said, Mr Justice Coleridge described family breakdown as a

“never ending carnival of human misery—a ceaseless river of human distress”.

The judge went on to say:

“We are experiencing a period of family meltdown whose effects will be as catastrophic as the meltdown of the ice caps”.

From practice, I know that the situation is indeed dire. Our family courts are overstretched and under-resourced, and there are many delays. The situation will be made even worse with the demise of legal aid and the increasing number of litigants in person. This comes at a time when ever more people need family lawyers, and families are marching through the family courts at an ever-increasing rate and with no sign of decline. Sir David Norgrove, in his interim family justice review, acknowledges the capability and dedication of those who work in the family justice system, but he also says that the family justice system is no system at all. He identifies fundamental failures and faults, and he concludes that our children are badly let down.

Successive Governments seem to have been oblivious to the realities of family life for many—and oblivious, too, to the profiles and personalities, psychological and otherwise, of those who rely on the family justice system and use the family courts to resolve their problems. If those Governments had appreciated the situation they would not have hesitated in comprehensively reforming the family justice system, including the substantive law of divorce, and questions of money and cohabitation; they would also have adequately funded the system, including giving legal aid for family cases.

My firm looked after about 14,000 clients in south London, Surrey and west Kent. The family profile that I shall describe to the House is, sadly, not unusual.

Mother presents with some learning difficulties, a history of violence and a history of drug abuse, but says that she is now clean. She has three children, all girls, with three different fathers. Mother seeks a non-molestation injunction order against X, the youngest daughter’s father, mum having been hit over the head with a pickaxe. There are numerous other incidents of violence. The two older children, too, need injunctions to protect them from X. There are also allegations by the eldest girl that X had touched her in an inappropriate manner. All the girls are having problems at school. The middle girl has been diagnosed with ADHD—attention deficit hyperactivity disorder. The school has threatened suspension because of disruptive behaviour. Mother is on income support and feeling suicidal. All the children are on the child protection register. When I took instructions from this lady, her physical appearance and her demeanour when she came into the room led me to think that she was about 50; only when I asked for her date of birth did I realise that she was only 25 years old. That is a true story.

Tragically, the children growing up in these families are watching and learning from bad behaviour and absent boundaries, and they will breed future generations of victims and perpetrators. It is an absolute vicious circle.

[Jessica Lee]

I am grateful to my hon. Friend for giving way at this important point in her speech. Does she agree that after taking instruction from such clients, a further question is often posed? We might be dealing with a young mother whose baby may be taken into foster care, and the question is, “Who is there for you? Who can help you and support you?” Sadly, the answer is often no one. The client will have lost the family support network. They may have managed to extricate themselves from an abusive relationship, but they will be on their own and that is such a difficulty.

[Mrs Grant]

My hon. Friend makes an excellent point, and I could not agree with her more. I know that in her practice she has also come across the very situation I described. The answer to her question is that often, there is nobody, which neatly brings me on to my next point in this sad scenario.

It is worth noting that under the Government’s proposals for legal aid, this highly vulnerable woman, with nobody there to help her, would not be entitled to help with her residency and contact issues, with her debt problems or with the educational difficulties that she had with her children.

[Mr Andrew Turner (Isle of Wight) (Con)]

Will my hon. Friend help me by saying how many of the 14,000 clients whom she referred to fall below the lady whose story she has spelt out for us? I ask that not because there is a disagreement that there is a problem, but because we must say how much money would be needed to put it right.

[Mrs Grant]

It is very difficult to give an exact figure, but probably 80% of clients in my family law legal aid practice in south London have a profile very similar to that of the family I described.

When Mr Justice Coleridge made his remarks about family meltdown, he was criticised for sounding off by some in the media and others, whom I think should have known better. That learned judge, of some 20 years’ experience at the sharp end, was absolutely right. There have been at least seven reviews of the family justice system since 1989, and yet precious little has changed or improved. We cannot allow this to continue. We ignore the family at our peril. I urge the Government not to avoid the issue but to be brave and robust in dealing with it.

10:19

[Mr David Burrowes (Enfield, Southgate) (Con)]

It is a pleasure to take part in a debate on such an important subject, and I congratulate my hon. Friend the Member for Erewash (Jessica Lee) on securing it. It should be noted that it is only six hours since we were in the main Chamber, and you will forgive me, Mr Meale, for saying that today we have shown our capacity to be full-time MPs without a change in the electoral system.

As all speakers have noted, family policy is not shaped around living in an ivory tower. As my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) said, we are dealing with a policy that affects intractable problems in society—the poverty-stricken estates and the areas in all our constituencies where we see the need to support and strengthen the family, which at its core would provide a stronger community, as the hon. Member for Strangford (Jim Shannon) mentioned, and by its essence would support the weakest and most vulnerable.

When we debate family policy, we are talking not about the washing powder advert, sanitised version of the family, but about families affected by the deepest problems. I draw attention to the 250,000 to 350,000 children living in households where a parent is misusing drugs; barely four in 10 fathers in such families are in any contact with those children. At least 2.6 million children live in households where a parent is a hazardous drinker, and 750,000 live in a household with an alcohol- dependent parent. Those are deep problems, which are affected by our family policy.

Moving away from those statistics, one can drive down into the individual stories. A number of years ago, when taking part in the Centre for Social Justice’s study of addiction issues, I came across Ruth, who told me that, once, when politicians and others talked about family values she did not have a clue what they were talking about. She was a victim of drug and alcohol abuse, and went through the experiences of children’s homes and further abuse, which previous speakers have described. In words that have long stayed with me, she said that at the age of eight,

“I longed for someone to cuddle me and tell me they loved me, as I just didn’t belong. I cried and I cried but no one heard. My tender heart was breaking.”

Thankfully, Ruth managed to get through the system, going through numerous social workers, homes and allocated workers. The great value of voluntary sector organisations has been mentioned today: Ruth eventually found herself and landed on the help and care of one of those organisations, Victory Outreach UK, run by a Christian couple acting on their own family values of reaching out to others and to the most vulnerable, not just keeping to themselves. They supported Ruth and enabled her to understand what family values were about. She ended up saying that she did understand families and that they were about belonging. She wanted me to ensure that we take account of that as a matter of policy.

Mark was one of my regular clients as a criminal solicitor. No doubt he gave my firm good trade, but he blighted his life and the lives of those around him by being one of the most prolific criminals in Enfield. He was the subject of intergenerational drugs misuse, knowing only what he saw: he saw his mother taking drugs and he continued to take drugs, and from what he saw around him, he knew that the way to get more drugs was to commit more crime. His life was full of potential—he had the potential to train for the Olympics next year in weight-lifting, rather than watch the hatch lifting on cell doors in Pentonville and other prisons around London, which is what he spent his time doing. What made a difference to him and made the lights flicker on, just for a while, was the involvement of family.

I remember a time when Mark had gone through a spate of criminality and ended up in the cells of Enfield magistrates court. The bravura of being a high-profile criminal left him, and he did not demand a cigarette as he usually would, but said, tears running down his face, “Where’s my father? I want to speak to my father.” That was the big issue for him and what he had missed through his life. The lights flickered on again when Mark himself became a father—he suddenly realised that life was not just about himself and feeding his addiction habits and the criminality around him, but about his responsibility to others and his profound responsibility to the most vulnerable person in his vicinity: his child. That was when he realised that he had a responsibility beyond himself to his child and to the community. Sadly, that opportunity was not grasped the first time round and was taken from him, but it was grasped for the second child. There were people and community organisations around him who helped him to engage with the child. Mark is now, thankfully, turning the corner, being a great dad to his child and trying to break that intergenerational cycle of crime and drug misuse.

[Anna Soubry (Broxtowe) (Con)]

In many ways, what my hon. Friend describes, drawn from his experience as a solicitor, is very similar what our hon. Friend the Member for Maidstone and The Weald (Mrs Grant) said. She too was speaking from the heart as well as from her experience, as was our hon. Friend the Member for Erewash (Jessica Lee). Does he agree that it is imperative that the Government understand and appreciate that lawyers, be they solicitors or barristers, play an invaluable role in bringing families together? We are much more than just lawyers: we bring together other services through our work when we represent people.

[Mr Burrowes]

I am grateful to my hon. Friend for that intervention. I do not want the debate to be too much of a mutual admiration society. The reality is that lawyers are not top of the bill in terms of our promoting them. What they are about is providing a service, especially to the most vulnerable, and we need to ensure that they are part of the picture—it is quite right that they should be part of it—of supporting and strengthening families.

My point is that we do not need a family policy for just one Government Department. I say that with respect to the Minister, and it is excellent to see her here today. She recognises, as we all do, that family policy affects all Departments. When we look at individual cases, we see that support and welfare structures have tended to treat people as one-dimensional clients rather than as the complex and unique individuals they are, who are part of complex and unique families. We need to look at the whole person and beyond them at their whole family, however dysfunctional it might be. We need to look at the mum, the dad—if he is around—the brothers and sisters and the grandparents. The Government need to assess at all times and in all policies the impact on whole families.

As my hon. Friend the Member for Erewash mentioned, family policy is not simply about having a centrally directed policy. Let us take the example of early years child care. High-quality nursery care provision is important, but it is not just about the Government directing that provision; it is about nurturing children in their early years—indeed, in their early days and weeks. That is why we can all welcome the increase in the number of health visitors and the empowerment that that provides. If the parents are dealing with drugs or alcohol misuse, early intervention could indeed mean intervening as soon as pregnancy has been confirmed and creating the opportunity to prevent more children from entering the intergenerational cycle of abuse.

Supporting early years provision also means recognising the value of parents in their nurturing role. More often than not, it is the mother who is involved in full-time care of children in their early years. I want to see a time when that practice is not the preserve of the few who can afford it but a choice that is available to many.

Family policy is not just about money—and more money. Yes, resources help to provide the opportunity for children to have a good start in life, but the most important element in any family is good relationships, which most likely involve having both a mother and father around and, the evidence shows us, the parents being married. That is where Government can play a role. We are having the debate about the proper incentives and support that can help that family structure.

Finally, family policy is not only about mothers. As I said when I talked about Mark, it is about fathers too. It is worth saying that the time that my hon. Friend the Member for Erewash spoke for this morning—15 to 20 minutes—is roughly the time in the average working day that that a father 30 years ago would spend with his child. That that has improved is positive: indeed, a father today typically spends about the entire length of this debate—an hour and a half—and perhaps even a bit more time with their child in the average working day.

We must all recognise that the absence of a father has a profound effect, whether that be seen in problems for the children at school or in their future mental health, employment, and involvement with crime or misuse of drugs. That is why we welcome the approach right across Government of encouraging payment by results, giving incentives and measuring outcomes in all those policy areas that have at their heart the health and well-being of children. In particular, that approach will help to support and incentivise relationships that can become so frayed, but that are so fundamental to improving the outcomes for children.

We have spoken about strong family attachment, the supervision of children, establishing boundaries, affection and emotional warmth, all of which are crucial not only to protect children but to enhance their health and well-being. I believe that this Government will be judged by results and should be judged most profoundly on whether we are protecting and doing our best for the most vulnerable and fighting poverty. The way that we will do all that is by strengthening the family.

10:34

[Fiona Bruce (Congleton) (Con)]

It is a pleasure to serve under your chairmanship, Mr Meale. I congratulate my hon. Friend the Member for Erewash (Jessica Lee) on securing this important debate. I thank her and my other hon. Friends in Westminster Hall today for all the excellent contributions that they have made.

This debate on family policy comes at a particularly auspicious time following the royal wedding, which I mention because I believe the most important relationship is marriage. I believe that Government should support marriage, particularly for the sake of children—many of which I wish upon the happy royal couple, in the fullness of time.

Like many of my hon. Friends in Westminster Hall today, I have practised in the field of law. I did so for well over 20 years—actually, nearly 30 years, but I was reluctant to say that—as the head of a high street law firm. As a result, I do not have a completely doe-eyed view of marriage. In my time practising law, I witnessed the incalculable cost of relationship breakdown, not least the financial price and the personal price paid by children. However, even after taking that cost into account, I still believe that it can be argued persuasively that marriage is good for the stability of family life and that stable families are good for society.

That being the case, if a key question in policy making is about fairness, why do many parents who choose to marry feel penalised for doing so by our tax system? Fiscal policy that was intended to help single mothers, which is a wholly worthy cause, has created the odd situation whereby some couples who want to live together actually live in separate homes because the tax system rewards them for doing so. On a national scale, that is terribly wasteful, not only because shared housing is more efficient but because, as we have already heard today, cohesive family life brings immeasurable benefits to both individuals and society as a whole.

In a research paper produced by the Christian charity CARE in January 2011, “The taxation of families 2009/10”, Phillip Blond, the director of ResPublica, wrote:

“The family is the most fundamental, basic and rooted unit of society…The centre of the family, the thing that holds it together…is the relationship between parents… There is an increased unwillingness for parents to commit to each other which has given rise to a significant increase in cohabitation which in turn has major implications, not only for adults but also for children… A child born to cohabiting parents has a nearly one in two chance of living in a single parent family by the time they reach their fifth birthday, whilst a child born to a married parent has only a one in twelve chance of finding themselves in this situation. The consequences are far reaching. Children from lone parent families—who today constitute nearly one quarter of all children—are 75 per cent more likely to fail at school, 70 per cent more likely to become drug addicts and 50 per cent more likely to become alcohol dependant. Girls from fatherless homes are an over-represented demographic in teen pregnancy statistics, while boys from fatherless families are typically over-represented in criminal gangs.”

Even if one’s ideals do not include marriage as a public act of commitment, there is evidence that marriage as an institution is mutually beneficial, both to the partners in the relationship and to society as a whole. It is also the most important factor in predicting a child’s well-being. Some see supporting marriage through the tax system as regressive, but I see it as progressive.

In the UK, we support single parents financially—directly or indirectly—because it is right to recognise that bringing up children is a hard job at the best of times, particularly if one is more or less alone in doing so. Many single parents are courageous, self-sacrificial and deserve commendation. Sadly, it is also true that many children who grow up in a single-parent household live in poverty. That is not right, but it is also true that almost half of children who live under the poverty line come from two-parent households. It seems wrong that we should incentivise single parents through the tax system to remain single, simply because of the financial benefits that that status affords.

Other research shows that it is harder for couples with children to lift their children out of poverty than it is for single parents. Again, I quote from the CARE paper:

“Although designed to deal with child poverty, tax credits are now locking children into poverty in working households, especially couple households. The latest poverty statistics are those for 2008/2009 which show that of the 2.8 million children living in households with incomes below the official poverty line (60 per cent of median equivalised income), 1.5 million were in households with one or both parents in paid work, 1.3 million (a number that is increasing) were in couple households… The problem arises because tax credits do not take account of the way income is measured for calculating the number of children in poverty. The DWP say that a lone parent with two children would have required net income of £293 per week to be on the poverty line, whereas a couple with two children would have needed £374 per week. However, a couple family’s entitlement to tax credits is the same as that for a comparable lone parent family. Couple families therefore have to earn more, but because of the way the means testing formula works they receive fewer credits… However, there is a further problem. As pre-tax income increases, tax credits reduce… In 2008/09, a lone parent would have needed to earn only £95 per week to be out of poverty. By contrast, the couple family would have needed to earn £283 per week.”

For a number of years, CARE has been pointing out that many couples would be better off financially living apart than living together. Seventy-eight per cent. of the families in CARE’s sample were shown to be better off living apart, even after the additional housing costs were taken into account. Families find themselves better off living apart principally because of the way in which tax credits are structured and means-tested.

[Mr Alan Meale (in the Chair)]

Order. May I ask the hon. Lady to proceed very quickly? I need to call the Front Bench speakers.

[Fiona Bruce]

Certainly, Mr. Meale. I will conclude my remarks.

Marriage is good for society. It is a public institution as well as a private relationship, and as such society as a whole has a stake in supporting the family unit. If society benefits from the family, as it undoubtedly does, families should benefit from society and its fiscal policies, especially for the sake of our children and their children.

[Mr Alan Meale (in the Chair)]

I thank the hon. Lady for speeding up. It is unfortunate that she was called at the very end, but we have to give the Front Benchers time to speak.

10:39

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

It is a pleasure to serve under your chairmanship this morning, Mr Meale, after just about five hours’ sleep.

