House of Commons

Tuesday 13th September 2011 Commons Chamber

Tuesday 13 September 2011

The House met at half-past Two o’clock

Prayers

Tuesday 13th September 2011 Commons Chamber

[Mr Speaker in the Chair]

Business before questions

London Local Authorities and Transport for London (No. 2) Bill [Lords] (By Order)

Second Reading opposed and deferred until Tuesday 11 October (Standing Order No. 20).

Oral Answers to Questions

Tuesday 13th September 2011 Commons Chamber

The Secretary of State was asked—

[Yvonne Fovargue (Makerfield) (Lab)]

1. What recent discussions he has had with Her Majesty’s Revenue and Customs and the Insolvency Service on the viability of insolvency litigation following the implementation of the reforms proposed by Lord Justice Jackson.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

The Department has received many representations about different aspects of implementing the reforms proposed by Lord Justice Jackson, which we are taking forward in the Legal Aid, Sentencing and Punishment of Offenders Bill. I and my officials continue to have discussions with Government Departments and others on implementation generally, including with Her Majesty’s Revenue and Customs and the Insolvency Service in relation to insolvency proceedings.

[Yvonne Fovargue]

In June, the Minister said that he was discussing with HMRC and the Insolvency Service the specific implications of the Jackson reform for the punishment of dodgy directors of insolvent companies, with a view to reaching a satisfactory conclusion. Three months down the line, what conclusion has been reached?

[Mr Djanogly]

Our current position is not to depart from Lord Justice Jackson’s recommendations on recoverability, with the sole exception that we have outlined in the Bill. However, the Government are aware of the particular issues concerning the impact of abolishing conditional fee agreement recoverability in relation to insolvency and related proceedings. I and my officials will continue to assess and discuss the implications.

[Mr Mark Spencer (Sherwood) (Con)]

Will the Minister find time to meet me to discuss the case of a company based in Staffordshire that sold hot tubs and which defrauded many of my constituents? It took their money, went into insolvency and became a phoenix company.

[Mr Djanogly]

I shall listen to the circumstances of my hon. Friend’s case, but it might be one for the Department for Business, Innovation and Skills rather than the Ministry of Justice. If it is relevant to my Department, however, I will be happy to meet him.

[Jessica Lee (Erewash) (Con)]

2. What recent progress he has made in making prisoners work while in custody; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

We have made clear our intention to make prisons places of work and industry. We are already making good progress towards longer prisoner working weeks at a number of prisons, including 13 early-adopter sites that are implementing regimes designed to facilitate increased working hours. We are continuing to develop a framework that will enable us to maximise this approach across the prison estate. To achieve this, we are looking at the experience of other countries and have established a business advisory group to help us to deliver prison industries that operate on a commercial basis so that much more work can be delivered at no cost to the taxpayer and can contribute to victims’ services while competing fairly in open markets.

[Jessica Lee]

Does my hon. Friend agree that having prisoners do real work will help not only by tackling the culture of idleness in prisons, but by giving prisoners valuable vocational skills that we all hope they will put to good use upon their release?

[Mr Blunt]

My hon. Friend is absolutely right. There will be substantial benefits from bringing this policy to scale, which I am optimistic we can do. There will be benefits to victims from the resources generated by the work that prisoners do; to the taxpayer from relieving the cost of the regime; and to the stability of the prison regime, as she mentioned. However, there will also be a substantial rehabilitative benefit to prisoners who will leave prison with a CV that includes skills training in the work in which they have been involved as well as experience in the work itself.

[Mrs Jenny Chapman (Darlington) (Lab)]

We all agree that prison industry is good for rehabilitation, but how many additional prison officers does the Minister think will be needed to supervise movement around the estate and to ensure that prison industries are secure and properly delivered?

[Mr Blunt]

The hon. Lady is absolutely right. If we are to change prisons from being simply places of security and of warehousing people, where work is wedged in when possible, there will be additional costs to the prison regime. The businesses that go into prisons will have to generate the resources to support that.

[Mr Julian Brazier (Canterbury) (Con)]

In strongly welcoming my hon. Friend’s initiative, I urge him to consider the position of young people on remand. As successive prison inspectors have said, it cannot be right to have young people, even though they have not been sentenced, sitting about not required even to undertake any education let alone work.

[Mr Blunt]

Again, my hon. Friend is right. Remand prisoners pose a particular challenge, in the youth estate as well as the adult estate, because of the speed with which they tend to turn over in those institutions. That makes getting work for them more difficult, but there needs to be a proper focus on programmes for all people in custody following a proper assessment of their rehabilitative requirements.

[Kate Green (Stretford and Urmston) (Lab)]

The Minister will be aware that women in prison are often under-occupied. Will he tell us what special attention he is giving to creating working opportunities for women who are serving custodial sentences?

[Mr Blunt]

This agenda has to apply to women as well as to men. The sad fact is that, overall, too many of our prisoners are under-occupied, whether women or men, and the same attention must be paid to the women’s estate as to the men’s estate.

[Caroline Lucas (Brighton, Pavilion) (Green)]

3. What his policy is on the right of overseas victims of alleged human rights abuses by UK multinational companies to access justice in the UK.

[Katy Clark (North Ayrshire and Arran) (Lab)]

7. What recent discussions he has had with the Secretary of State for Foreign and Commonwealth Affairs on his proposed reform of access to justice for overseas victims of corporate harm.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

Overseas victims of alleged corporate harm by UK international companies are, where appropriate, able to bring civil claims in the UK now, and that will continue to be the case following implementation of our reforms to civil litigation funding and costs. My officials and I are in contact with the Foreign and Colonial Office—[Laughter]—the Foreign and Commonwealth Office as and when necessary to discuss the impact of our proposed reforms to legal costs in this class of case in this country, the Commonwealth or the colonies.

[Caroline Lucas]

I thank the Secretary of State for that interesting reply. Notwithstanding his response, he will be aware that the United Nations Special Representative on Business and Human Rights has said that clauses 41 to 43 of the Legal Aid, Sentencing and Punishment of Offenders Bill will present a major barrier to justice for overseas victims of human rights abuses by UK multinationals, not least because of the significant increased cost burdens. Will he therefore withdraw those clauses from the Bill?

[Mr Clarke]

We are not changing the jurisdiction in this country, which certainly does entertain claims in personal injury cases and so on against multinational companies that have some footing in this country. All we are arguing about is how much is paid in legal costs. The reforms to the no win, no fee arrangements that we are proposing would ensure that the costs would be fairer, more balanced and not out of proportion to the claim. We are not making any change at all to the jurisdiction. Most of the cases against multinational companies are not human rights cases; they are personal injury cases. Many of those cases might be attracted here because our present system of rewarding lawyers is far more generous than can be found in any other jurisdiction in the world.

[Katy Clark]

The Secretary of State will be aware that the UN Committee on the Elimination of Racial Discrimination has also criticised the reforms, which would remove access to justice for the victims of corporate abuse overseas. Does he not recognise that the reforms could result in there being no disincentive to environmental and other abuse? Will he not look at this again?

[Mr Clarke]

As I suggested a moment ago, I regard it as just a little disingenuous—I hate to say that about UN agencies—to suggest that we are in any way undermining the jurisdiction here for dealing with racial discrimination or serious personal injury cases involving British companies. What we are talking about is how much the lawyers are paid by way of success fees and other costs. The Trafigura case was a classic scandalous personal injury case involving a British company and an incident in Côte d’Ivoire, in which £30 million in compensation was awarded by the British courts to the plaintiffs and £100 million was paid in legal costs to those who brought the action. All we are doing is going back to where no win, no fee used to be—in getting the costs and the claims back in proportion to each other.

[Mr Andy Slaughter (Hammersmith) (Lab)]

What we are talking about is whether such cases will get into court at all under the regime that the Government are proposing. It appears they will not listen to Her Majesty’s Revenue and Customs on insolvency, or to Amnesty International, Oxfam or the United Nations on multinational cases. Now, Admiral, the leading specialist motor insurer, is saying that premiums will go up as a result of the proposals. Is it not time to think again, and to stop favouring insurance companies, crooks and multinationals over their victims?

[Mr Clarke]

If the hon. Gentleman wants to widen this argument, which is perfectly legitimate, to include a general proposition as well as multinational company cases, the questions must be: how much is proportionate to the claim when it comes to paying costs, and what effect does no win, no fee, since it was changed, have on the judgment on both sides? We do not want such cases to be such a high earner for the plaintiffs’ lawyers that they are prepared to bring more speculative cases, which is happening at the moment. Nor do we want pressure to be put on defendants who have a perfectly sound defence, forcing them to say, “We cannot defend ourselves, because it will cost us less to pay a nuisance fee by way of settlement.” Justice involves striking a balance between what the lawyers are paid and what the plaintiffs get by way of compensation.

[Mr Gordon Marsden (Blackpool South) (Lab)]

4. What assessment he has made of the proposal to allow a right of appeal of decisions by judges to grant bail following the death of Jane Clough and other cases.

[The Minister for Policing and Criminal Justice (Nick Herbert)]

There is a right of appeal against bail decisions made by magistrates, but not against those made by the Crown court. This is not a straightforward matter; we are examining the issues very carefully to identify the best way to take this forward.

[Mr Marsden]

Jane Clough was stabbed to death outside Blackpool Victoria hospital by her former partner who had been freed on bail after being charged with nine counts of rape, and a similar case took place in the Blackpool area in the previous year. Jane Clough’s parents’ MP, the hon. Member for Pendle (Andrew Stephenson) has introduced a ten-minute rule Bill, which commands wide support. I wrote to the Lord Chancellor this July, asking him to give families and the Crown Prosecution Service the chance to appeal against this judicial bail decision. Will the right hon. Gentleman and other Justice Ministers at least consider making this change to the bail law? After such horrific events have taken place, it is not good enough simply to wash their hands of this subject when they have the power to make the change.

[Nick Herbert]

I am not sure whether the hon. Gentleman is aware of it, but along with my hon. Friend the Member for Pendle (Andrew Stephenson), I have met Mr and Mrs Clough. This was an appalling case in which a young mother was tragically killed. No one could have failed to be moved by what the parents said. They made a powerful case and I have said that the Government are considering my hon. Friend’s proposal, but Crown court judges are judges of some seniority and we need to assess the issues with care.

[Philip Davies (Shipley) (Con)]

Ministry of Justice figures show that more than 10% of all crimes and almost 20% of burglaries are committed by people on bail. Is it not time that the Government clamped down on the courts giving people bail and tightened the rules? Is it not self-evident that the more people are remanded in custody, the fewer the crimes will be committed and the fewer victims there will be?

[Nick Herbert]

I am sure that my hon. Friend is aware that many people who are remanded in custody and subsequently found either to be either guilty or not guilty would not have merited a custodial sentence. That is an issue that the House has to confront.

[Sadiq Khan (Tooting) (Lab)]

I am afraid that the Chamber will be concerned about the complacency of the language used in the Minister’s response. I am sure he will agree that judges, like the rest of us, are not infallible and make mistakes. If he accepts that and the fact that it can lead to catastrophic effects, why not allow the CPS the right to appeal in limited circumstances against a decision of a Crown court judge to grant bail?

[Nick Herbert]

I have answered this question, and I thought I did so in very reasonable terms. I said that we all appreciated that the case was very serious and that the Government would consider the proposal. We have to be aware, however, that granting an appeal on a decision of a Crown court judge—a more senior member of the judiciary than a magistrate—raises serious issues, which need to be considered with care.

[Sadiq Khan]

I am really sorry to raise the matter again, but a justice Bill is going through Parliament and it seems to the rest of us to provide the ideal opportunity to make the change required. The Minister will be aware that many colleagues—and not just those in the House—constituents up and down the country, victims of crime and experts working in the justice system all think that Ministers in the Justice Ministry are not fit for purpose. They were out of touch when it came to the issue of rape; they were out of touch when it came to providing a 50% reduction in sentence to those who pleaded guilty; and I am afraid they are out of touch on this issue. The Bill is in Committee, so will the Minister agree to support our amendment, which would allow the CPS in limited circumstances to appeal against a decision of a Crown court judge to grant bail?

[Nick Herbert]

I am not sure how many times I can repeat to the right hon. Gentleman that I have said that the Government are considering these matters. I am not going to announce policy on the hoof when very serious issues are raised. It is not proper to make a link between the provisions in the Bill and the case that arose because the restriction on custodial remands in the Bill applies only to magistrates courts and not to the Crown courts—so it would not have affected the case that gave rise to the question.

[Gavin Shuker (Luton South) (Lab/Co-op)]

5. Whether his Department has undertaken a cost-benefit analysis of the implementation of the office of chief coroner.

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

19. Whether his Department has undertaken a cost-benefit analysis of the implementation of the office of the chief coroner.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

An impact assessment for part 1 of the Coroners and Justice Act 2009 was published by the Ministry of Justice in December 2008. It summarised the full costs and benefits of implementing the coroner provisions in the Act.

[Gavin Shuker]

I am grateful for that answer. Baroness Finlay, working with the president of the Royal College of Pathologists, proposed a model with much lower running costs—just £300,000—than those that the Government are talking about. So will the Minister accept that the costs for the office he is proposing could be reduced?

[Mr Djanogly]

I have met and discussed this point with Baroness Finlay on a number of occasions. The previous Government said that the set-up costs were going to be £10.9 million and the running costs would be £6.6 million a year. We looked at that those figures and we agree with them. The problem is that as we have to maintain the independence of the judiciary, the chief coroner—if there were to be one—could, unfortunately, not be based in the Ministry of Justice, as Baroness Finlay wanted.

[Tom Blenkinsop]

The delays and current practice in the coroner system is having a direct impact on bereaved families, particularly in the Teesside area. What costs to the UK health services arise as a result of the current coroner system?

[Mr Djanogly]

We remain committed to fundamental reform of the coronial system. I know that there are particular issues to address in the hon. Gentleman’s constituency, and they are being dealt with. Implementing the office of the chief coroner would require new funding, which simply is not available in the current economic climate. Our proposals will allow us to deliver those reforms, but without those additional costs.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

Does my hon. Friend recognise that there is a much cheaper and more cost-effective way of raising professional standards and creating a head of the coronial profession? That would involve designating a serving coroner as chief coroner and giving just minimal assistance to support him in that role.

[Mr Djanogly]

Unfortunately, the existing legislation would not allow that; the job would have to be done by a High Court judge or a circuit judge. The point of the matter is that we are putting in place a ministerial committee, which will answer to Parliament in a way that a chief coroner never could.

[Mr James Gray (North Wiltshire) (Con)]

As the repatriation of fallen soldiers through RAF Lyneham and Wootton Bassett in my constituency comes to an end, I know that the Minister will wish to join me in paying tribute to the first-class work done by the Wiltshire coroner over some four or five years. Will the Minister also now work closely with the Royal British Legion to ensure that the maximum possible support is available for bereaved families as these inquests proceed?

[Mr Djanogly]

I certainly congratulate the coroner on his work in tough circumstances. I also wish to tell my hon. Friend that I have met representatives of the RBL on a number of occasions. I believe that our reforms will improve the situation for the armed forces tremendously, through the national charter that we are providing and the ability to train coroners to military standards.

[Robert Flello (Stoke-on-Trent South) (Lab)]

There is a long list of organisations that wish to see a chief coroner in post and just the Minister who thinks he knows better. The Government’s fragmented proposals for the coronial system contain no mechanism to improve the appeals and complaints process—that was to be a key function of the chief coroner’s office. Nobody really believes that the proposed coronial board, reporting to Ministers, will fulfil that role. Does he think it acceptable to expect families to have to continue to pursue expensive judicial reviews and litigation in respect of coronial decisions, at great cost also to the taxpayer, and have no way of holding to account those coroners who do not deliver for bereaved families?

[Mr Djanogly]

As I have said, the Government are committed to urgent reform of the coronial service, and this is exactly what we are going to be doing. We are putting in place all the provisions under the 2009 Act, except the appeal process, which was going to cost £2.2 million a year. We feel that the existing processes are adequate.

[Toby Perkins (Chesterfield) (Lab)]

6. What recent representations he has received from people with mesothelioma and mesothelioma support groups on the potential implications of his proposed reforms to legal aid.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

Legal aid for personal injury claims was abolished by the previous Administration in 1999, so I take the hon. Gentleman to be referring to the proposed reforms to civil litigation funding and costs, and will answer on that basis. I have received several letters from MPs and others about the potential impact on mesothelioma sufferers. The Government’s package of reforms includes a number of measures to help claimants. We believe that valid claims will still be brought under the new regime but will be resolved at more proportionate cost.

[Toby Perkins]

Mesothelioma victims are often in the last year of their life by the time they are diagnosed and many are already too ill to seek redress. The proposals to prevent their being able to recover afterwards from the insurance premiums will mean a big up-front cost for many people. Derbyshire asbestos support team is very concerned that they and their families will miss out on access to justice because of these proposals. What can the Minister do to ensure that those people, who are very ill and who do not have trivial claims, have access to justice?

[Mr Djanogly]

The hon. Gentleman makes an important point. We recognise that reducing the time from diagnosis of the disease to settlement of the claim without the need for litigation would be preferable. Proposals to introduce a scheme that will incorporate a fixed time scale and cost each stage of the claim so that only the most complex cases reach litigation are being considered.

[Mr Jack Straw (Blackburn) (Lab)]

8. What decisions he has reached on implementing the recommendation of the review by Lord Justice Jackson to abolish referral fees.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

As the House was informed on Friday 9 September in a written ministerial statement, the Government have decided to ban referral fees in personal injury cases as recommended by Lord Justice Jackson. The ban complements our wider reforms to no win, no fee arrangements, which are being taken forward in the Legal Aid, Sentencing and Punishment of Offenders Bill.

[Mr Straw]

May I first express an unequivocal welcome for the announcement that the right hon. and learned Gentleman and the Under-Secretary of State for Justice, the hon. Member for Huntingdon (Mr Djanogly), made on Friday not only in respect of motor insurance but more widely about implementing this central plank of Lord Justice Jackson’s recommendations? Since the Justice Secretary used the word “ban”, which I think is the correct word, may I ask him whether he accepts that, given the level of malpractice we see across the legal and paralegal industry, the ban will have to be backed by the criminal law?

[Mr Clarke]

First, may I say that I am glad that my old friend the right hon. Member for Blackburn (Mr Straw) and I are in complete agreement on this subject? It is not the first time. He got in first, really, because I waited for the opinion of the Legal Services Board, which I have not followed but which I had to consider, and he rightly prompted a decision. People who agree with us include not only Lord Justice Jackson but my noble Friend Lord Young in his report, “Common Sense, Common Safety”, the Law Society, the Bar Council and the Association of British Insurers. The main beneficiaries will be claimants who are genuinely referred to the best expert to act for them and the justice system in general. We are now considering the way in which to put this into practice, but it is likely to be in the form recommended.

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

Developing on that point, does my right hon. and learned Friend agree that we should consider not only criminal law but close liaison with professional bodies to ensure that strict disciplinary action is brought against individuals or bodies who seek to circumvent any ban by rebranding fees as other costs or, worse still, start an emerging black market in referrals?

[Mr Clarke]

My hon. Friend makes extremely sensible and welcome suggestions. We have not decided exactly what form the ban will take yet, so I will not predetermine its eventual form. As the professional bodies strongly support us, we look forward to their co-operation because they are in the best position of all to ensure that different types of abuse with the same bad consequences are not used to evade the ban.

[Mr William Bain (Glasgow North East) (Lab)]

9. If he will make an assessment of the effectiveness of the Human Rights Act 1998 in respect of the balance between fundamental liberties and obligations to society.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

We have established an independent commission to investigate the creation of a United Kingdom Bill of Rights. The commission is due to report no later than the end of next year and the Government look forward to receiving and considering its findings.

[Mr Bain]

I am grateful for that answer. Does the Secretary of State support Liberty’s campaign, entitled “Common Values”, that seeks to separate the myths from the truths of the Human Rights Act, which has, for example, protected the victims of rape from being cross-examined in court by their assailants? Is this not the right way to tackle what the Prime Minister recently called the misrepresentation of human rights?

[Mr Clarke]

The best way to answer that is to say that I agree with the campaign, with the hon. Gentleman and with the Prime Minister. A perfectly serious debate has taken place about human rights legislation and I look forward to the commission’s advice. A lot of the difficulty comes when human rights are invoked by officials in excuse for bad decisions or in all kinds of cases that have nothing to do with any human rights legislation. We would have an altogether more sensible debate if people understood the real problems and difficulties—and that they are not all problems and difficulties.

[Andrew Bridgen (North West Leicestershire) (Con)]

For many, the perception of the application of human rights law is that the pendulum has swung too far away from responsibilities and duties. Does my right hon. and learned Friend agree that the commission will present a good opportunity to extend the understanding that with rights go responsibilities?

[Mr Clarke]

I think the commission is a very helpful idea for getting some objective and balanced advice on the whole subject. Otherwise, I agree with my hon. Friend that there is no reason why human rights should interfere with the proper balance between the responsibilities and duties that one properly owes to society. Everybody in this country is in favour of basic human rights and everybody wants to have an orderly society. I think the commission will help to steer the debate in a more sensible direction.

[Jeremy Corbyn (Islington North) (Lab)]

Will the Secretary of State take this opportunity to assure us that any review of the Human Rights Act will not include withdrawal from the European convention on human rights or the European Court of Human Rights? Will he recognise that both those institutions have done a great deal of good to improve the human rights of minorities and ordinary citizens across Europe and that the convention is worth staying in?

[Mr Clarke]

The convention was largely drafted by British lawyers led by Lord Kilmuir. Successive British Governments have adhered to the convention and have put great value on it and the Court. Since the fall of the Berlin wall and the end of the cold war, the convention has acquired new importance in making sure that we support advancing standards in eastern and central Europe. There is not the faintest chance of the present Government withdrawing from the convention on human rights, and we are waiting for the commission to give us—[Hon. Members: “Ooh!”] Have a look at our coalition agreement. Indeed, it is not just the coalition agreement—we have agreed to have a fresh look at this through the commission and we are not prejudging its findings.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

10. What steps he is taking to eradicate gang culture within prisons and young offenders institutions.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

Youth and adult custodial establishments have access to a range of accredited programmes that address offending behaviour, including gang-related issues. Programmes include engaging community and voluntary sector groups to help deliver solutions to gang-related issues, and the National Offender Management Service and the Youth Justice Board support this work. The Government are developing a cross-departmental programme of action to tackle gangs and gang violence. An inter-ministerial group will report to Parliament in October.

[Dr Coffey]

I thank the Minister for that answer, which goes part of the way to addressing these issues. However, when I visited the Warren Hill young offenders institution in my constituency last year after there had been a riot, one of the reasons cited for the riot was the growing emergence of gang culture and the fact that when people are placed in young offenders institutions, proximity takes priority over gang dispersal. I would like him to look at this policy again.

[Mr Blunt]

I am very grateful to my hon. Friend for the interest she takes in Warren Hill. I have followed up the discussions that we have had and I assure her in relation to gang violence that there is no absolute, rigid rule that proximity should take precedence. When placing young people and adults into custodial establishments, both the YJB and NOMS take proper account of all the factors required and there is emerging good practice around identifying gang affiliations.

[Keith Vaz (Leicester East) (Lab)]

As the Minister knows from the evidence that has been received about the recent riots in London and other cities, a number of people involved in gangs were part of those riots. Will he ask his Department to deal with organisations such as User Voice, which consists of ex-offenders who were in gangs, which are willing to work with the Ministry of Justice and assist it in its projects?

[Mr Blunt]

The right hon. Gentleman has made an excellent suggestion, which I am very happy to pass on to officials in the Department.

[Mr Philip Hollobone (Kettering) (Con)]

Many of the foreign national prisoners in our jails are members of foreign national EU gangs that commit organised crime in this country. What is the Justice Department doing to tackle this aspect of gang culture in our cities and in our prisons?

[Mr Blunt]

Of course, where evidence and intelligence of that kind are received, they will be acted on to make sure that those gangs cannot operate within the prison estate and that gang members are properly dispersed by the placement decisions taken by NOMS. We will also want, as we do with all foreign national prisoners, to try to make sure that those people go home to serve their sentences.

[Stephen Pound (Ealing North) (Lab)]

11. What assessment he has made of recent trends in the size of the prison population; and if he will make a statement.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

Since the summer of 2008, the prison population has been increasing much less quickly than had been the case for a number of years. The public disorder in early August has, however, resulted in a sharp rise in the number of prisoners in recent weeks, with the prison population reaching 86,842 on Friday 9 September. Despite this unprecedented rise, sufficient capacity has been maintained in the prison estate to accommodate the prison population effectively.

[Stephen Pound]

Like any decent, reasonable human being, I am grateful for that answer from the Secretary of State. Could I ask him to give credit to the prison officers who have participated in this expansion, and the people working within the prison estate? It cannot have been easy for them. An additional 500 operational usable places have appeared in the last few weeks. Where from?

[Mr Clarke]

First, I agree strongly with the praise that the hon. Gentleman gives to the prison officers. The system did respond—the criminal justice system responded very well to the totally unexpected pressure of the riots. Partly it proved that our criminal justice system does work well in such circumstances. Secondly, it was entirely because of the public-spiritedness and good will of prison officers, probation officers, policemen and court staff, all of whom responded to the events with horror, as did every decent member of society, and decided to put the public interest first.

We always carry a cushion in the prison estate, because we do not know what number of prisoners will come. I know the consequences, which some of my predecessors have encountered, of running out of places in the prisons, and for that reason, I am glad to say, we were able to cope—there is still sufficient capacity—and it is very important that we continue to do so.

[Tom Brake (Carshalton and Wallington) (LD)]

Has the Secretary of State had time to consider the Make Justice Work report, “Community or Custody?” which sets out clearly how much more effective properly managed community sentences are than short-term prison sentences, and the potential for greater use of community sentences to push down the prison population?

[Mr Clarke]

We have to have all forms of punishment available, because no two cases are the same. What is likely to be most effective with one offender may not be with another. We do have to punish, and then we have to see what we can do to rehabilitate and prevent people from reoffending. But I quite agree: for some prisoners, the best effect from the public point of view—returning them to an honest life—can be achieved by non-custodial sentences, and the Government hope to make them more credible to magistrates and to strengthen them, so they can be used effectively in suitable cases.

[Sadiq Khan (Tooting) (Lab)]

The Secretary of State has, on a number of occasions, said and written that he intends to reduce the prison population significantly over this Parliament. As he has confirmed, 16 months into the Parliament, the prison population is at a record high. It was also at a very high level before the riots. As he is aware, the prison estate is struggling to cope. Prison officers and probation officers are increasingly stretched, and prisoners are spending even longer times idling in their cells rather than engaged in productive activities such as work. In the light of that, is he still committed to reducing the prison population significantly, and if so, how will he do it in a way that puts public protection first?

[Mr Clarke]

I do not think I have ever said that. I have made it quite clear that the prison population responds to demand. I did not anticipate the riots, but we have to have a prison population that can cope with the judgment of judges and magistrates who send us a number of people who have to be dealt with and punished in that way. I have said that I expect to have a more stable system, but I cannot understand why everything possible was done under the last Government to push up the total number of prisoners but to let them all out earlier, so that the system looked tough but actually turned into something of a shambles. I am also hoping that prison can be made somewhat more effective, and that it might be better at putting people to work, getting them off drugs, tackling their mental health problems and getting fewer of them to go on to commit more crimes—

[Mr Speaker]

Order. I am grateful, but we must move on.

[Mr Edward Leigh (Gainsborough) (Con)]

12. What steps he is taking to improve the functioning of the Special Immigration Appeals Commission.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

The operation of the Special Immigration Appeals Commission is kept under regular review. There are no present plans to change current arrangements.

[Mr Leigh]

Too often immigration cases are deliberately spun out using never-ending reviews and ever-upwards appeals. What steps will the Minister take to protect the much-needed immigration reforms proposed by the Government from such delaying tactics?

[Mr Djanogly]

Parliament has on previous occasions decided against the ousting of the High Court’s judicial review jurisdiction. The Supreme Court recently indicated that it considered it would not be appropriate for the Government to take that route. However, improvements are being made. The legal aid reforms currently before Parliament seek to remove legal aid from repeat applications for judicial review in immigration and asylum cases.

[Ben Gummer (Ipswich) (Con)]

13. What recent progress he has made in implementing his policy of payment by results to reduce the rate of reoffending.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

Payment by results is gathering pace. We are piloting a number of different approaches to see what works best. Two prison pilots have been put in place at Her Majesty’s prisons Peterborough and Doncaster.

Pilots also will begin in public sector prisons next year. Six justice reinvestment pilots have been put in place through memorandums of understanding with either local authority chief executives or local police chiefs in Manchester and London.

In 2012 two community pilots will commence to rehabilitate offenders while serving sentences in the community, in addition to one or more provider-led innovation pilots. We are also working with the Department for Work and Pensions through the Work programme and with the Department of Health on drug and alcohol recovery to look more widely at payment by results mechanisms which fully—

[Mr Speaker]

Order. I advise the Minister, for next month the answers should be a bit shorter. They are just a bit too long.

[Ben Gummer]

I thank the Minister for that careful reply. He will be aware of the Justice Committee’s recommendation that contracts should follow the offender through the criminal justice system, rather than attach themselves to the various institutions through which he or she might pass. What progress has the Department made in considering those proposals?

[Mr Blunt]

My hon. Friend will have realised, given the number of pilots we are conducting—I am sorry, Mr Speaker, that the list was too long for me to deliver satisfactorily—that we are testing the different elements of the system to identify the best and most effective way to deliver payment by results. I hope that, in the end, we can deliver the offender-centric process on which my hon. Friend relies, once we have identified which part of the system makes offenders best respond to effective rehabilitation measures.

[Fiona Mactaggart (Slough) (Lab)]

Do any of those projects help to test whether providing housing for people leaving prison helps them to be less likely to reoffend?

[Mr Blunt]

Housing—having a home to go to—is plainly a key crime desistance factor, but an awful lot of other key factors, such as work and drug addiction, are well-documented. We want to get out of the business of identifying exactly what inputs people must deliver to offenders, but make all sorts of institutions responsible for focusing on the outputs and let them take the decisions about which are the appropriate desistance factors to address for the offenders whom they are treating.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

14. When he plans to bring forward proposals on compensation for victims of overseas terrorism.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

Compensation for victims of terrorism overseas is being considered alongside the Government’s review of victims’ services and compensation in this country, at the conclusion of which we will publish a consultation document. We plan to make an announcement on the victims of terrorism overseas at the same time as we launch the consultation.

[Gemma Doyle]

I thank the Minister, but the families of the victims of overseas terrorism and the survivors were promised on 28 June that an announcement would be made “in the coming weeks”. Some two and a half months have now passed with no announcement. How much longer should the victims and their families expect to wait?

[Mr Clarke]

I have to confess that the hon. Lady has a valid point on the timing, but the fact is that it makes sense to consider the victim support that we give, the present criminal injuries compensation scheme and the support that the Foreign Office gives overseas alongside the proposed terrorism compensation scheme. This has always been a great difficulty over the years. We can all recall that, probably over the past 20 years, people’s aspirations to help victims here and abroad have run rather ahead of the arrangements made to finance them. I assure the hon. Lady that we are having to look at this again. I realise that we are slipping behind the timetable that we announced, but we will proceed as quickly as we can.

[Bob Blackman (Harrow East) (Con)]

15. What recent assessment he has made of the operation of the courts during the public disorder of August 2011.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

The courts responded swiftly, fairly and properly during the recent public disorder and continue to process cases as soon as they are brought by the prosecution. Although it is too early to make a final assessment of the courts response to the disorder, my Department is reviewing all aspects of the response to find out whether opportunities for continued improvement in public service can be identified.

[Bob Blackman]

I thank my right hon. and learned Friend for that answer. One of the lessons of the riots was that those who were responsible were arrested, held on remand and processed through the courts and, if found guilty, began their sentences almost immediately, thus protecting the public and acting as a significant deterrent to others. Surely, that should be the norm, rather than the exception.

[Mr Clarke]

First, I have already praised the staff of all the services involved for the service that they delivered, and I think that we have all noticed that it was possible to handle certainly the straightforward cases much more quickly than we have become too used to regarding as the norm elsewhere. Obviously, we realise that we cannot expect such extraordinary efforts to be made all the time and in all normal circumstances, but efficiency can be improved. My right hon. Friend the Minister for Policing and Criminal Justice is taking a particular interest in improving the efficiency of the system and learning the best lessons that we can from our welcome experience of the riots.

[Kerry McCarthy (Bristol East) (Lab)]

It seems that in the immediate aftermath of the riots, in many cases, courts completely dispensed with asking for pre-sentence reports. One of the consequences was that parents of young children received custodial sentences, and no regard at all was paid to what would happen to those children. Does the Secretary of State agree that when parents are sentenced to custody, there ought to be automatic checks on what happens to the children?

[Mr Clarke]

My colleagues and I have just been checking with each other, and we all think—well, we all know—that pre-sentence reports were provided. One cannot proceed to swift justice without getting the necessary information about the circumstances of the client and their family. I am sure that pre-sentence reports were, in fact, required by courts, and they can certainly be obtained at adequate length in the time available if one is moving briskly. Of course, all the sentences are open to appeal, and the situation and the consequences can all be looked at in the normal way that always follows a sentence involving someone with family responsibilities.

[Sajid Javid (Bromsgrove) (Con)]

16. What plans he has to improve the efficiency of the criminal justice system.

[The Minister for Policing and Criminal Justice (Nick Herbert)]

We are taking forward a programme of work to tackle inefficiency, including by streamlining the administration of cases, extending digital working, and making greater use of video links. We will in due course bring to the House further proposals that will build on the effective response of the criminal justice system to recent public disorder.

[Sajid Javid]

Does the Minister agree with me that we can make better use of our magistrates courts?

[Nick Herbert]

Yes, I do, and we are looking to do precisely that, so my hon. Friend is right. It is noticeable, for instance, that more than half of defendants in either-way cases sentenced in the Crown court receive a sentence that could have been imposed by magistrates. The Government understand that the Sentencing Council is developing draft allocation guidelines to support magistrates in determining where cases should be heard, and we will consult on the draft guidelines in the autumn.

[Kevin Brennan (Cardiff West) (Lab)]

In considering the efficiency of the criminal justice system, does the Minister know whether there has been any discussion in Cabinet about what the appropriate punishment is for drug-related offences involving class A substances, such as cocaine?

[Nick Herbert]

No.

[Mr Peter Bone (Wellingborough) (Con)]

17. How many prisoners are serving sentences for (a) human trafficking and (b) drug-related offences; and what the average length of sentence is in each case.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

Between 2006 and 2010, 109 people were sentenced for human trafficking offences, with an average determinate custodial sentence length of 50 months, and 254,980 people were sentenced for drug-related offences, with an average determinate custodial sentence length of 32 months. The average determinate custodial sentence length for trafficking for sexual exploitation was 50 months; in the case of trafficking for forced labour, it was 51 months, and in the case of drug trafficking, it was 73.5 months.

[Mr Bone]

I think that the House will agree that there is a bit of difference between the figures for human trafficking and for drug-related offences, yet the two crimes—human trafficking and drug offences—are very difficult for the victims. We should surely rebalance the criminal justice system to ensure that more traffickers are caught. I know that the Government have produced their human trafficking strategy, but there is a terrible imbalance at the moment.

[Mr Blunt]

I am grateful to my hon. Friend, and I thank him for his energetic chairmanship of the all-party group on human trafficking, and for continuing to bring the issues to my attention. Trafficking drugs and people are both extremely serious offences, and when people are caught—obviously, we want to make sure that they are, on every conceivable occasion—they should serve an appropriately serious tariff.

[Mr Speaker]

I am grateful to the Minister both for his succinctness and his control of his breathing, which was impressive.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

I begin by making a topical statement, Mr Speaker, controlling my breathing carefully as I do. Last week, as well as announcing plans to allow cameras into courts, I outlined plans to open up the justice system by publishing unprecedented local data. We will publish data on court performance, sentencing and reoffending, and provide information on what happens next following a crime, alongside street-level crime data. That will allow people to see how the criminal justice system operates in their area. We will also encourage consistent publication of the names of offenders unlawfully at large; that will help in apprehending them and returning them to custody. Those measures will place the crime and justice sector at the forefront of the Government’s policy on transparency.

[Bridget Phillipson]

We have seen real success across Sunderland in reducing reoffending year on year. Of course, more needs to be done to tackle that, but it has been put at risk by cuts to the local probation trust. Does the Lord Chancellor think that reoffending rates will be higher or lower by the end of this Parliament?

[Mr Clarke]

Criminal statistics are more reliable than they used to be, but I still do not have total confidence in them, and I would certainly never make forecasts with them because crime trends are very difficult to predict. However, I am glad that success has been achieved in Sunderland on reoffending, which we propose to make the prime focus of our policy: punish offenders effectively and, at the same time, try to stop them offending again.

[Sajid Javid (Bromsgrove) (Con)]

T2. In Worcestershire, we have had persistent problems with Travellers who refuse to respect the law. My fellow MPs in the county have recently written to the Justice Secretary with some suggestions about that, and I know that he is considering them. Does he agree that we should help Travellers to preserve their way of life—their travelling way of life—by moving them on?

[Mr Clarke]

This is a difficult subject, and it certainly needs to be looked at all the time. I agree: my experience in my part of the world is that many Travellers do not travel as frequently as they are supposed to, and they are fond of occupying vacant land and building houses on it, while still describing themselves as Travellers. The subject is more complex than that, and if we can make any improvements to the law that protect the legitimate interests of society as a whole, we will certainly do so.

[Helen Goodman (Bishop Auckland) (Lab)]

Last week, the Under-Secretary of State for Justice, the hon. Member for Huntingdon (Mr Djanogly), defended the Government’s narrow definition of domestic violence in the Legal Aid, Sentencing and Punishment of Offenders Bill with these words:

“We are concerned that to include admission to a refuge in the criteria would be to rely on self-reporting…We are not persuaded that medical professionals would be best placed to assess whether domestic violence has occurred. Although they may witness injuries…nor would the fact of a police investigation without more evidence provide sufficient evidence”.––[Official Report, Legal Aid, Sentencing and Punishment of Offenders Public Bill Committee, 6 September 2011; c. 359-60.]

Women in this country will be appalled by those remarks. Would the Under-Secretary like to take them back, and also change his definition in the Bill?

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

It is not a question of taking them back; it is a question of making them in a very transparent way in our consultation. Having looked at the consultation, we came back and reassessed the definition of domestic violence, broadened what is included, and we are prepared to debate it in Committee. That is the process that is under way, and the Government stand by that.

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

T4. I fully support the plans to introduce television cameras in courts to improve transparency. What plans are there to improve transparency in the Prison Service so that we can see exactly what work and activity have been undertaken in each prison so that justice can be seen to be done?

[Mr Kenneth Clarke]

We intend to apply exactly the same policy in all sensible ways to the prison system generally as far as is practicable. We publish more figures all the time about reoffending rates and we will certainly be open about our success in extending the policy of providing more worthwhile working opportunities for prisoners, because getting them back into the habit of work is one way of getting them to live as responsible citizens in a normal society.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

T3. Using a restricted definition of domestic violence, as discussed a moment ago, will penalise victims of domestic violence, many of whom suffer for long periods before they begin to report incidents to the police. Will the Minister, given that he appears to be in some difficulty over this, consider meeting organisations working on domestic violence to work out how to make that definition work?

[Mr Djanogly]

I have met organisations and we have consulted on the issue. I am always prepared to meet organisations. I have to tell the hon. Lady that the key issue is having tests that are objective, and that is what we are trying to achieve.

[Laura Sandys (South Thanet) (Con)]

T6. Does the Minister agree that it is a scandal that so many drugs are swilling around prisons? It is crucial that we ensure that those who arrive in prison clean do not leave as addicts.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

I completely agree with my hon. Friend. Some 55% of those entering prison have been reported to have a serious drug problem, and 64% in a recent survey had used drugs in the previous month, which gives a sense of the scale of the problem. My hon. Friend is absolutely right: we must use all means possible, in a multi-faceted way, to address the problem, and provide safe places in prison, at the very least, for those attempting to recover from drug addiction, which is why we are beginning to develop drug recovery wings.

[Julie Hilling (Bolton West) (Lab)]

T5. There are 66 people in Bolton and more than 10,000 across the UK who are still driving with more than 12 points on their driving licence. Many are repeat offenders of the offences of speeding and driving without insurance and have more than 20 points. Is there a problem with the legislation or are judges being too lenient? Will the Secretary of State investigate?

[Mr Kenneth Clarke]

I think the answer is that we will investigate. I am grateful to the hon. Lady for the figures. They sound astonishing, so I look forward to her providing me with sufficient details for myself and my ministerial team to find out what lies behind them.

[Stephen Barclay (North East Cambridgeshire) (Con)]

T9. The building that formerly housed Wisbech magistrates court is owned by the Ministry of Justice and is in a prime site next to the historic port in Wisbech and a couple of yards from a conference centre. Will my hon. Friend the Minister meet me to discuss how we best use the site for regeneration so that it does not get locked in the stalemate that there has been with the police service locally?

[Mr Djanogly]

I will meet my hon. Friend. The court closed in April this year and Her Majesty’s Courts and Tribunals Service is progressing the disposal of the courthouse. As part of that process it is due to meet officials from both Cambridgeshire district council and Fenland district council later this month.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

T7. In the aftermath of the riots that so rocked the country last month, what lessons does the Justice Secretary think can be learned about the need to respond swiftly to public outrage at the actions of a lawless minority, balanced with the need to deliver justice?

[Mr Kenneth Clarke]

We obviously have to study the events closely, looking for any lessons we can learn from recent experience. More and more facts will come to light, upon which we can base firm conclusions. The question that the hon. Lady raises about the rapidity of the response in the early days to the first threats to public order and to citizens is not primarily for my Department, but I know that the Home Office is taking it extremely seriously. It is easy with hindsight to criticise operational decisions. What is important is looking to see how we can improve the response in the future.

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

Is it not bizarre that many Travellers originate in Ireland? The Irish Government changed their law, so now the Travellers have moved to England. In his review, will the Justice Secretary learn from how the Human Rights Act in Ireland does not prevent Travellers from being moved on?

[Mr Clarke]

I agree that there is a problem. Let us be clear. Travellers, like anybody else, are entitled to the protection of the law and are also subject to the law. We have to deal with Travellers on the basis of how they behave, not start going against them as a class. But we have to look at how the operation of the law at present is enabling people to lead a somewhat odd way of life which is totally at variance with that which is led by the rest of the population, and to seek to disregard laws to which everybody else is subject. I am not sure that the Human Rights Act and human rights legislation generally is terribly relevant, but if it gets drawn in, we will look and see what it can do to help with the case.

[Bill Esterson (Sefton Central) (Lab)]

T8. The Government cancelled the building of the Maghull prison after work had already started. Will the Lord Chancellor take this opportunity to tell my constituents what plans he has for the site, to allay their concerns about the Maghull prison site and nearby greenfield projects, which developers are eyeing up?

[Mr Blunt]

I am grateful for that detailed question from the hon. Gentleman. I will write to him with a full answer.

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

Does the Minister agree that prison is not the right place for women who pose no risk to the public, and that robust community sentences would be a much better option?

[Mr Kenneth Clarke]

It depends on what they have done for which they have to be punished. I do not think that prison is the right place for people who pose no risk to the public, but if they have done something heinous, they have to be punished in a way that the public regard as proportionate to the crime. We are paying considerable attention to the problem of women in prisons. There are too many. The combination of problems is sometimes quite specific, and in many cases there are multiple problems. Anything that can sensibly be done to improve the way we handle women prisoners, with proper regard to punishment and the protection of the public, we will do.

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

T10. Further to the question raised by the hon. Member for Brighton, Pavilion (Caroline Lucas), without legal aid or Government financial backing for the fee arrangements, how can we ensure that overseas victims of alleged human rights abuses by UK multinational companies get justice?

[Mr Clarke]

They have the jurisdiction. Britain entertains these personal injuries cases, these actions in tort, against multinational companies that have an adequate presence here in a perfectly open way, but it is still necessary for the costs of a case to be proportionate to the claim. We do not want people coming here and bringing their cases in British courts because the costs available to the lawyers greatly exceed those which could be attained by bringing similar cases in other jurisdictions.

[George Eustice (Camborne and Redruth) (Con)]

Does the Secretary of State agree that we need to do more to curb the compensation culture in this country and that one way of doing so would be to ensure that plaintiffs incur some form of financial risk in bringing their case so that they focus their minds on the merits of their case?

[Mr Clarke]

I am glad to say that I agree with my hon. Friend’s every word. There is a compensation culture. We are taking practical steps to get it back to common sense.

[Meg Munn (Sheffield, Heeley) (Lab/Co-op)]

The Secretary of State has stated his commitment to rehabilitation as a priority. Probation officers are key to this. They often need highly developed skills, particularly when working with violent offenders and sex offenders. Is he committed not only to maintaining levels of funding for probation officers, but increasing it in order to continue the downward trend in crime that continued under a Labour Government?

[Mr Blunt]

As the hon. Lady very well knows, we are having to manage a 23% reduction in our budget over the next four years in order to make the Ministry of Justice’s contribution to rescuing the nation’s finances. Sadly, probation services, like other elements, are not exempt from this. However, for the reasons she has given, they have been relatively protected under the spending review. We will of course continue to look for all available efficiency savings wherever we can, but the output of probation is very important.

[Alun Cairns (Vale of Glamorgan) (Con)]

An appeal to the special educational needs and disability tribunal listed today will not be heard until late February 2012. Does the Minister agree that that is wholly unacceptable and that a much quicker process is needed in order to resolve some of the cases relating to special needs?

[Mr Djanogly]

If my hon. Friend would like to write to me, I will look into that.

[Ian Paisley (North Antrim) (DUP)]

Can the Secretary of State inform the House what efforts he is making to ensure that sentencing policy and practice is consistent across all parts of the United Kingdom for rioters, and that rioters in Rasharkin and Belfast who try to kill police officers and damage property will face the same swift, certain and good judgment faced by rioters in England?

[Mr Kenneth Clarke]

I realise that our fellow citizens in Ulster have unfortunately had just as much experience of rioting as some of our British cities have. Among the many things that we must look at when we get the full facts about the very good response of our courts and criminal justice system to the recent English riots is how it compares with the experience in Northern Ireland. I agree with the hon. Gentleman that there should be some general consistency of approach, with swift and firm justice, particularly when rioting is taking place, because it stops people imitating it and lessens the likelihood that the disorder will spread.

[Tom Brake (Carshalton and Wallington) (LD)]

On the subject of payment by results, what guarantee can Ministers give that small providers will win some contracts and that small and large providers will have to make information about their performance publicly available?

[Mr Blunt]

Of course, anyone who is going to deliver payment by results would be crazy not to engage the voluntary and charitable sector as part of their delivery mechanism. Some of those charities will not have the resources to be able to underwrite payment-by-results schemes, but the prime provider would be mad not to engage those services.

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

The Government are currently consulting on the criminalisation of squatting. Has the Secretary of State seen the report “The Hidden Truth about Homelessness”, produced by the housing charity Crisis, which reveals that 39% of vulnerable homeless people have at some stage resorted to squatting to find a roof over their heads, and has he made an assessment of how the proposals he is putting forward will affect homeless people?

[Mr Blunt]

The consultation will end on 5 October, and I will of course be looking at all the reports and responses to it, including the one from Crisis.

[Philip Davies (Shipley) (Con)]

The Secretary of State was good enough to accept on Second Reading of the Legal Aid, Sentencing and Punishment of Offenders Bill that people who served indeterminate sentences for public protection had a very low reoffending rate, despite the fact that 29% of them have more than 15 convictions. Given that people with indeterminate sentences are in prison for manslaughter, other homicide, rape, robbery, arson and other violent crimes, why does he want to let them out?

[Mr Kenneth Clarke]

I made some cautious remarks a little earlier about criminal justice statistics. There is a very small number of people on indeterminate sentences who have ever been released, and I am very glad that there has been a low level of reoffending.

We are committed to ending that system. We have 3,500 people who have finished their normal sentence—that is, the tariff—and are unable to satisfy the Parole Board that they can be released, but we are looking at all those cases to find the best possible way of ensuring that the bulk of them do not reoffend. Some of them always will, however, and we cannot avoid that.

[Mr David Hanson (Delyn) (Lab)]

On the question of compensation for overseas terrorism, will the Secretary of State confirm that any scheme eventually brought in will apply from 18 January 2010, as originally proposed by the previous Labour Government?

[Mr Clarke]

I do not want to trail parts of the announcement that we will make when we are able to start the consultation, but I do remember very clearly that that was the commitment upon which everybody has been firmly proceeding.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I do apologise to colleagues whom I have not been able to accommodate. I could listen to the Secretary of State all day—and indeed all night for that matter. An additional session should be put on precisely perhaps for that purpose, but today I am afraid that we must move on.

Swansea Coastguard Station

Tuesday 13th September 2011 Commons Chamber

Martin Caton (Gower) (Lab)

- Hansard - - Excerpts

I present a petition on behalf of the “Save Swansea Coastguard” campaign, which in a few weeks has collected more than 100,000 signatures in opposition to the closure of the coastguard station at Mumbles, Swansea.

The petition states:

The Petition of people concerned about maritime safety in the Bristol Channel,

Declares that the recommendation of the UK Government to close the Swansea Maritime Rescue Coordination Centre at Tutts Head, Mumbles, would endanger the lives and wellbeing of people on the water and around the coast of the Bristol Channel.

The Petitioners therefore request that the House of Commons press the UK Government to retain the Swansea Maritime Rescue Centre as a 24-hour staffed coastguard station.

And the Petitioners remain, etc.

[P000957]

Lauderdale Avenue Tram Crossing (Blackpool)

Tuesday 13th September 2011 Commons Chamber

Paul Maynard (Blackpool North and Cleveleys) (Con)

- Hansard - - Excerpts

I should like to present a petition from the people of Blackpool and Cleveleys.

The petition declares:

The Petition of the people of Blackpool and Cleveleys,

Declares that the Petitioners are opposed to the permanent closure of the Lauderdale Avenue/Blandford Avenue crossing to traffic and pedestrians.

The Petitioners therefore request that the House of Commons urges the Government to encourage Blackpool Council to ensure that the Lauderdale Avenue/Blandford Avenue crossing remains open.

And the Petitioners remain, etc.

[P000959]

Port of Falmouth Masterplan

Tuesday 13th September 2011 Commons Chamber

Sarah Newton (Truro and Falmouth) (Con)

- Hansard - - Excerpts

This petition states:

The Petition of the residents of Falmouth,

Declares that the Petitioners believe that the dredging of Falmouth Harbour should be permitted to go ahead so as to enable the implementation of the Port of Falmouth Masterplan which is essential to the future prosperity of Falmouth.

The Petitioners therefore request that the House of Commons urges the Government to ensure that the Marine Management Organisation strikes the appropriate balance between environmental protection and social and economic development, with particular regard to the Port of Falmouth Masterplan including the dredging of Falmouth Harbour.

And the Petitioners remain, etc.

[P000958]

Points of Order

Tuesday 13th September 2011 Commons Chamber

15:35

[Chris Bryant (Rhondda) (Lab)]

On a point of order, Mr Speaker. I am not sure whether I concur with your last remarks, but I am sure that since noon on Monday you have been considering your own boundary recommendations, as indeed have many other English Members of Parliament. Unfortunately, at the moment it is impossible to go to the Vote Office and get copies of the boundary recommendations for the whole United Kingdom. In fact, in the House of Lords they are not available at all. Can I suggest to you that it might be a good idea if the draft recommendations were available in the Vote Office, so that the whole of this House might consider them, come to a firm view—and, I hope, reject them?

[Mr Speaker]

The hon. Gentleman asks whether he can suggest that. He can, he has done. I do listen, I have listened on this occasion, and he is proving himself, as ever, the candid friend. I will make inquiries into the matter and try to ensure that satisfaction is provided. That would be a very happy state of affairs.

[Jack Dromey (Birmingham, Erdington) (Lab)]

On a point of order, Mr Speaker. The Government have now made a number of misleading statements about their increasingly chaotic planning reforms. Last week the Minister of State, Department for Communities and Local Government, the right hon. Member for Tunbridge Wells (Greg Clark) told Parliament that the previous Government’s successful “brownfield first” policy, whereby previously developed land was to be prioritised before building on greenfield land was considered, had been retained. The Government’s own impact assessment in the national planning policy framework, however, makes it clear that the brownfield first presumption has been abolished. In addition, the Minister has been describing the policy as a “national ban”, when he knows that it is nothing of the kind. Has the right hon. Gentleman indicated his intention to come before the House to put right his misleading statements, and to explain to the House why priority is not once again being given to using brownfield land, of which there is enough to build 1.2 million homes on?

[Mr Speaker]

I am sorry to disappoint the hon. Gentleman, but the Minister in question has given no such indication. That said, I am grateful to the hon. Member for Birmingham, Erdington (Jack Dromey) for notice of his point of order. I am always concerned that the House should be given accurate information. I hope that he and the House will understand that it is not really for the Speaker to compare the accuracy of remarks inside the House with that of those made outside, let alone to offer an assessment of the relative merits or accuracy of comments that might appear on websites. I am sure that the hon. Gentleman, who is nothing if not the proverbial woodpecker in these matters, will seek advice from the Table Office on the ways in which he can pursue his concerns.

If there are no further points of order, we come to the ten-minute rule Bill, for which the right hon. Member for Blackburn (Mr Straw) has been patiently waiting.

Motor Insurance Regulation

Tuesday 13th September 2011 Commons Chamber

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

15:39

[Mr Jack Straw (Blackburn) (Lab)]

I beg to move,

That leave be given to bring in a Bill to reform the regulation and operation of the market in motor insurance; and specifically, to ban the payment of referral fees; to establish new standards relating to the evidence required and damages payable for whiplash; to reform the Pre-Action Protocol for Personal Injury Claims in Road Traffic Accidents; to set requirements in respect of risk pricing for personal injury claims; and for connected purposes.

The last time I had a ten-minute rule Bill was as a young and callow Back Bencher—

[Sadiq Khan (Tooting) (Lab)]

You still are, Jack.

[Mr Straw]

Thank you.

That was in April 1980, with my Police Authorities (Powers) Bill. Successive Home Secretaries were unpersuaded by the merits of my proposals until a new Home Secretary took over 17 years later, in May 1997, and progressively implemented most of the Bill.

The contrast between the fate of that first Bill and the fate of the Bill before the House today could not be more stark. Even before I had had this opportunity to move it, the Government announced last Friday that they were accepting one of the fundamental propositions of the Bill—the abolition of referral fees. The problems in the insurance market are, let me say, not of this Government’s making. As I have already expressed during Question Time, I am very grateful to the Justice Secretary and his Ministers for recognising the need for change, and to the backers of this Bill from across the House in giving momentum to the campaign that I have been mounting. Although there has been that welcome announcement by the Government, which will implement a key recommendation of the Jackson report, there are other necessary reforms that my Bill covers and which I hope the Government will also adopt.

First, let me spell out the concerns that exist in all parties about the wholly unacceptable state of the motor insurance market. In the past year alone there has been a 40% increase in the average premiums paid by Britain’s motorists to insure their cars. Young drivers face premiums of £2,500 or more, even if they can find underwriters to cover their risk. Older drivers with impeccable records who live in certain urban areas have been especially hard hit.

The principal factor behind these rocketing premiums has been an extraordinary increase in the number and value of claims for personal injuries—but this increase in personal injury claims has in no sense been caused by any commensurate increase in the number of accidents leading to such injuries. Indeed, the number of accidents has been going down, not up. Britain’s roads, long among the safest in the world, have been getting safer still, with fewer accidents and, where accidents do occur, fewer serious injuries. Those improvements have been paralleled by a dramatic drop in the number of thefts of and from vehicles.

Instead, the increase in claims has been artificially generated by a new industry, unheard of 20 years ago—a “claims industry”—with, I am afraid, the complicity of the insurance companies themselves. Claims management companies, personal injury lawyers, credit hire companies and repair and recovery firms have built a lucrative and self-serving merry-go-round in which the personal information of anyone involved in any collision with another vehicle, no matter how trivial its effects, is traded like a commodity, typically for £600 to £800 a shot, with the aim of pursuing a claim—any claim—provided that it brings rich rewards to all those involved in this industry.

Some police and NHS employees have been unlawfully engaged in this trade. Some police authorities have officially been charging recovery firms to pass on information about drivers and vehicles involved in accidents; one such made over £1.3 million in two years. I can also tell the House that some NHS acute trusts have been making money from this so-called industry, charging ambulance-chasing lawyers to advertise their services to patients waiting in accident and emergency departments. I have here data which show that since 2006, in aggregate, 70 NHS acute trusts have received £2 million in this way. As the Information Commissioner, Mr Christopher Graham, told the Justice Committee this morning, data protection and telecommunication laws are routinely broken by this claims industry as firms cold call, harass and browbeat individuals whose details they have purchased into pursuing claims.

Often such claims are for whiplash, which is not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers. Whiplash now accounts for 80% of all personal injury claims, adding about £66 to every premium. Latest figures suggest that 1,200 claims for whiplash are now made in the United Kingdom each day. The bait of £3,500 in compensation for no discernible injury and sometimes for no accident at all, which features so prominently in the text messages, telephone calls and high-pressure advertising, characterises this extensive and grubby industry.

Driving out the parasitic practitioners and cleaning up the motor insurance system will be complex and will take time. I suggest to the House that my Bill would make an important start. Clause 1 would make it unlawful to solicit, offer or pay a referral fee relating to a personal injury road traffic claim, although I would like to see that extended across the piece. Breach would be a criminal offence. That, in my view, is the only way to stamp out this unethical and unwholesome practice. I was pleased to hear earlier from the Lord Chancellor that he accepts that view.

Clause 2 deals with whiplash. Some jurisdictions abroad restrict the payment of damages for whiplash to claims where there is clear objective evidence that real injury has been suffered. Clause 2 provides for the need for such objective evidence. No one who has genuinely suffered an injury would be in any way disadvantaged by the provisions in the Bill.

In my Blackburn constituency, and in many other constituencies, there are law firms with banners outside their offices promising £650 in cash in return for any new personal injury claim. They can make those promises and pay out because the flat fee that insurers pay the lawyers for claims below £10,000 has been set too high. Such claims are now processed through an electronic portal, which costs the law firm no more than £100 in staff time to operate. The flat fee is £1,200, so even if a firm pays a £650 introduction fee it can make exorbitant profits. Clause 3 would cut the fee in half.

I will now deal with the fourth provision in the Bill. Honest law-abiding drivers in my constituency, and in many similar urban areas, especially in the north and the midlands, have faced even higher increases in premiums than most drivers, despite their impeccable driving records and inherent low risk of a future claim. That is because of postcode discrimination by insurers. Such practices do not harm those involved in the rackets, but they do harm entirely innocent people. Clause 4 would prohibit insurers from isolating the level of risk arising from personal injury claims in an area smaller than Wales, or a standard English region.

There are other measures that need to be taken alongside this Bill. There is already provision on the statute book for tougher custodial sentences for selling and trading in data contrary to section 55 of the Data Protection Act 1998. Those provisions, in the Criminal Justice and Immigration Act 2008, should be brought into force without delay. The prosecuting authorities should consider whether criminal proceedings under the Bribery Act 2010 should be instituted against some of the worst abuses, as the Bar Council has suggested. All the regulators—not just the Information Commissioner who, commendably, is seeking to do so—must toughen up their approach.

The changes in my Bill would make a significant difference for Britain’s hard-pressed motorists. The insurance companies would have to start stabilising their premiums and, as their costs came down, would have to reduce their premiums. I commend the Bill to the House.

Question put and agreed to.

Ordered,

That Mr Jack Straw, Sir Alan Beith, Sir Peter Bottomley, Steve McCabe, Graham Jones, Penny Mordaunt and Mr David Ward present the Bill.

Mr Jack Straw accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 20 January 2012, and to be printed (Bill 229).

Opposition Day

Tuesday 13th September 2011 Commons Chamber

[20th Allotted Day]

Opportunities for the Next Generation

Tuesday 13th September 2011 Commons Chamber

15:49

[Mr John Denham (Southampton, Itchen) (Lab)]

I beg to move,

That this House believes that young people face a more uncertain future which may not offer the increased opportunities and prosperity enjoyed by their parents and their grandparents; notes that, following the Government’s decision to cut public spending too far and too fast, it has targeted young people with cuts, resulting in nearly one million young people not in education, employment or training; further notes with concern that there were no university places for around 100,000 applicants this year, that tuition fees are trebling, university places will be cut next year and many universities will lose popular courses; highlights that the proportion of apprenticeship places for 16 to 18 year olds has decreased by 11 per cent., new apprenticeships are providing mainly short-term training for older workers, the Future Jobs Fund has been scrapped, the apprenticeship guarantee abandoned, Education Maintenance Allowance ended, homelessness has risen and homebuilding is at a 90-year low; believes the Government must take action to secure business growth to create opportunities for young people; resolves that the Government should repeat the bank bonus levy to create over 100,000 jobs through a youth jobs fund, to build 25,000 affordable homes and to support business through increased funding for the Regional Growth Fund; calls on the Government to expand apprenticeships for young people and to ensure that public sector contractors offer apprenticeships; and further calls on the Government to enact a temporary VAT cut to boost consumer spending, business confidence and support the UK’s high streets.

The motion is in my name and those of my right hon. Friend the Member for Leigh (Andy Burnham) and others. I thank the Minister for Further Education, Skills and Lifelong Learning, who has given his apologies for his absence this afternoon, which is for understandable reasons. I see that the Secretary of State for Business, Innovation and Skills is not here to answer the debate; he seems to be curiously reluctant to answer when I introduce Opposition day debates, but no doubt he is trying to work out how to be selected as the coalition candidate for Richmond at the next election.

We British people have always been confident that each new generation will do better than their parents and their grandparents. There have been wars and economic crises, and individual families have had their ups and downs, but what my right hon. Friend the leader of the Labour party calls “the promise of Britain” has held true. Parents have been able to say, “Our children have had more opportunities, a better education and a higher standard of living than we had.”

However, Members on both sides of the House will know that confidence in that British promise has never been more shaky, knowing that the average age of a first-time buyer is approaching 40, and that there are 1 million young people not in employment, education or training. At the same time, we have all heard young people asking whether the cost of a degree is worth it, and what the alternative would be. We have all heard parents asking how this country will pay its way in a fiercely competitive world, and what young people will do. Only a quarter of parents and grandparents questioned by YouGov believed that their young would be better off than they were.

Today, the Opposition are asking the House to focus on things that the Government should and should not have done, but let us be clear: the challenges did not suddenly emerge from a blue sky at the last election. The Minister for Universities and Science advocates the view that over decades, the older generation has in some way stolen the future from young people, and that we have so rigged the rules of the game throughout our lives that the young have only half a chance—I apologise if I paraphrase cruelly. We hear similar views across the political spectrum. Whether or not we share them—I have very strong reservations—it is clear that the generation now in power has a huge responsibility to young people, and that the changes that are needed in our economy and society are profound. Those changes will take leadership, which Labour will offer, over many years.

However, I would not be doing young people any favours if I pretended that it was only in the past year that everything had gone wrong.

[Mr John Redwood (Wokingham) (Con)]

In his motion, the right hon. Gentleman states that one problem is that the Government have cut

“too far and too fast”,

but in their first year they increased spending by 5.3%, or £32 billion, and every extra pound that they spent was, of course, borrowed. How much extra would he have wanted to spend?

[Mr Denham]

We know that the Government aim to cut sufficiently fast to eliminate the deficit in four years. Our judgment was that the right balance between dealing with the deficit and sustaining jobs and growth would be to halve the deficit over a similar period. That allows us to say not that there would never be any cuts in public expenditure, but that there would be a very different trajectory to public spending. For reasons that I will give, that difference of choice would have made a big difference to the young people of this country.

I have acknowledged that some of the problems are deep-seated and long-term, but today’s Opposition day debates focus critical attention on the Government’s actions. The charge is clear: the Government’s economic policy has directly made the lives and prospects of young people worse. They have not hit young people along with everyone else; they have chosen—I think “chosen” is the right word—to single out young people and to make their lives and prospects worse.

[Alok Sharma (Reading West) (Con)]

Yesterday the shadow Chancellor came to the House and, for the first time in 15 months, apologised for Labour’s mistakes. Are we going to have an apology from the right hon. Gentleman today for the fact that social mobility has fallen and attainment in schools has declined by international standards? By just about every measure, young people suffered under the Labour Government.

[Mr Denham]

We will have the opportunity in a few moments to see whether that last claim is accurate, although I think that the hon. Gentleman might be disappointed. On the question of apologies, though, we did not hear yesterday an apology from the Conservative party for urging the Labour Government to deregulate further and faster in the financial services sector. The right hon. Member for Wokingham (Mr Redwood) was one of those producing Conservative party policy documents in that vein. I think that we should hear a little honesty from the governing party.

[Mr Redwood]

Will the right hon. Gentleman give way?

[Mr Denham]

I will have to give way on that point.

[Mr Redwood]

As the right hon. Gentleman should know by now, the report that I co-authored stated clearly that the Government needed to regulate the cash and capital of the banks more strongly than they did. Had they done that, they would have been in a much better place.

[Mr Denham]

But the problem did not come from the cash or the capital; it came from the complex financial instruments that were not being properly regulated, as we discussed yesterday. However, I am trying your patience, Mr Speaker, so perhaps I should make some progress.

The Government have chosen to single out young people and make their lives and prospects worse. In June I visited the Bombardier factory in Derby and talked to three young apprentices. I asked them how they saw their future in the company. “To go as far as we can,” said one. Mr Colin Walton, the chief executive officer, used to be an apprentice. That is what the promise of Britain was all about: if someone wanted to get on, they could. We all know what happened, though. The Government missed the chance to reopen the Thameslink contract, despite the many changed circumstances. It was a disastrous failure of will and responsibility, and the dreams of those apprentices now hang by a thread.

The decision to tackle the deficit by cutting spending too far and too fast has had predictable results. The economy was growing a year ago, but today it is choking.

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

rose—

[Mr Denham]

And the hon. Gentleman will explain why.

[Mr Evennett]

I will if I get an opportunity to speak later, Mr Speaker. I always listen to the right hon. Gentleman with great interest, but he is rewriting the history of the Labour Government of which he was a member. The present Government have increased the number of apprenticeships dramatically. I would like to refresh his memory: in May 1997 there were 664,000 unemployed 16 to 24-year-olds, but that had increased to 924,000 by May 2010. Is that not an indictment of the failure of the Labour Government of which he was a member to manage affairs and to help young people and apprentices to get the jobs that they needed?

[Mr Denham]

I will deal directly with both those issues in due course, if the hon. Gentleman will have patience.

Every family is suffering, but young people are paying a particularly heavy price. Young people in Britain today are not accidental victims of the cuts; what is happening to them is not some collateral damage of Treasury policy. When the Government drew up plans to cut spending too far and too fast, they decided to target young people, and they did it recklessly and without thought or heeding the evidence. They ended education maintenance awards without understanding how important they were. As the Education Committee wrote:

“The Government should have done more to acknowledge the combined impact on students' participation, attainment and retention, particularly amongst disadvantaged sub-groups, before determining how to restructure financial support.”

They got that wrong, and young people who want to stay on will suffer.

Advice and guidance to young people is essential. The Government are wrecking the careers services—but that is the subject of the second debate today. Labour’s future jobs fund had a simple aim: to prevent a destructive rise in long-term youth unemployment during the recession. All unemployment hurts, but long-term youth unemployment has the longest, most corrosive effect on its victims. And the future jobs fund worked. When it started, the number of those not in employment, education or training fell by more than 200,000. The current Prime Minister praised it when in opposition, but after the election it was scrapped, and nothing effective has taken its place. In the past year, the number of NEETs rose by more than 100,000, with 119,000 19 to 24-year-olds not doing anything productive.

[Robert Halfon (Harlow) (Con)]

Will the right hon. Gentleman acknowledge that, although there were 90,000 starts under the future jobs fund between October 2009 and January 2011, the analysis of the Department for Work and Pensions from March this year shows that half the young people involved were back on the dole just seven months later?

[Mr Denham]

I am proud of the effectiveness of my Government’s policies in tackling long-term youth unemployment. The experience of having nothing to do has a lasting effect on people’s careers, incomes and aspirations up to 20 years after the event, and we succeeded in tackling that throughout our period in office from 1997. The reality is that that this Government have scrapped the future jobs fund and, far from introducing anything better, have put nothing effective in its place. The effects of that on young people are all too clear.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

Does my right hon. Friend agree that the Government’s contempt for young people is illustrated by the fact that the Work and Pensions Select Committee has pointed out the lack of evidence for the decision to scrap the future jobs fund and called into question the value for money of the decision? The Government did not know what they were doing to our young people.

[Mr Denham]

My hon. Friend is absolutely right. The truth is that it was more important for this arrogant Government to scrap something because it was a Labour scheme than to look at whether it was working not. But it is not the Labour party that has paid the price; it is young people up and down the country.

[Ian Paisley (North Antrim) (DUP)]

Does the right hon. Gentleman accept that the scrapping of the education maintenance allowance, the apprenticeships fund and the future jobs fund is having a more pronounced effect in the regions of the United Kingdom? In my constituency, for example, 19,000 young people aged 16 and above do not have employment. Does he accept that this loss of benefits and opportunities is having a much more pronounced effect there than it is having even here in England?

[Mr Denham]

The hon. Gentleman speaks with great authority about his constituency.

It is a tragedy that the importance that was attached to young people and to avoiding long-term unemployment, from the new deal onwards, has disappeared under this Government. Too many people are being pushed to the edges of the labour market, where there are too few opportunities for them. Many parents, and young people, want apprenticeships. Labour rescued and rebuilt apprenticeships. There were fewer than 70,000 a year when we took office, but the figure had increased to nearly 280,000 in the last year of the Labour Government, and those apprenticeships were more credible and successful than those that had gone before. Again, however, the new Government were keener to rubbish our record than to get their own plans right.

I have to say that, on paper, it is hard to fault the ambitions that the new Government set out: now, however, the truth is coming through. The great growth in apprenticeships has turned out to involve short-term training courses for adults. There is nothing wrong with training adults, but it is certainly not what most people think of as an apprenticeship, and it certainly does not provide new opportunities for young people. The proportion of apprenticeships for 16 to 18-year-olds has actually fallen. We need, but are not getting, longer apprenticeships in high-end technical subjects that are necessary to spur growth; we need electrical, mechanical and construction apprenticeships.

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

I visited a forging business in Cradley Heath in my constituency on Friday. For the first time in five years, it has taken on an apprentice from a local college. It is offering a high-quality, high-tech apprenticeship to that young person, who will be able to develop the skills to get a high value-added job in the future. That is what is happening as a result of Government policy.

[Mr Denham]

I applaud that company and those apprenticeships. That is a story that is being repeated in my constituency, but it was being repeated three or four years ago as well. The myth is that the situation has been transformed overnight. We are presented with some impressive headline statistics, but close analysis suggests that we are not getting an expansion of the high-quality opportunities that our young people and the economy need.

If the Government really had confidence in what they were doing, they would not have scrapped Labour’s guarantee of an apprenticeship for every qualified school leaver. They have also refused to require Government contractors to provide apprenticeships. In the past, that guarantee meant that investment in social housing also involved investment in training young construction workers. The Minister for Housing and Local Government described that policy as “ridiculous” and “counter-productive”, while the Minister for the Cabinet Office said that it “wouldn’t be appropriate”.

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

Does my right hon. Friend agree that the key choice in cutting the deficit is the balance between growth and cuts? If the cuts reduce our capacity to grow, as do the cuts to the future jobs fund and in proper apprenticeships, they will be completely counter-productive and economically illiterate.

[Mr Denham]

My hon. Friend is absolutely right, but there is a further point. The refusal to link Government procurement to the provision of apprenticeships has nothing to do with the deficit. It is wrong policy. The Government could take that action whatever their deficit reduction strategy, but they refuse to do so. It is not just about the deficit; it is about missed opportunities.

I am pleased to say that after what could be called a cock-up—I hope it is not an unparliamentary term—by the Government Whips, Labour’s call for green apprenticeships is now in the Energy Bill, and it looks as though it will stay there. One bit of Government will be doing the right thing, thanks to Labour, but more than £200 billion of public procurement—taxpayers’ money—could be working harder by providing apprenticeships.

[Mr Stewart Jackson (Peterborough) (Con)]

The shadow Chancellor apologised yesterday for some aspects of Labour policy, so will the right hon. Gentleman take the opportunity to apologise for the previous Government reckless immigration policy, whereby people were imported into low-skill and low-wage jobs, pushing many thousands of unskilled youngsters into welfare dependency?

[Mr Denham]

I was very pleased that we ended unskilled immigration from outside the EU and introduced a points-based migration system. I think the real issue now is the damage being done in higher and further education, for example, to the country’s economic prospects by restricting universities’ ability to offer courses that attract high-paying overseas students.

The point I was making a few moments ago was that the failures in apprenticeship policy have nothing to do with deficit reduction. They were calculated decisions that harmed young people, as, indeed, did the decision to let fees treble. That is why too many students and parents are now asking whether it is still worth going to university. That policy was not required by deficit reduction. If higher education had been cut in line with other public services, fees would have risen to less than £4,000 a year. This summer, more than 100,000 determined, hard-working and qualified students could not get a university place. The first action of the new Government was to stop 10,000 new places Labour had planned for last September. Another 10,000 places will go next year. Teaching and nursing places, too, will be cut. If the students who missed out this year get a place next year, they will pay a £15,000 lifetime penalty for having missed out this year.

All this has happened because the Government lost control of fees, with most universities wanting to charge £9,000, so they are now introducing a bizarre auction to cut fees at the expense of quality. Those students who apply next year will find not only that they are paying higher fees and that fewer places are available, but that many of the popular courses they thought about getting on to this year do not even exist. Over the next three years, 60,000 places will be taken from popular courses and popular universities and given to cheaper providers—irrespective of whether students want to study them.

A degree is a good thing to get, but recent reports have highlighted the difficulties too many graduates experience in getting a job, particularly one that rewards their effort in today’s sluggish economy. That is not because we have too many graduates, but because the economy is creating too few challenging, demanding and high-value posts. Instead of being plunged into the chaos of the last year and next, universities should have been given one priority—to play their full role in creating growth, getting their knowledge, research and skills into the businesses and companies of the future. That is what a Government with a single-minded focus on jobs and growth would have done, but it is where the Department for Business, Innovation and Skills, too, is failing young people and the country as a whole.

[Toby Perkins (Chesterfield) (Lab)]

Does my right hon. Friend agree that it is perverse that, at the very time a generation of students are about to go to university and pay huge tuition fees, setting themselves up for decades of debt, they see people who made that choice three or four years ago leaving university with a degree, but no opportunities to move into?

[Mr Denham]

There is a huge responsibility on the Government to respond to my hon. Friend’s challenge—to take the measures necessary, get growth going, create jobs and reshape our economy so that we can pay our way in the world in the future and make the full use of the talents of young people and, indeed, older people in this country. I say that because there will not be opportunities for young people unless we build an economy that can compete with the best in the world.

The truth is that we had to wait a year for a growth plan and it was so weak and useless that it is already being rewritten for October. When every taxpayer’s pound needs to work as hard as it can to build a new economy for Britain, the Government’s decision on Bombardier means that taxpayers’ money will needlessly be spent abroad. When every pound of taxpayer’s money needs to work hard to build the new economy, the Government are refusing to ensure that public sector contractors provide apprenticeships. When there is £200 billion-worth of infrastructure for the new economy that needs investment, the Government are dragging their feet. To see that, we need only look at the way they are doing broadband: slowly, in inefficient penny-package projects.

When we need the Government to be working with business to build the new economy, all we get is the tired mantra, “The less government does, the better.” If we are to be the very best at the things we are good at—advanced manufacturing, creative industries, business services, pharmaceuticals and renewables—government has to work in partnership with business. It must do so: to understand what technologies and skills we need in the future, so that companies have confidence to invest; to set clear priorities and stick to them, so that companies have the certainty they need to invest; to look at what government buys and how we buy it, so that innovative companies can grow; to must make sure that good regulation lets good companies win new markets; and to build, in every region and nation, the universities, the skills, the banking services and the leadership in cities and regions that will let companies grow and create jobs.

[Mr Denis MacShane (Rotherham) (Lab)]

Does my right hon. Friend think that the Secretary of State is absent from this debate because he realises that, despite his many university qualifications, he is about to lose his job because of the democracy reduction Bill that the Government have imposed and the fact that his constituency is about to disappear? Is it not symbolic that this Government reduce by 50 the number of MPs and in every sector of the economy they are reducing employment as we speak? Sadly, the Secretary of State himself is included in that, but he did vote for it, so what one reaps, one sows.

[Mr Denham]

I have already made a passing remark about the Secretary of State’s role, but let me just say that I have tried to set out briefly the sort of lead we should be getting from the Department for Business, Innovation and Skills. Active, intelligent government working with business is what we need to transform the shape of our economy, but all we are getting is the same dogmatic argument: “Government should do less. It should do less in the regions, less in investment, less in research, less in working with business.” Our young people will pay a heavy price for that.

[Alok Sharma]

The right hon. Gentleman is leaving the House with the impression that the Labour Government left this country with a golden legacy in dealing with businesses. Let me remind him that his party was talking about putting up corporation tax and was imposing such a level of regulation on businesses that they just could not cope, and that we were left with the most complex tax system in the world. Is that what he calls “government working with business”?

[Mr Denham]

We must remember the situation at the end of the previous Labour Government. It is no part of my case that we were a flawless Government with no imperfections. Indeed, I am one of those who has acknowledged already in this debate the need for change, and the Labour party will undertake that. Let me just tell the hon. Gentleman three things. First, there were 1.1 million more small businesses thriving in this country at the end of the Labour Government than there were at the beginning. Secondly, the OECD reckoned that this country was third in the world for ease of setting up a new business. Thirdly, almost alone of the western European countries, we enjoyed net foreign direct investment, because businesses around the world had the confidence to invest in Britain. Not everything was perfect, but that was not a bad record to show that we worked well with business.

What we need today is a plan B for the economy and a plan B for young people to begin to restore the promise of Britain. The Government must see that cutting too far and too fast means sacrificing the growth and jobs that make it easier to reduce the deficit. We need a temporary reduction in VAT until growth is re-established to put money in families’ pockets and to boost shopping centres and jobs.

Yesterday, we saw long-term plans to restructure the banks, whose irresponsibility around the world caused so much harm, but nothing to tackle the immediate problems facing Britain. The Government should repeat the banking levy, raising £2 billion, and with the money they could reduce the damage done by ending the future jobs fund by establishing a £600 million youth jobs fund. The Government could get young people back to work by building 25,000 affordable houses. We could boost opportunities by investing in high-growth small businesses. When every taxpayer’s pound needs to work as hard as it can, the Government should grasp the nettle and require public sector contractors to provide apprenticeships for young people.

For too long, this Conservative-led Government have blamed everything bad that has happened in this country on the unavoidable effects of deficit reduction. They are not just wrong about the pace of deficit reduction, however. Deficit reduction cannot be used as a systematic excuse for, in plain and simple terms, bad policy and missed opportunities. It will take more than this Government to restore the promise of Britain, but in the meantime they could at least stop making things worse.

16:16

[The Minister for Universities and Science (Mr David Willetts)]

Of course, the Government oppose the motion. I regret that we are depleted as a result of efficiency savings, but I should explain that the Secretary of State is battling for Britain and representing British business in Paris and, sadly, our colleague the Minister for Further Education, Skills and Lifelong Learning is recovering from a minor operation in hospital. I hope that satisfies the House on our position.

I assure the shadow Secretary of State that despite our disagreement with many of the assertions in his motion, we very much agree with the underlying principle of which he reminds us. There is an obligation on all our generation to ensure that the younger generation has better opportunities in life. One of people’s most fundamental concerns is that opportunities for social mobility, getting started on the housing ladder and getting a good education should be at least as good for our kids as they have been for us. That is a principle that we absolutely endorse.

Opposition Members might be used to having rather embarrassing books passed under their noses—such as the memoirs of the right hon. Member for Edinburgh South West (Mr Darling)—but I have with me a book that need cause them no embarrassment: my book, “The Pinch”, which is on precisely this subject. I strongly recommend it to the entire Opposition Front Bench team and they should each buy a copy—they are not allowed to share it.

We support the principle of which the motion reminds us and it is a challenge to which successive Governments have had to rise. No Government can claim that they have been able fully to rise to that challenge, and the right hon. Member for Southampton, Itchen (Mr Denham) is right to challenge the Government in the House today to recognise it, which we do, and to ask us what we are doing about it. Let me try to explain what we are doing.

[Margot James (Stourbridge) (Con)]

My right hon. Friend is introducing our side of the argument with great generosity of spirit, but does he not agree that the tone of the motion encourages an extremely unhealthy sense of victimhood among our young people? I will not pre-empt his speech by giving a long list of all that the Government are doing for young people, but we are doing a great deal and I trust that the Minister will give full voice to all that.

[Mr Willetts]

My hon. Friend is absolutely right. The debate is an opportunity for me and all Government Members to set out very clearly what we are trying to do with more apprenticeship places, 80,000 work experience places, and a funding system for universities—however controversial—that has been set up on a reliable basis for the future that will enable us to maintain the number of places to students. That adds up to more education and training places in total for young people than ever before. We are also making bold reforms on schools through free schools and the pupil premium, which will help children from low-income families, as well as through the spread of the academies programme and the arrival of university technical colleges. Going beyond education, we are also making bold reforms on housing with the new affordable homes programme bringing 170,000 new affordable homes by 2015. That all adds up to a programme that is absolutely aimed at ensuring that young people get a fair deal.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Minister explain how properties at 80% of market value rent are affordable and how that links to his party’s declared aim of reducing spending on housing benefit?