I congratulate the hon. Member for Erewash (Jessica Lee) on stepping in to lead this debate, which I understand was secured by the hon. Member for Loughborough (Nicky Morgan). I also thank her for providing me with notice of the particular aspects of family policy that she addressed. Yesterday, I learned that in a former life she was a lawyer specialising in family law, and that background certainly came to the fore today in her very well-informed speech. She praised Sure Start centres in her constituency and made the suggestion, which has a lot of merit, that parenting classes should become the norm. She also said that early intervention is not only about the money but about how it is used. I note that my hon. Friend the Member for Nottingham North (Mr Allen) highlighted evidence on specific early interventions that work in his excellent report—I am sure that the Government are paying particular heed to that report. The hon. Lady also spoke about the speed of the safeguarding process, which we all agree takes far too long, especially for babies and toddlers.

I pay tribute to all the other hon. Members who have spoken this morning. There have been many excellent contributions, covering the whole gamut of family policy issues. We have heard some harrowing cases that have been used not to sensationalise but to highlight the worst that can happen when families break down, or when they were never whole or healthy in the first place. There is a cycle of damaged people having children, who are then in the system in one way or another, throughout their lives, from day one. I think that we are all united in an ambition to end the cycles of deprivation that we know exist right across the country, despite decades of initiatives and interventions.

Although the debate has been very well-attended, there are other hon. Members who would have wanted to be here but are no doubt tied up with campaigning around the country. Many of them will be speaking to families at this very moment, about the issues we are discussing here.

It goes without saying that families are the bedrock of our society, and one of the most important duties of Government is to support the parents of today in providing a stable and loving environment in which the parents of tomorrow can flourish. No two families are the same, however, and the needs of parents and children vary widely, making developing policy in this area as difficult as it is important.

On safeguarding, we are clearly waiting for the outcome of the Munro review, which was commissioned following the tragic case of Peter Connelly, and I would not want to presuppose what any of its final recommendations might be. Needless to say, I welcome Professor Munro’s initial findings, and I look forward to the final recommendations and to the Government response. It is welcome that the Government are seeking the advice of the professionals who deal with at-risk children and families every day to find out how we can improve the systems to help those children.

I have not been working on this particular area, but I think that I am safe in saying that we accept the need for a balance between the guidance and processes that adults and professionals working with children are given, and their ability to act on the basis of their judgment and to respond swiftly in co-operation with other agencies when a risk to a child’s safety or well-being is identified. There are concerns about whether the cuts to local authority budgets will mean a reduced social worker work force in some areas; many local authorities certainly expect an increased case load, and foresee problems due to cuts to police, mental health and primary care trust budgets. I hope, therefore, that we can implement any sensible changes quickly and seamlessly, to ensure that no children slip through the gaps in the meantime. As the hon. Member for Erewash described in highlighting a particularly concerning case, the unintended consequences of our care system often do not help or improve the life or outcomes of an already damaged child, and we must do all that we can to ensure that the system does not cause harm.

An area in which I have done a lot of work is that of early years and early intervention. This is another very important topic, and although the Government have been making some positive noises, it is actions that count, and their actions, so far, have left a lot to be desired. Again, they have sought wise counsel, and we have seen some very thoughtful, and at times convergent, reports from my right hon. Friend the Member for Birkenhead (Mr Field), my hon. Friend the Member for Nottingham North and Dame Clare Tickell.

One of the programmes that my hon. Friend the Member for Nottingham North praises in his report is that of family nurse partnerships, in which young, first-time parents, possibly from families with multiple problems, are given help and support from the point of identification, past birth and into the early years of their child’s life. The intervention does not focus on just the health of the mother and the child—important though that is—but crucially on the aspirations that parents have both for their child and for themselves, and on how to achieve those aspirations. I have heard great things about the results, and look forward to shadowing a family nurse in my constituency later this month to see the work for myself as part of the Royal College of Nursing’s campaign for everyone to shadow a nurse. The Government have made a commitment to reach 12,000 families in that way by the end of this Parliament, but I hope that, given the strong recommendation in the Allen review, the Minister and her colleagues will look at rolling that kind of intervention out more widely, particularly as it focuses wholly on families who might not actively engage with other services, such as Sure Start children’s centres.

I also welcome the fact that the Minister has assembled an early years working group to advise on further policy development in this area, but I hope that she will listen to the group if it turns around and says that what she and her colleagues have done to early intervention funding—cutting the budget by some 22% this year and removing the ring fence—negates what we ought to be trying to achieve, which we all agree is to improve outcomes for all children. I have been trying to get that message across for a while now, but do not seem to have had much success, with the Opposition day debate on children’s centres last Wednesday a case in point. I have to place on record the fact that the Minister was very much missed from that debate, and I sincerely hope it was not through illness. The Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton), might have his eye on her job. He is a very charming man, but I have to admit that I have grown to enjoy my little jousts with the Minister, so I am very pleased to see her in her place today.

On the afternoon of last Wednesday’s debate on children’s centres, the OECD published a report, “Doing Better for Families”, that called on Ministers to rethink their decisions to cut support for families, particularly support for early years services. The Government enjoy quoting OECD reports, so I hope that they will listen to this one. Perhaps the Minister will give us a few comments in a moment.

On wider policies affecting families, one key element that a family needs to thrive is the parents’ ability to earn a decent income with which to bring up their children. In the vast majority of cases, that means that they must be able to organise child care in order to go out to work. I do not want to take this collegial and serious debate down too political a route, but it is clear to most people that many of the choices made by the Minister’s colleagues over the past year have not been a great help to ordinary working families in that respect.

One decision that keeps coming up relates to working parents’ ability to pay for early education and child care. Hon. Members will be aware that Save the Children’s report on child well-being, published yesterday, places the UK 23rd out of 43 developed countries on that measure. That might be the subject for a later debate, but Save the Children’s chief executive, Justin Forsyth, said that the Government should reverse their cut to support for child care in tax credits, which reinforces what I have heard time and again from the sector.

I wanted to say a few more things, but I will conclude, as I think that everybody here wants to hear the Minister’s response to the debate. I am grateful to the hon. Member for Erewash for leading this debate. Given the day and many Members’ commitments to the campaign trail—and to catching up on sleep—it has proved to be a useful discussion. I hope that we will have many more opportunities to continue this vital discourse.

10:52

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

It is a great pleasure to serve under your chairmanship, Mr Meale. I congratulate the hon. Member for Erewash (Jessica Lee) on—I was going to say winning this debate, but I am not sure whether “winning” is the right word, considering what time she probably got to bed last night. There is some irony in discussing family policy in the least family-friendly institution in the UK. I congratulate all hon. Members on being here and on an interesting and informative debate. I particularly enjoyed the opening remarks of the hon. Lady, which addressed family policy across the piece. I doubt that I will be able to respond to everything in the time remaining, but I will do my best to pick up on as many of the points raised as I can.

I thank the hon. Member for Washington and Sunderland West (Mrs Hodgson) for her profound affection for my colleague, the Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton). I will of course pass on her remarks to him. I am sure that he will be terrified, but I will draw his attention to her flattery of his great skills.

The hon. Member for Washington and Sunderland West said that this goes without saying, but I think it is worth saying again: strong and stable families are the bedrock of a strong and stable society. They are key to ensuring that children grow up in a loving and nurturing environment and develop into healthy, happy, successful adults. The quality of relationships matters. Adults in good, stable relationships have better life outcomes, and so do their children. Families are also the social capital that builds and sustains neighbourhoods and communities, as the hon. Member for Maidstone and The Weald (Mrs Grant) said eloquently in her introductory remarks. They are the basic unit of society, and they are where we learn the social skills we need to survive and flourish in life. They are where we learn how to form relationships with other people, and the success of those relationships will affect our life outcomes as well as those of our children.

The make-up of the family unit is changing, as several hon. Members said. Families come in many varied shapes and sizes, including single-parent, multi-generational and foster families. Fathers are becoming more involved with their children, which I believe is a positive step forward that the Government should do much to support. Despite the many different changes referred to by the hon. Member for Strangford (Jim Shannon) in his speech, families are, as he also said, happy on the whole with family life. Most families say that they are fairly or very happy; 93% of respondents to a recent BBC poll said that they were happy with their family life.

However, it is vital that we support families as much as we can, and this Government believe that we should do much better. It is our ambition to make this country the most family-friendly in the world. At the heart of all our policy making is the determination to ensure that family services are designed around parents’ needs rather than the other way around, and take account of changing work patterns, the evolving roles of parents and the financial pressures families face.

The hon. Member for South West Bedfordshire (Andrew Selous) said that some people believe that families are not the Government’s business. Sadly, many politicians who consider themselves progressive believe that the family is not an area in which the Government should be involved. There is sometimes a dichotomy between believers in a small state and in a big state regarding what they believe the role of Government should be. However, I believe that the Government have an important role in supporting families, systematically removing the barriers that prevent them from thriving and creating the right environment through legislative change, financial systems and the design of public services so that families can be the best that they can be. That matters to our children, and to their children as well.

It is also important that we intervene to support vulnerable families when things are difficult. All families go through times when things are harder. We know, for example, that there are pressures on families when they have a first child or when children move into the teenage years. Those with many social networks might manage to get through such times, but if life is stacked against people, as in some of the examples given in several hon. Members’ speeches—if they suffer from a mental health problem, have unstable relationships, live in overcrowded housing or have a drug or alcohol problem—it is much more difficult to do so.

That is why the Government are investing in extra health visitors, for example, to support people in the early years. It is why we are doubling the number of family nurse partnerships—to refer to the remarks of the Opposition spokesperson—and why we feel so strongly that Sure Start matters and must be focused particularly on families that need support at that time. It is also why we have begun a new campaign to support families with multiple problems to ensure that they get the support they need, rather than being passed from one service to another.

We will shortly consult on new proposals for family parental leave, an issue about which I feel strongly. Several hon. Members discussed fathers and the need to involve them more. Involving fathers at an early stage makes a difference to children’s outcomes. If the worst happens—if all the other things we are doing to support relationships do not work and the relationship breaks down—fathers who are engaged at an early stage are much more likely to remain engaged later.

I am running out of time, so I will not be able to speak about all the things that I wanted to address, but I will refer a little to our work on relationship support, which I believe is important to sustaining families who might go through difficult times, as any family will. As the hon. Member for South West Bedfordshire said, the Prime Minister recently announced that my Department will fund relationship support to the tune of £30 million, a substantial increase. As part of that, we are also providing funding through a series of voluntary sector organisations—at the moment, telephone and internet services are going out to tender—to ensure that all sorts of relationship support mechanisms are available to families.

The hon. Member for South West Bedfordshire will be pleased to know that we already support prisoners’ families with £1.3 million through about six voluntary sector organisations. I agree that it can have a dramatic impact on reducing reoffending. I have long been interested in the ideas that he mentioned involving greater availability of guidance and support before marriage. Having the skills to negotiate difficult times and knowing where to go for support can make a difference when couples hit rocky periods.

The work we are doing—

[Mr Alan Meale (in the Chair)]

Order. We now move on to our second debate. Can Members who are not going to participate in it please leave quickly and quietly?

NHS Prescribed Medicines

Wednesday 4th May 2011 Westminster Hall

11:00

[Margot James (Stourbridge) (Con)]

It is a pleasure to serve under your chairmanship, Mr Meale. I am grateful for the opportunity to open this debate on the crucial matter of securing the supply of medicines in the interests of the patients for whom they are prescribed.

Ever since the pound gained against the euro a few years ago, the UK has experienced shortages of medicines, because some stakeholders find it more profitable to sell medicines intended for use by patients in the UK abroad, where higher prices, aided by the exchange rate, will prevail. Ministers are making efforts to resolve the problem, and I will return to the action that is being taken when I discuss some of the potential solutions.

First, I want to focus on the nature and scale of the problem and its effects on patients and pharmacists. It used to be the case that, if someone was prescribed a medicine by a GP, they went to their local pharmacy, handed over the prescription, waited for a few minutes and then went home with the pills. Occasionally the pharmacist would apologise, because they did not have the item in stock, and the patient would return the next day to collect their medicine.

Some years ago, I was responsible for the various medicines prescribed to my elderly parents. I was annoyed to find that, sometimes, the medicine that I collected from the pharmacy was Greek or Spanish, with inadequate English language directions. The pharmacist had dispensed a parallel imported drug, on which extra profit had been made by the wholesaler and, possibly, the pharmacist. Back in 2005, parallel imported medicines accounted for 18% of the value of branded medicines dispensed by UK pharmacies.

The tables have now been turned and our continental partners are being prescribed medicines intended for the British market that have been subject to parallel export. This has led to patients in Britain being prescribed a medicine, taking the prescription to their local pharmacy and being told that the product is not in stock and that it might be a few days before it will be. Patients are advised that they can shop around but, if it is a particular type of drug that is routinely demanded at a higher price on the continent, the chances are that neighbouring pharmacies are experiencing the same problem in accessing supply.

The effect of that shortage can range from minor inconvenience to potentially serious health risks. The BBC programme “You and Yours” featured the problem at the beginning of April. It interviewed an organ transplant patient who needed continuous treatment with the drug Rapamune to ensure that their body did not reject the new organ. The very idea that such a drug should be hard to obtain is absolutely scandalous, which is also true of that person’s experience.

How widespread is the problem? Chemist and Druggist, the pharmacy trade publication, conducted a survey of pharmacists last September that highlighted the difficulties caused to pharmacists, 90% of whom are not profiting from the shortages caused by selling medicines abroad. The survey found that pharmacists have had to turn patients away, because they had not been able to source the medicine prescribed. Moreover, 93% of pharmacists had at some stage had to ask the doctor to change a prescription in order to secure the supply of something similar. More than two thirds of pharmacists are spending between one and five hours a week chasing around, trying to get hold of out-of-stock medicines. That is a complete waste of pharmacy time and, now that the Department of Health has agreed to pay for that time, it is also a waste of NHS money.

Research conducted at the end of last year by the Devon local pharmaceutical committee supports the findings of the Chemist and Druggist survey and provides additional insights. Seventy pharmacists monitored medicine supply issues for a two-week period and identified 537 such issues, which was up from the 379 issues reported in a similar study by the same group a year previously. The problem has, therefore, been getting worse.

The Devon audit found that the average delay caused by one of those instances to the medicine being available was four and a half days, which is pretty much a whole working week. It was found that those delays caused minimal harm in 13% of cases, but in just over 5% of cases the harm was defined as moderate. For example, a missed dose of an anti-epilepsy medicine caused a patient to fit. In nearly 20% of those cases, the pharmacist had ultimately to go directly to the manufacturer to order the medicine via the emergency procurement procedures.

I have mentioned that the principal cause of the problem is the export of medicines intended for UK patients to other European markets. I should point out that it is not possible to prevent the export of UK medicines per se, because that would be contrary to the free movement of goods guaranteed by European trade laws. We might, therefore, expect the same problems to be experienced by other countries when the exchange rate boot is on the other foot. There is no doubt that, during the years when extra profit was obtained by importing medicines into the UK, there were similar shortages of medicines in some countries, such as Greece and Spain. There was, however, no such shortage in other markets such as Germany, so we cannot lay the blame for this problem on the liberal trading laws of the EU, which are something that I think we all support.

The cause of our problem goes beyond the trade in medicines across national boundaries. The law governing the supply of medicines derives, in part, from article 81 of European Union directive 2001/83. The directive simply requires the maintenance of appropriate and continued supply of medicinal products by marketing authorisation holders and distributors. It was introduced into UK law via statutory instruments in 2005. At that time, the UK Government did what I would applaud in all normal commercial situations. They incorporated the directive into UK law with minimal—well, zero—gold-plating. It was, in fact, a textbook example of how we would want our Government to deal with European regulations under normal commercial circumstances. Medicines, however, are different from other products, especially medicines that treat serious conditions such as cancer, Parkinson’s disease, which is another area in which there have been significant supply problems, and organ transplant patients. Sometimes, medicines can make the difference between life and death, which is why the research, manufacture and promotion of medical products are such highly regulated activities. That is not true, however, of distribution. The reason for the difference between the UK and continental markets, such as Germany, Belgium and France, is that those and other markets that signed up to the EU directive incorporated their own more stringent conditions in respect of securing a continuous supply of medicines.

Before I conclude by giving the Minister some recommendations on action to resolve the problem, I want to acknowledge the efforts that the Minister and his team have made thus far to improve the safety and supply of medicines to the public. Efforts have also been made by manufacturers, wholesalers and pharmacists. The Department of Health hosts a supply chain forum, which has recently published best practice guidance and will meet again in a few weeks’ time. I welcome the steps being taken by the forum to address the problem. Participants represent all stakeholders in the complex system of medicine supply. However, I want to ask the Minister whether patients are represented, because I have not seen any reference to patient organisations in the notes that I have seen from the meetings thus far.

All stakeholders involved in the group have committed to the principle of enabling a minimum standard of 24 hours to supply any prescribed medicine to a pharmacy, and manufacturers and wholesalers will risk prosecution if they breach the code of ethics in relation to that supply standard. The Government have promised to raise the standards for wholesaler dealers’ licences, which I very much welcome.

I wish all those actions well, but I am concerned on two fronts: first, that those actions do not go far enough and, secondly, that the MHRA, which is charged with policing the system, is not adequately resourced to monitor and enforce the recommendations. Given the financial incentives to sell certain products abroad and the number of traders with wholesale licences in the UK, my concern is that the difficulties of policing all the organisations, combined with the lack of prosecutions to date—I think that there have been nil prosecutions—for breaching existing duties to supply medicines do not bode well and make me think we need to strengthen those existing duties.

I want to express my appreciation to the British Association of Pharmaceutical Wholesalers and the Association of the British Pharmaceutical Industry for the help they have given to me during my research for the debate. The ABPI and the BAPW have called on the Government to strengthen the existing duty of wholesalers, and indeed all stakeholders, to supply medicines within 24 hours in the way other European markets have done. The introduction of what has become known as a patient service obligation, which obliges wholesalers to guarantee permanently an adequate range of medicines, is required to enable patients to receive an NHS prescribed medicine in the necessary time scale and to allow pharmacists and dispensing doctors to receive a medicine following its order and dispense it within 24 hours of a patient presenting the prescription.

Manufacturers and wholesalers should be obliged to hold buffer supplies, as those who operate to a high standard currently do, to help pharmacists to manage spikes in demand. That is really no different from obliging banks to hold capital reserves. Banks have recently been required to hold a higher proportion of capital on reserve, and I am calling for the same principle to be applied to the essential supply of medicines. Public health is as important as the supply of money, so why should similar precautions not be applied?

Finally, the patient service obligation needs to be backed up by the more stringent regulation of wholesalers. Germany and other countries place much stricter obligations on wholesalers than those that are required in this country. They are required to have appropriate facilities to hold a full range of products and a reserve supply of those products. Indeed, I am not sure why we need so many wholesalers in the UK. Another aspect to the problem the MHRA has in policing the system is that we have 1,800 licensed wholesalers. That number leapt up mysteriously over the past two years in response, I suspect, to the exchange rate. There are just 39 wholesalers in France, 90 in Belgium and six in Denmark. Across the EU, only Germany has more wholesalers than the UK.

I trust that I have given the Minister food for thought, and I urge the Government to consider more rigorous regulation in this essential area of the provision of medicines to the general public. I hope that the Minister will share with us some of his forward thinking about how the steps he has taken so far will be policed, monitored and might pan out over the coming months.

11:15

[The Minister of State, Department of Health (Paul Burstow)]

I congratulate my hon. Friend the Member for Stourbridge (Margot James) on securing the debate and on setting out so clearly the issues that affect many of our constituents. Ensuring that NHS patients have access to the medicines they need when they need them is absolutely vital. My hon. Friend is right to have described the situation in such terms herself. I can assure her that the Department takes the supply issues she has raised very seriously indeed.

It might be helpful if I start by giving a sense of the scale that we are talking about. There are about 16,000 licensed presentations of medicines. That covers different formulations such as tablets, capsules and injections, and different dosages. The most recent figures record that there were more than 10,600 community pharmacies in England and nearly 900 million prescription items are dispensed each year. The production of medicines is truly a global business, with ingredients supplied from all over the world. In such a large and complex system, there will from time to time be problems with the supply of medicines. However, where there is evidence of systemic or real issues, the Government need to act and intervene appropriately.

Such problems are not new, and nor are they confined to the UK. They can occur for a number of reasons; for example, there might be manufacturing problems or difficulties in obtaining raw materials. They can also occur as a result of distribution problems, or through the parallel exporting of medicines when exchange rates or prices make that a lucrative trade. The increasing trend towards the concentration of manufacture within global pharmaceutical companies has exacerbated the situation. That means there is little flexibility if problems are experienced at particular manufacturing sites. Production schedules have to be planned months in advance, and if one company is unable to supply a product, others may be unable to make up the shortfall at short notice. Therefore, there is a need for the regulatory framework that my hon. Friend talked about.

Supply issues can also arise as a result of the parallel trade. The strong euro means that parallel imports into the UK have declined and the incentives for UK medicines to be exported to other European countries have increased. I stress that, as my hon. Friend said, parallel exporting is legal and that it can be carried out legally by anyone who holds the necessary licences under the medicines legislation. She has rehearsed some of the statistics on the number of companies that have such licences, and as has rightly been said, prevention of the export of UK medicines would be contrary to EU trade laws.

However, there are legal duties on marketing authorisation holders and manufacturers and distributors within the limits of their responsibilities to ensure appropriate and continued supplies to pharmacies, so that the needs of patients are met. The Government work closely with pharmaceutical companies, wholesalers, pharmacists and the NHS to ensure that the system delivers medicines to patients quickly. They also monitor individual supply problems and work closely with individual manufacturers to prevent shortages, and manage consequences when there are shortages.

As has been said, the Department has published joint best practice guidelines with the Association of the British Pharmaceutical Industry and the British Generic Manufacturers Association in order to help manage shortages as and when they arise. Those give guidance to companies on what to do in the event of a shortage, and recommend that companies communicate with the Department as soon as possible about impending shortages that are likely to impact on patient care. The Department, the Medicines and Healthcare Products Regulatory Agency and pharmaceutical supply chain stakeholders—the manufacturers, wholesalers and pharmacy representatives—continue to work collaboratively, better to understand and mitigate the impact of supply difficulties associated with parallel exports, so that patients receive the medicines they need.

We have also established, as was said, the medicine Supply Chain Group as a forum for organisations to meet and exchange information, understand the causes of the supply problems, including those due to parallel trade, and seek possible solutions. The Supply Chain Group continues to meet with individual companies in order better to understand the issues, and to explore ways of mitigating them and to take forward the action points agreed at the ministerial summit last year.

My hon. Friend asked about lay and patient representation on that body. As I understand it, the British Medical Association plays a part in acting as a conduit for that voice. There is a good case for looking at whether that should be changed, so that such representation is not simply through the BMA and that patients have their own voice in those deliberations—not least given the Government’s commitment to the introduction of Health Watch England and the desire to see a greater place for patient interests across the system.

The summit made a number of recommendations. The first, as we have discussed, was the publication of “Best practice for ensuring the efficient supply and distribution of medicines to patients” in February 2011. That also offers practical guidance on the use of quotas by manufacturers. Also published was the joint guidance on the legal and ethical obligations on the supply chain, “Trading Medicines for Human Use: Shortages and Supply Chain Obligations”, in November 2009. That was updated and republished in December 2010. We also developed and are maintaining a list of products in short supply. That is published on the Pharmaceutical Services Negotiating Committee’s website, so that no one—I repeat: no one—trading in those products has the excuse that they are not aware of supply difficulties. The MHRA is conducting a series of targeted inspections aimed at those who jeopardise patients, in order to ensure that they comply with their supply duties and that those who breach existing duties face the consequences.

My hon. Friend said that there have been no prosecutions. The intention is to change behaviour and ensure compliance, rather than undertake regulatory intervention, which would result ultimately in suspending licences or in criminal proceedings, although in many other cases licences are suspended for other reasons. As a result of those arrangements, medicines are getting through to patients. I am concerned, however, to hear the examples given by my hon. Friend today. As she documented, there are in some cases completely unacceptable periods of delay. However, the latest evidence from the pharmacies at the end of the supply chain is that in England there are supply problems with approximately 50 products.

My hon. Friend raised a point about standards and the work being done by the MHRA to ensure that packages are consulted on to improve quality standards across the system. The approach to inspection is a risk-based one involving targeted inspections, and there has been an increase in the number of staff to support the resulting increased work load. I stress that the 50 products currently identified as being in short supply have to be seen in the context of the 16,000 licensed presentations of medicines. The affected medicines are used to treat a wide range of conditions. They include treatments such as Femara for breast cancer, Cipralex for depression and CoApprovel for hypertension. For that reason, the guidance we issued in February recommends that pharmacy and general practice staff should advise patients to request their prescriptions in good time. Most companies have put contingency arrangements in place, so that pharmacies can obtain supplies of medicines directly from them if they are unable to obtain them from their usual wholesaler. The time taken for supplies to be obtained in that way varies from company to company, depending on the nature of the arrangements, but we have been assured by the companies concerned that they endeavour to supply their products as soon as possible. However, I will draw the attention of officials and others to the evidence that my hon. Friend has drawn my attention to today.

I would like to take this opportunity to pay tribute to the efforts made by pharmacy staff, who have worked tirelessly to ensure that patients have not gone without their medicines—it is key to stress that. Patients and prescribers also have an important part to play. Prescribers should, where appropriate, consider a change in medication for patients, and advise patients to request prescriptions in good time where there are supply difficulties.

My hon. Friend referred to article 81 of directive 2001/83 as a textbook example of the UK Government’s not gold-plating such a regulation, but said that in this case, that was possibly not the thing to do. I hope that I have outlined a series of measures that this Government are taking to secure the supply chain and to ensure that everyone in the supply chain understands their obligations to patients. I stress, however, that we have not ruled out taking any of the further steps she has suggested. We want to be sure that we have proper evidence of resulting harm to the patient interest before we act. That is why we are keeping matters under review, and targeted inspections will play their part in gathering further evidence. If there is other evidence from other parts of the supply chain, we would certainly want to look at that carefully. The London School of Economics is doing some comparative work, looking at other jurisdictions where such public service obligations have been introduced, and that will also inform our thinking.

I am grateful to my hon. Friend for raising these important matters. I assure her that the Government are committed to patients getting their medicines quickly. If all parties in the supply chain adopted the best practice guidance issued in February, the problems caused to patients by parallel trade would reduce. The guidance sets out the aim that, under normal circumstances, pharmacies should receive medicines within 24 hours, although there may be circumstances where that is not always the case. We do not believe that increasing the regulatory burden at this point is the right answer, but we will keep that under review. The Government will continue to work closely with all those involved in the supply chain to ensure that NHS patients get the medicines they need when they need them. That is our enduring commitment.

11:26

[Margot James]

Thank you, Mr Meale, for your chairmanship. I thank the Minister for his generous and comprehensive response. I remain concerned that the measures do not yet go far enough, but I am reassured that measures have been put in place and that the 60 or so medicines affected will be monitored closely. I hope that I am wrong and that it will not be necessary to introduce more stringent regulations, because I am a great campaigner against increasing the regulatory burden on industry. Patient safety, however, has to be paramount. I am not yet convinced that the measures will have the desired effect, but I am willing to keep an open mind, monitor the situation and bring any further evidence of problems to the Minister.

11:27

Sitting suspended.

Private Finance Initiative Hospitals

Wednesday 4th May 2011 Westminster Hall

14:30

[Mr Dave Watts (St Helens North) (Lab)]

It is a pleasure to have the opportunity to debate this subject under your chairmanship, Mr Meale.

Before I set out my concerns, I put on record my appreciation and that of my colleagues for the work of the excellent St Helens and Knowsley Teaching Hospitals NHS Trust. I pay tribute to its doctors, nurses, technicians, cleaners and all its support workers, who provide an excellent service to my community and to the communities of my colleagues.

I am pleased to have the opportunity to debate this important subject. St Helens and Knowsley is a five-star hospital trust, benefiting from excellent staff and management and delivering well run hospital services that are clean and safe. The trust now provides state-of-the-art treatment to the people of our communities. I asked for the debate in an attempt to discover the details of the secret discussions currently taking place between the trust, the strategic health authority and the Department of Health.

The trust provides services mainly for St Helens, Halton and Knowsley, but for the wider north-west community as well. Its burns and plastic surgery department provides treatments for patients over a wide area, including the Isle of Man, Cheshire and north Wales, altogether serving a total population of more than 4 million. The trust operates on two sites, St Helens and Whiston. The new hospital opened in 2010 and, as is the norm for the trust, did so on time and on budget. There was new hospital investment of £350 million, so the trust now boasts world-class services at the St Helens site as well as the newer Whiston site.

The trust has a strong performance record: three stars, a “double excellent” rating and performing above average in all key indicators. It is one of the few trusts to have achieved the maximum overall score in the auditor’s local evaluation. The hospital trust is well run and well managed, and the financial problems it faces are not of its making. It has managed to achieve high standards over the past five years despite having a low level of funding and extremely high levels of demand—its accident and emergency units have some of the highest levels of use in the whole country—and serving a community with poor health indicators. The trust used to operate from two run-down main buildings, one of which was a workhouse before being turned into a hospital, and from 40 separate sites in total. Imagine the difficulty of providing health care to a community when operating from so many different sites, with the related management problems.

The trust’s current problems stem from it having to become a foundation trust hospital by 2014; that is something the Government are insisting on, not something the trust is attempting. To achieve that aim, the trust must make efficiency savings. Every hospital, as we know, is having to struggle to make the efficiency savings expected by the Government. On top of the efficiency savings to meet the Government’s financial requirements for FT status, the trust must save a further £20 million a year to pay for the PFI estate. That is impossible and will not happen.

The trust commissioned its own report, I think by Coopers & Lybrand, on the feasibility of those savings. Coopers & Lybrand came back and made it absolutely clear that such levels of efficiency savings are not possible. Efficiency savings are already being made, but the requirement to save a further £20 million a year is impossible to meet. At the same time, the trust must run a state-of-the-art hospital on virtually the same budget as when it had three worn-out hospital buildings in St Helens.

The Government need to act, and to do so transparently, but the discussions so far have been held behind closed doors. The local MPs believe that such important discussions taking place in private is totally unacceptable. The community, health professionals, local MPs, councillors and the House need to have the information in the public domain, so that we know exactly what is going on behind closed doors and what options the Government are considering. Despite written questions, letters to the Minister and an oral question last week, that information has still not been put into the public domain. That is not acceptable. We wonder what is happening not only in our trust but in others. Are the same sort of secret discussions taking place throughout the country? If so, why are they taking place behind closed doors, instead of openly and transparently?

In case some people wonder whether a new hospital was required, as I said earlier, the trust was previously working out of 40 buildings, including two old hospitals, one a former workhouse. Clearly, new hospital buildings were needed. Furthermore, the health problems of St Helens, Knowsley and Halton are extremely well known: we have poor health indicators, high levels of deprivation and had poor medical services for many years. Before the new hospitals were built, we had poor health services provided in poor buildings.

One of the health indicators is that St Helens, Knowsley and Halton males are likely to live 10 years less than the national average, and women seven years less. The poor health indicators are partly owed to the poor lifestyles of many of our constituents: smoking, obesity and drinking levels are all higher than the national average. The local partnership is addressing some of the issues successfully, but not all our problems are related to lifestyle; we also have an industrial past to deal with and high levels of poverty. In my constituency of St Helens, the traditional industries of coal, chemicals and glass left a legacy of poor health. My colleagues in Knowsley and Halton would say the same.

Not everyone is in favour of PFI schemes; they have their critics. Frankly, I would welcome a change in the rules, which are controlled by the Treasury, because they are inefficient and ineffective. I want my hon. Friend the Member for Halton (Derek Twigg) and his Front-Bench colleagues to consider whether there is a better way than PFI to provide the capital required for public services. At present, however, no political party—not the Liberal Democrats, nor the Conservatives, nor the Labour Opposition—is proposing to change the Treasury rules. I understand that the Conservatives are looking at a new vehicle, resembling PFI mark 2, which the Government claim would cost the Treasury and the public purse less and provide better value for money, but all Governments say that when introducing new schemes, and few succeed in achieving those aims. I wish them well with delivery, but I suspect that they will have similar problems to those the Labour Government had when introducing our PFI schemes.

The private finance initiative has achieved a great deal. It has created Britain’s biggest hospital building. The previous Labour Government delivered 118 new hospitals—88 PFI schemes and 30 with public capital, amounting to a £10 billion investment in our hospitals. In its last report in 2003-08, the National Audit Office confirmed that PFI schemes provided guaranteed price certainty. Much hospital building before the PFIs—under the old Health Department schemes—came in well over budget, and delivery was delayed. Even before PFI schemes, hospital building programmes often came in at a much higher budget than expected when they were first approved.

The second issue, which was often raised by the then Opposition, is that health investment was simply unaffordable. That is not true. Most of the investment in our health and public services was made at a time when the national debt was lower than in most European countries. On top of that, under the Labour Administration we had long-term economic growth, unlike what we are seeing now under the new coalition Government. However, when the world financial crisis came, it hit countries such as the UK, which had large financial sector industries: the USA, Britain, Ireland and Iceland all had large financial institutions and were hit harder when the financial crisis came. It is worth remembering that in 1997, 50% of our hospitals had been built before 1948. Now, only 20% of hospitals remain to be modernised. It was a substantial achievement by a Labour Government to turn around the hospital-building programme as we did.