[Mr Willetts]

In our affordable homes programme we have set out arrangements whereby new providers will deliver extra homes for a given amount of rental income. We aim to generate and achieve more house building as a result.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

Will the Minister give way?

[Mr Willetts]

I want to make a tiny bit more progress.

Although we are doing those very important things on higher education, skills, schools and houses, the most important single way in which we can help the younger generation is by reducing the burden of Government debt that they will have to pay for. That is at the heart of our programme. Every time the previous Government introduced some unaffordable expenditure programme paid for not out of taxes but by issuing Government bonds lasting for 25 years, they were paying for public expenditure out of burdens being placed on tomorrow’s younger generations. That is the fundamental moral failure behind the levels of debt that we inherited from the previous Labour Government.

[Stella Creasy]

I am pleased to hear the Minister talk about the importance of debt levels. Will he comment on the figures from the Office for Budget Responsibility that show that directly as a result of the Government’s plans an extra £10,000 of personal debt has been loaded on to our hard-pressed households already in the past year?

[Mr Willetts]

Given what happened to personal debt under the previous Labour Government, about which my colleague the Secretary of State has been absolutely eloquent, I do not think that Labour can be taken seriously on this subject. We are still waiting for Labour to learn from its fundamental mistake of having uncosted public expenditure programmes and irresponsible and unfunded tax reductions, but it has not learned that lesson as we can see from the motion, which is an absolute example of that. It is full of extra public expenditure promises, it has a tax cut in it and, once again, as always with Labour, the figures do not add up.

[Andrew Bridgen (North West Leicestershire) (Con)]

The Browne review estimated that if all new students from 2012 paid Labour’s favoured 3% graduate tax, it would not provide sufficient revenue to fund higher education until the tax year 2041-42. Will the Minister estimate how much that would add to the record budget deficit left behind by the Labour party?

[Mr Willetts]

My hon. Friend is absolutely right that the graduate tax favoured by the Labour leader would make the fiscal crisis that we have inherited far worse. That is one of the many objections to the idea.

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

Will the Minister confirm that the Chancellor’s own Office for Budget Responsibility has stated that the borrowing requirement will have to increase by £46 billion and that unemployment figures will increase by 200,000 as a result of the Chancellor’s economic strategy?

[Mr Willetts]

I do not know which specific OBR forecast the hon. Gentleman refers to, but the OBR work I have seen makes it clear that although there are reductions in public sector employment, they are more than offset by increases in private sector employment. That is one of the many ways in which we are rebalancing the economy. We are now hearing claims to fiscal rectitude from the party that left us the largest structural deficit in the G7 and the largest level of borrowing in the developed world. Unless the Labour party gets serious about the importance of prudent management of the public finances, we simply will not take seriously its commitment to caring about the interests of future generations.

[Mr Evennett]

My right hon. Friend, as always, is correct in saying that it is essential to repair the economy to ensure a good future for all our young people, and that if we had an economy like the one left by the last Labour Government, that future would be bleak. The Wolf report on vocational education said that a significant proportion of the 14 to 19 cohort are being offered a less effective path into employment than their predecessors. Does my right hon. Friend agree that this Government’s policies, particularly in respect of training and apprenticeships, will help to address that serious problem?

[Mr Willetts]

My hon. Friend is absolutely right, and I should have included Alison Wolf’s excellent report on my list of the things that we were doing to try to offer a fairer deal for young people.

[Geraint Davies]

Does the Secretary of State agree that sovereign debt in Ireland, Iceland, Spain, Italy, Portugal and so on is much worse than that of Britain, and the reason is that Labour left 2 million more people in jobs in Britain than we inherited in 1997? The future of keeping deficits down is jobs and growth—not stupid cuts, like those he is pushing forward with.

[Mr Willetts]

The crucial difference between our economy and those that the hon. Gentleman listed is that our economy has the benefit of a credible package for bringing down the public deficit, as a result of which the markets have retained confidence in us. It is because of this Government’s economic policies that we are not facing the same risks.

[John Hemming (Birmingham, Yardley) (LD)]

Does it not surprise the Minister, as it surprises me, that the Opposition seem to be unconcerned about the rate of interest paid and the fact that, as a deficit goes up, the rate of interest goes up as well?

[Mr Willetts]

That is a very important point; indeed, I understand that with its latest debt issue the Bank of England has secured historically low—almost unprecedentedly low—interest rates, which is further evidence of the confidence that people have in our seriousness about tackling the deficit that we inherited from the previous Government.

I now want to make progress on some of the specific points in the motion that the shadow Secretary of State put before us. First, let me focus briefly on youth unemployment and those not in education, employment or training. Youth unemployment is a serious problem; it does need to be tackled, and of course we regret the fact that it now stands at 949,000, having been at 924,000 when we took office. However, as we have heard, when Labour took office it was at 664,000, and the rise in youth unemployment began long before the economic crisis hit.

The really serious question that parties on both sides of the House need to address is why, even during Labour’s boom years, was youth unemployment already starting to rise. That tells us that it is a deep-seated trend, which tells us that something has gone seriously wrong with our education and training system—it was not meeting employers’ needs.

[Tom Blenkinsop]

Will the Minister give way?

[Mr Willetts]

Just a minute; I want to make a bit more headway on this point.

There is a very similar pattern in numbers of NEETs. On the current data series starting in 2000, there were 655,000 NEETs in 2000, and when Labour left office there were 874,000. I have looked up the figures for two dates that may particularly strike the shadow Secretary of State’s memory. When he arrived as Secretary of State in the Department for Innovation, Universities and Skills, there were 835,000 NEETs. During the following two years, until he left that post, he was remorselessly harried on those figures by his Opposition spokesman. By the time he left the post, the number of NEETs had risen to 954,000; we debated that many times in the House. We had an increase of 120,000 on his own watch as the Secretary of State responsible. Actually, he got out just in time: the quarter after he left, the number went over 1 million, to hit 1.74 million. I had hoped we would hear a slightly more frank account from him of the lessons he learned about the difficulty of tackling the challenge of NEETs, drawing on his own experience.

The shadow Secretary of State went on to complain about our record, but I have to say that when in opposition we warned about Train to Gain, which we said was not a serious investment in training opportunities; about programme-led apprenticeships, which were losing contact with the jobs market; and about paper vocational qualifications being churned out that did not meet the real needs of employers. Those warnings, sadly, have proved to be correct.

[Tom Blenkinsop]

I thank the Minister for giving way; he is being generous with his time. We are experiencing not only record youth unemployment, but record female unemployment. I believe that the last time that such rates were experienced was in 1988, when the Minister was last in power.

[Mr Willetts]

I was not personally in power then—but absolutely, some groups are excluded from the labour market whenever times are tough, and youth unemployment and female unemployment are both aspects of that.

[Mr Stewart Jackson]

My right hon. Friend omits to mention one of the biggest catastrophes under the last Government: the disastrous incompetence of the further education capital build programme under the Learning and Skills Council, for which the former Government have not apologised. This Government are having to pick up the pieces.

[Mr Willetts]

Absolutely; my hon. Friend the Minister for Further Education, Skills and Lifelong Learning is doing an excellent job with tight resources in trying to ensure that we can make at least some improvement to the further education estate, but I want to talk about apprenticeships in particular.

[Jeremy Corbyn (Islington North) (Lab)]

Before the Minister goes on to talk about apprenticeships, will he acknowledge that the direction of travel is entirely wrong? With many young people deterred from going to college because of the loss of education maintenance allowance and rising fees, and others deterred from going to university because of debt and rising fees, does he not think that the situation will be considerably worse in a year or two, because of the policies that he has already adopted?

[Mr Willetts]

Let me now turn to what we are doing to ensure that young people have more opportunities, so that the picture that the hon. Gentleman paints does not come to pass.

I should now like to make some progress and to say that one of my other regrets about the Opposition motion is that it repeats not only the economic mistakes that we associate with the Brown premiership, but the spinning techniques that we recall from the Blair premiership, and that is not an attractive combination. The worst example of that in the motion, which the shadow Secretary of State repeated in his speech, is the statement that

“the proportion of apprenticeship places for 16 to 18 year olds has decreased by 11 per cent.”.

I should like briefly to explain to the House why that statement is both strictly speaking accurate and deeply misleading.

We are talking about a nine-month period, because we have only nine months’ data for the latest year. In the first nine months of 2009-10, 92,500 apprenticeships were started for 16 to 18-year-olds out of a total of 211,000 apprenticeships, so 43% of apprenticeships went to 16 to 18-year-olds. By comparison, in the first nine months of the 2010-11 academic year, under this Government, 102,900 16 to 18-year-olds started apprenticeships—up from 92,500—out of a total number of apprenticeship starts of 326,000 in a comparable period. So we have more apprenticeships for 16 to 18-year-olds, as part of a big increase in the total number of apprenticeships. Therefore, because the rate of increase in 16-to-18 apprenticeships was not as rapid as that of other apprenticeships, 16-to-18 apprenticeships in our first nine months constitute 32% of the total number.

The shadow Secretary of State, using his knowledge and ingenuity as a former Secretary of State, constructs an argument in which, because 16-to-18 apprenticeships were previously 43% and are down to 32%, we are all supposed to regret the fact that they have fallen by 11 percentage points given the increase in total apprenticeships. If anyone wants an example of the Blairite attitude to statistics—using every trick in the book to take an increase in the number 16-to-18 apprenticeships as part of an increase in the total number of apprenticeships and to include in a motion an assertion that, somehow, there has been an 11 percentage point fall—we have just seen a case study.

If Labour Members want to be taken seriously, they must get serious not just about the economic challenge that we face, but about levelling with the country and dealing with the facts that we face in an honest way. Referring to that 11 percentage point fall shows something deep in Labour’s instincts; the electorate got completely fed up with it, and we all understand why. We are delivering more apprenticeships across the piece.

[Ian Paisley]

Perhaps the Minister can give me reasons why I should vote against the motion. There are 56,000 unemployed people in Northern Ireland; that is the jobless total. That has trebled over the past four and a half years. The Minister is telling the House that everything is going swimmingly, but I do not think that it is. What are the Government doing to get those 56,000 people out of unemployment?

[Mr Willetts]

I am trying to explain exactly what we are doing to deliver a significant increase in the number of apprenticeships. We initially pledged to deliver 50,000 extra apprenticeships in our first year; we believe that we have achieved more than double that—100,000 extra apprenticeship places—and there are more to come.

[Toby Perkins]

Will the Minister give way?

[Mr Willetts]

I shall try to make progress. Those are real apprenticeships. The shadow Secretary of State said that they were short-term apprenticeships; let me make absolutely clear how we are financing them. We are doing so from the savings that we are making on Train to Gain, which my party in opposition and the Liberal Democrats in opposition rightly criticised as an ineffective programme with a large amount of dead-weight. The average number of hours of training received under a Train to Gain place was 33. We are replacing that with apprenticeships, in which the minimum number of hours of training and directed learning are 280. That is what we are putting in the place of Train to Gain. For the shadow Secretary of State to complain about short-term training when we are providing real apprenticeships instead of his Train to Gain is a bit rich.

[Toby Perkins]

Will the Minister give way?

[Mr Willetts]

No, I shall try to make progress. We are delivering more apprenticeship places, which I very much hope will be of value to the people of Northern Ireland, as it is to the rest of the United Kingdom. The figures are dramatic: the provisional figures for the first three quarters of the academic year 2010-11 show 330,000 apprenticeship starts—an excellent record.

Let me turn to universities, briefly. Of course, we have debated this issue many times in the House, and will doubtless do so again. I begin by accepting something that the shadow Secretary of State said, and a point that he made when he was Secretary of State. It is painful when, in the summer, one is confronted with young people who have done their best in applying for university, and have not secured a place. It is painful for them, and we recognise the work that they have put in, but in recognising the difficulties that they face, I cannot do better than repeat the words spoken by the shadow Secretary of State when he was Secretary of State and was responsible for the matter:

“In terms of student numbers, going to university has always been a competitive process…we cannot afford to fully fund every single person who might like to go to university and we never have been able to.”

That is the correct position. We have been able to continue to provide record numbers of places at university, despite all the funding pressures that we face and the need to make reductions.

The previous Government, in their final days, had a plan for 20,000 extra places, as they called them, but there was no funding attached beyond the first year. There was no money to pay for years 2 or 3 of the studentship. Incidentally, contrary to the implication in the motion and to what the shadow Secretary of State said, that was explicitly described as a one-off funding stream for one year—“extra one-off funding” were the words of the then Chancellor in the 2010 Budget. What we have done instead is provide those 10,000 places last year, and we will provide another 10,000 next year. Instead of having to reduce places, we hope to maintain broadly that number, so that at least an equivalent proportion of the cohort of 18-year-olds has a chance of getting to university.

We inherited from the previous Government a simple statement, which I shall quote from the pre-Budget report of December 2009. In their list of cuts, there was

“£600 million from higher education and science and research budgets from a combination of changes to student support within existing arrangements; efficiency savings and prioritisation across universities”.

We never knew how that £600 million-worth of cuts was to have been delivered, but it was very hard to see how we could maintain the number of university places that we have done and continue to provide high-quality education given that we inherited that commitment to a cut of £600 million. That is why we took the tough but controversial decision, rather than simply face cuts and reduce student numbers, to base university financing on student fees and loans—absolutely following the model used by the previous Government, with no payment up front. I believe, given the fiscal pressures that we face, that that is in the best interests both of universities, which will find, if anything, that they have extra cash as a result of our reforms, and of students, as it has enabled us to maintain a high level of places, and to reduce the monthly repayments facing students. The shadow Secretary of State failed to explain at any point what Labour would do.

[Geraint Davies]

rose—

[Mr Willetts]

I shall not give way, as I am going to try to make progress, although I would welcome an intervention from the shadow Secretary of State, who could usefully clarify his position. We would like to know what Labour policy is. I have been to the House, as have my ministerial colleagues, to explain our policy, and we have heard a range of suggestions from the Labour leadership. We heard what Lord Mandelson, in his memoirs, thought that a Labour Government would have done if they had been re-elected:

“I assumed, as the Treasury did, that the outcome would have to include a significant increase in tuition fees. I felt that they would certainly have to double in order to offset the deficit-reduction measures that we too would have implemented had we won the election. The alternative would have been a disastrous contraction of higher education.”

Separately, the leader of the Labour party, the right hon. Member for Doncaster North (Edward Miliband), said:

“I would not go ahead with the increase they’re going with. I want to have a graduate tax. Why do I want to have a graduate tax? Because I think it’s a fairer way of paying for higher education, because it says the amount you pay is related to the ability to pay”.

We have three options: recognising that fees and loans were the way to help universities out of the fiscal pressures that they faced; having a graduate tax; or having a third policy of no policy whatsoever. Once again, we are having a debate in the House called by the Opposition with no indication whatever of how they would put our universities on a solid financial footing. Governments across Europe are battling to tackle their deficits, and it is important that we hear from Labour what it would do. Instead, what we have in the motion, alongside the promises on NEETs and apprenticeships, and quotes on student places, is a reference to the £2 billion tax on bankers’ bonuses, which will pay for those policies. Let me tell the shadow Secretary of State that that tax is already paying for reversing the consumer prices index-retail prices index switch for benefits and pensions; for jobs and growth spending, which adds up to £9.5 billion; to support the cancellation of the fuel duty escalator, worth £1.7 billion; to enable the Opposition to reverse the child benefit freeze, which costs £1.3 billion; to reverse the time-limited employment and support allowance, costing £1.1 million; to enable them to reverse the working tax credit freeze for £1 billion; and to reduce the age-related payment every year, costing another £600 million. In fact, we estimate that in total, the £2 billion that the Opposition will raise from a bankers’ bonus tax will pay for £27 billion-worth of public spending increases and other tax cuts.

The right hon. Gentleman has put his bid in and it is on the list. If wants to be taken seriously as a member of Government he has to tell us how he would make the figures add up. He does not rise to that challenge. We are rising to the challenge of sorting out the mess in the nation’s finances that we inherited from the Labour Government, and we are addressing that challenge while, at the same time, doing absolutely everything that we can to ensure high-quality education and training opportunities for young people—and we are proud of the commitment that we are displaying to them.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Will hon. Members take their seats? A number of Members want to participate in the debate, but we have not imposed a time limit for speeches. However, if they speak for considerably longer than six minutes, many other Members will simply not be able to take part, so they should bear that in mind when they make their contributions.

16:44

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

The debate is about future generations. The prospects for the next generation will impact profoundly on not only very young people, but older people. The ability of our young people—the next generation—to get the skills and jobs that form the basis of economic growth will provide the wherewithal to finance our ageing population and the policies that we need for our very young people. Although the debate focuses on a particular generation, it is crucial to the whole population.

Getting the outcome wrong will have profound consequences, socially and economically. Areas such as mine in the black country even now show the scars of the unemployment and lack of investment in education that took place in the 1980s, and the intergenerational social problems that arise from families with low levels of educational aspiration and no head of the family in full-time work. Although any Government would have needed a deficit reduction plan, a slowing economy should not in itself be a reason for cutting investment in education and training. It is education and training that will enable an economy to grow out of recession as circumstances change.

My right hon. Friend the Member for Southampton, Itchen (Mr Denham) acknowledged that the previous Government did not get everything right, but to listen to Government Members one would think the previous Government did not get anything right. No mention has been made of the fact that the number of apprenticeships rose from 70,000 to nearly 280,000—a fourfold increase—or of the huge improvement in education and training qualifications. However, I accept that even at the end of the last Labour Government, there was still a problem.

The west midlands skills partnership, which covers the skills profile in the west midlands, acknowledged that there were 3.5 million people of working age in the west midlands but only 2.5 million jobs. That is an indication of the deep-seated problems that such areas face. The west midlands skills partnership also predicted that under Government policies there would be a net loss of a further 38,000 jobs. It said that with adequate training for people in work and young people, there was the potential to create 10,000 net jobs. If the appropriate investment is made and the required standards are achieved, that will make a substantial contribution to reducing the deficit.

We should recognise that there are deep-seated problems with training and apprenticeships that we as a Labour Government did not totally overcome, but it is legitimate to ask whether this Government’s policies will address them. One of the problems is that a huge sector of the economy consists of small businesses, many of which are so small that they find it difficult to engage with the potential that apprenticeships offer. The figures quoted by my right hon. Friend demonstrate clearly that we are not getting the number of new apprenticeships for young people to which Government policy aspires. That is backed up anecdotally by conversations that I have as Chair of the Business, Innovation and Skills Committee with businesses ranging from a boat building firm in Cornwall to black country manufacturing small and medium-sized enterprises. The hon. Member for Halesowen and Rowley Regis (James Morris) mentioned an apprentice in the black country. I am pleased about that, but I had a conversation with a representative of the Black Country chamber of commerce this morning who tells me that apprenticeships are not happening. All the evidence suggests that the Government have not yet cracked the problem.

[Gordon Birtwistle (Burnley) (LD)]

My hon. Friend the Member for Eastbourne (Stephen Lloyd) and I have held meetings with local industrialists in our constituencies and challenged them to take on 100 apprentices in 100 days, working with the Government’s apprenticeships scheme. He has succeeded in Eastbourne and I have succeeded in Burnley. Has the hon. Gentleman taken on that challenge, and does he understand that if every Member did so, 60,000 more apprentices would be employed across the country? What effort has he made to raise the number of apprenticeships in his constituency?

[Mr Bailey]

I congratulate the hon. Gentleman on that. I cannot comment on his constituency, but I am told that the problem in mine is that there are not enough young people aged 16 to 18 with adequate national vocational qualifications to be accepted by local companies. As representatives of our areas we need to play a role in changing that, but with the greatest respect, that will not be done by setting targets—it is interesting that those Members seem suddenly to have adopted the principle of targets—over a short period of time.

[Jeremy Corbyn]

I am glad that my hon. Friend has come on to this point. Does he share my concern that too many colleges are closing high-skill courses in carpentry, engineering and electronics in favour of others, which means that the whole industrial base of this country is declining rapidly? Intervention at college and school level is essential if we are to get the number of apprenticeships rising.

[Mr Bailey]

My hon. Friend makes a valuable point, and that is certainly a complaint I hear from local manufacturers. I would hope that the new local enterprise partnerships could address that by involving businessmen and further education provides in policy development, but we are yet to see any benefit.

My great concern, which has been reflected in some of the comments made so far, is that the new higher education funding regime will impact on the apprenticeships market. There undoubtedly appear to be real concerns among young people about the financial consequences of going to university and, as a result, they are looking for alternative routes by which to obtain qualifications. That is not wrong in itself, as vocational qualifications could be ideal for them and for the country.

However, I have looked at some figures. Pearson Professional and Vocational Training reckons that 46% of a poll of 1,100 adults and 58% of 16 to 18-year-olds are now more likely to start an apprenticeship than they were before. Analysis shows that the number of internet searches for “apprenticeship vacancies” has increased by 425%, and the website “notgoingtouni” has seen hits soar by 150%. That is not necessarily bad, but it indicates that a cohort of young people who might have gone to university are now looking to take up apprenticeships or go into vocational training. Where will the young people who would otherwise have taken those apprenticeships go? I think that this is very likely to result in a huge surge of NEETs.

That could be combated by reinforcing the policies and structures, some of which were put in place by the Labour Government, intended to overcome young people’s concerns or resistance, and in some cases the cultural obstacles, that prevent them from going to university. The abolition of Aimhigher, which had an enormous effect in areas like my constituency, is a matter of huge concern. The role of encouraging young people from relatively low-income families or deprived backgrounds to go to university has been outsourced. The problems have become much greater and the means for dealing with them have disappeared.

[Margot James]

Aimhigher was not without its merits, but it did not succeed in getting students from lower socio-economic groups into the more selective universities; it succeeded only so far. I also take issue with the question of what help is now going to be provided, because the whole fair access programme, which underpins the rise in tuition fees, will enable many more people from lower socio-economic groups to access university education.

[Mr Bailey]

I agree with one element of the hon. Lady’s point, because the figures for the elite Russell group universities did not increase significantly, but let me give her some UCAS figures. Between 2003 and 2010, the number of disadvantaged people in the west midlands applying to higher education and being accepted rose by 61%, compared with 27% for people from more affluent backgrounds. Certainly within the higher education sector as a whole, there was a big improvement.

I was just coming on to the point about outsourcing and the Office for Fair Access. If OFFA is given the teeth and the funding to clamp down on universities to ensure that, as a result of their being allowed to levy the new increase in tuition fees, they carry out their function successfully, it may work, but the jury is out on that.

I could also talk about the education maintenance allowance, which was referred to earlier, because about 70% of the students in my local college of higher education receive it, but we have yet to see either the fallout from the changes to it or the potential consequences of that for encouraging young people to take up post-16 education.

I am conscious of the time, Mr Deputy Speaker, so I will not go on much longer, but I make the general point that getting young people not only into vocational training but into higher education is a complex and difficult job. What the Government have done with their cuts is to remove the infrastructure needed to encourage, and to provide the right backing for, young people in order to change the fears and attitudes that have prevented them from going into training and higher education.

We do not yet know the full consequences, but I certainly have great fears that the consequences in the 1980s—with the withdrawal of jobs, education and training from so many young people—will be lived out now. I very much fear that we could recreate the vicious cycle of intergenerational deprivation and marginality which has caused so many social problems, and which in retrospect proves so difficult to counter.

I therefore support the motion and welcome the opportunity to make these points. In the new year, my Select Committee will look at apprenticeships and, I hope, secure a more in-depth analysis of what is happening and of what the Government should do.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. If everybody takes 14 minutes, it means that well under half the people present are going to participate, so I implore hon. Members to take note of the six-minute guidance.

16:58

[Esther McVey (Wirral West) (Con)]

When I became a Member, I said that one of the biggest issues facing the coalition Government was the number of young people not in work, education or training. The figure stands at almost 1 million, and in some areas of the north-west it is one in four, which equates to a huge amount of young people, with a significant amount of energy and ideology, who might not be able to do anything with their lives. Youth unemployment increased by 40% under Labour, and the number of people not working, in education or in employment rose between 2000 and 2008 under Labour, while in the rest of the world it fell. Those are the figures and that is the reality of the situation. Compounded with that, we have a global financial disaster. In addition, Labour left the country with the largest deficit in the developed world, with a rising structural deficit for the seven years before the recession.

However, I do believe that Members in all parts of the House entirely believe that opportunities for the next generation are vital. There are a couple of things that we have to do. We must learn to live within our means and learn to get the deficit down so that we do not pass on more debt to future generations and so that we do not always have to say no. When we have the money, we will be able to say yes.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

May I remind the hon. Lady that the UK had the second lowest debt in the G7 in 2007 and only slightly worsened its position when it was recovering in 2009? I would suggest that the flatlining of the economy due to this Government’s lack of economic policy is contributing to the poor state of affairs.

[Esther McVey]

I hear what the hon. Lady says, but I hope she recognises that we are paying £120 million per day on interest payments alone—not a healthy bank balance if it were mine, not that it ever would be.

One of the key things we have to do is focus on what resources we have. There must be a fundamental mind shift on what we are going to do genuinely to help young people, with honesty, truthfulness, and no false hopes or expectations being created. The Opposition are saying, “Too far, too fast”, but I would say to them, “You did too little, too late. You took your eye off the ball locally, nationally and globally, and the disconnect between the youth and what business wants expanded.”

Let me substantiate those comments. Before I came into Parliament, I set up and ran the biggest business women’s network in the north-west, with 9,000 women members. I am honorary president of WIN—Wirral Investment Network—which is for businesses in Wirral. For 10 years, I worked with school children across all platforms and all backgrounds, and wondered what their hopes and aspirations were. We believe in creating opportunities, but the question is how we are going to get there and achieve that. I spent the past three years interviewing the world’s top 100 women from top backgrounds. I asked them, “What did you manage to do and how did you manage to achieve it? What differentiated you from other people?” In helping me with those interviews, they too wanted to help the next generation of young girls in particular.

[Lilian Greenwood (Nottingham South) (Lab)]

Last week, my daughter, who is 14 years old and has just gone into year 10, came back from her school and told me that this year it no longer had the funding to arrange work experience for her and her classmates. How is that going to increase opportunities for young women?

[Esther McVey]

I find that hard to believe. I am not sure how that has happened, because under the Department for Work and Pensions we are building and taking forward the biggest programme of work experience and voluntary work.

I asked the women what they had that other people did not have, and they said that in life the great equaliser has to be character and personality traits that will lead to success in individuals, irrespective of their background, connections and schooling. They said that those key things have to come from teaching, at a young age and throughout life, determination, ambition, team playing, trustworthiness, focus, working together, and the realities of life, and that that would be the great equaliser whether someone was the daughter of a baron or a baker.

That is what I want to work on with the Government. I welcome the new university technical colleges that want to expand education and ability—hands-on and mental—and will work with kids who want to do engineering and technical jobs. In Wirral, we are hoping to get one of those for the chemical industries and the built environment. I welcome the notion of free schools and academies that will open up environments and different ways of looking at things that possibly were not there before. I welcome the introduction of the pupil premium worth £430 for every pupil on free school meals. I also welcome the national scholarship programme to help the poorest students. We are also planning 250,000 more apprenticeships than were planned under Labour, which is the biggest ever boost to apprenticeships.

Under Labour—this might be difficult for the Opposition to hear—the gap between the relative chances of poor and rich students to go to university widened, the attainment gap between those at private and comprehensive schools doubled, and in places like Wirral the wealth gap doubled. The life expectancy differential between rich and poor men is now 15 years on the Wirral peninsula. I know that we are all hoping to come together to look at opportunities for the next generation, but we have to live within our means, see what we have got, and have a fundamental mind shift to what businesses want.

I am engaging with the National Youth Theatre, which works with kids from all backgrounds to help them with their dreams, aims and aspirations, and to give them the realities of ambition, hope and desire. In every theatre production, we are saying to 1,000 kids, “You can do it, but life will be tough and it isn’t easy.”

I will finish by mentioning the country’s first ever female to set up a public limited company, Debbie Moore of Pineapple Dance Studios, who has said that “nothing good comes easy”, but that opportunities are out there for everyone, and that in times of economic hardship opportunities are still out there, but it might just be a little tougher.

The Opposition motion is flawed, inaccurate and misleading. For that reason, it needs to be opposed.

17:06

[Pat Glass (North West Durham) (Lab)]

I will focus on the reality of Government policies on the lives of our young people. The Chancellor tells us that unemployment has not increased since the 2010 election. In my constituency unemployment has doubled, and the number of young people who are unemployed has risen by 28%. The hon. Member for Stourbridge (Margot James), who is no longer in her place, told us that the Opposition were encouraging a culture of victimhood among young people. However, citing the 28% increase in youth unemployment in my constituency is not shroud waving; those are real young victims with real young lives that are being wasted.

The Government talk about social mobility, narrowing the attainment gap, and focusing on the vulnerable and those living in deprivation and poverty. In reality, they are presiding over a huge increase in the number of young people not in education, employment or training. They have abolished many of the policies, such as the future jobs fund and the education maintenance allowance, that had a positive impact. Although the Government say nice warm words about social mobility and narrowing the attainment gap, their policies appear to be designed directly to exclude, rather than include, these young people.

The number of young people not in education, employment or training increased by 54,000 in the last quarter of last year. That is an additional 54,000 wasted young lives. Anybody who has worked with these young people sees them not as numbers but as wasted young lives. When the figures are broken down, it is clear that the biggest proportion is made up of young people who would be classified as vulnerable, such as those with special educational needs and those living in poverty. We have not seen this level of wasted young lives, or witnessed such indifference to such a tragedy from a Government, since the 1980s.

I accept that having people who are not in education, employment or training is nothing new. We had them at the time of the last Labour Government. The difference is that we did something about it. We did not sit back complacently and just let it happen. In the period between its implementation in 2009 and its abolition in 2010, the future jobs fund reduced the NEET figure by more than 200,000—that is nearly a quarter of a million young people who were given hope and the possibility of a future.

The Government’s response to all this wasted youth and potential is apprenticeships. However, what they say and what they do are two very different things. They have scrapped the guarantee of an apprenticeship for every 16 to 18-year-old who wants one. They are manipulating the figures on apprenticeships by claiming that apprenticeships for those aged 25 and over have increased by 234%.

The Minister for Universities and Science earlier accused Labour of spinning statistics, and tried to give us a lesson on it, but this is an example of high-grade spinning: the Government have rebadged Train to Gain—in-work training for older people—as “apprenticeships”. The economy needs more proper apprenticeships for young people, not short-term courses designed for older workers simply rebranded as apprenticeships. Older workers deserve better than to be pushed on to courses that do nothing for them, but are cheap for the Government to run.

On education maintenance allowance, I have worked for many years wrestling with the dilemma of improving outcomes for poorer and more vulnerable pupils, narrowing the gap between the most advantaged and the most disadvantaged, and improving participation in further and higher education. In my view, the introduction of EMA had a greater impact on the delivery of those difficult goals than almost anything else that I have seen, but it was abolished. I think it was abolished because it was a Labour Government policy. If we can find £180 million to spend on an experiment such as university technology colleges, we can find the money for EMA.

EMA was a contract between the Government and the student. Those on EMA had better attendance and attainment than their peers, and we were beginning to make good on some of the seemingly intractable and complex issues in education, such as improving boys’ attainment, narrowing the attainment gap and raising the participation of the poorest.

The Secretary of State for Business, Innovation and Skills keeps telling us—we heard this again today—that the gap between the most advantaged and the most disadvantaged increased under Labour, but the truth is that educational attainment for all children improved under Labour. Attainment outcomes improved more for the most advantaged, but that is because of the complex set of barriers that face the most disadvantaged. Anyone who has ever worked in that field—that probably rules out most of the Government—will say that it is easier to improve outcomes for those who are already advantaged. It is much harder to improve outcomes at the same rate for the more disadvantaged. That takes consistent hard work from teachers, high levels of resources, targeted interventions and, most importantly, commitment by the Government, which is clearly no longer there for those young people.

EMA gave a leg-up to the young people who face the biggest challenges in life. It gave them access to the best courses by providing help with travel costs, books and equipment. It became the silver bullet for many disadvantaged young people. The Secretary of State came to this House and told us repeatedly that students would go to college with or without EMA—presumably on the basis that if he told us often enough, someone, somewhere would believe him—but that is not borne out by the evidence given to the Select Committee on Education, and it is not what I hear from students in my constituency, who have seen a combination of the abolition of EMA and the tripling of tuition fees. Those together have robbed them of their shot at further and higher education. That toxic combination has produced a barrier that they simply cannot get over. That is not good for them or their families, and it is disastrous for the long-term interests of this country.

The Government say that they care about all children, and that they want to improve outcomes for all children, and yet their policies directly contradict that. Their policies are about the fragmentation of the education system in favour of those who are already advantaged. A bit of help from the pupil premium will not bridge that gap.

Government cuts are wiping out youth services across the country. At the same time, the Government are providing resources for the Prime Minister’s flagship national citizens service, which, frankly, will provide an extra six weeks’ holiday for some rich kids, at the expense of desperately needed targeted youth services for others. That favours those who are already advantaged over the disadvantaged.

Government policies and cuts in public expenditure that are effectively wiping out careers advice to school pupils favour the advantaged over the disadvantaged. The well-off can already open doors to opportunities for their children, but disadvantaged young people cannot rely on family connections to open doors for them, or to get them work experience, unpaid internships with foreign banks or similar opportunities.

The Government’s policies are disadvantaging those young people and curtailing social mobility. In the long term that makes poor economic sense. It is time for the Government to rethink their policies on young people, and to start supporting all our young people, not just some of them. It is time they stopped supporting the advantaged over the disadvantaged, and stopped wasting young lives and talents.

17:14

[Mr Robin Walker (Worcester) (Con)]

Today’s debate is on a vital subject, and I have no doubt that opportunities for the next generation are dear to the hearts of every Member. I am sure that we all come to this place motivated to ensure that opportunity is as great as possible, and I have no doubt that Members of all parties are passionate about delivering for the next generation. It is tragic, therefore, that Labour Members can only talk down the opportunities for the next generation, given that their party in government did so much to blight them with debt and economic uncertainty.

[Lyn Brown (West Ham) (Lab)]

Is the hon. Gentleman trying to convince the House that no young person in his constituency has talked to him about the withdrawal of the EMA and its impact on their life?

[Mr Walker]

Absolutely not. I have met young people in my constituency and I have been to my local technical college and explained to my constituents what we are doing to replace it. The people to whom I have spoken have been satisfied with that, however, because they have understood that there will be support in the future.

It is important to consider how to create opportunities. In my maiden speech I noted that some of the steps set out in the Gracious Speech aimed to increase opportunities for young people by supporting businesses that wanted to hire, by increasing the number of apprenticeships and by pursuing vital education reforms. Since then, all three of those themes have been strengthened. In answer to a recent parliamentary question, I discovered that 38 businesses in Worcester—a significantly higher proportion than the average—have successfully registered and benefited from the national insurance holiday scheme to allow them to hire new employees, and earlier this year another parliamentary question revealed that 400 apprenticeships were started between May 2010 and the end of last year. Following the huge success of the 100 in 100 campaign, championed by my excellent local newspaper, the Worcester News, I have no doubt that there will be even more this year.

Apprenticeships are a fantastic pathway to opportunities for young people. I have no compunction about saying that the previous Government were right to start the process of building them up, and I will not pretend that all Conservative Governments in the past have given them the priority that they deserve. However, it is churlish for this Opposition motion to decry the achievements of the Government and the Minister for Further Education, Skills and Lifelong Learning in delivering more. As the Minister for Universities and Science pointed out earlier, the statistics in the motion are based on spin. I welcome the Government’s commitment to fund 360,000 apprenticeships in this financial year alone, and we should all welcome the announcement in this year’s budget of a further 50,000 apprenticeship places and the more recent announcement that the Government are beating their own ambitious targets for apprenticeship starts.

[Lilian Greenwood]

Does the hon. Gentleman not share my concern that even if we do see the apprenticeships that he is talking about, if growth does not return to the economy and if the Government do not do something to stimulate that growth, those people will do their training and then have no jobs to go to?

[Mr Walker]

I totally agree that we need to deliver economic growth. I welcome that intervention, and I will come later to that point and to some of my suggestions for delivering growth.

Just last week the Government announced plans to cut more red tape for apprenticeship providers and businesses. That will be welcomed by businesses in my constituency, which often say that it is fear of the red tape involved that discourages them from supporting the scheme. The hon. Member for West Bromwich West (Mr Bailey) made an important point about how it is a challenge to encourage small businesses to provide apprenticeships. It is a challenge that we must meet, though, and one that I am depressed to see is not mentioned in the Opposition motion. It makes no suggestions for how to deal with red tape.

Businesses in Worcester are taking on apprentices, though—businesses such as Worcester Bosch, Skills for Security, Yamazaki Mazak, Sanctuary Housing, Worcester Community Housing and Tesco. From engineering expertise through to cooking and food safety, retail and administration, young people are learning on the job, and more are doing so as a result of the Government’s determination to strengthen the apprenticeship route. Next Monday I shall host an apprenticeship fair at Worcester’s historic guildhall, to celebrate the successes that have already been achieved and to launch a new challenge for apprenticeship recruitment in the city. It will be aimed specifically at NEETs and will be a celebration of real success and a chance to create new opportunities for the next generation.

It is not through apprenticeships alone, however, that opportunities will be created. Businesses must be supported in hiring and encouraged to invest in their staff and pursue opportunities for growth. Through scrapping Labour’s jobs tax right at the start of this Parliament, the Government did exactly that. Is it enough? Of course we would all like to see more, but is it a step in the right direction? Absolutely it is. We have also supported small business through corporation tax reductions and making the small business rate relief automatic.

We should never underestimate the vital role of SMEs in providing employment and opportunities for young people. The Opposition motion makes little mention of that, but it does mention the regional growth fund, which is already backing opportunity in Worcester through its support for the plans for a Worcester technology park. Once it gets the go-ahead, this project will provide a new home for green technologies in our county and provide thousands of jobs for the next generation. In contrast to the picture of doom and gloom painted by Labour Members, this body, created by the coalition Government, is already providing valuable investment in growth and making a real difference in our communities today.

The Labour party calls for a VAT cut, and for many businesses that might seem like an attractive option, but the best way in which this Government can help business is to provide economic growth and stability. Neither will be possible, however, so long as we labour under a growing deficit and burden of debt.

[Toby Perkins]

Will the hon. Gentleman give way?

[Mr Walker]

I will not, I am afraid; I have already given way twice.

With their unfunded tax cuts, the Opposition have neither a plan nor a blueprint for growth. The coalition Government must do better. We must continue to invest in apprenticeships, and continue to ensure that a world-class higher and further education sector delivers real value and opportunity. Most of all, we must support a business-led recovery.

I would like to see more people taken out of tax, and more businesses participating in schemes such as the national insurance holiday, apprenticeships and business rate discounts. I would like to see a reform of the business rates system, to give local councils more power to provide targeted discounts and to replace the antiquated valuation system. I would also like to see a real focus on the skills needed for the next generation—but today’s negative and dispiriting Opposition motion provides none of those things. I urge the Minister, in dismissing this dismal motion, to show that the coalition Government are continuing as they started out, by supporting skills, backing business and opening opportunity for the next generation.

17:21

[Chris Evans (Islwyn) (Lab/Co-op)]

I congratulate the hon. Member for Worcester (Mr Walker) on manfully standing up and giving us the Tory mantra. Looking across at the Government Benches, I feel sorry for him, however. It is a pity that Government Members could not be bothered to turn up to listen to his speech. Look how empty those Benches are. They should be disgusted with themselves. How many Liberal Democrats can we count? One, two, three—I cannot see any more.

[Sajid Javid (Bromsgrove) (Con)]

Look behind you!

[Chris Evans]

Has Christmas come early? Is this the pantomime season?

I come to this debate remembering the experience of the 1980s. We cannot talk about opportunities for the future without thinking about that period. I grew up in the south Wales valleys, and I remember the headmaster saying to us on our first day at school, “Some of you will bring joy to the school. A tiny minority of you will make us proud and you will go to university. An even smaller minority will get into trouble with the police and bring shame on the school. The vast majority of you are only good for factory fodder, and until that time comes, we are going to make this the happiest period of your lives.” [Laughter.] We can laugh at that, and we can look back and mock it, but he was putting across the poverty of ambition that we felt. We felt ignored by the Tory Government; we did not fit in with Thatcher’s economic miracle. We simply wanted one thing. Well, we wanted a few things, actually. We wanted to feel safe in our own homes, we wanted to feel secure in our jobs, and we wanted hope for the future.

But, as we have heard today from the Opposition Benches, there is no hope for the future. Education maintenance allowance has gone and tuition fees have trebled, but what do we hear from the Minister? “We can’t do anything different. It’s the deficit. It’s the only way.” I congratulate the Whips, because that is all I have heard since I came into the House: “It’s the only way; it’s the only way.” Well, if the Minister wants to find a different way, I suggest that he phone the Welsh Assembly and make an appointment with the Education Minister there, Leighton Andrews. He should then jump on the tube, go to Paddington, take the train to Cardiff and go and speak to him. He will hear how our students in Wales are paying only £3,000 in tuition fees, and how we have managed to keep the education maintenance allowance. Then let him come back here and say, “It’s the only way.” In Wales we have a Labour Government. In Wales we are delivering for young people. That is the truth.

I have been hearing about the wonderful idea of apprenticeships, but there is also a huge problem with them. I pay tribute to the companies in my constituency, including Axiom, Abingdon Carpets and Pensord, that are offering wonderful apprenticeships; those schemes will build for the future. They face a problem, however, and I think that it comes from the 1980s. Many of the candidates do not have the necessary skills, such as timekeeping or communication skills, and that puts them at a disadvantage before they start. We need to look at the education system.

[Justin Tomlinson (North Swindon) (Con)]

I congratulate the hon. Gentleman on his eloquent speech, but will he confirm that those very same potential apprentices were educated under a Labour Government?

[Chris Evans]

The apprenticeship scheme was during the Labour Government, and we have a Labour Government in Wales. It is devolved. [Interruption.] Will the hon. Gentleman repeat his question?

[Justin Tomlinson]

Is it not the case that those potential apprentices who do not have the necessary skills were educated under a Labour Government?

[Chris Evans]

I apologise for not having caught part of the hon. Gentleman’s question. The point I am getting at is that this problem has come down through the years. Sometimes the problems have not been addressed by any Government. As my hon. Friend the Member for West Bromwich West (Mr Bailey), who is no longer in his place, said, because of the decline of the manufacturing base, a number of families had no jobs and were on benefits, as there was a benefit culture there. That permeated through the education system. We need to take action now to ensure that when apprenticeships are available, those people can go for them.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

The hon. Gentleman is making an important point, which is why the Government have introduced the access to apprenticeship schemes—to tackle that very problem.

[Chris Evans]

I agree with that, but I am saying that it needs to go much deeper. I was talking today to a friend, Andrew Whitcombe, who is the director of skills and business development at a local college. He told me that those schemes were fine, but that more needed to be done within the education system; some sort of driving licence was needed.

[Lyn Brown]

Does my hon. Friend agree that the biggest problem with this Government is that they take an awful lot with one hand, and give back a few pebbles with the other hand, to the people we represent? The biggest problem young people have had to face in trying to fulfil their aspirations in my constituency is the removal of their education maintenance allowance, which is not being replaced by anything of equal value. The replacement is certainly not going to provide for as many people in my constituency as EMA did. Although Conservative Members can talk about their grandiose schemes, they are not replacing what they have taken away—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Will the hon. Lady face the Chair so that the microphones can pick up her words?

[Chris Evans]

That is the point I was trying to make. We in Wales have realised the importance of EMA, which is why we have kept it. Why have we been able to keep it? Because we have a Labour Government.

To pay off the deficit—yes, we do need enterprise and we do not want inertia, but there is a problem with the Government’s belief that people can somehow go into a shop, see some sort of product on the shelves, drink it and then all of a sudden become entrepreneurs. What we need is a fundamental overhaul of how we look at our education system. We need to make work part of our education from day to day; we need to talk about self-image and communication skills, and above all, we need to talk to people about entrepreneurship. That is the only way forward for us.

To return to the motion, I do believe we need an economic stimulus, and that could come about through a VAT cut—but we also need to look at fundamental problems in our society and try to address them.

I have kept my points short, Mr Deputy Speaker, and have spoken for only six minutes. I hope that you will remember that in future when I want to speak again.

[Several hon. Members]

rose—

[Mr Deputy Speaker]

Order. To make sure that everyone follows the hon. Gentleman’s excellent example, I am now going to introduce a six-minute limit so that all Back Benchers are protected.

17:24

[Lorely Burt (Solihull) (LD)]

I am speaking not just as a member of this coalition Government but, like the hon. Member for West Bromwich West (Mr Bailey), as a west midlands MP. In the west midlands, we have a youth unemployment rate of 9.6%, which is 2% higher than the UK average. There is nothing I would like more than to see young people given the opportunities that they need, but this is not a new problem. Youth unemployment in the west midlands has been running at about 2% higher than the national average since mid-2008, but is this motion the right way to deal with it?

I would say that the Opposition have failed because, once again, they have not faced up to the realities of the situation. The Government are taking the tough action needed to reduce the deficit—a deficit left to us by the Labour party. It is in that context that we have to view the motion before us.

[Debbie Abrahams]

Will the hon. Lady give way?

[Lorely Burt]

I have a six-minute limit, I am sorry.

[Mr Deputy Speaker (Mr Nigel Evans)]

The usual injury time will apply.

[Lorely Burt]

In that case, I will give way.

[Debbie Abrahams]

Is the hon. Lady aware that debts in the City of London in 2009 stood at 245% of gross domestic product in comparison with a public sector debt of 60%. Is it not about time that the Government acknowledged that point and made sure that they targeted their action where it belongs?

[Lorely Burt]

I do not think that debt is a good thing. As has been mentioned, we are spending £120 million a day paying off our debts, which means that the money cannot be used for all the things that hon. Members would like to spend it on.

It is well known that Labour’s plans for the economy would have cut £7 for every £8 that the Government are cutting.

[Toby Perkins]

Will the hon. Lady give way?

[Lorely Burt]

No.

The difference, other than the £1, is that the Labour party has not had the decency to tell us where it would cut that from. The Opposition claim that it is this difference that has resulted in the number of people not in education, employment or training reaching 1 million. That is the first of many interesting recollections in the motion, so let me highlight a few stark facts: in May 1997, there were 664,000 unemployed 16 to 24-year-olds in the UK, but in May 2010 there were 924,000. After 13 years in government, the Labour party left youth unemployment 40% higher than when it took office; it was Labour Members who took us to that level.

What are the Government going to do about that? We have rolled out the Work programme across the UK. It provides flexible and tailored support that will be of real benefit to our young people, unlike many of the unsuccessful schemes operated by the previous Government. We are yet to see the initial results of the Work programme, but I am confident that it will prove more successful than the future jobs fund, which was heavily reliant on the public sector and provided little more than a smokescreen for the increasingly poor youth unemployment record. In Birmingham, 2,500 positions were created under the future jobs fund, only 50 of which were in the private sector, and evidence shows that 50% of the people who took up a placement were back on jobseeker’s allowance when their placement ended. So that is not a programme that can be deemed a success.

The motion condemns this Government for leaving 100,000 people without a university place. Labour’s collective amnesia appears to have struck again. The shadow Secretary of State seems to have forgotten that in 2009, when he was universities Minister, he imposed a strict cap on places, which led to 130,000 people missing out. In 2010, the situation got worse, because 150,000 people missed out on a place. The Labour party focused so much on the 50% target it had set that it forgot the minor detail of how it was going to pay for it. Government Members will take no lectures on universities from Labour Members, especially as the intense focus they put on universities left other routes of education for our young people neglected.

The Government have sought to rebalance that equation. We have increased the number of apprenticeships by 100,000, smashing even our own targets. These apprenticeships will provide skills and training that will allow people to progress into the job market. Not only that, they will offer more flexibility than the traditional route of education, allowing people to decide what is best for them, rather than being subjected to the conveyor-belt style of the previous Government.

The motion also, bizarrely, highlights house building and claims that the Government are responsible for the current slow-down. House building under Labour fell to its lowest level since 1946. It got so bad that Labour’s housing Minister advised our young people that it was, “Time to give up the dream of home ownership.” What kind of message is that for young people? What kind of message does it send after 13 years in government? This Government are building 170,000 affordable homes over the lifetime of this Parliament. We have established the new homes bonus and the FirstBuy scheme, and we are bringing back into use many of the 300,000 empty homes in the UK. We are taking action to help young people on to the property ladder—where the previous Government failed.

The Government have also set up the regional growth fund to boost businesses outside the south-east, and I note from the motion the Opposition’s tacit approval for the scheme. They call for more money to be spent. We, too, would like to invest more money but, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) admitted, there was “no money left”. At the same time as making spending commitments and opposing deficit reduction, they have called on us to cut VAT. Cutting VAT to 17.5% would require £13 billion more of spending cuts and I would be very interested to know where hon. Members feel that should come from. All that the Opposition offer to pay for new homes, increased regional funding, VAT cuts and a new youth jobs fund is a bankers’ bonus tax that raises less than our bank levy and failed last time. It is economic nonsense.

This debate is about chances for our young people. We do nothing to help their chances if we do not take the difficult decisions necessary to reduce the deficit. We are investing in apprenticeships, building new homes, getting people into work and securing the long-term future of the economy. That is what this Government are doing.

17:35

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

There is no doubt that this is a worrying time for this and the next generation of young people. That is not just my view but that of those who see first hand the damage being done to opportunities for young people, particularly across Newcastle and the north-east.

The abolition of Labour’s education maintenance allowance came as a serious blow to thousands of young people across the north-east, yet organisations have stepped into the breach. Newcastle city council, now safely back in Labour hands, was not prepared to stand back and abandon Newcastle’s generation of young people and therefore established a new 16-to-19 bursary scheme that is helping young people who face financial hardship to stay in full-time education.

The decision to end the highly regarded Aimhigher programme recently came in for strong criticism from regional universities, which fear that greater barriers to social mobility in deprived areas will be the result. Despite what the hon. Member for Solihull (Lorely Burt) has just said, I have yet to find any support for the scrapping of Labour’s future jobs fund, which helped more than 5,000 young people get a foot on the job ladder in the north-east alone, not to mention the coalition’s decision to allow universities to charge students up to £9,000 per year, with the maximum fee looking likely to be the norm, not the exception, despite the promises of Ministers.

That all adds up to a total lack of Government strategy to support young people at a time when youth unemployment has hit record levels. Some 949,000 16 to 24-year olds—more than one in five across the country—are now out of work. Over the past 12 months the north-east has seen an 18% rise in the number of jobseeker’s allowance claimants, one of the highest increases in any region by some margin. For me—and for many, I am sure—that is very alarming.

Since I was first elected to this House, I have been a passionate advocate of apprenticeships and the important role that they can play in supporting young people into the workplace. To give him his due, the Minister for Further Education, Skills and Lifelong Learning shares my passion. Indeed, I welcome his commitment to expanding the number of apprenticeship places and to building on Labour’s excellent work in government. I am seriously concerned, however, that the figures on apprenticeship places are possibly being fudged, with the number of places increasing by 234% in the past nine months, which is largely attributable to Train to Gain being rebadged.

I also believe that we need to look very carefully at the quality and types of apprenticeships that are being created because we need to ensure that they genuinely meet the needs of current and future employers and match the skills that we need for Britain’s future economy. How will the Government ensure that new apprenticeship places are additional to any new jobs created? It is no good converting existing jobs into apprenticeships just to say that a target has been reached; we need to offer genuine opportunities to young people and provide genuine support for businesses so that they embrace the apprenticeship model. Despite many local employers taking up the apprenticeship agenda with gusto, many still do not appreciate the benefits that taking on an apprentice can have for their organisation. Indeed, that concern is borne out by a recent north-east chamber of commerce report that found that companies wrongly believe that taking on an apprentice is “too expensive”, or that apprenticeships are available only in a very narrow range of sectors.

[Caroline Dinenage (Gosport) (Con)]

Does the hon. Lady agree that the emphasis that the Government have put on apprenticeships has been fantastic PR in the sense that people who would not previously have thought of offering them now do so? I met a chap in my constituency the other day who is a carpet cleaner and who, purely because of the Government’s emphasis on apprenticeships, suddenly had the idea of offering an apprenticeship to kids from the hardest-hit areas of my constituency. That move has been a huge success and can be credited solely to the emphasis that the Government have put on apprenticeships.

[Catherine McKinnell]

I agree that apprenticeships need a sales job to be done on them, but there is a greater need for real action that meets the needs of businesses and the economy, and I am worried that the Government’s approach is just a PR job and does not have much substance. Having met a number of apprentices from across Newcastle who work in catering, construction and as motor technician apprentices, I have seen how beneficial they can be to businesses. I have a business apprentice in my constituency office in Lemington, who just turned 18 last week and who is genuinely invaluable to my office. I encourage all hon. Members to take on an apprentice in their office and lead the way.

Clearly, the coalition needs to do more. In these straitened economic times, the Government should use every lever in their power to increase the opportunities available to young people. They should lead the way and they could make a huge difference by using public procurement to achieve social and economic ends. They spend £220 billion a year purchasing goods and services from the private sector—from business support services to new schools and hospitals to new trains. They are the top single contractor in the UK. I introduced my Apprenticeships and Skills (Public Procurement Contracts) Bill, which is due to have its Second Reading shortly, so that all companies that win major public sector contracts give a firm commitment to create apprenticeships as part of that bid.

I am delighted that my proposal has been adopted as Labour party policy, but I am disappointed that it has received only warms words from the Minister for Further Education, Skills and Lifelong Learning. As I have said, this is not the time for warm words—it is the time for action. It is hugely disappointing that the Minister for the Cabinet Office has repeatedly rejected the idea, stating that using public procurement policy

“to stimulate the creation of more apprentices...wouldn’t be appropriate”.

I ask, “Why?” If getting the cheapest price for a contract results in long-term costs and missed opportunities for young people and for the creation of our future skills base, that is short-termism at its worst and is an irresponsible way of spending taxpayers’ money. That attitude is even more disappointing because the policy has the backing of many people and major organisations, including the Federation of Small Businesses, chambers of commerce, the Association of Colleges, many unions, the Federation of Master Builders, the Electrical Contractors Association and indeed Lord Sugar.

I urge all right hon. and hon. Members to lend their support to today’s Opposition motion, because we simply cannot take the risk of creating another lost generation of young people. We have the tools to make a difference and we have the spending power of public procurement—let us use them.

17:43

[Justin Tomlinson (North Swindon) (Con)]

Given the time constraints I shall cover a number of topics swiftly and litter them with personal requests in the hope that the Minister will agree to every one of those requests. First, on apprentices, about which several Members have made some excellent points, I welcome the increase in numbers both for young people and for adults as I am a huge fan of apprenticeships. As a Member of Parliament I have taken on an apprentice in my constituency office, and in my former role as a business owner I also took on an apprentice, who has gone on to have a good career.

In my constituency, we have launched a scheme with a number of local businesses called plan 500, which has sought to increase the number of opportunities for work experience and apprenticeships. I am such a huge fan of apprenticeships because they help businesses by giving them an opportunity to train and shape apprentices to their organisation’s needs. They are an affordable step for businesses that are looking to progress and they provide an excellent opportunity for those who participate in apprenticeships, often giving them far better career opportunities than traditional university graduate schemes. Having talked to local businesses and business forums in my constituency, I know that they are extremely supportive of apprenticeships.

My hon. Friend the Member for Gosport (Caroline Dinenage) made a point about the need to improve the perception of apprenticeships, which has continued to improve over a number of years, and rightly so. One problem is that many businesses still do not understand how easy it is to employ an apprentice or what it entails. I have mentioned this in several debates, and I shall repeat it because it is still an excellent point. All businesses receive a business rate mailer, and I call on the Government to include in it information on how to take on apprentices; it would lead to the creation of further opportunities for young people.

We should do all we can to encourage the next generation of entrepreneurs. Talking to young people, it becomes clear that they love, and are inspired by, “The Apprentice” and “Dragon’s Den.” To make a sweeping generalisation, young people have enthusiasm, drive and cheek. These are all essential ingredients needed to innovate and challenge the norm, especially in high-tech and traditional industries where new opportunities could be created.

To be proactive, I think we should encourage young enterprise schemes in schools; we should establish the network of 40,000 business mentors; we should support global enterprise week, which for all those with diary open and pen poised is 14 November; and we should tap into inspirational projects, including the excellent work of the Peter Jones Foundation and of the Premier League, which has managed to deliver enterprise activities to more than 115,000 children in just two years. Too often we actually educate people out of entrepreneurial flair. I studied business at university, and only a handful of the 300 in our year went on to set up their own business. My plea is that we just let people get on and be that next generation of business owners.

I am particularly keen to see an expansion in financial education. It is essential that we equip the next generation to understand the increasingly complex financial world, and to have the confidence to be savvy consumers. That will help young people make informed financial decisions; it will help provide them with the confidence to manage their own money; it is good for their CVs, helping improve their likelihood of securing work in a challenging market; and it encourages entrepreneurs. I hope all Members will continue to support our all-party parliamentary group on financial education for young people, which is calling for compulsory financial education in the school system.

On housing and the challenges for young people in becoming first-time buyers, I would like banks to show flexibility rather than sticking to the crude method of “timesing” income by a multiple to determine whether the young person can afford to pay a mortgage. A lot of young people are already demonstrating that they can afford a mortgage by paying rent, which is nearly always more expensive than the current mortgage. I would like banks to look a lot more carefully at the person’s credit history and disposable income to determine whether they can service a mortgage.

On student finance, we have a duty to provide information to allow young people to make the best career choice for their individual circumstances, so I welcome the setting up of an independent taskforce, led by Martin Lewis of moneysavingexpert.com, to provide clear, independent advice covering the good and, crucially, the bad of any changes. For example, the emphasis should be on the question: is university really the right option for an individual? It is good for some people, not so good for others, and we have a duty to ensure that young people make informed decisions to get them their best opportunities in life.

I was going to set out a series of observations on student finances, but I will go straight to my plea that under the new system graduates should be allowed to repay loans early. The reason that we need to do so is set out in Martin Lewis’s “mythbusters” on the seven deadly sins of not allowing early repayment. First, we encourage everyone to try to manage debt responsibly, and the policy flies in the face of that. It is unpopular; in a survey carried out on the website, 87% of people said they wanted to repay early. It penalises people for good financial management and success. For some it will mean that commercial loans are cheaper; student loans will no longer be good debt for them. It pressurises parents into stumping up so that students do not need loans; and higher repayment thresholds mean that people are in debt for longer.

I understand that the policy is being considered because we do not want to disadvantage people from challenging backgrounds; I was one of the people who benefited from a full grant. But although a young person relies on their parents when they go to university, when they graduate their destiny is in their own hands as they secure work, and if a graduate has secured a good job and has disposable income, they should not be penalised with a lifetime of debt. I urge the Government to consider that.

17:48

[Jim Shannon (Strangford) (DUP)]

I am pleased to be called to speak. The first line of the motion before us says that

“this House believes that young people face a more uncertain future”

than

“their parents and their grandparents”

ever did. None of us in the House could argue with that, and it is the premise on which the debate is founded—that things are not as rosy today as they were for us or our parents. I am proud to be a father and grandfather. I am also proud to represent the constituency of Strangford in Northern Ireland. I am conscious of the fact that, when young people come to me, I sometimes see desperation and anxiety about getting employment and trying to do better for themselves, and I ask myself, “How can this happen? How can we help?”

The hon. Member for North West Durham (Pat Glass) gave an indication of the unemployment figures for her area, and the figures for my area do not make good reading either. In July this year, 2,580 people were unemployed in my constituency. That represents 6% of the economically active population—those aged 16 to 64—and places my constituency 219th among United Kingdom constituencies. Yes, it is in the bottom third, but the number of claimants is 250 higher than last year and has increased by almost 80 in the past four months. So a clear trend is starting, and that worries me.

Many of our young people are in this bracket; they are seeking employment, improvement and opportunity. I often see young, highly qualified university graduates applying for jobs in Tesco stores. There is nothing wrong with them doing that, but they are qualified to do better. I am concerned that they are not getting better opportunities. A new Tesco store is opening in my area in October, and some 2,500 people applied for the 160 jobs on offer. There are opportunities coming through, but not enough of them. We need to ensure that opportunities are there for the future, and I believe that the debate shows how we can do that.

I recognise clearly what the Government have done and what they are trying to do, but I suggest that there should be more focus on other methods of doing things. Internships are a route being followed by increasing numbers of graduates. The Government must continue to encourage employers to invest in students and graduates by offering work experience and internships, which help them to develop valuable skills and boost their employment chances.

I welcome the individual commitment by many hon. Members to successful initiatives in their areas—that is good to see—but apprenticeships are an essential mechanism. There must be in place encouragement schemes for employers to keep on their apprentices once they are qualified. In Northern Ireland, where this is a devolved matter, the Department for Employment and Learning has a programme whereby those who hire long-term unemployed people receive a financial incentive for the first few months of the employment. It is my belief that, if we made a similar offer to those who employ people for the first time, more employers would see the benefit of taking on additional employees.

We are all too aware of the financial difficulties that most small and medium businesses face, and it is the duty of the House to understand them, while encouraging sustainable employment. The motion refers to

“a temporary VAT cut to boost consumer spending”.

There is some debate about whether that is a good idea, but I feel that it is. It would boost confidence and lift the economy, and I believe that it is important to do so. I see the benefits of that proposal.

It distresses me to hear that a great many young people are moving abroad. I know people who have moved from my area to Australia, which has a bit of an economic boom, or to New Zealand to get jobs. People who were brought up in my area and have construction skills see opportunities elsewhere and move out of the country to take them.

As has been said, there is another way if we look hard enough. The Northern Ireland Assembly has put a ceiling on tuition fees for students in Northern Ireland. Initiatives can be taken if the willpower is there. I see a major problem in relation to the brain drain. We often think that that happens when people reach a certain age, but I am concerned that we must stop our young people leaving our shores for pastures further away. The skills for life programme and further education have delivered much, but I am concerned—this terminology was used by a previous speaker—about a lost generation. I see a lost generation for my area if we are not careful in how we plan our strategy for the future. The Government are committed to doing better, but we must look at things in a different way. A business constituent has suggested that people could do voluntary community work for a few hours daily to get their benefits. They could then build that up as a CV, as well as helping the constituency.

I also welcome the part of the motion that refers to the bank bonus levy, which would have a financial benefit if we took it upon us. We must look to the future and foster a generation of workers who have had the opportunity to gain expertise and experience from their education. The reality is very different out there, and I urge the House to support the proposal, which was made with the best of intentions. Hon. Members should look on it favourably.

17:54

[John Hemming (Birmingham, Yardley) (LD)]

Sometimes, I think that there is a tendency in politics to focus too much on trying to avoid tripping over the hurdles in front of us. We do not look at the horizon and see where we are going in the long term. Rather than focusing on the minute issues about the immediate policy and the motion—I oppose the motion and support Government policy—I should like to consider the longer-term issues.

It was rather sad to hear the hon. Member for Islwyn (Chris Evans) criticise factory work. For my constituents, we try to maintain work at Jaguar Land Rover. Those skilled jobs give people an opportunity in life. My view of work is that people should work to live, not live to work. If people have skilled jobs or have gone to sixth form or university, they can find a house to live in, bring up a family and go on a few holidays. They have some stability in their lives. That is a positive thing to have, and it should not be downgraded as something that society should not aim to have. The hon. Member for Strangford (Jim Shannon) made the valid point that jobs in Tesco are important. I am pleased that a Tesco will soon open in Yardley and provide people with additional jobs.

Within all this, we need security. Young people need such opportunities in the first instance. Let us put aside party politics for a moment and look at what has happened over the past 20 or 30 years. Technology has improved things in one sense—obviously, we can do a lot more with fewer people—but we do not need so many people to do what we do. The hon. Member for West Bromwich West (Mr Bailey) said that there are perhaps 1 million jobs short in the west midlands. Obviously, some people are now in education who would previously have been in work. Considering 50% growth is a thought experiment; it will not suddenly magic up massive employment. We need to consider what is happening in other countries. Rather than focusing on a relatively small number of people working many hours a week, trying to put everything together so that they can afford to buy a property, perhaps our long-term aim should be that people need not necessarily work so many hours and that the work is shared out.

We have had disadvantages with the benefits system. People have been discouraged from working part time. If they work part time, they do not qualify for benefits such as tax credits and the like. I hope that the universal credit system will enable people to say, “Actually, by balancing out work and life, I don’t necessarily have to work full time.” We could then share out the work and have greater numbers of people contributing to society and fewer people being described as NEETs. I do not like using acronyms to describe people. Perhaps people’s finances might not be so good, but if more people were in work but not necessarily working so many hours, they would have a better quality of life.

[Sheila Gilmore]

If people work fewer than 16 hours, they do not get support from tax credits. Under the universal credit system, a ceiling will be placed on people’s incomes. They will not get out of poverty as a result of those proposals.

[John Hemming]

I am trying to move on from just being party political about the next few minutes’ policies. If we want to design a society—okay, I do not believe in centralised state management—we should consider our objectives. If our society is to be one in which a greater proportion of people participate in its operation, we do not need to discourage people from working only two days a week, which is what the hon. Lady was referring to. That issue needs to be looked at.

We cannot just solve things with economic growth. In practice, there are limits to the resources available for growth. As colleagues might be aware, I chair the all-party group on peak oil and gas. Putting aside climate change, there are constraints on the availability of fossil fuels and limits to the extent to which we can increase consumption. When we look at obesity in society—perhaps I am a good example—we should consider whether we need to increase consumption.

There is a wider view. We need to look critically at what we are doing in the long term. In the short term, we have to deal with the deficit; there is no question about that. If we do not, interest rates will go up, and we will end up in a situation similar to that of Greece, or various other countries that face serious financial problems. However, in the long term, our objective has to be a society in which everybody participates; in which we work to live, rather than live to work; and in which we try to involve everyone. We cannot do it with a command-economy approach, but we need to support people in doing what they can and working part time, rather than penalising them for that.

I think that I have, in less than six minutes, managed to make my point, so I leave the Floor to other hon. Members.

18:00

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

It is a great pleasure to follow the hon. Member for Birmingham, Yardley (John Hemming), but in general, we have heard a rag-bag of rubbish from Government Members today. Let us think about the big picture: accelerating globalisation; climate change; the ageing of western populations; and the emergence of developing markets, particularly in China and India, that are driving up energy prices, which makes green technologies economical.

In Europe, there is a sovereign debt crisis in the aftermath of a financial crisis, but the UK, after 13 years of Labour Government, is in a pretty strong position. As I pointed out earlier, Iceland, Ireland, Italy, Portugal and Spain are in a much worse position than Britain. Why? It is because Labour had created 2 million extra jobs since 1997. Those people are working, paying tax, and making their way.

Of course, we have a deficit, two thirds of which, as the Institute for Fiscal Studies acknowledged, was created by the bankers. The other third was due to the fact that, in the recession, we invested more than we earned, but there is no apology for that. Yesterday, the Government attempted to say, “Oh well, we’ll sort out the banking crisis,” but their remedy would take eight years. They also acknowledged that they would bail out Lehman Brothers and others, so that was no real solution.

The big choice is in deciding what the balance should be between growth and cuts to get the deficit down, and there is also the issue of timing. We have not heard much about what a growth strategy would look like. We have seen what a cuts strategy looks like; we are living that awful nightmare. What we need in a growth strategy is a strategy for indigenous growth, in which we invest in education, skills, apprenticeships, economic clusters, and an entrepreneurial culture; we have heard some reference to that. We need to build up trade links, which have been savaged by the Government’s disinvestment in regional development agencies, which means that UK Trade & Investment cannot market the UK abroad effectively and get companies to invest in Britain. We need to invest in infrastructure and, in particular, in housing, as is mentioned in the motion, to crank up the economy once again.

We need inward investment, resulting from the effective marketing of Britain—something that has been cut to the bone. We need to create economic conditions of stability and certainty, not just in Britain but across Europe and globally, to give business the confidence to invest. We need to spot the obvious fact that the emerging opportunities are in future markets, not least in China and India. What is the verdict on the Government’s efforts so far? Pretty poor, frankly. Small business is starved of cash from banks. The news of massive cuts in public services means that consumers are saving instead of consuming, so companies are not investing in new jobs. In construction, things are almost as dead as a door-nail.

On education and skills, Government Front Benchers deny that it is possible to send students to university for £3,000, yet in Wales that is precisely what is happening. A student from Wales will leave university with a debt of £10,000, but in England, it will be £30,000. If there are three children in a family, that is £100,000 in England, versus £30,000 in Wales.

[John Hemming]

Does the hon. Gentleman accept that Wales gets a lot more money per capita through the Barnett formula?

[Geraint Davies]

That is complete rubbish. The calculation is that Wales is underpaid by £300 million. We started in the same position. This is about economic choices. There are tough choices; the choice in Wales was to cap investment in the health service. It was a tough choice, but the right choice, to invest in skills for the future and productivity to make Wales strong—

[Mr Davey]

rose—

[Geraint Davies]

What the hon. Gentleman is doing is making England weak.

[Mr Davey]

The hon. Gentleman and his colleague from Wales, the hon. Member for Islwyn (Chris Evans), have praised the Welsh Government. Can the hon. Member for Swansea West (Geraint Davies) explain why the average spend per school pupil in Wales is £604 less than in England in 2010-11?

[Geraint Davies]

The average spend in Wales is less, but the reality is that the Welsh Government have given an undertaking to increase that spend year on year. In fact, because the Government are cutting local authority funding by 7% a year for four years, there will be less money for education in England. What there is will be funnelled into middle-class free schools, to the cost of poorer communities. Wales will put a cap on health spending, and more money will go into education. It will have a comprehensive system in which there is more money, instead of cuts, and a system in which people are enabled to go to university. That is investing in the skills of the future.

As I have mentioned, UK Trade & Investment has historically been very effective in promoting inward investment and trade in Britain, but crucially, that relied on regional development agencies, which have been abolished. When I spoke to UKTI in Brussels, Belgium, and in Düsseldorf, the same message came back: German companies would come back with a computer platform, saying, “We want to put a factory somewhere.” Where are the RDAs to draw that down? They have been abolished. Well done, the Tories and the Liberals.

On infrastructure and construction, the Government have abolished the scheme to renew schools, which basically means that construction workers are being laid off. As for future markets, we have to look at companies such as Tata Steel near Swansea, and Airbus in north Wales. Those big consumers of energy are being penalised by the Government and their unilateral carbon pricing. The Government forget that we operate in a European market, and do not understand how the markets work at all. Those companies are part of the solution. Tata Steel has a new generation of steel, with seven layers, that generates its own heat and energy; that reduces the carbon footprint by cladding a building. Airbus has a new generation of planes that use 30% less energy. That is part of the solution, and we should be supporting, not penalising, those big employers and companies.

Let me talk about Swansea. I am proud that people in companies such as Amazon are flying the flag and saying, “Come to Swansea.” We are in the premier league, so we are a global brand. What is stopping us are the Government, who are cutting the coastguard, which undermines confidence in tourism and investment in wind farms offshore, and are stopping the electrification of the railway from Cardiff to Swansea, which would link us to the European network. We just need a helping hand so that we can keep going for success, can build on the intellectual clusters in the two universities in Swansea, can build on our team spirit in marketing Swansea, and can make our contribution to a sustainable, inclusive, growth-focused future for the rest of Britain. There is enormous opportunity for Britain to get up off the floor and fight, but it is being held down by the Tories’ and Liberals’ ineptitude.

18:07

[Robert Halfon (Harlow) (Con)]

This is a very important debate. As I said in my maiden speech,

“In Essex, nearly 4,000 young people are not in employment, education or training, and Harlow is one of the worst-affected towns…If we give young people the necessary skills and training, we give them opportunities and jobs for the future.”—[Official Report, 2 June 2010; Vol. 510, c. 488.]

I went on to say that that is not just about economic efficiency; it is about social justice. That is what the debate is about—real, tangible, long-term opportunities for young people, not false hope, short-term Government programmes, or a revolving door back to benefits.

It is worth looking at the history of the past few years. In 2000, around 600,000 16 to 24-year-olds were not in employment, education or training. By 2010, the number of jobless had doubled to well over 1 million, where it remains today.

[Sheila Gilmore]

If we are to have a history lesson, it is perhaps pertinent to point out that the rate of youth unemployment fell during the first years of the Labour Government. The 2010 figure that all Government Members want to quote with such glee was after the recession. One must look at the whole period, and not simply take the beginning and end point and imply that the Labour Government did nothing to reduce youth unemployment.

[Robert Halfon]

It is interesting to hear that, because youth unemployment rose steadily over the past 10 years.

For those who call for a stimulus at all costs, such as the hon. Member for Swansea West (Geraint Davies), that decade is a warning. Even during a boom, we cannot spend our way to full employment. Other factors must be taken into account. From 2001, we asked teachers to spread themselves too thinly, with too many competing priorities. Maths and English suffered, and in the past 10 years, 500,000 children left primary school unable to read or write, which is shameful.

Our business culture is flawed. In Austria and Germany, for example, one in four businesses offer apprenticeships to young people, but in England it is just one in 10. Twice as many Germans qualify to become apprentices, or gain technical skills, compared with British people. What has gone wrong in the UK for our skills levels to be so low? I accept that the previous Government, as many Opposition Members have said, were concerned about youth unemployment, but far too often the schemes that were introduced in the past 10 years worked like a hamster’s wheel: people were shifted around and around, but they did not get anywhere.

The future jobs fund, which was celebrated by the right hon. Member for Southampton, Itchen (Mr Denham), cost a huge amount—£6,500 per placement. As I said in an intervention, about 50% of people who took part in the scheme went on the dole. I accept that there is genuine concern in all parts of the House about young people, but some of the policies introduced by the previous Government failed to get to grips with the problem, which should have been acknowledged in the Opposition motion.

What is to be done? We must improve our schools, build up vocational education, and encourage the right climate for employers to create jobs. We are already seeing a massive expansion in academies, and free schools and simpler budget lines for colleges have been introduced. All state schools will be assessed on maths and English, and that new focus is yielding results. We must build up vocational education. As has been said, the Government are funding 100,000 sponsored work experience placements for jobless 18 to 21-year olds. All vocational training will be free at the point of access, with costs repayable only when someone earns a decent salary. As has also been said, record numbers of people are signing up for apprenticeships—real apprenticeships—and getting into work.

The flagship, I believe, will be the 24 university technical colleges, which are being driven by Lord Baker and Lord Adonis. Their vision is for new 14-to-19 apprentice schools, which will be led by employers and will be centres of excellence in manufacturing, building and engineering. That will be a conveyor belt to university and high-skilled jobs. The first round of UTCs will be announced this autumn, and Harlow college in my constituency has made a strong bid to be one of the first, specialising in building systems and the new internet media that are helping to grow our economy at the London TechHub. It is shame that the shadow Secretary of State did not mention UTCs and the advantages that they will bring.

As has been said, we must encourage the right climate for employers to create jobs. Like other hon. Members, I have employed an apprentice, and I am recruiting another one at the moment. However, one problem experienced by my apprentice is that universities did not give his NVQ the UCAS points that it deserved. Apprenticeships are much harder in many ways than A-levels, and we should recognise that in the UCAS system. Elsewhere in the Government there are initiatives to create a job-friendly climate, including the Work programme, lower taxes for lower earners, welfare reform, and cuts in small business tax and corporation tax. In the past few months, I have worked with the National Union of Students and major UK firms to launch a new apprentice card, which has received strong support from my hon. Friend the Minister for Further Education, Skills and Lifelong Learning. It will give apprentices the same financial benefits as those for A-level and university students.

I congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on her push for apprenticeships in public sector contracts. I urge the Government to implement that proposal, not just nationally but in local councils. I have called for that repeatedly, and I have discussed it with members of Essex council, which is taking a serious look at it.

The number of jobs available has been discussed, and I want to read something from a recent letter sent to me by Monster, the jobs company:

“In order to meet…challenges, we have identified that the problem lies, not with the availability of jobs, but the failure to match jobseekers to job vacancies.”

That is crucial: it is about information and changing the culture so that people know what jobs are available. We must make sure that the National Apprenticeship Service and other schemes work as they should. In the next few weeks, I will launch a parliamentary academy—some hon. Members will have received a letter from me about this—with Martin Bright and his charity New Deal of the Mind.

Youth unemployment is devastating, and if we can improve school and vocational training—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.

[Several hon. Members]

rose—

[Madam Deputy Speaker]

Order. May I ask the remaining six Members who wish to speak—there were only five on my list—to resume their seats while I am speaking? We have to begin the winding-up speeches at 6.40 pm. Six Members stood up to speak, which means about four minutes each. That is the good news. The bad news is that if everyone takes longer than four minutes someone will fall off the end of the speakers list, and I am afraid that I cannot do anything about that.

18:16

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I will be brief, Madam Deputy Speaker.

With a few notable exceptions, it is a shame that hon. Members have tended to conduct the debate on party political grounds. We are discussing the future of our young people, which is much too important for us to take that approach, so I pay tribute to the hon. Members for North Swindon (Justin Tomlinson) and for Harlow (Robert Halfon). I have grave concerns about the Government’s policies, particularly the spending cuts and what they will mean for our young people.

In my constituency, there has been a steady rise in unemployment among 16 to 24-year-olds over the past 18 months. That was not something that happened before the Government took office—there has been a consistent increase in the past 18 months, and I have looked at the figures for other constituencies, too. As for NEET statistics, the figures are reaching 20% in the north-west. In my constituency, there has been a 10% increase in unemployment in the past year. In the 1980s, when I began my working life as a community worker with unemployed young people, I saw that unemployment had a significant impact on them. We must not forget the human costs, and I remember that those young people felt abandoned and separate from a society in which they had no stake.

The hon. Member for Wirral West (Esther McVey) said that opportunity is open to everyone if they can find it. That is not the evidence from the OECD’s recent report, which shows that, of the 30 developed countries, the UK has one of the poorest records for social mobility, along with the US, France and Italy. Using income changes as a proxy measure for social mobility, the OECD found that a hefty wage premium was associated with growing up in a better educated household, with a corresponding penalty for being raised in a less educated family. That was particularly the case in southern European countries and the UK.

In the UK, the OECD found that 50% of the economic advantage that high-earning fathers have over low-earning fathers is passed on to their sons. By contrast, in Australia, Canada and the Nordic countries, less than 20% of the wage advantage is passed on. Analysis undertaken by the London School of Economics showed that the bigger a country’s income differences the lower its social mobility. The American dream, it seems, is just that, as the US has the lowest social mobility, followed by the UK. Again, the Nordic countries are the most socially mobile. We must look at all those factors in our policies to make sure that we live in a country in which our young people can aspire to achieve their ambitions, and in which they believe there is something for them.

Policy reform can and should remove obstacles to intergenerational social mobility and to promoting economic equality of opportunities for all, but unfortunately I see direct parallels with the policies that we endured in the 1980s. The cuts to public spending are ideologically driven, with scant regard for the human costs. The scale and pace of the cuts mean that we risk abandoning yet another generation. We have already heard about the scrapping of education maintenance allowance and the trebling of university fees, but we have not heard mention of the introduction of commercial interest rates on student loans and how that will make such loans even more off-putting for people from low-income backgrounds. In addition, the Government have done away with the future jobs fund and fudged the figures on apprenticeships.

I urge all Members to look closely at opportunities for all our young people and to support the motion.

18:20

[Nic Dakin (Scunthorpe) (Lab)]

When young people in my Scunthorpe constituency express exasperation about how hard it is to get a job and look me in the eye and say they have no future, I feel guilty because it is our responsibility to ensure that young people have hope. It is our responsibility to ensure that our young people have a better future than their parents and their grandparents. Now, thanks to the actions of this Government, that is in jeopardy.

We all have personal experience of how motivating it is for someone to get on to a course or into a job. It is particularly motivating for young people. I know this from my 30 years’ experience in education, most recently as principal of a large open-access sixth-form college. Students would grow in confidence in their first few weeks, encouraged and enthused by teachers and others. They would be amazed at their own abilities. We would unlock their talent and release their potential.

We have all observed, I am sure, how someone loses interest in life, becomes irritable with friends and family and is in danger of sinking into idleness as a result of weeks of worklessness, and how that same person suddenly grows in stature and confidence in their first few weeks of work. Work is transformational for all of us, but particularly for our young people. At the Crosby employment bureau I was privileged to witness first hand the transformational impact of work on youngsters on the future jobs fund. From being listless and desperate, they became focused and enterprising. With the vast majority progressing on to jobs at the end of the programme, this was a real success for individuals and for society.

Figures show that one in four 18 to 24-year-olds are out of work, and that is worst for young men. Those not in education, employment or training were at a record high of 18.4% last quarter. There is a danger of significant lifelong costs of long-term youth unemployment—a generation suffering for the rest of their working lives from poor job prospects, and a return to the economic, personal and community despair of the 1980s.

The ladders of opportunity put in place by the Labour Government are being systematically kicked away by this Government. EMA, the future jobs fund and the September guarantee have all been scrapped, tuition fees have trebled and student numbers have been slashed. Add to this the chaos in the careers service, which is to be debated later, and the dismantling of youth services up and down the land, which is well documented in a Select Committee report, and one wonders why the Government have got it in for young people.

EMA was the most transformational thing I have ever seen in my professional experience. It gave young people hope. It was demonstrably clear from all the evidence that EMA impacted on their attendance, their achievement and their life chances. The fact that it has gone is extremely worrying. Among the colleges in my constituency, John Leggott college last year received £865,000 in EMA. This year it has £130,000 in bursaries. North Lindsey college last year received £1,168,000 in EMA and this year has £187,000 in bursaries. That is a real impact, and it is being felt out there.

I hope the House rallies behind the motion, recognising that although all of us have not always got it right, this is an opportunity to move forward together in line with the interests of our young people.