I do not accept the point, which I am sure that the Minister will make, that in the past the coalition and its friends called for greater regulation of the banking industry—I am moving a little away from PFI schemes—and one reason given was that it was unaffordable. Banking regulation rules were weak, and I accept that they needed to be changed, but I will take no lessons from the Conservatives, who claimed for many years that we had too much regulation and that we needed to loosen our grip on the financial institutions.

Why was such major investment required? The Government would have us believe that before 1997, Britain was a success story. That is simply not true. It had run up massive public debt not to invest in Britain’s public services and future, but to pay for mass unemployment and economic failure. It had failed to invest in our schools, hospitals, roads and railways. Many of my colleagues have been involved in local government and we remember the state of our public buildings before 1997. I remember schools and hospitals with holes in the roof; I remember the shortage of nurses and doctors; I remember people waiting six or seven years for operations. The investment the Labour Government need to put in to deal with the problems caused by the preceding Tory Government was clear for anyone to see.

Returning to the main point of the debate, I want the Minister to be open and transparent. I want him to set out his own views on the options open to the hospital trust in my constituency. I want him to agree today to publish all the documents on discussions between the Department and the trust, which he has failed to do so far. I have one here, but we have not seen the other documents. There is only one option. The Government should invest in and reflect the cost of running the PFI scheme at St Helens and Whiston hospitals by increasing the budget in proportion to the increased PFI cost.

On 26 April, during Health questions, the Minister stated that the Government are not and will not seek to privatise my trust or any other trust. Will he explain why his Department produced a document containing three options, of which the first is a national solution; the second is a merger with another trust, although no one knows where that would take place, and the Minister and the Department seem unwilling to discuss it; and the third option, which requires a proper explanation, is a joint venture with a private provider? I am not sure what that means, but most people I have spoken to in the health industry in St Helens, and my political colleagues believe that that is an element of privatisation. I would welcome the Minister setting out what the comment in the document about a joint venture with a private provider means. I have here a copy of that document, and the Minister should explain why it was produced and what the implications are, and provide the assurances that we seek today.

[The Minister of State, Department of Health (Mr Simon Burns)]

I am somewhat confused. At the beginning of his speech, the hon. Gentleman made an important comment: that one problem is that no documents are available for people, including MPs, to see. As he is now quoting one of those documents, surely it must be in the public domain. He has produced it at this debate, and I know that it has been written about in the Liverpool Echo. Is there not a contradiction in what he is saying?

[Mr Watts]

It seems that the Minister is the only person who has had difficulty getting hold of a copy. Mine is a leaked copy, but it is clear that it is from the Department of Health. When I raised the matter with him, he seemed to have great difficulty in finding it. He should get a grip on his Department, and find out what documents are being produced and why he is unable to obtain a copy when he needs one.

[Mr Burns]

I do not want to sour the hon. Gentleman’s speech, but during our private conversations to identify the leaked document when he first mentioned it, he did not seem to be 100% aware of exactly what it was, so I had to look for a needle in a haystack.

[Mr Watts]

I understand why the Minister asked for more detail, because another document was also produced. I do not have a copy of that, but I hope that when he returns to his Department he will publish the second document. I understand—the Minister will clarify whether this is the case—that when the document was produced, and the option for private sector involvement partnership was suggested, my local trust refused to endorse that option. I am told that it endorsed it only on the back of the fact that a sentence would be included stating that it was at the direction of the Department of Health—not only was the Department involved in the discussions, but it was driving them. I understand that when the document went back to the Department, it refused to accept the amendment to the original document. That leads me to believe that the Government are trying to influence the trust to go down a path that it does not want to go down, but that they are unwilling to do so publicly.

The only way to clarify the matter is for the Minister to guarantee that he will produce the original document, a copy of which I have, and the second draft, so that we can see what is going on between the Department and the trust. Discussions are being held behind closed doors for obvious political reasons, and my colleagues and I suspect that they are being kept quiet until the outcome of the local elections. Frankly, I think the Minister knows that my constituents and voters who support his party in St Helens, Halton and Knowsley would not support the proposal that is being pushed forward by the Department.

[Mr Burns]

I advise the hon. Gentleman, who is usually eminently reasonable, that he should not believe in conspiracy theories. It may help him to know that American astronauts did land on the moon in 1969, and that Kennedy was shot in Dallas in 1963.

[Mr Watts]

I do not normally believe in conspiracy theories, but I have seen a document that everyone claims does not exist. I passed that document to the national media, and an article was written for The Sunday Mirror by an excellent journalist, Vincent Moss. Apparently, when he contacted the Department of Health the officials asked whether the document existed and whether he had a copy and he replied that he did. They asked to see the document but he said that they could not. The Department then refused to comment on the matter.

The reason behind the conspiracy theories is clear: the Department is acting in an underhand way. Those discussions should take place not behind closed doors but in an open and transparent way so that the community, local health care providers, MPs and the House can understand what is driving Government policy and where it is going. My view is that the Government intend to try to privatise hospitals. Unless the Minister publishes the documents in question and clarifies some of the points raised, people will be left to come to their own conclusions.

I do not believe this is an isolated case. My hon. Friend the Member for Blackley and Broughton (Graham Stringer) and other hon. Friends with new PFI hospitals in their constituencies will experience similar problems to those faced by the trust in my constituency. Unless the Minister can clarify how the costs of running those estates will be paid for in the future, the uncertainty will remain and many people will believe that he intends to do exactly what he claims not to be doing.

I hope the Minister will provide some reassurance today. I am looking for one particular assurance. The only way to resolve the outstanding problem is if the Minister gets to his feet and says that he will provide the £20 million a year extra funding required to run state-of-the-art hospitals at Whiston and Knowsley, rather than the old workhouses we had before. If the Minister can do that, I will gladly congratulate him. Most of my constituents and the trust itself would welcome such a decision.

14:49

[Mr George Howarth (Knowsley) (Lab)]

May I repeat what my hon. Friend the Member for St Helens North (Mr Watts) said about it being a pleasure to serve under your chairmanship, Mr Meale? I congratulate him on being fortunate enough to secure this debate on a matter that is of great concern to our constituents, and on the manner in which he presented his case.

It is right and proper to begin by repeating something mentioned by my hon. Friend, which is that the hospital staff, whether medical, support or care staff, are highly regarded by the local community. The St Helens and Knowsley primary care trust is highly thought of, and has been prominent in ensuring that we get the health service we deserve. The new hospital facilities at Whiston and St Helens are considered to be at the cutting edge in technology, the use of space and the way that services are conducted, and we appreciate the service that we currently receive. I know from recent personal and family experiences that those who make use of the hospital facilities on both sites have every reason to be grateful that they are available.

The communities served by the two sites have particular, and in some ways difficult, health needs. Some of those health needs are related to former and current occupations, and some to the prevalence of poverty and consequent lifestyle choices. In parts of my constituency, for example, we have abnormally high rates of cancer. That is partly a result of high levels of smoking, but in some cases it is the result of former occupations. My hon. Friend mentioned the mining industry and the legacy left by that in St Helens. Some of the chemical processes that have taken place over the years in and around that area have also taken their toll on people’s health, and we therefore need a very good hospital service. We also need a good primary care trust that can provide a lot of the treatment people need, but hospital services are an important part of that mix.

As my hon. Friend rightly said, the difficulties we seem to have arrived at are due to the deficit carried by the hospital. We could have a long discussion about how that deficit was created, but that would not necessarily be fruitful. The deficit appears to stand in the way of the hospital achieving foundation trust status, and that seems to have been the impetus behind the three options referred to by my hon. Friend and mentioned in the tripartite document of which he has a copy.

I do not for one minute underestimate the seriousness of the deficit. Any responsible Administration or Government should take a deficit of that size seriously, and I understand that is the case. The difficulty arises, however, because the three options under discussion leave people concerned about what might be going on. I will talk about what has and has not been published, because the Minister tried to cast some doubt on that a few moments ago.

[Mr Simon Burns]

On what?

[Mr Howarth]

Had the Minister been listening, he would know that I said that a little later in my speech, I will try to cast some light on what has and has not been published. He cast some doubt on whether there is in fact material that we should have seen but have not, and I will return to that issue in a moment.

My hon. Friend referred to the three options that have been suggested. The document refers to a national solution, and even if it is not spelled out in clear terms, I take that to mean that it is intended—presumably by Department officials—for some means of closing the deficit to be found nationally, in order to get rid of the £20 million deficit that is creating the problem. I am not in a position to say whether that is a likely solution; hopefully, the Minister will be better able to explain that. To me, however, that solution is the most preferable of the three options.

The second option would involve some kind of amalgamation or merger with other existing NHS facilities, although that seems fraught with inevitable difficulties. If an existing facility already carries some sort of deficit, presumably it will not be keen to add to that by amalgamating or merging with another institution that might bring even more of a deficit to the table. Furthermore, I do not see any of the synergy that would need to exist between the St Helens and Knowsley trust and other nearby hospital trusts for such a move to be thought of as a likely solution.

We are therefore left with the third option, which is some kind of merger or joint venture with the private sector. I was interested to see that when my hon. Friend the Member for St Helens North referred to that option, the Minister, from a sedentary position, seemed to indicate that it was not an option. [Interruption.] Well, I am glad that he clarified that. When my hon. Friend mentioned that option—I think that he used the word “privatisation”—the Minister said no.

[Mr Burns]

Absolutely.

[Mr Howarth]

But presumably the Minister is not ruling out now the possibility that something could happen that would involve the private sector in the long-term future of these hospital sites. No doubt he will enlighten us on that when he replies to the debate.

[Mr Burns]

indicated assent.

[Mr Howarth]

I have to warn the Minister that I am not someone who believes that everything should be owned by the state. There are occasions when I can understand that some co-operation with the private sector is required. In fact, the PFI in itself is in many ways an exemplar of that. On occasion, such an approach is appropriate, but any wholesale transfer of these hospital facilities would meet strong opposition from the public in St Helens, Knowsley and Halton, and it would certainly include my hon. Friends and me, because we do not see that as a viable way forward for these hospital sites. The body language coming from the Minister is encouraging. I just hope that the words that follow are equally encouraging.

Before I conclude, I want to clear up one point, which is what we know and do not know and what we hope the Minister can enlighten us on. I am sure that he is aware that my right hon. Friend the Member for St Helens South and Whiston (Mr Woodward) wrote to the Secretary of State about this matter several weeks ago, seeking clarification; my hon. Friend the Member for St Helens North tabled written parliamentary questions about the subject; and I wrote under the terms of the Freedom of Information Act to the regional health body, the Department and the hospital trust, asking not only for the tripartite document that my hon. Friend has a copy of, but for any advice and other, associated documentation that would throw any light on it. It is because we do not have all the information that there is a great deal of suspicion on the part of local people.

The Minister is a reasonable man whom I know will want to be as open and frank as possible in the debate. I hope he will be able to dispel those fears and leave people with the belief that no conspiracy is going on, that the Government are not trying to manoeuvre our hospitals into some kind of private sector solution and that a solution will be found that is within the NHS and is acceptable to all concerned. If he can do that, the debate that my hon. Friend the Member for St Helens North has promoted today will have been a worthwhile exercise.

15:03

[Derek Twigg (Halton) (Lab)]

It is a pleasure to speak under your chairmanship, Mr Meale. I congratulate my hon. Friend the Member for St Helens North (Mr Watts) on securing this very important debate and my right hon. Friend the Member for Knowsley (Mr Howarth) on the contribution that he made. As you will have picked up, we are constituency next-door neighbours, but there are wider issues that we need to discuss and that I intend to raise with the Minister.

15:04

Sitting suspended for a Division in the House.

15:14

On resuming—

[Derek Twigg]

I will say more about the St Helens and Knowsley Teaching Hospitals NHS Trust a little later, but I have a lifelong relationship with the Whiston hospital, which is used by many thousands of my constituents. As I said, my right hon. Friend the Member for Knowsley, my hon. Friend the Member for St Helens North and I work very closely on issues relating to it, as neighbouring MPs.

I congratulate the hospital on delivering the PFI six months ahead of time and to an excellent standard. The chief executive, the board and the staff have done an outstanding job. The many medical staff, support staff and ancillary staff do an amazing job, and the hospital has the highest reputation, but I will talk specifically about the hospital in more detail later.

It is important to understand the use of PFIs, what was required and what was achieved. In 1997, after 18 years of Conservative disinvestment in the NHS, the service was in crisis: 1 million people were on waiting lists, hospitals were in disrepair, staff felt undervalued and buildings had been neglected. As my hon. Friends will confirm, people regularly complained to us in 1997 and thereafter—my right hon. Friend will say that they were complaining before then—about waiting more than two years to have an operation or even to be seen by a specialist in some instances. It is important to make that point.

The Labour Government made a firm commitment to improve, support and protect the NHS. In government, we did what was necessary to turn it from an organisation that was struggling for survival into the world-class and world-leading service it is today. It is important to make that point about the improvements made under the previous Labour Government, which included achieving the lowest waiting times, the highest public satisfaction, a two-week turnaround to see a specialist, a massive decrease in the number of those dying early from heart disease and cancer, and improved facilities. In the context of PFI, investment in the NHS is important.

As my hon. Friend said, 114 new hospitals were built over Labour’s 13 years in government to replace the existing ageing and neglected infrastructure. In 1997, half the NHS estate dated from before 1948; in 2010, that figure was down to about 20%. That rapid modernisation was unprecedented, but vital to the regeneration of the NHS, and PFIs played an important part in making that possible. They made possible the move from the previous workhouse-style provision of health care to a modern, technically advanced health care system for the 21st century. [Interruption.] The Minister tuts, but an old workhouse building was still being used on the Whiston site at the time. In fact, back in the 19th century, one of my distant relatives died in that building when it was still a workhouse, so it was a workhouse and it was used for health care. Now, we have a modern hospital to replace it. It is important to make that contrast, as my hon. Friend did.

[Graham Stringer (Blackley and Broughton) (Lab)]

Even with the massive investment and improvement under the previous Labour Government, my local hospital is still 60% a Victorian workhouse, and we need more. [Laughter.] The Minister laughs, but I mean that we need more investment, not more workhouses. Does the shadow Minister agree that although PFI was incredibly valuable in bringing that expansion about, it had two fundamental flaws? In a pragmatic way, it relied on the private sector being more efficient than the public sector to recover the higher borrowing costs, but that has not happened in many cases, because of the strict configuration of the contracts. Secondly, when the private sector is involved—I am not totally against that—we have the secrecy that my hon. Friend the Member for St Helens North (Mr Watts) mentioned. There are commercial interests, which is bad when public money is being used for the public good, because we cannot find out what is going on.

[Derek Twigg]

I totally understand my hon. Friend’s concerns. As regards his local hospital, he will realise that I never said that every hospital was modernised and improved. The issue now is how they will be modernised and improved under this Government, and I will return to that because we need to know from the Minister today what the Secretary of State’s and the Prime Minister’s plans are for modernising our NHS estate. The massive improvement under the previous Labour Government was unprecedented, but my hon. Friend is right that there were concerns. Not everybody supported PFIs, and there were issues, which I will come to later. My hon. Friend raises an important point.

It should be remembered that PFIs were also used under the previous Conservative Government. As noted in the Public Accounts Committee report entitled “PFI in Housing and Hospitals”, which was published on 18 January,

“PFI has delivered many new hospitals and homes which might otherwise not have been delivered”.

It is also important to note that the report’s summary says that hospitals are mostly

“receiving the services expected at the point contracts were signed and are generally being well managed.”

Again, I accept there were some problems, but the Public Accounts Committee recognised that they were generally well managed. Labour not only invested in the NHS, we invested in protecting its future. The contracted maintenance of buildings under the PFI agreements will ensure that the standard of NHS buildings will be as high in 30 years as it is today. The present generation is only the custodian of the NHS. Future generations are its owners, and PFI agreements will ensure that they are served by the same exceptional standard of facilities as today. That is an important point.

The system is not perfect, but at least it guarantees the maintenance of the buildings over a 30 to 35 year contract period. We all know that, with financial pressures, funding was cut for maintenance. Rather than being a one-off, that became a regular occurrence. That is why we found hospitals in the state they were in 1997—for which we, too, had some responsibility, as we had been in government for various periods before then. The fact was that there was massive under-investment, which was exacerbated by the Thatcher Government.

Under Labour, PFIs gave private sector partners responsibility for the completion of large infrastructure projects. A crucial point—of importance to my hon. Friend the Member for Blackley and Broughton (Graham Stringer)—is that accountability for services and the satisfactory completion of such projects remained in the public sector. That meant that the Government were still accountable to the people and Parliament for improving services to patients.

The PFI arrangement is a tool; it is a method that can be used badly or well. It would be disingenuous, as I said to my hon. Friend, to suggest that we were all in favour of PFIs when we were in government. It is important to be frank and honest and acknowledge that. There are strong views opposed to PFIs—it would be wrong to suggest otherwise with regard to some schemes. What we can be sure of is that, under Labour, the PFIs formed part of a carefully managed NHS in which the private sector could play a limited role. Sadly, under the Government’s current reforms, that will no longer be the case. The Government continue to rush through their NHS reorganisation; despite the so-called pause, work is still going on, without sufficient evidence or consultation on its true effect. Pressure has been relentlessly piled on to the NHS and foundation trusts, with insufficient consideration for the future. Through these costly, unwise and unwarranted reforms, spending cuts and efficiency savings, the Government are showing once again that they cannot be trusted on the NHS.

My hon. Friend the Member for St Helens North and my right hon. Friend the Member for Knowsley highlighted the issues surrounding the St Helens and Knowsley Teaching Hospitals NHS Trust, with which they have had a long association. However, it is important to repeat some of the things they said. This trust has a strong track record of high performance, achieving three stars and consecutive double excellent ratings from the Care Quality Commission. That high standard of care has been maintained: in 2010, it was the only acute trust in the country to perform above the national average in every indicator of quality of services and care in the CQC assessment. Therefore, I believe it could be described as the nation’s top-performing hospital. In addition, the trust achieved the maximum overall score in the auditors’ local evaluation for the use of its resources, for the fourth year running, acknowledging the trust’s excellent financial management.

Therefore, the trust performs to an excellent standard, not only in services and hygiene, but in financial management. The benefits of the PFI scheme for the hospital have been tremendous—more than 80% of the accommodation is new build on two sites, to which my right hon. and hon. Friends have referred; there has been capital investment of £350 million, with a 35-year concessionary period; radiology imaging equipment through a managed equipment services has been provided by GE Medical Systems; and hard and soft facilities management services, including catering, domestic estates, grounds, gardens and so on, have been provided. An important point for the Minister is that there is also 50% single room provision, with en suite facilities, as per Department of Health guidance. That is important in meeting both what we wanted and what the Government have said in respect of single-sex wards.

In 2009, the Secretary of State for Health, who was then the shadow Secretary of State, said this in an interview on Mumsnet about the pledge regarding single-sex rooms:

“This pledge will be delivered as part of our plans to provide 45,000 more single rooms in the NHS.”

Funnily enough, that pledge was dropped, and we have heard no more about it. I am interested to know, in the context of any PFI plans or hospital building programmes that the Minister has to comment on, whether there are plans to increase the number of single rooms, which is an important part of improvements in the NHS. I look forward to hearing any details that the Minister might give us.

My hon. Friend the Member for St Helens North, backed up by my right hon. Friend the Member for Knowsley, made some important points about secret documents. One has now been put into the public domain, though not officially, but we have not been able to see the other one. The Minister must answer who suggested as an option that a private sector provider could be brought in to manage this specific trust, and perhaps other trusts. Who suggested that that was the case? I understand that the trust board rejected that option and would only deal with it if directed to do so by the NHS, whether that involved the strategic health authority or the Department. I understand that that was the case. Will the Minister clarify that important point? I understand that one reason why the trust board would not accept the option of voluntarily considering a private sector provider coming to run it was a concern for patient safety. The cuts it was being asked to make to get to foundation trust status were too great and, in its opinion, were threatening patient safety. Will the Minister tell us whether that was the case?

What part of the NHS would suggest that option for a hospital that has achieved a double excellent rating, that has excellent financial management, that has been well run for years, that has a brilliant chief executive and management board, that has a committed staff and that has the support of the community? What person in their right mind would suggest a private sector provider? How could a private sector provider run it better than a double excellent rating?

[Mr Simon Burns]

I want to deal with this in detail when I come to my contribution. The hon. Gentleman said, “What man in his right mind would consider the private sector being used in the NHS for the management of an NHS hospital?”

[Derek Twigg]

This particular one.

[Mr Burns]

I am talking about the generality. I can answer the generality and will come to the specifics in my speech. The gentleman concerned, who accepted the principle in a generality, was the right hon. Member for Leigh (Andy Burnham), who was Secretary of State for Health before the election.

[Derek Twigg]

I am not sure that that is worthy of a reply. I am being specific. The Minister may remember—and the hon. Member for Broxtowe (Anna Soubry) sitting behind him will—that when the Health and Social Care Public Bill Committee discussed foundation trusts and insolvency, I made the point that it does not always follow that a hospital that gets into financial difficulties is badly run. That is the issue that the proposals in the Bill do not take into account. What was the logic behind the proposal for this specific hospital to have a private provider brought in to help manage it? That is a different point from the one that the Minister took.

I also want to make the point that the Government are placing NHS trusts under intense pressure through the policy of forcing foundation status within three years, coupled with the costs of reorganisation and the efficiency savings that trusts have been asked to find. That is leaving many NHS trusts in peril as they struggle to meet foundation trust status, or become foundation trusts with financial difficulties from day one. The Minister knows a number of hospitals are in financial difficulty. I do not know whether he has yet decided to put that list in the public domain.

The dangers are clear. St George’s hospital in Tooting, London, recently decided that it was too risky to push ahead with the Government’s preferred timetable for NHS trusts to become foundation trusts. Speaking after announcing a two-year delay to the plan to become a foundation trust, the board of the hospital said:

“The board recognises that if we put the organisation under pressure to become an FT during 2011-12 then this could impact on the quality and safety of the patient care that we provide.”

I wonder whether parallels can be drawn with the St Helens and Knowsley trust, as the board is not prepared to take the risk. Put simply, existing pressures on NHS trusts are too great to risk a massive reorganisation. Hospitals realise that, and so should the Government. It is important to understand that the pressures are great, and what is being asked behind the scenes at particular foundation trusts is important.

Now more than ever, the dangers of an FT or NHS trust experiencing financial difficulties are growing. Under the Tory-led Government’s plans for the NHS, a struggling FT will be faced with two options. One is insolvency in line with commercial insolvency procedures, and the other is the sort of takeover dictated by clause 113 of the Health and Social Care Bill, which the Committee discussed in some detail, or a takeover on unknown terms. The Minister refused to be drawn on giving an example of what hospitals might be in difficulty and what sort of takeover might be considered. I do not know whether he has changed his mind since then, because an example would help us with the detail of our deliberations.

Although the debate on PFIs and their appropriate use will continue, it is important to be clear on one issue. During our time in government, we supported the NHS. We undertook no step that would have endangered its position as a world class public health care system. In comparison, this Government’s policy on health care has been in turmoil from the very beginning. It is hated by the public and despised by the professionals, and we believe that that is dangerous for the NHS.

We need to know what plans the Government, the Secretary of State and the Prime Minister have for capital investment in the NHS. What will hospitals and NHS facilities have to do if they require large capital investment? Is it the case, as reported in the Financial Times last year, that the Secretary of State has ruled that they should no longer have access to public sector cash for big capital projects? Is that the Government’s current policy? Alternatively, will the Minister confirm that future investment in NHS capital projects will be determined solely by the market, as part of the Government’s plans to place the market at the centre of the NHS?

The Minister will expect me to remind him that he was forthright—it is not what the Secretary of State would have wished—in identifying the extent to which EU competition law will increasingly apply to the NHS. Just as importantly, we need to understand where the Government are going on PFI. Much has been said about what they are considering, but when will they publish their plans?

I remind the Minister that he is now in government. Whatever matters he raises this afternoon, he must realise that he needs to supply the answers to these difficult questions. There is great uncertainty within the NHS, which is not helped by the lack of policy detail on which course the Government intend to pursue. It is a crucial question for NHS services, and the answers need to be heard.

The Government should make no mistake about it that their massive reorganisation proposals are putting the future of the NHS as we know it in peril. They are causing massive uncertainty and distracting the professionals, and, as the Health and Social Care Bill impact assessment shows, it could have an impact on the safety and care of patients. The fact remains that opposition to the Health and Social Care Bill, which has been led by the Labour party, and the increasing rejection of the Government’s plans by medical professionals, health experts and patients groups alike have forced the Government to take this humiliating pause. If it is to be more than a simple political ruse to get through the local elections tomorrow, real and significant changes will need to be made to the Bill, including the crucial deletion of part 3, which has severe implications on the issues that we have been discussing today.

Labour left the NHS with record levels of public satisfaction, record low waiting lists and world class hospitals such as those at St Helens and Whiston. It is becoming increasingly clear that the NHS is moving backwards because of this Government’s cuts and broken promises. I have no doubt that that will inform the choice that people will make tomorrow at the ballot box.

[Mr Alan Meale (in the Chair)]

I call the Minister to reply. As an ex-Whip, you will be aware that you have extra time—11 minutes will be added to our debate because of the Division.

15:33

[The Minister of State, Department of Health (Mr Simon Burns)]

Thank you for that, Mr Meale. It is a pleasure to serve under your chairmanship.

I congratulate the hon. Member for St Helens North (Mr Watts) on securing this important debate. I take the opportunity to pay tribute to the many who work so hard to deliver high-quality NHS services and health care for the benefit of his constituents and the constituents of the right hon. Member for Knowsley (Mr Howarth) and the hon. Member for Blackley and Broughton (Graham Stringer). I pay particular tribute to the St Helens and Knowsley Teaching Hospitals NHS Trust’s approximately 4,500 staff and its many trainee specialty doctors, who bring a consistently high level of care to patients throughout Merseyside and Cheshire.

The trust has a track record of first-rate clinical performance. As we heard, it achieved three stars and consecutive double excellent ratings from the Care Quality Commission, a feat that was maintained in 2010. It also achieved the highest score nationally for cleanliness in the recent national in-patient survey. The people of St Helens and Knowlsey can be very proud of what has been achieved. The hospital’s staff do a tremendous job, and the Government will support and empower them and all front-line staff in continuing to improve services free from the interference of meddling politicians in Westminster—and free at the point of use for all who are entitled to use the national health service.

The fact has been underlined that in 2010-11 we increased PCT allocations for the area to just under £600 million, a cash increase of £17.2 million or 3%. I know that the House will share with me the pleasure of knowing that, in the last two years for which figures are available, there was an increase in the number of nurses, consultants and doctors who serve the local community.

The hon. Member for St Helens North raised the important issue of PFI contracts. I shall deal with this topic in two parts. First, I shall outline the coalition Government’s approach to the private finance initiative generally. Secondly, I shall examine the situation at St Helens and Knowlsey.

The Government confirmed at the end of last year that we remain committed to public-private partnerships, including those delivered via PFI, if they can be clearly shown to represent good value for money. Such arrangements will continue to play an important role in delivering NHS infrastructure. However, we believe not only that too many PFI schemes have been undertaken but that some were too ambitious in their scope, a point made in an intervention by the hon. Member for Blackley and Broughton.

[Mr Watts]

Will the Minister say which PFI schemes should not have gone ahead? Frankly, we had a legacy of neglect under the previous Conservative Government, and most people believe that we should increase the hospital building programme, not decrease it. Will the Minister itemise those schemes?

[Mr Burns]

I do not share the hon. Gentleman’s blinkered view of what went on in the health service prior to May 1997. I am probably of a more generous spirit, in that I am prepared to pay tribute to the achievements of the last Labour Government, although it would be more difficult to discover those of the Wilson-Callaghan Government and before that the Wilson Government because of the chronic economic situation.

Unfortunately, the hon. Gentleman is not as generous of spirit; he seems to think that everything changed in May 1979 and did not improve again until May 1997, despite the fact that for every year between those dates we saw a real-terms increase in health spending. Indeed, health spending went up from just under £9 billion a year in 1979 to more than £39 billion in 1996-97, which at the time was an incredibly large sum, although due to inflation and other factors, it now seems far more modest. However, I am prepared to be more open-spirited and to acknowledge achievement when justified, but also to criticise when justified.

[Derek Twigg]

No one suggested that everything was renewed and changed under the previous Labour Government, but there was record investment and an unprecedented hospital building programme. How many hospitals did the Thatcher and Major Governments build?

[Mr Burns]

This is the point. Perhaps the hon. Gentleman is taking a punt on something with which he is not very familiar, but if he had been in the House in the mid-1990s, he would know beyond doubt that there were record levels of investment in the NHS. Even he said, looking at the report in front of him, that the Major Government used PFI, and there was considerable investment in infrastructure. He would probably argue—with some justification because one can always argue this—that there should have been more investment, but there was more. I shall give one example, but—

[Derek Twigg]

Give examples.

[Mr Burns]

I will. There are so many examples of old and dilapidated buildings or buildings that were past their sell-by dates that the Thatcher and the Major Governments knocked down and replaced through new investment. One example was the moving of the European-renowned burns and plastic surgery facility on a Billericay site in Essex, which wanted to expand to maintain its position at the forefront of providing highly specialist services and was moved to Broomfield. I remember a particularly happy day in February 1997 when, as a junior Health Minister, I accompanied the then Prime Minister to open it.

May I now get back to the point I was making to the hon. Member for St Helens North? However reasonable the hon. Member for Halton is trying to be, his hon. Friend was not quite so generous, suggesting that everything was appalling prior to 1997 and everything was magnificent after it. The hon. Member for Blackley and Broughton rather unfortunately brought the speech of the hon. Member for Halton to a bit of a halt by highlighting some of the perceived criticisms of the PFI system under the Blair and Brown Governments, but the hon. Member for Halton very neatly sidestepped the issue. He did not want his story of good news on investment in hospital buildings to be punctured, and neatly avoided it.

[Mr Watts]

Will the Minister give way?

[Mr Burns]

I will, but then I am going to make progress.

[Mr Watts]

The Minister must understand that St Helens was served by three Victorian workhouses. After the Labour Government were elected in 1997, three brand-new, state-of-the-art hospitals were built and we had a walk-in centre, new GP services and more doctors and nurses. He should understand that my experience is that after 1997 there was massive investment, and before 1997 there was very little.

[Mr Burns]

To pick up the point made by the hon. Member for Blackley and Broughton, until October last year, I, too, for the 13 years of the previous Labour Government had a hospital in my constituency that was an old, Victorian workhouse, with ancillary wards that were improved Nissen huts. We could go round the country and find many buildings that needed improvement.

I am sure that Labour Members will accept that even the NHS is restricted in that it cannot have unlimited funding, there will be priorities for improvements and reinvestment, and not everything will be done all the time. The process is ongoing. To answer another point before I focus on St Helens, the hon. Member for Halton asked about what is happening to the capital spending settlement and programme. As I am sure he is aware, as an outcome of the spending review, the Government have a capital spending settlement up to 2014-15, and capital will continue to be used to provide investment for NHS development, as well as PFI.

[Derek Twigg]

How many hospitals?

[Mr Burns]

The hon. Gentleman wants me to list some more new hospitals. There is the Chelsea and Westminster hospital on Fulham road, which was a flagship hospital for the centre of London initiated by Baroness Bottomley, I believe. I could continue round the country, but I will not because my time is limited. I think that the hon. Member for St Helens North would prefer it if I spent more time discussing his local PFI project, because there is a lot to be said to clear his mind and reassure him, if only he has the open ears to listen; an open mind would help as well.

As the Government confirmed at the end of last year, where they can be clearly shown to represent good value for money, we remain committed to public-private partnerships, including those delivered via PFI. Such arrangements will continue to play an important role in delivering future NHS infrastructure. However, the Government also believe that not only have too many PFI schemes been undertaken, but some were too ambitious in their scope. The Treasury has now reviewed the value for money guidance for new schemes and looked at how operational schemes can be run more efficiently. We are clear that the focus should now be on releasing efficiencies at the many existing PFI schemes.

In January, the Treasury published new draft guidance, “Making Savings in Operational PFI Contracts”, which will help Departments and local authorities to identify opportunities to reduce the cost of operational PFI contracts. As part of that initiative, my noble Friend Lord Sassoon, the commercial secretary, launched four pilot projects to test the ideas raised in the Treasury’s draft guidance. The focus of the pilots is to find efficiency gains and savings within the PFI contract itself, allowing the quality of care for patients to remain the priority. The pilots should end by the end of this month. The lessons learned will be used to finalise the Treasury guidance and to improve other relevant PFI contracts, including the one at Whiston hospital. One essential element is that all NHS trusts will retain any savings made to reinvest in improving patient care.