18:24

[Toby Perkins (Chesterfield) (Lab)]

We can tell that we have a Tory-led Government when we are back here again debating how a whole generation can be looking forward to so challenging a future. I was desperately disappointed by the speech from the universities Minister. He spoke for 28 minutes today and he kept promising that he was going to get on to what he was doing for young people. I heard him say about four times, “I’m about tell you what I’m going to do for young people.” He quoted Lord Mandelson and my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), and he tried to sell us his book. Perhaps we need to buy his book to learn what his policies are, but he did not tell us anything about what the Government’s plan is to try to end the record level of youth unemployment.

The Minister told us that apprenticeships were the way forward, but he was already doing that, so there was no reason for any young person listening to the debate to leave with any confidence that we had a Government with a plan that would do something about youth unemployment. Never before have young people in our country been faced with such an economic assault on all sides. The lesson of our history is that when young people start on the dole, they stay on the dole. It is so important that we get them into the right habits of working from the moment they leave school.

We urgently need growth in our economy. The Prime Minister said last week that the country was facing a growth crisis, yet we come to a debate here about the central issue facing our country, and the Conservatives and Liberal Democrats run out of speakers a long time before the end because they have nothing left to say. We have had about five speakers in a row from the Labour Benches because Government Members have given up. They have no idea what to say about this policy area.

We could look at education maintenance allowance, at university tuition fees, as my colleagues have said, or at the Government’s decision to abolish the future jobs fund before they had even assessed its success. What has happened to all those show that we have a Government who are careless of the damage that they are doing to the next generation. Why? Because the young are dispossessed, they are less likely to vote and they pay less in taxes—but times are changing. The student demonstrations showed that young people are being politicised as never before. The number of young people who have been joining the Labour party in Chesterfield, coming forward and wanting to have their voice heard gives me great confidence about what young people will do in future.

We are facing a desperate graduate employment crisis. The public sector is not growing. We have hundreds of social work graduates out of work. It is no accident that we have a huge increase in graduate unemployment at the same time as the public sector cuts. Perhaps that is because the Government have some sort of plan for a private sector-led recovery. However, the private sector recovery is not doing all that well, as we see from examples such as Bombardier, where the Government had an opportunity to safeguard jobs in British industry but decided instead to send those jobs overseas.

In the case of Forgemasters, the Government could have taken a decision that would have put Britain at the forefront of a new industry, but instead they pulled the ladder away. We see what they have done to growth in our economy with the scrapping of the regional development agencies. In Chesterfield, when Auto Windscreens went into liquidation, more than 1,000 employees turned to the Government for help and no help was forthcoming.

The future looks bleak for graduates, but it looks even worse for those who have not had the opportunity to go to university. In the next debate we will consider the dreadful mess in the careers service. At every level we see a Government who are careless about the future for young people and who are setting young people up to fail. If they do not take action soon, there will be a wasted generation.

18:28

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

This debate is about the ability to provide skills, work and disciplined, self-organising working communities. That in turn provides revenue in tax and safeguards pensions, services and social security, on which we all rely to support the next generation.

I draw the attention of the House to a response that I received from the Minister to a written question. I asked him:

“what assessment he has made of the potential effect on youth unemployment of the change in higher education fee arrangements in 2012.”

He replied:

“The change in the fee arrangements enables the Government to continue to finance a high number of places in higher education for students in 2012, and therefore there is expected to be no adverse impact on youth unemployment as a consequence of the change.”—[Official Report, 7 September 2011; Vol. 532, c. 721W.]

The poverty of that response from the Minister is surpassed only by the poverty that the Government’s policy on tuition fees will induce in areas such as mine.

Last week Bill Gross of PIMCO said that the market would look favourably on a change of the Government’s economic plans. That is because the growth forecast has repeatedly been lowered. Inflation today was 4.5% on the consumer prices index, although that is not reflected in pay increases. We have seen an increase in unemployment, massive public sector redundancies and the private sector slowing down and building up for redundancies. In manufacturing and construction purchasing managers’ index figures have declined continuously in the past few months under this Government

Middlesbrough, unfortunately, tops the league in the north-east as the area with the highest youth unemployment, with 31.6% of economically active young workers aged 16 to 24 resident in the borough out of work. It is followed by Redcar and Cleveland, two boroughs that I also represent. Across the UK as a whole, almost one in five economically active young workers aged 16 to 24 are unemployed. Around 949,000 16 to 24-year-olds are out of work, following a rise of 15,000 in the last quarter, which is approaching levels last seen in the 1980s. Overall, unemployment rose by 39,000 in the three quarters to June this year, to top almost 2.5 million. The number of jobless women benefit claimants rose by 15,600 to over half a million, the highest rate since 1996.

What is especially concerning for me, coming from an area where the mass unemployment of men from 1979 onwards led to a cultural phenomenon of long-term family unemployment, is that we are now seeing massive unemployment for women. We have not seen such unemployment rates since 1988. That has a massive cultural impact on constituencies like mine, where we have had fathers, brothers and uncles unemployed, because we will now see mothers, aunties and sisters unemployed for the long term, too, as a direct result of these policies. However, these concerns seem to be falling on deaf ears in the Government. The Office for Budget Responsibility, which was set up by the Government, knows that the Government will have to borrow £46 billion more as a result of their economic policies. That means that 200,000 more people will become unemployed, also as a result of those policies.

I suggest to the Government that their rebalancing of the economy, along with the recovery, seems to be flatlining. The latest survey data from business organisations suggest that the manufacturing revival has run out of momentum. Even as businesses complain about engineering skills shortages, the unemployment rate remains the highest in the north-east, at 10%. The fear is that the skills hoarding that we saw before is not happening. The unfortunate position we are in at the moment is that the same people are now going back on short-term working agreements that they had only recently come out of. We are returning to a period in which the economy could go either way. One suggestion that the Minister might like to make to the Chancellor is to reverse the CFP policy, please look at primary industries, such as the chemical and steel industries, and please do not put manufacturing in jeopardy from foreign competition.

18:32

[Chris Williamson (Derby North) (Lab)]

I want to talk briefly about the promise of Britain and how it applies in Derby, with specific reference to the rail industry. Derby is renowned for its railway heritage. We have been building trains in the city for 180 years, right back to the 19th century, but we are faced with a serious situation in which the rail industry in our country hangs in the balance. The industry has given hope and a good future to young people in the city for countless generations.

Before the general election, Members now sitting on the Government Benches said that they would review all the major rail contracts, so I assume that they looked in detail at the contracts before eventually deciding not to award the vital Thameslink line to Bombardier, which would have provided employment and security for thousands of people in my city, including young people with apprenticeships, and instead awarded it to Siemens, which will build the trains in Germany. It seems to me that Ministers have been very lax in their scrutiny of the tender specifications, because the invitation to tender clearly—

[Robert Halfon (Harlow) (Con)]

On a point of order, Madam Deputy Speaker. I thought that this debate was about opportunities for the next generation, not Bombardier railways.

[Madam Deputy Speaker (Dawn Primarolo)]

Mr Halfon, I think that you will find that that is a matter for me, not you. The hon. Member for Derby North (Chris Williamson) will return to the debate.

[Chris Williamson]

I am trying to make the point that denying Bombardier the opportunity to fulfil this contract denies future generations the opportunity to enjoy long-term employment in the rail industry. This is a serious situation, because we face the prospect of losing the ability to build a train ever again in this country—the country that gave the world the railways. We will never again be able to build a train because of a decision that this Government have taken. The specifications of the invitation to tender were very clear that the successful bidder must have a proven solution. Siemens does not have a proven solution. It does not have a lightweight bogie. The tender goes on to state that it should be deliverable—

[Madam Deputy Speaker]

Order. Mr Williamson, I am sure that you are illustrating a point, as you said, and mean to address the topic of the debate in your short contribution, but it would be good if you talked about that topic, rather than the tender.

[Chris Williamson]

I am, Madam Deputy Speaker. I am merely pointing out that the Government have not fulfilled their obligations and are thereby denying opportunities for apprenticeships for building the lightweight bogies, the carriages that will run on the Thameslink line.

There are opportunities to terminate that contract. I will not go into the detail in case you call me to order, Madam Deputy Speaker, and because I want to finish my contribution shortly. However, I must refer to what the Prime Minister said when he brought his Cabinet to Derby in March. He said:

“The point of the Cabinet today is to ask one fundamental question: what is it that we can do in government to help the economy to rebalance, to grow and for businesses to start up, to invest and employ people?”

I say to the Prime Minister and to the Government that they should honour the commitment he gave to the people of Derby and of this country when he brought his Cabinet there. They should give young people in my city hope for a future in the rail industry, and give our country hope that we can continue to have a rail industry long into the future. If they do not do that, I fear that people in Derby, and across the country, will be denied for ever the opportunity to work building trains in the rail industry.

18:36

[Sheila Gilmore (Edinburgh East) (Lab)]

I shall address first some of the points that the Minister made, yet again, at the outset of the debate, about the inter-generational issue. What he said is a complete red herring. His argument is that the problems that young people face today were caused by the previous generation stealing their children’s future. I declare an interest, as one of the baby boom generation—the younger end of it. I accept that in many ways we are a fortunate generation. We are fortunate because we are the children of the welfare state. We benefited from better education, better housing and better health. We were the children raised on the cod liver oil and that peculiar-tasting orange juice. I do not know how many Members present remember that, but it did us a great deal of good.

Government Members who are so concerned about social mobility should consider that social mobility rose for the generation who entered adulthood in the 1970s precisely because they had those opportunities. If social mobility is held to have stalled in subsequent years, we must look at what was happening when the young people of the first decade of this century were growing up—the 1980s and early 1990s. Social mobility is a long-term matter. This is not about the selfishness of a generation, but about the way that we structure society. If we are to structure society and the economy for future generations, we must put in place the sorts of measures that benefited us.

Housing is extremely important. In Edinburgh, and I suspect in many other parts of the country, the problem is not planning, despite the planning controversy that seems to have engulfed those on the Government Benches. The problem is about money to fund affordable housing. We have outstanding planning consents for buildings that are not being built. We have regeneration schemes that have stalled after demolition has been carried out, because we cannot afford to build. We have a plan for regenerating our entire docklands area. The development framework was developed five years ago, before the recession, for 18,000 homes, but it has stalled.

How do we unlock that? We could do it by making the investment that would allow affordable homes to be built. That would help to resolve the problem of young people being unable to afford housing. It would also create jobs in the private sector, and apprenticeships, which other Members have spoken about. That is very important, and we need to put it in place. That is where the investment should be going. We need to think about that very seriously, because if we do, there will be a future for our children.

18:40

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

We have, as ever, had an interesting debate, with the first Back-Bench contribution coming from my hon. Friend the Member for West Bromwich West (Mr Bailey), who rightly raised concerns about young people being deterred from going to university.

My hon. Friends the Members for North West Durham (Pat Glass) and for Scunthorpe (Nic Dakin), in powerful speeches, rightly outlined the huge mistake that the Government have made in axing the education maintenance allowance.

My hon. Friend the Member for Islwyn (Chris Evans) set out the stark difference between a Labour Government in Wales, committed to EMA and keeping tuition fees down, and the Government here in Westminster.

My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) rightly raised concerns about what axing Aimhigher means for the delivery of better access to university, and again she rightly pressed Ministers to look afresh at the case she has been making for the use of public procurement to drive more apprenticeship places.

My hon. Friends the Members for Swansea West (Geraint Davies) and for Chesterfield (Toby Perkins) highlighted the absence of a clear and coherent growth strategy—a point that my right hon. Friend the Member for Southampton, Itchen (Mr Denham) clearly highlighted in his opening remarks.

My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) dwelt on concerns about the impact on future social mobility of the measures from the governing parties.

My hon. Friend the Member for Derby North (Chris Williamson) quite rightly exposed the Government’s failures on Bombardier, offering a devastating indictment of the Government’s approach to manufacturing industry and of the future opportunities for young people not only in that business but, as other Members have said, in other firms such as Sheffield Forgemasters.

My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop raised the fears that young people in his constituency will be deterred from going to university, and he also highlighted the growing concern about rising unemployment among women, particularly in his area.

My hon. Friend the Member for Edinburgh East (Sheila Gilmore) joined in the concern about the impact on future mobility of the Government’s measures, but she also highlighted the need for more social housing funding in her constituency in particular, but also nationally.

We also heard from the hon. Members for Wirral West (Esther McVey), for Worcester (Mr Walker), for Solihull (Lorely Burt), for North Swindon (Justin Tomlinson), for Strangford (Jim Shannon), for Birmingham, Yardley (John Hemming) and for Harlow (Robert Halfon), but, apart from the hon. Member for Harlow, who joined the call from Opposition Members for a far greater effort by the Government to use public procurement to secure still more apprenticeships, we heard little from Government Members, including little sadly from the Minister for Universities and Science, who opened for the Government, that will encourage Britain’s next generation to believe that this Administration are not playing fast and loose with their prospects.

We had no apology for the decision to treble tuition fees, no apology still for axing the future jobs fund; no apology for scrapping education maintenance allowance; no apology for an economic policy that is cutting our deficit too far, too fast; and no apology for its devastating impact on prospects for the next generation.

The Government instead claim that the impact of their deficit reduction plans will be shared, but the truth, as the Institute for Fiscal Studies revealed this week, is very different. It is the next generation in particular who are bearing the brunt of the Government’s misplaced economic plans. When almost 1 million young people are out of work and Government policies are having little or no positive impact, it is surely time for the Government to come up with a plan B. Leaving young people on the dole is a waste not just of talent but of money, because it is pushing up the benefits bill.

One would have hoped that the current generation of Conservatives had learned the lessons of the 1980s. For years back then, even when recessions were officially over, youth unemployment continued to rise, and that is why action is needed now to prevent another lost generation of young people. Thanks to Labour’s youth jobs programme, youth unemployment was falling. Now, with the future jobs fund axed, youth unemployment is rising.

We have also had to listen to the complacent assertion from Conservative and Liberal Democrat Back Benchers that trebling tuition fees will not discourage the brightest and best of the next generation from going to university. Never mind that independent analysts, such as London Economics, advisers to Lord Browne’s inquiry, or the London School of Economics’ centre for the economics of education, both predict that the numbers of those going to university will drop.

[Robert Halfon]

The hon. Gentleman says that youth unemployment was falling under Labour, but Office for National Statistics figures show that from 1997 to 2010 it increased by 39.2%. Will he explain that, please?

[Mr Thomas]

As my right hon. Friend the Member for Southampton, Itchen pointed out in his opening remarks, youth unemployment was actually falling for the vast majority of our period in office. Of course, there was a global recession, and youth unemployment rose during that time, but thanks to Labour’s jobs fund youth unemployment was actually coming down when we left office.

Perhaps we need also to dwell on the quality of the higher education that will be available to young people. Before the summer recess, the Minister for Universities and Science presented a White Paper that could have meant a dynamic future for universities and their students, that could have been the centre of our country’s plans to rebalance the economy and that could have helped to drive the growth of new jobs in the new industries; instead, we had little more than a Coulson-esque smoke and mirrors exercise to try to disguise the coming auction of places to the lowest bidder in order to help close the funding hole that trebling tuition fees has created in the Government’s higher education budget.

[Mr Willetts]

The shadow Minister attacks our higher education policies, but are the Labour Opposition committed to reversing our increase in tuition fees?

[Mr Thomas]

My right hon. Friend the Member for Southampton, Itchen set out in his opening remarks what Labour would have done had we been in office. The Minister will recognise that we have in place a detailed policy review, but there was absolutely no reason why his party needed to cut university funding by as much as it did or needed to see—as a result—university fees rise so much.

Instead, the right hon. Gentleman is taking places from universities with international reputations and seeking to auction them off to the lowest bidder. He makes much of student choice, but it will not be students who decide which universities get extra places in that auction.

The Minister, under pressure back in April, praised London Metropolitan university for keeping its fees below £9,000, but just days after his praise London Met announced that 400 courses were being closed; and in July, Carl Lygo, the chief executive of BPP, one of the new providers that the right hon. Gentleman wants to see do more, said that his institution would be forced to increase staff-student ratios as it expanded. With higher tuition fees on the one hand, and cuts in courses and worse staff-student ratios on the other, this is a Government who clearly think that such measures are a price worth paying.

“And the…financial cost”

—these are not my words, but those of the independent Higher Education Policy Institute—

“to students and taxpayers—is likely to be considerable.”

As the Minister said in his opening remarks, the Secretary of State—in his more saintly past—railed against the levels of personal debt. Now he aspires to huge increases in the levels of debt that students face on graduation. If that were not bad enough, the Higher Education Policy Institute also found in its analysis that

“social mobility is likely to be”

a

“…victim of the Government’s plans, and the new methods of allocating resources and controlling numbers look likely to reinforce…disadvantage rather than remove it.”

The Conservative party is damaging social mobility and entrenching disadvantage. Why, who on earth could have predicted that? Almost 2,000 university nursing places and 4,000 university teacher training places have gone this coming academic year; 10,000 extra student places were axed last year by the former Chief Secretary to the Treasury, the right hon. Member for Yeovil (Mr Laws); and 10,000 extra places are being axed next year. Each one is an opportunity gone for the brightest and best of the next generation to fulfil their hopes and their ambitions.

The apprenticeships guarantee scheme has been axed, EMA has been ended, there is rising homelessness and we have a Government in need of a plan B. They are leaving young people with a more uncertain future than at any time in the recent past.

The Government need a serious strategy for growth; they need a plan B; the motion offers them one, and I commend it to the House.

18:49

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

I welcome this debate because I believe that all Members of this House came into politics with the intention of trying to ensure that the next generation has greater opportunities than the current generation. It is a debate that we need to take very seriously because there is a real problem in our country, and there has been for many years, regarding opportunities for the most vulnerable and disadvantaged in our society. The UK’s performance in relation to youngsters who have never been in education, employment or training has been lamentable for many years; we have been near the bottom of the OECD table for a very long time. The youngsters who have left school, are not looking for work and are not in training are those we should most worry about because their opportunities are most scarred, and they are out of contact with the many people who could help them. If we do not give opportunities to those groups of young people, the scars will be with them for life, and it will be a big loss to our whole economy and society; we need a national mission to focus on them.

We heard passionate contributions from many Members in all parts of the House. There was a degree of consensus on apprenticeships. The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) and my hon. Friends the Members for Harlow, for Worcester (Mr Walker) and for North Swindon (Justin Tomlinson) talked about the important opportunities provided by the increase in apprenticeships. I was particularly impressed to hear about the apprenticeships fair being organised by my hon. Friend the Member for Worcester and the increase in apprenticeships that my hon. Friends the Members for Burnley (Gordon Birtwistle) and for Eastbourne (Stephen Lloyd) have managed to achieve by working with businesses in their areas.

There was some debate about the numbers involved. This is only the second time that I have been able to address the House on apprenticeships. The first time was towards the beginning of this Government’s time in office, when Labour Front Benchers pressed me on whether our target of 50,000 apprenticeships in our first year would be hit. I was rather nervous about responding to that, and I said that I hoped it would. I could not have told the House then that we would not just hit it but do it twice over, doubling our target with 100,000 new apprenticeships in our first year—a record that we are proud of. There is a lot of enthusiasm among workers and businesses up and down the country for our approach to apprenticeships.

There was also some debate about the quality of apprenticeships—an important issue. We aspire to ensure that the apprenticeship is the gold standard approach to vocational training. We want to ensure that in putting this investment into the apprenticeships scheme, we manage to reshape it. I have talked about the idea of access to apprenticeships to ensure that people who are unable to persuade employers to take them on have the chance to experience that learning. We also want to look at higher apprenticeships.

[Mr Thomas]

If the hon. Gentleman aspires, as he says, to high-quality apprenticeships, why is he part of a Government who have abolished the apprenticeships guarantee?

[Mr Davey]

We are doing a lot better than under the apprenticeships guarantee. The hon. Gentleman should have apologised for his motion, because, as my right hon. Friend the Minister for Universities and Science clearly showed, it does not tell the real story—the success story—about apprenticeships by suggesting that it is a negative story. The truth is that the absolute number of all apprenticeships is up, as is the absolute number of young people on apprenticeships.

I am afraid that there was some misunderstanding of that success story, despite the support for our overall policy. That is not surprising, in a way, because Labour’s record is surprisingly poor in this respect. As my hon. Friends the Members for Wirral West (Esther McVey) and for Solihull (Lorely Burt) said, under Labour youth unemployment increased by 40%, and the number of NEETs increased. One of the most surprising facts is that as the number of NEETs was increasing under the Labour Government, it was falling internationally, so we fell behind Hungary, Greece and the Slovak Republic in what we were doing for the most vulnerable young people in our society. That is not a record for Labour to be proud of.

[Mr Denham]

The hon. Gentleman made a big point about statistics. Does he accept that the size of the cohort of young people rose massively during the years when Labour was in power, and that that is why we are right to say that up until the recession the rate of young people not in education, training or employment fell?

[Mr Davey]

The right hon. Gentleman will not admit that the percentage of unemployed young people increased. That takes account of all the issues that he is trying to wriggle out of.

There were complaints about parts of the coalition’s policies, particularly on education maintenance allowance. We heard impassioned speeches from the hon. Members for North West Durham (Pat Glass) and for Scunthorpe (Nic Dakin); they both have a lot of knowledge in this area and I listened to them intently. The hon. Member for North West Durham said that she was particularly concerned, rightly, about the outcomes of the most disadvantaged. However, she failed to recognise that our reforms—our different approach—to EMA will mean that more resources are targeted at the most disadvantaged. The 12,000 most disadvantaged young people will get up to £1,200 in a bursary that will help them more than EMA managed to do. I am afraid that her criticism ought to be of the Labour Government.

Two of the coalition’s policies that are vital for young people did not receive the attention they deserved. The first of those is a policy that we should celebrate across this House because it was introduced by the previous Government—increasing the participation age in education and training. We had to make a difficult decision during the spending review about whether this Government would be able to find the funds to continue with that policy. It was a real challenge, but we found the money despite the problems. The shadow Secretary of State complains that we have somehow targeted young people in our policies, but nothing could be further from the truth. Despite the financial situation, we are going forward with raising the participation age in education and training to 17 in 2013 and to 18 in 2015. We should be proud of that policy. We have gone further than the previous Government did. We have increased the number of trials to ensure that the roll-out of the policy is more effective, and we have freed up local authorities to come up with new, more imaginative ways to deliver on it. These are the sorts of policies that will bring real opportunities for the most disadvantaged in our society.

Secondly, there are the reforms to vocational education that we plan to take forward following the report by Professor Alison Wolf. She shook up the cosy consensus that was allowed to develop under the previous Government and made it clear that things were not all hunky-dory and that we needed to back apprenticeships, which the Government were doing, but also, crucially, to increase the quality of vocational education and ensure that those on such courses still managed to achieve basic skills in maths and English. This Government will take forward her recommendations because we believe that that will make a real difference.

We have discovered a number of things today. We have discovered that there is agreement across the House that issues of youth unemployment and the need to increase opportunities for young people are a challenge and a problem, and have been for many years, and that many of the Government’s policies, particularly on apprenticeships, are a real way forward in tackling them. We have discovered that things got worse under the Labour Government, particularly for the most disadvantaged young people. We have discovered that, despite the rhetoric of Labour Members, this Government are determined really to do something for young people and to put social mobility at the heart of our plans to succeed where the previous Government failed.

Question put.

18:58

Division 348

Ayes: 234

---

Labour: 216
Democratic Unionist Party: 6
Scottish National Party: 6
Plaid Cymru: 3
Alliance: 1
Independent: 1
Social Democratic & Labour Party: 1

Noes: 297

---

Conservative: 247
Liberal Democrat: 48

Careers Service (Young People)

Tuesday 13th September 2011 Commons Chamber

19:15

[Andy Burnham (Leigh) (Lab)]

I beg to move,

That this House believes that the Government should act urgently to guarantee face-to-face careers advice for all young people in schools.

The motion is in my name and that of my right hon. Friend the Member for Southampton, Itchen (Mr Denham). The House this afternoon debated the challenges facing the coming generation; this evening, it is right to consider how, as a society, we help all young people to face up to those challenges, and how we give them the advice and support that they will need to find their way in a changing and highly competitive world.

It would seem that our debate is well timed. After today’s bombshell from the Boundary Commission, perhaps a few more of us all of a sudden have a keener interest in preserving a good-quality careers service. However, our woes are nothing compared with the dejection, disappointment and sheer hopelessness that many of our young constituents are experiencing. Jobs are getting harder to find, with close to 1 million young people now unemployed. Many are struggling to stay in education or training with the loss of education maintenance allowance and local authority travel grants. For a growing number, university is quite simply no longer seen as a realistic option.

Not surprisingly, some young people are feeling lost and do not know where to turn. Some are able to fall back on strong families and family connections to open doors, but that is not available to all young people. Those who feel lost need good careers and life advice more than ever.

What is the Government’s answer? Having kicked away the ladders of support—the EMA, the future jobs fund and Aimhigher—they are now pulling up the drawbridge, leaving young people alone in the dark to fend for themselves. Let me say at the beginning that this debate is not about preserving the status quo, and nor is it special pleading for the Connexions service. The previous Labour Government commissioned a report that highlighted problems with that service and we accepted that there were areas where it needed to improve. I have not come to the House tonight to say, “Nothing must change.”

The Opposition have previously said that we have no real disagreement with the Government over their vision for an all-age careers service. However, with every day that passes, it becomes less likely that the Government’s vision will ever become a reality, because careers services are disappearing, advisers are being made redundant, and young people are being left in the lurch. Schools are being given the statutory responsibility to provide careers advice, but no money to do so. It is a complete mess. Ministers promised a transition plan months ago, and tonight we ask them this simple question: where is it? They are treating dedicated careers professionals with contempt, and owe them the courtesy of some answers. That is why the Opposition have brought Ministers to the House this evening.

We appreciate why the Minister for Further Education, Skills and Lifelong Learning is not here today—the Opposition wish him well—but why is the Secretary of State for Education not leading this debate for the Government? Where is he? I say this to the Minister of State, Department for Education, the hon. Member for Bognor Regis and Littlehampton (Mr Gibb): what is more important when young people all over the country face the difficulty of finding a job, uncertainty about their futures and worries about the cost of education? What could be more important than the Government ensuring that those young people have access to good advice? Why is the Secretary of State not here to answer those concerns?

[The Minister of State, Department for Education (Mr Nick Gibb)]

My right hon. Friend sends his apologies to the House, but he is meeting 100 outstanding head teachers in Nottingham who have travelled there to meet him to discuss the opening of the first 100 teaching schools. That is why he cannot be here. If it had not been for that, he would have been here.

[Andy Burnham]

I thank the Minister for his reply, but debates in the House used to be more important than that. This is an urgent situation facing the careers service in this country. This is more urgent and it needs to be addressed by the Secretary of State. We need him to provide leadership. Frankly, he has provided none to date on this important issue. On his watch, the careers service in England has gone into meltdown, which is unforgivable considering all the pressures on young people today. He has shown next to no interest in this subject and has his head permanently stuck in an ivory tower. Instead of obsessing about Oxbridge, he needs to start engaging with the real world and the challenges that young people face in trying to get on in life.

[Derek Twigg (Halton) (Lab)]

My right hon. Friend is right to pay tribute to dedicated careers professionals, who do a superb job, but is there not complete confusion over who provides advice to young people and those not in education, employment or training? Also, where has the money gone?

[Andy Burnham]

My hon. Friend asks a good question. In opposition, the Conservative party produced a manifesto for careers that spoke of £200 million being allocated to an all-age careers service. As well as asking this evening where the transition plan has gone, we might pick up the question that my hon. Friend has just asked: where has the money gone? Schools have not been given any extra money to provide a new careers service and to fulfil the statutory responsibility that the Government want to place on them. How can it be right at this time to ask schools to do more and then not give them the money to do the job for young people? It is utterly disgraceful.

[Alok Sharma (Reading West) (Con)]

rose—

[Andy Burnham]

I give way so that the hon. Gentleman can apologise for that.

[Alok Sharma]

I was rather hoping that the right hon. Gentleman would apologise, as his colleague the shadow Chancellor did yesterday, for the mess that the Labour party left this country in. The right hon. Gentleman asked where the money has gone. His Government managed to spend it. As he knows, his colleague, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), left a note at the Treasury saying, “There is no money left.” There he has his answer. He should talk to his own colleagues, not lecture the rest of us.

[Andy Burnham]

The Conservative party has to change the record. The hon. Gentleman stood for young people’s votes—

[Alok Sharma]

indicated assent.

[Andy Burnham]

He is nodding. He promised them the education maintenance allowance, did he not?

[Alok Sharma]

indicated dissent.

[Andy Burnham]

He saw his Prime Minister make a personal promise to those young people that they would continue to have their EMA. He also stood on a manifesto promising £200 million for an all-age careers service. If he could not deliver those promises, should he not now apologise to the House for seeking the votes of young people in his constituency on a false premise? That speaks for itself.

Our motion is deliberately broad so that we do not get drawn into a debate about the merits of one service versus another. I have said that we are prepared to support the Government in their vision for an all-age careers service. We want to work with the Government to make that service as good as it can be so that it is fit for purpose in these times and for the challenges facing young people. The motion is simple, then, and makes two requests. I might say in passing that it is drawn directly from the report, published in the summer, to the Prime Minister and the Deputy Prime Minister from the advocate for access to education, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), who I am pleased to see in his place. In fact, the motion repeats the words of his recommendation verbatim. I hope, therefore, that he can support us this evening, given that the motion is his own recommendation—but I know now not to come to any such conclusions where he is concerned.

Our motion makes two simple requests to the House. First, as Members of Parliament standing up for young people in our constituencies, we ask the Government Front-Bench team to get a grip on this mess—[Interruption.]—to stop messing around on their BlackBerrys and to stop going off to attend other events around the country. They need to get a grip on this mess, publish the transition plan, show some leadership for once in their lives and get on with the job of standing up for young people. Secondly, we want the House to send a clear message that we have high expectations of what we expect all young people in this country to get and that we want them to have face-to-face advice.

We hear that the Government want to downgrade the quality of careers advice to a phone or web-based service. The national careers service will be a phone or web-based service! It seems that this cost-cutting drive has been partly driven by the raid on the careers budget, to which my hon. Friend the Member for Halton (Derek Twigg) alluded, which the Government made having been forced to make a partial U-turn over EMA. I want every Member to ask themselves whether they think that a remote and impersonal phone or web service is good enough. Would that be good enough for their own children when they are making life-changing choices and considering their options?

[Mr John Redwood (Wokingham) (Con)]

rose—

[Andy Burnham]

I hope that the right hon. Gentleman can answer that question.

[Mr Redwood]

I have a lot of sympathy with the idea of high-quality careers advice, and I am listening with great interest. However, could the right hon. Gentleman tell us exactly how the Secretary of State could guarantee face-to-face advice and what it might cost?

[Andy Burnham]

The Secretary of State could guarantee it by amending the Education Bill, which is in the House of Lords at the moment—

[Alok Sharma]

What about the cost?

[Andy Burnham]

I will come to that in a moment.

The Secretary of State could guarantee it simply by inserting the words “face-to-face”. Indeed, my hon. Friend the Member for Hartlepool (Mr Wright), the shadow young people’s Minister, introduced such an amendment to the Bill on Report. I find it extraordinary that Government Members can troop through the Lobby to vote against face-to-face advice for young people. [Hon. Members: “And the cost?”] As I said a moment ago, the cost was put forward by the Conservative party. It costed its own all-age—[Interruption.] I am trying to answer the question. The Conservative party promised and costed a fully funded, all-age careers service which maintained those currently employed in the Connexions service. It promised £200 million.

[Nick Boles (Grantham and Stamford) (Con)]

Where has the money gone?

[Andy Burnham]

Exactly, what have the Government done with that money? Where have they spent it? Those are questions for the hon. Gentleman to answer, not me.

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

May I correct my right hon. Friend? Is it not a fact that face-to-face careers advice will be available? It will be available in the public schools, the independent schools and the most elite and privileged schools in the country; it just will not be available to most schools.

[Andy Burnham]

That is the point, is it not? This well-connected Cabinet think that everyone’s lives are like their own and that everyone can just call on a friend, uncle or whoever in a law firm or in the City. Sure, they will open a door—ring them up and they will give the advice. They live in a world, and constituencies sometimes, where that advice is readily available through informal family networks. They probably do not see the need for careers advisers. They have used them themselves, but do not see the need for them. However, there are many young people in the constituencies that we represent who cannot draw on those family networks and connections, who do not have role models to whom they can go and who perhaps have never had family members in the professions. They are the ones who need help to enter these closed worlds run often by a self-perpetuating elite.

[Yasmin Qureshi (Bolton South East) (Lab)]

Is my right hon. Friend getting a bit sick and tired of Government Members talking about money issues, given that they will be wasting £3 billion on an unnecessary reorganisation of the NHS and £100 million on unnecessary unelected police commissioners? If they can find money for that, why can they not find a few hundred million pounds for these services?

[Andy Burnham]

My hon. Friend puts her question very well. The Government have got their priorities completely and utterly wrong. If I were a young person watching these proceedings tonight, I would be asking why since the coalition Government came to power they had singled out young people for this barrage of cuts. Do they think that young people are an easy touch? I do not know, but that is what I would be asking if I were them. I would also be asking what an elected police commissioner was going to do to improve life in the community. Very little, I would suggest. I return to the point that I was making earlier. If Government Members do not think that an impersonal, remote service is good enough for their children, they should not accept such a service for anyone else’s children in their constituency.

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

As my right hon. Friend the Member for Wokingham (Mr Redwood) said, everyone in the House would like to see high-quality careers advice, but a little humility might be required all round, not least from representatives of the previous Government, under whom the number of young people not in employment increased in this country despite the fact that it fell in other OECD countries. Furthermore, as their own report showed, at the end of their term in office, the standard of careers advice for young people was palpably poor. Does the shadow Secretary of State agree with the Government’s intention to take the decision making down to school level and let the school decide what is most appropriate? In many cases, that will involve face-to-face advice, although I do share his desire to see greater resources allocated to that.

[Andy Burnham]

I thank the Chair of the Select Committee for his question. He calls for humility, but I acknowledged at the beginning of the debate that we did not get the Connexions service perfect and that we were prepared to work with the Government. I pay tribute to him in leading the Select Committee’s production of a very good report that comes to the right conclusions on this issue. It is possible for schools, with sufficient support, to provide face-to-face advice, although I do not think that he or I would want to go back to the days when the PE teacher or some other member of staff was responsible for giving careers advice and did not do a particularly good job of it. We need independent, good-quality, face-to-face advice.

There is an important point to be made about conflicts of interest. At 16, young people face choices about whether to go on to further education college or sixth-form college, or whether to stay at their school. It is important, in the highly competitive world that the Government are creating, that the careers adviser in the school should not have a vested interest in advising the young person to stay there if that would not be the best option for them. That needs to be thought through, but, without a transition plan, we have no means of judging what will happen. The Government have simply not provided us with any detail.

[Jeremy Corbyn (Islington North) (Lab)]

I agree with what my right hon. Friend is saying. Is he aware that a generation of young people will get no support or advice this year or next year? In particular, children whose parents’ first language is not English have no opportunity to talk to them about their options. What those children need is not a school-based service but an independent, professional service that can assess them in the round and give them support, help and, above all, inspiration. They will not get much inspiration from trawling a website.

[Andy Burnham]

My hon. Friend speaks with customary clarity on these issues, and tells us what life is like for the young people he represents, many of whom might be new arrivals in this country who do not understand how young people can open the doors to education, training and jobs. He has put his finger on the problem. The Government take the view that schools can do everything, and that everything can be pushed down to the schools. Some things need to be organised across the whole local authority, however, if we are to maintain quality and expertise.

I am prepared to believe that schools could provide the necessary advice, but the transition process needs to be managed so that the experts who are currently working for the local authorities can be brought into the schools to provide the advice from those schools. Instead, this lot are allowing those people to be let go and made redundant, even though they have many years experience in the careers service. They are being lost to the profession, and in a few months’ time the schools will be expected to subscribe to a phone or web-based service.

Government Members might think that this is funny, but I do not. We are talking about young people’s life chances, and those young people deserve better than what the Government are giving them. We owe them more, because the world that they are facing is far harsher than the one that we lived in 30 or so years ago. Young people today can expect to have at least 10 different jobs throughout their careers—probably more. Unlike their grandparents, who did specific jobs in large industries, they will be most likely to work in smaller companies. They will need to be all-rounders, able to adapt quickly to new situations. It is also more likely that they will be employers as well as employees.

The harsh truth is that it is getting harder for everyone to get on, but the odds are being stacked much more heavily against those who have the least. If we do not act, this century will see us return to a world in which the postcode of the bed that people are born in will pretty much determine where they end up in life. In today’s world, as traditional structures break down, social networks and connections are becoming the key to jobs and opportunities. In some industries—sadly, we can count Parliament among them—it has become almost expected that a young person will have to work for free before they can get their first foot on the ladder. That is wrong; it is the exploitation of young people’s determination to get on.

If we allow the situation to continue in which there is no careers advice and in which the only way in is through having a connection with a company or organisation and moving to London to work for free, we will limit the job opportunities in the most sought-after careers in the country to less than 1% or 2% of the population. That is not a situation that I am prepared to accept. Parliament needs to step in and level up the playing field, to ensure a fair distribution of life chances around the country. We need to help those young people who have the least.

A statutory careers service is important because not all young people get the same support and advice at home. Dame Ruth Silver, chair of the Careers Profession Task Force, says of the Government’s approach:

“It will further deepen deprivation, because some people come from families who have never worked; the ones who need it most are those who don’t have successful adults in their lives.”

[Neil Carmichael (Stroud) (Con)]

The shadow Secretary of State rightly talks about levelling up the playing field. Does he acknowledge the concerns expressed by Dr Alison Wolf about courses leading to no employment, or leading to a “road block” because they are not allied to any specific employment prospects?

[Andy Burnham]

I have some sympathy with that argument, but it is an argument for more and better careers advice, not less. We have some sympathy with the view that we need to ensure that all qualifications should be of a decent standard and should lead somewhere. We accept that view and we will support the Government in that regard, but that is not an alternative; we still need good quality careers advice alongside those routes. I feel passionately that, collectively, the whole lot of us here have failed the 50% or more of young people who are not going to go down the university route. We have not done enough to provide them with a proper structure or a proper route through to good qualifications and a good job, and it is about time that we addressed that balance. It is about time that this House, rather than focusing on the top 20% and the English baccalaureate, thought about a pathway for all children, so that they can all fulfil their potential.

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

If the right hon. Gentleman thinks it important that all students have a pathway, why did the Labour Government remove the modern foreign language requirement in 2004?

[Andy Burnham]

The hon. Lady was not here at the start, and I am not sure whether she has heard the whole debate. Her point does not quite fit. We want young people to make the right choices for them. We should strongly encourage the teaching of foreign languages, particularly in primary schools, but they will not be right for all young people. The question I would ask her is this: why are young people who want to do engineering, information and communications technology, business studies, economics, music, art or other creative subjects being told that they are somehow second best because those subjects are not in the English baccalaureate? What is it that justifies the Government ranking some subjects above others—and, by definition, ranking some children above others?

[Neil Carmichael]

rose—

[Andy Burnham]

I give way one last time to the hon. Gentleman.

[Neil Carmichael]

Following the right hon. Gentleman’s response to my previous intervention, will he shed some light on his view on the need to involve employers in creating the courses and qualifications that lead to outcomes for young people? One thing Professor Alison Wolf made very clear is that employers should be much more involved in the FE sector and in the formation of courses and qualifications.

[Andy Burnham]

The hon. Gentleman makes another good point. I agree with him, but urge him, perhaps when the Minister is speaking, to stand up and ask his Front-Bench team what discussions they had with the CBI before they introduced the English baccalaureate. What is the CBI’s view of it? Does it respond sufficiently to the needs of employers. I see the hon. Gentleman nodding and I hope he will direct those questions to his Front-Bench team. Quite frankly, we risk preparing young people for a world that no longer exists and we need to ensure that young people have the crucial skills—good communication skills, critical thinking and good presentational skills—that they will need if they are to survive in a workplace where much more is demanded of them.

The Minister for Further Education, Skills and Lifelong Learning is not in his place this evening, but when we last debated these issues he said:

“Let us once and for all kill off the bourgeois, left assumption that working-class people do not aspire to the same things as their middle-class contemporaries. Their ambitions are the same; what they lack is the wherewithal.”—[Official Report, 11 May 2011; Vol. 527, c. 1257.]

I agree with that statement. Let me share a shocking statistic with the House; I genuinely find it appalling. It is that 39% of 16 to 19-year-olds who went to a state school say that they do not know anyone in a career in which they would like to work. This rises to 45% among the poorest young people who receive free school meals. What Ministers fail to recognise is that if someone does not know a single person in a career in which they would like to work, they might not be able to fulfil their aspirations in the same way as others.

[Kerry McCarthy (Bristol East) (Lab)]

What my right hon. Friend has just said ties in entirely with what I am about to say. Three of my nephews came to do their work experience here; they are mixed-race lads from council estates in Luton. One of their friends—they did not have an aunt who was an MP—spent the night as a security guard in a factory where his dad sat watching telly all night, walking around the building once an hour to check that no one else was in the building. Another friend did his work experience at Costa Coffee. That was because they did not know anyone who worked in professions to which they could aspire. It is important for career advisers not just to try to get people into internships, but to encourage young people through early work experience placements to stretch their horizons and make connections with people in the professions.

[Andy Burnham]

My hon. Friend makes an excellent contribution; she puts her finger on the problem. I hear anecdotally that, increasingly, schools are saying to young people, “Can you sort out your own work experience? Is someone in the family able to give you an opportunity?” I understand why they might say that because there are lots of pressures on schools, but that highlights the dangers of what is being created. If we live in a world where people say, “The schools do it; we’ll leave it up to them”, that can reinforce low expectations. It is basically telling kids that they cannot break out from their family circumstances because they will dictate what they have experience of and where they will set their expectations. That is what is so wrong about that approach—this random laissez-faire approach to this crucial issue.

My hon. Friend and other Opposition Members will remember a report by Alan Milburn on fair access to the professions during the last Parliament. He made the point that we need to do the reverse—take those young people who have no connection with the powerful worlds of the professions and transplant them into those worlds. We need the highest quality careers advice and work experience for those young people. As the Opposition develop our policy, that is exactly what we should aspire to deliver—alongside excellent careers advice, of course, which has to be impartial, independent and personalised.

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

rose—

[Andy Burnham]

I agree, just as I did with the Education Committee report, with much of what the right hon. Member for Bermondsey and Old Southwark said in his report. I look forward to hearing what he has to say and to his support for our motion.

[Simon Hughes]

May I absolutely endorse the comments of the hon. Member for Bristol East (Kerry McCarthy)? All the evidence from my conversations around England in the early part of this year showed that there was not only very poor careers advice for many young people, but really poor work experience. In a difficult economy, the chances of getting a job from 16 onwards are, to put it bluntly, reduced horribly for those who do not have work experience.

[Andy Burnham]

I agree completely, but the right hon. Gentleman is in a position to do something. I say that not to make a party political point. In some ways, this is not the most headline-grabbing of debates. We are raising this issue out of a genuine concern about what is happening to the careers service and what it might do to damage the life chances of some young people. He has produced what I consider to be a very good report for the Prime Minister and the Deputy Prime Minister, but if Government Members troop through the Lobby against this motion tonight, where does that leave the advice he is giving to the Government? Is he happy about that? There has to be a change.

[Simon Hughes]

I will obviously wait to hear the Minister and I hope to be called to speak. My hon. Friend the Member for Burnley (Gordon Birtwistle) said to me earlier that this is exactly the sort of issue where we should avoid party politics and seek a consensus. I commit myself again, as I have said to the right hon. Gentleman and to ministerial colleagues, to doing so, even if it is sometimes very hard work to get us all in the same place. Careers, work and work experience seem to me to be issues on which there is much more than a party interest in getting to that right place.

[Andy Burnham]

I agree again with what the right hon. Gentleman says. If there is some passion in my voice tonight, it is because I am standing up for people to have a careers service that is under attack. It is quite simply going before our eyes. It is no good saying complacently“let us find consensus” complacently; we need to say that the issue is urgent and it needs to be got a grip of right now. Otherwise, the damage will not be reparable. That is why I continue to point out what I consider to be unacceptable complacency on the part of the Government Front-Bench team. It promised us a transition plan on how this responsibility would be managed as it moved from local authorities to schools and on how we would ensure that we do not lose professionals. This plan has been promised for weeks and weeks and weeks. Every day that passes, more and more damage is being done to the careers service. I say to Government Members who worry about these issues that the time has come for them to start holding their own Front-Bench team to account.

I agree with much of what the Minister for Further Education, Skills and Lifelong Learning said when we discussed the Education Bill on Report:

“I find it inconceivable, or at least unlikely, that best practice will not include face-to-face provision.”—[Official Report, 11 May 2011; Vol. 527, c. 1257.]

If that is the Government’s view, why do they not guarantee it for all young people? The aim must be to give a basic minimum to all young people. I have to say that the Government are in danger of looking seriously isolated on this issue. The Education Select Committee—I mentioned its report a few moments ago—highlighted the need to protect face-to-face guidance. When a Committee is chaired by a Conservative Member—the hon. Member for Beverley and Holderness (Mr Stuart) is no longer in the Chamber—and it makes that direct recommendation to the Government, one would expect them to do him the courtesy of making a proper response.

The hon. Member for Wirral West (Esther McVey) put it this way when we last debated these issues:

“We must not lose the knowledge on the internet, but we must also not lose those people and their personal knowledge. We cannot let something so vital slip through our fingertips when it was within our grasp and when we had the ability to save it.”—[Official Report, 11 May 2011; Vol. 527, c. 1249.]

Voices are speaking from the Conservative Benches, which I do not think Ministers can or should ignore, but the careers service is slipping out of our grasp.

Research conducted by the university of Derby and Unison reveals that just 15 councils are retaining a substantial universal careers service. More than 4,000 careers advisers have already lost their jobs and 50 councils have closed their Connexions centres completely. This expertise is being lost. According to the university of Derby,

“the current environment is having a potentially disastrous impact on the careers profession.”

In a speech in November 2010, the Minister said:

“As we go about this, it’s important to recognise that we’re not starting from scratch. On the contrary, we will build on Next Step and on Connexions because we must not lose the best of either.”

But that is exactly what is happening. We are losing the best of what we have, and this gross mismanagement is simply unforgiveable. It could damage the life chances of up to 2 million young people, as the Association of School and College Leaders has estimated. Young people appear to have been sidelined from the Government’s plans for a national careers service; the Education Bill transfers the responsibility, but not the £200 million that they were promised. Ministers need to tell us tonight what has happened to that money, what is available for the new national careers service and when it will be made available to save these services. Schools have a statutory responsibility to provide a service, but it is absolutely clear that if they are not given the guidance or the money, these services will be of a substandard quality.

The Government have provided no transition plan, no funding, no clarity and no guarantee of face-to-face advice. If they vote against our motion, they will be completely isolated. They have not tabled an amendment—an alternative—which in itself illustrates their sheer absence of ideas on how to take this issue forward. If their own advisory group cannot support them, what does that say about the position the Government are in? In August, the entire careers advisory group considered resignation, because it wanted to protest at the situation that it had been left in. These people did not resign, but they must now be listened to if the Government are to retain any credibility on this issue.

In conclusion, I am proud that it is Labour Members who have spoken up for young people and for a service in crisis. I know that many careers professionals will have been watching this debate, and I am sure that many feel utterly demoralised and undervalued right now. If nothing else, I want them to know tonight that, on this side of the House at least, we appreciate what they do for our young people. A bit of recognition is due, and Labour is proud to give it to them.

However, we also know now what we are up against. This is a Government who have a brutal approach to public service reform, and who are too lazy or too arrogant to produce a transition plan for the careers service. We have Education Ministers who like to focus on the elite—on Oxbridge—when the kids who have least are left to fend for themselves. The fact is that some young people cannot call on well-connected families to open doors. When a family does not have role models or where there is little family experience of what it takes to break into the professions, young people need youth workers, careers advisers and personal advisers to help them open those doors.

Just a few short weeks ago, this House reconvened to discuss the summer disturbances. Many theories were put forward on that day to explain what had gone wrong with our young people to make some of them act in that way. Of course we will continue to debate those things, but I suggest to the House something simple that all young people need, regardless of their circumstances—hope. They need hope of a job and hope of a better life, but that hope is being taken from them. So my appeal tonight goes beyond the Government Front-Bench team and to the House as a whole: is it not about time that this Parliament started standing up for young people? How much longer will we tolerate this attack on aspiration? Let us say tonight that enough is enough. That is why I urge the House to support our motion.

19:53

[The Minister of State, Department for Education (Mr Nick Gibb)]

I am delighted to be able to respond to the right hon. Member for Leigh (Andy Burnham). I had thought that this might be a policy area where the differences between us were slight enough and that he would not feel the need to overstate his case. Alas, that hope has been dashed. My right hon. Friend the Secretary of State would have liked to respond to the right hon. Gentleman but, as I mentioned earlier, he is in Nottingham meeting 100 head teachers to discuss the future teaching schools. I hasten to add that 100 people is more than the number of Labour Members in the Chamber right now, and this is an Opposition day debate. The Minister for Further Education, Skills and Lifelong Learning would also have liked to have responded to the right hon. Gentleman, but he has just undergone minor surgery and is recovering in hospital. He sends his best wishes and wanted me to pass on his apologies to the House for the fact that a lesser orator than he is responding.

It is hard to listen to the right hon. Gentleman when he clamours for £200 million here and £200 million there, given that he was in the Cabinet of a Government who left this country with the largest budget deficit in the G7 and interest payments of £120 million a day, leaving the country on the brink of financial collapse. That is why we have had to take some very difficult decisions. Until Opposition spokesmen acknowledge that point, nothing they say on public spending will have any credibility.

[Andy Burnham]

rose—

[Mr Gibb]

I will make this final point and then I will give way to the right hon. Gentleman. I dread to think of the damage that would have been done to young people’s prospects had Labour won the last election and plunged our economy into a crisis such as those that Greece and Ireland have faced.

[Andy Burnham]

This evening, will the Minister at least tell us where the money has gone? Was the careers budget in the Department raided to pay for the patched-up version of the successor to the education maintenance allowance that the Government were forced to cobble together?

[Mr Gibb]

As I just mentioned, the £200 million to which the right hon. Gentleman is referring would pay for two days’ interest on the debt left by his Government. In addition, we have put extra funding into tackling post-16 deprivation and providing help for those who need additional support: we increased that by a third, to £750 million. That is how those sums have been prioritised by this Government.

[Derek Twigg]

Following on from that point, will the Minister tell us what money is actually being given to schools to provide careers advice? I would particularly like to know the answer in respect of Halton, which is one of the most deprived areas. Does how good the careers advice is just depend on what money is in school budgets now? Is this a lottery?

[Mr Gibb]

Despite the appalling state of the public finances that we inherited, we have managed to ensure that school funding is maintained, in cash terms, at a consistent level over the next four years. That is despite the fact that we inherited a budget deficit of £156 billion. We have also allocated a significant sum to the pupil premium, which is worth at least £430 per pupil qualifying for free school meals this year, and the figure will rise to £2.5 billion by 2014-15. These are the extra sums that we are putting into schools, at a time when our public finances are in a dire state.

[Derek Twigg]

Let us be clear about this, because the Minister is trying to avoid the question and we should not forget that we are talking about £200 million. What extra is specifically being given to schools for careers advice?

[Mr Gibb]

This Government are not involved in ring-fenced budgets for schools. We have de-ring-fenced a large number of budgets into the dedicated schools grant, so that head teachers and teachers can decide how that money is allocated within the priorities of their school. That is the approach that this Government are taking to public spending in the schools sector.

[Jeremy Corbyn]

Can the Minister tell us how many secondary schools are providing careers advice, what means he has to survey what they are doing, and how many of the 100 “super heads” who are meeting the Secretary of State this evening are providing careers advice?

[Mr Gibb]

The hon. Gentleman is asking me to provide a critique on the state of careers advice in this country today. I will come to that, because his party’s record is not one of which he should be proud. The Labour party has just been in power for 13 years and the state of careers advice today is a consequence of what happened during those 13 years, not of what has happened during the first 16 months of this Administration. Hon. Members in all parts of the House agree on the importance of pupils receiving good quality advice and guidance to help them make the right choices for their future; that is particularly the case in these difficult economic times. We have recently seen a welcome reduction in the proportion of 16 to 18-year-olds who are not in education, employment or training—it has fallen from 9.4% in 2009 to 7.3% in 2010—and rises in the number of 16 and 17-year-olds in education. The youth labour market is also tightening, with unemployment for 16 to 24-year-olds who are not in full-time education growing each year from about 420,000 in 2004 to its current level of 671,000. The premium on achievement in particular vocational and academic qualifications demanded by employers and universities means that making the right choices becomes ever more important, and the consequences of making the wrong choices are ever more damaging.

[Liz Kendall (Leicester West) (Lab)]

The Minister is talking a lot about 16 to 18-year-olds, but does he agree that if we are going to raise aspirations we need to start young? Will he agree to look at some of the good work that Leicester Connexions has done with Folville primary school in my constituency? Parents and pupils have been brought together when the children are still really young to talk about what careers options might be possible. The events were really well attended—much better attended than many other events involving parents run by the primary school. Does the Minister agree that the new system that his Government are proposing must support and fund initiatives that start at such an early age?

[Mr Gibb]

I could not agree more. We want to promote such best practice and we want schools to be innovative, but to do that they need control of their own funds. We have tried to de-ring-fence funds and to delegate and devolve decision making on funding to schools so that they can engage in such innovative activity. We have also de-ring-fenced the early intervention grant for local authorities, which now stands at £2.2 billion. That means that such initiatives can be undertaken by local authorities to tackle the very vulnerable people about whom the hon. Lady is talking.

[Liz Kendall]

The problem with the early intervention grant is that, in Leicester, it is being cut by £5 million this year. The Minister says that the Government are not ring fencing things, but I am not arguing for that. I am saying that there will be less money for such innovative projects, and I am asking what the Government are going to do about it.

[Mr Gibb]

The hon. Lady makes a valid point. We de-ring-fenced all the components that make up the early intervention grants, and that funding is £2.2 billion, rising to £2.3 billion next year. That is a very large sum. I acknowledge that we had to reduce it by 10.9% as we moved into the coming year, but that is a consequence of the many very difficult decisions we have had to make in government as a result of the budget deficit. I am sorry to sound like an over-wound gramophone, but those are the consequences of being in government and of inheriting a budget deficit that had to be tackled if we were to get our economy moving again. Young people suffer more than any other group in society when an economy is floundering, and we are in the middle of a very difficult world economic crisis driven by world debt, so we have to get our budget deficit under control if we are to survive as an economy through such difficult periods. I think the best thing for young people is to get our economy growing as soon as possible. That is why we have had to make those decisions.

Local authorities currently have a duty to provide careers advice, and they fulfil that duty through the Connexions service—a service that has, I am afraid, had mixed reviews. The Education Committee’s report said, in measured terms:

“Connexions services have provided careers guidance to individuals alongside wider support services targeted, in general, at more disadvantaged groups; and some Connexions services have been more successful than others in discharging these two duties equally successfully.”

Alan Milburn, who was referred to by the right hon. Member for Leigh, was a little less circumspect in his report on access to the professions when he reported a number of surveys that suggested low levels of satisfaction among young people with the careers guidance they received from Connexions, showing that 45% of over-14s received either no careers advice or advice that was poor or limited. He went on to say:

“Throughout our work we have barely heard a good word about the careers work of the current Connexions service.”

It is very difficult to listen to the emotional tones of the right hon. Gentleman when that is the legacy of the very careers advice that he is so passionate about providing to young people.

[Julie Hilling (Bolton West) (Lab)]

I find it slightly odd that the Minister is not quoting from the Department for Education survey of 5,000 young people, which found that more than 90% were satisfied with the service that they had received. That survey was carried out by his own Department.

[Mr Gibb]

I am not sure what service those people were receiving from Connexions, but there is no doubt that all the surveys showed dissatisfaction with the careers advice given by Connexions. There is more satisfaction with the advice that it gives to vulnerable young people on how to get back on track and back into the mainstream, and I acknowledge that that part of the service has been of a higher quality.

[Mr Sheerman]

Perhaps I can assist the Minister. When I was Chair of the Select Committee, whenever we considered that service we felt that it was very patchy up and down the country. That made us very angry in some circumstances, but it is, I think, called localism.

[Mr Gibb]

I agree with the hon. Gentleman that the service is very patchy.

Our starting point was that careers advice needed to improve, and I think that there is unanimity across the House on that. We decided to split the provision of careers advice from the provision of advice to vulnerable young people. They are very different disciplines requiring different skills and different knowledge bases, so the decision was taken to provide an all-age careers service—the national careers service. That is the responsibility of the Department for Business, Innovation and Skills, and the service will be up and running from April 2012. I pay tribute to my hon. Friend the Minister for Further Education, Skills and Lifelong Learning for the work that he has put in to delivering that service.

The duty to provide careers advice to young people will therefore be removed from local authorities and transferred, subject to the passage of the Education Bill, to schools from September 2012. That duty will require schools to secure access to independent impartial careers guidance for their pupils in years 9 to 11. As part of the consultation process, we are also considering whether there is a case for extending that duty down to year 8 or up to the age of 18.

[Andy Burnham]

Will the Minister confirm that it might be independent and impartial advice, but it will not be face-to-face advice? That is to say, the Government’s plan is that it will be delivered over the phone or via the internet.

[Mr Gibb]

The legislation states only that the advice must be independent. We are considering all the issues being raised in this debate, and by my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes).

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I am ever so grateful to the Minister for giving way and for setting out the schedule. What careers advice has he given all the careers advisers who have now lost their jobs because local authorities have had that funding cut and are therefore no longer providing that service? Given that he is talking about the new service not coming on line until April 2012, and that there is no guarantee that it will be provided by individuals face to face, what does he expect to happen to the people who are the experts in this system?

[Mr Gibb]

Local authorities still have a duty to provide careers advice, because section 68 of the Education and Skills Act 2008 is still in force, and they are required to do so. They are making decisions based on the very difficult financial settlement that we were left with by the previous Administration, but there are good examples of good practice from around the country, including Northamptonshire. In April we published statutory guidance setting out how local authorities should continue to meet that statutory duty under section 68 to encourage and help young people to participate in education and training. We are publishing on the Department’s website best practice from around the country.

[Julie Hilling]

I thank the Minister for giving way yet again; he has been very generous. Will he confirm that the careers advice will be given by professionally trained and qualified careers advisers? Will he also confirm that as soon as the Education Bill goes through, local authorities will retain responsibility just for the NEETs and not for everything else, which will transfer to schools, although schools have not been given any additional funding to provide that independent careers advice and guidance?

[Mr Gibb]

On the first point, the duty to provide advice to vulnerable young people who face problems in accessing education will remain with local authorities, whereas the duty to provide careers advice is transferring to schools. Of course, schools currently have a duty to provide careers education, within which an element of careers advice is also required. We are introducing that duty in the Education Bill at a time when we are acting to reduce bureaucracy and remove unnecessary duties and burdens from schools to allow them to focus on driving up standards, so the fact that we are introducing that new duty is a signal of the importance that the Government attach to high-quality careers guidance.

We are giving schools that duty for two reasons. First, we believe in the concept of decentralisation and of devolving decision making. We trust schools to take decisions in the best interests of their pupils, and restoring trust to the teaching profession is the cornerstone of our approach to education reform. Some argue, as has been argued today, that schools have an inbuilt bias to advise pupils to stay on in the sixth form regardless of whether it is in their best interests. That is why the Education Bill imposes the duty on schools to give advice that is independent.

Many of the incentives for schools were distorted by the structure of the league tables. Professor Alison Wolf set out this problem in her landmark report on vocational education. She said that false equivalencies have encouraged schools to enter pupils for qualifications that score highly in performance tables but are not necessarily valued by employers—effectively building bad advice into the system. Some qualifications have been proclaimed as being equal to four GCSEs, but they do not provide the broad grounding that students need to progress. As a consequence, some pupils have been encouraged to make choices that significantly reduce their prospects for success in later life.

That is why we are reforming performance tables—to end the damaging impact of false equivalencies, as well as removing perverse incentives in the funding system that have encouraged schools and colleges to offer qualifications that are easier to complete but do not necessarily provide the rigour and quality that students need. We are also introducing destination measures that set out where school leavers go after they leave school—whether into high-quality employment with training, to further education colleges or to university.

[Neil Carmichael]

The shadow Secretary of State asked me to ask the Minister about the E-bac, and I do so with pleasure because I welcome its introduction. I think it will have a huge impact in improving opportunities for young people. Does the Minister agree that it respects and represents the preferences of many employers and universities in that it encourages students to do the right subjects and get the right range of qualifications?

[Mr Gibb]

Yes; my hon. Friend makes a very good point. Whatever people say, employers disproportionately employ people with the E-bac subjects among their qualifications.

Our approach is to measure and report on the outputs—on what schools achieve for their pupils. The destination measure will say more about the success of a school’s approach to careers advice and will do more to deliver high-quality advice than will any number of detailed regulations.

The second reason for giving schools the duty is that they are best placed to decide what support their pupils need to make the right choices. We have considered carefully the evidence about what works and what does not work in the provision of information, advice and guidance. The approaches that are most effective work because they are part of a wider approach in a school or college that promotes ambition and aspiration, and encourages pupils to think about their future throughout their education. Effective careers guidance is not a one-off event.

There is no single right way; many different approaches work, depending on the precise circumstances of the school or pupil. That is why it is right to leave schools to decide how to provide impartial independent advice. How they choose to do that should be determined by what works for them. In making choices about how to provide impartial advice, they will benefit from independent benchmarks of quality—something that was recommended by the taskforce on careers guidance led by Dame Ruth Silver, which was commissioned by the previous Government and reported to us last year.

Alongside the duty for schools, local authorities will also have responsibility for encouraging young people to stay in education to the age of 17 or 18 by 2015. They are free to determine how best to fulfil that responsibility, taking account of local priorities. That is a duty that local authorities take seriously.

There will also be free online and helpline services for young people, which will be provided through the national careers service from April 2012. The motion mentions a requirement to provide “face-to-face” guidance for every young person, and that was also recommended by my right hon. Friend the Member for Bermondsey and Old Southwark in his report as the advocate for access to education. The issues that he raises in his report are important: making the right choices at the key decision points in a young person’s education and career can open or close a lifetime of opportunities. We are still considering all 33 recommendations in his report—not just the one recommendation that has been picked up by the Opposition—so we are not, at this stage, ruling anything in or out, and we will respond in full to his report in due course.

We also need to recognise that although advice is important, other elements are also fundamental to a pupil’s ability to achieve and progress. If a pupil does not have a thorough grounding in the basics of literacy and numeracy, or is not given the opportunity to study the subjects that are the best foundation for progression, the best information and advice in the world will not help that pupil to progress far beyond the constraints that a poor education has put on him or her. The evidence is very clear that the longer someone stays in education, the higher their earnings are and the less likely they are to be unemployed. OECD figures show that the earnings premium resulting from a university degree is between $200,000 and $300,000. People with two or more A-levels can earn 14% more than those without. For those who secure five good GCSEs the chances of being NEET are just one in 40, whereas for those who do not achieve five or more good GCSEs the odds fall to one in six.

For young people who are set on pursuing a vocational route at an early age we are promoting university technical colleges and studio schools, we are encouraging FE colleges to consider recruiting students at age 14 and we are allowing further education lecturers to teach in schools. That is also why we are increasing apprenticeship places for 16 to 18-year-olds, with 102,900 young people starting apprenticeships in the first nine months of this year compared with 117,000 for the whole of the last academic year. That is why we have protected school budgets in cash terms, and why we have ensured that we are funding participation at age 17 by 2013 and at age 18 by 2015. It is also why we make no apology for prioritising resources on funding for early years on the pupil premium in schools and on funding for disadvantaged young people post-16.

[Mr Edward Timpson (Crewe and Nantwich) (Con)]

Perhaps the greatest benchmark for deciding whether we are providing the best careers advice for our children is the advice that we provide to children in care, and we know that the outcomes for children in care, particularly in relation to their education, remain woeful. I welcome the Government’s commitment to the continuation of the care-to-work project. However, will my hon. Friend look again—perhaps this could be a 34th recommendation to add to his list—at widening the Frank Buttle Trust quality mark, which provides looked-after children with real confidence that any higher or further education institution that they might want to go into has support and guidance in place for them as a looked-after child or care leaver, to enable them to succeed and achieve their aspirations?

[Mr Gibb]

My hon. Friend makes some very good points. The gap between looked-after children and the rest of society is unacceptable. The low proportion of looked-after children who go to university—just 6%—is also unacceptable. Looked-after children qualify automatically for the pupil premium, and I am listening carefully to what my hon. Friend suggests.

[Adam Afriyie (Windsor) (Con)]

My hon. Friend is making an incredibly powerful speech, and I have been on the edge of my seat throughout. In Windsor we have some of the best schools in the country, and many eminent and pre-eminent Members of the House have attended one or two of them. What the Government propose is absolutely right: it gives flexibility for schools to decide which type of independent advice they think is necessary for their pupils, but does not rule out the selection of Connexions in future to continue to provide some of those services. Can my hon. Friend confirm that that is the case—that Connexions can continue in the new framework?

[Mr Gibb]

Yes, my hon. Friend is absolutely right. I am grateful to him for his very sincere comments about my speech. He is right that the purpose of the clause in the Education Bill is to enable schools to buy in, to procure those services—whether provided face to face, online or by other means—for the young people in their care. We want to avoid the scenario painted by the right hon. Member for Leigh of a PE teacher providing careers advice in his spare time. We want to ensure that advice is independent and high quality.

I shall now bring my remarks to an end; I apologise to my hon. Friend the Member for Windsor (Adam Afriyie) for doing so. On funding, schools will make any provision for careers guidance from their overall budget. Schools already have, under the existing legislation that we are amending, a duty to provide careers education, which includes duties to provide impartial careers advice. Schools’ budgets are no longer ring-fenced and schools can make, and can fund, careers advice.

We are a Government who believe in high-quality careers advice, which is what our reforms are about. We are acting at a time of fiscal constraint, as a consequence of the state of the public finances left by the last Labour Government. I urge all hon. Members, therefore, to reject any motion tabled by the Opposition on any issue that requires funding, and in particular to reject their motion this evening.

20:21

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

It is a pleasure to be called in this debate. I shall start with a confession: when I chaired the Education and Skills Committee—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

May I just say that we have nine Members left to speak, and that if the hon. Gentleman limits his speech to eight minutes it will help everybody?

[Mr Sheerman]

I was going to confess that when I was Chair of the Education Committee I never did an inquiry into careers, but in 2008 I was co-chair of the Skills Commission and we undertook a major inquiry into careers. Lord Boswell, Baroness Sharp and I were on the commission and we produced an all-party report, “Inspiration and Aspiration: Realising our Potential in the 21st Century.” Dame Ruth Silver, whom the Minister and anyone who knows anything about careers will know, the former principal of Lewisham college, was a very important influence on our inquiry, and she now chairs the Government advisory organisation that fell out with the Government recently.

We found pretty simple things. We found that, yes, information technology is very useful and that it will increasingly be used by many young people and older people, but at that stage—three years ago—it was used by only about 17% or 18%, which is not a lot. We also found that it was not enough in itself—face-to-face experience and trusted professionals were vital. There was no doubt that all the research, all the evidence that we took, showed it could not be done by technology alone, and that we blanked out many people by relying only on the technology and the internet.

We also found that yes, the careers service was not as good as it should have been. Anyone who does a PhD in future about the Conservatives’ enthralment with localism will have a wonderful time with the Minister’s speech tonight, because what is this localism? I intervened and said, “The trouble is that Connexions was patchy.” It is true that in every local government service I know, much is good in some things, but less is good in others and things are pretty average too much of the time. So how does one, believing in localism, raise the bar for careers advice? It is a great challenge, as Conservative Members will find. Pushing the responsibility back entirely on to schools, they will find the service very patchy indeed, especially if there are very few resources to some schools and better resources at others.

The Skills Commission report was accepted by all three parties and influenced all three manifestos, so there was the start of a good cross-party agreement on the need for high-quality careers advice—absolutely everyone from whom we took evidence agreed on that. But how do we push that forward? When we found that all the manifestos had been influenced by the cross-party consensus, we were very hopeful. But how did we get to the Government advisory group on the all-age careers service? The Labour Government of 2008 did not want an all-age careers service. They were eventually persuaded—again, there was cross-party consensus. All three main parties agreed on an all-age careers service, and they reconstituted it under a different name—the national careers service advisory group. I understand that it is now in the Department for Business, Innovation and Skills, with the Education Department visiting, rather than its being in the Education Department. I have some concerns, and I think hon. Members will have some concerns, about careers being put very securely in BIS rather than in the Education Department.

Responsibility for providing face-to-face services is, however, being transferred to schools, without funding. I have the report from the advisory group on the all-age careers service and the comments by Dame Ruth Silver about the very real problems with it. It says:

“The new National Careers Service will include face-to-face services for adults, but not for young people. Instead, its service for young people will be confined to telephone- and web-based services. Responsibility for providing the face-to-face services is being transferred to schools, without any transfer of funding: the previous provision of around £200 million per annum for the service for young people has been allowed to disappear.”

That is the Government’s advisory group speaking. These are the leading people in the country advising on careers. The report continues:

“There are widespread concerns about the destruction of careers services across the country, with heavy staff redundancies. At a time when young people are facing massive changes in further and higher education, and new apprenticeships—as well as high youth unemployment—stripping out the professional help available to them is not only foolhardy; it is potentially damaging to young people’s lives and ultimately to the economy.”

What a damning report by the Government’s advisory committee! It cannot be right to go in this direction.

As a result of this kind of localism, schools with few resources will have very little careers advice. That is the truth. At the same time, local authorities up and down the land, under pressure of resources, are getting rid of their careers services or slimming them down to the very bone. We will not recreate a culture of high-quality careers service professionals in that way, even though the Government asked Ruth Silver to chair a committee to determine how to increase the professional quality of the careers service.

Everything was going in the right direction, with all-party consensus. Localism could have worked in this respect if the money had followed local responsibility and accountability. I worked closely with the Minister, who was a good member of the Education and Skills Committee for some years, when I chaired it. He is a reasonable man, and he will understand that this is not a party political issue. Good-quality careers advice is absolutely essential to everyone of whatever age. I am one of those people who believe that it is shame and a stain on our country to have a thing called NEETs. I believe that anyone who is not in education, employment or training of whatever age is a NEET, and we cannot have them.

20:29

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

I am happy to follow the hon. Member for Huddersfield (Mr Sheerman), with all his expertise as the former Chair of the Education Committee and his reminder of what the Skills Commission, on which he so honourably served, so clearly said.

I am grateful to the right hon. Member for Leigh (Andy Burnham) for choosing this subject. I shall let him and the House into a secret: the more pressure that we as a House can put on the Government on this issue between us, the better. I am therefore grateful to the Minister for the way in which he responded. May I pass on through him my thanks to the Minister for Further Education, Skills and Lifelong Learning, with whom I have had several pragmatic and good conversations, and to his colleagues at all levels who have said that, having received the report that I gave them in July, they are taking seriously what I asked them to do?

May I now go back a step? In May, we sent the Education Bill from the House to the House of Lords. We held robust debates on this and other issues. It left with two relevant provisions. First, clause 27 states:

“The responsible authorities for a school in England…must secure that all registered pupils at the school are provided with independent careers guidance”.

I support that. Secondly, it states:

“For the purposes of this section the relevant phase of a pupil’s education is”

between 14 and 16. That is an adequate starting point.

Two months later to the day, the Education Committee, chaired by the hon. Member for Beverley and Holderness (Mr Stuart)—a Conservative Back Bencher—produced its report. The cross-party Select Committee had a clear, unanimous view on the issue. It said specifically, at paragraph 156:

“Professor Watts told us that ‘we used to have a careers service for young people, and all we had for adults was a strategy… What we now have…is a careers service for adults, and a very loose”

information advice and guidance

“framework for young people’. Online career guidance, which allows young people to explore at their own pace and according to their own interests, is valuable; and we heard praise for the online careers services offered by DirectGov. However, this is no substitute for personal advice, given on the basis of an understanding of a young person’s circumstances and ambitions. We recommend that the all age careers service should be funded by the Department for Education for face to face career guidance for young people.”

It could not have been clearer.

I did not know that the Select Committee would say that specifically, but the following week, on 21 July, I gave my report to Ministers. Let me summarise the recommendations and then make a point about my passion for the issue and ask Ministers to consider where we go from here. In passing, I pay tribute to all those in the careers services, including the Institute of Careers Guidance and the trade unions, who have been to see me and are absolutely passionate that this issue needs to be accepted by the Government.

I was clear, because the evidence given to me was clear, that people should start to talk about careers in year 6 in primary school. I was clear, which is why I was so glad about the intervention made by the hon. Member for Bristol East (Kerry McCarthy), that work experience was seen as something where the cleaner did not take a child to work to clean or the accountant take another to do accountancy, but where the cleaner’s child had the same exposure to the opportunities that the accountant’s child would have and, to be honest, vice versa.

[Lilian Greenwood (Nottingham South) (Lab)]

I wonder whether the right hon. Gentleman shares my concern about what is happening in Nottingham and Nottinghamshire, where Futures used to charge £13 per pupil to fix up work experience, but as a result of the loss of a £500,000 Government grant, it now charges £31 per pupil. Many schools are unable to buy in the service to match students with work experience opportunities, yet individual parents can pay £150 to buy just those opportunities for their children to be matched with work experience. What does that say to the children of cleaners and school dinner ladies about the importance of their opportunities?

[Simon Hughes]

I absolutely share that concern. We need a system that guarantees more than just one week of work experience once in July—at the same time all around the country—at one stage in a person’s career. The Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton), and I were at City hall today with some young people who argued that they should have at least two weeks’ work experience. I am clear that it should be for those aged from 14 through to 16, and be held at an appropriate time and in an appropriate place. It should not be something that people charge to fix up; we should develop it so that it is part of the expectation in secondary school, and part of youngsters’ lives.

[Andy Burnham]

I agree very much with the right hon. Gentleman, and I welcome the spirit in which he is speaking. He would probably agree with Labour Members that, as my hon. Friend the Member for Nottingham South (Lilian Greenwood) said, work experience is so important that it should not be left to random chance. We have to find a way of offering structured opportunities, particularly to those young people who have the least. With that in mind, may I ask the right hon. Gentleman to comment on the Government’s intention of removing the requirement on schools, at key stage 4, to offer work-related learning, which essentially is work experience? Is it not the case that if they remove that requirement, provision will be completely random? Some schools will offer it, and some will not.

[Simon Hughes]

Let me be absolutely straight with the right hon. Gentleman: I understand the Government’s wish not to burden heads and schools with over-prescription. I am chair of governors of a primary school, and a trustee of a secondary school, so I understand that completely. However, some things have to be guaranteed, and in my view we have to guarantee the opportunity of work experience during secondary school time, and we have to guarantee face-to-face careers advice. I say that not because I have some theological view about it, but because the evidence that we have heard, and that I collected, is that youngsters are overwhelmingly saying, “We’ve had bad careers advice and bad work experience.”

In a tight economic situation, people even more need both careers advice and work experience. The figures that I collected show that there are more than 4,000 different qualifications that a young person can gain between the ages of 14 and 18. There are millions of combinations of qualifications that they can end up with. Navigating a way through that requires more than a person’s ability to go online and discover what they think they might want to know; that, bluntly, is different depending on how bright the person is, what family support they have, and other things. It is about more than having some books to look at; it is about speaking to somebody who can relate to them where they are, and engage with them.

As my hon. Friend the Member for Burnley (Gordon Birtwistle) said to me when the debate began, in the end what is required may be more than one half-hour session; there may need to be follow-up—mentoring, support, and continuous commitment. That might mean a local employer—PricewaterhouseCoopers could step over the river to my constituency—coming into a school to continue to support somebody as they work things out. It might mean working out how somebody who fluffs some exams, and does not start very well academically, can recover and be told, “You haven’t lost everything just because you had a terrible year when your parents separated and your family situation was a disaster.” We have to understand that people have only one school time in which they can do work experience.

[Nic Dakin (Scunthorpe) (Lab)]

The right hon. Gentleman must be commended for speaking with great foresight and spelling things out with great common sense. Does he agree that there is real urgency, as is reflected in the motion? Young people have only one chance, and getting things right tomorrow is no good for today’s kids. We need to get things right now. There is a transition gap; to be fair, the Minister for Further Education, Skills and Lifelong Learning has recognised that that is an issue in talking to me. That gap needs to be addressed immediately.

[Simon Hughes]

I do not disagree with that; I said it in my report, and I remind the hon. Gentleman to go back and look at it. I just have time to list the recommendations and give my conclusion on where I think we should go.

The second recommendation, which is relevant, is that the Department for Education should continuously consider how best to support schools and colleges in their access activities, and in building up much more available information.

The third recommendation is that at the age of 13 and 14—in year 9—every student should have available to them a proper, broad base of information on what the pathways are. Indeed, it is not just the young people who need that information; their parents do, too, so that they are not prejudiced by their own experiences and past.

The fourth recommendation is that the Government “should act urgently”—those are the words on the Order Paper—to guarantee face-to-face careers advice for all young people in schools; that should be taken up to age 17 and 18, as the school leaving age increases.

We need a plan on how to keep the expertise of current careers services providers, given the change in the system. I welcome the change in the system—Connexions was often not successful, but we must make sure that we do not lose the expertise of the people who delivered the service. We must hold events for parents and carers to make sure that they understand that. Someone in each school—not the independent provider—should be responsible for access issues and someone for careers issues. Finally, Ofsted should evaluate the careers service given to the school and report on it, and how it makes use of destination data.

I am grateful for the Minister’s courtesy and his Department’s consideration. I can hold back my colleagues from voting with the Opposition only because of the undertaking he has given. [Interruption.] No: the Government are going to respond to all the recommendations, not one. I accept absolutely the point about urgency made by Back Benchers. Our Liberal Democrat colleagues in the Lords feel equally strongly that we must ensure the provision of face-to-face guidance.

I represent a strongly working-class constituency. If we believe in social mobility, we must additionally assist those who do not have the advantages of privilege and finance, which is why the Government must deliver. I await the recommendations and their response, but there must be a yes to the proposal.

20:41

[Mrs Jenny Chapman (Darlington) (Lab)]

I greatly admired the speech given by the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), but I am slightly perplexed as to how he can speak eloquently and passionately about something in which he clearly believes but then, at the last minute, say that he will be able to vote with the Government—that is extraordinary— and that he will encourage his colleagues to do the same. It is his call to vote with the Government and support them. I shall support young people in all of this, as they need us now.

We decided to call this debate on careers advice—not the sexiest subject out there—because it matters to us in the Labour party. This is about social mobility, and if the Labour party cares about something, it is social mobility. If we get this wrong, it will make a huge difference to young people’s lives.

[Simon Hughes]

The hon. Lady rightly said that we all have to show that we are on the side of young people, and I hope that I have shown that and that my colleagues are, too. The Government must not just provide one response to one question but respond comprehensively. They also have to find the money. That is their job, not my job. I want them to do it, and we are putting pressure on them. Let me put pressure on in my way; if the hon. Lady puts pressure on in her way, I am determined that the Government will deliver.

[Mrs Chapman]

I listen carefully to the right hon. Gentleman, and clearly he is far more experienced in the ways of the House than I am. It really is not about what we get up and say—it is what we do. We must show support for young people through our actions, not just by giving a fancy speech.

[Dan Rogerson (North Cornwall) (LD)]

I am listening carefully to the distinction that the hon. Lady is drawing between how Members will vote on the motion and their commitments more widely. Will she tell us whether the previous Government guaranteed face-to-face contact for every person, as the motion seeks to demand that the Government guarantee?

[Mrs Chapman]

There are issues with Connexions, and if I am able to deliver the rest of my speech, I will come on to that.

Satisfaction with Connexions varies a great deal, and the Minister rightly pointed out that its careers advice was lacking. In his report, Alan Milburn observed that only one in five young people questioned on the issue found that the careers advice offered by Connexions was satisfactory. That situation is not sustainable, and we should not put up with it. My objection is that the only young people who will receive guaranteed, face-to-face, top-notch, good-quality careers advice are those in fee-paying schools, which no one in the House should tolerate, regardless of their political affiliation, background or education.

The issue is not just the life chances of individual young people, although it certainly includes that, and I am sure that will be the main focus of debate. This is about economic regeneration. My constituency has an engineering heritage and I have some very large engineering companies. I am thinking of Cummins, which makes engines. I do not understand fully what the company does, but I know the engines come in a range of colours. The careers advice and guidance that I was given, growing up in a town with such a strong engineering heritage, was about the public sector, health care and social sciences. Nobody ever spoke to me about taking maths, about a career in engineering, about getting into technology—nothing. Not very much has changed in that respect.

[Damian Hinds (East Hampshire) (Con)]

Does the hon. Lady agree that it is the quality of advice that counts, more than its quantity? What does she recommend we could do to get more people into schools to talk about STEM subjects, for example, and to inspire pupils to take those—boys and girls?

[Mrs Chapman]

Exactly right; I agree with that. I look at my own sons and wonder who is going to talk to them if they want to go into science, technology, engineering or maths. Heaven help them if they look to me or their father for advice. I can give them advice on politics, psychology, archaeology, retail and cake decorating.

Alan Milburn was right. I am happy to see the service devolved to schools. It is fine for schools to commission the service as they see fit, but they need money to enable them to buy quality face-to-face advice, and there needs to be a proper inspection regime.

[Damian Hinds]

rose—

[Mrs Chapman]

Please be brief.