The other important aspect of operational PFI schemes and their cost to local health economies is their effect on NHS trusts seeking NHS foundation trust status. The coalition Government have set a clear commitment for all remaining NHS trusts to achieve foundation trust status by April 2014. That policy will finally realise the ambition of the previous Labour Government. It is about ensuring high quality and sustainable NHS services by giving trusts the freedom to serve their patients to the very best of their ability, unhindered by top-down bureaucratic control.

An issue facing some NHS trusts in their move towards attaining FT status is the affordability of their PFI schemes, as hon. Members are aware from examples in their constituencies. We are tendering for an independent review to establish where PFI schemes may, in some organisations, be the root cause of problems that prevent them from becoming foundation trusts. St Helen’s and Knowsley NHS Trust is one such organisation, and will be considered as part of the scheme. In addition to the independent assessment, the Department and the NHS are developing solutions in a systematic and comprehensive way to manage the PFI schemes in the very small number of trusts where a local or regional solution cannot be found.

When the current management of St Helens and Knowsley NHS Trust signed their PFI agreement in 2006, with the agreement of the then Secretary of State for Health, Patricia Hewitt, and other Ministers, local PCTs agreed to make up the shortfall between the revenue generated by the hospital through the national tariff and other means and the cost of the unitary payment—the annual PFI charge, which was some £20.3 million. Unfortunately, that decision built a deep lack of sustainability into the trust’s finances—a lack of sustainability that the trust, the strategic health authority and the Department are now working extremely hard to rectify. To that end, the trust’s board and the strategic health authority, NHS North West, are developing a tripartite formal agreement, or TFA, to be agreed with the Department of Health, which will support the work to achieve foundation trust status.

Every trust is required to produce a TFA, setting out how it plans to progress to FT status by 2014, the challenges that it faces and how it plans to overcome them. In the case of the St Helens and Knowsley trust, the TFA is still in draft form and is very much a work in progress. Beyond what was leaked to the Liverpool Echo and to the hon. Member for St Helens North, I have not seen the draft and while discussions are ongoing it would be inappropriate for me to do so and I will not see it. Therefore, it would also be inappropriate at this stage to publish the documents.

[Mr Watts]

Minister, the local community and the local MPs will believe that that is a totally unacceptable stance to take. It is clear that there are grave doubts about the future financial viability of the trust—the St Helens and Knowsley Teaching Hospitals NHS Trust, including the Whiston hospital—and that a number of options are being considered in the current discussions about the trust. For the Minister to hide behind the fact that he does not want to see that report removes the accountability that we would expect him to have. Will he reconsider that decision and will he look at that document? Also, will he rule out some of the options, including the private provider option? If he does not do those things, people will continue to suspect that his Department is being driven by the fact that it wants to privatise our hospitals, but he and other people in the Department do not want to see the documents that are being discussed now. I can see no reason why he should not see that draft document and why we should not see it.

[Mr Burns]

First, of course, the hon. Gentleman has seen the first draft document—it was leaked to him and I think that he held it up during his remarks this afternoon—so it is slightly stretching the point to say that local MPs have not seen it. I have no doubt that he has shown it to his hon. Friend the shadow Minister for Health, the hon. Member for Halton, and I would be rather surprised if the right hon. Member for Knowsley has not seen it too.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I have not seen it.

[Mr Burns]

Of course the hon. Gentleman, who has just come into Westminster Hall, has not seen it. He is a Scottish MP, and it may have escaped his notice but the English Department of Health has no responsibility for the day-to-day running of the Scottish health service.

[Mr Donohoe]

Thank God.

[Mr Burns]

And there we are.

[Mr Watts]

The Minister has seen it.

[Mr Burns]

No. I have not seen it. I took a deliberate decision not to see the draft—

[Mr Watts]

Why?

[Mr Burns]

Because it was a first draft document, drawn up between officials in the Department of Health, the SHA and the trust, and I do not think that at that stage it was appropriate for me to see it. Also, I suppose that if one is being totally candid, which often gets me into trouble when the hon. Member for Halton or particularly the hon. Member for Leicester West (Liz Kendall) are around, it does make it slightly easier for me because I can say, “In all honesty, I have not seen it.”

I will now make some progress, because I think that what I am about to say may answer some of the questions put by the hon. Member for St Helens North and it may well help the right hon. Member for Knowsley, too. If it does not and I have time to do so, I will give way then.

The TFA process should be completed soon, with the final approved version hopefully being published some time in June or July. I can confirm—if the hon. Member for St Helens North would like to listen to me, because I think that he will find what I am about to say particularly interesting, as he has expressed a degree of confusion about the issue—is that one of the options under review is not, I repeat not, to somehow “privatise” the NHS. As I said to the hon. Gentleman during Health questions last week, this Government will never privatise the NHS and we have no intention of doing so at the St Helens and Knowsley trust.

Perhaps it would be a help if I took a moment to explain the process through which the trust, like all trusts in a similar position, is progressing towards becoming an FT. First, the trust, along with local health authorities, will attempt to find a local solution to whatever financial issues there may be. If a simple local solution cannot be found from within its own resources, then a more radical solution may be necessary, such as merging with another trust and examining whether services need to be reconfigured. On that point, it may be of some consolation to Opposition Members that the benefits of a merger with another trust are that it reduces the percentage of the unitary payment of the PFI in relation to income, which helps with the financial situation, and for other FTs in a merger it increases the income base and economies of scale become possible, which again potentially helps with the finances of a trust.

If the problems cannot be resolved in that way, we would work to a national solution, which is being developed by the Department and which will be agreed with the Treasury. If there is no foreseeable solution, a final option would be to consider tendering the management of the trust. Under that option, management teams from within the NHS, from a social enterprise or from the private sector would put forward their ideas on how to find a way forward for the trust.

[Derek Twigg]

Will the Minister give way?

[Mr Burns]

May I just continue, because this is rather important?

While that option is a very long way down the line of potential solutions, it is only what is currently being done at Hinchingbrooke hospital in Huntingdon, in the constituency of the Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon (Mr Djanogly). The decision on that hospital was taken by the previous Labour Government, when the right hon. Member for Leigh (Andy Burnham) was the Secretary of State for Health. So it is not a new option dreamt up by the present Government since coming into office. We are simply taking an option that is already on the table and that was there when we came into power, which the previous Secretary of State for Health—a Labour Secretary of State for Health—was prepared to accept.

[Derek Twigg]

Will the Minister give way?

[Mr Burns]

Just one minute. I must say that at the time, during the discussions about what should happen to Hinchingbrooke hospital and about the use of the option that the right hon. Member for Leigh agreed to, nobody said that that was privatising the hospital, because it was not. If—and it is a big if—that solution were to be considered the right way to solve the problems at the St Helens and Knowsley trust, that would not be privatisation either.

[Derek Twigg]

With respect to the right hon. Gentleman, we are not comparing like with like.

[Mr Burns]

We are.

[Derek Twigg]

We have a double-excellent hospital at St Helens and Knowsley; it has excellent financial management and excellent services. It meets all the standards. I put the question back to the Minister. On that basis, why is the Department—whether we call it the SHA or not, it is part of the Department and it has responsibility to the Secretary of State—

[Mr Burns]

It is not part of the Department.

[Derek Twigg]

Well, I understand the SHA discussed this as an option with the hospital. I want the Minister to ask my question. Did the hospital voluntarily reject the third option of a private sector provider coming in to manage or run the hospital? Did it refuse that option and also say that it would not accept the cuts being asked of it by the SHA as that would put patient safety at risk? Is that correct or not? If he does not know, will he find out?

[Mr Burns]

I can advise the hon. Gentleman that it is not correct. That is the advice—

[Derek Twigg]

indicated dissent.

[Mr Burns]

The hon. Gentleman could at least have the decency to listen to what I am saying first. The advice that I have been given is that that is not correct.

[Derek Twigg]

What is not correct?

[Mr Burns]

That the trust rejected consideration, or the possible consideration, of that option, because—[Interruption.] What I want to do is to put it in context. As I said in my comments earlier, that is very much a last possible solution if the other solutions are not able to be worked out.

[Mr Watts]

Will the Minister give way on that point?

[Mr Burns]

Let me just finish. If I have been given the wrong information, and I do not believe that I have been, the hon. Member for Halton will be the first person to find out, because I would hate to mislead him.

[Derek Twigg]

Will the Minister give way?

[Mr Burns]

No. I have answered the hon. Gentleman. He said, “Did the trust reject the proposal because they found it unacceptable and they thought it wasn’t in the best interests of patients and patient safety?” That is what I—

[Derek Twigg]

Will the Minister give way?

[Mr Burns]

All right, I will give way for the last time.

[Derek Twigg]

I understand that the SHA, not the hospital trust, suggested as a third option having the private provider, on the basis that the hospital—I understand that it was approved by the board—would not accept what was on offer because of the cuts that it would have to make and it was concerned about patient safety. It therefore would not accept voluntarily an option to have a private sector provider come in. The question is whether that option was proposed by the SHA and whether the trust, because of concerns about patient safety, rejected it on that basis, on a voluntary basis. I make that point very clearly.

[Mr Burns]

Right. I repeat the answer that I gave to the hon. Gentleman before. My understanding is no, that is not correct.

[Mr Watts]

Will the Minister give way?

[Mr Burns]

No. There is no further point to this.

[Mr Watts]

I think there is.

[Mr Burns]

If—I will pursue the matter after the debate—there is anything in that that is incorrect, I will come back to the hon. Gentleman as quickly as possible, but my firm understanding and the advice that I have been given is that the answer is no.

May I reassert what I said earlier about the processes of the options, because it seems to be getting lost in the telling? I have said that it is important to find a local solution to whatever financial issues there may be. That is what the trust and the local health authorities are working to try to secure. If a simple local solution cannot be found from within the trust’s own resources, a more radical solution may be necessary, such as merging with another trust and considering whether services need to be reconfigured.

I think that it was the hon. Member for Halton but it may have been the hon. Member for St Helens North who said, “But nobody has ever said what other trust there might be.” I may be able to help the hon. Gentleman who asked that question. One of the options is the North Cheshire trust.

[Mr Watts]

Will the Minister give way on that point?

[Mr Burns]

Right, I will give way and then that is it—finally.

[Mr Watts]

I am extremely grateful to the Minister for giving way, because this goes to the heart of the matter. The lack of accountability comes from the fact that he has not seen the documents and therefore does not know what is in them. If he published the reports, he would see that there is a first draft and a second draft, and that the idea of the privatisation of the management comes from his Department. I do not want to see the Minister embarrassed. The best way for him to resolve the problem is to publish the two documents, and everyone will then be able to see that the third option was not wanted by the trust but is being driven by the Minister’s Department.

[Mr Burns]

May I return to the intervention made by the hon. Member for Halton? I said that as soon as I heard anything I would get back to him. He asked whether it was the trust that said it would not accept the option, and about the patient safety and quality of care recommendation. My answer should have been “I do not know,” not “No.” The advice I have been given is that I do not know, and we do not know.

As time is running out, may I reiterate the process? I do not want any confusion. I have said that if a simple solution cannot be found from within the trust’s own resources, more will be done to find a radical solution, perhaps involving a merger with another trust and examining whether services should be reconfigured. Although that option is a very long way down the line of potential solutions, it is similar to the one at Hinchingbrooke hospital that was embraced by the previous Labour Government and accepted, in principle, by the former Labour Secretary of State for Health, the right hon. Member for Leigh, as the way forward in a particular hospital with a particular problem. However, even if that were, in any circumstance, to become an outcome for a hospital, to suggest that it somehow equates to hospital privatisation is nonsense, for a number of reasons.

First, the hospital will remain a wholly owned NHS hospital, with NHS assets and NHS staff remaining entirely within the public sector. Secondly, I remind the hon. Gentlemen that the hospital has achieved its record of sustained excellence in part due to the significant involvement of private sector companies, a policy that was actively encouraged under the previous Labour Government. All the Labour Members present for this debate were proud members of that Government at some point during the Administration’s 13 years. Examples of that policy in operation in the hospital are that radiology imaging equipment has been supplied through a managed equipment service provided by GE Medical Systems since 2006, when Patricia Hewitt was Labour Secretary of State for Health. Facilities management services, which the hon. Member for Halton rightly praised and which have been vital to delivering high levels of cleanliness throughout the trust, have been provided by two companies—Vinci FM and Medirest—also since 2006. The use of the private sector does not mean privatisation, nor does it lead to a poorer quality of patient service, and I hope that hon. Members will acknowledge that the hospital trust’s excellent clinical reputation is evidence of that.

This Government want all NHS trusts to become foundation trusts because they will provide better patient care. Foundation trusts will be free to respond to the needs and wishes of local people and will be far stronger, both clinically and financially. To become a foundation trust hospital, an NHS trust must prove that it has passed strict tests on clinical care—the care that patients deserve. It also must prove that it is financially sustainable in its own right, which is what all taxpayers deserve.

Hospitals that are built on sand will sink, and this Government will not stand idly by and allow that to happen—the people of St Helens North deserve no less. I am sure that in due course, when the proper procedures have been adopted and the strategic health authority, the primary care trust, the hospital trust and the Department of Health have reached conclusions, documents will be published and decisions will flow.

This is not a conspiracy; it is a sensible and coherent way to move forward and discover a viable, practical and proper decision to help what is, in many ways—as all speeches in the debate have shown—a very good hospital that has a problem because of its PFI scheme. I gently remind Members that the PFI was approved by the trust and the Department of Health under the Labour Government, not the coalition Government. That is what has caused the problem, and it is why a viable solution is important. I wish everyone well in seeking a solution that is relevant and meaningful to the future success of the trust.

For a variety of reasons, it is always nice to have a conspiracy theory tucked in one’s back pocket to cause concern, but this is not a conspiracy. Just as I said earlier, Americans did land on the moon in 1969, John F. Kennedy was sadly shot in 1963 and, contrary to some people’s views, Barack Obama was not born in a manger.

Equitable Life

Wednesday 4th May 2011 Westminster Hall

16:08

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

It is good to see you in your place, Mr Meale. I thank Mr Speaker for allowing me to participate in this very short debate on a subject about which the Minister has corresponded with all Members, and which has been a problem since 1992, the very beginning of my time in this place. It has been a problem all those years, and no Government have addressed it as my constituents deserve, a fact on which I will concentrate in my speech.

Guidance has been given to Members. The Government first gave it to us in a round robin letter from the Minister on 15 November, and an update was given on 26 January this year indicating that things were moving apace and that solutions and a process had been found. I am after an update from him and the Treasury on where we are at and when the first payment will be made to those who seek and deserve compensation.

There is absolutely no doubt that there was foot-dragging during the 13 years when we were in government. I participated in debates on the other side of this Chamber and was critical of the Government of the day. I also remember occasions when the Minister was on this side of the Chamber, making all sorts of promises to the public that were most effective at the time. That is what I will concentrate on.

The place to look in order to understand a party’s position on any given subject is its manifesto. The Liberal Democrat manifesto referred to

“Meeting the Government’s obligations towards Equitable Life policyholders who have suffered loss. We will set up a swift, simple, transparent and fair payment scheme.”

The Conservative manifesto said:

“We must not let the mis-selling of financial products put people off saving. We will implement the Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.”

That was in the Conservative party manifesto for last year’s general election. Having read those, I would have thought that measures would be in place by now. We are a year into the coalition Government, and I understand that not a single payment has been made. Perhaps the Minister will update us on when it can be expected.

The Conservative manifesto says “mis-selling”. It is a somewhat unfortunate choice of phrase, as many pensioners feel that they were mis-sold an election promise by the Conservatives. That is a fairly serious accusation. I get letters in my mailbag almost weekly—34 of my constituents write to me regularly on the subject—and I am sure that that is repeated across the land and that every Member of Parliament is being written to by those most affected by the mis-selling of that fund.

More recently, the hon. Member for Southend West (Mr Amess) said in the Chamber:

“I know that the Treasury team are working extremely hard to try to balance the books, given the terrible legacy that we were left, but I must tell the Deputy Leader of the House that I am worried about the promises that were made before the general election. Some of my elderly constituents feel that we have not honoured them.”—[Official Report, 5 April 2011; Vol. 526, c. 987.]

That is a Conservative speaking. There is concern across the House about what this Government are doing, and it must be considered.

What are the problems, and how are the Government and the Treasury addressing them? Although they made that promise, they almost immediately excluded some 10,000 elderly people from the compensation scheme because they took out policies before the September 1992 cut-off date, which seems unfair. Those trapped policyholders arguably suffered the same maladministration as the others. We were told that they would be paid 100% compensation, but they will not receive anything. That should, indeed must, be addressed.

I must concede one thing—I have already done so publicly in this place, during the last debate on the subject. Investing in anything involves taking a gamble. People must understand that even a pension scheme, which could be described as a gold-type investment, can never be expected always to go one way. It is always possible to lose money. I have seen that at first hand. At the same time, we are talking about investments made when the Government of the day—and particularly one Minister, Eric Forth—said that they did not want any form of regulation whatsoever governing the finance sector. If we trace back the history, that is where the problem was first created. There should have been regulation. The whole fund was tied up in a system that had no regulatory body to examine what was going on.

It is simply wrong for the Treasury to have revised the amount of money that will be available from the public purse for the payment scheme. It promised total payment—that is what was said and understood. That is what was in the correspondence I received. I was challenged at the hustings during the run-up to the last election, and that was what was read to me as the policy of this Government. They made that clear to those constituents of mine who were concerned about the question.

Even to suggest that the money is not being paid as intended due to this country’s financial situation is absolute nonsense. Anyone could see that the global financial crisis would affect Government thinking and that the Opposition of the day were being foolhardy in making the promises they made. It almost indicated—to some of my constituents, at any rate—that there was no chance that the Tories would form an Administration. That is part of the reason why they were in a position to make such promises, which still have yet to be met.

The Minister said in a written answer:

“The Government have accepted all the parliamentary ombudsman’s recommendations in full. The Government’s ambition is to start making payments in the middle of this year.”—[Official Report, 31 March 2011; Vol. 526, c. 472W.]

Can the Minister indicate or commit to a date when that will start to happen? Who will first receive the moneys outstanding?

There is no doubt whatever that, just as with previous Governments, there has been delay after delay. It is immensely frustrating, particularly for those very elderly people who have been deprived of the pension they expected from the company. The matter has been addressed by ombudsmen and all sorts of courts, yet even today no money has been paid. I am looking for an update from the Minister, and I expect to hear something this afternoon.

16:18

[Neil Parish (Tiverton and Honiton) (Con)]

I do not know that I necessarily thank the hon. Member for Central Ayrshire (Mr Donohoe) for how he has introduced this debate. For 13 years, the Labour Government prevaricated about doing anything about Equitable Life. To be blunt, many policyholders believed that it was the Labour Government’s policy to wait long enough that they would not have to pay out to so many people. He has stood up and criticised what we as a Government are trying to do to put that right, yet his party lived through probably the most profligate times that any Government ever lived through and did absolutely nothing about the problems with Equitable Life.

I sat on a European inquiry on this issue, because Equitable Life sold policies not only in this country but in the Republic of Ireland and Germany. The problem was that it was mis-selling—it mis-sold the product by saying that these were with profits insurance policies when, of course, the profits it predicted were never going to be met. Every time we inquire into the matter, we find that all the people who used to manage Equitable Life have mysteriously disappeared and that the new bunch of people running it had no knowledge of what was happening before. We never seem to be able to pin down exactly who was to blame among all the people who were valuing those policies.

The whole issue now rests on the question whether the policies were mis-sold and whether the company acted outside the legislation. I say to the hon. Gentleman that the previous Government had plenty of time to look for and find a way of compensating those who had lost money. Why did they refuse to accept the ombudsman’s report? Why did they go to virtually every court they could find to avoid paying any compensation?

[Mr Donohoe]

I should like the hon. Gentleman to address one issue. What was in his party’s manifesto and why does he think that this Government have acted under the auspices of that particular entry in the manifesto?

[Neil Parish]

The manifesto referred to compensating people who had policies with Equitable Life and lost money, and what we are now introducing is a package of measures to compensate them. Whether we can compensate them 100% or not is a difficult question, especially in the financial circumstances that we inherited from the previous Government. I made the point at the beginning of my speech that the hon. Gentleman’s party had the opportunity, when tax receipts were flowing into the Treasury and when there was plenty more money sloshing around in the economy, to make those payments. That was a much less painful time than now, when we have to take into account the financial situation in which we find ourselves. The Minister will explain exactly what we are doing.

I agree with the hon. Gentleman that people want to know exactly when they will receive compensation. I hope that we will hear about that from the Minister. Many of us would like to see as much compensation as possible. In fact, we would like to see greater compensation, but we have to realise that the funds are competing against everything else for which the Government have to find money, at a time when we have inherited such incredible debts. I am sorry to say it, but I find it almost unbelievable that the hon. Gentleman can stand up and accuse this Government of not honouring their pledges when, as I have said, the previous Government had plenty of time to do something about the issue. What we have done is to put together a package of measures that will find ways of compensating people.

This is about when and on what date the policies were sold. Some of those issues are sensitive and I imagine that people who bought policies before 1992 are concerned, because they were also mis-sold policies. The issue has been painful for many of my constituents and many others throughout the country because of the money they have lost, but the one thing we have failed to talk about in this debate is that we have to be absolutely certain that this will never happen again. Lessons must be learnt, because this has caused so much suffering for people who were putting money away for their retirement. Do not forget that all Governments—Conservative Governments in particular—always want people to save for their retirement in order to look after themselves. In this case, people lost money, which is to be regretted.

I am happy to have spoken in the debate and will be interested to hear what the Minister has to say. The coalition Government have introduced a package of measures that will give people compensation after 13 years of a Labour Government who failed.

[Mr Alan Meale (in the Chair)]

Before I call the Minister, I apologise to you, Mr Donohoe, because I presumed you had given permission to the last speaker to speak. I tell the hon. Member for Tiverton and Honiton (Neil Parish) that it was wrong of me to bring you in. Having said that, at least in the latter part of your speech, you joined Mr Donohoe in hoping that we will get clarity on this issue.

[Neil Parish]

I apologise. I did not realise that I had to do that. I did not do it on purpose.

16:25

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I congratulate the hon. Member for Central Ayrshire (Mr Donohoe) on securing this debate. It is the first time for some time that we have had the opportunity to discuss Equitable Life, and I am grateful for the opportunity to update Members on the progress that we have made on resolving the issue.

The hon. Gentleman was right to highlight that some time has elapsed since these problems first arose. A number of reports that established that maladministration had taken place had been published, but the previous Government failed to act on them. When the ombudsman published her report in July 2008, we immediately accepted her recommendations and her findings of maladministration. We were clear that compensation should be paid for relative loss, but we also accepted the second leg of that recommendation, which was that it had to be subject to the constraints of the public purse. We have been clear throughout. If the hon. Gentleman looks at the speeches that I have made in this Chamber and in the main Chamber on Opposition day motions, he will see that we have been explicit about the two legs of the ombudsman’s recommendations. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) has said, if the issue had been resolved earlier, perhaps policyholders would have been in a better position than they are now.

I remind the hon. Member for Central Ayrshire that, while we accepted the ombudsman’s findings on the day on which they were published, Labour Ministers waited until the January of the following year before accepting only some of her recommendations, and they were challenged on that in court.

The hon. Gentleman asked when we are going to make payments and claimed that there had been a series of delays. However, I made it clear in the House last July, when I made an oral statement on the day on which we published Sir John Chadwick’s work, that we would start to make payments before the end of the middle of this year—that is, before the end of next month—and it remains our intention to do so. I am not sure where these mythical delays have emerged from, because over the course of the past nine months it has been clear when we expected to start to make payments.

[Mr Donohoe]

Will the Minister be specific and say what the payments will be and when they will start to be made?

[Mr Hoban]

As I have said, we will start to make payments before the end of next month. I will address the structure of the payments and the next formal step in the process later in my speech.

We have been clear from the date on which the coalition was formed that we want to end the plight of policyholders. Indeed, one of our first pledges—it is in our coalition agreement—was to implement the ombudsman’s recommendation to make fair and transparent payments to Equitable Life policyholders for their relative loss as a consequence of regulatory failure. We have kept that promise. In the year since we came into government, we have made significant progress towards achieving that ambition. Last July, we introduced the Equitable Life (Payments) Act 2010, which gave the Treasury the authority to incur expenditure when making the payments. I am grateful to both Government and Opposition Members for supporting the 2010 Act and for allowing it to receive Royal Assent to an accelerated timetable. That has enabled us to press forward with our preparations for making payments as soon as possible.

We published Sir John Chadwick’s advice on the financial losses sustained by policyholders, as well as the calculations of the actuaries, Towers Watson, of the relative loss figure. At that time, I invited all interested parties to make representations to the Treasury so that they could be considered as part of the preparations for the spending review. We considered the full range of those representations, including those from individual policyholders and lobby groups, such as the Equitable Members Action Group and Equitable Life Trapped Annuitants, and from Equitable Life itself. After final refinements of the calculations by Towers Watson, we quantified the relative loss at £4.1 billion. That is based on the Government’s full acceptance of the ombudsman’s findings of maladministration. That is more than 10 times the figure arrived at through Sir John Chadwick’s methodology, which was based on the previous Government’s limited acceptance of the ombudsman’s findings. In last October’s spending review, we announced that approximately £1.5 billion would be made available for payments to policyholders through the scheme. That is perhaps not as much as we would have liked but, as the ombudsman herself has acknowledged, the impact of the scheme on the public purse has to be taken into account.

It is also important to note that, even in the midst of last year’s understandably constrained spending review, we still found a way to cover the losses of the with-profits or trapped annuitants in full. That was achieved by paying their losses through annual payments that reflected the structure of their policy. Those policyholders were particularly vulnerable to their losses because they were unable to move their funds elsewhere or mitigate the impact of their losses through employment. They were also generally the oldest policyholders.

The hon. Member for Central Ayrshire raised his concerns about the exclusion of those with-profits annuitants who purchased their policy before September 1992 from the scheme. He is not the first to do so, but this is an important opportunity to restate what I have said in correspondence to a number of hon. Members and what I said in the Committee that considered the 2010 Act. In her report, the ombudsman recommended that the aim of the scheme should be

“to put those people who suffered a relative loss back into the position that they would have been in had maladministration not occurred”.

With-profits annuitants who bought their policies before September 1992 did so before maladministration could have affected their investment decision. The first returns that the ombudsman found were affected by maladministration were those of 1991, which would not have influenced policyholders’ decisions until September 1992. Once a with-profits annuitant had purchased their policy, they did not have the option to move it elsewhere. Therefore, the correct question is not what these policyholders would have received if they had invested in a different company or had transferred their policies at some date after September 1992, but how their Equitable Life policy would have performed if maladministration had not occurred. Calculations by Towers Watson show that, if there had been no maladministration, those policies would not have performed better than they actually did, so no loss has been suffered.

For pre-September 1992 with-profits annuitants, the reduction in the levels of annuity payments is largely due to a combination of circumstances, such as poor investment market performance and the fact that early annuity payments were artificially high due to the structure of the product and over-bonusing. I understand that this is a complex issue, and I have happily engaged in correspondence and discussions with hon. Members on it. However, I hope that my explanation about the situation facing with-profits annuitants clarifies our position.

I want to move on to the principles that have guided our decisions on Equitable Life. At all times we have sought to ensure that our choices have been both fair and transparent. In that vein, we set up an independent commission to advise on the distribution of funds to people with policies other than with-profits annuities. The commission reported in January and we accepted the principles it recommended: that we should introduce a pro rata allocation of funding in proportion to the size of relative losses suffered; that we will take a single policyholder view wherever that is fair and practicable to offset relative gains against relative losses for individuals with more than one policy; and that we should announce a minimum amount in the region of £10 beneath which payments should not be made. The reason behind that decision is that administering payments below that amount would be disproportionate to the administrative costs of making them in the first place. Subject to practical constraints, payments to the very oldest policyholders and the estates of deceased policyholders should be made an absolute priority. I want to make that clear to hon. Members today.

We are working on translating those principles into a quick and efficient payment scheme. That work is nearly complete and, as promised during the debates on the 2010 Act, I will be placing a scheme design document before Parliament imminently. In that document, hon. Members will find details on how the new payment scheme will work, including information on who will receive payments, how those payments will be calculated and how they will be made.

We have appointed National Savings and Investments as the scheme delivery partner to oversee that process. I am confident that its experience in processing large numbers of payments makes it the best choice for this important and complicated role. To reduce the complexity of the scheme, we announced in the spending review that payments will be both tax-free and should not affect eligibility for tax credits. That is both fair and sensible, and I know that hon. Members here today will welcome it. A statutory instrument introduced under the 2010 Act to put that into effect is currently before Parliament, and it will be debated shortly.

I want to make one final point to set policyholders’ minds at rest. Policyholders do not need to do anything to claim their payments. Those operating the scheme will contact them in the first instance. A website and call centre will be up and running for the duration of the scheme to guide policyholders and address any queries they may have.

[Mr Donohoe]

Will the Minister tell me for how long the scheme will be up and running and whether payments will be made over a three-year cycle?

[Mr Hoban]

The hon. Gentleman has raised an important point. We need to distinguish between two groups. The first is the eligible with-profits annuitants. Payments will be made to them over the lifetime of their policy. That has enabled us to extend the cost of this beyond the spending review and therefore to spend more on resolving the problem than would otherwise have been the case. Other policyholders who have suffered losses and are eligible for compensation will receive a single payment at some point over the next three years, with priority being given to the oldest policyholders and the estates of deceased policyholders. That is to ensure the cost of the scheme is manageable and that the scheme is deliverable in the period.

We have spent a lot of time making sure that the administration and delivery of the scheme works as effectively and as quickly as possible. However, I do not want to give any false promises to people. We said that we would start to make payments before the end of next month. It is a three-year scheme for people, apart from for those who are with-profits annuitants. For with-profits annuitants, payments will be made over their lifetimes, which is the right way to maximise the amount of money available to policyholders given the economic situation that we inherited.

I look forward to hon. Members’ comments on the scheme design document, which aims to be as simple and clear as possible both for policyholders and for those who take a more detailed interest in the technical details of the scheme design. The scheme holds out a prospect that policyholders will receive compensation, and it brings to an end a long-running saga that has not reflected well on how such issues are handled. Of course, as my hon. Friend the Member for Tiverton and Honiton has rightly said, we need to ensure that people have confidence to save for the future. That is why, as part of our reform of financial regulation, which focuses principally on the lessons to be learned from the financial crisis, we are introducing a dedicated financial conduct regulator—the Financial Conduct Authority—which will be responsible for all aspects of the regulation of financial conduct. That will help to strengthen consumer confidence in this area, and we hope will ensure that a problem on the scale of Equitable Life does not happen again.

Small and Medium-sized Businesses (Witham)

Wednesday 4th May 2011 Westminster Hall

16:38

[Priti Patel (Witham) (Con)]

I am grateful for the opportunity to draw attention to small and medium-sized businesses across the Witham constituency. I welcome the Minister responsible for business and enterprise, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), to the debate. Like me, he is a strong champion of business enterprise and economic growth, and he has a great deal of experience in the business sector. I know that he understands from first-hand experience many of the challenges facing businesses across the country. I also have absolute faith that he will want to hear some of the concerns and issues that I have, and that he will want to do what he can to help and support business growth in my constituency. As such, I would like to extend to him an open invitation to come to Witham and meet local business men. After today’s debate, when he has got a feel for some of the businesses we have, I hope he will grasp with open arms that compelling invitation.

By way of background, the Witham constituency has a variety of businesses across a number of sectors. That reflects its diversity and the wider strength of Essex, which I call a county of entrepreneurs. We have some great businesses and some passionate advocates of enterprise. In Witham town itself there are many shops, industrial estates, manufacturing industries and services. In the villages alongside the town, in the more rural part of the constituency, we have farms, village shops, market areas and some impressive post offices that do all sorts of creative things. They managed to survive the previous post office closure programme and I pay tribute to the work of the sub-postmasters and sub-postmistresses. Those businesses across the constituency would benefit enormously—I touched on this point in the House—if Essex was made a designated enterprise zone. That would give added zeal to the spirit of enterprise that we have in the county. May I urge the Minister to consider that, as part of the wider proposition, with Treasury colleagues? We would love to be a prime candidate for that status.

Businesses in my constituency vary in size, from one-man operations and family businesses—we have many family businesses—to companies employing hundreds, which have multi-million pound turnovers. They provide everything from glass, plastics and clothing to food. Over the years, some businesses have grown to become world-renowned household names. The village of Tiptree is synonymous with Wilkin & Sons jam. It produces the finest preserves and conserves in the world—Tiptree jam, as it is known. Last year, Crittall Windows employed more than 200 local constituents. It is a pioneer in window making and has a tremendous local history in the Witham constituency. Silver End is the garden village founded by the Crittall family. Last year, it won the Queen’s award for enterprise.