[Damian Hinds]

Is the hon. Lady aware of the STEMNET ambassador programme, in which people from relevant industries go into schools and get the benefit of continuing professional development while they are sharing their knowledge and enthusiasm with the young people?

[Mrs Chapman]

Fantastic! I am all for that. That is marvellous, but is it happening in every school in the country? Of course not. I have some brilliant engineering businesses which go into schools and inspire young people. They try to point young people in the right direction and show them that there are wonderful careers for them on their doorstep—international careers—but young people need more than a visit from such a company. They need proper face-to-face advice from people who will inspire them.

The businesses in Darlington to which I referred are recruiting senior engineers from Greece, Brazil and Turkey, because we are not producing the people to fill those senior roles. One reason for that is that people are not getting the right advice at the right age. I am not talking just about 16 and FE. I am talking about year 6 in primary school, before they take their options, so that they know that they have to take good science subjects and maths. I am glad to see the hon. Member for East Hampshire (Damian Hinds) agreeing with me. Such careers advice will not happen via Google. It needs to be face-to-face, inspiring advice.

I am fortunate to have in Darlington the Queen Elizabeth sixth-form college. I shall shamelessly plug the work of one woman, Stella Barnes, who provides first-class careers advice to young people there. I am sure that despite the pressures that it faces, the college will find the funding to keep Stella doing such fantastic work, but that is one woman and she can only do so much.

In the turbulent world that our young people are entering, job prospects are not certain, the costs of higher education are putting people off, and EMA no longer incentivises young people to stay on post-16. That applies not only to the at-risk, the vulnerable, the people who would not have a job if their mother had not organised something for them. It applies to all young people from all kinds of backgrounds. It is not just about the children of people on benefits. It is about people whose parents are in professional careers but who lack the wherewithal to open other doors—people like myself.

The biggest shame is that the Government have over-promised on what they will do. When they said that there would be an all-age careers service, people took them at their word. They thought that that meant the same for everybody and that it would be fair, but that is not what we will find. Adults can get face-to-face advice, because the Government rightly recognise that they need it, so why can young people not get it? They need it more than anyone else. They need someone to look them in the eye, work out their personal circumstances, listen to their hopes, dreams and aspirations, perhaps give them some if they do not have any, and work out the best thing for them. Otherwise, we are leaving young people stranded.

[Jim Shannon (Strangford) (DUP)]

There are good examples across the United Kingdom, and some of those will be in Northern Ireland. I suggest that that might be a way forward.

[Mrs Chapman]

I am grateful to the hon. Gentleman for that inspiring contribution. I find myself now in a situation in which everything has been said, but probably not by everyone.

20:50

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

I fear that the Opposition are on the wrong track with the subject they have selected for today’s debate. I fear that much more damage has been done by the dilution of maths, sciences and languages in our schools than by poor careers advice, and yet we have yet another Opposition day debate on education that does not address the core issue. We are not talking about what students actually learn in school.

During their period in government, Labour presided over a hollowing core that failed to prepare people properly for the world of work. Britain has been left with a skills shortage in crucial areas, and I fear that we are losing the race against international competitors. An OECD report published today indicates that there has been a rebalancing of skills between west and east. The leagues tables for the OECD’s programme for international student assessment speak for themselves, with the UK falling to 28th place in maths.

The previous Government, instead of addressing the fundamental weaknesses in our education system, further skewed education towards those subjects that employers did not want and spent money on careers advice that only a few people appreciated. Only 20% of students said that they thought the careers advice provided was useful. Alan Milburn, a former Labour Minister, said that the careers advice simply was not good enough.

[Simon Hughes]

I recognise my hon. Friend’s interest in this wider subject. The really important thing is that both should work. The reason we need good, personalised careers advice is that it enables young people to make the right choices, for example on what subjects to study, so that they do not end up excluded from university courses—medicine, for instance—because they made the wrong choices when they were 14 or 15.

[Elizabeth Truss]

I thank my right hon. Friend for his intervention. I advocate making the E-bac subjects that the Government are encouraging compulsory until age 16, as they are in Canada, Germany and France. It is good for all students to get a core basic education. We currently have one of the lowest proportions in the OECD of students doing maths aged 16 to 18. We have a very poor record on foreign languages, history and sciences.

To address the point that the shadow Secretary of State made in his speech, we need to get everyone up to a good level in a core general education. It is no longer appropriate to say that it is okay for students to cut off their options at age 14 and regret it later in their careers. I do not think that we need a lot of expensive careers advisers telling students that; it should be a broad part of a general education that everyone in this country studies, as is the case in most of our major competitors. I would like the Government to take up that point.

Employers say that they are most concerned about foreign languages—75% said that it was their major concern. Yet in 2004 the previous Government dropped the requirement of a foreign language at key stage 4, and since then the proportion of students studying foreign languages at GCSE has plunged from 79% to 44%. In mathematics, the UK is an outlier, with only 50% of sixth forms offering further mathematics A-level, and yet students who wish to study mathematics or physics at one of the top universities need a further mathematics A-level. That means that 50% of our young people are unable to study those important subjects at university. That is absolutely disgraceful. Why are they not able to do so? There are perverse incentives in the league tables, as the Minister said earlier, and we all know that some subjects are more equal than others, but there is also a fundamental dishonesty in how they are presented and reported.

One thing that no one has mentioned in the debate so far, however, is the role that teachers should play. We have seen their role diminished since 2003, and in particular since their terms and conditions restricted the activities in which they may become involved. Teachers have a crucial role in inspiring students to think about their future and what they could make of themselves, but sometimes we focus too much on the student’s immediate career, rather than on building up their long-term capabilities.

It is better to have somebody who is close to a student giving them regular advice and being honest about their subject options. I have been into local schools and talked to teachers, and often they are afraid of denigrating a subject for fear of seeming elitist, but unfortunately that is undermining our meritocracy and meaning that students from well-off backgrounds who attend independent schools are twice as likely to study maths and science at A-level, three times as likely to study modern languages and seven times less likely to study media studies. That, I am afraid, is the legacy of our system.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

What is the basis for assuming that unqualified teachers who flourish in the free-school experiment will be better equipped to provide the support and direction that the hon. Lady hopes pupils will receive?

[Elizabeth Truss]

I thank the hon. Gentleman for his intervention. I support the idea that a good head teacher will select those teachers who are the most inspirational to the students entering that school and encourage them in their future lives and careers. In this country, however, we often look to the short term and the next job, instead of building up the capability for a lifetime of jobs—which could amount to 10 jobs. We are all going to work longer, because we are all living longer.

I know from the previous comments of Labour Front Benchers that they do not always approve of traditional subjects such as physics, chemistry and modern languages—[Interruption.] Well, I have heard expressed in this Chamber objections to the English baccalaureate. However, even if the Opposition think that those subjects are old hat, which people in China and India certainly do not think, as they are rushing to institutes of technology to study them, I am afraid that we are not that great either at teaching new subjects in the way that employers want.

The shadow Secretary of State mentioned ICT, and Dr Eric Schmidt of Google said:

“Your IT curriculum focuses on teaching how to use software, but gives no insight into how it’s made. That is just throwing away your great computing heritage.”

I fear not only that we are not teaching enough rigorous and traditional subjects, but that we are not teaching the new subjects deeply enough, or in a way that imparts how things work, in order to give us the capability to build more effective programming and IT industries. The problem therefore is not just with the subjects, but with the way ICT is being taught.

The Government are taking absolutely the right approach by encouraging more students to study such core subjects, which will give them broad career options, rather than cut off their options early, as many people have unfortunately been doing.

[Julie Hilling]

I thank the hon. Lady for giving way, because I have been sitting here getting increasingly frustrated at the notion that history, geography, modern foreign languages, maths and science are the only subjects that will give a student the breadth of knowledge with which to go forward in their lives. Is the issue not about academic rigour and young people learning to learn and learning to evaluate what they learn? That is the important thing, not the subject that they are doing.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Interventions are getting a little bit too long.

[Elizabeth Truss]

I thank the hon. Lady for her intervention. Perhaps in due course she could tell me why Canada, France and Germany insist on those subjects being taken to age 16, and why all those countries are doing better than us in the OECD PISA—programme for international student assessment—tables.

The Government are taking absolutely the right approach of strengthening the core, getting rid of modules from exams, making rigorous assessments, and encouraging students to take the E-bac. It is so encouraging that this year the numbers of new entries to these subjects have gone up. We are also offering proper apprenticeships to get people the proper work experience that they need to build a successful career. We will not create careers with more hot air; we will create careers through real learning in real subjects and real jobs.

20:59

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

This is the first debate I have spoken in since the summer recess, so may I declare an interest that I should have declared when I spoke in a Westminster Hall debate on 6 July? Since March this year, I have had a part-time placement in my local office from a local not-for-profit social enterprise, the Neighbourhood Services Company. Due to an oversight on my part, I did not register that interest until 8 August. I am pleased to have this opportunity to put that on the record.

My right hon. Friend the shadow Education Secretary set the context for this important debate—rising youth unemployment, the loss of education maintenance allowance and the increase in tuition fees, with the danger that today’s generation of young people could be left in the lurch. He also made the important point that Labour Members are not arguing for preserving the status quo, and he made it clear that we want to work on a cross-party basis to deliver the terms of the motion. I welcome the comments by the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), who reminded us of the recommendations in his report. I gently encourage him and his colleagues to follow those words by joining us in the Aye Lobby.

The big policy challenge to which several Members have referred is how we can increase social mobility. We know from research, including last year’s “Going for Growth” report from the OECD, that this country has an appalling record. The strength of the link between a person’s income and their parents’ income is higher in this country than in any other OECD country. That is a truly shocking fact. I think that every speaker has mentioned Alan Milburn, so I feel the need to do so as well. In his 2009 report, Alan said:

“Birth, not worth, has become much more of a determinant of people’s life chances.”

We must ensure that we address that in this debate.

[Mrs Chapman]

On the subject of Alan Milburn, if my hon. Friend cared to read further on in his report, he would notice that Mr Milburn recommended that schools should be funded in order to commission such careers advice.

[Stephen Twigg]

My hon. Friend is absolutely correct. I was going to make a similar point later, but she has made it very powerfully.

The Minister for Further Education, Skills and Lifelong Learning, who is not here this evening, has been cautious in his criticism of the previous Government’s programmes, and rightly so. Of course, as Members on both sides of the House have said, there were serious imperfections with Connexions and Next Step, but we must be careful not to write off the positive features and the important work of many talented and committed professionals who have worked, as some still do, in those programmes.

Today, in advance of tonight’s debate, I spoke to people in some of the secondary schools in my constituency. Those at St John Bosco school in Croxteth told me about the work they have been doing with the Aimhigher programme. They have drawn particularly on the importance of the role of face-to-face contact by employing a graduate mentor to assist the girls at the school with their university applications and career development. This is a school in a very deprived neighbourhood that has an excellent reputation and a high percentage of its girls going on to university.

Cardinal Heenan school for boys has pioneered a particularly innovative approach to careers advice. I want to commend Dave Forshaw, the head teacher, and his team for their industry day programme, which I have had the opportunity to visit on two occasions. The programme draws on alumni, partners and a range of local organisations to deliver rich and effective careers advice, starting in year 7. Its recent industry days have had contributions from a former pupil of the school, the actor Ian Hart, who appeared in the Harry Potter films, as well as local and national journalists, sports professionals, solicitors, accountants and others. West Derby school has adopted a similar approach and held its first careers convention last year.

I cite those examples because they demonstrate two important points. The first is the critical importance of giving information and advice at an early age. Too often, these things are left too late. The second is the importance of drawing on expertise, including among the alumni of the schools themselves, to inspire young people.

The head teachers of those schools said to me today that quality careers advice needs resources. They are very concerned about what they see as a potential shift in policy away from face-to-face interaction to online and telephone-based services. My right hon. Friend the shadow Secretary of State set out the research published by Unison that was done at the university of Derby, which shows the sheer scale of the cuts in careers services up and down the country. That is the backdrop for this important debate.

Some of this debate has focused on low-cost solutions and how effective they are in delivery. I would like to bring the House’s attention to the work of an organisation called Future First. It has done excellent research on careers services. Like the head teachers of the schools in my constituency that I have cited, it emphasises that careers advice cannot be reduced to online information and telephone services. A complementary model is surely the best way forward. Future First seeks to increase social mobility by building communities of alumni around state schools to inspire young people about their futures.

[Mr Graham Stuart]

The hon. Gentleman is giving a passionate speech. He has just said that careers advice should be complementary, and I agree. However, the Opposition motion does not say that the Government should seek to find additional funds to provide face-to-face careers advice; it says that all young people should be provided with face-to-face careers advice whether they need it or not. That does not sound complementary; it sounds like the cumbersome over-specified and overly expensive processes that we saw too much of under the previous Government.

[Stephen Twigg]

Not at all. What I mean by complementary, and what I understand Future First to mean by complementary, is that we need face-to-face advice, but that that is not enough. We also need the other projects to which I and other Members have referred.

[Eric Joyce (Falkirk) (Lab)]

On the subject of complementary services, my hon. Friend will be aware that the Labour Government and my hon. Friend the Member for Huddersfield (Mr Sheerman) explored the possibility of using social media as a complementary way of introducing kids at school to people who have the same interests. Does he think that we might take that idea forward in the future?

[Stephen Twigg]

Absolutely; my hon. Friend makes an important point. Face-to-face advice is vital, and that is why the motion is about that, but it is not enough on its own. We need other initiatives, whether they use information technology or networks of alumni, as Future First does.

Future First started as a project in London state secondary schools. It was founded by a team of graduates from state schools, who were motivated by their own experience. It seeks to improve the support offered to young people at school as soon as they start considering their future. It is now supported by a wide range of organisations, including the Sutton Trust. It is looking to extend its excellent practice beyond London to other parts of the country. Recently, I had the opportunity to introduce Future First to Liverpool Vision, with a view to opening opportunities for it to take its programmes to Liverpool. It will be meeting shortly with head teachers and business leaders in the city of Liverpool.

Future First’s study, “Social Mobility, Careers Advice and Alumni Networks”, to which my right hon. Friend the shadow Secretary of State referred, makes the point that was made earlier by my hon. Friend the Member for Huddersfield (Mr Sheerman) about the contrast between what happens in private schools and state schools. When asked how they rated their careers service, just 31% of young people in state schools said “good” or “very good”, yet in private schools the figure was almost double that at 57%. The figures from the independent sector and those from the state sector show a very significant contrast, which highlights the scale of the challenges that we face.

In-school services must get better. Schools need to improve them, but they cannot do that on their own; they need partners, and organisations such as Future First provide ideal partners for that excellent work. I therefore urge the Government, following tonight’s debate, not only to guarantee face-to-face careers advice as set out in the motion, but to go beyond that, and support and encourage excellent programmes such as the one at Cardinal Heenan school in my constituency and the ones that Future First has promoted in London. As my right hon. Friend the shadow Education Secretary said, Opposition Members will work with the Government if they genuinely seek to advance that vital instrument in the fight for a more socially mobile country.

21:10

[Alok Sharma (Reading West) (Con)]

I do not know whether you have seen the film “Groundhog Day”, Mr Deputy Speaker, in which history keeps repeating itself, but this Opposition day debate and the one before it feel very similar. We have heard the same old tired arguments from the Opposition, with very little acknowledgment of the mistakes that they made or the mess in which we find ourselves, in terms of both the economy and the careers advice service.

A number of hon. Members have quoted the former Member for Darlington, Alan Milburn, so let me do so as well. Having chaired the panel on fair access, he said:

“In my view, the service requires a quite radical rethink”.

Indeed, the panel concluded:

“We believe that schools and colleges need to be given direct responsibility, working with local authorities, for making their decisions about information, advice and guidance”.

That is exactly what the Government plan to do.

The current hon. Member for Darlington (Mrs Chapman) quoted a survey that said that only one in five young people found Connexions helpful. Further surveys said that under Labour, six in 10 were unhappy with the quality of the careers that they were getting—[Interruption.] There has been an element of good advice, but perhaps not enough, and we must acknowledge that there was no golden age of careers advice under the previous Government. We need to put the debate in that context.

I agree with hon. Members who have made it clear that careers advice is vital, and that young people need to get it as early as possible in their school careers. It is important that we foster aspiration, which hon. Members have talked about; that we expand the boundaries of what students believe is possible for them in their careers; and that we get young people to aim high.

The hon. Member for Bristol East (Kerry McCarthy), who is not in the Chamber, spoke about that, and I agreed with her, but the question is this: how do we deliver that careers advice? We have heard that the Education Bill will introduce a legal duty for the provision of impartial careers guidance in years 9 to 11, which is absolutely right. I am pleased that the Minister spoke about the fact that the Government are consulting on whether they should extend that duty downwards to year 8, which would be great. I would like to see it go down further, because we cannot start careers advice early enough.

I agree that that responsibility should go to schools. At the end of the day, they know their pupils best and know what is required. They will be able to commission advice and services from the new national careers service when that is up and running, and of course from other external sources.

It has been implied—I do not whether it was deliberate or not—that providing online advice does not make sense for young people. Some of us have young children ourselves, and some of us know young people, and we know that it is second nature for them to use the internet to do research. Professor Alison Wolf, who led the Government review of vocational education, has said very clearly that there is a role for the Government in providing online, updated information on what is available. It is entirely consistent that online provision is one of the things that will be happening.

[Lilian Greenwood]

I agree that young people often want to access information through new technology, but does the hon. Gentleman consider it an adequate replacement for guidance and the opportunity to discuss options face to face?

[Alok Sharma]

Clearly, we need to have both. [Interruption.] Hang on, let me finish! Schools will be able to access this information.

I want to talk about what is happening on my patch in Reading. It is vital that not just schools, but businesses have a key role in providing careers advice, because, at the end of the day, they have an interest in interacting with their future employees. It is vital that we do not forget that element. As the Minister knows, because he is opening it at the end of the month, we have organised an interactive careers fair—we have called it a “futures fair”—open to all secondary schools in my constituency. We have organised it with the educational charity, Central Berkshire Education Business Partnership, which I guess is the sort of external service provider that we are talking about. I have long thought it important—I am sure that other Members have too—that we connect schools and business and that careers advice is not provided in isolation by schools and teachers.

When I began the initiative, I wondered how we would fund it, but actually businesses bent over backwards to provide funding. We are holding it at the conference centre at the Madejski football stadium in Reading—it is going to be a very big event—and schools will not have to pay a penny because it will be fully funded by business. More than 60 organisations, including businesses, multinationals and local companies, are taking part. An hon. Member said that we needed alumni and former students in positions of responsibility in companies to come and talk to pupils in schools, which is exactly what we will have—every sector will be covered, from engineering to IT and apprenticeships providers—along with seminars on practical skills, including on how to write a CV, perform in mock interviews, secure an apprenticeship, manage money and budget. There will also be advice on pursuing a science career. Hon. Members have rightly said that we need to encourage STEM subjects.

The careers fair is also about ensuring that before the students arrive, they know exactly what to expect and that afterwards there will be follow-up sessions with teachers. Hon. Members talked about the need to involve families and parents. There will be an opportunity, after the school day, for parents to come back with their kids and talk to businesses. There are families in my constituencies—perhaps in all constituencies—who have never had a scientist, lawyer, accountant or whatever in their family, and this is an opportunity for parents to talk with businesses together with their kids. That is vital.

In the previous debate, the shadow Business Secretary, the right hon. Member for Southampton, Itchen (Mr Denham), talked about the need for long-term apprenticeships. We have companies coming to the fair offering three-year apprenticeships, and there is even a seminar for teachers to learn about the local labour market and the types of skills that employers are looking for. I am talking about this because we need to stop thinking one-dimensionally and assuming that the Government must provide everything. There is a clear role for businesses. They bend over backwards to help schools and local communities because they know that at the end of the day they will see the benefits. We need to find a way of getting the business community more engaged. Bridging the skills and expectations gap between young people and potential employers is vital.

In conclusion, I think that the Government are on absolutely the right track with careers advice, and I ask the Opposition to think carefully about what the Government are doing and the constraints placed on them as a result of the position in which we were left by the previous Government. Unfortunately, I cannot support the Opposition motion tonight.

21:19

[Julie Hilling (Bolton West) (Lab)]

In the ’80s and ’90s, I spent 10 years as a youth worker in a youth co-operative project for unemployed young people. At that time, more than a quarter of young people were unemployed. They were a generation who had no jobs, no hope and no future. Some of those young people never recovered from that period. Some committed suicide; others turned to drugs and alcohol, or ended up with long-term mental health problems. Even when the economy started to recover, those young people who had spent many years unemployed found it incredibly difficult to get a job. Let us be honest, most employers would probably prefer to employ a 16-year-old fresh out of school than a 26-year-old who has spent most of the past 10 years unemployed, with nothing to get up for and nothing to do.

The youth co-operative tried to stop the cycle of despair for young people. It helped them to gain skills and set up their own businesses. It gave them driving lessons and taught them how to use computers. It built up their confidence and gave them a reason to get out of bed, and it was open 365 days a year. It was about more than skills education; it provided a support network, and it challenged attitudes. It helped people to believe in themselves and gave them practical help. We helped young people who were sleeping in cars and on friends’ floors to get rehoused. We then helped them to decorate their new homes and find second-hand furniture. We helped young people whose schools and colleges said that they were not good enough for university to get there and to complete their degrees, and we supported young people into work. Then we were closed by Tory cuts in the youth service.

The Labour Government came along and introduced the Connexions service, which offered careers advice-plus, in the form of straightforward careers advice for all young people and a dedicated support service for young people not in employment education or training, or those at risk of becoming NEETs. The service did many of the things that the youth co-operative did in the ’80s and ’90s. Now we have another Tory Government, and youth unemployment is at its highest since 1992. We are seeing the destruction of Connexions and the youth service, and all support services are being slashed. It is back to the future again. Young people again feel that they have no jobs, no hope and no future.

We can argue about the effectiveness of the Connexions service. The Government like to use the result of an online survey of 510 respondents who said that they were unhappy with the service, rather than the survey of 5,000 young people carried out by the then Department for Education and Skills, which found that over 90% were satisfied with the service that they had received. Surely no one can argue that online advice is a substitute for face-to-face advice. Like my hon. Friend the Member for Darlington (Mrs Chapman) and, I suspect, many other Members, I did not get good careers advice—[Laughter.]

[Stephen Twigg]

Like all of us; that’s why we are here.

[Julie Hilling]

Perhaps—although I have to say that it is not a bad job.

It is down to us to ensure that young people are inspired to follow certain careers. How can they find out what jobs and careers are out there? If they do not have friends, family or people in their neighbourhood who are in a variety of professions, how do they find out what they can do, or what their options are? That is the situation that faces many of our young people, especially those from poorer backgrounds.

[Damian Hinds]

The hon. Lady is raising some very good questions, but is she implying that all those services have been working perfectly for the past 10 years or so?

[Julie Hilling]

I am quite happy to concede that they have not been working perfectly, but I have to tell the House that the Government’s proposals will make things worse, not better.

Many industries—not just the professions involving solicitors, doctors and so on—are very much family affairs, in which sons and daughters follow fathers and mothers, aunts and uncles and grandparents into the workplace. Before I worked for a rail union, which was very much a family affair, I had no idea about the range of jobs available in that industry. How does a young person without connections find out about such jobs, and how do they ensure that they have the right skills to apply for them when they do find out about them?

Of course, the advice that young people receive has to be good. I remember a member of my staff taking a young person to meet a careers officer before the Connexions service was established. Again, I am not saying that Connexions was perfect. That young women wanted to become a vet, but the careers adviser very kindly told her about how to become a veterinary nurse. That was disgraceful. We need to be ambitious for young people. I worked with two young people who were told that they were too stupid to go to university. One of them now has her master’s degree, and is a head of department in a sixth-form college. The other has a degree in Russian and splits his time between Russia and Korea. A computer program will not inspire young people. It will not be ambitious for them, and it will not stretch them. It will not build their confidence, or give them the support that they need if they are to reach their full potential.

What if a young person has learning difficulties or physical disabilities? I want to talk about Thomas, whose mum and gran came to see me in my surgery. Thomas had not been diagnosed with a disability and there was a threat to take his mum to court because he would not attend school. Eventually, through our intervention, Thomas was diagnosed with an autism-related condition. He would not leave home, go to school or do anything else. He had a Connexions adviser, however, who regularly came to the house at the same time each week—the sort of thing that a young person with an autism-related condition needs. By using the available funding, the adviser was able to take Thomas out to the library and various other activities, and to give him experience of work programmes. Thomas’s life was transformed, but his mum and gran are now absolutely desperate about what will happen to him.

Connexions was not just about careers advice. Funding was made available to support young people like Thomas or others who for other reasons were not making a good transfer to further education or work. There was funding for programmes that provided support, training and education for young people, including a summer programme for 16-year-olds from the New Opportunities Fund. An activity agreement provided an allowance in return for fulfilling an agreed action plan and funding was provided to purchase experiential learning opportunities. There was a learning agreement aimed at engaging local employers and increasing the number of young people in jobs with training. The programme offered financial incentives to employers and young people, in combination with suitably brokered learning provision.

In Wigan there was a range of bespoke projects aimed at the most vulnerable young people in the borough—including teenage pregnancy courses and a video production course for young offenders. The re-engage project built on the success of the activity agreement pilot by securing a discretionary fund for young people living in Wigan’s most deprived neighbourhoods. That also funded summer projects, in partnership with the youth service, to keep school leavers engaged. An apprenticeship pathways project was delivered by Wigan college and local learning providers, which looked at new ways of engaging and motivating closer to the labour market young people who were struggling to find opportunities. Wigan council’s supported employment team was funded to assist young people with learning difficulties in accessing work opportunities. The council delivered a successful apprenticeship programme, recruiting young people and supporting them through trained mentors. In partnership with local learning providers and colleges, it successfully delivered a range of activities to engage and motivate NEET and potentially NEET clients—including the clearing house, taster sessions, locality-based summer programmes and careers events.

What happened as a result of all that support and all those programmes? Youth unemployment fell by 40% from 1997 to the start of the global financial crisis, and more than half the young people on jobseeker’s allowance were off it within three months. But now it is all gone.

Most young people from advantaged backgrounds will make the transition from school to employment, probably via university, with few problems, but surely we have a duty to support young people who, through no fault of their own, will find that transition difficult or impossible. We owe it to young people to help them fulfil their potential. We owe it to them to give them the best possible support and advice from trained and qualified advisers. I hope that the Government will do another U-turn and save either the Connexions service or the careers service—at least something that will be valuable to young people. And while they are at it, I hope that they will save the youth service, too.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

There are two speakers and 12 minutes left.

21:28

[Gordon Birtwistle (Burnley) (LD)]

I thank the shadow Secretary of State for bringing this debate to the House, as I believe it is valuable—one of the most important debates I have attended since being elected. It is only a shame that so few Members are present to hear the contributions. [Interruption.] I am not naming names, just making a comment. The principle behind the motion is very good, but the way in which it has been written is very poor. [Interruption.] Those might be the words of my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) but they are not in this motion. The problem with it is—[Interruption.] The hon. Member for Kingston upon Hull East (Karl Turner) has only just come into the Chamber, yet he seems to think this is a joke.

The motion says:

“That this House believes that the Government should act urgently to guarantee face-to-face careers advice for all young people in schools.”

It does not tell us how many times, at what stage careers advice is needed, or how old the young people should be. Let me explain why I believe it has been badly written. If it had been written differently, I might have been able to support it.

When I was leader of Burnley council some three years ago, I went to a junior school to speak to some year 6 students who were just about to leave the school and go on to secondary education. The headmistress had invited a number of prominent people in the town—the mayor, myself and one or two more—to say what our jobs were. After we had told the young people what our jobs were, we asked them what sort of vision they had for their future. One little girl said that she was interested in becoming a nursery nurse, as she had some siblings and was keen on looking after them. The shock for me came when one young man said, “I want to be a benefit claimant.” That was the aspiration in life of a young man of 11, and he had never been given any different advice. When I asked him why, he said, “My dad and uncle are benefit claimants and we live very well off it, so why should I get up every morning to go to work?” When I told the head teacher afterwards how stunned I was at that, she said, “I’m afraid that’s the way of the world round here.” I then decided that I would look into how that happened, and what we could do to try to stop it.

After that we got talking to people in the secondary schools. The secondary schools in Burnley have gone through a torrid time, although I am pleased to say that they are now recovering. Nobody in here needs to tell me about privileged students; if they came to Burnley, they would find that we do not have very many privileged students at the moment. I thought it would be a great idea to get the companies involved, and we managed to get a big company involved in every school. They carry out a lot of careers advice because they are the professionals; they know what educational skills they need from the people who are coming to them.

A lot of young people want to go on to university, and that is fine, but a lot of young people are going on to university to study subjects that do not qualify them for any jobs when they have finished studying them, while there are a number of jobs in manufacturing, particularly in Burnley, for which we cannot get staff. One company in Burnley is looking for 300 skilled workers and cannot get them. It has suddenly decided that taking on a vast number of apprentices, through the Government’s apprenticeship scheme, is a good idea. But a young person of 16 does not get to be a skilled airframe fitter or aero-engine fitter by the time they are 17. The process takes four or five years. For the past 30 years that process has not happened; we have let the whole thing fall apart. I am not blaming the Labour Government or the previous Tory Government, but that has happened; this is where we are.

We have a careers service that has failed the young people of this country for the past 30 years, and we desperately need to do something about it. We do not need the Government to do everything; we need to get the professionals from industry involved. Why do we not invite Sir John Rose, who has retired from Rolls-Royce, to talk to people and advise them about how he would run a careers service? He has run Rolls-Royce for donkey’s years and made it very successful. I do not think that the Government can do this on their own. People outside government can give better advice than anybody within it.

I suggest that the Government should examine what they are doing. I accept the need to do more and if money is available, I hope that they will do more. I also think that the local colleges and further education colleges could do more. Twice a year Burnley college has a careers day, when it invites all the companies from Burnley and most of them attend. They put stands up and speak to young people, and they take vast numbers of young people on as a result of those nights. One company took six apprentices on as a result of one of these nights—young people who had never thought of going into that sort of industry.

We cannot take too narrow an approach to this issue. We should expand it to include everybody involved in employing young people once they have finished school or university. I implore the Government to examine all the options. As I have said, I am disappointed that the motion has been so badly written. [Interruption.] It is not my right hon. Friend’s motion; it is the shadow Secretary of State’s motion. It is badly written—but if it had said, “We want to do this at certain times of people’s education and there is some money for it here,” I assure hon. Members that I would have supported it. Unfortunately, the Opposition motion does not say that.

21:34

[Damian Hinds (East Hampshire) (Con)]

So much to say, and so little time to say it in.

Many of the contributions from Opposition Members have been about bad careers advice, stereotyping and ambition limiting. The unfortunate point is that guaranteeing that advice will be provided face to face does not get rid of bad advice; all that it guarantees is that the advice will be heard more directly. The title of this debate displayed on the annunciator is “Careers Service (Young People)”, but doing real service to young people in their careers is about much more than specifying a certain amount of time with the man from the council. It only happens when the whole education system and the economy work together on young people’s careers. We must take a much bigger, broader, holistic view of this at a national level, in industry, throughout the education system and in interaction with individual young people.

As we know, we live in a rapidly changing world that has already changed in many ways, not least through the disappearance of many jobs that young people used to do between the ages of 16 and 18 and in terms of the types of skills we need for the jobs that we expect to be available in the future. As the right hon. Member for Leigh (Andy Burnham) rightly said, the range of different jobs that people might now do over their lifetime calls for much more flexibility.

We do not have a great record in this country, historically, of picking winners, but we need to recognise that certain industries will be growth industries at which we need to excel. Without exception they are industries that need greater skills, and we need to help young people to focus on them. We need better links between industry and education, both so industries can inspire young people to want to go and work in them and so that the skills sets that come out of the education system include the things they need as companies, and that we need as an economy and as a country to succeed in the world. There also needs to be a feedback mechanism so that companies and sectors can tell the education system what they are looking for. We often hear complaints about what comes out, but it is not quite so clear what the mechanism for change is.

There must also be opportunities, of course, for young people to experience, sample and gain experience and training in firms, and I welcome the expansion in apprenticeships and work placements. I agree that we must look again at how the internship system works. We have heard about internships from Opposition Members, and a number of Members of Parliament have taken the decision that they will ensure that internships are paid, so that they are available to the full range of young people.

Education as a whole must guide young people towards fulfilling careers. I was surprised that the right hon. Member for Leigh left colleges out of the motion, as they are an important part of the education system. He referred only to schools, but of course the whole system must work effectively. I do not think anybody could doubt the Government’s commitment to reforming the education system, both to raise the average level of education and, crucially, to narrow the yawning and embarrassing gap between rich and poor.

I am afraid that in parts of the education system too many young people have not been guided towards fulfilling careers. Let me quote the Wolf report:

“The staple offer for between a quarter and a third of the post-16 cohort is a diet of low-level vocational qualifications, most of which have little to no labour market value.”

At an even earlier stage—coming up to key stage 4—it seems that some young people are guided towards subjects that will boost the school’s performance in the league tables more than they might boost the individual’s performance in the job market and their opportunities through life. Perhaps they get face-to-face advice: perhaps somebody tells them that all GCSE subjects will be worth the same to them as any other; perhaps somebody tells them that equivalencies will always be accepted in the outside world; and perhaps somebody tells them that getting a GCSE in accountancy, law or financial services is a key step to starting a career in one of those professions.

I welcome what the Government are doing to publish destination data on schools as well as more information on higher education institutions, and I also welcome the reform of the key stage 4 league tables. I also welcome the somewhat controversial—in parts—English baccalaureate. The simple fact is that those core subjects have a premium value among employers and higher education institutions, and we should stop fibbing to young people. It is not a full curriculum. There is plenty of room for options on top of the English baccalaureate, but the best advice we can give to a young person who wants to keep their options as open as possible is to include in what they study those core academic subjects. Of course it will not be for everyone, and I also welcome the Government’s moves to ensure that the league tables and metrics recognise equally the progress of every child. We must find new and better ways to ensure that post-16 students are more engaged with mathematics.

In conclusion, the motion talks about guaranteeing good careers advice. I put it to you, Mr Speaker, that the only way to guarantee a good careers service for young people is if all the elements—at national level, in industry, in education, and direct advice for people—are working in concert.

21:39

[Mr Iain Wright (Hartlepool) (Lab)]

May I begin by extending the Opposition’s best wishes to the Minister for Further Education, Skills and Lifelong Learning? He always makes these debates an absolute delight and pleasure; frankly, we have missed him today and we very much hope that he has a speedy recovery from his operation.

The debate has not been what I expected, which was more of the yah-boo politics that we have come to expect in the House. I expected to hear, “You spent too much money,” coming from one side and, “You don’t care about vulnerable people,” on the other. I have been struck by how much consensus there has been and what a good, measured, well-informed and excellent tone there has been throughout. At its best, the debate has featured hon. Members being very much in agreement. I pay tribute to all hon. Members who have contributed tonight, particularly to the spirit in which the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) made his remarks. What I did find regrettable, however, were the contortions that he and the hon. Member for Burnley (Gordon Birtwistle) got into in saying, “We agree with every single point that the Opposition are making regarding the motion, but we cannot possibly vote with them tonight,” for whatever reason.

[Dan Rogerson]

The point that might have escaped the shadow Minister is that the Opposition have taken one recommendation out of a whole report and sought to force a vote on something tonight that they never provided for when they were in government. Unfortunately, that brings a yah-boo, cynical element to something that goes much wider. It would be better to debate the full report from the Government and the reaction to that report.

[Mr Wright]

I disagree. The right hon. Member for Bermondsey and Old Southwark made an excellent and measured contribution about expanding the provision of careers advice to younger pupils, about making sure that we have a wide variety of work experience and about making sure that careers guidance is not offered on a wet Wednesday afternoon, as we mentioned in the Committee on the Education Bill. I agree with every word. This is more complex than it just being about face-to-face guidance, but face-to-face guidance is an important complementary step. I should have thought that he agreed with that and would want to show his support and put pressure on the Government by joining us in the Lobby tonight.

[Simon Hughes]

The hon. Gentleman knows that I respect his commitment to these issues both before he came to the House and since he has been here. We are very clear that we want the same objective. Tonight is a chance for the Labour party to put its cards on the table, and we have made our position clear about where we want the Government to get to. I believe that they have listened and that the Minister will respond, and I hope that in not many weeks from now we will end up where we all want to be.

[Mr Wright]

The Minister said earlier that he did not want to rule anything in or out regarding the right hon. Gentleman’s recommendations and I should have thought that meant an abstention in tonight’s debate to make sure that all the cards were on the table, but that does not seem to be the case. I do think that the Minister is thinking about moving in that direction and I hope that he will accept an amendment to the Education Bill—we will certainly put pressure on him as the Bill makes its way through the Lords—but it is disappointing that, in the spirit of consensus that we have seen in tonight’s debate, he cannot make more positive remarks to make sure that we make provision for face-to-face guidance.

Two or three weeks ago, our young people got excellent GCSE and A-level results and, as hon. Members have said tonight, we should all celebrate their success. The Minister said in August that

“we have to make sure we prepare young people for the future, whether they are going onto further education, training or into the workplace.”

He reiterated that tonight by saying that it is important for young people to make the right choices in order for them to be guided in the future. We could not agree more, but it is abundantly clear that the Government are failing to do that.

As my right hon. Friend the shadow Secretary of State has made clear, young people are facing the most difficult and turbulent prospects for at least a generation. The modern world is complex and often disorienting and is unrecognisable from what it was a few short years ago, both in its challenges and in its opportunities. The certainties that we had in the labour markets in the 1950s and 1960s when the Minister of State, Department for Education, the hon. Member for Bognor Regis and Littlehampton (Mr Gibb), listened to his gramophone records have gone for good. Much of that change is due to large-scale shifts in global forces, such as the economic rise of China. The present economic situation is made more difficult by the current turbulence in the global economy. I fully accept that when global aggregate demand goes down, additional pressure is placed on youth employment, but the Government’s policies are making a bad situation very much worse.

As we heard in an earlier debate today, the loss of EMA, the abolition of the future jobs fund, the scrapping of the young people’s guarantee, the trebling of tuition fees and the ending of Aimhigher have made it more difficult than ever for young people in this country to work hard, to get on and to succeed. That implicit contract that we had, in place since the post-war era and shared by successive Governments, that somehow the next generation would do better than the previous generation, is in real danger of being broken. That was made clear in an excellent contribution by my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg).

In difficult and confusing times such as these we need, now more than ever, an effective, functioning and professional careers service to support and navigate young people through the turbulence. We need a personalised service, with close links between the young person and the adviser. We need, as the right hon. Member for Bermondsey and Old Southwark said tonight, face-to-face guidance, helping to motivate, inspire and enthuse young people in difficult times.

In the current economic difficulties, when a young person receives rejection letter after rejection letter, it is neither use nor ornament just to point them to a phone. As my hon. Friend the Member for Huddersfield (Mr Sheerman) said, IT is important but we cannot do it with technology alone. We need a professional to say to that young person, “Keep going,” or “I think you should try this,” or “This might suit you.” As my hon. Friend the Member for Bolton West (Julie Hilling) said, we need in the careers service trusted professionals who know the young people—young people such as Thomas—who can help inspire and motivate them. Tragically, the cuts to such services mean that the professionalism and expertise of careers personnel has been lost, and lost for good.

Time and again in the debate we heard that our young people from places across the country have been denied such opportunities. We heard that from my hon. Friends the Members for Huddersfield and for Darlington (Mrs Chapman), who in a powerful speech expressed her concern that high-quality advice might be confined to those in fee-paying schools.

Ministers in the Department for Education pride themselves on trusting professionals to make the right decisions, but we have had in the last month the astonishing, and possibly unprecedented, situation where a Government advisory group of some 20 renowned experts and professionals considered resigning en masse in protest at the Government’s shambolic and incompetent handling of careers services for young people. Steve Higginbotham, president of the Institute of Career Guidance, blasted the Government and stated that the service

“will not be an all-age careers service. It is a rebranded Next Step service for adults plus an all-age telephone advice line and website.”

As my hon. Friend the Member for Darlington said, if the Government truly wish to aid social mobility and break the cycle of multigenerational worklessness or low aspiration, they need to provide all possible tools. By removing face-to-face careers guidance for all young people, they are taking one of those vital tools away.

Ministers also often cite international comparisons to support their policies. The hon. Member for South West Norfolk (Elizabeth Truss) cited those a lot tonight. But international evidence shows clearly that devolving such career advice to schools has not worked in other countries. Professor Tony Watts, giving evidence to the Education Committee, stated that in studying 55 countries it emerged that three negative things happen when it comes to school-based guidance. First, impartiality goes out of the window because schools have a direct and vested interest; secondly, there is a weakening in links with the labour market; and finally there is an unevenness in performance in schools. Professor Watts said that two countries, New Zealand and the Netherlands, have recently done what this Government are now doing, and in both cases it resulted in a significant erosion in the quality of help as well as the breadth of its extent.

I mentioned the Education Committee. In its excellent report on participation in education and training by 16 to 19-year-olds, it makes a valued point on the unease about the Government’s changes to careers. That was highlighted several times tonight. It draws attention to the fact that the Department for Education’s funding commitments to an all-age careers service consists only of online and phone services. As we heard tonight, the Select Committee makes the very clear recommendation that the Departments should fund face-to-face careers guidance for young people under the age of 18. Opposition Members very much agree.

So I ask the Minister—for the sake of his career, let alone the careers of hundreds of thousands of young people—to look again at this important matter. Will he listen to the impassioned pleas made tonight by hon. Members on both sides of the House? Will he consider the almost unanimous view of professionals? Will he take on board the Education Committee’s reasoned comments? Will he listen to what is best for young people? Will he listen again to the right hon. Member for Bermondsey and Old Southwark and act urgently to guarantee face-to-face careers information, advice and guidance for all and not just some young people in schools? Listening to the speeches made by hon. Members on both sides of the House, that definitely seems to be the will of hon. Members tonight. I commend the motion to the House in a spirit of consensus.

21:50

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

First, I agree with the shadow Minister that we have had a lively, good-humoured and balanced debate this evening, even if it has lacked the sagacity and flair of my hon. Friend the Minister for Further Education, Skills and Lifelong Learning. I am sure that we all wish him well in his recovery.

I must repeat that the Secretary of State is not here this evening because, heeding the shadow Secretary of State’s advice, he is not hiding his head in an ivory tower; he is out meeting 100 excellent head teachers who have gone to see him to talk about weighty matters—five times the number of Labour Members who bothered to come to the Chamber to listen to the shadow Secretary of State when he opened the Labour party’s debate in this Opposition day earlier this evening, so let us get things into perspective.

We heard the same old script. Whether it is “Groundhog Day”, which was mentioned by my hon. Friend the Member for Reading West (Alok Sharma), a wind-up gramophone—a phrase used by my hon. Friend the Minister—or an over-heated iPod, the shadow Secretary of State and the hon. Members for Halton (Derek Twigg), who is not here, and for Bolton West (Julie Hilling) came out with the same old stuff: where is the money? They should tell us where the money went. Where did the money go? Why did we have such an inheritance, which meant that difficult decisions had to be made? Why has face-to-face advice become such a totemic issue? If it was such a be-all and end-all that it had to be guaranteed, why did the previous Labour Government, in 13 years of running the careers service, never offer that guarantee? Why has it become so totemic now?

It was an understatement par excellence by the shadow Secretary of State when he said that the previous system was not perfect. He is dead right that it was not perfect. Labour Members left a system where youth unemployment had risen from 664,000 to 924,000 on their watch and where the number of NEETs aged between 15 and 19 rose from 8% to 8.8% when it was falling in other OECD countries. They left far too many of our young people without the basic literacy and numeracy skills that they need to get any career going at all.

Labour Members trotted out the same old platitudes and clichés. The right hon. Member for Leigh (Andy Burnham) said that we are interested only in the elites. If pioneering a pupil premium for the most disadvantaged young people from the most disadvantaged estates in this country is an elite, call me elitist. If giving special treatment to those children in care who suffer appalling outcomes after 13 years of Labour Government is elite, call me elitist. If it is elitist to offer 250,000 additional apprenticeships and 80,000 more work experience places and to ensure that we will raise the participation age, despite the financial pressures at the moment, call me an elitist. Our view of elitism is to ensure that every child in this country gets a fair crack of the whip and a fair opportunity to get a decent career—something that got worse under the previous Government.

The hon. Member for Darlington (Mrs Chapman)—the successor to Alan Milburn, who came up in just about every speech that we heard—gave us the most unparalleled outpouring of stereotypes that I have ever heard in 14 years in the House: the feminine qualifications of cake decorating and the colour of cars. She talked about social mobility and said, “If Labour is about anything, it is about social mobility.” Why, then, after 13 years of Labour, at key stage 4 did 68.5% of non-free-school-meal pupils achieve five or more A to C grade GCSEs or the equivalent, compared with only 30.9% of free-school-meal pupils? Why did only 8% of free-school-meal pupils take the E-bac, with 4% achieving it, as against 24% of non-FSM pupils? Why, at age 18, are 29% of young people who have claimed free school meals not in employment, education or training? That is more than double the rate for those who had not claimed free school meals, for whom the figure is 13%. If that is social mobility under Labour, I do not want any of it. It is up to this Government to do something about social mobility, which Labour talked and talked about but delivered in reverse.

The hon. Member for Huddersfield (Mr Sheerman), whom I respect greatly as a former Chair of the Select Committee, said that in his day technology alone would certainly not have solved the problem. Of course it would not; technology has moved on enormously in the past 10 or 20 years. Who, 20 years ago, would have envisaged ringing up NHS Direct to get medical advice, or using computer programs to get mental health advice? It is horses for courses. He talks about localism; what localism means for us is leaving it up to the expertise in the schools—the professionals, teachers and heads—to decide whether careers advice should be given face to face, over the internet, over the phone, or even by retaining Connexions. [Interruption.] If Labour Members listen, they will learn something, I hope. I have four minutes to try to get them to learn something, but they are in denial about where the money went, about where the £200 million exclusively to guarantee face-to-face interviews will come from, and about social mobility, when they know that it went the wrong way under Labour.

I pay tribute to my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) for the work he has done on the subject, and for his report. He is interested not in numbers, but in quality. He says that there has been a proliferation of courses and qualifications, and he is absolutely right. That is why we are ensuring a concentration on good-quality, core subjects that people can understand—subjects in which employers want the people whom they take on to have qualifications.

My hon. Friend the Member for South West Norfolk (Elizabeth Truss), in another excellent and typically thoughtful speech, said that we need pupils to have a core general education. We need real subjects for real jobs. Teachers, who did not feature much in the contributions of Opposition Members, have a crucial role in inspiring young people in the classroom. In the same way, people from industry—engineers, business men and women, scientists, doctors—who were mentioned by several hon. Members, have a crucial role to play in coming into classrooms and giving their face-to-face advice, and experience of what it is like to go into their career.

The hon. Member for Liverpool, West Derby (Stephen Twigg) gave some very good examples of good practice in his constituency. He talked about an industry day, when real people come in and share their real-life experiences to inspire others. We are talking about people who have lived those experiences, trained for those experiences, and are making a living from them. All that can happen under the new system; it is up to the schools to decide, because we trust the schools. We trust the teachers and head teachers to make the right decisions on the ground, locally, for the children whom they teach, and to have an interest in what those children go on to do.

My hon. Friend the Member for Reading West (Alok Sharma) talked about “Groundhog Day”; he got it absolutely right. You would not believe it from the opening speech, or from other contributions from Labour Members, but there was never a golden age of careers advice. It was as if things had suddenly gone down the plug-hole after the election. The hon. Member for Bolton West (Julie Hilling) talked about the youth service, as she often does; she has expertise in the subject.

[Ms Rosie Winterton (Doncaster Central) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.

21:59

Division 349

Ayes: 220

---

Labour: 209
Democratic Unionist Party: 6
Plaid Cymru: 2
Alliance: 1
Green Party: 1
Social Democratic & Labour Party: 1

Noes: 288

---

Conservative: 242
Liberal Democrat: 44

Business without Debate

Tuesday 13th September 2011 Commons Chamber

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Rights of the Child

That this House takes note of European Union Document No. 7226/11, a Commission Communication on an EU Agenda for the Rights of the Child; welcomes the Government’s commitment to children’s rights and urges that any European Union-level action in this area supports rather than supplants the role of Member States.—(Miss Chloe Smith.)

Question agreed to.

Petitions

Tuesday 13th September 2011 Commons Chamber

22:16

[Martin Caton (Gower) (Lab)]

I present a petition on behalf of the “Save Swansea Coastguard” campaign, which in a few weeks has collected more than 100,000 signatures in opposition to the closure of the coastguard station at Mumbles, Swansea.

The petition states:

The Petition of people concerned about maritime safety in the Bristol Channel,

Declares that the recommendation of the UK Government to close the Swansea Maritime Rescue Coordination Centre at Tutts Head, Mumbles, would endanger the lives and wellbeing of people on the water and around the coast of the Bristol Channel.

The Petitioners therefore request that the House of Commons press the UK Government to retain the Swansea Maritime Rescue Centre as a 24-hour staffed coastguard station.

And the Petitioners remain, etc.

[P000957]

22:17

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

I should like to present a petition from the people of Blackpool and Cleveleys.

The petition declares:

The Petition of the people of Blackpool and Cleveleys,

Declares that the Petitioners are opposed to the permanent closure of the Lauderdale Avenue/Blandford Avenue crossing to traffic and pedestrians.

The Petitioners therefore request that the House of Commons urges the Government to encourage Blackpool Council to ensure that the Lauderdale Avenue/Blandford Avenue crossing remains open.

And the Petitioners remain, etc.

[P000959]

22:17

[Sarah Newton (Truro and Falmouth) (Con)]

This petition states:

The Petition of the residents of Falmouth,

Declares that the Petitioners believe that the dredging of Falmouth Harbour should be permitted to go ahead so as to enable the implementation of the Port of Falmouth Masterplan which is essential to the future prosperity of Falmouth.

The Petitioners therefore request that the House of Commons urges the Government to ensure that the Marine Management Organisation strikes the appropriate balance between environmental protection and social and economic development, with particular regard to the Port of Falmouth Masterplan including the dredging of Falmouth Harbour.

And the Petitioners remain, etc.

[P000958]

Microgravity Research

Tuesday 13th September 2011 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Miss Chloe Smith.)

22:19

[Dr Phillip Lee (Bracknell) (Con)]

This is a rather esoteric subject on the face of it, so I should like to explain why I have chosen it. I am vice-chairman of the parliamentary space committee, and as a consequence of that role I have come into contact with many people in the space industry who have spoken to me about microgravity, the research thereof and its potential value to the British economy. I do not have any direct constituency link, although I have a local company that provides equipment for satellites. In the past decade, the UK space industry has been growing, year on year, at a rate in excess of 10%. I genuinely think that it should be part of the Government’s growth strategy and that it would contribute to the diversification of this country’s economic base. I have had the particular pleasure of meeting Tim Peake, who is the only British astronaut on the European Space Agency manned programme, and who also happens to be a champion of microgravity. That is quite important, because it indicates how good we are in Britain at research in this area.

Why have microgravity research? First, as I said, the UK is very strong in that area. Microgravity crosses a large number of fields, and that may contribute to why it has not always received support from the research councils. Secondly, it has huge potential economic benefits, particularly in bio-medicine. Thirdly, I do not think I am alone in this House in thinking that we should have a manned space flight programme. We need to do that with partners—perhaps with Europe, Russia or the United States—but I genuinely believe that we are better off seeking out new knowledge, endeavour and aspiration. All those things are positives, and Britain was at its best when it was displaying those facets.

Let me explain the structure of my speech. First, I will explain microgravity. I am sure that all colleagues here understand it fully and do not need a definition, but I will provide it for the benefit of the many people who have tuned into BBC Parliament for this debate. I will then touch on the sectors that microgravity research can impact on; talk about the history of the involvement in microgravity research, or the lack thereof, of Governments, this one and previous; and put some questions to the Minister.

As life evolved on this earth, lots of physical and chemical change took place in the environment that caused adaptations to take place in life, be it plant or animal. The only thing that has been constant in 4.8 billion years is gravity. It is therefore thought that organisms now have little or no genetic memory of how they would respond to low gravity, and that the low-gravity environment could uncover some novel mechanisms and responses to adaptations that may benefit the economy through commercial applications. That is basically why researchers are so eager to get into space, so to speak, to test the impact of microgravity.

This definition is just one of many I have read:

“Microgravity research = the research into the impact of low or zero gravity on human health and on other materials, and the exploitation of the low gravity environment to conduct research into pure science and human applications.”

We can create such low gravity here on earth in drop towers—something like those found at Alton Towers—or through parabolic flights. However, the best place for it to happen is in space. It can be done by a sounding rocket; at the moment, it is done at the international space station. Why conduct the research? Put simply, gravity adds complexity to certain experiments by contributing to convection currents, shear stresses and buoyancy, and that can impact on processes that we would like to study. In order to try to remove those potentially confounding variables from the experiment, one needs to go into a microgravity environment, and the best place for that is in space.

Let me turn to the sectors that may be impacted on, both economically and in terms of human knowledge and pushing back these boundaries. First, I will mention bio-medicine; as a doctor, I would be expected to do so. The bio-medical applications are numerous. Essentially, it is thought that putting cells—any cells—into a microgravity environment affects the way in which they work. Understanding how cells work and how they communicate with one another will have broad applications in the study of cancer, coronary heart disease, AIDS and diabetes. We can all understand that that might lead to the development of new therapies and drugs that would benefit mankind. In economic terms, if British patents were attached to such developments, UK plc would benefit.

One can also grow pure protein crystals in microgravity, and by doing so aid the understanding of the immune system, which would again benefit health care. One of the most noted areas is musculoskeletal systems and the response of bone and muscle. I am sure that most hon. Members know that spacemen who have spent lots of time in space have been found to have reduced bone density and muscle wastage. Why that happens is not fully understood. By trying to understanding that and how tissue remodels, we may very well find new techniques to treat musculoskeletal disorders.

Another sector where microgravity can be used is fluid physics. The understanding of the forces that affect fluids has wide applications. If we can understand them better, it might contribute to the miniaturisation of electronic devices. The BlackBerrys and laptops that we use have all benefited from greater knowledge in this area. Using these developments will undeniably lead to a reduction in costs for the customer when they buy such electronic devices at John Lewis and elsewhere.

[Jim Shannon (Strangford) (DUP)]

I am not an expert in microgravity research—far from it—but I had a wee look at it before the debate. I understand that some microgravity research has looked at earthquakes and the pre-warning of earthquakes. Perhaps the hon. Gentleman would comment on that, because obviously if people can be warned of earthquakes and tremors, it might save life.

[Dr Lee]

I have absolutely no idea about the prediction of earthquakes and I am struggling to think why an understanding of microgravity would help to determine when there might be an earthquake. The hon. Gentleman has given me something to look up when I leave the Chamber.

The final area is material science. Understanding how materials or composite materials behave in a microgravity environment might help to develop new alloys and ceramics. That has broad applications. We are at the cutting edge in Formula 1 and in the use of composite materials and alloys. That knowledge originally came from the space sector. By doing this research we will enhance our standing in that area.

This list is not exhaustive. A variety of different sectors are involved. In the area of plant biology, I have seen the suggestion that plant stem cells could be grown on an industrial scale in space, thereby assisting us in our need to develop biomass for energy. I could go on.

Moving on to the history of Government involvement in microgravity, the Pippard report of 1989 was the first mention that I could find. It made some interesting observations that have since proven to be true. The Wakeham review of 2003 found a lack of interest among the research councils, which goes back to the point I made at the start of my remarks that microgravity does not have a single voice. That is why it has not received funding in the past. As a result of the Wakeham review, Britain did not contribute to the European Programme for Life and Physical Sciences—ELIPS—with the European Space Agency, which was started in 2001 and is ongoing. The ELIPS 4 funding round is due at the next ministerial ESA meeting in 2012. I would push for us to participate in that, not least because doing so would allow us to work with NASA, which will not work with us outside ESA as I understand it.

Finally, I have some questions for the Minister. First, will he confirm that the Government are not against manned space flight? For some time in this country, it was Government policy to be against manned space flight. I think that manned space flight is inspirational. Anybody who goes into a school on a science, technology, engineering and mathematics day will find children building rockets and looking at pictures of planets. The reality is that space inspires children and that we will need more scientists and engineers in the future. I spoke about the inspirational quality of space in my maiden speech—I do not know how many hon. Members who are present were here for that. I strongly believe that there has to be a man on top of the rocket for it to be inspiring.

Secondly, will the Minister outline the Government’s position on the ELIPS programme and the ESA manned space flight programme in anticipation of the 2012 ministerial meeting? I ask that because for about £200 million a year we could participate in that programme. Over a 20 to 25-year period, we could perhaps participate in the exploration of the moon and, further, of Mars. That may seem an extravagance to some, but it is not. For every $1 spent on the Apollo space programme, it was estimated that the US economy got $14 in return.

We can make money out of space—it is as simple as that. Britain is outstanding at space, and we do it on a shoestring in comparison with some of our competitors. I think that in future, we should be a greater player in space. I know that the Minister shares my feelings on that. I forget the figures, but we are projected to increase our space industry over the next 10 years, and I am wholly supportive of that.

What is the Minister’s opinion on a microgravity forum? I have had e-mails from around the world since I tweeted that I would introduce this debate, and I have met people, and it is interesting that there is not one, single voice for microgravity. Microgravity perhaps needs that one voice, but does the Minister have any views on that?

Finally, more generally, as a new boy in town, I get the distinct impression that Whitehall is risk averse. If there is one thing that we cannot be when it comes to space, it is that. We have to go for it. I am encouraged that the Government have in the last year announced changes to legislation with regard to aiding the space industry—it relates to space insurance—but ultimately, Whitehall remains risk averse. I would be interested to know the Minister’s view on that.

The best way to conclude is by quoting an e-mail that somebody sent. He ended one paragraphs as follows:

“In addition to providing benefits to society”

microgravity

“research will also help the UK to maintain some degree of scientific relevance - scientific capability in a nation is a recognised necessity for economic development.”

I could not have put it better myself, and that is why I called for this debate.

22:32

[David Morris (Morecambe and Lunesdale) (Con)]

I congratulate my hon. Friend the Member for Bracknell (Dr Lee) on securing this important debate, which is particularly timely given that we are gearing up for the ESA conference in 2012, in which the funding priorities for the industry will be set for the future. As a result, the UK’s involvement in the ESA will also be forged.

May I thank Tom Gunner and Sarah Chilman from the parliamentary space committee for the work that they do all year round in promoting space? Unlike many other industries, space does not have lots of lobbyists with huge budgets, but the small team at the PSC is none the less effective. I must also thank Astrium for allowing Tom and Sarah to undertake their important work.

The space industry has grown 10% year on year. It is one of this country’s major success stories, but it has not been sung out loudly. For most people, the space industry seems distant—both literally and figuratively—but we need the public to understand just how big an impact that high-tech industry has on our lives.

Like my hon. Friend, I am a vice-chair of the PSC, and many of my constituents ask why an MP from a northern Lancashire constituency would take an interest in space. I point out to them that there are important benefits from the space industry, including high-tech jobs in places such as Bracknell and the M4 corridor. Perhaps more importantly, however, space technologies impact on areas such as Morecambe and Lunesdale and people’s day-to-day lives.

Owing to the space industry, people can get around easily by sat-nav and explore areas of the country that they would not ordinarily be able to go to and find their way around; we can roll out fast satellite broadband to rural areas; and we can watch satellite television, which has brought a wider entertainment choice to everyone. Those industries are direct spin-offs of the space industry. Even though the space industry does not have major funding, it is a success story year in, year out.

Space delivers a host of everyday benefits—some might even say that they are mundane—but we are not always very good at pointing out those successes. We can all agree that although we have led the way on space in general, we have lagged behind badly in microgravity research.

I add my name to the list of those who believe that we should be involved in ELIPS and, by extension, the international space station. It cannot be right that Germany funds 50% of it. The widely accepted tradition of the UK being negative about putting scientists into space should end, not least because space tourism and exploration are going to become boom industries in the future, in the same way as transatlantic shipping and air travel became hugely popular in a short space of time. We do not want to be on the list of countries left behind by this exciting new development in human history.

I have asked the Secretary of State about our preparedness for the next European Space Agency ministerial council, and I am glad that things are progressing well, but we need the Government to set, as a central aim for that conference, greater UK involvement in microgravity research. It is important that we ride on the back of this industry. Future generations are looking to science as a cool subject to be involved in. A report by the Science and Technology Committee, of which I am a member, has shown that young people are engaging particularly well in anything to do with space exploration. Amazingly, when I was a small boy, I made an Apollo rocket, like many Members here, from an Airfix kit. I am sure that we can all remember sitting at the kitchen table gluing our hands to our faces and everywhere but the model itself. Funnily enough, my little boy, Robert, found my Saturn 5 rocket that I made—I had forgotten that I still had it. I grudgingly put it back together. It brought back happy memories, but I looked at my eight-year-old son, and he turned around and asked, “Dad, why are we not going to the moon again?” I think that that was very poignant.

22:36

[The Minister for Universities and Science (Mr David Willetts)]

This has been a rather special Adjournment debate in which the passion of colleagues for space travel and the space sector has been exposed to wider debate. I congratulate my hon. Friend the Member for Bracknell (Dr Lee) on securing the debate and leading it so well. I also thank my hon. Friend the Member for Morecambe and Lunesdale (David Morris) for his speech, because he also spoke with the authority that comes from being a member of the parliamentary space committee. It is also great to see in his place my hon. Friend the Member for Windsor (Adam Afriyie), who does an excellent job as the chair of that committee. We have people here who rightly care about space.

I would like to make it clear that the Government realise the significance of the space sector, which is why we have tried to support the space industry even during the tough fiscal decisions that we have had to take. Through my role as co-chair of the space leadership council, I have a good and constructive dialogue with the industry, and we were able to get a section of the growth review devoted specifically to the space industry. The space sector matters in lots of different ways. It is crucial to scientific and technological advance. We undoubtedly conduct high-grade scientific research through the space programme, and the technological challenges posed by the programme drive technology forward.

As we have heard, with 10% growth a year, the space sector is a rapidly growing part of the British economy. There are not many parts of the British economy growing as fast as China, but the space sector is. I absolutely agree with the final point from my hon. Friend the Member for Morecambe and Lunesdale that the excitement of space can get younger people involved in science. As someone who wants more and more young people excited by space, I believe that, by and large, it is space and dinosaurs that interest young people in science. In America, they still talk of the generation of scientists and technicians that came through as a result of the Apollo effect getting them interested and involved. The space sector has a lot to contribute, and within the inevitable constraints on public spending, we are doing our best to back it.

I was asked some specific questions that I will try briefly to answer. The first was about manned space flight. I should make it clear that the UK has historically focused its space investments on areas such as telecommunications, earth science and robotic exploration of the universe; and, as we are not directly involved with the international space station, we have not developed human space flight technology, although we have the relevant technology for the future exploration of the moon and Mars, including advanced robotics—of which the ExoMars rover programme is a classic example—communications systems and small satellites. So that is the view that we have taken, historically.

I was asked whether we had any objection in principle to a manned space flight, and the answer is no, although there will always be pertinent questions about cost effectiveness. The Government are delighted that Major Tim Peake has been selected on merit to join the ESA astronaut corps. That will be a great opportunity for him to inspire young people in the UK; indeed, I know that he is already doing so. So that is our attitude to manned space flight.

I was also asked specifically about microgravity. It would be correct to disentangle microgravity research from the manned space flight issue. It is possible to research microgravity without getting involved in manned space flight, and we do understand the value of microgravity research. There are difficult obstacles to overcome, however. First, the range of topics is so wide that there is no coherent voice to articulate the needs of the researchers, as my hon. Friend the Member for Bracknell said. I understand that point. Secondly, materials researchers do not normally work with biomedics or astrobiologists, but they would all find microgravity important in pursuing their research. The researchers who would benefit from microgravity research therefore comprise a rather fragmented and diverse group, but my hon. Friend eloquently argued that it would be helpful if they could come together to provide a more coherent voice.

Historically, the UK has had little involvement in microgravity research, so the researchers are largely unaware of the possibilities involved. Let me make it clear that I would welcome new collaborations, including the ones that are now developing, and new ways of serving the interests of UK researchers and those of our international partners.

[Stephen Barclay (North East Cambridgeshire) (Con)]

I was interested to hear about the Government’s support for a forum. Would my right hon. Friend support ministerial attendance at such a forum, if one were to be established?

[Mr Willetts]

As I hope those in the space sector know, I am personally committed to working closely with the sector. The idea of a microgravity forum is very worth while, and it would be great if people who could benefit from microgravity research came together. If it would make sense to do so, I would be willing to meet such a group, but I must stress that I am working within a fixed science budget. We have the protection of the ring fence around the £4.6 billion, and we are all very proud of that illustration of our commitment to science, but I have to work within that budget. So, provided that ministerial attendance did not give rise to the assumption that the Minister would come to the meeting armed with a cheque book, I would be happy to attend. We could then purse the matter from there.

[Adam Afriyie (Windsor) (Con)]

The research council model for funding research has worked incredibly well over the decades since it was established in the 1980s by Lady Thatcher when she was Prime Minister. I wonder whether the Minister might write a letter urging the research councils to consider such a forum or meeting to facilitate an interest in it.

[Mr Willetts]

It would be best if there were ways in which the research community could come together, but I am always wary of anything that could be taken as a breach of the Haldane principle, which hovers over all these debates. We have to be very clear in regard to giving instructions or directions on areas of research activity. One of the reasons that we have an excellent science research base in this country is that, by and large, Ministers have kept their grubby hands off these issues.

As I said, I have tried to indicate that I recognise that microgravity research could play an important role. It has suffered from the structural problem of having such a diverse and different range of disciplines that could benefit from it. I can see the argument for them coming together in a more coherent way and I would be happy to look at that. Of course, many of the decisions would ultimately be for the research councils.

Let me briefly say in the few minutes remaining that a lot of this stuff will come up as we plan for the European Space Agency ministerial council in 2012. No doubt we will be invited by the ESA to join its microgravity research programme, ELIPS. I am told that the UK Space Agency has already held a workshop with researchers and providers of facilities to explore their mutual interests, and it will be holding a further workshop in November to examine the opportunities presented through the ESA’s programmes. As we prepare for the next ESA ministerial, we are of course considering this alongside many other options.

Let me conclude by saying that we recognise the significance not just of microgravity, but of the presence of people like Major Tim Peake who are aiming to become astronauts. I am delighted that Tim Peake has said that he will act as an ambassador for microgravity research in the UK. Because of our ambition that he should be able to engage in space flight, it is great that he is willing to take on that role. I am confident that, as part of that role and of the UK Space Agency’s work, we will consider the proposed strategy for space biomedicine that the UK space biomedical consortium is developing with Tim’s help. It will continue to facilitate negotiations between UK research groups and prospective international partners.

I should like to assure the several Members in their places today who all share this interest in space research—my hon. Friend the Member for Bracknell has done an excellent job in bringing this crucial subject to our attention—that I will undertake, given my ministerial responsibilities, to follow the debate on microgravity research very closely as we prepare for the ESA ministerial next year.

Question put and agreed to.

22:47

House adjourned.

Ministerial Correction

Tuesday 13th September 2011 Ministerial Corrections

Tuesday 13 September 2011

Travellers

Tuesday 13th September 2011 Ministerial Corrections

[Caroline Flint]

To ask the Secretary of State for Communities and Local Government what estimate his Department has made of the number of unauthorised Traveller sites in (a) each local authority area and (b) England (i) in each of the last five years and (ii) since May 2010.

[Official Report, 8 September 2011, Vol. 532, c. 752W.]

Letter of correction from Andrew Stunell:

An error has been identified in the written answer given to the right hon. Member for Don Valley (Caroline Flint) on 8 September 2011. The error occurred in the figures given for January 2009, January 2010 and January 2011.

The full answer given was as follows:

[Andrew Stunell]

The “Count of Gypsy and Traveller Caravans” undertaken bi-annually by local authorities in England and collated by my Department collects data on the number of caravans on unauthorised sites in England. It does not provide data on the number of unauthorised sites. Information on the number of caravans on unauthorised sites in England and by local authority area for 2007, 2008, 2009, 2010 and 2011 is available in the Library of the House.

Figures from the “Count of Gypsy and Traveller Caravans” for the past five years indicate a downward trend on unauthorised caravans.

[Andrew Stunell]

The “Count of Gypsy and Traveller Caravans” undertaken bi-annually by local authorities in England and collated by my Department collects data on the number of caravans on unauthorised sites in England. It does not provide data on the number of unauthorised sites. Information on the number of caravans on unauthorised sites in England and by local authority area for 2007, 2008, 2009, 2010 and 2011 is available in the Library of the House.

Figures from the “Count of Gypsy and Traveller Caravans” for the past five years indicate a downward trend on unauthorised caravans.

Petitions

Tuesday 13th September 2011 Petitions

Tuesday 13 September 2011

Prevention of Abuse of Adults in Residential Care

Tuesday 13th September 2011 Petitions

The petition of supporters of The National Autistic Society,

Declares that the petitioners believe that the Secretary of State for Health should take urgent action to prevent abuse in residential care settings and work with commissioners, providers, individuals receiving support and their families to ensure that vulnerable adults are treated in a dignified, safe, enabling and respectful way.

The petitioners therefore request that the House of Commons urges the Department of Health to urgently review the work of the Care Quality Commission and the appropriateness of the inspection regime for protecting vulnerable adults in out-of-area residential accommodation.

And the Petitioners remain, etc.—[Presented by John Pugh, Official Report, 19 July 2011; Vol. 531, c. 907 .]

[P000948]

Observations from the Secretary of State for Health:

The issue referred to relates to the abuse uncovered by a BBC Panorama programme at Winterbourne View, an independent hospital for people with learning disabilities.

When the abuse at Winterbourne View became known, the Care Quality Commission (CQC), commissioners and other agencies took prompt action to safeguard the patients there. Winterbourne View has now been closed permanently and Castlebeck Care is no longer registered to provide services at this location.

The Government are committed to learning the lessons from this tragic case and a number of actions are underway to ensure that this happens.

CQC is undertaking a number of reviews of services for people with learning disabilities starting with the review of all of Castlebeck’s facilities in England. Reports on each of these reviews were published on Thursday 28 July and where CQC has found that services are not meeting the essential safety and quality requirements, CQC is taking appropriate action.

CQC is also undertaking a focused inspection programme to review care for people with learning disabilities in independent hospitals. The review will be in two phases:

phase 1 will consist of the inspection of 150 services that provide care for people with learning disabilities;

phase 2 will use the learning from phase one to look at a sample of other registered services covering alternative models of provision for people with learning disabilities.

In undertaking these reviews, where inspections identify care and treatment that does not comply with the safety and quality requirements for example the requirement on safeguarding service users from abuse, CQC has powers to take enforcement action. This includes the power to issue the provider with a warning notice that requires improvement within a specified time, prosecution and the power to cancel a provider’s registration, removing its ability to provide regulated activities.

In addition to the reviews CQC is undertaking into services for people with learning disabilities, CQC is undertaking an internal review of its actions. This, along with reviews by other bodies involved as well as the independently chaired Serious Case Review will feed into an overall review by the Department of Health which will be draw together the key lessons. This work is being led by Bruce Calderwood, Mental Health and Learning Disability Director for the Department. A panel of experts including Professor Jim Mansell, Mark Goldring and Anne Williams will advise the review. Its activities will be informed by the views of service user and carer representatives including the National Forum for People with Learning Difficulties, the Challenging Behaviour Foundation and the National Valuing Families Forum. Ministers will then report further to Parliament.

The forthcoming Care and Support White Paper will look at the quality framework for social care as a whole, to make sure we have got the right arrangements in place to ensure high standards for all people who receive care.

The White Paper will be informed by an engagement process over the autumn on priorities for social care reform and we will set out more detail about our plans imminently.

Westminster Hall

Tuesday 13th September 2011 Westminster Hall

Tuesday 13 September 2011

[Mr Mike Hancock in the Chair]

Tourism in Yorkshire

Tuesday 13th September 2011 Westminster Hall

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

09:30

[Nigel Adams (Selby and Ainsty) (Con)]

I thank the Minister for attending this debate, which is important for the Yorkshire region. I also thank my Yorkshire colleagues for getting up early this morning for a debate on an industry that means so much to our great county.

The tourism industry is a rare wealth generator for this country and one of our most important industries. The variety and history of our landmarks, monuments, countryside and culture are powerful magnets for visitors from all over the world. Important events such as next year’s Olympics will continue to contribute greatly to putting Britain firmly at centre stage, globally.

A little more than a year ago, the Prime Minister gave a speech on the importance of tourism in the UK and launched the first ever tourism policy in this country. That landmark policy set out targets for attracting 4 million extra visitors to Britain over the next four years and is backed by £100 million-worth of marketing campaigns. Along with that increase in visitor numbers, the policy aims to increase the proportion of UK residents who holiday in the UK to match that of those who choose to holiday abroad each year.

This country has some of the most spectacular and wide-ranging scenery and holiday destinations, most particularly—I am sure those present will all agree—in Yorkshire, God’s own county. It is important that we encourage the British people to make the most of what they have on their doorstep.

[Greg Mulholland (Leeds North West) (LD)]

I thank my hon. Friend and Yorkshire colleague. He will be pleased to know that I was happy once again to take my family to Yorkshire on our summer holiday. I apologise to him and to you, Mr Hancock, because I have to leave for an equally important event for Yorkshire; it is the launch of the Leeds city region bid for the green investment bank—something that colleagues will also support.

My hon. Friend is right about the offering that Yorkshire has, with two national parks, some of the finest coast in the country and a host of attractions. I pay tribute to the wonderful and important work that Welcome to Yorkshire does in promotion. I ask the tourism Minister not only to be a champion for tourism in this country, which I am sure he will be, but to ensure that he speaks to his colleagues in the Treasury—

[Mr Mike Hancock (in the Chair)]

Order. You are pushing your luck; this is an intervention, not a speech. You have apologised for having to leave, so ask your question and then we will move on.

[Greg Mulholland]

Thank you, Mr Hancock. I am asking my question now. Can the Minister, in his discussions with the Treasury, ensure that sustainable development cannot include the deliberate closure of pubs and other community assets, which are enormously important to the whole of Yorkshire? People are cashing in those assets for the one fast buck of development, but that is not sustainable development.

[Mr Mike Hancock (in the Chair)]

That is not a precedent for anyone else. Mr Mulholland, I think you owe the House apologies for that; it was an intervention, not a Member’s speech or a speech in lieu because you had to leave. May we bear that in mind for future reference?

[Nigel Adams]

I appreciated that intervention, despite its length. I echo what my hon. Friend the Member for Leeds North West (Greg Mulholland) said about pubs—I am a fellow member of the all-party save the pub group. The point that he made is incredibly important.

Not only is this country well worth a visit, but the tourism industry is vital to our economy, and the 200,000 businesses directly involved are key contributors to Britain’s economic recovery. They provide £52 billion of our gross domestic product and 4.4% of our jobs, and they have contributed to making tourism one of the fastest growing sectors, providing employment in our most rural communities and enjoyment to millions. The industry accounts for almost £90 billion in direct spending each year and, equally importantly, it rises above north-south or regional divides and creates wealth and employment in all parts of the country. It remains a fantastic, cost-effective way to rebalance the fortunes of the country away from past reliance on financial services, construction and the south-east.

I turn to tourism in Yorkshire. As I am sure we are all aware, Yorkshire is England’s largest county, with a population of 5.5 million—equal to that of Scotland and twice that of Wales. Tourism is the county’s third largest industry and continues to support a quarter of a million jobs and more than 25,000 businesses, many of which are in rural and coastal areas that depend solely on visitors for their livelihoods. I am pleased to see Members representing coastal areas in the Chamber today.

All my Yorkshire colleagues present today are well acquainted with the county’s official destination management organisation, which is called Welcome to Yorkshire. I am delighted to see the senior management team of Welcome to Yorkshire, who are—by sheer coincidence—in the Chamber today. The organisation is widely heralded as a national success story that has transformed the UK tourism landscape. I confess to being, in a previous life, a director of its predecessor, the Yorkshire Tourist Board. What now exists is a completely different beast; Welcome to Yorkshire is doing a fantastic job.

[Neil Carmichael (Stroud) (Con)]

Yesterday, I launched the Stroud special train, which is designed to pick people up from Paddington and take them to Stroud and, obviously, Gloucestershire. The train will run every day, with cheap tickets and advice on what people can and should do once they reach their destination. It seems to have caught the imagination of people in Stroud and the rest of Gloucestershire. Does my hon. Friend think that that kind of thing should be done for Yorkshire? Can he not imagine trains going from King’s Cross to Yorkshire, with the same sort of promotion, tickets and, effectively, navigation of people to the right place?

[Nigel Adams]

That is an excellent example. Yorkshire is fortunate to have a good railway service to and from London, but I am sure that the railways Minister might be interested in a similar proposal that involves taking advantage of the high-speed rail network in a few years’ time—such a train could be up in Yorkshire within several minutes, I imagine. The Stroud train is a great initiative and, although we are well served in Yorkshire, it is certainly something we could take on board.

Since Welcome to Yorkshire was launched in 2009, the value of Yorkshire’s tourism has increased from £5.9 billion to £7 billion, adding more than £1 billion to the economy. Its role is to change perceptions of Yorkshire, by projecting a new, dynamic and vibrant county sitting alongside its tradition, history and natural beauty. The Welcome to Yorkshire gates at King’s Cross station fill me with great pride every Monday morning when I arrive in London, reminding everyone that they would surely rather be spending their time in Yorkshire than London.

It goes without saying that Yorkshire is awash with tourism assets, which are the envy of the nation. I do not mean to upset any of my Yorkshire colleagues, but I am sure that they will allow me to mention a handful and that they will put me right if I miss a few. We are lucky enough to host, in the constituency of my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), the world’s oldest and greatest cricket festival, at Scarborough. We have two world heritage sites, Studley Royal and Fountains abbey, and Sir Titus Salt’s vision at Saltaire.

We have some fantastic churches, abbeys, minsters and cathedrals—none finer than Selby abbey in my own constituency. The weekend before last, I visited a fantastic small church in the village of Birkin in my constituency, a Norman church which has lasted for all those centuries and is an absolute gem, and a great potential tourist destination. Hopefully, it will not be blighted by the proposed wind farm adjacent to it.

Other great examples of what we have in Yorkshire are UNESCO’s first and only world city of film, Bradford, and six national museums. Yorkshire is arguably the food larder of Europe, and we have 190 independent breweries, which many of us are doing our best to ensure that we visit in the course of this Parliament. We have the seventh most visited attraction in the UK in Flamingo Land. We have more blue plaque awards for quality beaches than any other county, and the world’s No. 1 heritage railway—North Yorkshire Moors railway—which was featured in ITV’s “Heartbeat” and in Harry Potter movies. I could go on.

Our destination management organisation has revolutionised the approach of the UK’s tourism industry as a whole by raising standards and redefining the role of traditional tourist agencies. Its return on investment is impressive, with £40 delivered to the local economy for every £1 invested in the organisation, £18 of which goes back to the Treasury in tax receipts. There is not much not to like about that; it is a great return on investment.

The tourism policy’s aim is to attract greater numbers of visitors over the next four years, and Welcome to Yorkshire has become an innovative international ambassador, tirelessly promoting Britain and, of course, Yorkshire, as leading tourism destinations. It has even been suggested that, within the tourism policy, Yorkshire has become an attack brand, capable of rivalling London as a super-destination for international visitors—although we do not want to stir up too much rivalry.

According to independent research from Visit England, we are succeeding in the role of encouraging more people to visit Yorkshire, to stay longer, and to spend more. In the first quarter of 2011, visits to Yorkshire were up 14% on the same period last year, compared with just a 5% increase throughout the UK as a whole. During the same period, length of stay increased by 15% in Yorkshire, compared with a 2% decrease nationally. Yorkshire also experienced a 25% growth in visitor spend, compared with just 5% for the UK, with overseas spending at 70%, compared with a 7% expenditure increase in the UK overall. In the two years since Welcome to Yorkshire was launched, 4,000 new jobs have been created in the tourism industry in Yorkshire. I have listed many figures, but they are impressive and worth mentioning.

The organisation has won numerous awards, including the world’s leading marketing campaign and Europe’s leading marketing campaign, and has been shortlisted for status as the world’s leading tourist board 2011; I believe that it is England’s only representative, and it is up against the likes of Malaysia, the Maldives and New York. We wish it well with that award. However, the progress and success of Yorkshire’s tourist industry is now at risk.

When Welcome to Yorkshire was launched, it had funding of £10 million a year for three years, but that funding stream ends on 1 April 2012. When it ceases, in just over seven months, its resources will be vastly reduced, leaving it to be funded through a cocktail of revenue streams, including strong private sector support from several thousand businesses that partner the organisation, local authorities and the newly created local enterprise partnerships.

Those new methods of funding are concurrent with the tourism policy’s stated aims for tourism bodies to be less reliant on public funds, and more locally responsive. I support that. It seems all very well, self-sufficient and in order, until one discovers that Visit Scotland received £66 million in funding in 2009-10, the majority of which came from Westminster. As I pointed out, the populations of Yorkshire and Scotland are the same, with similar sized tourism industries, employing 240,000 people in Scotland and 254,000 in Yorkshire, yet Scotland received six times more funding than Yorkshire in that financial year.

When centralised funding ceases on 1 April 2012, Visit Scotland will continue to receive funding from Westminster, but England’s largest county will receive nothing. If we are successfully to rebalance the UK economy, as we all know we must, it is clear that some central funding, not necessarily at the same level as in Scotland, is needed in England for super-destinations such as Yorkshire, which the Government have already identified. I urge the Minister to consider that in great detail.

[Mr Gerry Sutcliffe (Bradford South) (Lab)]

I congratulate my hon. Friend on securing this debate. He is rightly making the point that tourism is important to local economies, particularly in cities such as Bradford, as is the investment that comes to Bradford from tourism, whether in Haworth or the variety of other assets that we have, and which I will talk about later. Should not the Government recognise that if that funding ceases, and Welcome to Yorkshire does not succeed, local economies such as Bradford will be affected?

[Nigel Adams]

My hon. Friend makes a good point. The days of going cap in hand to the Government, and of organisations such as Welcome to Yorkshire being funded totally from the public purse, are gone, and rightly so, but we must be mindful of the impact of complete cessation of funding. That is the point that I want to raise with the Minister, and I have another suggestion for a way of squaring the circle. The Government’s tourism policy has identified Yorkshire as one of a few elite areas capable of being an internationally attractive super-destination, with pulling power alongside the likes of the Cotswolds, Cornwall, the Peak district and the Lake district. The risk is that, without continuing funding, Yorkshire may no longer be able to keep up.

One idea being bounced around and discussed is that the Government should match-fund the private sector membership of England’s attack brands over a minimum subscription level of £1 million; Welcome to Yorkshire is capable of extracting money from the private sector—from industry in Yorkshire. That would be extremely cost-effective in helping to fulfil the Government’s goal of rebalancing the economy geographically, investing in the success of areas that they have identified as being examples of excellence in UK tourism and helping to increase a major local and national industry, safeguarding jobs and generating additional wealth.

I welcome the Secretary of State’s recent announcement that £3 million will be made available for tourism in connection with the Olympic games, and I am keen to hear from the Minister how much money Yorkshire is likely to receive from that £3 million. Continued support of our leading tourism agencies will also help the Government to achieve their three stated aims of attracting more visitors to Britain, increasing the number of Britons who holiday at home, and improving the sector’s competitiveness and efficiency.

I realise that I am biased towards Yorkshire, as are many of my colleagues. I am Yorkshire born and bred, and I urge the Minister to look at the facts and figures that I have mentioned, all of which prove that Yorkshire is a worthy investment—not only for our visitors’ time, but for the national economy.

09:40

[Mr Gerry Sutcliffe (Bradford South) (Lab)]

I am grateful to my Friend the hon. Member for Selby and Ainsty (Nigel Adams) for raising this important debate. I am delighted that members of Welcome to Yorkshire are in the Chamber and that parliamentary colleagues from all parties are united in saying how wonderful Yorkshire is. I say that as a Lancastrian. By an accident of birth, I was born in Salford, but I have lived and worked in Yorkshire all my life, and was educated there, so I hope that that will not be held against me. I fully understand the importance of the tourism industry to Yorkshire, and during my intervention on my hon. Friend I referred to the importance of tourism to economies such as Bradford.

Welcome to Yorkshire and its predecessors have brought people together. In the past, tourism involved competing city against city, area against area. The good news is that Welcome to Yorkshire has brought the whole of Yorkshire together, and collectively its assets and other fantastic attractions, such as culture, sport and recreation, have been packaged together. It fills me with pride whenever I watch adverts about Yorkshire, wherever I am in the UK or indeed the world. Welcome to Yorkshire has united the county to ensure that we maximise what we can from the tourism industry.

The hon. Member for Selby and Ainsty discussed Yorkshire’s various assets, and I could go on at length about the wonders of Bradford. He mentioned Sir Titus Salt’s village, Saltaire. It has a festival this week, and people will be coming from all over the UK to enjoy its benefits and delights, not least the Saltaire brewery. Talking about breweries was a noble attempt by the hon. Gentleman to encourage us to go to as many as possible during the lifetime of this Parliament. I will try to help him, not least by visiting the Timothy Taylor brewery in Keighley, which is world famous for its bitter and other delights. It is a brewery, and it employs people.

Yorkshire has breweries but also culture, and it is amazing what Yorkshire has produced in terms of film, culture and arts. Last week saw the launch of the film “Jane Eyre”, and I understand that a remake of “Wuthering Heights” is due to be released shortly. That shows the impact of Yorkshire. Behind those films are the great delights and wonders of the Bronte family at Haworth, but jobs are connected to those great assets.

We have mentioned breweries and culture. As a former Sports Minister, I wish to talk about sport in Yorkshire. It is fantastic that we have got the Olympics, and it is great to see the Minister, and the shadow Minister my hon. Friend the Member for Ashfield (Gloria De Piero), in the Chamber today. We will have the delights of the Olympics next year; there are training camps in Yorkshire, which is fantastic and will boost the economy. Young people will draw benefits from having international athletes in our community.

Sport is important in many other regards. Yorkshire has nine great race courses, which is more than any other county. The race course at York is the jewel in the crown with the one at Doncaster not far behind, but people also enjoy the smaller courses such as those at Wetherby and Ripon. Those assets are important, and Welcome to Yorkshire has increased its spend in Yorkshire and brought people together.

The hon. Gentleman is right to say that the days of handouts are gone, but the Government must recognise how important it is that organisations such as Welcome to Yorkshire continue to operate. We must encourage more people from the private sector and more individuals to become members of Welcome to Yorkshire and to join the crusade of extolling the virtues of Yorkshire. The Government have a role to play not only at national level, but at local level, and we must keep the momentum going. Those who support Welcome to Yorkshire do a fantastic job, and we must ensure that people are behind them.

I hope that the Government will listen to the hon. Gentleman’s comments about the possibility of matching funding and about whether there are other ways we can be creative. As I have said, in cities such as Bradford the tourism industry is perhaps akin to the engineering and textile industries in the past—tourism is a key player in the city’s regeneration. Bradford has a diverse population, and we have the opportunity to enjoy wonderful international cuisine. We are proud of the curry run in Bradford, and people can come for the weekend and enjoy the flavours of Asia.

Bradford has been called “The World in a City” because of the make-up and diversity of its population. That developed over centuries and is based on the wool capital of the north that Bradford once was. I know that the Minister, and the shadow Minister, will recognise the importance of the tourism industry, not only in terms of the beautiful and wonderful things that we see in Yorkshire, but because of the impact that has on our economy. I would be worried if organisations such as Welcome to Yorkshire were not supported by the Government and others, and this morning’s debate provides a wonderful opportunity for us to state our thanks to Welcome for Yorkshire for the work it does in the region. I hope that the Minister and the shadow Minister will do what they can to ensure that the momentum that has started will continue.

09:54

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

May I start by congratulating my hon. Friend the Member for Selby and Ainsty (Nigel Adams) on securing this debate? Tourism is an important issue in Yorkshire, and it has been important for me during my career. I spent many years working in the tourism sector, first running the marketing team at Going Places, and more recently on the board of Harrogate International Centre. Tourism is a critical part of our local economy, and it is a sector that drives our economic growth. It is the third biggest sector in the county as a whole, and it is the biggest sector of the economy for my part of the county, North Yorkshire. Overall, the industry employs 250,000 people and accounts for just less than 10% of our economy. There is an enormous scale to our tourism industry.

Tourism is a marvellous success story. Visitor numbers are up by 12% this year, which vastly outperforms other parts of the country even when building on high levels of visitors in the first place. I read that we have about 215 million visits to Yorkshire every year, which is more than to Disney worldwide, so the scale is significant. I want to say why the tourism sector in Yorkshire is doing so well, mention a little about the business tourism sector, which is often ignored, and comment on where we might perform a little better.

There are a number of reasons for the encouragingly strong performance by Yorkshire, but the main reason is the quality and variety of the tourism offer. The product is excellent, but it is not a single product and the key is in its variety and choice. Yorkshire delivers a world-class offer in many different sectors of the tourism industry. From family holidays to short breaks, no destination can better match the heady mixture of landscape and heritage offered by Yorkshire. Underpinning much of that is the stunning natural landscape. Yorkshire men often refer to our county as “God’s county”. I have occasionally had a bit of a joke or banter about that with tourism Ministers in the past, but we continue to refer to Yorkshire as God’s county because it is.

Last week, Mintel’s annual British lifestyles survey rated Yorkshire as the happiest place to live in the UK. Yorkshire men and women are more satisfied with their lives than people in any other part of the country, and one reason for that is the abundance of open spaces. The range of accommodation and hospitality available in our county has breadth and quality. Visitors can be catered for in different styles and to different budgets, and the product is very good. It is not possible to drive an industry if the product is poor.

The tourism sector has had a strong product for some years, so what is driving growth and causing visitor numbers to accelerate? I think that it is the combined effort by the industry and the way in which the county has set about selling itself. We saw a change some years ago with the move from marketing campaigns based on destinations, where towns and cities marketed themselves, to more co-ordinated campaigns based on the types of holiday and break available. That is a more customer-driven approach that shows fantastic insight and has been a practical way forward. It has meant the promotion of heritage, art, sport, spa breaks or whatever type of holiday people are looking for. I say sport with a heavy heart, because yesterday Yorkshire county cricket club was relegated. [Hon. Members: “ Shame”.] It is a shame, but I cannot really say any more about that.

That change in the tourism industry has proved extremely successful and combined with the great efforts made to improve the offer available and create new products. Tourism entrepreneurs are bringing new developments to market. Around the Harrogate and Knaresborough area alone, we are seeing new rooms and a spa at Rudding Park hotel, a new golf resort is planned at Flaxby, Harrogate’s Turkish baths have recently been refurbished, and we have the Royal Horticultural Society’s Harlow Carr garden and its successful partnership with Bettys tea rooms. Across the county there is ongoing investment in some of our major stately homes, such as Harewood house and Castle Howard, a location that my hon. Friend the Member for Selby and Ainsty will know well as he used to live about a mile away from it.

There are efforts to keep what Yorkshire offers live, fresh and new. People will have read recently about aspirations to bring the opening stages of the 2016 Tour de France to Yorkshire, and to host the British leg of the World Rally Championships. Aspirations are high. Underpinning all that, however, must be a culture of service. A holiday destination is not only about product but about the service offered by individuals. That is firmly understood. In Yorkshire, there is always friendly service and a welcoming approach.

There has been a recognition that the area must compete and win as a whole. Community groups and local authorities have been playing a major role. The excellent work of the In Bloom teams, which I support locally, makes our communities not only better places in which to live, but better places for visitors. The Harrogate In Bloom team and their partnership with the borough council’s very good parks department play a critical role in making Harrogate Britain’s premier floral town.

The improvements in Waterside in Knaresborough, driven by the Renaissance Knaresborough group, have improved the walk and the views of the river, the castle and the crag. That iconic Yorkshire view has been much improved.

My point is that we are seeing growth coming from a quality product, good service, an entrepreneurial spirit and effective partnership working, but also from the entrepreneurial vigour with which that is sold. At this stage, I join the praise for Welcome to Yorkshire. The whole team, under the dynamic leadership of Gary Verity, has displayed professionalism and zeal and has really made a difference. It is good to see some of the team in the Public Gallery today.

There is one part of our tourism industry that does not receive as much attention but that can be an important driver of business growth—business tourism. There are huge overlaps between leisure and business tourism. From my experience in Harrogate, I know that visitors who come for conferences often return to the county later for leisure breaks, too. However, that is a different market and, at the moment, it is a troublesome market that has obviously been affected by current economic conditions. As I have said, I was on the board of the Harrogate International Centre. That conference centre brings to the area 300,000 visitors and £150 million of spend and supports more than 5,000 jobs, so business tourism is clearly a major player in my constituency. It has been a success story, irrespective of the current trading difficulties. The drivers of success in that field are, again, investment and partnership working.

I will share a couple of examples to make my point. Investment in new facilities is fundamental. People have to keep their offer up-to-date, relevant and attractive, because many new entrants are challenging for business in the marketplace. In Harrogate at the moment, there is a £13 million scheme to build new exhibition halls. I look forward to that scheme coming online next year, as it will be a significant addition to the offer. I have been very involved in making that deal happen, which will be a huge tonic for our conference industry.

[Mr Greg Knight (East Yorkshire) (Con)]

Does my hon. Friend agree that sometimes local authorities could do more in encouraging business tourism, because one of the problems that most businesses face when organising a conference is lack of parking spaces? If we are to encourage more businesses and more business conferences to come to Yorkshire, we need to ensure that there is adequate car parking near any exhibition centre that may be operating.

[Andrew Jones]

I agree with my right hon. Friend. Ensuring that the offer is welcoming to visitors is critical. All local authorities should have that in mind all the time. Parking facilities are necessarily an important part of that, but so are other means of transport, too. Local authorities should be working together to secure better parking provision, and they should lobby Ministers and the Highways Agency for improvements in the road and rail networks. I strongly agree with my right hon. Friend’s point.

I was recently at the opening of a trade show, the home and gift show, in the Harrogate International Centre. The organisers told me that they would use the new facility, but I have also spoken to many delegates, who have commented on the importance of transport connections to the decision about where to locate a conference.

The biggest single show in Yorkshire is a mixture of business and leisure. The Great Yorkshire show, organised by the Yorkshire Agricultural Society, is a magnificent event. It has bucked the trend in agricultural shows by going from strength to strength. Indeed, this year it was just four visitors off its record attendance, so if the Minister had been able to visit God’s county for the show and brought his family, we would have had a record! He should take that as a standing invitation. If he can come up to future events, I will be delighted to provide him with tickets—I would happily buy those. I hope that we can enjoy attending such an event in due course.

There is a strong partnership that helps to promote business tourism in my area. Called Destination Harrogate, it is an association of the leading hotels, which work with the conference centre, the local council and the media to bring business to Harrogate. I support its work, which has been excellent, but there is one example of partnership working that I want to draw to everyone’s attention—the Harrogate hospitality and tourism awards. Those awards are all about celebrating success and outstanding service. It is right to recognise and reward what makes a difference to customers. The awards are used by a variety of local players to showcase their offer to visitors and to build relationships.

I am conscious that I am describing the factors involved in making a successful sector even more successful, but it is not without its problems. Other hon. Members have spoken about funding. I want to highlight a feature that the industry is talking about a lot at the moment—a potential subsidy being paid by local councils to conference organisers to bring their conference to a venue. The team at the Harrogate conference centre think that that is a major factor in the market and have questioned whether it is appropriate for local councils to use council tax or Government grants in that way. I am not sure whether that is classed as state aid, so its legality might be questionable. The issue needs to be explored.

One factor that is a key challenge for the future of our industry is the transport infrastructure. There are 220 trains a day from London to Yorkshire, but we certainly have room for improvement. As a region, we have not enjoyed the same long-term investment in transport as other regions, but I can say to the people of Yorkshire that they have a new set of MPs, who are working together to address that issue. I have been working with the chamber of trade and commerce in Harrogate to secure better rail connections. We have secured our first direct London-to-Harrogate service in 20 years and are now working on a scheme of improvements to the Leeds, Harrogate and York line. I applaud the work done by the chamber of trade and commerce.

A major problem is our lack of air links. Direct links to Heathrow or Gatwick do not exist. We need connecting flights, but we do not have them. That is a factor in our performance in the international business exhibition market. Indeed, I think that transport is a reason why the UK underperforms in the huge international business exhibition market.

Overall, however, the tourism industry in Yorkshire is doing well. The reasons for that growth are quality products, new investment, excellent service, working together and good marketing. Those are sound ways in which to grow any industry for the future. The industry understands what drives it and is determined to make it even better. Indeed, there are lessons from Yorkshire that the rest of the country could learn. I hope that as a country we do learn them, because tourism could be at the heart of the economic recovery that we all need.

10:08

[Julian Sturdy (York Outer) (Con)]

It is a pleasure to speak under your chairmanship again, Mr Hancock. It is also a great pleasure to speak in this debate. I congratulate my hon. Friend the Member for Selby and Ainsty (Nigel Adams) on securing a debate that is so important to our region. I echo the sentiments already expressed by fellow Yorkshire Members on both sides of the Chamber.

Tourism is a key economic driver across the Yorkshire region as a whole and to the city of York directly, creating 23,000 jobs in the city, generating £433 million for the local economy and promoting the many visible and, indeed, hidden treasures of God’s own county to more than 7 million visitors a year.

As my hon. Friend the Member for Selby and Ainsty has said, the Prime Minister made a key speech in August 2010 about the importance of tourism to the UK economy. Tourism is worth at least £47 billion a year to the UK economy, with more than 1.7 million people employed in the sector at present. Throughout his speech, the Prime Minister admirably stressed the importance of a renewed focus on tourism and the need for Britain to break into the top five in the World Economic Forum’s travel and tourism competitiveness ratings.

If Britain is to achieve that goal, a vibrant, growing and resilient tourism sector across Yorkshire will be crucial. However, too many people still automatically think of London when they think of British tourism. The capital is indeed a remarkable and historic place, and it is undoubtedly one of the greatest cities in the world—up there even with the great city of York. However, there is more to Britain than London, and if we are to boost the tourism sector, we need to boost our support for local tourism in regions across the country. With that, I pay tribute to Welcome to Yorkshire’s success in our region, from innovative advertising to key partnership working.

My hon. Friend the Member for Selby and Ainsty has mentioned King’s Cross station. Similarly, on the few times I fly into Manchester airport, I see the sign saying “Gateway to Yorkshire”, which always lifts the heart of any Yorkshire man. I am sorry that the hon. Member for Bradford South (Mr Sutcliffe) has had to leave, but he is a keen Manchester United supporter, and he will have seen that sign many times.

As one of the two MPs for the city of York, I shall focus particularly on tourism in York. As many Yorkshire colleagues present will testify, York is a beautiful and historic city. It is situated on the banks of the River Ouse and surrounded by quaint villages and spectacular landscapes. From its Roman ruins and Viking remains to the industrial legacy of the National Railway museum and the jewel in the crown that is York minster, York is truly one of Europe’s most inspirational and eye-catching destinations.

More than 1 million people a year walk on the city’s historic walls. For a Yorkshire man or woman, it is almost a ritual to be walked over the walls by their father or grandfather as a young child. Originally designed to defend the city from attack, the walls now stand as a proud symbol of York’s history and international standing.

The challenge for York, as for so many areas, is to compete in an increasingly tough tourism market during extremely difficult economic times. That is why regional partnership working, which my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) has mentioned, is so important. York has already benefited from such partnership working, which brought about the refurbishment of the Yorkshire museum, which now receives record numbers of visitors.

Yorkshire racing and the Ebor festival are other examples. The hon. Member for Bradford South touched on Yorkshire racing, and Welcome to Yorkshire got involved in promoting racing across the region two years ago. This year, the numbers at the Ebor festival were up 16% on the back of record attendance figures last year. Some 360,000 people visited the race course last year—the highest number since racing started on the Knavesmire in York in 1761. Members should think of the impact those growth figures have on the economy of not only York but the wider region. Similarly, the production of “The Railway Children” in London lifted visitor numbers at the National Railway museum by 6%.

I welcome the Government’s tourism strategy, which they published in March, and I agree with their three aims of launching a £100 million marketing campaign, increasing the proportion of UK residents holidaying in the UK and increasing the sector’s productivity—no one can argue against those—but we must make sure that the money is channelled through the right areas to deliver the biggest impact.

I acknowledge the important role played by local authorities in promoting local tourism, and I congratulate the Minister on a policy that will incentivise local authorities to do more on that front. I hope reforming business rates revenue will ensure that local authorities reap the full rewards of their tourism strategies, rather than simply picking up the costs. Such incentives should drive City of York council to do even more to promote the city’s tourism industry. I would, however, be interested to learn the Minister’s thoughts on the role played by local enterprise partnerships in local tourism. How much responsibility for tourism are those new bodies expected to pick up in the coming years?

In his speech last August, the Prime Minister stated that

“tourism is one of the missing pieces in the UK’s economic strategy.”

I agree wholeheartedly with those sentiments, and I would be grateful if the Minister were to provide an update on the Government’s work internationally to promote tourism in Britain and specifically in Yorkshire. Likewise, the creation of business-friendly conditions is key to supporting the tourism sector in cities such as York. Such conditions encourage entrepreneurship and support small local businesses, which are crucial to York’s vibrant atmosphere. I would therefore be grateful for the Minister’s thoughts on whether the Government are doing enough on that front.

I want briefly to mention the funding of Visit York. Visit York is having to apply for alternative funding, and one of its bids is being made to the regional growth fund via VisitEngland. Given that it faces budget cuts, I would be grateful if the Minister could advise it on how best to apply for funds elsewhere and if he could give us his thoughts on how partnership working across the region might drive economies of scale.

I appeal to the Government to retain their strong focus on tourism. The sector needs encouragement and reassurance. Cities such as York have much to offer, as long as enough support is provided during economically challenging times. As a result of the dynamic and innovative work of Welcome to Yorkshire and Visit York and the partnerships they have formed, the tourism industry in our region is in great heart. Those bodies have proved themselves great wealth creators in our region, and that must always be remembered in any funding formula. For that success to continue, however, we need a level playing field. In that respect, I support my hon. Friend the Member for Selby and Ainsty in his drive for matched funding for the tourism industry.

As I have mentioned, the city of York and our region have a magnificent story to tell visitors, but we, as representatives of our region, also play a role, in proudly talking about our beautiful, historic county and in promoting its many delights and attractions.

10:17

[Gloria De Piero (Ashfield) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hancock. It is also a pleasure to respond on behalf of the Opposition. I congratulate the hon. Member for Selby and Ainsty (Nigel Adams) on securing this important debate. He spoke passionately about the issue and posed some good questions, which I hope the Minister will address.

I echo many of the things that have been said about Yorkshire, because, as hon. Members may be able to tell from my accent, I am originally a Yorkshire girl. Everybody in the room has a responsibility to ensure that Yorkshire and its tourism industry stay on the agenda. As the hon. Member for York Outer (Julian Sturdy) said, the debate is an important part of that.

I am from Bradford, and it is good to see my hon. Friend the Member for Bradford South (Mr Sutcliffe) here. He is my mum and dad’s MP, and I know how proud he is of his constituency and how hard he works to promote Bradford. He has also done a fine job of promoting Yorkshire today.

Tourism is incredibly important for the survival and continuing regeneration of many regions such as Yorkshire; it creates huge numbers of jobs for people directly employed in the industry and for many thousands more working in similar industries. Its importance to our national economy is highlighted by the fact that it is our fifth largest industry. According to figures from Yorkshire Forward, tourism contributes billions of pounds to the regional economy.

Tourism should feature strongly in our strategy for economic recovery. I know that Britain cannot afford to give the industry a specific VAT cut at this time, but does the Minister accept that this is perhaps not the right time for the Chancellor to hike up VAT?

It is not hard to see why Yorkshire is popular with tourists and so valuable to the economy. It has everything, from the hidden gem of Selby abbey, in the constituency of the hon. Member for Selby and Ainsty, to Scarborough, which was one of the first seaside resorts in Britain, to great moors and coastlines. It also has cities such as York and Leeds and shopping complexes such as Meadowhall. The hon. Member for Selby and Ainsty is rightly proud of the region.

I have learned some new facts about Yorkshire from the hon. Member for Harrogate and Knaresborough (Andrew Jones). We all know about the landscape and heritage, but I did not know that it was the happiest place to live in. I have enjoyed tea and cake at Bettys, and it is a fantastic part of Harrogate.

[Mr Knight]

Can I add to that impressive list the enjoyment of fresh crab and lobster at Bridlington, Britain’s largest shellfish port?

[Gloria De Piero]

I remember the odd school trip to Bridlington. I did not have any crab then, but perhaps I will now, as a grown-up.

As people have said, tourism is about more than economics. It has the magical ability to conjure up dreams and create special memories. I grew up in Bradford, and I remember vividly the opening of the National Media museum, where my dad used to take me when I was a little girl. That museum did so much to capture my imagination. It was there that I learned about how television was made, and its history. That broadened my horizons, and who knows whether it was responsible for my choosing a career in TV before I came to this place? There was a mat to sit on, which would transform, by means of the television screen in front, into a flying carpet to transport visitors to far-flung places. I went back to the museum a couple of years ago and the flying carpet mat had gone, but the special effects meant that people could transport themselves to outside 10 Downing street, to be a reporter. That offered a little less magic to me, as that was my job at the time.

Another pleasure when I was growing up was Haworth, down the road. I am sure that it was the main reason I fell in love, as a teenager, with Emily Bronte’s book “Wuthering Heights”, and went walking the moors wondering when my Heathcliff would come. Those moors brought the novel to life for me, and I am sure that they do for many tourists. That reminds us that tourism is not only about people from different counties or countries, but can be for people from nearby in the same county: it can expand people’s horizons. It can expand the taste buds too. Much to the horror of my Italian parents, spag bol was not my food of choice, because, as everyone knows, Bradford has a reputation for fantastic curries, and I became a devoted convert. I wish Bradford and Sheffield well, as they have both been nominated for the Curry Capital of Britain award. It would not surprise me if Yorkshire were to add another award to its growing list.

With brilliant attractions on our doorstep, it is important to make sure that everyone knows about them, and that people do not miss out. That is why hon. Members are right to point out the importance of promotion. I am originally from Bradford, and am the shadow Minister for Culture and Tourism, but I did not know until recently that my birthplace beat cities such as Los Angeles, Cannes and Venice to achieve UNESCO city of film status. If I did not know that, what are the chances that someone from Japan, or even someone from Jarrow, will know?

Spending on promoting Britain and its wonderful regions should not be seen as an unnecessary cost; it brings valuable cashinto Britain too. I am sure that the Minister is all too aware of figures that show that money spent on promoting tourism can be extremely cost-effective. For instance, Welcome to Yorkshire was launched in April 2009 with regional development agency funding from Yorkshire Forward of £10 million a year for three years. According to Welcome to Yorkshire, for every £1 invested, it has delivered £40 back into the local economy. However, the Minister will know that it is in the dark about its financial future, with the impending closure of the regional development agencies. When regional funding ceases in April 2012, it will be interesting to see what effect the Government’s new enterprise partnerships will have on the tourism industry. If regions such as Yorkshire are not protected and developed, and if budgets to attract tourists to them are slashed, people may simply go elsewhere.

The Labour Government worked hard to ensure that the British isles were once again becoming an attractive place in which to live and work and enjoy simple pleasures such as the Yorkshire moors, Whitby bay, Bradford and Selby—places where vast numbers of people show their support with their feet and their wallets. Yorkshire is a wonderful place and I hope that it has a wonderful future.

I have a few questions for the Minister. What does he believe will be the impact of the VAT hike on the Yorkshire tourist industry? What does the Government tourism strategy have to offer the Yorkshire tourist industry? Does the Minister appreciate that spending on promoting Britain and Yorkshire should not be viewed just as a cost, since it brings in cash? Will he give an assurance that Welcome to Yorkshire will receive some financial support from the Government, after April 2012? Finally, to echo what the hon. Member for Selby and Ainsty said, will the Minister tell us about the funding anomaly in relation to Scotland?

10:25

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose)]

It is a pleasure to know that you are here this morning, Mr Hancock, to provide a firm hand and make sure that we stay in order. I congratulate my hon. Friend the Member for Selby and Ainsty (Nigel Adams) on getting the debate under way. It is tremendously helpful to be able to mark the contribution that Yorkshire makes to tourism, because Yorkshire is one of our most important attack brands—I think that is the phrase that my hon. Friend used—and a potential alternative to established tourism honey pots such as London. Providing us with a chance to consider how to pursue that potential is a tremendously worthwhile and intelligent use of time.

Everyone in the debate, across the party divide, seems to agree on the importance of tourism overall to Britain’s economy. I shall not repeat the various figures that have been cited and points that have been made, but it is helpful and instructive to note that one of the Prime Minister’s main intentions in making his speech on tourism within the first 100 days of the coalition Government was to raise the profile of tourism as a sector of the visitor economy overall. The reason why he did that, apart from the fact that I was cheeky enough to ask him to, was his feeling that it was important to nail down the point that although tourism and the visitor economy as a whole have been an important part of the economy for many years, they have perhaps been slightly undervalued and under-appreciated. There was a need to raise their profile. That is also why the Prime Minister appointed, for the first time in many years, a dedicated tourism Minister—in the shape of myself—in an attempt to give the sector a fair crack of the whip.

All that attention, focus and constructive and helpful input, from all sorts of people around the industry and Members of Parliament on both sides of the divide, led to the tourism strategy that was published in March, which several hon. Members have mentioned. I hope that the strategy will create—again, for the first time in many years—a focus and sense of overall direction for our visitor economy and that it will give people something to get behind, a template to work to. However, it will be a slightly different kind of template from those that people have been used to in the past. The intention is to say, “Tourism involves a very large number of small and medium-sized businesses, and therefore it is wrong to try to treat the industry as a single organisation.” In fact, it would be counter-productive and destructive of value to do so.

There will not be a grand, centrally planned Stalinist master plan handed down from my office about how we shall pass investment between different parts of Britain and different sectors of the visitor economy. Instead, we must have a much more bottom-up, organic approach, through which local destinations can say, “This is what we need in our area.” What is right for Harrogate will be different from what is right for York or Scarborough. That is entirely correct, and the people best placed to understand the different responsibilities and priorities in each area are inevitably the businesses that operate in those local markets, which are trying to make their living in those local destinations.

[Mr Sutcliffe]

I understand the thrust of what the Minister says about small and medium-sized businesses, but it is important that there should be an overarching organisation. As I said in my speech, before the tourist board and Welcome to Yorkshire, areas competed against each other. There is a need for co-ordination. That is why we are concerned about the long-term future of Welcome to Yorkshire.

[John Penrose]

I completely agree; I am not talking about an either-or option. We need the bottom-up, organic, business-led approach, because that is what will give our management and marketing efforts to grow the local visitor economy in each destination more commercial edge and nous. The hon. Gentleman is right to say that the approach must not be at the expense of other areas or trying to do down neighbouring destinations, particularly those that could themselves be a vital attack brand or an overall destination. If he will hold his horses for a moment, I will come to the point about Yorkshire’s overall position as a potential rival to London, alongside the Peak district, Cornwall, the Lake district and others.

There is an important difference in the way that we are trying to approach things, in that local destination management organisations will increasingly become more business-led and commercially savvy but still be supported by local councils, local enterprise partnerships and all sorts of other public sector bodies, particularly where tourism is an important part of the local economy, such as in large parts of Yorkshire.

Tourism’s place in the pecking order will obviously vary from place to place, but there is no doubt, as we heard this morning, that the visitor economy is an extremely important part of the local economy right across Yorkshire, and local councils and other public bodies will naturally want to support tourism in whatever way they can. Again, however, we hope that they will be supporting and backing up a business-led organisation—one that has that extra commercial nous. In creating those organisations, I hope that we will have started to change the culture of the business and the way in which we approach the matter.

Before speaking about how we might create rival attack brands or alternatives to London, I should make clear that all the contributions made today show that Yorkshire has a great sense of place and of a shared culture and history. That is a huge advantage when creating an alternative to London and rival destinations. There is a huge sense of pride in a shared Yorkshireness.

My hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) said that in the past he and I have been prone to a little banter on the relative merits of Yorkshire and my county of Somerset. I shall not intrude on private grief by alluding too often to the Yorkshire cricket team, but I was pleased to hear the selfless offer made by the hon. Member for Bradford South (Mr Sutcliffe) to arrange a tour of the Yorkshire breweries. I am sure that many Members here today would be willing to assist him.

Having spoken about breweries, I mention in passing the contribution of my hon. Friend the Member for Leeds North West (Greg Mulholland), who was concerned about pub closures. I remind the House that the Government recently announced what I hope will be a valuable initiative, one that will help many more of those pubs that have been struggling to stay open. It is a strong consultation on deregulation and reducing the red tape on entertainment licensing. That will clearly be very important for a great many pubs that currently find it difficult, time-consuming and awkward to lay on music. I believe that that will make a huge difference to the future success of many pubs, both rural ones and those in city centres.

I speak next about establishing Yorkshire as an overall destination, as well as a place that contains many local tourism gems. As everyone else has done so, and because they deserve it, I add my congratulations to the people of Welcome to Yorkshire. It is a good example—I am boring the rest of the country with it—of a high-functioning, well run and effective local destination management organisation, and Yorkshire can be proud of it. The organisation will be at the front and centre in the drive to establish Yorkshire as an alternative destination, and an attack brand to attract people to other parts of the country rather than simply to London. It is important that we make the effort.

London is a hugely valuable tourism asset to Britain. It is the single most visited area of the country. However, we need to use London as a way not only of attracting people to Britain but of making it their first stop before they move out and visit all the other things that we have to offer. As Minister with responsibility for tourism, I do not much mind if that means Cornwall, the Lake district or Yorkshire, but we must have credible alternatives. That is why I was pleased to hear my hon. Friend the Member for Harrogate and Knaresborough talk about the importance of investing in the product and ensuring that the attractions and accommodation are kept up to standard. He is right to say that it is impossible to drive success in this industry without a product that is worth promoting.

Once we have created a high quality and good value product—I mean good value at all price points, from the cheapest to the poshest and most expensive—we must ensure that people understand that going for a weekend to York is fine but that they can spend longer there, perhaps spending an entire week visiting the whole of Yorkshire. That is the kind of challenge that we must get across; we must ensure that people understand the richness, breadth and diversity of the various things that can be done in places such as Yorkshire. It should not matter if people go to Yorkshire for a particular purpose; there are always other things to tack on the end. If one goes with the family, the children will not be bored. There will always be something new and different to do.

It is important that organisations such as Welcome to Yorkshire put across the message of a rich and diverse tourism offer. Destination management organisations are not the same as destination marketing organisations, and the difference is crucial. We need management organisations to act as the voice of the visitor when talking to local public bodies, be they local councils, LEPs or whatever. It is important that locally elected councillors and other politicians have somebody to remind them what visitors want because, by definition, visitors come from elsewhere and do not have a local vote.

We need somebody to stand up and speak up for the local tourism industry on behalf of its customers; when councils are considering how, for example, to renew or regenerate a piece of public space—perhaps an old market square—we must ensure that the needs of the tourists are considered at the same time as those of local people. Those needs can often be entirely congruent and aligned, but occasionally the needs of the visitor will be slightly different from or additional to what local people want, so it is vital that we have organisations strong and vibrant enough to speak when the moment strikes.

My hon. Friend the Member for Selby and Ainsty raised some important questions about funding. I wish to develop my argument in response to those questions, possibly wrapping up the various queries raised by others during the debate. My hon. Friend was entirely right to say that there are different levels of funding around the country, but we are in a transition period at the moment. The old regime of regional development agency funding is coming to an end, and new sources of funding are being found by destination management organisations around the country.

My hon. Friend was right to point out that DMOs take a different approach in Scotland. It is worth pointing out that domestic tourism in Scotland is a devolved matter; it is the responsibility of the Scottish Executive. Having taken the overall funding devolved under the Barnett formula, they may make decisions about the relative priorities for spending in Scotland that are different from those made in England. If they want a different trade-off between the health service spending and tourism, they are entitled to make it. None the less, and however those local priorities are assigned, we in England have to ensure that we make the best of our overall funding allowance.

My hon. Friend mentioned the efforts that we are making to promote Britain abroad and to attract more foreign visitors. That is going pretty well. I suspect that few Members will have seen our advertisements or marketing, because by definition they are being applied in foreign markets. They are being targeted at the top 20 or so most important markets for visitors to the UK. They include some of what I would call the near abroad, in western Europe, which may have been a little ignored in the past; it also includes some traditionally strong markets for the UK, such as the USA and Canada. It also includes some of the high-potential, fast-growing but historically small contributors to our visitor base, such as China, Russia and Brazil. Those are working well, and we are seeing strong levels of interest.

As will be understood, we also have a series of amazing and wonderful events to add to our existing attractions, not only in 2012 but in future years. Next year we have Her Majesty the Queen’s diamond jubilee. We also have the Olympic and Paralympic games and the cultural Olympiad, and in 2012 and 2014 we will have the two flavours of rugby world cup. We have the Commonwealth games, the Ryder cup and so on and so forth. There is a whole stream of wonderful opportunities that we can use to raise the profile around the world of Britain as a destination.

The point that I want make to hon. Members here and to the industry more broadly is that those events are not the main course. They are not the moment when we will see huge increases in the numbers of visitors, although we expect and hope to see influxes of visitors around the events themselves. The really big-value opportunity here lies in the fact that events such as the Olympics will probably attract the single biggest TV audience that this planet has ever seen, which gives us an unparalleled, historic opportunity to demonstrate all the wonderful things that Yorkshire and other parts of Britain can offer to the rest of the world. We want the people who cannot come to the Olympics or the Paralympics next year to watch the events on TV and think, “You know what, I may not have been able to get there for the games themselves, but I fancy going to see all those things that are available in Britain in 2013, 2014 or 2015.” That is the big opportunity that the international marketing campaign is aiming to use.

There are also some domestic funding opportunities and targets that we want to explore. Various Members, including my hon. Friend the Member for York Outer (Julian Sturdy), mentioned the reform of business rates. Those rates are tremendously important as a source of public sector funding. By reforming them and giving councils an opportunity to share in the proceeds of local economic growth by retaining some of the increased business rates that are generated, we change the mindset of councils about investing in local tourism. From being something that was not a statutory duty—it still is not a statutory duty—and was, in many cases, viewed as a cost and something for which local councils got very little return, it will hopefully be seen by local councils as an opportunity to invest in a successful local business. We expect them to say, “If we put some money into local tourism, either into marketing a local destination or into investing in infrastructure, we have an opportunity to drive economic growth very effectively.”

The figures that have been quoted in this morning’s debate show that tourism is an extremely rapid and financially efficient way of driving economic growth. It is also a way of driving economic growth that is not centred on the south-east or on one or two of our traditional sectoral strengths such as financial services.

Tourism, therefore, ticks a great many boxes. It is instructive to see what has already been done by successful organisations such as Welcome to Yorkshire. The local rates of economic growth in the sector far, far outstrip those of the economy as a whole. From the Treasury’s point of view, that has to be good because it shows that the tourism sector and the visitor economy as a whole has a huge potential and is already delivering on that potential to be a leader in the country’s economic recovery. The reform of business rates is crucial and will provide important incentives for local councils and other public bodies to invest in local tourism organisations.

It is also true that local tourism businesses are increasingly willing to get involved. If they contribute to local destination collective marketing campaigns, they will see positive returns to their businesses as well. It is important to draw a distinction here. In the past, in some parts of the country—there have been notable and honourable exceptions to this—local councils and local councillors have gone round and effectively twisted the arms of local tourism firms to contribute to a local tourism marketing campaign, which has never been a terribly effective system. It was driven more by the mayor’s desire to wander into the local tourism and information centre and see his picture and a foreword from him on the front of a leaflet rather than to put heads on beds or bums on seats and drive top line revenue for local tourism businesses.

If we move away from that and have business-led organisations, we will achieve our aims because those organisations will have an extra commercial edge. If we start running campaigns that genuinely make a difference to local tourism businesses, and make more of a difference to those that have contributed to a collective pot than the ones that have decided to free-ride, we will have something that is not an exercise in corporate philanthropy or council arm-twisting but makes good commercial sense because it justifies its own place in any local tourism companies’ local marketing plans. Equally, it will make more sense to participate than not to participate. Firms that participate in the scheme will do better that those that do not. Those are simple, clear incentives that will transform the way in which local tourism bodies work. They will also transform the incentives for local companies and local councils to get involved. What that means—this is already happening in many parts of the country—is that we will get locally organised, locally run and locally focused shared marketing campaigns that are funded by contributions from local businesses, and backed up by local tourism and marketing organisations, often with the support of local councils.

It would be remiss of me to pass over the issue of ongoing central Government support. There is the regional growth fund, into which a number of what I hope will be highly successful tourism-related bids have gone for consideration. Those bids vary in size from the small to the extremely large. We hope and expect that many of them will be compelling when they are being considered.

Yesterday’s announcement on the torch relay was also mentioned. We are using £3 million of central Government money to leverage local tourism money from different parts of the country. There will be a strong discount-led offer for anyone who wants to book a trip to a destination where the torch relay is happening. The trip does not have to take place at the same time as the torch relay, but it has to be booked while the relay is happening. We will use that unique event to highlight the wonderful things that visitors can do in York or in Harrogate or wherever the relay may be happening. It is a golden opportunity to leverage a lovely piece of Olympics-related public relations in a way that will stimulate local tourism demand. Therefore, there will be a series of central Government initiatives designed to drive Olympic-related tourism activity.

I hope that I have responded to all the points that have been raised and that it is clear that there is a great deal of commitment to tourism both in Yorkshire and elsewhere in the country, a high degree of pride in the kind of tourism opportunities that counties such as Yorkshire provide, and a huge excitement in the potential that places such as Yorkshire have to put across the breadth and depth of what they have to offer to potential visitors, thus enabling them to become rivals to London and alternative centres for extended stays rather just short breaks.

I am sure that hon. Members will agree that the opportunities for Yorkshire tourism are bright. The future looks very good indeed. We must understand that landing those opportunities will require huge amounts of hard work, but with the cross-party commitment and local pride that has been on offer today, I am sure that we will manage to do so.

10:49

Sitting suspended.

Road Fuel Duties

Tuesday 13th September 2011 Westminster Hall

11:00

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

I welcome you to your rightful place in the Chair, Mr Hancock, and I also welcome the Economic Secretary to the Treasury and my hon. Friend on the Front Bench, the Member for Bristol East (Kerry McCarthy), to this extremely important debate. It is also good to see that all parties in the House are, I think, represented here, and I look forward to what they have to say. I particularly want to hear what the Economic Secretary has to say about the high levels of road fuel duties in this country. I also want to put on record my thanks to the Speaker for allowing the debate to take place at this time.

This year, 2011, has been eventful in every sense of the word. It has perhaps been the most financially eventful year in the history of politics. It has been a rollercoaster. We have seen global financial turmoil, and the stock market has fluctuated at a rate that I have never seen before. We are seeing the beginnings of high unemployment levels, along with a rise in inflation, increasing transport costs, and tax changes that I have never witnessed in my time in the House—I have been here some 20 years. The past eight months have delivered a record-breaking run of price rises, those of petrol and diesel being among the most alarming.

Across the UK—there are, of course, highs and lows across the country—the average price of petrol reached a high in May of 137.43p per litre, and an examination of the relevant website just last night showed that the average price just now is not far from that. There is a differential of some 24p per litre between the highest and the lowest price across the country. I remember that when the Labour party was in government there was a near revolution when the truckers blockaded the refineries as a consequence of high fuel prices. Interestingly, we have not seen anything like that since, and I wonder why.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I am not certain from the tone of the hon. Gentleman’s voice whether he wants a blockade of refineries by truckers across the United Kingdom.

[Mr Donohoe]

The hon. Gentleman should know, as should all Members, that I would be the last person in this place to call for a revolution and civil disobedience.

There is absolutely no doubt, however, that the high fuel prices are at the point of driving people out of jobs, which is the most serious aspect of the matter. I shall give an example, which makes me angry, of the desperate situation of a nurse in my constituency. She has had to put up with a wage freeze for the next two years, her pension contributions have gone up, she has to pay double for parking at the hospital in Glasgow where she works, and she has to find £100 extra a month to get to and from work because of the high fuel prices. That proposition cannot feasibly be sustained for too long, but she cannot use public transport because of where she stays and where the hospital is. That problem must be looked at.

Regarding what the Government take per litre, I always remember a case from some years ago of a retailer who was determined to show the breakdown of the price of petrol and diesel. He was told that that was not the form, and the petrol company said that it would no longer supply him, for some obscure reason. When one considers that of the average 135p price of a litre of fuel, 81p is taken, one starts to understand the cost to the individual buying the petrol or the diesel. A good 60% goes on dealing with Government intervention in the form of fuel duty, and there is also VAT. Indeed, 20% VAT increases the price of petrol by 2.5%, putting something like 2.5p on it. In addition, outside of Government intervention in the price, there are the oil companies, and it is time to argue for a windfall tax on their profits. I know that there has already been a tax, which a lot of colleagues are very concerned about in relation to the oil companies’ continued investment, but I believe that the Government should look at the correlation between profit and price.

I have already argued that a significant portion of the price of petrol and diesel in this country is made up of the Government take, and I argue that it is higher than in most other European countries as a consequence of the high level of tax. Is there any opportunity to make the price cheaper? I am sure that the Economic Secretary will argue that in the present climate there is no leeway—no room for manoeuvre—but I suggest that there might be, and I shall come on to that later.

The reason for this debate is obvious: the price of fuel is crippling a great number of the people whom I represent and, I am sure, a great many of those represented by other Members here this morning. The Institute for Fiscal Studies has announced that the living standards of UK families will decline by more than 10% over the next three years, and it predicts that in real terms the typical household income will fall by 3.5% in the year to April, which will be the steepest drop since 1981. We understand that there is little room for offsetting falling living standards by cutting taxes, but the matter must be looked at. The level of tax and duties on petrol and diesel is cutting off the prospects of many struggling families and small businesses, and since I secured this debate I have had dozens of e-mails from small businesses with examples of just what it is doing to them.

The situation is also destroying job prospects, in particular among young people. I have already had a summit in my constituency, attended by the Secretaries of State for Work and Pensions and for Scotland. Youth unemployment is reaching levels that I never thought possible—it is as high as 70% in many areas. That cannot be sustainable and it is not helped at all by the cost of living today, particularly in more rural areas—I see that the hon. Members for Argyll and Bute (Mr Reid) and for Na h-Eileanan an Iar (Mr MacNeil) are present.

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

I am delighted that the hon. Member for Central Ayrshire (Mr Donohoe) has brought this important topic for debate. Is he aware that the current Chief Secretary to the Treasury called in 2007 for a rural fuel discount scheme, and so may have a favourable view? Like the hon. Gentleman, I am concerned, because the south-west has a very rural community. Three quarters of the land is agricultural holdings, so a rural discount would be of great benefit.

[Mr Donohoe]

We will have to wait for the Economic Secretary’s response on that point. As an Opposition Member, I am not in a position to give any assurances.

We must consider the problems with the Government’s approach. Although they have frozen fuel tax duty for the next couple of years, we must take into account the fact that the freeze will be more than offset by the rise in inflation. As petrol is always an easy revenue raiser, it is widely expected that the Government will make up their losses, leaving the consumer no better off in the long term.

I will highlight three areas of concern. The first is environmental, the second is economic and the third involves the social impact of the road fuel duty. The removal of the duty differential will affect the green economy. The UK Sustainable Biodiesel Alliance has raised concerns about the Government’s decision to remove the 20p duty differential for biodiesel produced from used cooking oil by April 2012. I ask the Economic Secretary to consider that loss more closely. It does not stack up against the Government’s views on the green economy. Many see the impact of the removal of the duty differential for biodiesel as a disastrous blow for the growth of the green economy. Just outside my constituency is the company Stagecoach, which runs buses on biodiesel. It is highly successful, and particularly popular with youngsters, but it will come to an end if the differential is not maintained. Will the Minister clarify why on earth the Government, whom we have heard are the greenest Government ever, continue to consider it?

On the economic side, we risk the demise of the independent fuel sector. Retail Motor Industry Petrol told me that MRH, the UK’s largest independent forecourt operator, has highlighted the unfair pricing practices used against it by both hypermarket chains and oil companies. That is a concern. In addition, the four big supermarket chains are struggling with their own retail this year due to the downturn, which in turn is placing greater pressure on and compounding the problems of independent retailers.

Such relentless competition has been going on for some years. It is responsible for the closure of around 400 independent forecourts, and it continues. It will lead to a sparse population of fuel retailers, obliging motorists to drive great distances to top up their tanks, which is not sustainable. More than 6,000 garages have closed since 1998, which is a problem, as anybody knows who travels off motorways. Particularly in more rural areas, as I have seen at first hand, running out of fuel because there are no petrol or diesel stations is always a danger.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman has outlined the issues relating to road fuel duty and mentioned garages running short. Does he share my concern—I suspect that he does—that it is not only about garages running short but about elderly people in our community? This winter, they will be asking themselves, “Should we use oil, electric, coal or gas?”, but they will be stuck with oil and the cost that that entails. Does he not feel that the Government should consider what help they can give elderly people to ensure that this winter will not be a hard one?

[Mr Donohoe]

The blasé slogan “Either eat or heat” is becoming a reality faced by many of my constituents, particularly the elderly. The hon. Gentleman is right. It is a major concern, and it should concern the Government.

To return to the economic point, the industry should look into the fact that some oil providers supply their own forecourts with fuel at one price while selling the same fuel to a second retailer down the road at a higher cost. Something must be done about that. Anyone who travels two miles along the road from Prestwick to Ayr in my constituency can see it at first hand. Prices at forecourts using the same supplier vary 6p from one end to the other, which should not be allowed. Two-tier pricing is becoming a joke.

[Mr MacNeil]

I hear what the hon. Gentleman says about two-tier pricing, but I am sure that he will sympathise with areas of one-tier pricing, such as my constituency, where all prices are high and the closest cheaper fuel is a ferry ride away. Does he not feel that there has been too much inaction by successive Governments on tackling the problem?

[Mr Donohoe]

I agree entirely. It is interesting to note that Shetland has some of the highest petrol prices in Scotland, although half the United Kingdom’s total oil supply flows through two pipelines there. Another instance is Grangemouth, where the refinery for Scotland is based. The price of fuel there is also among the highest in Scotland. That does not stack up.

[Mr Jim Cunningham (Coventry South) (Lab)]

I was interested by the intervention of the hon. Member for Newton Abbot (Anne Marie Morris), because not far from Newton Abbot is the Devonshire coast. I was down there about 12 months ago or more, and it was amazing to see the number of tankers lined up that were not being unloaded. Does my hon. Friend not think that there might be a case for an investigation into oil companies and hoarding to force up prices? Price is as much an element of the problem as taxes.

[Mr Donohoe]

I thank my hon. Friend for that intervention. I am sure that the Economic Secretary will address that issue when she sums up, along with the points made by other hon. Members.

My third point concerns the social and economic consequences of the situation. Everybody can see that many kinds of damage have been done to consumers and businesses, particularly small businesses. As I have mentioned, the erosion in the number of forecourts is obvious, particularly in rural areas, and it will lead to fuel deserts in many parts of the UK. A vital immunity for low-income families, pensioners and the disabled has been lost. Journeys to fill fuel tanks are longer, increasing carbon emissions needlessly. Consumer choice has been reduced. There are fewer facilities for HGV and van users, as supermarkets do not cater for them. The impact on the UK’s ability to cope with emergencies has also been massive. Perhaps most importantly, jobs and job opportunities are being lost.

[Jim Shannon]

As the hon. Gentleman will be aware, an e-petition is circulating that has some 62,000 signatures at the moment. If it gets 100,000 signatures, we can debate the matter in the House of Commons. Does he not feel that he should encourage people to sign it so that the matter can be debated at length in the House, as it needs to be?

[Mr Donohoe]

That was one of my conclusions, so it is useful that the hon. Gentleman has made that point. This morning, the Fair Fuel UK campaign e-mailed me, as I am sure it mailed everybody. Like everybody in this room, barring perhaps the Economic Secretary, I signed the e-petition. As a consequence, only 17,000 signatures are now required to reach 100,000. I urge everybody—not just those here but anybody listening to this debate who is concerned about high fuel prices—to sign the petition so that a full debate can be held. This is, after all, only an Adjournment debate. Important as it might be, we need a full debate in the House with the Government leading. I look forward to it.

In conclusion, we must consider the issues that I have highlighted. The Government know that the Labour party opposes 20% VAT, which has helped to push up petrol prices to their current levels. I did not realise until I was preparing for this debate that VAT is put on top of the tax, so the duty is taxed with VAT. If the tax is 50p, 20% VAT is put on top of that fuel duty. The Government should look at that. If, as is being argued, a reduction in VAT is not an option because of the bureaucracy across the water in Brussels, we could consider a reduction in fuel duty to lower the cost of taxation, which, as I have said, is initially some 80p per litre. The Economic Secretary and the Treasury should look at that.

[Guto Bebb (Aberconwy) (Con)]

On VAT, I have been in discussions with a representative from a coach company in my constituency, which has put on hold plans to employ more staff because of the extent of fuel duty. One of the issues that he raised was VAT. He actually argued in favour of a higher rate of VAT for diesel and petrol, because, as a business, he can reclaim the VAT but not the fuel duty. I wonder whether the Treasury has an opinion on that.

[Mr Donohoe]

That is a matter for the Economic Secretary, not me, to address, but I am grateful to the hon. Gentleman for his intervention. A tax increase is being proposed for next January and August, but I would like an assurance from the Economic Secretary that it will not be implemented. The best way to help hard-pressed consumers would be for the Government not to adjust the tax on families, who are already feeling the squeeze as a consequence of the Government’s policy on pay freezes and pension hikes.

We also have to look at the big six energy providers, which recently announced large price rises and bigger profits. The Government must have scope to look at that in order to redress, via a windfall tax, the whole problem of taxation. There is also the issue of the Government’s policy—if it is a policy—to move people from the road to public transport. The Government have just increased the cost of rail travel by 10%, which seems to go against everything that is being argued. Is that policy supported and likely to continue to be supported by the Treasury?

A number of representatives from rural areas are present. More emphasis needs to be put on trying to allay the problems associated with living in the countryside, which are an enormous burden on businesses and the consumer in those areas. I have already mentioned the removal of the duty differential for biodiesel, but the position of that industry needs to be addressed by the Government. It is a growing industry and one that is useful in addressing both public and private transport in my constituency. I have already mentioned the prices set by supermarkets and oil providers, which have to be addressed.

I have two final points. The Government must reduce the tax on petrol. That would increase employment prospects, particularly those of the nurse whom I mentioned earlier, as well as those of people who rely on public transport to get to work. Finally, I am old enough to remember when fuel prices were fixed universally throughout the whole country. A lot of the commodities that were deemed at that time to be essential, such as bread and milk, were all the same price. Given the disparity between the highest and lowest price in this country, will the Government examine the issue so that the disparity is overcome and the price of petrol is not a commodity with which the supermarkets and some of the country’s suppliers play?

[Mr Mike Hancock (in the Chair)]

Thank you, Mr Donohoe. A lot of Members want to speak, but we do not have a great deal of time. Will those Members who speak be careful about the number of interventions they take? Perhaps that way everyone will get in.

11:25

[Mr Alan Reid (Argyll and Bute) (LD)]

It is a pleasure to serve under your chairmanship, Mr Hancock. I congratulate the hon. Member for Central Ayrshire (Mr Donohoe) on securing this debate and on bringing this important issue before the House.

I represent a sparsely populated constituency, so I am well aware of the impact of high fuel prices on people and businesses. I represent many of the islands of the Inner Hebrides. The price of fuel on the larger islands, such as Mull and Islay, is typically 15p a litre higher than at a city centre supermarket, and on the smaller islands, such as Coll and Colonsay, the price is usually about 30p a litre higher. That is not due to any profiteering by local filling stations; Office of Fair Trading investigations have shown that there is no local profiteering. The main reason is the low turnover. The high fixed costs of running a filling station mean a high price.

[Mr MacNeil]

On that point, Donald MacNeil of the Burnside filling station in Daliburgh, South Uist, has told me that, if he paid somebody to sell fuel all day, they would not raise their own wage from the amount they sold, which is a reflection of why the price of rural fuel is so high. There is no profiteering. Apart from the high prices, we also know that there are distribution issues.

[Mr Reid]

I am grateful to the hon. Gentleman for his intervention. He is correct that there is no profiteering at the local filling station, although the distribution network, as he has indicated, might be another issue.

The high price obviously has a great impact on people’s living standards and on anyone trying to run a business on an island or in a remote rural area. I was therefore delighted when the Government announced their intention to pursue a pilot scheme under which there will be a 5p a litre fuel duty discount on many of the country’s islands, including all the islands of the Inner Hebrides and the Clyde. The Treasury is currently consulting filling station operators on the terms of the pilot scheme. Its original consultation proposals were met with significant concern by filling station operators, because they would have caused a cash-flow problem. I was pleased when the Government responded quickly to those concerns and revised their proposals in a way that removes the cash-flow problem.

The revised consultation proposals envisage two possible schemes—a distributor-based scheme and a retailer-based scheme. Of the two, it looks like the distributor-based scheme would be easier to operate, because the distributor has the resources to carry out the administration, which the small retailer would often find more difficult. I appreciate, however, the Government’s concern that a distributor-based scheme may fall foul of EU state aid rules and might not be approved by the European Commission. I hope that a distributor-based scheme can be devised that is acceptable to the Commission. If not, we would have to proceed with a retailer-based scheme.

The cash-flow problem in the original proposals has been overcome, but filling station operators are still concerned that it is not clear how they can prove to the Treasury that they are passing on the discount to the consumer. An essential principle of the scheme is that the 5p discount is passed on to the consumer. What retailers have asked me is whether the Government can provide clarity on how they should demonstrate that they are passing on the discount. That clarity would be welcomed because, as I say, the retailers are still not clear what they would have to do to comply with the scheme—and, of course, they are all keen to participate. If the islands’ pilot scheme is successful, as I am sure it will be, I would like it to be extended to remote areas of the mainland.

[Anne Marie Morris]

I absolutely endorse what my hon. Friend says, but some of the rebates that have been given in France, Portugal and so on are not limited just to the islands. The Government’s current view is that it is only in an island situation that such relief can be made available, but that does not seem valid.

[Mr Reid]

I wholeheartedly agree with my hon. Friend. As she said, other EU countries are operating a similar scheme, so I am sure that it can be successful here.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Mr Reid]

The Chairman asked for limited interventions and I have already given way to the hon. Gentleman.

I have accepted the Government’s view that we must have an islands pilot first, but after that I would certainly press for it to be extended to remote areas of the mainland.

[Jim Shannon]

The hon. Gentleman refers to the mainland; obviously, I am very keen for the same opportunities to exist for the people of Northern Ireland. Will he address that issue and does he agree that Northern Ireland also needs to have a similar pilot scheme, because the prices there are equal to those in the western islands of Scotland?

[Mr Reid]

I agree with the hon. Gentleman. From the perspective of a Scottish island, the mainland is the mainland of Great Britain, but I accept that there is another part of the United Kingdom. I am not sure whether calling it the mainland is the correct way to refer to it or not.

[Jim Shannon]

As Margaret Thatcher said, we are more British than Finchley.

[Mr Reid]

We are straying into another debate here. I think we will stick to fuel duty, which is probably a lot less contentious.

Operating a rural filling station is clearly not a profitable business these days, and we heard from the hon. Member for Central Ayrshire about how many have closed. In my constituency, I can point to 10 that have closed since I became an MP in 2001, and that is fairly typical of the country as a whole. On the Kintyre peninsula, only three of the five filling stations that the area had at the beginning of the year are still open. Two have closed this year, which is causing real concerns on the peninsula. As the hon. Gentleman who opened the debate pointed out, people are therefore driving longer distances to fill up their tanks and the choices available to rural motorists have been reduced. Action to help rural motorists is certainly badly needed.

There was a time when it could be argued that high fuel taxation was needed to discourage people from polluting the environment, but market forces have already achieved that. Nobody drives for the fun of it these days unless they literally have money to burn and, of course, anyone in such a position would not be deterred by high fuel duty anyway. High fuel duty has played its part in discouraging people from using their cars when public transport alternatives were available but, of course, in a rural area those alternatives are not often available. The price of fuel is already very high and the Government should not be considering putting duty up any further.

I was delighted when the Government abandoned Labour’s fuel duty escalator in the Budget, introduced the fuel duty stabiliser instead and brought down the fuel duty because the price was so high. The Government have scheduled a fuel duty increase for January as it was hoped at the time of the Budget that prices would have decreased by then, although they show no sign of doing so. If prices are still at this level in January, I hope that the Government will not press ahead with the increase.

My final point, which was also touched on by the hon. Member for Central Ayrshire, is about what exactly is causing the high price of fuel. The hon. Member for Coventry South (Mr Cunningham) referred to oil companies storing fuel rather than putting it on to the market. I want to ask the Government whether any collective action can be taken internationally—for example, through the G20—to bring the price of fuel down. The price of fuel adds to the price of everything in a rural area, so anything that the Government can do to bring the price down would be greatly appreciated by my constituents and all hon. Members who represent a rural constituency.

11:35

[Mr Jim Cunningham (Coventry South) (Lab)]

This is the first time I have taken part in a debate that you have chaired, Mr Hancock, and so far you have been handling the discussion very well.

I want only to make one or two points of emphasis because I am conscious that all hon. Members present represent constituencies that are under the cosh in certain ways regarding fuel prices. I congratulate my hon. Friend the Member for Central Ayrshire (Mr Donohoe) on securing the debate. I know that there is high feeling in the country about fuel prices because I get regular letters about the subject. I also note one of the points that he made earlier: so far, we have not seen the lorry drivers demonstrating. I do not know and would not like to say whether that will happen, but I would not like it to. I would prefer to think that the Government will take action, as they promised in the run-up to the general election when they were condemning us for the fuel price escalator.

It is worth noting and reminding the hon. Member for Argyll and Bute (Mr Reid) that the fuel price escalator was introduced by a Conservative Government—in fact, it was the previous Conservative Government. I was also interested to note that the hon. Gentleman mentioned that the Government had taken action to try to stabilise fuel prices. I think it was 1p or something that they knocked off so, frankly, they did not take very much action.

[Mr Reid]

As well as knocking 1p off, the Government did not go ahead with the increase that the previous Chancellor’s fuel price escalator would have caused.

[Mr Cunningham]

I welcome the hon. Gentleman’s response because he is only apologising for the Government of whom he is part. When he was in opposition, he said the opposite; but never mind, we shall carry on.

Although we cannot broaden the debate, I would like to mention that one of the major implications of the fuel price increase is its impact on the wider economy. We could talk about pensioners who are on fixed incomes, one-parent families or people who rely on transport—whether it is the motor car or the bus. I need to check this out, but I think that, a couple of weeks ago, National Express announced that it may have to reconsider off-peak fares for pensioners because of the subsidy situation. That is something that the Minister may want to investigate.

[Anas Sarwar (Glasgow Central) (Lab)]

I join my hon. Friend in congratulating our hon. Friend the Member for Central Ayrshire (Mr Donohoe) on securing the debate. My hon. Friend the Member for Coventry South (Mr Cunningham) mentioned the impact on pensioners. In the city of Glasgow, 100,000 pensioners face cuts to their winter fuel allowance this year as well as increases in the cost of fuel and of living. Sadly, too many pensioners right across the country will have to choose between putting food on the table, heating their homes and getting out and about around the country. Would he like there to be some real Government action to support pensioners?

[Mr Cunningham]

The previous Government certainly went a long way to try to address some of those problems. Some Labour Members did not necessarily think that they went far enough, but that is another argument. We now have the present Government. If they want to talk about the big society, they must get a grip of the issue and try to do something more positive. It is no good relying on a pilot scheme somewhere and a double-tier price index for fuel. We must tackle the problem in a proper way. Someone mentioned the European scheme, which may well be something that the Government can consider.

I return to the issues that affect the economy. Haulage prices must be affecting businesses, particularly small businesses—for example, in relation to builders. We rely on builders to generate much of the economy. There are one or two examples of that. In addition, small businesses cannot always get credit and have cash-flow problems, which impacts on small and other businesses and therefore on the economy.

It is also worth noting that this Government, like the previous Conservative Government, changed the retail prices index; we now have a new invention called the consumer prices index. Such an approach shows that the Government are concealing the real impact of their policies, particularly in relation to inflation. I hope that the Minister will address that because the retail prices index is a way in which the public can get a good measure of what is happening in the economy in respect of inflation. If we consider current inflation levels, the public are not sure whether they are getting a true measure. The household budget is mucked around with, to use an expression, but the real cost cannot be measured. I hope the Government will look at that.

In relation to the islands, I know a lot more about Cornwall. Some years ago, I sat on the Trade and Industry Committee. We discovered to our surprise that one of the poorest areas in the country was Cornwall. Like the highlands and islands, Cornwall relies on the tourist trade, as everybody knows; a lot of its jobs depend on the tourist trade and a lot of them depend on public transport. That has an impact on public transport and bus fares. That is bound to affect the poorest areas in Britain, whether we are talking about the islands, the south or the south-west.

I remember one scheme where the post office used postal vans as a method of public transport in order to pick people up. There have been cuts in public transport in the south-west; the frequency of buses, that public mode of travel, has been reduced drastically. I wonder what has happened to what we used to call the transport subsidy.

I have covered some of the main points that I thought needed emphasis. My hon. Friend the Member for Central Ayrshire has covered the major areas, so it was worth pointing one or two other things out. The seriousness of the situation has now developed, whether we talk about inflation measurements or the impact on ordinary people who have been encouraged to take part in what is called the big society.

11:41

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I congratulate the hon. Member for Central Ayrshire (Mr Donohoe) on securing this important debate, a debate that is in my ears every week of the year. I think the hon. Member for Coventry South (Mr Cunningham) used the words, “under the cosh”—and we are certainly under the cosh.

Road fuel in my constituency is at ridiculous rates, and has remained at ridiculous rates in the lifetime of this Government and the previous one. Road fuel is between £1.50 and £1.57 a litre. My constituency has the highest fuel poverty in the UK. In Stornoway, at the north end, fuel is £1.50 a litre. At a small fuel station in South Uist, where I stopped on Friday in a rush to the ferry—I was almost late, as usual—I paid £1.57 a litre for diesel for my car.

In the Faroe Islands, which are halfway between the Hebrides and Iceland, the price of fuel is usually 50p a litre less. That was confirmed to me this morning: it is £1.06 a litre in Torshavn in the Faroe Islands. The price is not a function of geography; it is a function of Treasury taxation. [Interruption.] The hon. Member for Strangford (Jim Shannon) asked me whether I wanted to move. Given how we are taxed from London, as Scotland does not yet control fuel tax, we may have to move to all sorts of strange, weird and wonderful places to avoid the Sheriff of Nottingham tax behaviour from the London Treasury, regardless of which sheriff is in charge. Be it the red sheriff or the blue sheriff, the prices are much the same from London.

Iceland has prices that follow the Faroese model. It is interesting to note, and probably no coincidence that, despite its problems three years ago, Iceland has bounced back better. Its unemployment is lower than that of the United Kingdom and its GDP per capita is higher—Iceland is moving on and putting the past behind it far better than the UK. In my constituency, higher fuel costs are bleeding the economy dry.

Unlike in Iceland, which is able to move on, we are still being bled dry and left in a very weakened state. Higher fuel costs are pulling money from councils, health boards, the police, the fire service, small businesses, pensioners and families. The hon. Member for Coventry South made that point very well. He also mentioned rural postal vans. My father used to drive one of those postal vans. They were certainly a crucible of politics when passengers came on from whichever part of the island of Barra, where I lived when I was younger, and where I still live.

When I spoke in the House of Commons on 7 February —I went back over Hansard this morning—I said that Alec MacIntosh at Benbecula airport was haranguing me about the price of fuel and telling me to sort them out in London. He said the same thing yesterday morning as I boarded the plane from Benbecula to Glasgow. Fuel in Benbecula is about 10p a litre higher than it was when I spoke in the House of Commons on 7 February 2011; it is 19p a litre up on the price it was in Stornoway last year. Orkney, Shetland and the islands of Argyll are suffering the same, and Northern Ireland is probably suffering the same.

That is all the more galling when we think of the oil around the islands of Scotland. Shetland, of course, is pumping oil at the moment, as is Orkney. West of the Hebrides, we apparently have 25% of the UK reserve of fossil fuels—$1 million for every man, woman and child in the Hebrides—but we are paying 50p a litre more than the Faroese, who have no proven or found reserves at all.

When the Government came to power, they talked about a rural fuel derogation, and that was welcome. We are having problems, of course, because the Scottish Government do not control this issue and we are left with the red sheriff or the blue sheriff in London. The previous sheriff played Pontius Pilate to the issues of rural fuel. They were not interested in the rural fuel derogation; spurious and ridiculous reasons came about why they could not do anything. They sat on their hands. There was no fair fuel stabiliser, absolutely no rural fuel derogation, daft excuses and—still dafter—they had no apologies. There is still no apology from the previous Labour Government for their inaction.

This Government came in and their words were like a fresh breeze. Being the fair and earnest fellow that I am, I welcomed their words and their stated intentions. They blamed Europe for the slow progress of the rural fuel derogation and, being the fair and earnest fellow that I am, I was minded to believe them and accept them at their word. Then, of course, the green light came from Europe. The Government are now in danger of eclipsing the previous Government in their cynicism.

Treasury rules are now so cumbersome that they might actually cause small rural fuel stations to go out of business. The Government are looking for every device to slow this down when we know that in rural France, 10 km from a main population centre, people enjoy rural fuel derogations. What is the difficulty? Please get it into place. I warned the Liberals in February—in the House of Commons, as recorded in Hansard—that if the rural fuel derogation was not in place before May, they would suffer at the polls for the Scottish elections. They did suffer in rural areas and they are now known as the “not so famous five” in the Scottish Parliament.

There is a good argument, as I think the hon. Member for Central Ayrshire or the hon. Member for Coventry South said, for fixing fuel across the country, just as the prices of newspapers are fixed. If we are to have any fairness, we will have people across the UK paying the same amount of tax; my constituents, and probably those in Argyll, Orkney and Shetland, are paying the highest tax per litre of any part of the United Kingdom.

[Mr Jim Cunningham]

Does the hon. Gentleman agree that one of the best ways to try to sort the problem out—it is becoming like a ping pong game between the political parties—is to have a proper public inquiry into the price of fuel and fuel hoarding?

[Mr MacNeil]

I have some sympathy for what the hon. Gentleman says, and I will come on to distribution in a second, but we have played the patient game long enough. I think it was Martin Luther King who said that it was not the time for the “tranquilising drug of gradualism”. This is a time for action. At £1.50 and £1.57 a litre, people are hurting and hurting badly.

I am aware that I have taken six or seven minutes, Mr Hancock, and that others want to speak. I would finally like to mention fuel distribution. I have asked the Secretary of State for Scotland, the right hon. Member for Berwickshire, Roxburgh and Selkirk (Michael Moore), about distribution from refineries to retailers, and he has assured me that he is looking into the issue.

[Jim Shannon]

On distribution, I would like to underline how the issue affects Northern Ireland. The same oil that comes into Belfast goes out all over the whole of the province and the prices vary incredibly. Does the hon. Gentleman feel that there is a need to address how oil companies distribute fuel across the whole of Northern Ireland and the United Kingdom?

[Mr MacNeil]

Yes, I could not agree more. I had a feeling that that was going to be a helpful intervention and indeed it was. As I was saying, I spoke to the Secretary of State for Scotland in the House and he has assured me that he will look into the matter of fuel distribution. I am not sure what progress there has been on that.

There is a difficulty between refineries and small rural fuel stations, and the habits of the distribution companies. They hold retailers very tightly and do not allow them the freedom to shop around and buy their fuel from different suppliers. A tanker in a certain area of the west highlands can move to a port further down and the fuel can be more expensive. It can go into another port and it can be cheaper. Batches of fuel, within a discharge at a small island port, can have different prices, depending on the amount that is bought. There is, in my view, predatory parasitical behaviour. I use those words with some thought. There is parasitical behaviour from fuel distribution companies when it comes to small rural and island areas.

I am not sure what the Scotland Office is managing to do, but I ask whether the Treasury might look into parasitical behaviour by fuel distribution companies, which are basically leeching off small, vulnerable island communities. That has to stop. At £1.50 to £1.57 a litre, there is utter anger at the price people are having to pay, and that in an area where the cost of living is generally higher—often thanks to the Co-op—where the wages are lower and, as I said, where we have the highest fuel poverty in the United Kingdom. I am making a plea to the Treasury.

The issue comes around every six months, but it is serious and affects people badly. If the powers were held in Scotland, we would not be coming every six months to talk to the Treasury or the Scotland Office in London, to make a plea about how tough things were in areas of Scotland.

I am aware that other Members want to get in, and some throats are being cleared around me, so I will leave it at that—I have said my piece. I am more than annoyed, and I hope that I am not back here in six months repeating part of my speeches of February 2011 and September 2011. We need the rural fuel derogation to come soon.

11:50

[Graeme Morrice (Livingston) (Lab)]

I thank my hon. Friend the Member for Central Ayrshire (Mr Donohoe) for securing the debate on what is clearly an important issue for all our constituents and the future of our economy. All right hon. and hon. Members will have had constituents approaching us and expressing their concerns about the current high cost of fuel. Individual constituents and local businesses have certainly raised it with me.

Fuel costs in West Lothian, where my constituency of Livingston is, are currently almost exactly in line with the national average: about £1.35 or a little more for a litre of unleaded, and £1.38 a litre for diesel—[Interruption.] The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) confirms that from a sedentary position.

High fuel costs form an important element of the general increase in household outgoings currently experienced by so many families, in many cases coupled with frozen or reduced household incomes. A constituent recently contacted me to describe her own circumstances: she has not had a pay increase for two years, yet she is having to pay an extra £10 to fill up her car with petrol, meaning that she must now prioritise her journeys to remain within her budget.

Interestingly, recent AA research found that one in four of its members is now in the position of having to restrict the amount spent when refuelling and to prioritise car use. Alarmingly, that figure rises to 40% among those on lower incomes. Edmund King, the AA’s president, commented:

“Members tell us that driving to work represents the priority use of their car and that other trips have to suffer to make financial ends meet.”

With the Institute for Fiscal Studies warning recently that household budgets are set to be squeezed for a decade, it is vital that we get a grip on the issue of fuel costs now, so that consumers do not continue to suffer misery year after year.

Other constituents have expressed their frustration at being told that they should use public transport when they live in areas where public transport links are simply inadequate, or the costs are as high as for using their own vehicle. We touched on that earlier in the debate, and I do not want to go into the detail. The impact of high fuel costs is also seriously hurting businesses, however, and I want to focus the remainder of my remarks on that aspect of today’s debate.

We have seen some welcome, if limited, respite for consumers in the past few weeks, with pump prices in supermarket forecourts falling in response to a reduction in wholesale costs. Even if that is of some small assistance to individual consumers, it does little to help businesses and, in particular, haulage and transport companies. Speaking about that recent round of price cuts, the Road Haulage Association chief executive, Geoff Dunning, said:

“These price cuts can only ever be short term. What is desperately needed and would help everyone would be a reduction in the actual rate of fuel duty.”

He went on:

“However, January’s planned duty rise, combined with the proposed August increase will drive up fuel duty by a massive 10.4%. This will suck more money out of the economy and further undermine efforts to regenerate growth.”

Only last week, the Freight Transport Association revealed research showing that, on average, vehicle operating costs for rigid, articulated and drawbar vehicles had risen by 5.6% in the year to 1 July 2011 and that they have remained close to record, all-time highs since April this year. The largest contribution to the rise is the 12% increase for diesel over the same period. The FTA said that, while hauliers could ride out the recession by reducing margins and delaying vehicle replacements, they continue to feel the pinch and that it is likely that some hauliers might not be able to sustain their businesses in such circumstances.

That is of particular concern in my Livingston constituency because of its central position in Scotland, which makes it a popular location for businesses that need to transport goods throughout Scotland and often to other parts of the United Kingdom. Before the previous Budget, Dave McDougall, the chief executive of the West Lothian chamber of commerce, highlighted that point and the importance of getting the cost of fuel down for businesses in West Lothian. He said:

“Fuel prices are crippling all types of business. West Lothian is a location of choice for many companies because of its access to all of central Scotland. But this means that the effects are even worse for our Chamber members.”

He urged the Chancellor to take action to reduce the costs but, of course, we know that the 1p cut in fuel duty announced in the Budget was wiped out within weeks by soaring world oil prices.

Also speaking before the Budget, in March, the Federation of Small Business’s Scottish policy convener, Andy Willox, said:

“Scotland is suffering disproportionately due to the spiralling cost at the pumps.”

[Mr MacNeil]

The hon. Gentleman has just said that Scotland is suffering disproportionately. Would he prefer those powers to be held by the most democratic forum representing Scotland, the Scottish Parliament, or to be controlled by the Tory and Liberal Government here in London?

[Graeme Morrice]

I do not want to get bogged down in a debate on the constitution or the whole question of more powers for the Scottish Parliament. I certainly support the Scotland Bill, which we have been discussing, and fiscal autonomy for Scotland—but not independence, of course.

[Jim Dobbin in the Chair]

The impact has also been felt by retailers, with Asda stating last month that its customers were cutting back on trips to its stores because of high fuel prices. It estimated that families have, on average, £9 less disposable income each week compared with this time last year, largely due to increased petrol costs. So there is absolute agreement about businesses needing more help with high and rising fuel costs.

The all-important question is what can be done with road fuel duties to reduce the pressure on businesses and individuals and to bring about a halt to spiralling price rises. Fuel duty accounts for more than 60% of the pump price of petrol and just less than 60% for diesel, with VAT on top of that—the highest percentage of duty in the European Union. While the anger and frustration of individuals at suffering such high duties are understandable, once again the major concerns that business has are also clear. How can we expect businesses to compete on a level playing field with European competitors when they face such high taxes and duties?

When the Government increased VAT to 20% in January, they contributed to a further hike in fuel costs. It was the wrong tax at the wrong time, hitting families and businesses hard, just when they were least able to absorb such an increase. I support the calls to look at reversing the VAT increase for road fuel. We know it is feasible to obtain approval at the EU level for such a cut, but the Government refuse to entertain the idea because it is politically inconvenient for them to do so.

In a debate on motoring fuel costs here in Westminster Hall back in June, the hon. Member for Harlow (Robert Halfon) called for a commitment to no more petrol tax rises in this Parliament. He urged the Government to consider abolishing even inflationary rises on fuel duty during the Parliament. Such calls have largely come about as a result of the work of Fair Fuel UK, which is a broadly representative body and is making a strong case for reducing fuel costs for both motorists and businesses.

How do such calls square with the Government’s position? In opposition, the Conservatives made much of plans to “slash fuel duty”, as the headlines screamed at the time, with their fair fuel stabiliser. The concept of fuel duty falling when fuel prices go up and rising when prices fall, seems, on the surface at least, like a winningly simple and effective idea. Many of my constituents certainly believed so and contacted me about supporting it. However, the Office for Budget Responsibility, the Institute for Fiscal Studies and others have raised problems with that approach. It remains to be seen whether the fair fuel stabiliser will deliver what businesses and individual motorists want.

[Mr Robin Walker (Worcester) (Con)]

When the Office for Budget Responsibility looked at the fair fuel stabiliser, it said that one of its fiscal problems was that the benefits to the Government of higher fuel prices were wiped out over time by the harm to the economy. Is that not evidence for intervention, and for the Government to set a lower fuel duty to stimulate the economy?

[Graeme Morrice]

The hon. Gentleman makes an interesting point. I am all for Government intervention in many walks of life, but I would have thought that reducing VAT would be a good start. My hon. Friend the Member for Central Ayrshire made the interesting point that putting VAT on top of the total cost of fuel is a tax on a tax, and the Treasury should look at that.

In summing up, I again thank my hon. Friend for this debate. It will not solve the problem, but I hope that it will at least provide further food for thought about what we can do to find a solution to this most thorny of problems in the longer term, and eventually to bring about a settlement that provides relief for hard-pressed families and businesses. I look forward to the Economic Secretary’s response.

11:59

[Kerry McCarthy (Bristol East) (Lab)]

I congratulate my hon. Friend the Member for Central Ayrshire (Mr Donohoe) on securing this debate. I am aware that the number of signatures on the e-petition that is doing the rounds calling for a debate on fuel duty is rapidly approaching 100,000. Since joining the shadow Treasury team, I have spent much of my time debating fuel duty with the Economic Secretary. It is indicative of just how strongly Members of Parliament feel about the matter, and of how much their constituents are affected by high fuel prices, that we have returned to the issue. It also suggests that the Government’s limited action so far—the 1p cut in fuel duty—has not done enough to satisfy people’s concern and its impact on their lives. For example, my hon. Friend the Member for Central Ayrshire referred to the impact on a nurse in his constituency.

The small increases in the cost of living and the small cuts add up. The cost of parking at a hospital may have doubled, and travel to work may cost an extra £100 a month. Such increases make the difference between people being able to get by on a modest income and being unable to make ends meet. Sometimes they must make the tough decision to give up work, because they simply cannot afford it. I want to allow plenty of time for the Economic Secretary to reply, so I will not elaborate further, but people are being hit across the board. Fuel duty rises and the cost of petrol are obviously a significant element in that.

Before the Budget in March, we called on the Chancellor to review the duty increase, and we welcomed his decision following the example of previous Labour Governments, who had cancelled or postponed rises in duty when circumstances suggested that would be a good idea because fuel prices were putting too harsh a burden on people. We welcomed the 1p cut in duty, but the savings lasted only a short time, and prices at the pump remained high. According to figures published by the Department of Energy and Climate Change this morning, the price of one litre of petrol has increased over the past seven days by 0.38p to 135p and diesel by 0.44p to 139.4p. That makes prices 20p and 22p respectively more expensive than in the equivalent week last year. I am sure that some hon. Members in rural constituencies will say that those average prices do not reflect the real prices in areas that are ill-served by petrol stations.

Clearly, the 1p cut has not been sufficient for motorists feeling the squeeze. That is partly because the Government added another 3p to the price of a litre of petrol by hiking up VAT in January 2011. Motorists are also facing the prospect of a 3p increase in January 2012, and a further increase in August 2012. That comes at a time when the Institute for Fiscal Studies is warning that the coalition’s tax rises and spending cuts will squeeze household budgets for the next 10 years, with families over the past year having suffered the largest fall in living standards for 30 years. Median net household income is down 3.5%, the consumer prices index stands at 4.4%, and the retail prices index stands at 5%, which is more than double the rate at which earnings are growing. The Office for National Statistics has highlighted that fuel costs are one of the most significant contributors to the CPI and are adding indirectly to the cost of our weekly food shopping, because distribution costs rise with fuel prices.

I need not remind hon. Members that fuel prices affect not only affect households, but are having a serious impact on businesses, which are already struggling in a flatlining economy. Only this month, the Freight Transport Association reported that the high cost of fuel remains the biggest cause for concern among haulage operators. A survey by the Federation of Small Businesses found that its members were most concerned about the fuel tax rise in January. It warned that small and medium-sized enterprises would be severely affected.