We have a dynamic company called Servowatch, which is based in Tollesbury. Witham is a coastal constituency, and Servowatch provides alarm and monitoring systems and software programmes for yachts and boats. It is very creative and highly innovative—a small, family business doing incredible things. Hayman Distillers is another family business in Witham. There are historic homes that are open to the public. They are creative, and house many small businesses. We have Braxted park. Layer Marney Tower is the largest Tudor gatehouse in England, and hosts the “Antiques Roadshow” programme next week. All sorts of small businesses and enterprises are based there.

As important and essential to the local community are the small business men and women who day in, day out open shops at the crack of dawn, struggle to make ends meet, and provide essential goods and services and, importantly, local jobs. I pay tribute to the local chamber of commerce and the Federation of Small Businesses in Essex for the support network they provide to many of those small and medium-sized businesses. They have been a great avenue for networking and, as I discovered not long after being elected, are a good sounding board for many of the challenges that small businesses face. More than 80% of jobs in my constituency have been created by small and medium-sized businesses. Compared with a national average of approximately two thirds, that is very high. Those businesses showed tremendous tenacity coming through the downturn with very little help from the previous Government, and keeping many thousands of local people in work. I pay tribute to them, because they have struggled and are on the front line. Their priority is to keep their heads above water while at the same time securing local jobs through this difficult period.

Many businesses did not make it through the recession. I put that down to the underlying failure of the previous Government to support private enterprise. Too many local high streets have been left struggling and dying. In Witham town we are, like many, scarred with empty premises and shop fronts.

The Minister knows that the nature of what constitutes a small business has changed over the years and decades. I am the daughter of a small shopkeeper—my parents started a business in the 1970s. The term “small business” has changed beyond all recognition compared with 30 or 40 years ago. The Minister will therefore be aware that Government policies need to adapt to the changing needs of SMEs in order to keep pace with job opportunities and the changing labour market, and to provide opportunities for the private sector to grow and avoid past mistakes. I am a champion of our high streets and independent retailers. Speaking personally, whatever the Government can do—I look forward to the Minister’s remarks—to support them is vital. I emphasise that in the past 10 years our high streets have been neglected. There are three areas where action is needed, and I would like to raise those directly with the Minister: tax, regulation, and access to credit for small businesses.

There is a lot to talk about with regard to tax. I welcome the cut in the small profits rate introduced by the Chancellor, and the cut in the main rate of corporation tax, which was subject to some debate last night during consideration of the Finance Bill. Those measures sent a clear signal that business should not face excessive demands to repay the debt legacy left by the previous Government. In contrast, the previous Government had plans to increase the small profits rate, which would have stifled our entrepreneurs and put investment and job growth at risk. However, I urge the Minister, in his discussions with his colleagues in the Treasury, to keep making the case for those important tax cuts for small businesses. We need to give them the freedom to succeed, and take away the shackles of bureaucratic taxes that eat away at enterprises and stifle their creativity. Businesses have felt far too squeezed for a long time, particularly given the rising costs of doing business—costs in materials, fuel and energy. Of course, tax just eats into that.

I would like to touch on the role of Her Majesty’s Revenue and Customs. It is a constant burden for business—full stop. In particular, I emphasise the attitude of HMRC towards business. I have raised with the Exchequer Secretary in previous debates a number of cases which were drawn to my attention through my casework. Given the way it conducts itself, I doubt whether anyone working in HMRC has any experience of running a business. Bureaucratic language is used. There is unfairness, a failure to get the facts right regarding individual self-assessment, and many issues arising from late-payment charges levied by HMRC. There are some desperate situations. I might write to the Minister following this debate to highlight some areas where we could work with the Treasury to introduce reforms. HMRC is over-zealous in the way it conducts itself with small businesses. We need a degree of common sense, better understanding and better dialogue. HMRC is far too faceless and bureaucratic in dealing with small businesses. We need to stop persecuting the people whom I call the nation’s wealth creators. Let them get on and do what they do best, and treat them in the right way on issues of taxation. There are some key areas of improvement for the HMRC.

On regulation, the Minister and the Government deserve a great deal of praise for the actions they have taken in the past 11 months, and for the commitment they have given to slashing the costs arising from red tape. The announcements in the Budget—long overdue—and the moratorium exempting the smallest of businesses, employing fewer than 10 people, from additional red tape for a three-year period are particularly welcome.

Businesses in Essex would welcome more support to take on apprentices, a cut in the red tape that hampers exports and more opportunities for our goods and services, in particular in the public sector. I have come across many small businesses that have struggled in that area, and more can be done. I will welcome the Minister’s thoughts. We would like to see more action taken.

The Minister must already be aware of an issue I raised with his colleague, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), regarding the Agency Workers Regulations 2010. They are having a significant impact and have been a constant worry for many small businesses. From talking to the businesses I have been dealing with locally, it seems the regulations will have a disproportionate impact on SMEs. Small businesses will struggle to absorb such additional costs and burdens.

I thoroughly appreciate the complexity of the issue, which was dealt with by the previous Government, the CBI and the trade unions. However, SMEs felt excluded from the process under the previous Government. SMEs tell me constantly that more could have been done on direct engagement and listening to them and their concerns. The Under-Secretary has been most helpful in taking concerns on board, but it is too little, too late, because a lot of the regulations were sewn up under the previous Government. I would welcome an update from the Minister on the regulations, as well as some more detail about the progress on the one in, one out rule. Businesses in my constituency definitely do not want to see more regulations and new burdens coming their way.

Clarification is also needed on the future of EU regulations. We welcomed with open arms the announcement that gold-plating would end; it was shameful that the previous Government disadvantaged British business to the extent they did. However, SMEs in Witham are eager to know how the current Government plan to protect them from further regulation by Brussels. Given my constituency’s manufacturing businesses, that is a big concern. The Minister is aware of the 2020 strategy developed in Brussels and its implications: we want assurances that it will not go unchecked. I ask for vigilance.

I also press the Minister to look at how to reduce regulation for the beer and pub sector. We have a lot of rural pubs in the constituency, and they create many jobs and have a good impact on the local economy.

Access to credit is a significant challenge for businesses in the constituency. Last autumn, I held a business advice surgery for all small businesses—with the Federation of Small Businesses and the banks, which were very good, actually—to facilitate dialogue and listen to businesses’ concerns. Obviously, without the credit lines, businesses cannot survive. My local businesses are struggling, and little progress has been made on access to credit. We welcome Project Merlin, but for me and my businesses locally it is about the money cascading down and going to the front line.

I would like to highlight an example—my constituent Amelia Rope, who runs an amazing chocolate business. She is an inspirational entrepreneur, as far as I am concerned. Her order books are growing—her clients range from Harvey Nichols to Selfridges—and she is desperate for funding. In fact, the Secretary of State saw her about a month ago. Despite even his interaction, no progress has been made with bank lending. That is simply extraordinary. Interestingly, her business seems to fall outside the scope of initiatives such as the enterprise finance guarantee, which should be available, and the banks are not helping her. I would welcome some thoughts on practical measures.

I have one further of example of where we would like to see credit going down to small businesses. A local convenience store in Witham wants to respond to local customer demand by opening a post office counter facility, and it is working with the Post Office to make what would be a good thing happen. Adapting the shop needs some investment, the cost of which is about £10,000. We have made lots of inquiries and have been told that for such a business to get any money, it would have to be making an investment of more than £1 million —that is the level of investment required under the terms of the available schemes, in particular the regional growth fund. That does not help small businesses of that nature, and certainly not that small shop, which I want to see survive, thrive, grow, expand and provide great postal services. I would welcome the Minister’s views on that as well.

To sum up, business is doing well in Essex and we want it to grow. We have the right Government with the right policies and initiatives to take away the shackles of regulation and other burdens. I would welcome the Minister’s thoughts, and his accepting the invitation to come to Witham at some stage to meet our local businesses.

16:55

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I congratulate my hon. Friend the Member for Witham (Priti Patel) on securing the debate.

As we have heard, my hon. Friend is an outstanding advocate for small businesses in her constituency—the wealth creators, as she has rightly described them. Although I am a Member of Parliament for a Hertfordshire constituency, I recognise that just across the border in Essex there are some fantastic wealth creators. She spelled out the passion of people who start and run a business, and who take that risk to create not only wealth for them and their family but jobs for their community. We often forget that role of small and medium-sized businesses. She has mentioned a remarkable variety of SMEs, including larger businesses, the self-employed sole traders, family firms and a household name. Tiptree, for those of us who enjoy a little jam on the side, is a fantastic household name, and it is seen around the world.

I note—I will go no further than that—my hon. Friend’s bid for the enterprise zone. I add that my hon. Friend is absolutely right to spell out the role of the business representative organisations. With 80% of SMEs in her constituency in that group, the networking opportunity is crucial. In many ways, that is the foundation for our thinking, as a new Government, on mentoring and business support, which have an important part to play. Government have a role in helping small businesses. That is not to tinker and meddle in every aspect of business, as perhaps we saw under the previous Government, but to create the stable, long-term framework sought by businesses so that they have the confidence to start, to build and to invest in their ventures.

My hon. Friend has mentioned three areas in particular. I am mindful of time, so I want to respond to her points, if I can. First, with tax, we are taking a comprehensive approach, starting by simplifying a system that has become hideously complex and has for far too long soaked up too much productive time, effort and resource. Simplifying the tax system would give businesses greater clarity and certainty, allowing people who are investing and trying to build a business to have some confidence about not only the current financial year but the next. Part of the process has been cutting the main rate of corporation tax from 28% to 23% and, as she has rightly pointed out, down to 20% for smaller businesses, which is one of the best rates in the G7. However, I am sure that the Chancellor is as open as I am to her suggestion that, in the right time and when the finances allow us, we keep that direction of flow with the tax burden, by reducing the rates further in due course.

My hon. Friend has also rightly raised the issue of high streets. The charges that matter, alongside business taxes, are business rates and national insurance contributions. We have sought to double the threshold of the small business rate relief and extended the duration of the scheme by a year. At the same time, we have reversed the previous Government’s bizarre attempt to increase the cost of employing people, through national insurance contributions, with the express intention of keeping jobs affordable. She rightly pointed out that many of the job creators are SMEs. If payroll taxes increased, as planned, how would businesses have been able to take on new people?

Equally important in such a context is capital gains tax. I am proud to be the member of a Government who in less than 12 months took capital gains tax entrepreneurs’ relief from £2 million to £10 million. That might seem somewhat technical, but we are saying to the business owner that we want to reward hard work and endeavour, which is an important part of the change.

I was concerned about the attitude described by my hon. Friend with regard to Her Majesty’s Revenue and Customs. It has a business payments support service which, on the whole, works well, in particular with the time-to-pay initiative allowing people to defer VAT and other business taxes. However, I am not unaware of complaints about some offices and some officers, and if she writes to me I would be happy to discuss that with my hon. Friend the Economic Secretary to the Treasury, because we want to ensure that a service that exists to help people with cash flow is operating effectively and consistently.

Let me turn to regulation, which is a perennial problem for all SMEs. During the past 12 months, we have sought to change a culture rather than just a few regulations. As Sir Humphrey might say, it is a courageous step for Ministers, because it is easier to find a few elements, and to say that we have got rid of them, without dealing with the system. The one-in, one-out system is intended to deal with the core of the problem, which is to get Ministers to understand, as SME owners do, that it is not the single measure of regulation that lies heavily on the shoulders of a business, but the cumulative burden. That is why we are forcing Ministers to show, before they introduce additional costs on businesses from regulation, where they can make a corresponding cut. That is the balancing act that we are seeking to achieve.

I can update the hon. Lady. Our first statement, for the first six months of this year from January to June, shows that proposals for 157 measures have been reduced to 46. That is a 70% reduction in the volume of regulatory measures. What is encouraging about that is that just 11 have a net cost on business. Most importantly, it allows us to deliver real savings. For example, the previous Government introduced the right for employees to request time to train, and were going to extend it suddenly to every small business. That would have cost £150 million, but we are scrapping it, not because we are against training, but because many SMEs are doing it anyway. The regulation would have subjected SMEs to paperwork and processes to prove what they were already doing. That was a needless cost, and we have got rid of it.

The net result overall in the first six months will be a reduction of £3.2 billion in the cost of prospective regulatory burdens on SMEs, which is mirrored in other areas. We are scrapping 16 of the regulatory bodies that exist at the moment. We are putting sunset clauses into new domestic regulations and, as my hon. Friend has rightly pointed out, we introduced from last month a moratorium for the smallest firms on the burden of regulation for the next three years.

My hon. Friend has mentioned EU regulations, and I shall touch on that matter, because I know that they cause great concern to her and many of her constituency businesses. We are taking three steps in this regard, first to ensure that Ministers engage far earlier in the process with Brussels so that we do not find ourselves behind the track, and that France, Italy, Germany and others have decided what the principles of the change will be. Secondly, we are ending gold-plating, whereby we have often tied the hands of UK businesses too tightly. Thirdly, on the 2020 strategy, the Prime Minister is leading the way in pressing the Commission to help small businesses, particularly with an exemption for SMEs in EU regulation. We have already taken that step in the UK, and we are looking to roll it out across the other half of the regulatory burden.

My hon. Friend has mentioned the agency workers directive and, as she has said, my hon. Friend the Employment Relations Minister is dealing with that specifically. The deal that was struck in May 2008 included a 12-week qualifying period before an agency worker is entitled to equal treatment. We recognise that some businesses will have real problems with the way that the directive will work from the autumn. If we seek to change the arrangement but do not secure the agreement of the CBI and the TUC as part of that, the danger is that we could find ourselves in a worse position. The dilemma is difficult, which is why we are consulting carefully, and I am pleased that, as my hon. Friend has said, the Employment Relations Minister is looking carefully at the matter to ensure that large and small businesses are engaged in the process.

Access to credit is also a difficult issue for many small firms. I understand the issue of Amelia Rope—what a super business it is. It can be frustrating, and I certainly find it difficult when the Government cannot intervene successfully in an individual case, but the Secretary of State is leading the way in challenging the banks to make sure that they are not only lending, but behaving reasonably.

[Neil Parish (Tiverton and Honiton) (Con)]

Will the Minister give way?

[Mr Prisk]

If my hon. Friend does not mind, I want to answer the questions asked by my hon. Friend the Member for Witham.

We are taking various steps to help SMEs. First, we have secured an effective lending code and an appeal process, so that, for the first time for a dozen years or more, businesses can tackle the unreasonable behaviour that they sometimes encounter. I have encouraged hon. Members—I suspect that I do not need to encourage my hon. Friend—to back up their businesses, because that is the sort of direct action that has an impact on the chief executive of a major bank.

Secondly, we are extending the enterprise finance guarantee—it is not directly relevant to Amelia Rope’s business—so that a further £2 billion of lending can be unlocked. For example, in Essex we have seen 397 businesses secure EFG funding to the value of around £34.5 million. I recognise that that is not the only answer, and my hon. Friend rightly has raised the issue of capital. Debt funding is important, but for many SMEs the capital side—the equity side—is also crucial. That is why we have sought to provide an additional £200 million through enterprise capital funds, which have been designed deliberately to unlock a total of £300 million—£200 million plus £100 million—in equity funding for capital investment for businesses.

Alongside that—this is specifically relevant to the regional growth fund—we recognise the value of business angels. I am a great believer that business angels sitting alongside a business often bring not only funding, but a little grey hair—I declare an interest in that aspect—in terms of experience. We must ensure that small businesses have someone to bring experience of funding. That is why the regional growth fund has been able to extend the way in which we invest through a business angel co-investment fund. The Government should be careful not to invest public money in the wild belief that we have great wisdom in what to invest in, but if we invest alongside those who are experienced, and have a little skin in the game, we can make a sensible investment and grow that market.

That leads me to a broader point about access to credit. I strongly believe that although we need to take short-term measures with banks, we must deal with the long-term issue of competition in the banking system. If we get more entrants—I believe that we will—we will have a golden opportunity to enable people to choose. Every market works when there is a choice of providers. The problem with our banking system at the moment is that most SMEs have a choice between three or four players who have similar terms.

My hon. Friend has raised some excellent points about tax, regulation and credit, as well as about how the agency workers directive will work. She has rightly pointed out that we must enable not only the CBI and larger businesses to have the ear of the Government, but also smaller businesses, which sometimes struggle. In the first 12 months, the Government have started to take effective action by cutting red tape, simplifying the tax system, ensuring that the tax system rewards endeavour through the capital gains tax changes, making it easier to start, fund and grow a business and, in particular, by ensuring that we send a message that the Government include people who have run businesses and who understand them and, just as importantly, that we are on the side of small businesses in Witham and throughout the country.

[Mr Alan Meale (in the Chair)]

That concludes the debate. I place on record my thanks to the Commons staff, who have worked vigorously throughout the day.

Question put and agreed to.

17:08

Sitting adjourned.