I shall move on to what the Government have said they will do about the problem. Before the election, great play was made of the fair fuel stabiliser. David Cameron said that he would introduce a mechanism to ensure that when oil prices went up, prices at the pump would go down and vice versa. That was widely seen to be unworkable, and has been proven by the fact that since coming to power the Government have not acted on it. The stabiliser in the form suggested by the Prime Minister and the Chancellor has not materialised. Even the Office for Budget Responsibility said that it would make fuel prices less stable rather than more stable.

The Treasury then moved to funding the 1p fuel duty cut with the windfall tax on the oil companies, which the Scottish First Minister described as cack-handed. It was introduced almost at the last minute, and the oil companies that it affected were not consulted. The reduced duty is funded by a rise in the supplementary charge on oil companies from 20% to 32%. The Government were then hit by evidence that that would lead to fewer new fields being developed, and greater reliance on foreign imports, which are, of course, more expensive. Under pressure, the Treasury announced in the summer that it would allow companies to offset some start-up costs against tax, but that only served to show the Government’s muddle on the fuel duty regime. They float various ideas, but when those ideas are subject to any scrutiny they do not stand up to cross-examination, and the Government have to make policy on the hoof.

That is partly why we tried to amend the Finance Bill to require the Chancellor to assess the impact of tax on ring-fenced profits. As I argued at the time, that seemed to be in line with the Government’s professed commitment to more consultation and greater transparency in tax policy, instead of coming up with measures without consulting industry and then having to make U-turns..

Another measure that the Chief Secretary announced and which seems to be running out of steam is the pilot scheme for the rural fuel duty rebate, which he announced last October. He was keen on that when he was in opposition, but it seems to be more complicated than the Treasury expected. The rebate would allow a discount of up to 5p a litre on petrol in the inner and outer Hebrides—

[Mr MacNeil]

There is talk in London of the scheme being complicated, but it need not be. It is happening in many places throughout Europe. The only complication seems to be the length of time it is taking to put it in place.

[Kerry McCarthy]

At the moment, it is suggested that the scheme will apply to the inner and outer Hebrides, the northern isles and the Isles of Scilly. The Minister will have to explain, but perhaps the delay is due to the fact that there is considerable pressure from other areas where fuel prices are very high. The hon. Member for Newton Abbot (Anne Marie Morris) is no longer in her place, but she made the case for her constituency in the south-west having a similar scheme.

People in the Scottish Highlands, where large distances need to be travelled and the scarcity of retail petrol stations adds to the cost of petrol, think that they, too, should be included in the scheme. Do the Government think that the scheme should be restricted only to the islands, or should it be extended? If the islands are a particular case, perhaps the Minister will clarify what that is. It is not clear whether the island populations would feel any benefit or how the discount could be delivered, and there have been warnings that such a scheme would risk putting petrol stations out of business.

Under the original idea, upfront costs would fall on retailers who might have to wait two months to be reimbursed by the Treasury. For many small retailers that is simply not viable, and if petrol stations in remote areas are forced to close, motorists will have to travel even further to fill up their tanks. I would appreciate a response from the Minister about how that could be avoided if the pilot schemes for rural islands are introduced.

[Mr Reid]

The hon. Lady has referred to the original consultation proposals, which the Government quickly changed because of feedback from retailers and the cash-flow problem that would have occurred. That feature is no longer in the revised proposals, so the issue has been solved.

[Kerry McCarthy]

I thank the hon. Gentleman for that clarification. It seems that the briefings from people lobbying on the issue are slightly out of date.

In conclusion, the Government’s efforts to reduce the burden of high fuel bills on households and businesses seem to have run out of steam, rather like a car running out of petrol. Ministers continually try to ignore the fact that their VAT rise has had the greatest impact on petrol and diesel prices by adding almost 3p to the price of a litre of petrol and £450 to the average family’s annual bills. As we know, VAT has a disproportionate impact on those who can least afford it, and evidence shows that that is harming the economy. The Treasury is happy to ask the EU for a derogation on fuel duty for the remote Scottish islands but, as we have heard today, people’s budgets all over Scotland and around the UK are being put under pressure by the cost of petrol and diesel, and the Government refuse to listen.

[Mr Jim Cunningham]

Does my hon. Friend recall that after the 1997 election, the first thing the Labour Government did was cut VAT on fuel? That helped fuel poverty.

[Kerry McCarthy]

I recall that, and there are various other examples. Hon. Members are keen for the Minister to respond so I will not elaborate on that point, but the fact is that the Government have not even tried to get a derogation from the EU on fuel prices. Opposition Members argue that the rise in VAT earlier this year is having a seriously damaging impact on the economy and, at least in the short term until the economy recovers and economic growth returns, that it should be reversed.

I have posed a number of questions to the Minister, and I look forward to hearing not only a recognition that fuel prices are impacting on families and warm words about how the Government appreciate that people are being hit by the cost of fuel, particularly in rural or remote areas, but something clear about what the Government intend to do. The 1p cut in duty is incredibly insignificant in the grand scheme of things, and the Government must act because people and businesses are suffering. It is time for action.

12:13

[The Economic Secretary to the Treasury (Justine Greening)]

It is a pleasure to see you in the Chair, Mr Dobbin, into which you seamlessly moved during the course of the debate. First, let me congratulate the hon. Member for Central Ayrshire (Mr Donohoe) on securing the debate. As the shadow Minister, the hon. Member for Bristol East (Kerry McCarthy) said, the House has had a number of opportunities to debate the pressures that the high cost of petrol puts on individuals, families and businesses. The Government continue to view the issue as incredibly important, and the hon. Member for Central Ayrshire was right to raise it. In the time that remains, I will do my best to respond to the points that he raised, and those raised by my hon. Friends. I also hope to provide an update on some of the questions raised about the rural fuel duty discount.

Even though average pump prices fell slightly over the summer, there is little doubt that the cost of fuel remains a difficult issue and concerns many families and businesses across the country. The Government have recognised that for some time, and as hon. Members will know, in the Budget we announced a second rise in the personal tax allowance that aimed to take more people out of income tax altogether. In total, that benefited about 23 million or 24 million people who pay the lower rate of tax on their household income. The Government have worked hard to recognise and tackle the cost of living.

There were extensive debates in the House and the Finance Bill Committee about the cost of fuel and the Government’s plans to support motorists. I welcome the opportunity to revisit those issues, but before I address some of the points raised today I want to explain why the Government acted as they did in the Budget, and set out why the approach proposed by the Labour party is not only illegal but unworkable. Perhaps if I explain to the Chamber why I believe that to be the case, we can put the issue and the alternative proposals to bed once and for all, and perhaps I can save Labour Members from continuing with the hole they are digging in pressing for them, although that is obviously up to them.

The coalition Government recognise that motoring is an essential part of everyday life for many households and businesses. The cost of fuel affects us all and the Government recognise that the rising price of petrol has become an increasingly significant part of day-to-day spending. We know that high oil prices are causing real difficulties in trying to ensure that motoring remains affordable, and it is important that when shocks such as the steep rise in the price of oil occur, a responsible Government are able to listen, consider and respond.

The hon. Member for Bristol East mentioned the fuel duty escalator. That was introduced in the 2009 Budget by the previous Government and involved seven increases in fuel duty. The previous Government had planned for an above-inflation increase at the start of April—that was the position we inherited, and we had to make a decision about whether to go ahead with the pre-planned rises left by the previous Government. Had we gone ahead with those rises, pump prices would, on average, have been 6p per litre higher than they are currently. I take on board many of the points raised by the hon. Member for Central Ayrshire about the impact of high petrol prices, but he must recognise that had we done nothing, that extra 6p would only have created more pain for motorists and businesses. On top of that—let us be clear—the plans that we inherited would have introduced further above-inflation increases in duty in 2012, 2013 and 2014. On taking office, we had to come up with a plan to support motorists, because the previous Government did not have one—it was the exact opposite.

From the start, the coalition Government have been actively looking at how we can ease the burden on motorists, although that is incredibly challenging given the constrained and difficult fiscal situation that we inherited. One of the first things we did, as the hon. Member for Coventry South (Mr Cunningham) mentioned, was ask the Office for Budget Responsibility to look at how high oil prices flow through to impact on the economy and try to understand that. As the hon. Gentleman pointed out, we were concerned to understand the impact on businesses and jobs. That was part of our work in looking at how we could construct a fair fuel stabiliser, which I will come to in a moment.

As part of the Budget, we finally announced our plan to ease the burden on motorists with a £1.9 billion package. The Government listened to hard-pressed motorists and businesses and acted. What did we do? We acted by cutting fuel duty. The hon. Member for Central Ayrshire clearly wants us to go further in cutting fuel duty, but he should at least be able to welcome the fact that we have already cut fuel duty by 1p a litre from 6 pm on Budget day. We acted by cancelling the previous Government’s plan for a fuel duty escalator for the rest of the Parliament. We acted by introducing a fair fuel stabiliser that will better share the burden of high oil prices between motorists and oil companies, so fuel duty will increase by inflation only when oil prices are high.

[Mr Donohoe]

Does the Minister accept that there is a correlation between the duty and the increase in VAT? Indeed, the cost of the VAT increase to the motorist was 2.8p a litre. If the Government are to do anything to redress the imbalance, it is that amount, not the 1p that she talks of, that should be taken from the price, because the consequence of increasing VAT to 20% has been an increase in the price to the motorist of 2.8p.

[Justine Greening]

I take the hon. Gentleman’s point. The issue was raised of VAT being applied to the total price of fuel, including fuel duty. For clarification, that is in line with EU rules. That is the reason why that approach is taken. However, I will say two things to the hon. Gentleman. First, we have introduced a £1.9 billion package to support motorists. Secondly, I have heard a number of Opposition Members bemoan the increase in VAT, but they have had several chances in the Division Lobby to vote against that VAT rise and they have not taken them. I would be happy for any hon. Member who voted against the VAT rise to intervene on me now, but having checked Hansard—[Interruption.] Let me be clear that I am not referring to the Scottish National party contribution to this debate, because of course it called the vote. I think that both I and the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), who represents the SNP, would recognise that the Labour party abstained in that vote and did nothing, despite its words. It never followed them up with action. Those Members owe it to their communities to be a little more frank about the fact that they waved through the VAT increase themselves.

[Graeme Morrice]

Who put VAT up to 20% in the first place?

[Justine Greening]

I did not hear the whole of that intervention. I am sure that if the hon. Gentleman repeats it, I can respond.

[Graeme Morrice]

Who put VAT up to 20% in the first place?

[Justine Greening]

Well, of course, that is one of the key measures that we had to put in place—[Interruption.] The hon. Gentleman laughs, but he is—

[Graeme Morrice]

You did it.

[Justine Greening]

I would rather be in my position, voting for things that I believe in, being clear to my constituents and accountable and being part of a Government who are tackling a huge fiscal deficit. I think it is the worst fiscal deficit handed to any incoming Government. It is one of the deepest seen in a developed country.

[Graeme Morrice]

Caused by the banks.

[Justine Greening]

It was not caused by the banks, actually. Let me explain to the hon. Gentleman what a structural deficit is. Even in the good times, the previous Government were spending more money than they were taking in taxation. That did not have to do with the banks. The banks simply dramatically exacerbated that problem. That was what we were talking about when we said that the previous Government did not fix the roof when the sun was shining. My point is that there is no point in Opposition Members complaining about the VAT rise when they have not taken the opportunity to vote against it. I think that most people in Britain would think that that was slightly disingenuous.

[Graeme Morrice]

rose—

[Justine Greening]

I will give way again if the hon. Gentleman wants to keep digging his hole.

[Graeme Morrice]

But we are not in government. When the sun was shining, we built schools and hospitals and improved public services. We spent the money on the people’s priorities. The current Government are now cutting that.

[Justine Greening]

There are many people with schools in their constituencies—I can certainly think of one in mine—that saw none of that investment. Frankly, it is easy to spend, spend, spend. That is the Labour party’s legacy to Britain—a debt that is so high that it is costing taxpayers £120 million of interest every day. It is always the same. Let us not forget that the other legacy was unemployment that was 400,000 higher.

[Anas Sarwar]

rose—

[Kerry McCarthy]

rose—

[Justine Greening]

I will give way to the hon. Gentleman, but then I would like to make some progress and talk about fuel, because that is clearly the point of the debate. However, I am happy to have a debate on the economy, because many people in Britain recognise exactly whose fault it is that the economy is in the state that it is in today—it is the fault of the Labour party.

[Anas Sarwar]

I give the Minister some credit for being able to rewrite history in the way that she has. Can she tell me why the Conservative party supported Labour’s spending plans before the financial crisis?

[Justine Greening]

You always know that you are making progress in an argument, Mr Dobbin, when people have to turn back to things that happened decades—[Interruption.] Opposition Members can make this into a political issue. I would like to make it into an issue that involves people outside this place. Frankly, if those in the Labour party had spent less time arguing among themselves, as we now know they were doing, and a little more time moving away from political stunts to manage the economy responsibly, perhaps the public finances in this country would not have been in the mess that they were in when they were handed over to us at the last election. [Interruption.] An Opposition Member says, “You are in government.” Yes, there’s a good reason for that—because the British people had just about had enough of the Labour party being in control of the purse strings. I think we all hope that it will be an awfully long time before it is given control of the purse strings again. [Interruption.] I now want to make some progress on fuel duty and I particularly want to —[Interruption.]

[Jim Dobbin (in the Chair)]

Order. Could I ask hon. Members to behave themselves?

[Justine Greening]

Thank you, Mr Dobbin. I want to make some progress on fuel duty, because that is the key concern in our minds today. The issue of hauliers was raised. The package that we introduced has meant that hauliers have been able to benefit on average by about £1,700 a year.

[Mr MacNeil]

I know that time is getting on—we meandered down a funny road there. I want to pull the Minister back to two important points. First, when are we likely to see the rural fuel derogation in place? That is very important. Secondly, does the Minister have any sympathy with my point of view that I am tired of the red and the blue sheriff and I would like to see some of this controlled in Scotland?

[Justine Greening]

We will update the House very shortly on what is happening with the rural fuel duty discount. We have made progress with the European Union. That will be good news for the hon. Gentleman. It will mean that we can get on with our pilot. I am sure that he very much welcomes that. In terms of other issues raised by the hon. Member for Argyll and Bute (Mr Reid), he will be aware that of course his islands will be part of that pilot. As he pointed out, we have within the Treasury met stakeholders—petrol retail associations and of course regional owners and operators—to talk about how we can ensure that any rural fuel duty discount scheme works effectively. I think that we are making good progress with that. Clearly, whenever we bring in such a scheme, we must ensure that we understand that it will do what we want it to do and that it will work in the way that we want it to work. We want it to be of help. We were therefore keen to sit down and work through some of the issues that came up, for example, in relation to cash flow. It is also important to ensure that the scheme is not administratively over-burdensome. We are making good progress with those discussions. We have made good progress with the EU. Perhaps we will be able to give further details of that in coming days.

Finally, I want to point out once and for all why it is simply not possible to go down the route of creating a separate VAT rate for petrol. I am surprised that I still hear the Labour party talking about that. We rejected that proposal for a number of reasons. One was that it would take six years—possibly more—to come into effect. The other was that it is illegal, because fuel is standard-rated in terms of VAT, as part of EU rules. If we want to reduce the rate of VAT on fuel, we need a revision of the VAT directive. In fact, we would have to have unanimous agreement from all member states, and the European Commission would have to approve. As I said, it could take six years or more. I say that because that is what the French found when they sought a reduced VAT rate. Just in case that is not enough of a problem, the EU has also agreed a moratorium on revising the VAT directive. That was agreed under the previous Chancellor of the Exchequer. That route is not the route to help motorists, whereas the route that we took of a £1.9 billion package to support motorists was.

Radar Industry

Tuesday 13th September 2011 Westminster Hall

12:30

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

Before I begin, I thank you for calling me to speak, Mr Dobbin. I also thank my hon. Friend the Minister for coming to discuss the future of radar. I have asked for the debate because my attention has been brought to a situation in my constituency involving BAE Systems and the procurement of radar systems by the Ministry of Defence.

Since 1940, Britain has been at the forefront of international research and development when it comes to radar. That heritage, along with our experience, knowledge and unsurpassed expertise, is routinely admired by militaries and Governments across the world. BAE Systems has been in the vanguard of the highly specialised radar industry for more than half a century. As the most significant UK company in the field, it is almost singlehandedly responsible for having put us in our current enviable position. At the same time, it has worked tirelessly with the Government, and particularly the MOD, to ensure that the nation is secure from airborne and seaborne threats. Additionally, it has provided skilled employment to a multitude of people and an unsurpassed graduate scheme, and it has generated huge sums for the taxpayer. It is also one of the largest private employers on the Isle of Wight.

Globally, the market for radar technology is £5 billion a year, with 20% coming from the US, and the majority of the balance coming from other markets. As a result of our highly regarded skill in the sector, UK radar products are now installed in approximately 100 countries, and the majority of those products are believed still to be in active service. BAE is the primary UK supplier of radar technology to global customers, but international competition is strong from the likes of Lockheed Martin, SELEX, Thales and Raytheon. If developed correctly, the UK has obvious political and economic advantages, which will allow BAE to remain a market leader.

On the island, BAE employs 290 people. In its radar business, it employs 510 people across the UK, and it has additional sites in Chelmsford, Portsmouth and Dunfermline. In 2009, an Oxford Economics report on BAE assessed its financial contribution to the UK as being more than £78,000 per full-time employee, which is 85% higher than the national average and 34% higher than in manufacturing in general. In the same year, it was estimated that BAE spent £4.1 billion paying for equipment, components, raw materials, rent, energy and other services from UK suppliers. That meant that for every 10 BAE jobs in the UK, another 12 were created in the supply chain. One example is a company called Pascall Electronics, which is also on the Isle of Wight, and that is just one of many local Isle of Wight suppliers in BAE’s supply chain.

Those figures cannot be ignored. The economy and defence of the UK, and the population of the Isle of Wight, simply cannot afford to lose the radar industry. Recently, however, events have conspired to threaten the current situation, and this incredibly specialised and niche manufacturing industry is in danger of being lost. The first reason for that is that a number of large long-running programmes have finally been finished. They have been delivered to the MOD after years of extensive planning, research, development, trials and testing. The most notable are Sampson, which is in the Type 45 destroyers, and the forthcoming Artisan RT997, which will be in the Type 23 frigates. Sampson has been universally recognised as a world leader, and Artisan has benefited greatly from the reuse of parts of the same technology. Consequently, it, too, has been designed to be extremely competitive in the global market. That has particular significance because both systems are designed and constructed on the Isle of Wight.

As those contracts with the MOD come to an end, BAE’s work load in the UK has decreased. There is simply not enough work to sustain such high employment and the range of specialist skills required for further development. BAE therefore recognises that it must focus on its international markets to avoid redundancies. Additionally, the MOD has chosen to take delivery of an off-the-shelf system from the US company Lockheed Martin rather than a BAE system to cope with the modern problem of offshore wind farms. That was done instead of working with BAE to mature a wind farm solution that could have been made available through its existing radars.

Having made that observation, let me quickly stress that the company appreciates the MOD’s logic in making that particular decision at that particular time, but the side effect has been to create genuine concern. If the MOD is planning further purchases of off-the-shelf products from the US or any other foreign supplier, and BAE so much as appears to fall out of favour with the MOD, its opportunities for export business will be adversely hit. The reason for that is that when potential clients abroad look at BAE products, they judge their worth by the standards of the UK. Has the MOD bought these products? Does it endorse them? Should the MOD cease to work in partnership with BAE, it will indirectly, and probably irreparably, damage the company’s credibility in foreign markets.

Should global sales in BAE start to diminish, it is likely to do what companies do when sales decrease—make employees redundant. Should it then go as far as deciding to cease work on radar, the MOD will simply lose the only technical experts in the field of radar in the UK. The inevitable outcome will be a huge increase in the costs of through-life care for the MOD’s current radar fleet, because it will have to pay a foreign company to keep it running.

The possibility that a company might lose international credibility and have to lay off staff is not a reason in itself for the MOD to purchase equipment from any defence company, let alone BAE. Indeed, BAE is not asking for handouts, subsidies or guarantees of sales at some point in the future—far from it. It recognises that having just come to the end of some very long-term programmes, the MOD has no need to buy further equipment. It accepts that there will be a competition for the replacement of the rest of the air defence system in 2017, and it is confident that its entry in Project Vigilance will be of the highest standard. However, it feels a firm appreciation of the relevant issues by the MOD is vital for the protection of the UK radar industry’s future. The most cost-effective method of developing the next generation of radar defence for the UK is by defining a cohesive and credible long-term partnership with the MOD. That was demonstrated successfully with the last projects, and those before them, including the multi-function electronically scanned adaptive radar and advanced radar technology integrated system testbed programmes. I also fervently hope to protect the employment of my constituents, and those constituents of my colleagues who are also affected by the issue.

I want to make a final point. Radar has defended our country definitively at least once, in 1940. It is likely that it has done so on many other occasions that are not in the public domain and it is more than likely that it will do so again. I pose this question: is it not essential that the radar technology our military are asked to use should be of British origin, in research, design and manufacture? It makes perfect sense to me that the company that we use to develop such sensitive technology should be British-based, like most of its employees. What would happen if there were to be an incursion into our airspace by a foreign power and the UK Government did not have the control and flexibility that we enjoy today, because the designs were not British? Many might scoff at that suggestion, and say that surely it makes no difference which of our allies makes our radar. It probably does not at the moment, when our airspace is not being challenged on a daily basis, but none of us knows what will happen in the future. Why should we take the chance when there is a world-class company specialising in the area in question, native to our country? Why would we even think about taking the risk? That would not only be imprudent, but would smack of recklessness.

No one is asking the Government to help one company over another, to provide subsidy or even to point fingers and lay blame about previous decisions that have affected a company’s reputation. By continuing to ignore those companies in the UK that add genuine value to the economy, are recognised world-class providers of technological solutions, carry the British brand globally, employ large numbers of people and, in the case of BAE Systems, are integral to the very defence of the United Kingdom, we will end up cutting off our nose to spite our face.

12:43

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

I begin in the customary way, but entirely sincerely, by congratulating my hon. Friend the Member for Isle of Wight (Mr Turner) on securing the debate. I am always impressed by the diligent way he represents his constituents’ interests, and I hope to encourage him by showing that there is a significant amount of work for British radar companies both here and overseas.

I hope that my hon. Friend will forgive me for saying that he gave a rather half-empty view of the radar world and the future of the British industry. I hope to persuade him that the glass is comfortably more than half full. The future of the British radar industry is an important topic and I am pleased to be able to share with the House all the good work in which the Government are involved, in support of that industry. My hon. Friend will understand that success has many fathers and failure is an orphan, and in that spirit I offer the thought that, as a Worcestershire Member, I look towards Malvern’s proud role in the development of British radar systems; I take a close interest in the development of radar.

The defence and security of our nation and people are the primary responsibility of Government, and defence is, as will be appreciated, my primary interest. There is a vital requirement for the detection of airborne assets entering and travelling through UK airspace, as my hon. Friend emphasised in his excellent speech. Radar is the primary tool used for such detection, whether for the tracking of co-operating civil aircraft or the detection and engagement of potentially hostile aircraft. UK companies such as BAE Systems, SELEX and Thales supply many of the radars that we rely on for that critical role. I want to emphasise that: I regard SELEX and Thales as British companies, and later this afternoon I will receive a delegation from colleagues in the House, making the case for SELEX, and will be visiting its excellent offices in Edinburgh on Monday to see its radar work. However, my hon. Friend is right to recognise the proud record of BAE Systems as well.

Our armed forces operate across the world—not just in Afghanistan and Libya, but also in our permanent bases overseas such as the Falkland islands. Accordingly, radar technologies sourced from British companies are deployed by our armed forces around the world, so we recognise the importance of radars across a range of military systems. They are a critical element of our air defence capability, supporting operations on land and sea and in the air. Recent operations over Libya have clearly demonstrated the effectiveness of commanding the air domain. Radars are required for combat systems working alongside our complex weapons from ships, submarines and aircraft as well as troops on the ground, so our ability to sustain and develop those systems, including our ability to respond rapidly to emerging and evolving threats, is essential to our operational effectiveness. On that point, there is nothing between my hon. Friend and me.

I am glad to reassure my hon. Friend that the UK’s industrial capability is critical to meeting the vital defence requirement that I have outlined. Indeed, we are working with BAE Systems and other UK industrial players, together with our scientists in the Defence Science and Technology Laboratory, better to understand the issues and to share our thinking regarding the evolving requirements—and they can evolve quite fast. That is very much in the spirit set out in last year’s Green Paper on technology, equipment and support. We enjoy a close and productive working relationship with our radar suppliers and look forward to maintaining that in the years ahead, so I was slightly disappointed by the way my hon. Friend characterised our relationship. I hope that BAE Systems feels that it has a constructive relationship with us.

On my hon. Friend’s points on air defence radars and wind farms, I must stress that the provision of up to three proven wind farm-tolerant radars by the wind farm developers, removing the objections of the Ministry of Defence to those wind farms and releasing significant renewable energy potential, is seen across Government as very encouraging. My ministerial colleagues have worked hard to achieve that. Indeed, the Secretary of State for Energy and Climate Change has acknowledged that work, which has been achieved by co-operating across Government, and with industry, to reach an outcome that is beneficial to our national security, energy security and decarbonisation goals. Furthermore, it is not the case that the UK’s air defence radar network will be made up of a foreign fleet in the future. I am assured that UK industry is developing a wind farm-tolerant air defence radar, and I welcome that.

There are many radars in service with our armed forces. Some examples are long-range air defence sensors, medium-range air defence systems, Type 45 air defence sensors—my hon. Friend referred to the Type 45—and air traffic control sensors, many provided by UK companies, including BAE Systems. In the long- range sector, UK BAE Systems produces the Type 101 and 102 radars used in support of the defence of the UK. In air traffic control there is UK involvement in the Watchman radar—again with BAE.

However, it is in ensuring the future capability and reach of the Royal Navy that UK companies stand out. I am happy to endorse what my hon. Friend said about the Sampson multi-function radar fitted to our newest class of destroyers, the Type 45, which, incidentally, is supported by MBDA UK and BAE Mission Systems. I want to make the point that support is extremely important. My hon. Friend should not concentrate only on manufacture, although I understand its importance for his constituency. The supporting of radars is also hugely important, and it brings many important jobs. It is an important skill for the UK.

Also in the Type 45 class of ship there is the Thales long-range radar, which is supported by BAE Mission Systems, and the Royal Navy’s next generation of radar capability, the UK company BAE Mission Systems radar—the RT997. The contribution to the Royal Navy’s current capabilities by UK companies is evidenced by the BAE mission systems radar 909, fitted to Type 42 destroyers and mainly supported by the same British companies. There is also the RT996, which is fitted to many ships throughout the fleet, including Type 23 frigates and destroyers, amphibious support ships and Illustrious, for which in-service support is provided through an award-winning long-term contract with a UK company. There is no shortage of business here, especially for UK companies.

[Penny Mordaunt (Portsmouth North) (Con)]

I thank the Minister for giving way. Does he agree that, when deciding whether to buy in the UK or from overseas and where to invest in research and development, we should be thinking about the export market, how many can be built over a particular cycle, and whether the technology is genuinely innovative? The examples that he gives fit into all three categories.

[Peter Luff]

I agree with my hon. Friend. I hope to talk later about exports and our export ability, an important part of the future of the UK’s radar industry. One of the major changes that we seek to achieve through our acquisition strategy—not only in radar but across the board—is to ensure that the exportability of a product developed for UK purposes is considered early in the life-cycle and acquisition process. When investing in capability for the British armed forces, we should develop a capability that has a ready export market. My hon. Friend is right to emphasise that point, and I shall return to it.

I turn next to a future capability referred to by my hon. Friend the Member for Isle of Wight. Project Vigilance will provide an upgrade to existing air defence radar systems, with the opportunity for industry to compete for those elements of the air defence radar system that need replacement. The project is still in its early days, and its exact scope and requirements are still being decided.

Project Vigilance is currently planned to sustain the long-range surveillance and air defence capabilities provided by the T101 and T92 radars, which allow United Kingdom air surveillance and control system force command and chief of joint operations to detect, track, identify, monitor and, if necessary, take action against objects flying within, approaching or adjacent to UK and Falkland Islands airspace. Work to develop the strategy is under way.

Given the financial climate, taking an incremental approach to Project Vigilance will ensure that existing sensors are utilised to full effect, the whole air defence network is coherent and each reaps maximum benefit from other interlinked projects. That applies not only to MOD projects, but to other Departments’ initiatives and requirements, including the need, whenever possible, to enable the use of renewable energy; I say “whenever” to emphasise the great importance that we attach to that.

Surveillance data are not limited to military air defence radars; information comes from a multitude of sources that includes military and civilian air traffic management radars, and links to NATO air defence sites and tactical data links from air, surface and land platforms. Again, industry has been and will be invited to compete in these and other projects.

Moreover, the utilisation of a plethora of data sources not only provides resilience, but allows defence to optimise the air defence radar footprint to ensure that an appropriate level of redundancy is met. We must have the capacity to ensure that we can carry on doing what we need to do in adverse circumstances. It is on this foundation that the air command and control strategy is being developed, but we recognise the need to ensure that value for money is obtained from the Project Vigilance procurement strategy, as my hon. Friend would wish.

There is also good news on another radar project. Project Marshall is a large and wide-ranging project for the provision of terminal air traffic management, essentially the provision of air traffic services to military and civil aircraft operating in and out of Government aerodromes. Air traffic control services are currently provided to 70 MOD-owned airfields and air weapons ranges through the use of a wide range of equipment located on more than 100 locations in the UK and overseas.

Project Marshall has four key objectives. The first is to ensure a safe and enduring terminal air traffic management capability; the second is to address issues of equipment obsolescence through a programme of capital investment; the third is to address regulation changes and make provision for emergent regulatory issues; the final one is to rationalise arrangements to benefit from associated efficiencies and savings. This transformation project will ensure that military air traffic control services continue to be operated in a safe manner, while complying with relevant legislation. The new services are planned to commence in 2014, and several UK companies are involved in the ongoing competition.

There is more good news, this time on the naval side. I have already highlighted some of the support that the Royal Navy receives for radars from UK companies. Five types of primary and secondary navigation radar are fitted to Royal Navy surface warships and submarines. I recognise the excellent support that a range of radar contractors have provided over recent years in maintaining the primary and secondary navigation systems used by the Royal Navy.

As for the future, the navigation and situational awareness radar is planned to replace 1007, which is fitted to most Royal Naval vessels; it is being designed to provide primary navigation and sustained situational awareness on surface warships. The project is in its assessment phase and, against current plans, the radar system is due to enter service in 2016.

I turn next to the air sector. I bear in mind what my hon. Friend the Member for Portsmouth North (Penny Mordaunt) said about exportability. Our highly capable Typhoon aircraft have long been served by the mechanically scanned, or m-scan, Captor radar, which is produced by the four partner nations on the Typhoon project. However, as the defence environment evolves, no matter how good those mechanically scanned radars are, they are having to be replaced by electronically scanned, or e-scan, radars, which provide increased detection and agility against a wider range of targets and a less easily countered capability.

In partnership with our Typhoon partners and industry, we are developing an e-scan solution that will further enhance Typhoon’s capabilities well into the 21st century. Industry has played, and continues to play a full, active role in achieving the optimum solution on e-scan. Not only will e-scan result in a capability leap for the UK Typhoon fleet, but it will further the chances of success for Typhoon in the highly competitive fast-jet export market, where e-scan is a key discriminator for many export customers. For example, the Indian Government order depends on the development of the e-scan radar, and we attach great importance to winning it, as it will represent a lot of business for UK industry—not only in radar, but across the aerospace sector.

We must not forget exports. There are significant opportunities to supply civil radar, for airports and air traffic control services throughout the UK. There will be an increasing demand for solutions that can mitigate against interference from wind farms. There are also increasing opportunities overseas, driven by airport expansion and upgrades in markets such as Brazil, Russia, India, China and the middle east. UK strengths in civil radar and air traffic control solutions, which my hon. Friend the Member for Isle of Wight rightly emphasised, mean that we are well placed to make the most of these prospects—but in a responsible manner, consistent with the UK’s export controls. UKTI can help UK companies sell overseas through a range of support, including trade missions, overseas exhibitions and inward buying missions. I encourage UK industry to make the most of these opportunities. Although I suspect that BAE systems needs no such encouragement, I encourage it none the less.

The defence and security equipment international exhibition takes place in Docklands this week, and it will showcase UK industry on the world stage. My ministerial colleagues and I will use that event to meet a large number of overseas Government delegations; high on the agenda, if not at the top, will be defence exports and the scope for the UK to engage in greater industrial partnerships across the globe. There are a number of attractive export prospects for UK radar systems, from a range of British companies, including those companies that I mentioned at the outset. It is a diverse sector. For example, UKTI DSO is already actively supporting BAE Systems with a campaign in Qatar.

In summary, I assure my hon. Friend and the House that we remain committed to supporting the future of the radar industry. To me, the future of the industry looks exceptionally bright. My hon. Friend has every reason to be confident about it, and about the future of his constituents.

Gaza (Aid)

Tuesday 13th September 2011 Westminster Hall

12:58

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

I gave you a note, Mr Dobbin, to say that we may be joined by others who have recently been on a trip to Gaza. Should they make it here—they are currently in other Committees—they would like to speak in this debate, rather than just intervene. If the Minister agrees, I should like to end my contribution early so that they can tell us about the recent events that they have seen with their own eyes.

[The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien)]

I am grateful that I have been given that notice. It is fine for those Members to speak, provided that we keep roughly to the same split of time.

[Michael Connarty]

Mr Dobbin, it is my intention to give the Minister adequate time to speak.

Having been to Gaza on five occasions, I feel that I should say a word about the people there. I was lucky enough to be a monitor at the first democratic elections in Gaza city. At all times, the people were unbelievably welcoming, friendly and tremendously supportive and I was much buoyed up by my meetings with them. On my last visit, we went to Beach camp. I was very ill—an allergy that I suffer from kicked in while I was there—and I found the people to be unbelievably hospitable and caring. They looked after me very well. I have nothing but the highest regard for them; they were kindness incarnate. It is those people whom I want to talk about in this debate.

First, though, I must talk about the context in which such recent visits have taken place. Deep concerns have been expressed, and continue to be expressed, about the impositions placed on the people of Gaza and the humanitarian effects of them. In the second democratic election, the people of Gaza chose to elect a Hamas majority Government. Since then, there have been tremendous controversies. I join others in condemning not only the inability of that Government to stop the firing of rockets into the Israeli territories and households, but the unbelievable excessive force used in retaliation by the Israeli Government, which has killed more than 1,000 people and destroyed many of the basic facilities required for humanitarian reasons.

There has been strong condemnation from the Turkish Government over the killing of nine Turkish citizens on the aid flotillas. They have now said that they will defend the flotillas taking humanitarian aid to Gaza if they are carrying Turkish citizens. The problem has been caused by Israel’s appalling blockade of Gaza. Access to the Gaza strip remains severely restricted. Only the Kerem Shalom crossing is functioning, although it has recently been subject to Palestinian industrial action, which is in protest at the recent closure of the Kami crossing. The Gisha Legal Centre for the Freedom of Movement notes that Kerem Shalom can accommodate 250 trucks per day in both directions, compared with 1,000 trucks in both directions at Kami, so that is clearly severely restricting the amount of aid going into Gaza.

In September 2009, the IMF directly attributed the continuing restrictions on access to Gaza as a prime reason for the continued high unemployment rate, low growth and high inflation. Gaza could reach growth rates of 7 to 8% if the economic blockade were lifted. As for the children of Gaza, one in three is anaemic and one in 10 is malnourished. The Food and Agriculture Organisation of the UN classes 61% of Gazans as “food insecure” and the United Nations Relief and Works Agency reports that 80% of Gazans rely on some form of aid.

A report published in January 2011 on the website of the Norwegian newspaper Aftenposten, which has access to documents obtained by Wikileaks, makes it quite clear that the Israeli Government are determined to starve the economy of Gaza to bring it to the point of collapse. If people cannot sustain their own economy, the need for aid grows and grows, and that is a strategy that the Israeli Government are clearly using. That is wholly unacceptable.

The report said that a shortage of Israeli shekels in Gaza has continued to be an issue. Last July, Tony Blair, speaking in his role as representative in the middle east, said that he welcomed

“Israel’s decision to allow the entry of 50 million shekels into Gaza as well as the exchange of 31.5 million shekels of spoiled banknotes”.

The pressure is on Israel. This is about not just starving people of basic materials that the international community would give them or that people would be able to trade, but trying to break the economy in retaliation for people exercising their democratic right, which we are always espousing, to choose a different Government.

Let me put on the record the names of all those Members who went on the visit in July 2011. They are my hon. Friends the Members for Manchester Central (Tony Lloyd), for Ayr, Carrick and Cumnock (Sandra Osborne), for Kilmarnock and Loudoun (Cathy Jamieson), and for Edinburgh South (Ian Murray), and Lord Warner. Before I quote from their reports, I also want to put it on the record that the right hon. Member for Rutland and Melton (Mr Duncan) was the first Minister to visit Gaza in the last decade. I hope that the Under-Secretary of State will follow that example and go to Gaza to meet the people.

[Guto Bebb (Aberconwy) (Con)]

The difference between Israel’s attitudes to the Gaza strip and the west bank might be because it faces more of a threat from the Gaza strip. As for the recent visit to the west bank, my understanding is that the economic growth in that part of the Palestinian authority is about 12% per annum. Clearly, the message is that if the Palestinians can restrain the violence being shown by Hamas in Gaza, economic growth in Gaza might be much greater.

[Michael Connarty]

Even when I have visited some of the worst regimes, I have always been impressed by the tremendous entrepreneurial ability of the people of the Palestinian nation and their tremendous thirst for knowledge and high skills. We see them all around the world. We have quite a number in Scotland who contribute to our economy.

If we look at what has happened on the west bank, and such things have been well recorded, we see that the people have to manage in very straitened circumstances, especially given the Israeli Government’s attitude to land, roads and water. Even in the west bank, the people live under a penal regime. In Gaza, there is an attempt to starve out and harm the ordinary people in retaliation for what is the unacceptable use of rockets.

Everyone recognises that Israel has used disproportionate force. We cannot just blame Hamas. The circumstances are set by the occupying nation, which is Israel. That may change shortly, because there will be an attempt in the UN to recognise the nation of Palestine as a state. Hopefully, that will change the attitude of the people in the UN—perhaps not in the Security Council. It will help Hamas and Fatah to try to create one non-violent approach to unity and to statehood.

Let me turn now to the situation that our colleagues found when they visited Gaza in July. The blockade clearly aims to cause great harm to the people’s ability to generate income and run their own economy. The effects of denying them the supplies that they require to function were quite stark. My hon. Friend the Member for Kilmarnock and Loudoun said that it took them three hours to get into the occupied territories. Some of the Palestinians who were waiting at the crossing to get through had been waiting for days.

The imposition was deliberately put in by the Government. On a positive note, my hon. Friend said that when she spoke to women’s groups, voluntary organisations, small businesses and trade unions, she found a tremendous sense of activity within the community to overcome the burden placed on them. The people are not lying down with their hand out waiting for someone to come to their aid; they are a very determined people who are attempting to live under these terrible conditions and to do their best.

None the less, the reality is that the people cannot generate much of their own wealth—50% of factories were destroyed in the Israeli war in 2008-09. The numbers of employed fell from 135,000 to 15,000; that is a massive drop that impacts on their ability to generate income. As a result, inferior, illegally imported goods are coming through, which create safety problems. They are not of the right quality. Raw materials for manufacturing are difficult to source, so the Palestinian people’s ability to save their own economic life is minimal.

Another problem that has always existed in Palestinian communities is the difficulty of sourcing adequate water. The hon. Member for Aberconwy (Guto Bebb) compared Gaza with the west bank. There is a water problem in the west bank, but the water problem in Gaza is probably more extreme. Even when I was last in Gaza, before the latest problem caused by the reaction to the election of Hamas, most of the main water sources had been diverted to Israeli settlements outside Gaza.

That has always been a problem, because the Israeli wells are sunk much deeper than the Israelis allow the Palestinians to sink their wells, so the Israeli wells soak up water from the aquifers. The Coastal Municipalities Water Utility organisation in Gaza has said that, because of the reduction in the flow of the water, the amount of nitrates and the level of chlorine contamination are now rising very fast in the water sources that the Palestinian people have to use. Even when I was last in Gaza, which is some time ago now, doctors told me that children were beginning to show signs of diseases that had not been prevalent among the Palestinian people for quite some time, and children are the ones who are harmed by using contaminated water.

Another thing that caused me great distress when I was last in Gaza was the fact that people were not being allowed to dump their rubbish by taking it away to somewhere safe; often they had to dump it within the limits of their cities and communities. That meant that, when it rained, material from the rubbish leached down into the aquifers and was then absorbed back into the bodies of the people using water from the aquifers.

Because of the inability to generate enough electricity, the people in Gaza now have problems keeping even the basic facilities running in their hospitals. One of the hospitals in Gaza city is mostly comprised of wards that were built with donations from the families of returning or deceased soldiers from the first world war. Many soldiers recuperated in Gaza city after the terrible Gallipoli campaign and many of the wards in that hospital have plaques on the walls to show that they were built by the British.

To keep those wards running is very important. However, the recent British delegation visited Al Shifa hospital in Gaza city and the members of the delegation were told that kidney dialysis machines have to be disconnected from patients every time the power goes out, meaning that the blood has to be cleaned and the dialysis process has to be restarted every time the power goes out. Dialysis has to be done twice, which is a great imposition on kidney patients.

There is also a major problem in trying to source legitimate building materials, because of the argument put forward by the Israeli Government that certain things, including basic building materials, have dual use and therefore should be denied to the people of Palestine. That argument does not make any sense. For example, radiotherapy drugs for cancer patients are banned, because Israel says—for some reason—that they are a dual use product. I am not quite sure how to extract the small amount of radioactivity from radiotherapy drugs and how it could be used for anything other than medical purposes.

I know, Mr Dobbin, that you come from a medical research background and so you will know that a small amount of radioactive material, with a very low level of radioactivity, is generated by every hospital in the country. I do not see anyone saying that we need to rush around and put that material in a high security facility, so the Israeli attitude is nonsense and an imposition on patients.

Doctors who spoke to the British delegation that visited Gaza recently estimated that in the past year 500 Palestinians have died simply because of a lack of medication; Gazans are simply not being allowed to import medication in adequate quantities. Children and cancer patients are most at risk, as they are denied the treatment they need. For example, we met a young boy with a sickle cell anaemia problem. In this country, we would regard any child who had that problem as being a priority, but that child in Gaza was denied drugs to deal with that terrible disease. Providing those drugs is what humanitarian aid is about.

We must ask the Minister, “When will the warm words and the talking stop? When is all this nonsense about it being all right when we have a negotiated settlement going to stop?” There is a widespread feeling that the Israeli Government do not want to have a negotiated settlement that would give the Palestinians an equal and adequate life, and it is quite clear that we are condoning and colluding in the situation in Gaza. We did not like the result of a democratic election and we have not done enough to try to move from that viewpoint, to a situation where that election result is not seen as a threat but as something that should be absorbed into the discussions about what happens in Palestine.

In all the years since I last visited Gaza, and in the time since the British delegation visited Gaza recently, there seems to have been very little movement, except perhaps for a backward movement in the conditions of the people there. That is a great tragedy and, to be quite frank, in the past it has been a cause of great shame for my party when we were in government; we should have dealt with that situation if we were in any way humanitarian and democratic socialists.

Now the challenge lies with this Government, without regard to party. I hope that they make the choice to change their position so that they support UN recognition of the state of Palestine. But if they cannot do that, I hope that they will do something to argue very strongly for, and win through the UN, a situation whereby it is accepted that it is wrong for Israel to do what it is doing in preventing humanitarian aid and other basic aid from being taken to the people of Gaza by whichever route people choose to take it.

13:15

[Jeremy Corbyn (Islington North) (Lab)]

Thank you very much, Mr Dobbin, for calling me to speak. I will be very brief and I am grateful to my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) for giving me a few moments to say something.

I have visited Gaza on quite a number of occasions and every time I have come away even more depressed than I was at the end of the previous visit. There was a sort of high point post-Oslo in the late 1990s, when there was an airport ready to function, there were water supply systems, drainage systems were in operation, forests were being planted, trees were growing, agriculture was developing, and there was a high level of employment and a real sense of optimism and hope.

I then went to Gaza in 2005 as an election observer. I have vivid memories of Israeli border guards at the Rafah crossing deciding to shoot into the town of Rafah on polling day. Why did they do that, other than to intimidate those people who were trying to cast their votes legitimately and democratically in that election? I was not particularly surprised at the result of that election. Along with many others, I confirmed that it was peacefully carried out and democratically conducted and that there was no intimidation of voters. So we must recognise what has gone on in Gaza; the situation there is very serious.

On a subsequent visit, I discovered the number of people suffering from mental illnesses and from wholly preventable conditions, because of polluted water supplies and everything else, which indicates that we are dealing not with a natural tragedy but a human tragedy, of human proportions, created by the blockade, the bombardment, Operation Cast Lead and the constriction of supplies. Under the Mubarak regime in Egypt, the Rafah crossing was opened and closed at various times. Now it is open most of the time and it is the only way that sufficient supplies can get into Gaza, because the Israeli blockade continues.

In the short time left to me, I want to make a plea to the Minister. I plead with him to understand that the people of Gaza—1.5 million people—are in prison. I plead with him to try to understand what it is like to be a young person growing up in Gaza, knowing that it is only possible to watch the world through television and computers and that it is only possible to listen to the world through radio, because the chances of travel are limited, job opportunities are limited and aspirations are limited. Education in Gaza is often very good; there are very many graduates and people with other educational qualifications in Gaza. That is what breeds the anger and all the problems that I have just outlined.

The pressure must be put on to lift the blockade of Gaza, to recognise the legitimate rights of the people of Palestine, and, above all, to get aid to Gaza as quickly as possible, to deal with what is a developing human tragedy of undernourishment and medical problems, including mental health problems, caused by the blockade. Anything that the Government can do in that respect would be very much appreciated and I appreciate the short time that I have had today to contribute to this debate. I also congratulate my hon. Friend on his contribution.

13:18

[The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien)]

Thank you very much indeed, Mr Dobbin, for calling me to speak. I congratulate the hon. Member for Linlithgow and East Falkirk (Michael Connarty) on securing this very important debate and I thank him for doing so.

Let me begin by stating very clearly that the humanitarian situation in Gaza is unacceptable and unsustainable. In Gaza, 66% of the people are dependent on food aid; 90% of mains water is unfit to drink, the consequences of which were particularly noted by the hon. Member for Islington North (Jeremy Corbyn), who has just contributed to the debate; and, despite the fact that schools are running on double or triple shifts, 40,000 children have no school place. Gaza’s economy is depressed and aid-dependent. There has been strong growth recently, but from a very low base. GDP per capita remains 40% below 1994 levels. At 37%, the unemployment level is among the highest in the world, and 38% of Gazans live in poverty. It is deeply troubling that Gaza, which should have a thriving economy, is currently one of the highest per capita recipients of aid funding in the world.

We believe that the actions of both Israel and Hamas have contributed to the current situation in Gaza. Between 18 and 21 August this year, we witnessed, once again, an alarming escalation of violence: a terrorist attack in southern Israel, more than 100 rockets and mortars launched from the Gaza strip at Israeli civilians, and retaliatory strikes by the Israeli air force against targets in Gaza. Nine Israelis were killed during the rocket attacks, and many more were injured.

We strongly condemn the appalling violence. In Gaza, at least 15 people have been reported killed, including three children, and 44 injured. We have urged the Israeli Government to ensure that everything is done to avoid further civilian causalities. The announcement of the current ceasefire is welcome, and it is vital that both sides now show restraint and seek to reduce the tensions. Like the hon. Members for Linlithgow and East Falkirk and for Islington North, I have been to the region, although not to Gaza itself—that was the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt)—but in the southern Israel area the problems are real and continuing.

Israel retains obligations under international law as an occupying power. It controls the majority of Gaza’s borders, and sea and air space and, as such, has primary responsibility for facilitating humanitarian access to Gaza. We welcomed the changes to the Gaza access regime announced in June 2010, and the subsequent package of measures agreed by Quartet representative Blair and Prime Minister Netanyahu on 4 February this year. However, recent UN reports show that the measures have not brought any fundamental change to Gaza, with food insecurity remaining high and economic opportunities scarce.

Much more needs to be done to ease restrictions on exports, construction material imports and the movement of people. Israel’s commitments on exports that were agreed with the Quartet representative in February 2011 have not yet been met. Increases in imports since June mainly relate to consumer goods, with the number of trucks entering still being only one third of what it was pre-blockade. We understand Israel’s security concerns, but the current access regime imposed by Israel has the perverse effect of fostering radicalisation and empowering Hamas, while punishing the ordinary people of Gaza.

Economic restrictions have not brought political change or degraded the military capability of Hamas. On the contrary, legitimate business is being strangled while Hamas allies are strengthened. Isolation and growing frustration at the lack of economic opportunities make extremism more attractive, a point ably highlighted by my hon. Friend the Member for Aberconwy (Guto Bebb) in his intervention. An improved economy and a resurgence of Gaza’s business sector are not only essential for the people of Gaza, but firmly in Israel’s security interests.

The vast majority of goods entering Gaza come not through the official crossings but through the vast network of tunnels between Egypt and Gaza. Hamas controls the tunnels and imposes taxes on goods passing through them, the money raised forming a large part of their revenue base. As a result of the blockade, UN and non-governmental organisation projects confront constant difficulties in gaining access and in importing construction materials, which means that projects designed to help the most vulnerable people are blocked, delayed or made more expensive. Meanwhile, 30 times more cement and 10 times more steel comes in through the Hamas-controlled tunnels than through the crossings.

[Jeremy Corbyn]

I hope that the Minister has the opportunity to visit Gaza at some point. I welcome what he says, but does he not acknowledge that the tunnels are a product of the blockade? Without the blockade there would be no point in the tunnels, and there certainly would be no economic advantage in having them. The blockade must be lifted; that is the crucial issue.

[Mr O'Brien]

I certainly recognise that it is difficult to envisage how the tunnels might have come into being but for there being a difficulty in getting goods to move, so I fully understand the hon. Gentleman’s point.

The United Nations Relief and Works Agency reports that at the current approval rate for reconstruction projects, it will take 78 years to rebuild Gaza. Only 28% of its work programme for Gaza has been approved by Israel, and only half of the materials needed for approved projects have entered into Gaza. UNRWA wants to build 100 schools, but at the moment has permission for only 42. The UNRWA schools are vital, because they teach the lessons of the holocaust and of the universal declaration of human rights. If a child cannot get a place at an UNRWA school, he or she might end up unable to go to school at all, or might attend a school with a curriculum approved by Hamas or another extremist group.

What is the UK doing? We continue to press the Israeli Government bilaterally to ease the movement and access restrictions. We have consistently lobbied the Israeli Government at ministerial and official level, in close co-ordination with the office of the Quartet representative and European Union partners. The Department for International Development supports the UN Access Coordination Unit to work with the United Nations, Israel, the Palestinian Authority and aid agencies to facilitate the transfer of vital humanitarian assistance, including medical equipment and supplies, in and out of Gaza. DFID has also contributed to a greater international understanding of the situation in Gaza and the impact of the blockade. Earlier this year, DFID-funded reports by the World Food Programme and the UN Office for the Co-ordination of Humanitarian Affairs provided detailed and impartial analysis of the situation in Gaza, and that has provided a solid, analytical basis for our work with partners in identifying ways to improve the situation.

We are also providing support through our programmes. Immediately after Operation Cast Lead, we concentrated on humanitarian aid, working with the UN, the International Committee of the Red Cross and NGOs to provide drinking water, food, shelter, medical assistance and support for those traumatised by the conflict. Our current work on Gaza addresses the key access constraints, promotes economic growth and provides support to the poorest and most vulnerable parts of society.

The UK supports the Palestinian Authority and UNRWA to provide basic services, such as education and health, to the people of Gaza. About 50% of our support to the Palestinian Authority and 30% of our support to UNRWA benefits the Gazans. We provide 2,400 vulnerable families with work and an income through our support for UNRWA’s back-to-work programme, and we help to develop the private sector by supporting 304 small companies in Gaza and generating jobs for more than 1,800 unemployed Gazans. We also provide food vouchers to 5,750 poor households through our support to the World Food Programme, enabling them to purchase the basic food items, such as bread and milk, that they need to survive. We help 24 UN agencies and 132 international NGOs to get aid and goods into Gaza through our support to the UN Access Coordination Unit and the Palestinian Authority’s crossing co-ordination committee.

We understand Israel’s security concerns, but for a peace settlement to work any future Palestinian state must be economically viable.

[Michael Connarty]

Will the Government take up with some priority the matter of much-needed medical drugs, particularly for the treatment of cancer? It is ridiculous to deny people cancer-treatment drugs because of the dual-use nonsense.

[Mr O'Brien]

I am happy to undertake that we will look into that, to see what the situation is and what can be done, not least because of the commitments that I have just listed, particularly our help in ensuring that there are supplies for assisting with medical needs—not just in emergencies, but for ongoing health requirements.

In the last couple of minutes of the debate, I shall touch on the broader process. We in the UK hope that the reconciliation agreement between Fatah and Hamas announced in May this year will lead to the formation of a Government who reject violence and pursue a negotiated peace. We will judge any future Palestinian Government by their actions and their readiness to work for peace.

It is clear that negotiations towards a two-state solution are the only way to meet the national aspirations of both Israelis and Palestinians and to achieve a sovereign, viable and contiguous Palestinian state living alongside Israel in peace and security. We therefore call on both parties to resume talks on the basis of clear parameters, including borders based on 1967 lines with agreed land swaps, security for Israel that respects Palestinian sovereignty, a just and fair resolution of the refugee problem, and Jerusalem as the future capital of both states.

We want the new generation of Palestinians to grow up in hope, not despair, and to believe in a peaceful settlement with Israel, rather than being impoverished and susceptible to terrorist recruitment. We want the next generation of Israelis to live free from the fear of rocket fire, and able to enjoy peaceful relations with their Arab neighbours. We cannot deliver that for either side, but as friends to both the Israelis and the Palestinians, we will work with our international partners to help deliver progress in the peace process. We remain a strong supporter of those who are building the institutions of a future Palestinian state.

UK Environment Capital (City of Peterborough)

Tuesday 13th September 2011 Westminster Hall

13:30

[Mr Stewart Jackson (Peterborough) (Con)]

It is a pleasure to serve under your chairmanship for the first time, Mr Dobbin. I am also delighted to welcome the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), who is doing an excellent job in his ministerial capacity. I am somewhat surprised, as I was expecting the enterprise Minister, the hon. Member for Hertford and Stortford (Mr Prisk), but my right hon. Friend is a more than adequate substitute. This is my opportunity to showcase the city of Peterborough’s positive and innovative growth agenda, particularly our aspiration to be the home of the UK environment capital, and to put on record our belief that we have a good case for being the future home of the new green investment bank.

From time to time, I have disagreed with Peterborough city council about the quantity of housing development in the city. I have also expressed concerns, as have many Members over the years, about the correlation between residential development and infrastructure. However, I believe that we are resolving those issues. Peterborough city council, the urban regeneration company Opportunity Peterborough, neighbouring Members of Parliament and I share ambitious plans for the future of Peterborough, which I will elucidate.

Peterborough’s population of 170,000 is set to grow to well over 200,000 by 2021, and there are plans to deliver more than 25,000 homes and 24,000 jobs by 2026. A McKinsey report published this year predicted that by 2025, Peterborough would have the highest growth in GDP of any English city. Private sector job growth is vital to the city’s economic prosperity and growth. Peterborough’s location—just 46 minutes from London by train, with direct links to the north of England, Birmingham, Cambridge and Stansted airport—makes it a nationally and internationally well-connected city that attracts and retains businesses.

The city’s economic growth is based on strong sectoral foundations. I will mention its environmental and financial businesses in a moment. Peterborough’s manufacturing companies have outperformed many competitors and include global giants such as Caterpillar Perkins, Dresser-Rand and Applied Energy. In printing and media, Peterborough boasts Bauer Media, Europe’s largest privately owned publisher, and Ideal World, digital broadcaster to more than 22 million homes in the UK. In food and drink, the full spectrum from processing and packaging to innovation and cutting-edge technology is covered by companies such as Coca-Cola, New Covent Garden Food Co., Masterfoods, British Sugar and AB Agri.

Although nowhere has been wholly unaffected by the recession, Peterborough has performed relatively well, creating over 3,000 private sector jobs in the past year. Investment has continued to head to the city. New high-profile operators such as TK Maxx, Nando’s, Patisserie Valerie, Van Hage, Andronicas, Pandora and Superdry have all set up in Peterborough recently, and imminent arrivals such as Kelway IT services and Stobart Group are due to deliver more than 700 jobs.

Given its accessibility, Peterborough’s economic growth is available to a wide geographic area. The city has taken a lead role in the development of the Greater Cambridge and Greater Peterborough local enterprise partnership and is assisting in the delivery of the enterprise zone at Alconbury in Huntingdon, ensuring that the zone’s benefits are more widely exploited. I must put on record my disappointment that the local enterprise partnership did not push for the Peterborough railway corridor, which would have had greater resonance as a catalyst for change, built on our regeneration, and had a bigger social and economic impact. However, that was the LEP’s decision. While I am making minor complaints to my ministerial colleagues, I must say that Peterborough’s exclusion from the national insurance contributions holiday will have had a slight impact on people minded to set up businesses in Peterborough, at the border between the east midlands and the east of England, rather than in the east midlands, Lincolnshire or Northamptonshire. However, those are my only gripes.

As we know, the east of England contributes significantly to the national economy, to the tune of £30 billion a year. As a powerhouse for growth in the area, Peterborough could have a positive impact on the UK economy, and its environmental credentials could make it an exemplar city for sustainable growth.

Peterborough was designated as an environment city in 1993 and became the home of the environment capital in 2010. The city’s environment capital is a collection of assets including, among many other things, a unique cluster of environmental businesses, innovative approaches to understanding environmental performance, development of the UK’s largest zero-carbon homes project, one of the highest amounts of green space per capita in the UK and a drive for sustainability at the core of all its activities. More than 380 organisations and businesses constitute the environment cluster, including Government and voluntary organisations such as Natural England, the Environment Agency, the Wildlife Trust and Froglife and international consultancies such as Halcrow, Royal Haskoning and the Rolton Group. It also includes major businesses such as Dresser-Rand, which is developing energy from wave technologies, Caterpillar Perkins, formerly Perkins Engines, which is reducing engine CO₂ emissions, and Anglian Water, which is delivering leading-edge innovation in water management.

Peterborough Environment City Trust is delivering nationally unique environmental programmes, attracting funds for major retrofit projects, developing community skills through its Greeniversity programme and the Green Apple resource kit and awards for local schools and involving more than 400 local businesses in environmental management improvements through its Investors in the Environment scheme. With 295 code 6 homes on the south bank of the River Nene, Peterborough will be the country’s biggest carbon challenge city. The city is also developing innovative utility provision to support housing and economic growth through a council-led energy services company installing photovoltaic and other energy solutions for council property.

As one of three Department for Transport sustainable transport demonstration towns—an initiative branded as Travelchoice—the city has achieved a significant shift towards more sustainable travel modes, including a 35% increase in the number of bus passengers between 2004 and 2009, a 14% increase in walking and a 12% increase in cycle journeys. The recent award of a £5 million Department for Transport grant to Travelchoice reflects the transformations already achieved and will enable the city to develop them further.

The 2008 Government-commended integrated growth study produced by Arup on behalf of the city council demonstrated how the city could meet its ambitious growth targets while achieving environmental, economic and social sustainability. Data sets from the study underpin the pioneering Peterborough model, a web-based visualisation of city-wide environmental performance developed through a public-private collaboration. The model has received interest from as far afield as New York, Cape Cod and Bordeaux, as well as closer to home from Her Majesty’s Treasury, to support the green infrastructure plan.

Skills development is key to the city’s future. The city council has recently partnered with Cranfield university to establish the Centre for Renewable Energy and Bio-Fuels and is supporting the commercial research and development of algae biofuel energy. That brings me to the bid for the green investment bank. The pioneering work of the coalition Government in establishing the green investment bank requires relevant expertise in the host city and a similarly innovative attitude. As the home of the environment capital, Peterborough has unrivalled expertise in environmental sustainability, with its 380 businesses and organisations, its innovation networks, which reach across the globe, and its innovative mapping of environmental performance through the Peterborough model.

Peterborough also has more than 27,000 people working in the financial sector, proportionally more than the east of England and the United Kingdom. Major companies with main offices in Peterborough include the insurance operators the BGL Group—famous for the meerkat adverts—Royal Sun Alliance and Diligenta, which is part of the giant Tata Consultancy Services conglomerate. Other financial operators include BNP Paribas, Handelsbanken, the Lloyds Group, Aldermore, Travelex and Clydesdale Bank. Many of these companies have announced significant growth and expansion, even during the recession.

Innovation is key to the financial as well as environmental performance of the city. Local companies such as PinPlus, for financial security, iGo4, for insurance, and indeed the city council, through its mortgage partnership with Lloyds TSB, are all leaders in creative approaches to finance. In these difficult times for first-time buyers, I commend in particular the collaboration between the city council and Lloyds TSB in providing much-needed finance for first-time buyers. I certainly commend it to other local authorities.

In Peterborough, the green investment bank would have access to unparalleled levels of financial and environmental expertise and innovation, as is already demonstrated by the Treasury’s interest in using the Peterborough model to support the green infrastructure plan.

In conclusion, Peterborough is ambitious and growing, with a work force to match. The city is actively exploring pioneering public-private partnerships to remove the burden from the taxpayer without slowing progress in the city. Innovation in all areas of environmental, financial, economic and social capital is matched by understanding infrastructure needs and opportunities.

I will finish with a quote from Diligenta, which is a subsidiary of the huge Tata group, is a leading player in UK life and pensions business process outsourcing, and has a headquarters in the city. It says:

“Peterborough…has great infrastructure that supports a vibrant economy and a financial sector presence. We strongly recommend it as an excellent location for any business looking to invest.”

Peterborough is moving forward and grabbing the opportunities of the Government’s growth agenda. I look forward to hearing the Minister’s response.

13:43

[The Minister of State, Department for Communities and Local Government (Greg Clark)]

It is a pleasure to serve under your chairmanship for the first time, Mr Dobbin, and to be able to respond to the debate initiated by my hon. Friend the Member for Peterborough (Mr Jackson). He has referred to the Peterborough model, and I think that he is the Peterborough model of a Member of Parliament who is absolutely passionate about his constituency and who represents it with the vigour for which that city is itself famous.

As my hon. Friend has said, Peterborough is a growing city. Even during the recession, it has performed well with 3,000 new jobs announced last year. It has great strength in sectors such as the environment, manufacturing, finance and investment. It is a city with innovation at its heart, with its Eco-Innovation Centre and Water Innovation Network. Cranfield university is not far away and Peterborough is working with it to establish a commercial research and development base in algae biofuel technology.

As my hon. Friend has indicated, Peterborough’s leading role in the Greater Cambridge and Greater Peterborough local enterprise partnership, which was announced in October, is a major positive force for the economy. There are great hopes for that local enterprise partnership, being, as it is, such a concentration of some of our most promising businesses and industries.

My hon. Friend has mentioned the new enterprise zone in Alconbury. It is outside his constituency, and I acknowledge his point about the Peterborough railway corridor. I say to him that that was the choice of the local enterprise partnership, and I know that his constituents will benefit from the general uplift that it will give to the whole area. Moreover, many of the powers in a local enterprise zone are in the gift of local authorities to bestow on other areas to create, as it were, enterprise areas. On simplified planning, for example, a new discretion will be available in the Localism Bill to give business rate discounts to particular types of businesses for start-ups. The proposed reforms to the local government finance system will allow authorities to retain the benefit of the uplift in business rates. I hope that, when he returns to Peterborough, my hon. Friend will encourage both the local enterprise partnership and the city council to think about how some of the benefits of the local enterprise zone in Alconbury might be conferred on the area in Peterborough that he has mentioned.

The unique model of the Peterborough skills vision of brokering direct links between local business and schools and colleges is another area that other cities are looking to replicate. Peterborough has so much more to offer besides, such as a spectacular cathedral and excellent rail links, which my hon. Friend has mentioned, as well as being the home of the Posh and of one of my great heroes, Peter Boizot.

The green economy is important to the whole country and I am aware that that applies nowhere more than in Peterborough—350 eco-businesses are located there and it has 29 conservation areas and an amazing commitment from its people to improve the city’s environment, as they have done over time. Peterborough’s long-standing association with the environment is clear. It was designated an environment city 15 years ago—one of only four at the time—and it recently celebrated its 20th green festival. In addition, I was pleased to hear about Peterborough’s recent environmental business successes with a Queen’s award for enterprise and the international interest generated by the Peterborough model, which my hon. Friend has mentioned and which brings the city’s environmental performance data to life through an online visualisation.

Peterborough is right to be so committed to the green economy. The green economy in the UK was worth more than £116 billion in 2009-10. By 2015, the sector is expected to employ more than 1 million people. We are taking action now to put the whole economy on a low-carbon, resource-efficient path. UK expertise and innovative low-carbon businesses can lead the way in refocusing our economy to capture the global opportunities that were worth £3.2 trillion in the past year alone and are forecast to grow by about 4% a year over the next five years.

A greener, low-carbon economy is one of the key areas that we have focused on in our plan for growth. The Government recently published plans that map out the Government’s action to enable the transition to a green economy, including areas such as climate change, resource efficiency, waste prevention and carbon capture and storage. These plans will form the basis for continuing dialogue between Government, business, universities and communities.

We understand that business needs to invest substantial resources, but it needs to be confident that this is at the heart of the Government’s agenda. I hope that it can see that it clearly is. We are putting in place the policies that will establish the long-term framework in which investment decisions can be made with confidence. Providing that consistency creates an attractive environment for investment, which, by its very nature, will pay dividends over a long period.

We are committed to substantial reductions in carbon emissions. We have launched the world’s first incentive scheme for renewable heat, which should increase investment in green heat technologies, and we are launching the green deal, under which householders, businesses and landlords will be able to improve the energy efficiency of their homes and buildings at no up-front cost. We are also introducing a carbon price floor, proposals on electricity market reform and a range of initiatives to encourage the roll-out of green vehicles.

High-quality economic infrastructure is important for any competitive, growing economy. The transition to a green economy will require unprecedented investment in green infrastructure in key areas. Hundreds of billions of pounds, mostly from the private sector, will be required in the energy sector alone. In the long term, the benefits to be gained from that action will be much greater than the costs of taking it. To ensure that a lack of sufficient finance is not a barrier to the scale and pace of the transition, we need to go beyond existing policies.

To that end, we have announced our intentions for the green investment bank, which is the first of its kind in the world and one of the Government’s top priorities. The green investment bank will be dedicated to providing financial solutions to accelerate and increase private sector investment. A new institution rather than a series of Government interventions is required, and the green investment bank will build the necessary deep expertise in financial markets and green investments. It will be an institution that complements our existing green policies and addresses the areas of under-investment that persist in spite of the other measures I have mentioned.

Our green objectives are ambitious, and to achieve them we need tailored and targeted financial intervention to overcome under-investment in those key areas. The green investment bank will work towards a double bottom line of achieving a significant green impact and making financial returns. There has been a great deal of interest in the green investment bank and I know that my hon. Friend is keen to understand where we are with setting it up and to ensure that Peterborough is well represented in those considerations.

We are at the early stages of establishing the green investment bank, and there is much to be done. Our proposals need to be approved by the European Commission before we can establish the bank as a fully independent financial institution. However, we know that there is a need for early action, so my Department will start to make direct state-aid-compliant investments in green infrastructure projects from April 2012. The advisory group, which was recently appointed and which met for the first time last week, will provide us with advice on the establishment of the green investment bank, including what its strategic priorities should be. Those priorities will then be decided by the Secretary of State and will be regularly reviewed by Ministers and the institution’s corporate board.

We will also need to decide on the bank’s location. Although it will not be a large institution, we know that people already see it as a valuable organisation and an asset to wherever it will be located. We are currently defining a process to decide the location that will build on the criteria we published in our May update on the green investment bank. We will, of course, make an announcement in due course about the process and ensure that all those who have already expressed an interest are kept informed.

We believe that a green economy is a growing economy and welcome Peterborough’s commitment to green growth. Through our green policies, our work with businesses and the green investment bank, we believe that we are firmly on our way to achieving that vision of a green economy. We will continue our work to establish the green investment bank, including the design of a process to decide the location, and we hope to make an announcement on progress as soon as it is sensible to do so.

I pay tribute to my hon. Friend for the consistent interest that he has taken in the green powerhouse that is the city of Peterborough’s potential in this area. No one in his city should doubt the fact that they could not wish for an advocate who has a stronger or more respected voice in this House. It has been a privilege to respond to his debate and to serve under your chairmanship, Mr Dobbin.

Question put and agreed to.

13:52

Sitting adjourned.

Written Ministerial Statements

Tuesday 13th September 2011 Written Statements

Tuesday 13 September 2011

Tax Policy Consultation and Draft Finance Bill 2012

Tuesday 13th September 2011 Written Statements

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The Government’s approach to tax policy making puts consultation on policy and scrutiny of legislation as the cornerstones.

Over the summer, HM Treasury and HM Revenue and Customs have been seeking the views of interested parties on the tax policies announced at Budget 2011. Responses to these consultations will be published on or by 6 December 2011.

As part of the next stage of consultation draft legislation for these measures, to be included in Finance Bill 2012, will also be published on that date. This will be supplemented by draft explanatory notes and tax impact and information notes. The draft clauses will be open to consultation until 10 February 2012.

Olympic Delivery Authority (Ministerial Guarantee)

Tuesday 13th September 2011 Written Statements

[The Minister for Sport and the Olympics (Hugh Robertson)]

The Olympic Delivery Authority (ODA) has entered into an agreement for Qatari Diar Athletes Village UK Ltd (QDD) to purchase 1,439 homes and associated ground floor retail units in the Olympic village development, together with six adjacent future development plots having the potential for a further 2,000 new homes in the public realm, which benefits both the Olympic village and the development plots. As Minister for the Olympics and an authorised signatory for the Secretary of State for Culture, Olympics, Media and Sport, I have signed a guarantee given in support of this agreement.

QDD is a wholly owned subsidiary of QDD Ltd, a joint venture between DV4 Ltd, a real estate investment fund advised by Delancey (a specialist real estate investment company with a property portfolio across the UK) and Qatari Diar Real Estate Investment Company (a real estate investor and developer owned wholly by the Qatar Investment Authority).

The agreement is between QDD and the Olympic Delivery Authority (ODA) for the sale of SVDP Ltd, a wholly owned subsidiary of the ODA which holds the ODA’s interest in the village (and associated development plots and public realm) on its behalf.

The ODA has provided various undertakings, indemnities and warranties under the terms of the agreement with QDD. In essence, these oblige the ODA to build and convert the village units from athletes’ use at games time to private housing and deliver wider Olympic park infrastructure. The ODA has no significant sources of funding other than the public sector funding package and is expected to have a limited life span that many of the obligations are expected to exceed. In such circumstances, and given that the obligations go beyond the lifetime of the 2012 games, I have agreed to a ministerial guarantee of the ODA’s obligations. Such a guarantee is provided for under the London Olympic Games and Paralympic Games Act 2006.

All of the ODA’s obligations to QDD are within the ODA’s existing scope and budget therefore no additional funding is required to meet these obligations. However if, due to unforeseen circumstances, additional funding is required there is access to ODA programme contingency, and if that was exhausted, to the public sector funding package contingency for the Olympic programme as a whole.

The obligations do not constitute additional contingent liabilities because the obligations covered by the guarantee can be funded within the overall public sector funding package for which a contingent liability was announced to Parliament in March 2007.

The coverage of this guarantee is very similar to that provided in 2009 in support of the agreements entered into by the ODA with Triathlon Homes LLP for the purchase of 1,379 affordable homes on the Olympic village development. Parliament was informed of the Triathlon guarantee by the then Minister for the Olympics the right hon. Member for Dulwich and West Norwood (Tessa Jowell) on 22 June 2009, Official Report, columns 47-48WS).

At the point at which the ODA is wound up, any subsisting rights and obligations under the agreements with QDD will be managed and considered as part of the Government’s decision at the time on the allocation of the ODA’s remaining assets, rights and liabilities.

Service Voter Registration

Tuesday 13th September 2011 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)]

I have today placed in the Library of the House a copy of the report of a survey on service voter registration levels in 2010 conducted by Defence Analytical Services and Advice in January 2011. As in previous years the survey was conducted to provide an estimate of the numbers of armed forces personnel who are currently registered to vote, and to assess the success of our information campaign.

I welcome the survey. It indicates that 75% of service personnel are registered to vote, up from 69% in 2009 and 60% in 2005. This represents the highest level of service registration since I first raised the issue back in 2005. Of those registered in 2010, the majority (77%) chose to register as ordinary rather than service voters. The level of voters registered as overseas voters has remained at 1%.

We recognise that there is still work to be done. Alongside the challenges presented by service mobility and the high proportion of young personnel in our armed forces, the results of the survey will help to inform how and where we should best concentrate our efforts in the future. We continue to work closely with our colleagues in the Cabinet Office and the Electoral Commission to further improve the quality and timeliness of information available to our service personnel and their families. It remains our firm commitment to improve arrangements for the service community to enable them to play a full part in the electoral process.

Oil Release (Gannet Field)

Tuesday 13th September 2011 Written Statements

[The Secretary of State for Energy and Climate Change (Chris Huhne)]

An oil release from a pipeline in Shell’s Gannet F development, totalling approximately 218 tonnes¹ occurred during the period from 10 to 19 August 2011. The oil dispersed naturally well away from the shore and the UK-Norway median line and there has been no evidence of any significant environmental impact to date resulting from this release.

An oil sheen on the sea surface was observed by Shell personnel on Wednesday 10 August, and my Department was notified on the same day that a leak had occurred. A DECC inspector was in regular communication with Shell from that point. On the evening of August 11, DECC was notified that the release had stopped. However, Shell provided DECC with further aerial surveillance information late on the afternoon of Friday 12 and it became clear that the release was continuing and that there was potential for significant pollution. The Secretary of States representative for maritime salvage and intervention (SoSREP) was immediately notified and he mobilised to Shell’s headquarters on Saturday 13 August. A team from DECC and Marine Scotland was assembled at Shell’s offices to attend an operations meeting that afternoon, with the SoSREP formally establishing an operations control unit at Shell’s office at 9 am on Sunday 14 August.

The role of the SoSREP is to represent the Secretaries of State for the Department of Energy and Climate Change (in relation to offshore installations) and the Department for Transport (in relation to ships) to ensure the risk to safety, property and the UK environment arising from accidents involving ships, fixed or floating platforms or sub-sea infrastructure is eliminated or effectively reduced.

In the case of an offshore oil release, the SoSREP monitors the operator’s response to a pollution incident and, if he deems necessary, has powers to give directions and to take such other actions as may be required where there is or may be a risk of significant pollution. The SoSREP is empowered to make crucial and often time-critical decisions, without delay and without recourse to higher authority, where such decision are in the overriding public interest. The SoSREP has been in close contact with DECC and the Scottish Government Ministers throughout.

On 14 August, a survey by a remotely operated vehicle confirmed that the initial leak had been stopped, but a second, smaller, leak was continuing. The survey also discovered that the pipeline bundle, within which the oil flow-line was contained, had lifted from the seabed in a number of places. Action to halt the continuing small leak had to be deferred until the pipeline could be stabilised. With the approval of the SoSREP, Shell partially stabilised the pipeline by laying concrete mattresses on it, and the second leak was then halted on 19 August.

The operations control unit remains in place and the SoSREP is continuing to work with Shell as they develop plans to remove the remaining inventory in the pipeline (estimated at 660 tonnes of oil).

Although this incident is in no way comparable with major pollution incidents such as the gulf of Mexico—in the case of Macondo it is estimated that 4,900,000 barrels of oil were released to sea, the Gannet release equates to 1,300 barrels—this is nevertheless the largest oil release on the UKCS in over a decade.

My Department and the Health and Safety Executive have commenced investigations into the cause of the incident, which are likely to take some months. A full report will be sent to the procurator fiscal to consider whether a prosecution is appropriate.

¹It is difficult and takes time to get an accurate assessment of the size of a release and this is subject to ongoing revision.

Imports of Animal Products

Tuesday 13th September 2011 Written Statements

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

As required under the Animal Health Act 1981 (as amended by the Animal Health Act 2002) the Government will publish today a review of controls on the import of animal products for the financial year 2010-11.

Following my first year as Minister of State responsible for agriculture and food, I welcome the opportunity again to report on the actions made by the Department for Environment, Food and Rural Affairs (DEFRA) and other Government Departments and agencies during the past year aimed at reducing the risk of disease entering the country via imports of animal products.

The Government remain committed to strong action to prevent illegal imports of animal products from outside the European Union (EU) that may bring the risk of diseases that can threaten animal and public health, for example foot and mouth disease (FMD) and highly pathogenic avian influenza type H5N1 respectively. There is also the substantial risk to the economy as we know from the outbreak of FMD in 2001 which is estimated to have cost £3 billion relating to agriculture and the food chain.

Following the spending review, DEFRA with the UK Border Agency (UKBA), the Foreign and Commonwealth Office (FCO) and the Food Standards Agency (FSA), albeit at low or no cost, have continued to undertake a joined-up approach on the overall communications strategy and seek opportunities to help raise travellers’ awareness of the rules on personal imports of animal products.

It is also pleasing to report the existing intelligence framework between UKBA and the FSA has been strengthened to improve the flow of risk information available for border and inland enforcement activities to target illegal animal products.

We can never have a zero risk but we continue to monitor and assess the changing threats from around the world. We therefore continue to work closely with the UK Border Agency (UKBA) to ensure that its anti-smuggling controls at the Great Britain (GB) border are responsive to new or changing animal health risks and to ensure it focuses on the most high-risk routings and goods.

Copies of the review will be placed in the Libraries of both Houses, on the DEFRA personal food imports website (http://www.defra.gov.uk/foodfarm/food/personal- import/index.htm), and we will be writing to interested groups and stakeholders providing them with the opportunity to comment on or query anything in the review and/or meet officials.

English National Park Authorities and the Broads Authority (Governance)

Tuesday 13th September 2011 Written Statements

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

The nine national parks in England, along with the broads, represent some of our finest landscapes which have been a source of inspiration, challenge, and reassurance to our citizens over many generations. Each now has an independent authority, constructed along local authority lines, to maximise the benefits which we all derive from these special areas. In the coalition’s programme for government we said that

“We will review the governance arrangements of national parks in order to increase local accountability”

That commitment was honoured by a public consultation which ran from 9 November 2010 until 1 February 2011. In the consultation document we made it clear that the Government did not intend to remove or replace the authorities but was rather looking for ways in which their governance arrangements could be improved. We also made it clear that there could be variety between authorities—this would allow governance to better reflect their individual circumstances and histories and be consistent with the coalition Government’s commitment to decentralisation and localism.

I am today responding to the NPAs’ proposals by placing on DEFRA’s website and in the Library of the House a list of the proposals made by the NPAs and my response to them.

Central to this consultation was the question of accountability and the ultimate accountability is of course through the ballot box. Ever since the original legislation was being enacted in 1995, there have been calls for some members to be directly elected and that already happens in the Scottish NPAs. I have concluded that the time has now come for us to explore that option more thoroughly in England. I therefore propose to bring forward legislation which will allow for the possibility of elections in the national park authorities and the broads authority. Initially we propose to apply the new legislation in two NPAs on a pilot basis, namely the New Forest and the Peak district NPAs which provide different contexts on which to assess the impact of directly elected members.

DEFRA will be talking to the New Forest and Peak district NPAs in more detail about their pilots, covering in particular the number of members to be directly elected and the way they can be accommodated without increasing the overall size of those authorities.

Other changes include: altering the composition of the Dartmoor, Lake District and Exmoor authorities; some changes to the procedure for selecting “national” members (within the requirements of the OCPA code); removing the Secretary of State’s role in confirming parish appointments; in some NPAs (but not all) making non-councillors eligible for parish seats; applying a maximum limit to the period which all members may serve; requiring annual reports on how well the members of each authority have collectively performed and endorsing a number of changes which NPAs can make under their existing powers—for example, strengthening links between members and particular areas of the park or improving meeting arrangements. I also propose further work in some areas.

A number of the actions I have outlined will require formal consultation and others require further development in co-operation with relevant bodies such as the NPAs and the Local Government Association. An implementation plan is being prepared which will present this information in tabular form and will be available on DEFRA’s website (www.defra.gov.uk).

Northern Ireland Human Rights Commission (Annual Report 2010-11)

Tuesday 13th September 2011 Written Statements

[The Secretary of State for Northern Ireland (Mr Owen Paterson)]

I have today laid before this House a copy of the Northern Ireland Human Rights Commission’s annual report and accounts 2010-11, in accordance with schedule 7 paragraphs 5(2) and 7(3)(b) of the Northern Ireland Act 1998.

This is the 12th annual report published by the Commission.

Grand Committee

Tuesday 13th September 2011 Grand Committee

Tuesday, 13 September 2011.

Public Procurement as a Tool to Stimulate Innovation: Science and Technology Report

Tuesday 13th September 2011 Grand Committee

Considered in Grand Committee

15:31

Moved by

[Lord Krebs]

That the Grand Committee do consider the first report of the Science and Technology Committee, Public Procurement as a Tool to Stimulate Innovation.

Relevant Document: Public Procurement as a Tool to Stimulate Innovation (1st Report, HL Paper 148).

[Lord Krebs]

My Lords, I thank the members of the Science and Technology Select Committee for their excellent contributions to this inquiry and to the report. I also thank our specialist adviser, Dr Paul Nightingale, for his valuable expert advice. My aim in introducing the debate is to give noble Lords an overview of the nature of the inquiry and some of our principal findings. I am sure that others will consider particular aspects of the topic in more detail.

I thank the Minister for the Government’s response to our report, and later I will refer to some of the key points in this response. First, let me be clear about definitions. According to the Merriam-Webster dictionary, “to procure” has two definitions: first, to obtain by particular care and effort; secondly, to get and make available for promiscuous sexual intercourse. To avoid doubt, our inquiry concerns itself with the former definition.

By the word “innovation” in our inquiry, we mean the stimulation and exploitation of new ideas. This could encompass a novel application of an existing idea; a novel product, process or system; or the successful translation of an idea from elsewhere. An example of that last form of innovation is the Oyster card, which was successfully introduced into London’s transport system in 2003, but was based on the concept developed in Hong Kong with the Octopus card and in Singapore with its EZ-Link card.

In 2009-10, the UK public sector spent £236 billion, approximately one-seventh of GDP, on buying goods and services. It is the largest single customer in the country. The focus of our inquiry was simply this: do the Government and other public sector bodies use this massive purchasing muscle to drive innovation? Why should they? We saw two potential benefits of seeking innovative solutions in public procurement. First, it could lead to better solutions and better value for money for the public. Secondly, and not incompatibly with the first, it could stimulate innovation among UK businesses. This latter point is echoed in a very recent survey of 368 companies by Logica, which recommends,

“the introduction of a policy under which public sector contracts are awarded only to companies that demonstrate a commitment to the principles of open innovation and foster a collaborative approach with small businesses and academia”.

While we recognise that much procurement is routine and simply involves reordering the same product or service as last time, there are situations, perhaps many, in which an innovative solution to a problem is better. However, from the evidence we heard we concluded that all too often those responsible for public procurement take the tried and tested route as the default. We are by no means the first to look into this question. For example, in 2009 the Business and Enterprise Select Committee in another place and the National Audit Office both concluded that the Government could do better. The NAO said:

“Only a few departments have strategies which show that they understand where they need innovation or how to encourage and support it”.

It is not that there is a shortage of government reports relating to the question of procurement and innovation—in fact, plenty of trees have been chopped down to write about it—but the evidence we received showed that the writing has not led to action. I shall mention just a few of these reports. One is Transforming Government Procurement, published in 2007. Another is The Race to the Top, the excellent report by the noble Lord, Lord Sainsbury, also published in 2007. I quote his conclusion:

“Government departments can play an important role in stimulating innovation in the companies with which they interact, but in the absence of a clear directive and adequate resources, they are failing to meet the challenge”.

Innovation Nation, a report published in 2008, said:

“In some specific areas, government can provide more direct support using regulation, public procurement and public services to shape the market for innovative solutions”.

These reports and others have led to the establishment of specific initiatives to help to stimulate innovation, including notably the Technology Strategy Board and the Small Business Research Initiative. However, we noted that these initiatives account for only a tiny fraction—around 0.1 per cent—of the public procurement budget. We are urging that, where appropriate, innovative solutions should be embedded into the mainstream of public procurement and not sidelined into specific initiatives. We found no convincing evidence that the various reports, a small selection of which I have referred to, have led to a systematic and coherent change of culture among civil servants and others responsible for public procurement. In fact, as so often seems to happen in this country, excellent reports are placed in the filing cabinet with the “Job done” box ticked.

From our inquiry, we concluded that three important changes are needed. First, there needs to be stronger overall leadership from Ministers. We recommended that one Minister should have overall accountability across government for innovation in procurement, rather than the present split between BIS and the Cabinet Office. BIS has responsibility for innovation policy, while the Cabinet Office—particularly the Efficiency and Reform Group—deals with procurement policy, with an emphasis on streamlining processes and securing value for money. Although we were told that the Cabinet Office recognises that innovation is not an alternative to value for money, we would like to be convinced that this is properly understood by decision-makers and those responsible at all levels. We also recommended that within departments there should be a lead Minister with responsibility for innovation and procurement. That is the first thing that we felt needed to change.

Secondly, there needs to be a better link within departments between the research base—both in academia and industry—and civil servants, so that those responsible for procurement know about the whole range of potential technologies and solutions and are able to act as intelligent customers. We recommend that departmental chief scientific advisers should play a role in improving these linkages with the research base in academia and industry. We also recommend that chief scientific advisers, in improving the “intelligent customer” capability of departments, should help in horizon-scanning to anticipate long-term implications of procurement.

The Foresight programme in the Government Office for Science could play a role here in highlighting longer-term issues. To give an example, the director of group procurement at Transport for London told us that TfL’s long-term time horizon was about 20 years, which implied that procurement decisions that it made would not take into account the effects of, for example, climate change. This is an extraordinary situation, if true, for a procurer of infrastructure that may last for a century or more. Although TfL told us later that the evidence it had originally given us was incorrect, the mere fact that there was a lack of clarity within the organisation does not inspire confidence that long-term thinking is a priority in its procurement decisions. That is our second point.

Our third general point is to do with the culture of risk aversion. It is a long-standing fact, recognised in many commentaries and reports, that those responsible for public procurement are risk averse. You can see why; when a major procurement project goes wrong, people are blamed. This reinforces the view that taking risks is a bad thing. However, properly managed risk-taking, with proper intelligence to back it up, is not necessarily bad; it could be good.

The changes to which I have referred—the three points—refer primarily to central government departments. However, we must bear in mind that, as the report makes clear, most public procurement is carried out by other public bodies. There is a further crucial challenge of how to embed the changes to which I have referred in other organisations that procure goods and services.

Although the report is concerned with procurement across the public sector, we looked in more detail at the Department for Transport. Here there was bad news and good news. The bad news was that the divisional manager of procurement policy and contracts in the Department for Transport told us that the department lacked an overarching strategy for innovation in procurement. This was a view echoed by Happold Consulting. I very much hope that by now this has been rectified.

However, we also heard good news from the Department for Transport—good examples of innovation in procurement. For example, Professor Brian Collins, who was then the departmental chief scientific adviser, told us how he had facilitated the translation of new research funded by the EPSRC into the procurement for the Thameslink project, and that this new technology and innovation would improve the flow of passengers on and off trains. This example underscores our point that the departmental chief scientific advisers could play an important role. Professor Collins, because of his connections to the research world, knew who was doing relevant work and saw how it could be applied. Knowing who and what to ask is a key element of being an intelligent customer.

The Highways Agency also gave us some good examples of its incorporation of innovative solutions, including the variable speed limit system to manage congestion. It is now not only implemented in 35 schemes in the United Kingdom but implemented and sold abroad. I hope that the Minister will explain how good examples such as these are now being taken as a lead for others to follow, and what is being done to embed this kind of thinking throughout government departments and the wider public sector.

We also heard that one important obstacle to potential suppliers of innovative solutions are the cumbersome and bureaucratic processes for public procurement. Therefore, we were pleased to hear from the Minister for the Cabinet Office that the Efficiency and Reform Group is determined to simplify the procedures. However, that group is concerned with central government spend, which, as I have mentioned, accounts for only a fraction of total public sector procurement. It was not clear to us how the benefits of its reforms will be cascaded out to other public bodies. Nor was this clarified in the Government’s response to our reports. I hope the Minister will develop this a little further.

The Government’s response to the report welcomed many of the report’s recommendations and pointed to certain changes that have already been implemented—for example, the appointment of Crown representatives to lead strategic discussions with potential suppliers and thereby, we hope, foster innovative solutions in public procurement. I do not intend to go through the Government’s response in detail, but I shall mention a few key points. The potentially positive changes highlighted in the response include improved training for those involved in procurement and the use of outcome-based specifications. We welcome these changes. However, there are also disappointing aspects to the Government’s response, including their rejection of our recommendation of a single Minister in overall charge of innovation and procurement across departments.

The response also places a great deal of emphasis on the small-scale initiatives to which I referred, rather than on mainstreaming innovation thinking throughout the public sector. I would like the Minister to assure us that the Government intend to mainstream innovation thinking in procurement, not to rely solely on small and as yet unproven initiatives such as the small business research initiative. The response is also somewhat evasive on the question of how local authorities and other arm's-length bodies in general, often short of the relevant expertise, can become more expert in procuring innovative solutions. In fact, the government response deals almost entirely with central government procurement. I ask the Minister for more detail on how she feels that innovation in other parts of the public sector will be fostered. There was also, in my view, not enough to reassure the committee that departmental chief scientific advisers will, as we recommend, play a more central role in building an “intelligent customer” capability in departments. Finally, I felt that the response focused very much on value for money and did not state clearly how innovation can contribute to the objective of achieving value for money for the public sector.

The Science and Technology Committee has said that it will return to this topic in the next 12 to 18 months to find out whether anything has changed. Among other things, we will be looking for measurable indicators that the Government have indeed embedded the culture of innovation into public procurement not only in central departments but elsewhere in the public sector. It would be interesting to hear from the Minister whether the Government have ideas about indicators that they may use to assess their own progress.

It would also be good, when we return to this topic, to hear of success stories. We found it difficult to dig out good success stories of innovation in public procurement. One that was highlighted to us in the Government’s submission was the recyclable mattress in the HM Prison Service, saving £5 million over the life of the contract. I am sure your Lordships will be most relieved that those serving custodial sentences are benefiting in that way from innovative public procurement, but I hope that when we next examine the topic there will be even more inspiring examples of innovation in public procurement. I beg to move.

15:47

[Lord Hodgson of Astley Abbotts]

My Lords, let me be the first to congratulate the noble Lord, Lord Krebs, and the committee on a fascinating report that highlights some important issues of public policy. I was particularly glad to hear that his committee intends to return to the issue to see what progress has been made, so that the report does not end up as a doorstop in some department in Whitehall.

I was not a member of the committee, so I was somewhat surprised to find myself chosen first on the speakers list. I normally skulk in decent obscurity some way down, but here I am blinking in the sunlight. I begin by declaring an interest. I am chairman of a private equity firm. I have spent most of my life in the City helping to fund businesses engaged in innovation, much of which has involved work, collaboration and frustration with government departments. Last year, I chaired for the Government a task force looking into the regulatory burdens that affect small voluntary groups and charities. These are groups that offer innovative solutions to some of the most intractable problems in our society: what is known in the trade as the hard to reach 5 or 10 per cent. When we set up our committee, we asked the sector for evidence. We had more than 600 pieces of evidence, many of which are produced and referred to in our report, entitled Unshackling Good Neighbours, but a lot of the issues to which the noble Lord and his committee refer in the report are replicated from those real-life examples.

I shall focus my remarks on three areas: first, the risk aversion issue that the noble Lord, Lord Krebs, referred to; secondly, the section of the report concerned with prescriptive and burdensome procurement processes; and, finally, the need to make sure we safeguard our intellectual property properly.

While it is certainly true that risk aversion is present in the Civil Service, it is quite widespread in our society as a whole. Many years ago I attended an American university. My professor was a great anglophile. He said, “One of the great problems is that, in the US, a new idea is innocent until proved guilty. In your country, it is guilty until proved innocent.” We are inclined to say we must work with what is tried and established, and that has run through the warp and weft of our society.

A great German friend of mine who runs a private equity firm in Germany talked to me about the Millennium Dome. I do not want to talk about what went on inside the Dome, but the Dome itself was a very interesting piece of engineering, a wonderful structure. He said, “If this was Germany, we would have articles in the press about how German technology was leading the world, and how this was going to show how German innovation was there, thrusting and showing the way. What did I read in the UK? Endless articles about what a waste of time it was, how hopeless it was, how awful it was and how it cost more than expected”. As the noble Lord, Lord Krebs said, we find it hard to celebrate success.

[Lord Hunt of Chesterton]

We heard many debates on the Dome in the House of Lords. Many speeches came from the noble Lord’s side of the House criticising the Dome. Not a single speaker mentioned the technology. I was delighted by the noble Lord’s point.

[Lord Hodgson of Astley Abbotts]

I am not quite sure whether that was a pat on the back or a slap in the face. I will take it as a pat on the back.

As I said, we find it hard to celebrate success, and we will, by some behavioural brilliance, have to nudge the public into getting a different view about success and innovation. It is, of course, needed in the Civil Service. My second point is therefore about procurement processes, particularly as they affect SMEs—some charitable, some commercial—whether they operate at local or central government level. If I go into some detail, I make no apology, because this is about hard yards. We can make general statements about how to do this, that or the other, but we have to find the problem and unpick it inch by inch. That is how we will make progress.

I have four or five things I would like to get on the record for my noble friend and her Department to consider. The first is what is known as the use of pre-qualification questionnaires. These are what you have to fill in before you can go to the tender process. Some of them are hugely lengthy and involve 150 questions. None of them are ever the same, so if you are an SME dealing with different parts of government—local or national—you will have to fill in different PQQs. No attempt is made to collect information that is available to the public at Companies House and so on. These small companies and voluntary groups have to go through a process of filling in these forms for very little benefit. I hope that the Government can abandon their use. If PQQs have to be used, they should be in a standard format, so that once you have filled one in you have completed the lot.

The second issue to consider is the use of multiple tenders. Of course there is a need to safeguard and obtain value for money, but if, to safeguard your position as a commissioner, you ask for 12 tenders, 11 will lose, so the economic friction and inefficiency arising from this is very great indeed.

The third issue is that of proportionate costs for tendering and for monitoring. Very often small contracts are let. The contract documents can be as thick as a small telephone book, and the contract is worth £50,000 or £100,000. There should be yardsticks to measure the value of contracts and their tender and monitoring costs.

Local or central government should set the measurement for success and not change it during the contract. Too often, half way through the contract, the way in which success is to be measured is changed. That is extremely difficult for a small or medium-sized company.

Then there is the question of scale. Where the Government cannot work with an individual company because it is too small and they have to work through a major contractor, there need to be clear guidelines whereby the main contractor shares the risk and rewards with the subcontractor. Too often the subcontractor takes the risk and the main contractor takes the reward.

There is a final thing to consider. Worst of all is when trying to get yourself as a small charity into the tender list, and the commissioner says to you, “Now, just tell me how you’re going to do this. Tell me your innovative leading-edge idea”. The company takes a lot of time and trouble to do that but then finds that all its ideas have been put in the tender document, so all its work and innovation have been lost because everyone is competing on the same basis as it is. Since a large company can probably offer this at a similar or even lower price, the halo effect means that all the work and innovation done by the small group is lost; everyone is able to quote using the work that it has already put into the work. There are some important issues to be dealt with there, and they can be followed through specifically if the Government have the grit and determination to force that through across Whitehall.

Thirdly, I would like to talk about the safeguarding and the value of intellectual property, which is referred to in the report of the noble Lord, Lord Krebs, as the effective engagement between procurers, suppliers and academia. There are some very distinguished academics here today so I know I am treading on thin ice here, but I am afraid that I am far from convinced that universities are using our public funding effectively. I have a specific example, which the Minister has some knowledge of because I have put down Parliamentary Questions about it: the University of Manchester and the development of graphene. What is graphene? I quote from a BBC article entitled, “Is graphene a miracle material?”:

“Our research establishes graphene as the strongest material ever measured, some 200 times stronger than structural steel … It would take an elephant, balanced on a pencil, to break through a sheet of graphene the thickness of … cling film”.

Graphene was developed at the University of Manchester by two gentlemen, Mr André Geim and Mr Konstantin Novoselov, and they won the Nobel Prize for that work. According to a Parliamentary Answer, they used funding provided by the Engineering and Physical Sciences Research Council. I understand, on good authority, that the University of Manchester authorities failed to take out patents on graphene before Messrs Geim and Novoselov published their paper, and of course once it was published any IP value was lost. If the two gentlemen had funded that research themselves, that would be fair enough. I would quite understand that, it was their work, but they did not. They funded it at the expense of us, the taxpayer, so either the University of Manchester authorities were so maladroit that they did not know what was going on, or they were incompetent in funding the research without an appropriate IP protection clause in the contract.

When you look further into the BBC article, you will see that graphene was picked up quite speedily in the Far East. It talks about the work being done in Korea by Samsung, which is now working on the research:

“(Samsung has its) own roadmap where they believe there will be a dozen products (on the commercial market) using graphene in the next five years”.

Far from graphene being exploited and used for the benefit of the UK taxpayer, the science base or indeed UK industry, it is now being exploited in Korea.

I would be delighted to be told that I have got this completely wrong, but my source is a pretty reliable one. I am not asking the Minister to answer this today, but I hope that when she goes back to the department she will have a real drains-up investigation into this and other cases that I have heard of, of which this is the most blatant.

I would like to end as I began. This is a fascinating report. Stating the problem is the easy bit; correcting it will be more challenging. I look forward to my noble friend’s reply and to hearing the follow-up report from the committee of the noble Lord, Lord Krebs, in 12 months’ time.

16:00

[Lord Hunt of Chesterton]

My Lords, I, too, congratulate the noble Lord, Lord Krebs, on this report. I also welcome the remarks of the noble Lord, Lord Hodgson, with which I agree entirely. I believe the story was that the noble Lord, Lord Sainsbury, made an effort to publicise the Dome and contact was made with the Institution of Structural Engineers. It said, “We don’t publicise our work, it’s all team work”. Enough said.

I have been interested in this topic since I was an academic working on government and industrial contracts, and consulting. Then I was chief executive of the Met Office, a government agency in what was the MoD. There, we were spending more than £20 million a year on advanced technology such as satellites, computers and radar. I think it pretty fair to say that for 100 years the Met Office has adopted new technology, often quite controversially, which is what has kept it in the lead, and it provides excellent services to the UK. The history of the Met Office has been published this year by Cambridge University Press, so you can read all about it. As chief executive of the Met Office, I had no mandate to use its purchasing power to support UK industry—a point made to me over and over again—unlike, interestingly enough, the MoD, which has always taken this into account in developing its relationships with industry on a long-term basis.

Thus, in the 1990s and in the last decade, both under a Tory Government and a Labour Government, the UK participated in the very important and large geostationary satellites, MSG2 and MSG3, which were huge programmes. We made significant financial contributions, but there was no participation by UK industry because we did not spend the extra amount under these curious arrangements to get the juste retour. However, the BNSC will tell you that despite that Logica did a very good job in getting work on the software side. Nevertheless, we in UK industry did not benefit from this.

Even sadder is the fact that weather radars, which are extremely important for weather, used to be built in the UK but are no longer. There was no mandate by the head of the Met Office to do that. That is completely different in other countries. If you run the Météo-France, Deutscher Wetterdienst or the National Weather Service, your job is in part to help the industries in your country.

I raised this idea at a big meeting of 150 chief executives of government agencies to a Tory Minister. First, he said, “I really appreciate government agencies working in the community—village fetes, Sunday afternoon, that kind of stuff”. I said, “We have in mind something rather different, the importance of UK industry”. The Minister replied, after being pressed privately, “That is the sort of thing they do in France”. Quite so, and we should be doing it in the UK. They do it in other countries. The United States, the great apostle of private enterprise, uses its government agencies extremely strongly, not only in promoting technology but in software, know-how, commerce, law, et cetera.

The other important point, which this report might have overlooked and the Government seem to overlook, is that if you make sure UK know-how is used abroad, that will enable us to use it in the UK. We are an international world now. We cannot just do our own thing. If the advances are happening abroad, we are going to import them. An intelligent programme has to be international by government departments. An example of this is the UK Government and private sector developing world-leading software for air pollution modelling, especially in cities. The private sector includes the SME of which I am chairman. We set it up 25 years ago. This provides street-by-street forecasts, which are sent by SMS and the internet to identified individuals to enable them to take appropriate measures. It is interesting that this product development was highlighted by the Cabinet Office in January this year as being the most significant demonstration of the use of software and data science in the UK.

For a Tory Government, it was surprising that there was no mention of the private sector in the public statement, nor of the company that was doing much of the work. However, this innovation might feature next time around in the good list of the noble Lord, Lord Krebs. The innovation should lead to significant savings to the National Health Service. As we know, 20,000 or 30,000 people die prematurely each year from air pollution. The Health Protection Agency, which, I am glad to say, will now survive, is working to ensure that these data are available every day during the Olympic Games.

This brings me to the point that the Government should promote not only intelligent procurement but its adoption internationally. The United States Environmental Protection Agency has an office in Beijing to provide United States science and technology consultancy to China. The Environment Agency is forbidden by Defra from any overseas promotion of environmental science and technology. The same applies to water technology. By contrast, the Netherlands and Denmark, which now lead in water technology in a way in which the UK used to, benefit hugely from significant programmes in their countries and abroad. The result of such negativity is that the UK’s strengths will steadily diminish in many areas of technology. Root and branch change is required. Foreign businesses have often commented that they are astonished that UK companies survive at all and that they must be jolly good, given the policies of the UK Government.

However, I am pleased to end on an upbeat note. There is now a government web page describing many private sector projects and consultancies. Perhaps it will do more to highlight technological innovation. My recommendations are as follows. Big innovation should be international at the European level, through collaborative projects and in promoting UK developments. There must be supporting research by government departments in considering their long-range investment. There should be small but steady investment in, for example, government laboratories, as there is in the Netherlands, which has had a huge global impact in water technology. Finally, we need to introduce intelligent procurement to the job descriptions of senior officials and agencies. I hope that in future the relevant official for the Met Office will have that as the first or second point in his or her job description.

16:06

[Lord Willis of Knaresborough]

My Lords, I am a member of the Science and Technology Select Committee. I pay tribute to the leadership of the noble Lord, Lord Krebs, which has produced an absolutely excellent report.

There is an inescapable logic that, with public sector spending of more than £236 billion a year on goods and services, the Government have a unique opportunity to use their procurement to drive innovation, cut costs, improve services and develop new technologies, which will in turn generate economic growth. The power of state procurement has long been recognised across the globe. Entrepreneurs, merchants, industrialists and venture capitalists have sought government contracts as a fail-safe way of sustaining their own economic performance, as well as enhancing the quality of services or goods offered to the public. However, the perception for generations, rightly or wrongly, has been that centralised public sector procurement led to overpricing and a lack of quality, imagination and innovation. This in part fuelled the privatisation and decentralisation of public sector suppliers by the Conservative Government in particular and, indeed, the previous Labour Government.

Despite these changes, inefficiencies and lack of innovation in UK public sector procurement are well documented, with the MoD a prime culprit, followed closely by big-spending departments such as health and transport. What is more, the process favours large organisations that can afford to understand and comply with the often highly bureaucratic and overly expensive procurement processes and compliance procedures. Large suppliers in turn often hold undue power over procurers. The current state of the economy should not only drive innovation in procurement but offer huge incentives to private sector companies, not simply to bid for new contracts but to bring new ideas, technologies and systems to the attention of public sector procurement officers. Our report saw some evidence of openness to allowing SMEs to bring new ideas to departments, particularly in the MoD and the Department of Health. However, we saw precious little evidence that this was part of a wide-scale procurement culture.

The debate about procurement driving innovation is hardly new. As the noble Lord, Lord Krebs, said, the previous Government regularly returned to the theme of The Race to the Top. The innovation White Papers were major pieces of work. Shortly before the previous election, a very readable pamphlet about driving innovation through public procurement was produced by the noble Lord, Lord Drayson, then the Minister for Science, and Ian Pearson, the Economic Secretary to the Treasury. If you read the introduction to that pamphlet, the words are exactly the same as those used by civil servants in response to the committee’s report.

Following all that work by the previous Government to try to link innovation and procurement, it is hugely disappointing that our report should have reflected that but, sadly, simply reflected opportunities lost. As Colin Cram, the managing director of Marc1 Ltd, a witness to our inquiry, said, the response is weak and effectively confirms that there is no coherent use of public procurement as a tool to stimulate innovation, either in central government or the wider public sector, nor any intention to do so. That is a damning indictment of where we are. Indeed, even Iain Gray, the chief executive of the TSB, admitted to the committee that the use of government procurement to stimulate innovation was a “patchy picture” and, considering the sums involved,

“there is a lot more that could be done”.

Our conclusion that the fault lay entirely at the door of government was, for me, summed up by the decision to abandon the departmental innovation procurement plans put in at the end of the last Parliament. The IPPs were abandoned not because they were not valuable but because they were variable in quality, with some relatively strong but others rather weak. So why, I ask, were the strong performers, such as the MoD and the Department of Health, not used as the standard to drive up the quality rather than abandon any sort of performance measure? The answer appears to be that no one in government, then or now, is a driving this agenda. That is exactly why the Select Committee proposed that a Minister should have responsibility for linking procurement and innovation agendas and that each department should have a Minister in charge of the overall policy. Our recommendation was dismissed, largely because the innovation is seen by many in government merely as a tool to drive down cost and create efficiencies to address budget reductions. It is about incremental change and it is about avoiding risk.

There is nothing wrong with risk avoidance, as our report states, but the sad thing is that innovation is not seen as a tool to do things radically differently, to introduce quantum change, to drive new technologies, and to create new markets and, hence, new income streams. In fact, innovation that strays beyond cost-cutting and efficiency is seen as risky. However, sadly, without taking risks, innovation simply cannot flourish.

When Sir Martin Sweeting decided to abandon the orthodox wisdom about satellite technologies, he did not simply look to lower costs; he revolutionised the concept of large expensive-to-launch satellites by building small satellites and delivering them in clusters on the back of someone else’s rocket. Surrey Satellite Technology is now the world’s largest producer of small satellite technology with a global order book, although sadly no longer in UK ownership.

The UK has the same potential in areas of genomics, bioinformatics, stem cell technologies, energy, nanoscience and, as we have heard, graphene materials science. However, I have to say to my noble friend that the fault lay not with Manchester University and the scientists but entirely with the venture capitalists, who in this country seem to be incapable of picking up those ideas and running with them. You have to have two to tango. We saw exactly the same with plastic electronics, which were taken from Cambridge University and sold to Korea, Germany and the United States rather than developed here. We are not short of brilliant ideas but we need to turn more of those ideas into world-beating products.

Crucially, the same innovative process that created the iPod, the Dyson cleaner or the robotics used in satellites needs to be brought to the development of our infrastructure in transport, power generation and communications, and the Government are ideally placed to drive that process. Procurement without innovation should be a barrier to government contracts and not, as is so often the case, a safe option. Indeed, it is this attitude of risk aversion that has seen a huge drop-off in private sector interest in innovation, according, as we have heard, to recent surveys by Logica, the computer software company. Simply making it a condition of contract that innovation has to be shown to be present would make a huge difference to the way in which SMEs approached the whole business of getting procurement contracts. Indeed, as Birmingham Science City said to the committee,

“public sector procurement needs to be transformed so that the public sector encourages suppliers to think the unthinkable”.

Before the Minister jumps into the Thames in desperation this afternoon, I should say that there are some encouraging signs that indeed all is not quite lost. In fact, the Government's response to our report was more encouraging than the evidence they gave us. The TSB appears to be working well, the investment in new technology and innovation centres is hugely welcomed—as are the phones that are ringing in the Room at the moment—and the SBRI initiative has demonstrated real potential. However, these are extremely small initiatives that are dwarfed by what is happening in the US, Germany and France, not to mention China, India and Brazil. The SBRI, which is supposed to drive new departmental initiatives, has only really been taken up by the Department of Health and the MoD, and with a total spend of a mere £41 million represents 0.008 per cent of total public sector procurement—hardly the big idea that will change departmental procurement processes.

As for the much heralded technology and innovation centres, the TSB has a mere £200 million to establish them before they are expected to become self-sufficient. Only £20 million for each centre is hardly enough to burn huge lights in the sky. That is why a more imaginative use of the massive public sector procurement budget must be rethought. A 0.5 per cent innovation procurement levy would inject over £1 billion into the process without departments losing money, and would have the potential to draw private sector capital into the process without having to create new structures.

The Government, individual departments or NDPBs could use part of a procurement innovation levy to sponsor high-profile competitions to solve specific challenges relating to procurement or the delivery of new services—not a loss of money, just a refocusing of existing resources. The Longitude Act 1714 created a prize fund to solve the difficulty of plotting where ships were when at sea, so why not take that idea and use the TSB as a vehicle for sponsoring high-profile innovation, with prizes from a procurement levy?

Finally, the Government have rightly recognised that without a cadre of well qualified and appropriately trained procurement specialists the public sector cannot act as an intelligent customer. The capability programme set up by the Cabinet Office is welcome. The licence to operate, to source, to supply and to contract and manage are sound developments, but we must guard against window dressing that gives the appearance of activity.

The innovation launch pad is yet another good idea, but of the 300 suppliers who entered the first innovation launch pad initiative, we are down to a shortlist of some nine companies, and at the end no one is guaranteed a contract. Given the huge amount of work that goes into the process, I doubt whether many will ever return. The same criticism could be levelled at the advent of Crown representatives, which, again, is an excellent one-stop initiative aimed at bringing coherence to common procurement processes. However, given that these posts are in addition to all other duties, I fear that once again it will be the lower-level civil servants who will do the bulk of the work and who are notoriously risk averse.

Conspicuously absent from the Government's response is a key role for CSAs. Our report emphasised the importance of the CSA being part of the procurement process, particularly at an early stage where the assessment of innovative ideas or products and links with academia are absolutely essential. However, it is more important that the departmental chief scientific advisers should interface with the science, engineering and technology communities to encourage innovative ideas, such as graphene, that are coming through and that can be brought to people’s attention and used.

While CSAs continue to have a role, it is far from the prominent role that the Select Committee envisaged, and yet again sends out the signal that the end is in sight for departmental CSAs, as the Government sideline their important independent challenge function. Nowhere could this be more apparent than in the Minister's own department, which has no CSA at present and appears to have little urgency about replacing the excellent Professor Collins, who was ideally suited to the role the committee envisaged. A similar tale can be told across government, with vacancies in DCMS, the Cabinet Office, the Department for Transport and in key departments such as the Treasury, the Department for Education. “CSA” is little more than an add-on title to their current job descriptions. The committee will return to this issue in a forthcoming inquiry.

This has been a far more useful inquiry than I thought it would be when I was faced with the evidence. The Government have given a robust response and promised significant changes, and I am sure the Minister will deliver. As a Lib Dem, I am ever an optimist.

16:19

[Lord Kestenbaum]

My Lords, I congratulate the noble Lord, Lord Krebs, and his distinguished committee on this most important report. It could not have been more timely and we would do well to treat its recommendations with great urgency. I begin by declaring my own interests. Until last year I was chief executive of NESTA. I still serve on the governing board of the TSB but, perhaps most pertinent to this report, I am now the chief executive of Lord Rothschild’s family investment interests—a large and imaginative investor in UK technology businesses.

What we all learnt from this report is the increasing consensus that Governments around the world see innovation as the key component to economic growth, and they have pledged, as has our Government, to shape public policies accordingly. Therefore, right at the outset, the report conclusively debunks the sterile argument that when it comes to innovation you have two policy choices, either a constant flurry of well intentioned interventions or staying firmly out of the way.

As noble Lords have remarked, we should consider the United States. The conventional wisdom is that, in the US, government does best when it is invisible. Yet procurement was the major factor in the growth and development of Silicon Valley. Military spending funded that generation of microwave technology companies, which were a mainstay of the region before the semiconductor industry arrived. It is no exaggeration that whether it is the GPS navigation system that we all use or internet protocol technology, the public procurement of technology has been the basis of some of the most transformational global innovations of recent decades.

The noble Lord, Lord Krebs, covered the ground thoroughly, but with his permission I should like to emphasise two points. The first relates to intelligent customers. The report speaks convincingly of government as an intelligent customer, and from my perspective as an investor, and an investor in technology, I wish to stress how vital these intelligent demanding customers can be in transforming the opportunities for small entrepreneurial companies in particular—companies that at a time such as this will be the absolute lifeblood of recovery. Intelligent customers, as the TSB evidenced in the report, allow procurement to be the vehicle in which companies—technology companies in particular—can step up to the task of solving major national challenges. Surely, government departments must increasingly frame their procurement needs as challenges for small businesses to solve, rather than as bureaucratic hoops to jump through.

The noble Lord, Lord Willis, referred to the SBRI scheme as an example, and I am sure he is right in suggesting that progress is being made. It is worth noting NESTA’s evaluation of the SBRI since its relaunch in 2008: that it is beginning to deliver on its potential to provide clever new solutions for government that generate business opportunities for private sector innovators. That is certainly encouraging. I cannot help thinking that to build on this we might want to focus on one or two areas of real scale that could have great and lasting impact that would generate evidence for others and encourage imitation. NESTA has spoken of a centre of excellence for innovative procurement, and that is certainly something worth considering.

I should also welcome the Minister’s views on the issue of focus. Most obviously, the lead candidate for focus is the prospect of the NHS—an enormous customer. As a potential lead and intelligent customer, the NHS would perhaps have a strong mandate to work with the TSB. That would surely provide the health service with a real way to drive innovative solutions to healthcare challenges.

The second point that I wanted to emphasise was that of leadership. I am concerned at how such a dramatic cultural shift that the report encourages can genuinely get embedded in the procurement system without the strongest of directives and—I know they are not fashionable these days—central directives. We know that there are insufficient incentives within the system to reward the intelligent customer. We therefore seem increasingly dependent on dynamic leadership, either in government departments or in the public sector, informally to influence customer behaviour. I shall give an example, which of course can work.

Only yesterday evening in preparation for this debate, I met the winners of the Times national procurement award. The winner was an institution very close to the Minister’s heart, Plymouth University, which won the national procurement award. When I met its representatives, they told me an inspiring story of how Plymouth University, working with the city council, while not compromising on standards or value for money, transformed the prospects for innovative entrepreneurial technology companies bidding for public sector contracts. As I listened, I understood that yes, there was procurement expertise in the exercise and greater simplification—all the formulas were there—but ultimately it was driven, cajoled and inspired by the institution’s dynamic leadership, who would not take no for an answer.

So what is the point? The point is that such leadership is not always widely distributed across this field, so I respectfully ask the Minister: where appropriate departmental leadership is absent or where civil service incentives to procure intelligently are inadequate, how will the procurement revolution be driven? How will this cultural change genuinely take root? I cannot help thinking that this is an instance where the laudable aims of localism need a little more than a gentle steer.

16:26

[Baroness Warwick of Undercliffe]

My Lords, I intervene briefly to re-emphasise the importance of the report and to hope that the Government will return to the recommendations as they develop what they promise will be a significant programme of reform.

I, too, pay tribute to the noble Lord, Lord Krebs, and his eminent committee for the robust, trenchant and fearless way in which they have approached this vital issue. “Fearless” may seem an odd word to use, but many reports over the years have tried to persuade successive Governments to take this subject seriously. In this report, there are recommendations that the Government may find inconvenient but which in my view go to the heart of the problem. That is why I urge the Government to keep these recommendations in mind, even if, as their response suggests, they do not all find immediate favour.

The Government’s response to the report has some very encouraging aspirations and sentiments, but I feel that it does not yet grasp the magnitude of the persuasion, mindset change and culture shocks that will be needed to change a decades-old approach. I recall being part of the government technology foresight programme discussions, some years ago now, which started with such promise and with the engagement of commercial, industrial and small business interests. The programme had some really good outcomes and certainly encouraged a better understanding of government decision-making processes, but it would be difficult to argue that it produced the significant departmental engagement in the use of new technologies and processes that had been hoped for.

I do not think it is possible to exaggerate the importance of the report’s main themes: that a clear vision for publicly funded projects can have a huge influence on the behaviour of both purchasers and providers, and that embracing innovative ideas and processes must be embedded in the minds of all those involved in government procurement projects.

I should explain that my interest in this area stems from my involvement with the university sector and its role in developing innovative ideas, in both science and the humanities, that could aid our country’s development and prosperity. The university sector was particularly encouraged by the 2007 report of the noble Lord, Lord Sainsbury, The Race to the Top, to which the Science and Technology report refers, which showed that there had been a dramatic increase in knowledge transfer from all universities and that UK universities’ performance in this area now compares to the United States. I do not know the example used by the noble Lord, Lord Hodgson, of universities and intellectual property. I can say only that the usual criticism of universities is that they are far too ferocious in their protection of intellectual property.

I saw the previous Government’s investment in its Ten Year Science and Innovation Framework as part of its procurement framework, albeit on the supply side. On the demand said, I applauded the Sainsbury report’s encouragement of the use of departmental R&D budgets to support innovation and to harness the power of government spending to create demand for innovative products and services. However, as I know David Willetts, the Minister for Universities and Science in another place, recognises, building productive links, particularly with small and medium-sized enterprises, is problematic for universities, just as it has proved challenging for government departments in their purchasing processes to engage effectively with myriad small enterprises.

I noted that the Government in their response to the report take head-on the committee’s finding that there is conflicting evidence of the contribution of SMEs in promoting innovation. The Government clearly continue to see the engagement of SMEs as crucial, but it would be helpful to hear from the Minister what new initiatives are planned to make this happen. I certainly agree with the Government’s view that departments will need to use more open procurement methods to drive up competition. They will need to engage with industry much earlier in the procurement process, and they will need to specify the outcomes and outputs rather than the product that they believe they want to buy. I hope that the Minister will explain in more detail how that is to be achieved.

I said I wanted to be brief. I refer to two recommendations in the report to which the Government in their response have given a rather dusty answer. The report recommends that a Minister should be responsible for both procurement and innovation. The Minister would formulate a national framework and would be accountable for how well procurement decisions are made. It further recommends that there should be a lead Minister in each government department with these specific responsibilities in order to create a high-level network across government. Although I appreciate the Government’s argument that the Minister for the Cabinet Office has responsibility for central government procurement policy and that each department’s procurement activity is subject to ministerial oversight, I am tempted to say, “It was ever thus”, and therein lies the problem. Something more radical is needed. The same arguments were applied to the approach to science in government departments, and I do not think that anyone doubts the change in attitude that has followed the creation of the chief scientist post to drive the agenda, together with a senior scientific adviser in each department.

The committee of the noble Lord, Lord Krebs, has tackled a long-standing problem. It has taken advice from a range of well informed practitioners, whose only aim is to promote innovative ideas to improve our country’s effectiveness. They have looked at a plethora of reports on this subject, which all show that the present processes do not work well enough. Indeed, they do this country a disservice. So I hope that the Minister will be willing to say that she will look again at the way in which government can be held to account for how its £236 billion of public procurement funds is spent and turn to the committee’s recommendations for inspiration.

16:32

[Lord Rees of Ludlow]

My Lords, my comments this afternoon will be somewhat oblique to the main thrust of the report, but I will conclude with a specific recommendation. As the noble Lord, Lord Krebs, explained, our committee was concerned with the mindset within government, whereby innovative procurement is inhibited because it is safer to use an established contractor and a well tried technique. But sometimes there is a compelling need for something that has never been achieved before and, in these cases, innovation is a prerequisite and risk-taking is unavoidable. The key issue then is how to jumpstart or accelerate R&D.

In this context, we can perhaps learn from historical precedents dating back nearly 300 years. Specifically, we should emulate the British Government’s response to the need to determine longitude at sea, a crucial requirement both for the Navy and civilian shipping. As is well known, in 1714 the Government set up the longitude prize, which offered £20,000—equivalent to many millions in today’s money—for a method that would determine longitude to better than 30 miles, with smaller sums for achieving less precise targets. This prize was administered by one of the first quangos, the Board of Longitude. It stimulated a variety of approaches—most famously, of course, John Harrison’s accurate chronometer.

There are some more recent precedents. We have heard a lot about DARPA, run by the US Department of Defense. It is extolled in our committee’s report as an effective agent of innovation, mainly for the defence sector, but often with spin-offs of commercial or social benefit. One way DARPA has achieved all this is by offering high-profile prizes. For instance, a few years back, it organised a competition for driverless vehicles. These robotic cars had to navigate a long, complicated path in the Mojave Desert. In the first year, no competitor did more than seven miles. A year later, 22 entries did better than that. The total investment by contestants, commercial bodies and universities was far more than the $4 million offered in prizes. The net effect was to stimulate the technology and raise the profile of those who had succeeded in an engineering challenge.

DARPA is, of course, publicly funded. In the US, the powerful incentive of prizes is recognised by entrepreneurs in the private sector. Pre-eminent in such ventures is the X Prize Foundation, a wide ranging and highly professional enterprise that has the savvy and the organisational infrastructure to establish, organise and monitor grand challenge prizes on various themes. It describes its mission as,

“inspiring the revitalisation of markets which are currently stuck due to existing failures or a commonly-held belief that no solution is possible.”

First, there was the much publicised prize for suborbital space flight, which was won in 2004. Under the auspices of this foundation, this has led to a diversified menu of grand challenges, spanning not just technology but societal and social issues. There are prizes for fuel-efficient cars, cheap genome sequencing, robotics, better ways of diagnosing TB, for cleaning up oil slicks and so forth. The special virtue, or USP, of these big prizes is that they enlist the interest of many people and organisations taking diverse approaches to reach the goal. They thereby release much investment, totalling a sum far larger than the prize itself. They bring about a tremendous focus of competitive talent. To the individual, or the small company, the prize money of several million dollars is a significant incentive. To the big company, the publicity and the PR are more important. These prizes have a high public profile.

If the challenge is manifestly of public interest and importance and incremental progress can be quantified, then these prizes not only attract continuing interest from the public, but have an important educational function. They also offer PR to the engineering profession and raise the profile and the schemes of innovators.

Here in the UK, there have been modest initiatives along these lines. In 2008, ESTL ran a grand challenge competition to help design robotic systems to help ground troops seeking to probe hostile environments. Competitions run by the SBRI have led to innovative contributions to, for instance, mobile phone security. But these precedents could be more widely followed. Organisations such as the SBRI and the TSB could build on what has been done already and establish Longitude-style prizes with a mixture of public and private support, perhaps in association with learned societies and academies. Better still, could not the UK trump what is being done in America by something really high profile? How about celebrating 2012 by, for instance, a series of Olympic or Diamond Jubilee grand challenge prizes open to the world?

16:38

[Lord Warner]

My Lords, as a member of the committee, I endorse the remarks of the noble Lord, Lord Krebs, about the support we were given by our adviser and the secretariat. I also pay tribute to the noble Lord for his leadership of our inquiry.

On my way to the Committee this afternoon, I had an experience of public procurement using innovation in action. The House authorities have put a Dyson hand-dryer in the men’s loo at the other end of the Corridor. However, they have demonstrated the tried and tested approach of the public sector by retaining not one but two of the existing systems for drying your hands. We have a living example here of some of the dilemmas caused by public procurement and the use of innovation.

The Government are the largest purchaser in the UK. In spending more than £236 billion a year, they are spending on procurement more than the combined budgets of health, defence and education, so making some modest gains here could have major effects on public spending programmes.

I had some experience of dealing with the frustration of the commercial sector over public procurement when I was a Health Minister. In order to respond to the frustrations of that sector, I spent a year co-chairing with the chief executive of Smith & Nephew, a healthcare industries task force, which in the end led to the establishment of the NHS national innovation centre, which is featured in the report. That experience showed me that industry looks very strongly to public procurement as a means of developing products. It is a way to expand their products and market them overseas. The brand of the NHS is very strong overseas, so if you have a product that you can develop within the NHS, prove that it is safe and use it in the NHS, you have a strong marketing aid to sell your product.

We found in that exercise, as was borne out in the committee's inquiry, that public purchasing for quite big sums of public money is undertaken, for the most part, quite a long way down the managerial food chain. The boards and chief executives of those public bodies have only a marginal interest in many of those purchasing and procurement decisions. So we have a system in which quite senior people in the private sector are concerned about the issue but the responses are being undertaken by people quite low down in the organisation. Not surprisingly, those people are cautious about change. Why should they not be? Most of us would be if we were that far down the food chain.

You see the same thing in the Civil Service if you are a Minister. I am old enough to have joined the Civil Service under the old class structure of administrative, executive and clerical staff. The executive staff did money and procurement. They did not do policy. The Civil Service still likes to give policy to the fast-streamers, and the less fast-streamers do sordid things with money, such as buying things. We have a problem at central government level and at local level. We do not like to talk about it very much, but that culture is what the inquiry exposed.

Every so often—about every 18 months to two years—Ministers change, so unless the Minister really wants to get a grip on some of this, nothing much will change in the culture of the public service about these issues because there is no longevity in the ministerial cadre for the most part. There have, however, been Ministers in both parties—I cite Michael Heseltine and Denis Healey—who stayed in their jobs long enough to take these management issues seriously. However, they are the exceptions, rather than the rule.

In the course of this inquiry, we found some good things and some bad things. The Government’s launching of an open public services White Paper has much to commend it, building as it does on the previous Government’s policies. However, a large chunk of public procurement is decided locally and cannot simply be drawn into the centre. Therefore, a large amount of that £236 billion is spent way outside the vision and influence of Ministers. No matter what Francis Maude does in the Cabinet Office, his impact at the moment on many of these local agencies, which spend large sums of that public money, is minimal.

I understand the importance of localism to this Government, and the importance of delegating responsibilities down to local level as far as possible. Certainly, as an ex-public-sector manager, I understand that. However, the Government have some responsibility for finding out and explaining to Parliament and the public what is happening to public money at that level. It is no good saying that there are directly elected bodies in local government. A large chunk of their budget comes from centrally directed grants that are paid for by the taxpayer and sent down in the post, so to speak, from Whitehall. There is an accountability issue, but what do we find? The Government are to abolish the Audit Commission, which is one of the bodies that looked at the value for money of local government activities, and have stopped its value-for- money inquiries. Therefore, despite the protestations of the Government in their response to this inquiry, there is no mechanism for monitoring and finding out what is happening to that public money and how procurement is being used away from central government to drive innovation and best value.

There is something of a conundrum for the Government when they genuinely want to do a good job in securing the best value for taxpayers’ money. They want to drive efficiency but seem to be slightly stuck in a mindset that separates innovation from efficiency and best value. They are not contradictions; they are part of the same way of achieving improved public services. You need innovation, efficiency and best value. In my experience you are likely to get best value—certainly in the health service—if you are also driving innovation. I cannot see from the Government’s response to the committee’s inquiry how they can be sure about what is going on in procurement and innovation away from the central departments. Nor can I see how they can have any confidence whatever that a major chunk of the £236 billion of procurement includes a satisfactory element of innovation.

Not all procurement requires innovative solutions. As the Government rightly say, in many areas innovative solutions may not be needed. It may be sufficient just to get the best price for the quality of goods or services required, as Francis Maude told the committee. There may well be risks attached to innovative solutions. I would be the first to acknowledge that. That is why a degree of testing innovative solutions, often on a smaller scale before you go national in a big way, is a sensible way to proceed.

However, too often the committee was left with the impression that “tried and tested” was the default position for public procurement. There was a conspicuous absence of challenge mechanisms to that default position. We did not hear much evidence of what were the challenge mechanisms to that approach to public procurement. As I said earlier, innovation was somehow seen as being in conflict with efficiency and saving money. It is striking that in their response to the committee’s report the Government have decided to scrap the departmental innovation procurement plans, as the noble Lord, Lord Willis, said, established following the previous Government’s Innovation Nation White Paper in 2008. I found the current Government’s reasons for scrapping these plans extraordinarily curious, as I think the noble Lord did. As he said, clearly some departments produced rather good plans, and most of us who have managed things would have thought that that was a good excuse to say to the other departments that were rather less good, “Why don’t you emulate the good plans in, say, the Ministry of Defence or the Department of Health?”. But no—because some were less than good, they scrapped the whole system. What are the Government going to do to put in its place a mechanism for strengthening the weaker brethren whose plans were inadequate in their approach to innovation? Are they just going to be left to slumber contentedly with their mediocre performance or is something going to be done to drive it up?

As public expenditure gets tighter, the need for new ideas and thinking in public procurement becomes more critical. As President Obama’s former adviser, Rahm Emanuel, so graphically said:

“Never let a serious crisis go to waste”.

If we want our business sector to grow, we should be using this procurement programme to stimulate UK enterprise and innovation. That is, for example, why the previous Government brought in David Cooksey, a venture capitalist, to look at the way we try to exploit clinical research in this country. A lot of very good work was done in that area, but it took someone of eminence to drive, with Ministers, that kind of change. In my experience in the public service, the gnomes do not come in the night and just drive change. Ministers and senior civil servants have to get their hands dirty, and they have to drive that change by providing what needs to change as an example to people outside the Civil Service and the departments—and within the departments.

That is why it is disappointing that the Government have not seen a stronger role for chief scientific advisers, as we have recommended. They are a bit of grit in the oyster. They could be some of the people who would build the bridges between industry and public procurement systems. They could be the people who could innovate, and have the authority to innovate if they were given it. I hope that the Government will look again at this issue and try to come up with some ideas about who in these departments will drive change—and not just in the departments but at local level. They are the bodies which come within the general rubric of those departments and whose budgets are usually shown on the departmental public accounts. They should bring about a step change in the way that public procurement is used to drive innovation.

In conclusion, I say to the Minister in a very friendly way, as a former Minister, that these things do not change in areas such as procurement unless Ministers really want to make them change. It simply does not happen. Ministers have to be prepared. I am less concerned about the committee’s recommendation for a single Minister for innovation and procurement, although I would like that. However, if the Government are not going to pursue that course, they really must take seriously the issue of finding a Minister in each department who will drive this change, because if it is not going to be driven from the centre of Whitehall, it will need to be driven across the departments and will need political leadership to make this change happen. It will also need continuity of political leadership as Ministers come and go within different departments.

I offer that in the most friendly and constructive way to the Minister. This issue is too important to simply bat back with fairly standardised Civil Service responses—I have seen those responses to Select Committee reports. As a civil servant, I have drafted a few in my time and I recognise a fairly standardised report when I see one. There is too much money at stake at a time when this country needs to grow its industries and private sector and get best value for its public service. We need a bit more energy in political leadership on this issue.

16:54

[Viscount Hanworth]

My Lords, the report that we consider today addresses some important issues. Successive Governments have had difficulties in procuring goods and services of high scientific or technical content. The committee’s report asks what can be done to improve the situation. It proposes that clear responsibilities for stimulating innovation should be assigned to Ministers and officials, who should be held accountable for this.

One does not have to look far to find startling instances of the problems that the committee is addressing. A current example of the failure of the Government's procurement policies in respect of modern technology is provided by the virtual abandonment by the NHS of its plans to create a centralised computerised system of patient records that would be accessible throughout the service.

The national programme for IT in the NHS was initiated nine years ago. So far, £2.7 billion has been spent on the patients’ records system to no discernible advantage. Several private sector suppliers were engaged, including the American CSC company. This company failed to deliver the bulk of the systems that it was contracted to supply. Instead, it has implemented a large number of interim or stop-gap solutions. These are preponderantly off-the-shelf solutions that the company has in its inventory.

It is doubtful whether the Government can obtain adequate redress from CSC or from BT, which is the other surviving supplier. Several other suppliers have walked away, including Fujitsu in 2008. This is the company that in 1990 absorbed the rump of the British ICL Corporation, which was created in 1968 through a government initiative. In fact, ICL was intended to rival IBM. Notice that the second and third letters of ICL are adjacent in the alphabet to those of IBM.

The defence that the suppliers might offer, if the matter were to come to the courts, is that they were confronted with inappropriate specifications that were subject to revisions so numerous as to make their task incapable of fulfilment. There might be some justification in such an argument but there is a more fundamental issue at stake here.

It is clear that the gains in efficiency that could result from enhancing the computerised records systems in the NHS are considerable. It is almost inevitable that eventually there will be such a facility for instant access to a patient's records from anywhere in the country. However, the advantages of such a system will accrue to the NHS and to the nation as a whole. They should not be expected to accrue to a private supplier; nor, as far as I am aware, is there any intention that they should do so. Therefore, the private supplier has little or no incentive to bear the costs of research and development, for they cannot reap the profits.

A further mismatch between public and commercial interests is occasioned by the nature of a developing technology. The private contractor is bound to seek an engagement that has a definite duration and which will result in profits that are calculable at the outset. The client, which is the NHS in this case, has an ongoing engagement and a need to adapt continuously to changing demands by exploiting evolving technologies. In brief, it needs to rely on its own technical expertise, which must be at a high level.

The IT disaster of the NHS has been analysed in two parliamentary reports, which are readily accessible. One is from the National Audit Office and the other is from the Public Accounts Committee of the House of Commons. This debacle is only the latest in a long line of similar failures from which we might have learnt our lessons. These failures owe much to the decline of the technological and scientific culture in our country. It is almost inevitable that a country that loses its manufacturing base should have difficulty in sustaining its technological competence.

The demise of Britain manufacturing has been hastened by the failure of our export industries, which has been mainly in consequence of the overvaluation of sterling in international currency markets. A contributory factor here has been the hypertrophy of our financial sector, which has led to large inward investments in financial assets and hence to a high demand for sterling.

Britain also has a peculiar social history that has militated against the survival of its scientific and technical competence. The pursuit of science and technology in the 18th and 19th centuries was strongly associated with people of a dissenting and nonconformist tendency. For them, the pursuit of codified technical and scientific knowledge was almost a moral endeavour. The established ruling classes had very different cultural motivations. During my own schooldays, I was keenly aware of the opinion that a gentlemanly education should be based on the classics and the humanities and that it should eschew matters of science and technology. I see that others have had the same experience. Social ambition and a distaste for hard, masochistic studies led many to abandon mathematics and science, as students continue to do today.

The once powerful Civil Service, whose members played leading roles in the process of government procurements, rarely contributes nowadays to any of the Government’s decisions. Those who are in the ascendancy are civil servants who have been trained in the humanities and the social sciences, if they have not been trained to be lawyers, accountants or financiers.

Great damage was done to Britain’s scientific and technological heritage throughout the 1980s and beyond. Numerous factors contributed to this, but it was the demise of the Government’s scientific establishments that deserves particular attention in the present context. These establishments had served Britain’s industry before, during and after the Second World War. When some of their original research agendas had been fulfilled or were abandoned, new purposes were not found for them. Their disbandment was justified by the doctrine of privatisation.

Among the victims that come very readily to my mind are the Post Office Research Station at Dollis Hill, the Royal Aircraft Establishment at Farnborough, the National Gas Turbine Research Establishment at Pyestock, the Atomic Energy Research Establishment at Harwell and the Road Research Laboratory at Crowthorne. The ICL Corporation, although not a government research establishment, could be counted among these. The list can be extended to include a wide variety of medical, veterinary and agricultural research establishments, some of which survived in a severely curtailed state. The scientific research institutes that best survived the onslaught were those that adhered closely to the UK universities. Nevertheless, during the period in question they were subject to a famine of research funding.

More recently, the research assessment exercises to which they are subject have had the perverse effect of limiting their interactions with industry. The assessments are based upon research published in academic journals, and research that has immediate commercial and industrial applications cannot be published in this manner.

During the period in question, the doctrine of outsourcing was widely propagated. It proposed that organisations should concentrate on their core activities, which are the things that they do best, and that they should assign other functions that had hitherto been performed in-house to external providers possessed of specialised expertise.

A requirement of outsourcing is that there must be sufficient in-house expertise in order properly to assess the need for outside assistance and to assess the quality of whatever assistance is on offer. Moreover, given the requisite in-house expertise, outsourcing may become unnecessary. It is clear that, in the case of the procurement of computer systems by the NHS, and in other cases I could have cited, there has been insufficient in-house expertise to inform the organisation of the opportunities and of the limits of the available technology and to predict how it might evolve. Instead, grandiose wish lists were created, which have become weighty and impenetrable documents once they have been made to conform to the nostrums of European Union contract law.

The managers of the NHS have been outsmarted and bamboozled by the commercial IT providers to such an extent that they have found that they have no redress against the manifest failures to fulfil the contracts. The organisation has lacked the technical expertise that might have informed and guided the endeavour and that might have averted the disaster. The Public Accounts Committee report attributed much of the blame for the debacle to the senior management of the NHS, including its chief executive, who did not fully discharge his responsibility for the oversight of the project. This criticism is in line with the recommendations of the Science and Technology Committee report, which proposes that there should be clear lines of responsibility at a senior level for the management of technology, as well as enhanced accountability. However, I fear that this misses the point to some extent. What is required is a technical and scientific intelligence that should be widely distributed throughout the organisation.

Some of us have witnessed outstanding examples of the successful management of technology. They were provided by many of the government research establishments that no longer exist. In the main, these organisations were characterised by a lively technical discourse and a remarkable intellectual democracy that allowed intelligent and inventive ideas to be propagated rapidly throughout the organisations, regardless of where they had originated. In most respects they were the antithesis of the modern top-down organisations that nowadays predominate in our public sector. Such managerial structures have been created in response to the demands of politicians, who have required clear lines of command to enable public organisations to respond rapidly to political initiatives. However, politicians are not well placed to assess the opportunities and limits of available technologies or to predict how they might evolve.

The problems that have been dramatically illustrated by the debacle of the NHS programme could be overcome by strengthening the scientific civil service and recapturing some of the ethos of the erstwhile government research establishments. Groups of computer scientists located within the relevant departments could be relied upon to co-operate across departments in ways that rival commercial suppliers are not able to do. There are some well known and striking examples of how co-operation among widely dispersed computer scientists can achieve results that are markedly superior to the results of scientists and technicians working under the direction of commercial organisations. The Linux operating system is a prime example, as is Wikipedia.

Of course, the virtues of technical co-operation are not confined to computer scientists. They characterise much of the scientific and technical culture that our country has lost, and we urgently need to rekindle that culture.

17:05

[Lord Young of Norwood Green]

My Lords, I, too, congratulate the noble Lord, Lord Krebs, and the committee on their succinct report. That is an innovation in itself, isn’t it? You were not deterred by the sheer size and weight of it from reading right through it. I found the report fascinating, as I have found the debate. If the Minister goes through Hansard after this, as I am sure she will, she will find that there have been a number of interesting contributions with some worthwhile and constructive recommendations. I have heard on many occasions that the prize is enormous, given the size of the procurement contracts— £236 billion was quoted. If the Government do not get this right then we damage the country’s ability to deliver new business products and services.

We are not using procurement to unleash the potential of SMEs, which I know is an aspiration of this Government. I am not sure about their commitment to the target of giving 25 per cent of public procurement to SMEs, which seems now to have been downgraded to an aspiration.

The small business research initiative has been successful in generating value, and it ought to be significantly scaled up to produce further innovation and economic growth. Why the delay? I see that an evaluation of the small business research initiative and the forward commitment procurement process is planned for some time in 2012. The sooner that evaluation takes place, the better; it looks as if on a small scale both those processes are beginning to produce valuable uses for innovation and better value for money.

The noble Lord, Lord Krebs, cited mattresses. There was another case involving lighting and the Rotherham NHS Foundation Trust. The report says:

“Cundall, a multidisciplinary consulting engineering practice, is one of the bidders involved in the Rotherham energy efficiency project … They were enthusiastic about FCP. Through FCP, they said, ‘we were no longer bound by technical specifications that might not deliver what the customer actually wanted, but were free to suggest innovative solutions that could meet this outcome-based requirement ... we clubbed together with other members of the supply chain so that we could offer an optimal and innovative solution ... we believe FCP has been totally revolutionary. Rotherham NHS Trust has been offered a solution that delivers energy savings, carbon savings and a “step-change” in patient and staff experience’”.

Building on that kind of approach is worth while. I hope that this evaluation, which will be done by Professor Georghiou and Professor Edler, will not take too long.

It is interesting that the World Economic Forum’s latest global competitiveness report, published last week, ranked the UK 49th for government procurement of advanced technological products, despite it being ranked 13th for overall innovation. The report ranked the UK second for university/industry collaboration in R&D—referred to by my noble friend Lady Warwick—third for the quality of its research institutions and 13th for its capacity for innovation, but 49th for government procurement, one place behind France and 36 places behind Rwanda. The sort of thing I used to get on my school report, “Plenty of room for improvement”, applies here. The same report revealed that 13.5 per cent of businesses believed that inefficient government bureaucracy was one of the most problematic factors for doing business in the UK. That has been referred to in several contributions.

Many people have talked about the default position of the tried and tested route. In some cases that might be appropriate, but on every occasion innovation ought to be considered before one embarks on the tried and tested route. The noble Lord, Lord Krebs, talked about embedding innovation into the mainstream and a change of culture. In one of the few management courses I have ever been on, we looked at organisational culture. I remember being told that that is the hardest thing to change within any organisation.

The Government’s response talks about improved training, but we know that on its own that probably will not be enough, although I would welcome it. I know that the Government are still interested in the concept of employee engagement, where we listen to some of the good ideas that are around. I was surprised at how often management failed to recognise the good ideas that exist among their own employees. Many of the recommendations are top-down; we ought to be looking also at the bottom-up approach.

As soon as my internal search engine finds the word “apprentice” in a government report, I cannot help but be attracted to it, and I was attracted to the response to recommendation 10, which states:

“Pan-Government Apprenticeship Scheme—research is being undertaken into the feasibility of introducing a ‘Pan-Government Procurement Apprenticeship Scheme’ in 2011/12”.

I would welcome more information on that. The response continues:

“The aim would be to attract new talent into Government and creating a more skilled, flexible and productive workforce”.

I like the concept and I assume that these will be high-level apprenticeships, but I should welcome a bit more information. It sounds a good idea to bring bright young minds into Civil Service and public sector procurement.

The noble Lord, Lord Hodgson, talked about simplifying the tendering process. The Government say that they will go down that road. From the examples given, there is certainly a need for that. My noble friend Lord Hunt gave us the example of the Met Office. We seem unable to take advantage of the innovation that we have created and use it abroad in the way that France seems so good at doing.

The noble Lord, Lord Willis, reminded us that a number of reports have contained very good ideas, such as the report of the noble Lord, Lord Drayson. My noble friend Lady Warwick reminded us all of the report of the noble Lord, Lord Sainsbury. There has been a plethora of reports. The real innovation would be to seize the key recommendations and drive them forward.

Having a Minister in charge of innovation does not seem to appeal to the Government, but I think it was my noble friend Lord Warner who said they should give it some thought. Clearly, we need more drive and we need to ensure that best practice created in one government department, especially in relation to innovation, is spread across all government departments. I think the same argument would apply to chief scientific advisers in making their role more powerful.

I was very interested in Longitude by Dava Sobel, mentioned by the noble Lord, Lord Rees. It is a great read, and the wonderful clocks in the museum at Greenwich are an inspiration. Having prizes is a great idea, and I should be interested to hear the Minister’s response to that. Perhaps I may suggest one in relation to the NHS. One idea has been referred to but another one that has recently emerged is the use of catheters. I cannot remember how long ago the catheter was invented, but I think it goes back well over 100 years, and I do not think the design has changed substantially in that time. It is one of the biggest causes of infection in the NHS and, unfortunately, the longer we live the more likely it is that we will be inflicted with the curse of the catheter. It certainly happened to me on one occasion, although I am not sure that I should have revealed that in Hansard. I also liked the example of the Dyson dryer mentioned by my noble friend Lord Warner. The innovation involved was good but the element of risk aversion meant that it was not possible to resist leaving other methods of hand drying in place.

I should like to pose a couple of questions, although I have already raised some during my contribution. What progress have the Government made on their aspiration for 25 per cent of their resources to be supplied by SMEs? Although the comments on SMEs seemed to be that the jury is still out, no one said that we should not involve SMEs to a greater extent. I am pretty convinced that in that way we will get more innovation in public procurement.

What is being done to increase government procurement of advanced technology products? I must admit that I could not help groaning inwardly as we were treated by my noble friend Lord Hanworth to the history of the computerised system for patient records. I suppose that that is an example of how not to do things and, as he said, there are some painful lessons to be learnt from it. I should think that one lesson is obvious; before embarking on a large scheme, you make sure that it works on a small scale, but perhaps that it is too easy and obvious an answer.

What plans do the Government have for Labour’s successful and innovative SBRI procurement programme? They have said that they are going to evaluate it, and I would welcome hearing the timescale for that. In addition, what are the Government doing to promote more innovative procurement from the European Union and other EU member states that would benefit UK companies?

In conclusion, I again extend my thanks to the committee for its report. It has stimulated a fascinating debate and I look forward to the Minister’s response.

17:18

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, I am grateful to the noble Lord, Lord Krebs, for bringing forward this debate and for highlighting the potential of public procurement to drive innovation.

The speeches of noble Lords both on and outwith the committee gave me much food for thought. We could all be here until about 7 pm if I tried to answer all the questions put forward this afternoon. I shall try to answer some as I go along, but I shall of course write regarding the others—that is, if the civil servants are still friendly enough towards some of the people around this table today. However, I am sure that I have confidence in their ability to answer those questions.

It was lovely hear about prizes—the noble Lords, Lord Hunt and Lord Rees, talked about the historical precedents here–—to get things going for the risk-taking and the jump-starting. It made me think of the most reverend Primate the Archbishop of Canterbury, who is going to stand down next year perhaps after struggling for 10 years. He started off by launching a prize for theological writing, which at the time I thought was an excellent idea. Let us see how good these prizes are in taking things forward and away from the traditional practices that we have used.

The noble Lord, Lord Young, rather shamefacedly had to spell out the sorry state of public procurement in this country. It is the system that this Government have inherited. I can assure him that by the time we have finished being in government we shall leave it in better heart than it is in now.

All public procurement must achieve value for money for the taxpayer. This is essential to managing the fiscal deficit that we face. The Government recognise that by procuring innovative products and services they can both improve the efficiency and delivery of public services and provide opportunities for UK business to grow. Both outcomes will benefit our economy.

With this in mind, the Government are currently carrying out a reform of public procurement to increase efficiency, value for money and transparency. Doing this will enable us to better plan procurements to drive innovation. It will also enable us to use more innovative procurement mechanisms that can deliver innovative products and services. This programme of reform will help to maximise the conditions for encouraging and fostering innovation that delivers value for money. I will highlight some of the key elements of this as we go through.

The noble Lord, Lord Hodgson, gave us a masterclass from the private sector investment area, and then started talking about intellectual property. As the Minister for Intellectual Property, I would be only too delighted to talk to him in my office about the way universities are going ahead and putting down what they should do. We have already had a response to that this afternoon.

The noble Lord, Lord Kestenbaum, talked about the Government as intelligent customers. I am very taken with that description. I shall take that away and, as with many of the things I have heard today, see whether we cannot benefit from some of the marvellous speeches that we have heard.

In response to the noble Lords, Lord Willis and Lord Kestenbaum, and the noble Baroness, Lady Warwick, I should say that the procurement capability of the public sector was a key feature of the Select Committee’s report. A change in culture and direction from the top must challenge this risk aversion. The new departmental board structures as detailed in the Government’s response to the committee’s report will help to drive forward this cultural change and it is a start. I hope there will be agreement on that at least.

The noble Baroness, Lady Warwick, asked what new initiatives are in place to engage SMEs in public procurement. To quote one in response, all central government contracts over £10,000 must now be advertised in Contracts Finder, central government’s procurement portal, and this will give greater visibility of procurement opportunities to SMEs. Suppliers can flag up instances of poor procurement practices, including overtly bureaucratic tender documents that lock out SMEs. The Cabinet Office will investigate these instances through its mystery shopper scheme.

The noble Lord, Lord Warner, asked about planning in best practice. The reform of public procurement that is currently under way will mean greater focus is placed on planning, on properly identifying what is needed and on how best these needs could be met by exploring different options before the formal procurement process starts. This includes thinking about long-term value for money. We will ensure best practice from these changes is shared across the various departments.

I return to the capability improvement programme and the SBRI. The programme will help to raise the level of expertise across central government to ensure that public procurers have the right skills to deliver what is expected of them. Part of it includes a commercial interchange programme, which is currently running as a pilot and is designed to facilitate two-way commercial skills and knowledge exchange between government and industry. I am sure we will find that very helpful. There have been seven placements to date, including one at the Department for Transport.

I should like to mention the small business research initiative and the forward commitment procurement model—two procurement mechanisms covered by the committee’s report. I shall update noble Lords on the small business research initiative. Since the reformed programme was launched in April 2009, various departments and other public bodies have run more than 60 competitions. These have been in many areas, including: defence, where we have sought to improve the energy efficiency of operating bases and to reduce the weight that individual soldiers need to carry; healthcare, where we have developed technologies for detecting asthma in children and the means of reducing healthcare-acquired infections; and sustainable construction, where we have installed sustainable technologies in more than 50 social housing units and developed more efficient and easily recyclable lighting technologies. To date, more than 600 contracts have been awarded to technology-based businesses to a value of just over £41 million. Sixty-seven per cent of these contracts have been awarded to micro-businesses—those with less than 10 employees—or small businesses, which have less than 50 employees. These businesses are typically the cadre of companies with which the public sector has the greatest difficulty contracting.

I should also mention that the Technology Strategy Board, which manages the small business research initiative scheme, is constantly engaging with public sector organisations to get greater engagement in the programme. The most recently launched competitions are in the areas of food security and animal research.

The committee’s report mentioned that the forward commitment procurement model is not currently as widely used as the small business research initiative. This is true, and we are seeking to expand the programme. The Government have recently started a project with the private sector to develop private-public forward commitment procurement compacts.

In addition, following the success of the zero-waste mattresses project with Her Majesty’s Prison Service, which was mentioned earlier, a second project has led to the development of an ultra-efficient lighting solution for use in hospitals, which we will demonstrate at the Building Research Establishment. We intend to use this as an opportunity to generate wider interest in this mechanism.

I turn now to the Department for Transport, which was a particular focus of the committee’s report. Since the start of the inquiry, the Department for Transport has introduced several new measures to ensure that it is able to identify opportunities for procuring innovative solutions. For example, it has established a board-level investment and commercial committee, which provides oversight and scrutiny of major commercial and investment decisions. The chief executive of the Highways Agency is a member of the committee and is therefore able to offer the benefit of the Highways Agency’s innovative thinking to the broader department—an area that was highlighted by the committee’s report.

The Department for Transport recognises that small and medium-sized enterprises are a source of innovative ideas and is keen to encourage solutions from them. It has published an action plan with specific targets and measures designed to provide real opportunities for small and medium-sized enterprises to meet its business needs. The department held a product surgery for small and medium-sized enterprises in June. It also participated in the Government’s innovation launch pad, offering mentoring support to small businesses to develop innovative solutions for public services. The department is also considering the development of supply chain charters to encourage fair treatment of small and medium-sized enterprises by prime contractors.

The noble Lord, Lord Krebs, asked how effective central government is in encouraging the take-up of these initiatives. They are being taken up across local government, so there is some hope there.

I know that this debate and the recent government response are starting to show that the Government recognise the important role of public procurement in encouraging innovative solutions in the public sector that deliver value for money.

The noble Lord, Lord Krebs, said that he will return to this topic with his committee. I am very pleased. If I could stand here and say what I personally think about a lot of things that have been said today, I would no doubt get the sack immediately. Certain things strike such a chord with me. When I started working with the Civil Service, it took me a while to realise that in the private sector, in business, where I come from, the biggest talent—certainly in a FTSE 100 company—is always in management, and writing wonderful reports and giving you all the information you need is regarded as something that you can buy in almost by the hour. You come into the Civil Service and it is completely the reverse. People who can write public policy are top of the heap and the people who do management are not.

I am not saying that one way of doing this is better than the other, but somewhere along the line, if we are to get public procurement right, we have to bring the two sides nearer to each other. It would be rude indeed to say that people are too far down the food chain to be taking such enormous decisions that have such a long-term effect. Some of the contracts that I have seen are enormously long. Some of the payment terms that I have seen have been idiotic. I have seen one that paid the main contractor on five days sight of invoice and he was paying the small businesses that contracted to him on 30 days sight of invoice. If that had happened when I was in business, he would have been out of the door tomorrow morning, but that is not how it can be run.

I have whistled through this. I have answered very few questions. We will write to answer the questions asked and when we come back the next time that the noble Lord, Lord Krebs, brings a committee report here, I hope that noble Lords will know that the Government are aware of the problems of public procurement. We will address it better than the previous Government did. As many noble Lords have said, the prize is enormous if we can get this right. I again thank the noble Lord, Lord Krebs, and his committee for bringing this debate here today.

[Lord Young of Norwood Green]

Before the Minister sits down, I could not let go her answer that I was shamefaced; I was not shamefaced about our record. It was a difficult task and we made significant improvements. I am only too happy to wish the Government success in building on those improvements. I am certainly not shamefaced about some of the initiatives that we took.

I hope that I might get an answer—if not, no doubt she will answer in writing—about the pan-apprenticeship scheme.

[Baroness Wilcox]

Ah! One moment. That I do have, and I will be delighted to give it to the noble Lord. As he knows, because we stand opposite each other many times at many times of the day and night, I certainly did not want to appear rude. It was tongue in cheek, but the truth is that his Government did not do terribly well in 10 years, and we have to make a better fist of it.

The noble Lord requested more information on the feasibility of introducing an apprenticeship scheme to improve Civil Service procurement skills. As this is a Cabinet Office lead, I will liaise with my colleagues in the department and write to the noble Lord with more details. As he knows, apprenticeships are close to both our hearts.

17:33

[Lord Krebs]

My Lords, I thank all noble Lords who have taken part in the debate this afternoon. It has been of extremely high quality. For me, particularly important is the different perspectives that have come in the debate from academia, the private sector and government organisations. I do not intend to try to summarise any points; it has all been clear. In general, the contributions in the debate have supported the conclusions and recommendations of the Select Committee. I believe that I understood that the Minister indicated her support for our recommendations although, on the face of it, the Government have not accepted all of them. I very much hope that when we come back to this in 18 months’ time we will see significant progress and understand how the Government are measuring it. We will try to establish how we might measure progress on the hugely important topic of promoting innovation in public procurement. With that, I commend the Motion.

Motion agreed.

[The Deputy Chairman of Committees (Lord Colwyn)]

I suggest that we adjourn for five minutes until 17.40.

17:35

Sitting suspended.

Relaunching the Single Market: EUC Report

Tuesday 13th September 2011 Grand Committee

Considered in Grand Committee

17:40

Moved by

[Baroness O'Cathain]

That the Grand Committee do consider the fifteenth report of the European Union Committee, Re-launching the Single Market.

Relevant document: Re-launching the Single Market (15th Report, HL Paper 129).

[Baroness O'Cathain]

My Lords, I am most grateful that we have been allocated time to debate this important subject, and particularly grateful that the debate comes only 56 working days after the publication of the Select Committee report on 4 April this year. This has to be something of a record. Unfortunately, due to pre-organised holidays, several members of Sub-Committee B are not available to take part in this debate. Holidays were arranged before we were informed that we would have a September sitting. However, it is most useful to have this debate and I hope that other people will read it in Hansard.

Before I begin to give the genesis of the inquiry, details of the process that the sub-committee adopted and the important issues raised, together with our conclusions, I want to give sincere thanks to all members of the committee who worked so diligently and engaged with the subject in such a manner as to make the inquiry a most enjoyable and interesting experience. We were particularly fortunate to have the services of John Turner, the Clerk, Michael Torrance, the policy analyst, and, for the initial scoping exercise, Laura Bonacorsi, our previous policy analyst. The committee as a whole is indebted to all three.

The House of Lords has a very long tradition of engagement with the single market. The late Lord Cockfield was instrumental in its creation during his time as a European Commissioner in the 1980s, and another Member of this House, my noble friend Lady Thatcher, was a mighty force in promoting it. Both believed that the single market was very important in the context of the whole European project and in the interests of the United Kingdom. It was regarded as important then, and it is even more important now when we are so focused on growth in the economy as one way of breaking out of the current doleful economic situation; and growth for the UK has always centred on our trade links and export effort.

When Sub-Committee B took the decision to undertake its inquiry in July 2010, the EU economy was in desperate need of a kick start. Nothing seems to have changed, unfortunately. That is why it is most appropriate that we draw attention to the absolute necessity to reignite enthusiasm in the single market, particularly as a counterbalance to the temptation of protectionism when the economic outlook is bleak.

The EU has produced a number of proposals with the aim of solving the serious economic problems. These include financial regulation, on which the EU Select Committee has already reported, and the Europe 2020 strategy, focusing on issues that were inhibiting growth and proposing measures to remove bottlenecks. The relaunch of the single market sits alongside these measures and is fundamental to future growth.

Our first witness was Professor Mario Monti, the former EU Commissioner. He explained to us that,

“the single market is not a flagship because it is neither a flag nor a ship, but”

the sea on which it floats and the wind in its sails. Professor Monti had produced a report at the behest of President Barroso detailing many ideas concerning the removal of bottlenecks that were hampering further development of the single market. A Commission consultation paper followed, entitled Towards a Single Market Act, and then finally the Single Market Act.

Our report is partly intended to inform the debate on which elements of Towards a Single Market Act should be included in the Single Market Act itself. The four main aspects that we examined were: first, the relationship between market liberalisation and social protection; secondly, the creation of a digital single market; thirdly, methods of enforcing single market rules; and fourthly, general ways in which the single market project could be relaunched. I wish to address each of these four points in turn.

Point one is the relationship between market liberalisation and social protection. Professor Monti acknowledged that the UK had been an enthusiastic advocate of the single market but was much less complimentary about other countries’ approach, which he described as,

“beset by fears about the erosion of the traditional social market economy.”

In order to overcome this reluctance he suggested that the Anglo-Saxon countries should accept greater social protection in exchange for the social market countries accepting greater liberalisation. We fundamentally disagreed with this analysis. We believe that each measure should be judged on its own merits and social measures should be the responsibility of member states. EU action should be necessary only where problems arose in liberalising measures. The posting of workers directive and the services directive fall into this category. The uncertainty surrounding the operation of the posting of workers directive and the subsequent rulings by the European Court of Justice exposed the difficulty between the right to trade in other EU member states and the right to take industrial action. This needs to be addressed and we welcomed the Commission’s intention to review the situation.

The services directive illustrates the tension between the Anglo-Saxon model and the social market model. I was glad to see that the noble Lord, Lord Hannay, had put his name down to speak in this debate. We had an interesting exchange of views on the services directive at the Select Committee. I do not know whether he will be adding anything to that subject today, but I suspect he will—I see he is nodding. I also recall that the noble Lord, Lord Liddle, had some interesting views on the services directive. I am delighted that he is speaking for the Opposition in this debate—he was a most valuable witness during the inquiry. How things change. I should mention that although the services directive was due to be implemented in December 2009, many member states have still not done so. On a more positive note, we welcomed the progress made so far, particularly in the establishment of points of single contact which assist businesses in trading abroad. However, we would like there to be speedier action to make sure that the directive is implemented properly.

Point two concerns the creation of a digital single market, which excites interest and significant progress is possible. The problem is that the regulatory conditions are not in place to enable more rapid progress to be made. The idea that 60 per cent of cross-border internet transactions in the European Union fail for one reason or another is both stupid and unacceptable. The Commission has this in its sights and I hope it will make progress speedily. Also, the objective of getting broadband to all EU citizens—thereby giving them the confidence to adopt the digital experience and benefit from the decided advantages it offers—is wholly admirable. We hope that that progress will accelerate rapidly. My noble friend Lady Wilcox, with her immense experience in consumer issues, will, I am sure, join us in welcoming the recent inclusion of digital goods within the scope of the consumer rights directive.

We did not consider mobile roaming charges but I was recently at an event in Warsaw to discuss the single market, and the issue of roaming charges was a hot topic. We in the UK and, indeed, in the EU Select Committee of your Lordships’ House can claim some credit in previously influencing the lowering of roaming charges, and I welcome the Commission’s recent proposals in this area and look forward to scrutinising them in the sub-committee in the autumn.

Point three concerns methods of enforcing single market rules. The single market must be policed more effectively. We do not believe that the Commission needs more power; it just needs to use its existing power more effectively. On the positive side, we are great supporters of SOLVIT, the online network permitting member states to solve the problems caused by the misapplication by public authorities of single market rules. We also support EU Pilot, which enables the Commission to raise problems with member states before starting informal infringement proceedings. In addition, the mutual evaluation process, used recently for the services directive, is another good thing.

Point four relates to the general ways in which the single market should be relaunched. I hope that I have convinced your Lordships that the single market is of benefit and that it has the potential to be of much greater benefit. When the arguments rage loud and long concerning whether or not we should leave the EU—which of course would be well nigh impossible now—we should counter the strident voices by pointing out that the single market is one area that we should all support, not least in our own interests. The single market can be of benefit to all citizens of the EU. It presents great opportunities for business and opportunities for jobs for the young at a time when such opportunities are so needed.

What is also needed is a concerted effort to convince EU citizens that, despite the tales of gloom and doom, we can use the single market as an engine of growth, not least in getting people back into the most important jobs of designing, producing, marketing and selling goods across the national borders of the EU member states. We must invest in projects that are relevant, properly managed and carefully audited. No more money can be wasted on projects that run over the original budget by a factor of three or more. I guess I should not say that “old Spanish practices” should be rooted out but that is the best way I know of insisting that every effort should be made to gear up our industry and businesses, particularly SMEs, to take on the ever-increasing competition from the BRICs. The old—very old—slogan of “united we stand, divided we fall” is how I see the single market.

The UK has been a champion of the single market right from the outset and I hope that this report will encourage many to champion it with renewed vigour. I beg to move.

17:52

[Lord Bradshaw]

I shall not detain your Lordships for long but I want to emphasise one point made by the noble Baroness, Lady O’Cathain, which is that infraction proceedings in the European Union should proceed at a much faster pace than they do at present.

We are members of the EU and, generally speaking, it is recognised that we are probably among the foremost in transposing EU legislation into our own law. However, there are many people who do not play by the rules. We heard yesterday of one country that was seeking to divert the money that the EU had paid it for one thing to another. This is the sort of thing that causes great impatience and of course provides a lot of opportunities for those who are against the EU to say that the proceedings are not properly or fairly conducted. I just expressed the view that, had we been more earnest within the EU in enforcing the rules relating to banking, the problems that have arisen in some countries would probably have been avoided.

Therefore, I want to make the point that infraction proceedings must be speeded up because they are most important in making sure that the EU is fair. We are well down the road with things such as advertising contracts in EU journals but, if other people are not playing by the same rules, you can be scrupulously fair on the one hand and sometimes face a chaotic situation on the other.

Therefore, my message to the Minister is very simple: I want to see something done to improve the infraction proceedings against those who choose not to implement EU law.

17:55

[Lord Hannay of Chiswick]

My Lords, it is all too easy, in this period of turbulence for the eurozone, to take one’s eye off the salience of the single market for the future prosperity and economic stability of all 27 members of the European Union. It is all too easy, too, to think that the single market was part of yesterday’s narrative, not today’s and tomorrow’s—all too easy but all too wrong, for two broad reasons.

The first reason is positive. A lot remains to be done before we have a true single market—a genuinely level playing field for our businesses, both manufacturers and services. Achieving that is not some academic or bureaucratic fancy. If noble Lords want an example, they should just look at the prescriptions that are being given to the weaker members of the eurozone—Greece, Portugal, Spain and Italy—by the IMF, the Commission and the European Central Bank. All involve programmes for getting rid of national barriers to investment and employment and removing national protections for vested interests; that is, for achieving a less imperfect single market. Moving the single market forward is therefore an integral part of making the EU capable of competing with the great emerging economies of China, India, Brazil and others.

The second reason that I suggest is the one put eloquently last week in a lecture at the London School of Economics by the president of the European Council, Herman Van Rompuy, when he said that it was the single market that had stood and continues to stand as the principal barrier against the follies of protectionism that so exacerbated the effects of the previous great economic and financial crisis in the 1930s.

This debate could not be more timely, as is the excellent report of the sub-committee, chaired by the noble Baroness, Lady O’Cathain, on which I congratulate both her and it. If the noble Baroness will forgive me one side remark, the only thing that I would suggest is never to refer to “old Spanish practices” in Brussels. I once went to a Bilderberg conference at which an Under-Secretary-General of the United Nations referred to “old Spanish practices” in front of Javier Solana, and the meeting had to be suspended for quite a long time.

What should the priorities be for the future development of the single market? Many of them are set out in the report that we are debating. First, I suggest that we need to recognise—this is the point that the noble Baroness, Lady O’Cathain, mentioned that I would get around to—that the services directive that was adopted a few years ago is a singularly imperfect and incomplete basis for a single market in what is now the largest part of all our economies. I argue that we need to go back to the drawing board as soon as this is politically feasible and start work on a second services directive to remedy at least some of, if not all, the deficiencies of the first. I hope that the Minister will give us some idea of the Government’s thinking on this point.

Secondly, I suggest that we also need to keep up the pressure for the liberalisation of energy supplies and markets, on which some progress has been made in recent years but where much remains to be done. Over the medium to long term, energy markets are tightening up and prices are set to rise as the global competition for resources increases. Europe surely needs to be making the most efficient use of those resources and to be working together collectively to maximise access to and diversification of supply, and I welcome the decision, which I believe was taken yesterday in Brussels, to give the European Union a remit to work on the diversification of supply.

Thirdly, we need a strong competition policy to underpin the single market and to roll back the increases in state aid that have been an inevitable but, in the long term, undesirable feature of the response to the current global economic and financial crisis.

If those are the priorities, we are certainly going to need allies in order to pursue them successfully—allies who go well beyond the enlistment of the majority of other member states, which is of course what you need if you are to get any piece of legislation through. We will need a strong Commission—and that was referred to by both previous speakers—ready to bring forward new liberalising proposals and ready to take a tough line on competition issues. We will need a Court of Justice whose rulings bring pressure to bear on laggard member states to implement properly the agreements reached in the Council—a point made by the noble Baroness, Lady O’Cathain, regarding the services directive still not being implemented in some member states. We will need a European Parliament ready to weigh in on the side of liberalisation when it exercises its powers of co-decision, but not to throw its weight behind protectionist amendments. Those three European institutions are not perhaps the flavours of the month in debates in this Parliament—particularly at the other end of the Corridor—but we need to realise that they are essential allies in any moves towards a more complete single market, and we need to treat them as such.

Another perhaps not very welcome point that we need to grasp is that you cannot hope to have a real single market on an à la carte basis, as some seem to think you can. An à la carte approach—picking the things you like and discarding the ones you do not—will lead to 27 different orderings of priorities and no single market at all. Therefore, when the rules of public purchasing lead to a contract going to a company in another member state, we will need to learn to resist the knee-jerk protectionist reaction. We really must not delude ourselves into thinking that a campaign to repatriate powers from the European Union is compatible with the proclaimed objective of achieving a more complete single market. It is not, and it would be a pity if we had to find that out by bitter experience rather than by applying a bit of common sense at the outset.

One final point: if the single market really is the bulwark against protectionism that Van Rompuy says it is—and I totally agree that that is the case—we need to be there to protect and to promote that bulwark in every forum available. That is why it was an error for the Government to have decided not to participate in the euro-plus pact, even when 24 out of 27 member states are in fact doing so—and a fair number of them are not in the eurozone. It is rather ironical, when our Government’s economic policies are totally consistent with those being followed and indeed applauded by eurozone Governments, that we should be absenting ourselves from a forum for discussion in which issues related to the single market will inevitably arise. I hope that over time the Government will have second thoughts about that decision and will realise that the euro-plus pact has nothing whatever to do with Britain’s decision on the euro itself, which is a separate matter that we all understand is not going to happen in the near future.

I welcome the fact that in his remarks after the G7 Finance Ministers’ meeting in Marseilles last weekend the right honourable gentleman the Chancellor of the Exchequer recognised the importance of this country being a continuing champion of the single market and of a firm competition policy. I hope he will ensure that he and his colleagues are there to do that on each and every occasion that it needs to be done.

18:04

[Lord Liddle]

My Lords, this has been a short debate but an excellent one. At least, the three speeches that we have heard so far have been excellent. I hope I shall not ruin the record. I have had three separate goes at this report. When I was first introduced to the House, the noble Baroness, Lady O’Cathain, kindly invited me to give evidence to the committee. I was then put on the Select Committee, on which I was delighted to serve. We discussed the report’s content, or some of its themes at any rate. Now it is my job to speak for the Opposition in this debate, so I have seen a lot of this report. I think it is excellent and applaud the committee for its work.

Sometimes we may think that the work of the European Union Select Committee does not get as much attention—the big attendances for debates in the House—as it perhaps should. However, from my experience I can certainly testify that outside the House—in the Civil Service and in Brussels—the reports are read with attention. This report will have a desirable impact in influential quarters.

Of course, the Labour Party supports the single market and wants to see it reinvigorated. The noble Baroness, Lady O’Cathain, was absolutely right; this is particularly relevant for the UK now, when we are in a very difficult economic situation. We all agree that we have to rebalance our economy and that we need more exports and investment. That needs a prosperous single market. There is no alternative to that. We cannot gloat at Europe’s difficulties. We must make the European Union, of which we are a part, an economic success if we are to succeed in our objectives for our own country. In this room we all agree on that.

The strengthening of the single market is also essential for our own interests. It gives our companies a huge home market from which they can tackle the challenges of globalisation. The noble Lord, Lord Hannay, was absolutely right that the single market is the cornerstone of the structural reform agenda that the member states, particularly in southern Europe—the Greeks, the Spaniards and the Italians—need to take forward if they are successfully to remain members of the euro. That is how they can improve their competitiveness and economic growth potential. The Spanish Government have certainly got that message, so I shall not join in making rude jokes about Spaniards. However, the Greeks and the Italians have some way to go.

I also agree very strongly with the noble Lord, Lord Bradshaw. If you are serious about the single market, you have to recognise that it is much more than a free trade area. It is an area of deep economic integration, which is underpinned by the supranational institutions, particularly the Commission and the Court of Justice. Britain needs, in its national interest, a strong Commission that will police the single market. It needs an effective Court of Justice that will come rapidly to decisions on the single market. Therefore, when some members of the Conservative Party attack the Commission and the Court of Justice, they undermine the very instruments that would lead to the success of their own ambitions for single market liberalisation.

Where are we on the single market? Formally we are making quite a lot of progress. The Monti report was excellent and set out an agenda for the future. The Commission is preparing a comprehensive single market Act, which is about to start on its way through the legislative procedures of the Union. However, my friends in Brussels tell me that the outlook for progress is not very good. In the Council there is essentially a deadlock between the northern liberals, of whom I suppose we count ourselves as part, and the southern protectionists.

If I have one disagreement with the noble Baroness’s committee’s report and its recommendations, it is that we as Brits should recognise more that you get somewhere in the EU only if you are prepared to contemplate a package deal. It is no good just saying, “I want this and I’m not going to give you what you want”. You have to be prepared to build alliances. That is why the Government should look favourably—if the Minister cannot respond to me now, perhaps she could do so in a letter to me later on the Government’s attitude—on the Mario Monti recommendations and the things that have been suggested, like amending the posted workers directive, that might produce a more balanced package that would ensure that the European Parliament was prepared to look again at toughening up the services directive. There are elements of the Single Market Act that could achieve what the noble Lord, Lord Hannay, wants, but they will not go through unless they are part of some package deal.

That brings me to other, wider questions of alliance-building, which are important. One group of countries who are potentially allies of the United Kingdom on single-market matters is the new member states of central and eastern Europe, particularly the Poles, who hold the presidency now. I was in Warsaw in June and I am afraid to say that the Polish Government are very upset with the British Government because of their attitude to the EU budget. I am a disciplinarian with regard to the EU budget—I am not in favour of huge increases in it—but when Britain puts forward its position of the EU budget, it must recognise that the plans for the future of Poland and other new member states in that region assume that they will have available for investment the money that they have been getting through the structural funds of the EU budget. If we go around making statements about the budget that give the impression that we think this vital infrastructure money that they are due to get will be cut off because of the British Government, that is seriously bad news for us in terms of our political influence. I urge the Government to bear this point in mind. I understand the point about budget discipline but this is important if we want to build allies.

Another point about alliance-building was made by the noble Lord, Lord Hannay. If you want to be influential in the EU, you have to be there in the room, engaged in the debate. Personally, I think it was a mistake for the British Government to steer clear of the euro-plus pact. I did not like a lot of what was in it—it is rather draconian in its approach to austerity, and I would be prepared to have a debate about that—but we should seek every opportunity to put forward our views about Europe’s future, including the need for the structural reforms to be promoted through single-market liberalisation. Therefore, I think that staying away from the euro-plus pact was a mistake. In itself, it probably does not matter that much but, if it is part of a trend, it could matter a great deal.

I am very interested in what the right honourable gentleman the Chancellor of the Exchequer has to say about the European Union. He is saying some rather interesting things. He is saying that he wants to see eurozone governance strengthened, but he recognises that this potentially puts us in a difficult position on matters to do with the single market, where in any future deals we would want to remain an equal partner with the eurozone.

That is a crucial issue for Britain. We cannot get ourselves into a position where the eurozone effectively determines its policy for the single market and then goes along to the Council saying, “This is what we’ve agreed. Under majority voting, that’s what you have to accept”. There is a real risk of that happening, and that risk is heightened if Britain adopts an approach to Europe which is unconstructive, which gloats over the eurozone’s difficulties and where people at home talk about what concessions they can screw out of the European Union as a result of its difficulties in order to loosen Britain’s relationship with Europe. That is not the way to win our objectives in Europe for a stronger, more effective single market, and I hope that we will hear from the Minister that that will never be the policy of the British Government.

18:17

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, this topic is of great importance to both the United Kingdom and the European Union in addressing the current economic situation. First, I commend the EU sub-committee under the chairmanship of my noble friend Lady O’Cathain for producing such an excellent report.

I shall start by responding quickly to a question from the noble Lord, Lord Liddle, who is quite frightening in his rise to glory through this House. He gave evidence as soon as he took his place here; he was then invited on to the Select Committee; and he is now standing opposite me speaking for Her Majesty’s Opposition. I worry about where he will be going next. However, I shall do my best. He asked whether the Government agree with the recommendations of the Mario Monti report. The answer is that we agree with many of Mr Monti’s points but, if the noble Lord does not mind, I shall write to him, with a copy to the chairman of the committee, with more detail on our thoughts about the individual recommendations, as we do not agree with them all.

The Government see the single market as one of the fundamental cornerstones in the drive for growth, as outlined by the Prime Minister in the pamphlet Let’s Choose Growth. In its report the committee raised a number of points that I should like to comment on further.

The Government agree that the social dimension of the single market should not be seen as a trade-off against market liberalisation. By removing barriers to trade, the single market opens new markets for businesses, provides consumers with greater choice, encourages innovation and, ultimately, creates jobs. It is the main driver of growth and prosperity across Europe and plays a key role in maintaining the European Union’s global competitiveness. Pressing for a deeper, more competitive and more effective single market is a key commitment of the UK Government’s Trade and Investment for Growth White Paper, which was published in February 2011.

Additionally, all EU proposals should be accompanied by impact assessments that analyse associated costs and benefits. We are working towards this aim with the Commission and other like-minded member states.

In response to the question of the noble Lord, Lord Bradshaw, infraction proceedings should proceed at a faster pace. We absolutely agree with him that infractions are too slow. Infraction proceedings under the services directive have only just started against Austria. The EU pilot cases are designed to speed up this process. I agree with him that fairness and enforcement are the watchwords here, and I thank him for that.

The services directive is central to the completion of the single market. Many providers in the UK look to Europe as a market for their services but they face restrictive regulatory practices in order to provide their services across borders. These barriers hinder service sector growth and job creation, and their proportionality needs to be rigorously assessed. Companies and individuals currently bear unnecessary costs, and consumers get less choice and lower-quality services at inflated prices. Further simplification of the administrative environment, ensuring transparent, proportionate regimes, is a crucial part of successful implementation and is vital to facilitate the growth of SMEs.

It is important where member states are shown to be lacking that any deficiency is addressed immediately by the member state or, ultimately, through the infraction process by the Commission. Ineffective implementation, transposition and enforcement will lead to potential gains not being realised.

The Government feel that the mutual evaluation process used at EU level for the first time was a valuable exercise and that member states, together with the European Commission, created a good evidence base for further improvements. The Commission and other member states feel the same way and the process will be used as an evaluation tool in other fora.

The noble Lord, Lord Hannay, asked about reopening the services directive. The United Kingdom would be open to a new services directive but there is unlikely to be sufficient support in other member states or from the Commission. We are keen to introduce a proportionality test into the current directive against which any barriers should be measured. We are also keen that the Commission should use these enforcement powers where there is blatant protectionism.

The mutual recognition of professional qualifications directive covers professionals who need to register with a regulatory body in order to practise or hold a title. The European Commission is currently reviewing this directive, with a view to proposing legislation by the end of the year. The main proposal is a professional card that can be presented to regulators. We are concerned that this could add an additional layer of bureaucracy and have asked the Commission to think through the proposal in more detail before taking action. We need to reduce regulated professions in areas where they are causing barriers. Consequently, we are pushing for member states to review their regulated professions and remove regulations that are unnecessary or disproportionate. Where necessary regulations remain, we would like more cross-EU collaboration to allow applications for recognition to be processed more smoothly.

We must also recognise the vital role that flexible labour markets play in a vibrant economy. It is important that we do not impose further EU labour regulations that undermine domestic regulatory systems and have a negative impact on labour market flexibility. The Government have taken note of the Commission’s proposals on the Single Market Act regarding the posting of workers directive. While we are happy to look at proposals to better implement the directive’s provisions, it is crucial that these proposals do not impose unreasonable burdens on business or the Exchequer.

The Government agree with the authors on the significance of a fully functioning digital single market. However, we come to a slightly different approach on assessing the recent policies of the European Commission.

We welcome that the Commission is not planning a full revision of the e-commerce directive because we are sceptical that reopening the directive would be productive. A preferred option would be to build on the fundamentals of the directive through advice and the promotion of best practice, using the existing directive to deliver more successful cross-border transactions.

My noble friend Lady O’Cathain referred to the new consumer rights directive and my background knowledge of it. Political agreement of the consumer rights directive has now been reached and the Council will formally adopt it very soon. We have supported the aims of this directive throughout because greater harmonisation of consumer rules across the European Union, particularly on distance selling, will improve the functioning of the single market. The directive also applies to digital content and will, among other things, require additional pre-contractual information such as system compatibility requirements and any technical protection mechanisms to be provided to consumers.

On intellectual property, both the European Commission and the Government have recently released strategies for future intellectual property policy. The Government’s was published in response to the Hargreaves review of intellectual property and growth. Both agree that a modern, integrated European intellectual property regime will make a major contribution to growth, job creation and economic competitiveness. Many of Hargreaves’s recommendations and European Commission proposals fall on common ground. Additionally, the Government agree with the Commission regarding other digital initiatives. These include policies that enhance the competitive deployment of high-speed broadband and the introduction of an alternative dispute resolution for online trading, which will help to overcome consumers’ difficulties in obtaining redress from businesses in other countries.

The Government believe that a common consolidated corporate tax base is unnecessary for the single market to function effectively. We will not agree to any proposals that would jeopardise the UK’s ability to shape its own tax policy or prevent the UK creating the most competitive corporate tax regime in the G20.

The noble Lords, Lord Liddle and Lord Hannay, spoke of the euro-plus pact. The noble Lord, Lord Hannay, mourned the fact that we did not join it, as did the noble Lord, Lord Liddle. It is true that we did not join the pact. However, we welcome the euro area’s determination to push forward structural reforms, which are very important for the future strength and stability of the single currency, which is firmly in the UK’s own economic interests. As we know, almost half of our exports go to the eurozone countries. The United Kingdom has its own special relationship with the European Union and the euro. We have a formal treaty opt-out from membership of the single currency. That is why we have decided not to participate formally in this pact.

The noble Lord, Lord Hannay, then referred to energy markets. My Secretary of State, Vince Cable, shares the noble Lord’s concerns regarding our energy markets. On the point that was made about competition policy, he is very interested in competition enforcers looking into the market via a market study. This is one of the enforcers’ competing priorities. They will have to make a decision on this shortly.

Looking forward, since the House of Lords inquiry took place, the agenda has not been static. On the digital single market, the Government initiated and hosted a meeting with 13 other like-minded member states in July. At that meeting, we agreed to put collective pressure on the European Commission, with clear targets and deliverables for how the Commission plans to implement the digital single market. A joint letter from the like-minded group to different EU commissioners will be sent out shortly. The next meeting of the group is scheduled for November. Following the Government’s response to the Hargreaves review we will, within the next few months, consult on the detail of how it will proceed, and will set out plans in a White Paper in spring 2012. Much of this will have consequences for the digital single market and wider European intellectual property.

We have also been working with the Polish and Danish Governments—the current and upcoming presidencies—to ensure that the single market and growth remain a priority. There are still a number of key issues to be resolved before we achieve full implementation of the services directive, but we remain optimistic that we will be able to achieve progress on this, on reducing burdens to business and on ensuring as far as possible the free movement of labour, goods, services and capital. These are the aims of the single market and are of great importance for both the United Kingdom and the growth agenda generally.

I have just realised that I have missed two questions. I think I have time in which to answer them; this will save you having to wait to receive a letter from me. One is from the noble Lord, Lord Hannay, and one is from the noble Lord, Lord Liddle. I apologise for having done that.

The noble Lord, Lord Hannay, asked a question on strong competition policy and rolling back state aid. The state aid regime is the cornerstone of the single market; it helps to ensure effective competition. The Commission rules create a level playing field for UK companies, while at the same time enabling member states to make targeted interventions aimed at correcting market failures. Whether you agree or not, that is the answer I give you today.

With regard to the query of the noble Lord, Lord Liddle, about how the United Kingdom should work with Europe, I agree with the noble Lord that the United Kingdom needs to work more collaboratively with our European partners and should take absolutely no joy from the eurozone’s current situation, given that the European Union is, as I have said before, the UK’s main trading partner. I once again thank the noble Baroness, Lady O’Cathain, for a most excellent report.

18:31

[Baroness O'Cathain]

Thank you very much. I thank all Members who participated in the debate. We may not have had the quantity but we have certainly had the quality, which has been very good.

I should like to proceed in the order of speakers. The noble Lord, Lord Bradshaw made a point about the infraction proceedings. We have not faced up to the fact but will have to consider that the backlog of work in the Court of Justice is considerable. This is one of those bottlenecks. I think we are always pussyfooting around anything to do with the judiciary—we cannot touch it because it is sacrosanct. However, there is something that the Government should do about trying to hasten the solution of these problems before the Court of Justice. The noble Lord is right about the infractions. As he knows, we wanted them addressed speedily and we will continue along that route.

I welcome very much the remarks of the noble Lord, Lord Hannay, about protectionism, which I mentioned. The big thing, when we have an economic disaster, as we have had over the past three years, is that people tend to go back into their huts and do not want to venture out. They do not think about going out and making an opportunity out of a disaster. This is a very valid point: we cannot afford to think about protectionism.

I was very sorry that the noble Lord, Lord Liddle, did not get a welcome from the Poles. They were all so kind to me when I was there a few days after the Summer Recess started. We are in dialogue with them and I am going again to Krakow in about a fortnight to take part in the chairmanship of a discussion about the single market. So I think they like our contribution and they are very genial. I will not make any comments about any other nations—I am sorry.

I should also like to thank my noble friend the Minister for her support and for her wise advice, bearing in mind her background. I would point out that professional qualifications are within the remit not of EU Sub-Committee B but of Sub-Committee G. I sat in with the chairman of Sub-Committee G at a meeting in Brussels after a meeting on the single market, so I know about the professional qualifications. This is a matter they should take up with Sub-Committee G.

Also, the point that I should like my noble friend to take back to the department is the absolute imperative to enthuse all the citizens of the European Union in this single market. There are a few quick wins we can get in doing that. One of the biggest would be—looking at the noble Lord, Lord Walpole—a total extension of broadband to every citizen in the European Union. We have had endless discussions about the black spots of the UK that still have not had broadband.

If we could go forward together and make sure that every European Union citizen was enthused about this we might get somewhere. Then the begrudgers would have very little to begrudge about and we should get somewhere. At the risk of boring everybody I repeat what I said, that I am very glad we have had this debate. I am sure that it will make good reading. I particularly want to thank again the Minister and the committee.

18:35

[Lord Walpole]

Before the chairman sits down, I want to say a brief word. One of the reasons why this committee has produced such a good report, and is going to produce another very good report fairly soon, is because our chairman looks after us so well and it is a very happy committee. We all get on with each other extremely well and that is reflected in the report. Of course it is our staff as well who help us to survive, and have written the next report already.

Motion agreed.

Committee adjourned at 6.36 pm.

House of Lords

Tuesday 13th September 2011 Lords Chamber

Tuesday, 13 September 2011.

14:30

Prayers—read by the Lord Bishop of Hereford.

Personal Statement

Tuesday 13th September 2011 Lords Chamber

14:36

[Lord Trefgarne]

My Lords, I wish to make a personal statement.

As your Lordships may be aware, there has been some recent press comment relating to a letter, now made public, which I wrote in 2007 on a private matter of a business nature. I accept that although the business interest to which the letter referred was correctly entered in your Lordships’ Register of Interests in 2003, it was removed in 2005, which was clearly premature. I also accept that the use of House of Lords writing paper was inappropriate. I apologise to your Lordships for these errors for which I take full personal responsibility.

Public Disorder: Business Damage

Tuesday 13th September 2011 Lords Chamber

Question

14:37

Asked By

[Lord Cotter]

To ask Her Majesty’s Government what progress is being made with the measures proposed to help businesses damaged or destroyed as a result of the recent riots in England.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, the Government acted swiftly to set up a range of measures to support those businesses affected by the recent disturbances. Our immediate priority has been to get local communities back on their feet and to get high streets and businesses up and running again as quickly as possible. The response has been amazing. Businesses have been helping each other and there has been a great spirit abroad. My colleagues, Mark Prisk from BIS, Crispin Blunt from the Ministry of Justice, Damian Green from the Home Office and Bob Neill from the Department for Communities and Local Government, wrote to all MPs on 6 September updating them on the support for communities and businesses. I have arranged for a copy to be sent to my noble friend, as I recognise his involvement, over many years, in the concerns of small businesses.

[Lord Cotter]

I thank the Minister for her reply. It will take some time for businesses and communities to recover. I hope that the Minister will continue to monitor the situation. However, on a broader point—not just in relation to the recent riots—two-thirds of businesses nationally have been a victim of crime over the past 12 months. Can a higher profile be given to policing crimes against business, to remove the perception, which somehow seems to be the case, that these are victimless crimes and to ensure that firms are given proper advice and help?

[Baroness Wilcox]

I am only too delighted to confirm to my noble friend that this is something that the Government are looking at. These are not victimless crimes, particularly for small, family businesses, which are almost afraid to open up again. A lot of work is being done in this area. I have spoken with my noble friend Lady Browning, the Home Office Minister, who has responsibility for crime prevention. In the next few weeks, the Home Office will be releasing an improved self-assessment tool for businesses to identify their vulnerabilities, providing practical advice for how those can be overcome. That will be available through the Business Link website and, to comfort my noble friend, I shall stay in contact with him on any other areas that develop well

[Baroness Royall of Blaisdon]

My Lords, when the commission, which was appointed by the Prime Minister, and of which my noble friend Lady Sherlock, I am proud to say, is a member, goes round the country, will it take evidence from businesses as well as from those who were affected in other ways by the riots? Does the noble Baroness know whether the commission will be going to areas which were not themselves affected by the riots but which potentially could have been affected? Many people up and down the country will have views on the reasons behind the riots and it is important that their views are listened to.

[Baroness Wilcox]

Pretty well anything that the noble Baroness could suggest today that we might do to reassure people all around the country, particularly in small high streets where the businesses are not run by great consortiums but by people who have been made very nervous, I will take away. I do not know whether they are looking at all of that at the moment. However, at the core of everything that we are doing is an understanding. We have been called a nation of small shopkeepers, and this is what the Question is about. We will make sure that we do our best for them.

[Baroness Hussein-Ece]

My Lords, many small businesses that were damaged or that have closed down as a result of the recent riots may have lost, or have a lack of, complete financial records. This may prohibit them from taking advantage of the compensation that has been made available. Will the Minister reassure me and these small businesses that they will be treated fairly and with sympathy, particularly at local level?

[Baroness Wilcox]

Yes, I can assure my noble friend of this. First, all 35 affected local authorities have now indicated that they will provide support for affected businesses through the high street support scheme. Companies without insurance can seek compensation from their police authority under the Riot (Damages) Act. Her Majesty’s Revenue and Customs is delaying tax payments for businesses needing help. Companies House has agreed to an extension for affected companies unable to file accounts or other documents, and a charitable high street fund has been set up. I am delighted to answer the Question, not because riots are something that I want to talk about, but because it is marvellous to see how much help is being given all over the country. This is society at work—I will not even say the big society.

[Lord Elystan-Morgan]

My Lords, the Minister referred to the Riot (Damages) Act 1886, under which claims can be made against the police for damage to property. While it is entirely appropriate that innocent persons' property that has been damaged in that way should recover, does she not consider that now it may be appropriate that such payments should be made by the Treasury rather than by the police, bearing in mind that that Act was passed 125 years ago in circumstances very different from those prevailing at the moment?

[Baroness Wilcox]

We will look at the lessons that we can learn from this. As the noble Lord says, it is the Riot (Damages) Act 1886 that applies. It does not include vehicles: we have had a little difficulty with people who have had their vehicles damaged. However, we can always refer them on to other areas and other ways in which they can claim damages. We will learn lessons from this, as we do from all these bad things.

[Lord Cormack]

My Lords, following that supplementary question, will my noble friend assure the House that the resources made available to the businesses that have been so wantonly destroyed will be sufficient to ensure that the legacy of the riots does not include one single destroyed family business?

[Baroness Wilcox]

Yes, I can assure my noble friend that £20 million has gone into the high street support scheme. If we discover that not all the money has been used, it will not be taken back: local authorities will be able to use it to cheer people up. If any noble Lord has a good idea, I urge them to let me know. We think, as it is getting near Christmas, that any money left over could go towards the Christmas lights.

Libya

Tuesday 13th September 2011 Lords Chamber

Question

14:45

Asked By

[Lord Hoyle]

To ask Her Majesty’s Government what assessment they have made of the political views of the coalition in Libya and their policies for running the country.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, the National Transitional Council has made a sincere commitment to a political settlement where human rights, fundamental freedoms and the rule of law are respected. We welcome its constitutional declaration which sets out a programme for conducting Libya’s political transition in a spirit of unity, moderation and reconciliation. We look forward to the formation of an interim Government, which is expected in the coming days. The United Nations will co-ordinate international community support for this transition and the UK Government will remain at the forefront of these efforts.

[Lord Hoyle]

I thank the Minister for that considered reply. Could I press him a little further about the people who are forming the Libyan Government? Many of them were members of the terrorist organisation, the Libyan Islamic Fighting Group. Although they have renounced violence, can we be sure that that they will not go back to their old ways?

[Lord Howell of Guildford]

The leaders—the chairman of the council, Mustafa Abdul Jalil, and the prime minister, Mr Mahmoud Jibril—are strong and remarkable people. Mr Jibril served under Colonel Gaddafi and was part of that regime, but he moved over. There are others who have had associations with other groups in the past. There is one prominent case, which I suspect the noble Lord has in mind, of someone who appears to have been involved in terrorist activities—that was certainly the case, so one can never be totally sure. However, there are wise heads leading the NTC and we believe that with careful pressures and support from outside we can proceed in a way which avoids the intrusion of extremism, which in Tripoli yesterday morning the prime minister was warning that he did not want to see in the new Government.

[Lord Chidgey]

My Lords, three weeks ago, the BBC reported that the joint FCO, MoD and DfID stabilisation unit had identified five long-term objectives for Libya, which included a conclusive political settlement ensuring security, the rule of law and restarting the economy. Can my noble friend say whether the Government will set out in a Statement how they intend to achieve those objectives, what resources will be deployed and what provisions have been made for a multilateral response to stabilisation from the three departments involved?

[Lord Howell of Guildford]

Those are indeed the objectives, as my noble friend acknowledges, and we will pursue them. How will we do it? We want to see the UN take the co-ordination role. A lot of co-ordination is needed, with wide international efforts for stabilisation, reconstruction and general social improvement, and recovery from the horrors of the last few months. Alongside that, we will work with all the agencies and through our own contribution to achieve these aims. I do not think that I can be more specific at this stage. In addition, as my noble friend knows, the Department for International Development is providing considerable funds to help with the reconstruction.

[The Lord Bishop of Hereford]

My Lords, I understand that Article 6 of the draft constitution emphasises the equality of citizenship before the law, but I am also aware that the constitution refers to Islam as the principal source of its jurisprudence. The two positions are not incompatible, but it would be helpful to learn about the conversations that our Government have had with the Transitional National Council in Libya regarding the protection of minorities.

[Lord Howell of Guildford]

The right reverend Prelate is absolutely right. These are very important issues, which we are raising all the time in our discussions and in the support that we are seeking to give. We do not want to cross the borderline between support and reinforcement of the new Libya, if that is what is going to emerge—the business is yet unfinished, as noble Lords know. We do not want to cross the line into telling the Libyan people what to do, as they own the procedure. However, they do respect these values, and we will certainly make those points to them in our continuing dialogue.

[Lord Triesman]

My Lords, the Libyan Prime Minister Mahmoud Jibril said on Monday that the National Transitional Council has mapped out a path forward and he added that this is no time for revenge. I note today that Donatella Rovera of Amnesty reports widespread systematic violence perpetrated by former rebel forces, including in the areas that they have controlled for over six months. It is an alarming report. Will the Minister tell the House in rather more detail what has emerged in discussion with the NTC about the main planks of its plan, whether he believes that the resources exist to deliver that plan and what the United Kingdom is saying to the NTC about violent crimes being committed by the NTC’s forces?

[Lord Howell of Guildford]

We have noted that report and the reports from the UNHCR about allegations of atrocities. We think all these things should be investigated. It is worth remembering that the International Criminal Court is remitted fully by UN Resolutions 1970 and 1973 to investigate these allegations, and we understand that it is doing so. If it is necessary, we will certainly encourage it to do so, but I think it is going ahead with the job anyway.

[Lord Avebury]

Can my noble friend say what is being done about the difficulties that the Tuaregs are having in gaining citizenship in the new Libya and whether any representations have been made on that subject by us?

[Lord Howell of Guildford]

No, I cannot. Whether the Tuaregs have come up in detailed discussions, I am not briefed to say, but I will write to my noble friend if the position of the Tuaregs has been discussed. I cannot add anything at the moment.

[Lord Anderson of Swansea]

Does the Minister agree that Libya enjoys one considerable advantage over many of its neighbours, which is that it is not in need of financial assistance? However, it is in need of massive technical assistance, particularly in ensuring that the vast oil resources go to help the many and not to oligarchs and so on. What are we doing to assist the Administration, particularly in the area of petroleum and gas resources?

[Lord Howell of Guildford]

The noble Lord is absolutely right. There will be some technical support, and we are encouraging oil experts to go back in and restart the industry. There are political and technical difficulties to overcome, but we are certainly going that way. As for resources, we have unfrozen a large number of assets which are now available to the new Government. The Libyans are the owners of this process, and it is for them to decide how to distribute the funds and resources of, I hope, a modern, democratic and settled Libya, which we all pray lies ahead.

Rainforests

Tuesday 13th September 2011 Lords Chamber

Question

14:53

Asked By

[Lord Eden of Winton]

To ask Her Majesty’s Government what is their latest assessment of the effect of logging operations in the rainforests of Africa, Asia and South America; and what is the likely impact on the indigenous human, plant and animal life.

[Baroness Verma]

My Lords, more than 1 billion people depend in varying degrees on the forests for their livelihoods with many more depending on the ecosystem services they provide. Some 350 million people who live within or adjacent to dense forests depend on them to a high degree for subsistence and income. Degradation and deforestation cause a loss of between $2 trillion and $4.5 trillion per year in ecosystems goods and services.

[Lord Eden of Winton]

Does my noble friend share my concern that while good intentions are being declared across the world, rainforest logging operations continue at a higher rate than before? Is it not just possible that funnelling loads of money through the World Bank is the wrong way to go about things? My fear is that in relying on REDD-plus and so-called sustainable forest management, fund providers are being hoodwinked? Would my noble friend and her colleagues therefore give much greater support direct to NGOs and the like which know what is happening on the ground and are much better placed to achieve early practical progress at the grass roots, where it really will make a difference?

[Baroness Verma]

My Lords, my noble friend is to be congratulated on raising this issue again. It is true that these issues will not be dealt with singly by the UK or by Governments who are not prepared fully to accept that there is a lot of work and persuasion to be done, by rule of law, that illegal logging must be stopped. However, I reassure my noble friend that we work with NGOs and are a founding member of the Global Partnership on Forest and Landscape Restoration. We are working very closely with countries such as India to help restore and recover forests. My noble friend Lord Henley has just recently participated in the Global Partnership on Forest and Landscape Restoration in Bonn. Governments can do their part and NGOs can do theirs. However, countries where this is happening also have to respond with severe penalties.

[Lord Blencathra]

Does my noble friend agree that biodiversity and loss of species are even more important than climate change? With a huge amount of resources and tremendous effort, it is possible eventually to reverse climate change, but once a species is lost, it is gone for ever, and the damage could be irreparable. Does she also agree that this is not just a matter of polar bears, tigers or even red squirrels, but that many of the boring little unsexy species that could be lost by deforestation could actually be valuable to human life and existence?

[Baroness Verma]

My noble friend has put the case perfectly for why we need to work incredibly hard. That is why the UK has supported developing countries to participate in the United Nations study on the economics of ecosystems and biodiversity which estimates, as I have said, that the financial cost is immense but the cost to species is even greater, and the initial long-term impact will be on us.

[Lord Clark of Windermere]

My Lords, does the Minister appreciate that one of the largest single sources of global emissions is actually deforestation, often illegal logging? The British Government took the initiative a number of years ago to push for reforestation, and we are one of the few countries in the world with experience of it. Can we have an assurance from the Government that they will redouble their effort for reforestation as well as stamping out illegal logging?

[Baroness Verma]

The noble Lord is absolutely right. It is about working with other countries, which we are doing aggressively. We have worked very closely to get all our partner countries to sign off the new EU timber regulation that came into force last December. It is about being persistent in our argument. I agree with the noble Lord that it is really a devastation to all countries if we do not tackle this issue right now.

[Lord Chidgey]

Is my noble friend aware that the Democratic Republic of Congo officially produces more than half a million cubic metres of timber each year, and illegally produces about the same amount each year? Is she also aware that British technology is now available to the DRC that tracks the entire supply chain of timber from standing forest trees to the wholesale timber market? What action will the Government take, therefore, to help facilitate the DRC Government’s efforts to complete negotiations with the European Union to enter into traceability agreements?

[Baroness Verma]

My noble friend is right about Congo. However, as with the previous question, it is about all partner countries being able to respond with severe penalties when they see illegal timber coming through their borders. Of course, the important thing is that these are conversations that continue. They are not had at one conference—it is a continuous conversation at many conferences, and it will arise again at the Durban conference in December.

[Lord St John of Bletso]

My Lords, can the noble Baroness give any indication as to whether our Government will be following the moves by Switzerland and Germany to investigate money-laundering of the proceeds of timber corruption by the chief minister of Sarawak in Malaysia? What other measures are being taken to identify and sanction those large international logging companies which do not ensure best practice in sustainable logging?

[Baroness Verma]

The noble Lord talks about a specific case, which I will not refer to. In a more general response, I would like to say to noble Lords that we are ensuring that we respond proactively to the difficulties we are all facing with this issue. The multinational companies that deal in illegal logging will find that the penalties for this will be severe. That is the agreement we are trying to get from all our partner countries so that it is not just a small group of countries that are willing to apply severe penalties, but that the penalties will be severe at every border that illegal timber comes through. It is about greater partnership but it is also about recognising that we are only a small cog when it comes to dealing with these issues and it is really for the whole world to respond collectively.

[Lord Avebury]

My Lords, what does my noble friend think about the UN-REDD initiative mentioned by the noble Lord, Lord Eden? Is it cost-effective, and how much does the United Kingdom contribute to it annually?

[Baroness Verma]

I cannot give my noble friend a figure on the contribution at the moment; I will write to him on it. However, I repeat that we may think that some systems are weak, but we have to strengthen those systems—review and revise them—and make countries where deforestation and illegal logging take place responsible for responding positively.

Palestine: UN General Assembly

Tuesday 13th September 2011 Lords Chamber

Question

15:01

Asked By

[Lord Wright of Richmond]

To ask Her Majesty’s Government how they propose to respond to any bid by the Palestinians for Palestinian statehood at the forthcoming United Nations General Assembly.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, we have been clear that a Palestinian state is a legitimate goal and the best way of achieving this is through a comprehensive agreement between Israel and the Palestinians. Palestinian action at the UN looks increasingly likely. We are working with partners to build a consensus on a way forward that recognises the progress the Palestinians have made in their state-building efforts, that meets Israel’s legitimate security concerns, and that avoids confrontation in the UN. Whatever action is taken in New York it is important that this increases the prospects for a return to negotiations. This is our goal and it is President Abbas’s goal as well. We have reserved our position on outright recognition and will take a decision nearer the time if needed.

[Lord Wright of Richmond]

My Lords, I thank the Minister for that reply. Does he accept that giving Palestine statehood does not in itself—and would not in itself—preclude future negotiations with the Israeli Government? Given that there is widespread acceptance of the concept of a two-state solution, with shared capitals in Jerusalem, is not recognition of a Palestinian state entirely logical? I also ask the Minister whether he accepts that whatever decision our European, American or quartet colleagues take on this matter, Britain—the governing power of Palestine until the time of partition in 1948—has a particular moral duty to support the revival of a recognised state for the Palestinians living in peace and security with the state of Israel.

I hope your Lordships will allow me to add a very short, sad but highly topical postscript to this Question. Some of you may have read in the Times this morning an obituary of the wife of the Palestinian ambassador in London, to whom I offer my condolences. That obituary states that Mrs Hassassian, who was a permanent arguer for Palestinian rights, was not allowed to open a Palestinian stall at the international diplomatic fair in Kensington a few years ago because Palestine was not a country. I hope that nonsenses of that sort are now in the past.

[Lord Howell of Guildford]

I am grateful to the noble Lord and, of course, I share and we must all share in the condolences which he touches upon. As to his earlier questions and propositions, I agree with most of them. However, the question hangs in the air, and I hope it will be resolved, as to whether action at the United Nations will enable that move to statehood to take place. That is what we all want and that is what must proceed. We hope that action at the UN will open up a better pathway to negotiation, but if it was the opposite and it led to confrontation—if more business there closed down negotiation—then it clearly would not be such a good thing. We just have to wait and see what the texts are, how the matter is going to be approached—whether through the General Assembly or the UN Security Council—and then we will take our decision.

[Lord Dykes]

My Lords—

[The Lord Bishop of Exeter]

My Lords, while the recognition of statehood might alter the negotiating parameters and the Minister has affirmed the importance of negotiations towards achieving a final settlement, will he also affirm the important role in any ongoing negotiations of the wider Palestinian diaspora, including those who have the recognised status of refugees? Will he say what the Government are doing to ensure that the rights of such refugees are not compromised or taken away by any recognition of statehood, including their legitimate right to be heard in international fora such as the UN?

[Lord Howell of Guildford]

These are very important issues. Clearly, they would have to be included in any advance towards statehood, which we want to see, which in turn depends upon a successful negotiation, which in turn depends upon the agreements that have so far eluded us between Israel and Palestine. The question of how this UN development fits into that pattern is an open one at present. But I fully agree with the right reverend Prelate that this is an important aspect.

[Baroness Ramsay of Cartvale]

My Lords, does the Minister agree that if such a bid by Palestinians is made to the upcoming General Assembly, they should be asked if they accept the United Nations General Assembly resolution—I mean “General Assembly”; it was not a Security Council resolution—of 1948 which set up the state of Israel?

[Lord Howell of Guildford]

I am not so sure about the exact content of that but certain conditions, which are parallel and relevant to that and may be embodied in that resolution, would go with any proposition before the General Assembly. Two-thirds of the General Assembly would then have to vote on it. It might also be qualified by the requirement that Palestine would take the role of observer-state membership rather than full membership. That is a possibility. I can give the general assurance that, certainly, conditions would be attached.

[Baroness Falkner of Margravine]

My Lords, does my noble friend accept that, in deciding the UK’s position at the General Assembly, we would do well to bear two things in mind? One is the formulation of our relationship with the United States, which the Foreign Secretary has described as an essential relationship rather than a special relationship, denoting a degree of independence on our position on this matter from the US. The second point is our relationship with our European partners. Does my noble friend accept that where our European partners such as Germany may wish for historic reasons to abstain, we have a special responsibility, as the noble Lord, Lord Wright of Richmond, has pointed out, to do the right thing by the Palestinian state? Will he therefore assure the House that he will keep an extremely open mind on the position we take on both those fronts?

[Lord Howell of Guildford]

The short answer is yes. Obviously we listen to the views of the United States but my noble friend will remember that, in a recent debate on settlements, we did not find it necessary to be on the side of the US. In fact, we voted on the other side. We are perfectly capable of asserting our independence and our interests as a nation, and as a contributor to Middle East peace, by ourselves. As far as the European Union is concerned, I am afraid that there is some difference of view between the members and it is hard to get a united European Union view, although, by working over the next week, it would be a good thing if we could do so.

Housing Benefit

Tuesday 13th September 2011 Lords Chamber

Petition

15:09

[Lord Touhig]

My Lords, I beg leave to present a petition from Community Housing Cymru, on behalf of the United Kingdom housing federations and other Welsh charities. The petition prays that the House urgently call on the United Kingdom Government to reconsider the cuts to housing benefit and local housing allowance, which your petitioners believe will disproportionately affect those in greatest need—including homeless and vulnerable families, those in need of housing-related support, people with physical and mental health problems and children living in poverty—and lead to greater long-term economic and social costs for local authorities, housing associations and government. The petition bears 1,731 signatures.

Petition presented.

Draft Financial Services Bill

Tuesday 13th September 2011 Lords Chamber

Motion to Approve

15:09

Tabled By

[Lord Strathclyde]

That, notwithstanding the Resolution of this House of 21 June, it be an instruction to the Joint Committee on the Draft Financial Services Bill that it should report on the draft Bill by 16 December 2011.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, on behalf of my noble friend, I beg to move the Motion standing in his name on the Order Paper.

Motion agreed, and a message was sent to the Commons.

Weights and Measures (Specified Quantities) (Unwrapped Bread and Intoxicating Liquor) Order 2011

Tuesday 13th September 2011 Lords Chamber

Construction Contracts (England) Exclusion Order 2011

Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (England) Regulations 2011

Tuesday 13th September 2011 Lords Chamber

Motions to Approve

Moved By

[Baroness Wilcox]

That the draft orders and regulations laid before the House on 27 June and 5 July be approved. 26th and 27th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 7 September.

Motions agreed.

Arrangement of Business

Tuesday 13th September 2011 Lords Chamber

Announcement

15:10

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, before we move to the Welfare Reform Bill, I point out that 51 speakers are signed up for the Second Reading. If Back-Bench contributions are kept to seven minutes, the House should be able to rise this evening at around the target of 10 pm.

Welfare Reform Bill

Tuesday 13th September 2011 Lords Chamber

Second Reading

15:11

Moved By

[Lord Freud]

That the Bill be read a second time.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I do not think that a single Member of this Chamber could stand up and say they truly believe that the welfare system is working. Personally, over the course of the past four years, I have been struck time and again by the sheer scale of the system, and therein the task we face bringing forth these reforms. Today’s benefits balance sheet tells a story of unfairness, dependency, and waste.

There are nearly 5 million people on out-of-work benefits. In 2010-11, the Government spent £201 billion on welfare and pension payments, compared to £38 billion on defence, £91 billion on education and £121 billion on health. Within that we spend £22 billion on the key out-of-work benefits and the same again on housing benefit. Working-age welfare spending has increased by over 40 per cent over the past decade, Housing benefit spend is up almost 50 per cent.

Of the 2.6 million people claiming incapacity benefits, over half have been on benefit for at least five years, and a third have been on benefit for 10 years or more. Spending on welfare has been allowed to get out of control. This Government have taken some tough decisions to restore affordability to the benefits budgets for both now and the future. Of course, welfare is about more than just numbers. Ineffective management of the benefits system has not just led to ever-increasing spending. It has also affected people’s lives. So, there are people who want to work but find they are better off on benefits, people who want to work but do not get the specialist support they need, and people who want to work but are actually hindered from doing so by the current rules. In the mean time it is the poorest and most vulnerable who suffer.

Welfare reform is first and foremost about refocusing the resources we have to help the people who need it most. This Bill contains a number of measures to address specific problems within the welfare system, to end benefit dependency and redress the balance by restoring fairness and affordability. These measures lay the groundwork for the main purpose of this Bill, the creation of universal credit, the most radical reform of the welfare system since its invention. With the creation of universal credit this Bill does not just allow for the development of a new benefit, it creates the conditions for attitudinal and behavioural change. It bridges the gulf that has opened up between unemployment and work, and delivers a benefits system that is about people not process, one that is flexible and responsive. As we debate this Bill today and in Committee over the coming weeks, we may disagree on the detail, but we must all agree on the need for reform. I know that noble Lords have a great deal of interest in these reforms. Many have been to briefing sessions on specific policies contained within this Bill and I hope this can continue throughout the Committee stage.

I shall also be publishing a great deal of detailed information provided for the Committee stage in the other place. This will include one-page notes relating to every regulation-making power in the Bill, illustrative draft regulations for some areas, and policy briefing notes. Some of these, as noble Lords may have seen, were published only yesterday. To inform our discussions, I also expect to publish updated impact assessments to reflect various announcements that have been made during the course of the Bill’s passage through Parliament.

Following further work my department has done, and the helpful report from the Delegated Powers and Regulatory Reform Committee, I am planning to bring a number of technical amendments during the Committee stage. I will ensure that noble Lords are made aware of these in good time to prepare for the debate. Today, I wish to set out for you some of the principles behind our approach and the rationale for some of the key measures included in this Bill.

At the heart of our reforms, indeed at the heart of this Bill, is the creation of universal credit. This will be a single income replacement benefit for working-age adults. It will be simple to understand and access, and crucially it will bring together in and out of work support, simplifying the current system of benefit payments and tax credits into a single payment for those out of work or on low pay. Universal credit will provide a more consistent system of support. For example, under universal credit, people remain registered with the system for two years after their claim has ended. So, someone can get a full-time job and leave universal credit completely, but if they lose their job or perhaps cannot work for a period because of a health condition, they will be able to start payments again almost instantly, ensuring that they do not have to wait for vital support.

Universal credit will also provide a more responsive system of support, because as part of these reforms we are developing a real-time tax and benefit system. Access to real time information means that we can deliver a more responsive system based on actual earnings, making the transition between benefits and work much easier. By basing support on financial need, not crude measures of employment status, we will remove some of the barriers preventing people returning to work and will provide the security of a minimum income while retaining and in fact, for many, restoring the financial incentive to work. Real-time information means that universal credit payments can be gradually reduced as earnings increase. Even for those at the bottom end of the pay scale looking to take on extra hours or a modestly paid job, there will be real financial gain. This is an important point; under the current benefits system some people can experience an immediate and almost total loss of benefits for working just a couple of extra hours a week. Under the old system, some households could lose as much as 96 pence for every extra pound they earned. Universal credit reduces this to around 76 pence for modest earners and 65 pence for low earners. This directly improves work incentives for around 700,000 people by putting extra money in their pockets if they do extra work.

The broader impacts of introducing universal credit make the argument for reform even more compelling. The original impact assessments published alongside the Bill suggested that around 2.7 million households will have higher benefit entitlements under the new regime—for over 1 million households, this will amount to more than £25 a week. These numbers remain our best estimate and will be updated in a revised impact assessment in light of the localisation of council tax benefits. Because universal credit is properly focused, 85 per cent of this increase will be in the poorest 40 per cent of households, and the commitment to transitional protection means there will be no cash losers at the point of transition, all other things being equal.

We anticipate that more people will take up benefits once the system is simplified, with the combined impact of take-up and entitlement potentially lifting 600,000 adults and 350,000 children out of poverty. The combined effects of welfare reform could lead to up to 300,000 fewer workless households. Taken together, these changes will help to end benefit dependency by creating a more active regime, which encourages people into work by making the financial gains clear and real for hundreds of thousands of people. The introduction of universal credit will restore affordability by creating a simpler benefits system, focused on those in the greatest need; and it will restore fairness for both taxpayer and claimant. A more transparent system will be more accountable to the public. A more effective system will deliver more for those who need it most.

This Welfare Reform Bill is not just about those who are claiming benefits, it is also about those who are paying into the system. We know that taxpayers want a benefits system that is fair. They want a system that does not abandon those at the bottom and a system that they can turn to if they need it. However, taxpayers also want a system that is not wasteful; a system that does not pay benefits to those who can work but choose not to; a system that is not open to abuse; and a system that is affordable and effective.

I believe this Welfare Reform Bill will deliver that system. Universal credit will generally be just one monthly payment per household, making it easier for people to understand what they are entitled to and manage their own finances. This is an important point. Currently, the experiences of unemployed people in this regard, particularly for the long-term unemployed, are very different from those of people in work. We must ensure that as many people as possible are empowered to manage their own finances and make the choices that people in work must make. We must close the gap between being out of work and having a job, so it is not such a major shift for people leaving benefits. Payments to tenants must be the default position under universal credit. That said, I am alert to the sensitivities that exist in relation to the supply of affordable housing and in particular for the social rented sector and its lenders. I am prepared to explore options that will provide some protection for this industry and I shall announce how I plan to do this in due course.

For the moment, let me say this: I am convinced that we can deliver a system that puts the full universal credit payment into a claimant's hands, empowering them to manage their own budgets and narrowing that gap between the experience of being in and out of work. At the same time, I believe we can build safeguards into the system to minimise the impact on social landlords’ incomes and reassure lenders. Universal credit payments will include additional elements for housing and childcare costs. However, as I am sure noble Lords are aware, the Government have made a decision to localise council tax support, and a consultation on the detail of this is currently under way. Much was made of this decision in the other place, so I will make a point for the record. Council tax benefit currently sits across the portfolios of two different departments. Ministers from both are determined to protect the positive work incentives and distributional impacts of universal credit and we continue to work very closely on the detail of these reforms. We have already indicated to the House that we may be minded to make some changes to universal credit design in light of this decision and we shall provide further detail in due course.

With the passing of this Bill, we anticipate the first new claims for universal credit will start in October 2013, with all existing customers moved to the new system by 2017. In the meantime, this Bill also includes some reforms to the current system. These changes will amend some of the existing rules and regulations and start to bring them into line with universal credit. One such change is the proposal to time limit employment and support allowance—ESA—to one year, paid on the basis of national insurance contributions, to people in the work-related activity group.

The basis for this change is to bring ESA rules closer to the contributory jobseeker’s allowance rules, which currently pay six months’ jobseeker’s allowance on the basis of national insurance payments. This change also supports the intention that ESA should be a temporary benefit for the vast majority of people—which indeed it is. This is particularly true of those in the work-related activity group, who are assessed as likely to recover and make an eventual return to work. There remain a number of options for the minority of people who do reach the time limit: a return to work if able; a move to income-based benefits if appropriate; and for those whose condition worsens, potentially continuing payments through the support element of contributory ESA. This is a change of principle more than convenience. Allowing people to become dependent on benefits when they do not need to be is neither fair to them nor to the taxpayer, and it is no longer affordable. This is not about removing support; it is about making sure people get the right kind of support.

This is also the case for people who have cancer. We have already amended the rules, put in place by the previous Government, so that people awaiting or in between certain chemotherapy treatments receive the support they need, and we have specifically asked Professor Harrington to look at this issue in his next review, which he has done in partnership with Macmillan Cancer Support. I know that many noble Lords are particularly interested in this subject and I can tell the House today that we have received Professor Harrington’s second report and we are considering it carefully. I will update noble Lords again in due course.

We do not underestimate the impact that this change will have on claimants. As a result, we have asked Jobcentre Plus to send out a letter to all ESA customers who could be affected by the change. The letter will be sent out over a four-week period starting on 19 September. We appreciate that it is unusual to alert customers before the Bill has been passed by Parliament, so we have been very careful about the wording of the letter, but we think it is important to provide as much information and reassurance as we can at this stage.

We must apply the same principles of fairness, affordability and ending benefit dependency across the welfare spectrum. This is why we must reform support for disabled people. Current provision of disability living allowance, or DLA, is confusing and inconsistent. Too many people think of DLA as an out-of-work benefit. In fact, DLA’s purpose is to provide financial support to contribute towards the extra costs incurred by disabled people as a result of their disability, irrespective of whether they are in or out of work. DLA awards have become inconsistent and subjective, and spending on this benefit has started to spiral out of control.

More than two-thirds of claimants receive one or both of the two DLA components indefinitely, with no systematic checks to see if their condition has changed. This is no longer acceptable. We must support people properly and that means more accurate and more regular assessments to see if their condition has changed and ensure they are receiving the right level of benefit. This means being prepared to pay more for those whose needs have increased as well as reducing the benefits of those who no longer need them. To that end, this Bill allows for the abolition of DLA and its replacement with the personal independence payment, which like DLA will be available to disabled people both in and out of work and will be non-taxable.

The key changes will be an end to automatic entitlements based on having a certain health condition or impairment, a more objective assessment, and the introduction of more regular check-ups. These reforms are designed to deliver a more responsive and sustainable benefit and to ensure support is focused on those who face the greatest challenges to take part in everyday life. They are not about taking support away from those who truly need it.

Many of you have raised with me the issue of DLA mobility payments to care home residents. We have listened to the concerns raised about mobility provision in care homes and will consider the needs of disabled people living in residential care and receiving DLA as we develop personal independence payment for introduction in 2013. Our aim is to treat disabled people fairly, regardless of their place of residence, not to reduce their ability to get out and about. We will continue to gather and consider the evidence about existing provision as we develop our plans.

The introduction of personal independence payment will restore fairness in disability benefit provision by providing support on the basis of ongoing need, and replacing DLA will bring spending in this area under control, making sure the system is affordable both now and in the future. But this is not about cutting spending. The funding for all DLA, in real terms on 2011-12 figures, was £12.1 billion in 2009-10. At the end of this Parliament in 2015-16, the funding will be slightly higher at £12.3 billion. The talk of cuts relates to projections on a benefit that was rising sharply. What we are doing is bringing it under control.

I hope that noble Lords can agree today that the spirit of these reforms is right: that it is right that we do not put people on any benefit and just leave them there, as has so often been the case with DLA; that it is right that we design a more objective assessment, one which can better take account of those with mental health conditions and learning disabilities who may also incur extra costs but which DLA is so ill designed to support; and, wider, taking this package of reforms as a whole, that it is right that we act now to reform the benefits system, restore fairness and affordability in welfare and end benefit dependency.

The reforms contained within this Bill will mean some of the poorest people in the country will benefit from more than £4 billion in welfare payments, as set out in the previous impact assessment, through increased entitlement and take-up. These reforms will lift as many as 950,000 individuals out of poverty, help 700,000 households keep more of the money they earn and cut the number of workless households by up to 300,000. These reforms will bring real change in both attitude and behaviour. This Bill marks the end of the something-for-nothing culture we have seen so recently on our streets. It is a new dawn for welfare—one of fairness, responsibility and effective support. This is something I believe we should all welcome and I commend this Bill to the House. I beg to move.

15:32

[Baroness Hayter of Kentish Town]

My Lords, I thank the Minister for opening the debate and I look forward, as does the rest of the House, to the maiden speech of the noble Lord, Lord Feldman of Elstree.

Given our support for the objective of the Bill, which is to make work pay and to simplify the system, it is deeply regrettable that it fails to achieve this. It fails partly because, despite the words we have just heard, it is taking place alongside a commitment to cut benefit expenditure and partly because it is work in progress, with far too many unanswered questions. In the previous speech, I think we heard the words “in due course” more than any other.

First, however, as vice-chair of the Webb Memorial Trust, perhaps I may quote three principles from Beatrice Webb’s 1909 minority report on the Poor Law, when she said that poverty has structural causes—it is not the fault of the individual—that the state has responsibility for preventing and alleviating poverty and that dependency should be avoided. I have no trouble with a no-dependency model of welfare, but Beatrice Webb also believed that the state is responsible for tackling the causes of poverty: the lack of jobs. Today, with 2.5 million unemployed there are six people chasing every job and in places such as Merthyr Tydfil, 84 for each vacancy. There is a responsibility on government to grow the jobs market because unemployment costs each of us—it is perhaps £500 per household—because we need jobs to enshrine a culture of work in every community, recognising the injury to childhood of a home without work, and because without jobs parents cannot return to work, no matter how hard they try.

We must help those who cannot work through age or infirmity but also assist those who have been out of work back into employment. The Work and Pensions Select Committee in another place goes further, calling on the Government to pay as much attention to getting employers to take on someone who has been out of work as they do to getting the claimant “work ready”. It is not alone in feeling that the Government are putting the onus on the individual rather than society. The most reverend Primate the Archbishop of Canterbury has written of,

“a quiet resurgence in the seductive language of ‘deserving’ and ‘undeserving’ poor”,

while the Government, I have to say even just now, seem to suggest that there is a “them and us”—taxpayers and the rest. I see it differently: we are all taxpayers, if only through VAT, and we are all potential recipients. Yes, the welfare state should reward work, but it must be there in times of crisis, where there is illness, unemployment or disability. It should be there for the vulnerable and it should be there to support families with young children, sharing the cost of the next generation throughout our life stages. We want to see a welfare system that is fair and straightforward, without the need for specialist help from hard-pressed Citizens Advice, especially with the threat to legal aid for welfare advice. We want a system that does the job, provides what is needed when it is needed and, yes, a system that is affordable. The Bill fails those tests. It is not fair or transparent, it does not help some of those most in need and it will not be affordable if it leads to homelessness, poverty, disincentives to save or family break-up.

I touch upon some of our concerns; first, childcare, especially in London, where it can cost £11,000 a year —perhaps a quarter higher than elsewhere. Childcare is key to whether parents are better off in or out of work, but in extending it to those working under 16 hours within the same fixed budget, there will be losers, with existing recipients getting less. On the savings cap, claimants will start losing universal credit with £6,000 in savings and will lose all of it with £16,000. While most claimants will never have such savings, this new rule will hit in-work families for the first time, as there is no such savings cap for tax credits. The savings cap undermines incentives to save, whether for a mortgage, tuition fees, social care or to top up one’s pension. The IFS has warned that the savings cap will give some families a strong incentive to lower their capital below £16,000.

Then there is the abolition of the discretionary Social Fund’s community care grants and crisis loans, devolving responsibility to local government, but without ring-fenced funding for cash-strapped councils—what the CABs have warned could be a return to the Poor Law. These safety nets—for cookers, beds, cots—help some of our most vulnerable in times of crisis, often as a result of family break-up. Family Action has warned that, for women setting up home after fleeing domestic violence, such financial support is precious to them and their children. Meanwhile, 22,000 people per year leave prison without accommodation. They need early help to prevent them falling into debt, with all the associated temptation to return to crime. As Sir Richard Tilt has said:

“The discretionary social fund has been the ultimate, final safety net for the poorest and most vulnerable”.

What will replace these half a million grants and 3 million loans? Food parcels instead of cash? A postcode lottery of handouts? Loan sharks instead of regulated grants? The Social Fund Commissioner has called for any replacement to be targeted at the most vulnerable, to be concentrated on one-off needs, to be fair and transparent, with national criteria, and to have an independent grievance process. So we ask the Government today: will they delay devolving responsibility until such a framework is in place?

I turn to housing. Londoners’ rent is already 50 per cent higher than the national average and 80 per cent of housing benefit recipients in private rented homes in central London face cuts in housing benefit. I have to tell the Minister that London landlords will not reduce their rents in response to this. There will be a flight from high-rent areas, regardless of the needs of the family or of children or, indeed, of the local economy; because who will do the jobs that they leave behind? Meanwhile, there are few jobs in low-rent areas. Westminster Council estimates that 5,000 households will be affected and,

“that a sizeable proportion … will need to move … Moving out of the borough is likely to be problematic for families with children at critical schooling points”,

which leads to the so-called underoccupation of social housing. Some 600,000 housing benefit claimants are deemed to need a one-bedroom property but only half that number of such properties exist. What if that family were helping to look after an ageing parent or perhaps were getting grandparent help themselves? How is this to be replaced if they are forced to move? Meanwhile, the household cap on benefit ignores variations in housing costs or, indeed, family size. The head of the Roman Catholic Church in England and Wales, the Archbishop of Westminster, identified these cuts as being likely to force thousands of poor families out of their homes. We know the likely effect of the changes to housing benefit, the underoccupation rule and the benefit cap because Eric Pickles’s private secretary helpfully told No. 10 about it, warning it that 40,000 families were likely to be made homeless. I remind the Government that even Dame Shirley Porter managed to move only 500 families when she tried her form of “social cleansing” from Westminster.

The £500 a week benefit cap will reduce the benefits of perhaps 50,000 families. This will hit carers as, unlike war widows, they will not be exempt. However, some carers will be forces’ wives whose injured husbands were fortunate enough to survive, but their carer’s allowance could go if they hit the cap. Will the Minister explain why the cap figure, mostly affecting families with three or four children in the south-east, has as its comparator the national average earnings for all families, including those with no children and those in low-wage areas? Furthermore, the comparator £26,000 income does not include child benefit, whereas the £26,000 cap does. Will the Minister agree to exempt child benefit from the new cap?

I believe that the change from DLA to the personal independence payment was probably aimed at improving the system, but—there are a lot of “buts”—it is taking place against a background of an arbitrary 20 per cent cut for some of our most vulnerable. There is as yet no decision on which rates of the daily living component of carer’s allowance will be due, but the words,

“those with the most intensive caring responsibilities”,

tend to suggest that other carers will be excluded. The qualifying period will be doubled from three to six months, but it is the first months of disability when one has lost a limb or is suffering from the effects of a stroke or serious illness when costs are highest and income falls as the ill or injured often give up work. Without PIP entitlement their carer similarly cannot qualify for carer’s allowance. The Minister suggested that he had heard concerns about the loss of mobility component for local authority-funded residents in care homes—I am not sure that he responded to them—which will make them virtual prisoners in what is, after all, their own home. How will they afford to go to weddings, funerals, shivas, christenings, bar mitzvahs, Eid prayers, the cinema, the pub, bingo or to shop for clothes without that mobility allowance? I recognise that Ministers have agreed to review this but with no terms of reference, no timetable, no involvement of disabled groups and no publication of the outcome. Will the Minister confirm what Maria Miller, the Parliamentary Under-Secretary of State for Disabled People, said:

“I can offer absolute reassurance to disabled people living in care homes … that this Government will not remove their ability to get out and about”.?

Cancer has been mentioned. We hope that the Government, particularly the Prime Minister, have now understood the concerns of Macmillan and have heard its three “asks”: first, that those on oral chemotherapy should get ESA without being reassessed; secondly, that support for cancer or stroke victims should kick in when their needs are greatest rather than having to wait six months; and, thirdly, that those taking more than 12 months to recover should not be penalised if they are not ready to return to work. After all, it is meant to be a contributory payment, often earned as a result of many years of contributions by today’s cancer sufferers. Without movement from the Government on this matter, someone’s health catastrophe will turn into a financial catastrophe.

The Bill is an assault on ambition. Without childcare support, how can parents return to work and proceed up the income ladder? The threatened cut in childcare, added to the reductions already made, will undermine the very purpose of the Bill, just as the savings cap will undermine incentives to save. This Bill is an assault on compassion. It risks watering down child poverty targets; it will force cancer patients into poverty or to seek work too early; and it risks trapping many disabled citizens in their care homes by the removal of mobility payments.

The Bill is still work in progress. It is not yet fit for purpose, yet your Lordships' House is being asked to scrutinise without the answers to some fundamental questions. We await details of the crucial element of making work pay: childcare. On PIP, the Government’s silence on the review of mobility payments has forced the Disability Alliance to launch a judicial review. The passporting of PIP to carer’s allowance will be decided only later this year. The loss of free school meals is perhaps the biggest cliff-edge disincentive to work and a blow to tackling child poverty. Council tax benefit will be localised, so its taper will be unrelated to the universal credit regime and it could vary across boroughs—a real postcode lottery.

The Bill is a leap in the dark for millions who rely on childcare to work, for the disabled and for the Government—for their IT project and their reputation—and because it appears to have no answer to the myriad questions that so worry the sick and the disabled. We support welfare to work, but for too many disabled and vulnerable people the question is: from welfare to where?

This is a bad Bill. We will seek to improve it to ensure that it becomes a better Bill, leading to a fair welfare system, rewarding effort and compassionate to those most in need.

15:47

[Lord German]

My Lords, your Lordships might expect me to take a slightly different tone about a Bill which has at its heart a universal benefits structure designed to help those who are trapped by no work and a dependency on benefits. Alongside the work programme, this is a transformational Bill—one where an alternative cannot wait. There are those who would argue that it is not an appropriate time because of the state of the economy to introduce such a Bill and to enact such changes. However, there is never a right time to make changes, but there is always a right time to ensure that better principles are put in place.

The DWP describes the current system in the documents that it has circulated as “Byzantine”. I reckon that that is a bit of an insult to Byzantium, which was, by comparison, a well ordered society. For example, there are currently seven different parts to the benefits and tax credits associated with disability. Each of those seven parts is paid at a different rate, has different qualifying conditions and is for different purposes. That is why I welcome the transformational elements of the Bill. We have a very complex system at present and we aim to make work always pay. Those are the Bill’s laudable objectives.

I congratulate the Minister on securing, at a time of great financial hardship, extra new money from the Treasury to ensure that universal credit is put in place. That is a real accomplishment in a tough economic climate. However, the question is whether the Bill provides an architecture that works, and will work for the future, to provide levers that can be pulled to improve the financial envelope as times get better.

As we change a complex system such as this, we need to be wary of two things. First, the end objective must never be forgotten. It is to reduce poverty, as the Minister said—he has given us the figures—and to increase hope and aspiration and to provide opportunity. We should not forget that those are the challenges at the basis of the Bill. Secondly, it is worth remembering that, in a complex structure, changing one part of a system could have negative effects on other parts of the system, and there are many places where that could happen. Shaping a system architecture that will stand the test of time, meet the demands of the modern economy and be a basis for a sound, compassionate and caring society is the challenge that we face.

One of the levers that I would like to see pulled as the economic system improves is the 65 per cent taper rate. That would make it even better for people to work and would be an even better challenge for them. People have suggested 60 per cent or 55 per cent—all very laudable objectives—and when the time is right that should be the first lever to be pulled.

The Bill covers a wide range of issues and touches so many individuals and families across the country. I do not recall the exact figure, but I think about 18 million people will be affected directly by the decisions that we make. It is rather like the most complex signal box that can be imagined, where you have 18 million people travelling on a journey, virtually all at the same time, with about 8.5 million places to which they can go.

A fundamental test of the Bill will be whether it can actually deliver the end goods. That is why I ask the Minister to reassure us about the technology, which is the biggest transformation of the IT system that any Government have seen and one that engages with the private sector payments structure in a way that has not been seen before. Will it really deliver the goods? Nothing could be worse for people than if they find at the end that they have not got the payments that they deserve.

Fundamentally, the Bill must support the broader, gender equality, children and family policies of the Government. That is a test that we will be making during the course of its passage through the House. Arising from that is one of the questions about the payments to households that my noble friend the Minister has already mentioned. I am grateful that he is considering this issue. One of the things that we did during the passage of the regulations on the local housing allowance was to extract a concession from the Government that they would seek to pay some tenants’ rent directly to the landlords. There will be circumstances in which rents should be paid directly. We made that commitment already once, and I hope that the Minister can assure us that that will happen in the future.

As well as looking forward to the Minister’s review of that issue, I look forward to the review of the mobility element. I believe that there is nothing wrong with the mobility element except that there may be some overlap. If there is overlap between two payments for the same thing, that should be eradicated, but we do not want to see that part of the measure lost altogether. That is why there is a need for the draft regulations, guidance and notes. I am grateful to the Minister for providing us with a great deal already, and I look forward during the scrutiny of the Bill to seeing far more.

One key issue at the heart of the family and gender equality issue must be that of childcare. I am glad to see that we will end the cliff-edge of the 16-hour working rule, which has bedevilled many people who could work for a few hours but no more. But we will need to find additional resource. The benefit of a universal credit and benefits system is that universally it becomes available to anyone without having to ask for it. There will be a bigger take-up from people who will have this element at their disposal. So far, we have had to make the current envelope of money stretch further. If we are now going to have to pay it to more people, we will need more money in the pot to make that happen. I would be grateful if the Minister could explain what he expects the additional gap to be between the current financial envelope for childcare and the extended financial envelope once universal credit is in place.

The Minister has confirmed that work will always pay, so the transitional support will be essential as well. My understanding is that “no cash losers” means that people will hold their cash benefit until it is overtaken by the increasing rate of benefit under the new system. I wonder whether there has been any modelling by the department on how long it will take for those “no cash losers” to become beneficiaries of the new system as the benefits increase.

It will be of no surprise to noble Lords that those of us on these Benches are very concerned about Clause 93(7), on the benefit cap. This is one of the examples of intended, or maybe unintended, consequences. It is clear that the clause has a sense of the vague about it. It just says that it is up to the Secretary of State to determine what the cap figure might be. Of course, I do not have any problem with the cap; the principle is fine, providing the cap fits. The problem is that the figure of £26,000 is taken as the median.

The latest data from the Family Resources Survey are as follows: the median income for households without children is £21,320 per annum; for households with children it is £30,680 per annum; and for all households the average is £27,300 per annum, whereas the Government have said £26,000. I would be grateful for an explanation from the Minister about where the figure of £26,000 has come from. What should be apparent from those figures is that £30,680 is the median income for households with children and yet we are likely to affect those families by some £3,380 if we take the £27,300 figure, which is in the Family Resources Survey data.

Of course, the differences between households are very varied across the country. Depending on where you live, there is a gap between the highest and the lowest of £12,000 per annum, which is an enormous gap between family incomes. If there is to be a move to allow people to move on to the new system, we need a cap which fits and one which is properly established and allows a period of transition. I hope that the Minister can confirm that that is his intention.

I move on to issues relating to council tax benefit and housing benefit. The Calman commission, which was the underpinning for the Scotland Bill which is before the House at the moment, says that social security benefits are the social glue which holds together a compassionate nation. I am an ardent supporter of devolution, as one might imagine, but is our social security system the one which should be universally available across all parts of our land, including Scotland, Wales, and Northern Ireland? If it is, you have to question the devolution proposal in the Bill, which is to local authorities in England, over whom this Government and this Parliament have some influence as regards the purposes for which that money might be spent. If these moneys are simply to be handed over, as the Bill suggests, to Wales and Scotland as part of the Barnett formula, for them to do with as they wish, they will have no obligations to the purposes of the Social Fund or council tax benefits, and this Government cannot insist upon them and neither can this Parliament. I believe that there is a fundamental point here about what holds our United Kingdom together. If you believe that these aspects of our system should be universally available across our country, the Government will have to find appropriate and perhaps alternative mechanisms—I might even suggest leaving them as they are.

A linked issue is the prospective changes to the housebuilding programme and household provision in our social housing sector. The new housing benefit regime outlined in the Bill presumes a change to the payments of households based upon the level of occupancy. Claimants who are in accommodation which is too large will have only three alternatives: first, to pay the extra above what the bill would be for a smaller property; secondly, to fill the spare space with a family member or a lodger; or, thirdly, to move either to the social housing sector elsewhere or into the private sector. However, housing associations have not geared up for this third choice. They have focused on providing two and three-bedroom properties. If the result of these changes is an increased demand on housing associations for smaller units of accommodation, they will need time to adjust. I would be grateful if the Minister would explain what modelling has been done on the changes to our housing stock for the social housing sector that will be needed as a result of the Bill.

I started by saying that this was a transformational Bill. The desired outcome is the lifting out of poverty of a significant proportion of our society. For me, that is an ambition worth pursuing. That is why I support the principles of the Bill: they are much needed. What we now need is to make the principles work.

16:00

[Baroness Hollins]

My Lords, there are winners and losers in life. Usually it is those who already have most who are the winners, perhaps because they are better able to advocate for themselves, and also because their needs are better understood in government. I am particularly concerned about two groups of disabled people who often lose out: people with learning disabilities and people with fluctuating mental health problems. I want to ensure that the welcome introduction of universal credit is adequately sensitive to their needs, and that they will gain from the changes.

Many mental health charities, including the Royal College of Psychiatrists, of which I am a past president, are concerned about a number of aspects of the Bill. It needs to be considered alongside other new legislation, the effects of which may be cumulative. I am thinking, for example, of the Localism Bill and the debate about housing tenancies. The Welfare Reform Bill has a heavy focus on increasing the use and severity of conditionality and sanctions. Mental health charities believe that this will be ineffective and potentially damaging for many people with mental health problems and learning disabilities. They fear that it could exacerbate the problems and have huge knock-on costs for health and social care services.

It is vital that mental health is a key consideration in the welfare reform process. Up to 40 per cent of all claimants are claiming primarily because of mental health problems. Many more experience mental health problems alongside physical illness or a disability such as a learning disability. The health and recovery of an individual must remain a focus when considering appropriate employment opportunities, because some work may be conducive to mental health and other work detrimental to it. The Bill proposes a one-year time limit on contributory employment and support allowance. However, this takes no account of the often complex issues that disabled people need to address in preparing for and finding work. The Disability Benefits Consortium makes a good case for the removal of the time limit. I understand that the Department for Work and Pensions has estimated that the vast majority of those on ESA and in the work-related activity group will take longer than a year to find work. Despite the Minister's introductory comments about people being able to move back on to universal credit quite easily, I remain unconvinced about the wisdom of the time limit.

I will explain my concerns further by giving two examples. The first concerns those with mild learning disabilities who achieve some independence from their parents and who, despite a lack of educational qualifications and limited literacy and numeracy, may be found fit for work and put in the work-related activity group. However, it is notoriously difficult for people with a learning disability to find work. Only 7 per cent of those known to social services are in employment. The paradoxical worry is that if they are found fit for work, they could lose their independence. This is a concern that I have had much correspondence about.

What about someone with a mental health problem? A person with a mental illness may be more likely to obtain employment after a period in the work-related activity group than a person with learning disabilities, but the recurring nature of their condition may make it harder for them to stay in employment. People with less severe mental impairments can often derive huge benefit from relatively minor financial assistance. Focusing resources only on those with the most substantial and tangible impairments may seem intuitively acceptable, but the risk is that many with less obvious or less severe impairments will lose benefits which have helped to prevent relapse or social deterioration.

Understanding the variable impact of fluctuating conditions in mental health is important when considering each individual’s eligibility for benefits. For example, one person with a mental health problem may find that for part of the time at work, their mood is low, that at other times they cannot concentrate or may be irritable, or that they may have to withdraw from their work setting to deal with auditory hallucinations. None of these experiences on their own may be severely incapacitating, but together they could be sufficient to affect their overall functioning in the workplace. There are real concerns about Jobcentre Plus and Atos assessing staff’s knowledge and understanding of mental health conditions. Can the Minister reassure the House that staff will have sufficient training in mental health?

More than 40 per cent of current decisions from the work capability assessment are being overturned on appeal. We could ask whether this is the fault of the appeals process or, perhaps more likely, of the original assessment? I appreciate the intent to remove benefits from people who are not genuine claimants, but reports are emerging of a lack of sensitivity for claimants with mental health problems, learning disabilities or autism when undergoing assessment for eligibility for benefits. Raising people’s employment aspirations now needs to be met with genuine opportunities for such individuals. This will require substantial efforts to address discrimination and stigma in recruitment and in the workplace.

You can imagine how difficult is it accurately to predict the sustainability of a work placement. Will the companies winning tenders to support individuals into employment, such as those that I have described, have a sustainability clause built into the contract? Without a commitment to sustainability, I think that the Government will find that this policy will prove to cost more in the longer term.

The Bill also looks to introduce regulations laying out how housing benefit costs can be integrated into the universal credit and how mortgage costs would be covered. Until recently, support for mortgage interest, the housing cost payment that people could receive under certain circumstances, enabled individuals with a learning disability, for example, to buy a property via the HOLD scheme—home ownership for people with long-term disabilities. Mencap is aware of around 1,000 people with a learning disability who have so far bought their homes through this route, but since last October this has in effect been closed down. I have brought to the attention of the Minister one case of a man with autism—there is no time to describe his circumstances—but the support for mortgage interest payment needs to continue to be available in the long term for those on income support or the equivalent under universal credit. I would welcome the Minister’s assurance that the regulations will address this.

I urge the Government to think very carefully about the impact of these proposed reforms on the wealth of some the most vulnerable in our society. My concern is upheld by the recent Institute of Fiscal Studies report which shows that the effects of the reforms will hit the poorest in society the most.

16:09

[The Lord Bishop of Leicester]

My Lords, it was Archbishop William Temple, one of Beveridge’s key associates, who first coined the term “welfare state”. He asked how one could justify an individual giving up some of his or her autonomy to the state. He contrasted the welfare state, in which Government gained legitimacy from their commitment to the welfare of the people, with the power state, epitomised by the fascist and communist totalitarianisms of his day.

These concerns remain in the minds of many today, not least those of the clergy of a diocese such as mine in Leicester and on the outer estates, who daily see desperate people turn up on their doorsteps. The church is the last resort when the inflexibilities of the welfare system have proved insurmountable. They know that many are often in the position of needing help not because of inadequacy, stupidity or fecklessness, but because they have made a mistake, lost their job, become ill or because they are children. They also know that, as the most reverend Primate the Archbishop of Canterbury said recently, it cannot be said often enough that most people in poverty—and we should be thinking of children in particular—have not chosen it. That is why the Church of England has strongly supported a just welfare system since its very beginnings as one of the key building blocks of a civilised society that cherishes mutuality at all levels and which sees each person as of equal worth.

We on these Benches recognise the principles behind this Bill: they reflect a desire on the part of the Secretary of State to see true welfare reform improving the lives of the most vulnerable children and families. We understand the department’s desire by means of universal credit to simplify a system that has become so complex that it is open to unintended mistakes and intended fraud. We endorse the principle that people’s well-being is more effectively enhanced when they are in work, but today we must put the question: how far do these reforms measure up to a national moral responsibility to ensure the well-being of the most vulnerable? In that sense, what is at stake here is the legitimacy of the state because well-being means more than cash benefits: it is about social inclusion, the bonds of strong communities under severe strain in the recent riots and the ability to live fulfilling lives.

My primary focus today as a bishop and a former chair of the Children’s Society will be on the effects on children who, by almost any measure, will be disproportionately affected by this Bill. We cannot go into a period of reform claiming to be all in this together while having our eyes closed to those who could be made homeless or could drop into the most severe poverty.

Let me raise, as other noble Lords have, some particular areas of concern. First, I underline what has been said about childcare costs. The Government want families with children to take responsibility for them by working their way out of poverty, yet it seems to me that these proposals will effectively make this impossible for many low-income families. Under the current system, the childcare element of working tax credit provides parents with support covering up to 70 per cent of eligible childcare costs up to a maximum of £175 for one child or £300 for two or more children. Significantly, because childcare costs are currently disregarded for the purposes of calculating entitlement to housing benefit and council tax benefit, some households receive help for up to 95.5 per cent of their childcare costs. The Government have presented a number of possible options outlining how to help with childcare costs, which will be integrated into the universal credit. We surely must have serious concerns that these options will leave working families facing substantial cuts to the help they receive for the childcare costs, leaving them worse off in work than under the current system. Can the Minister explain how he can guarantee that work pays for all families in view of the option to halve the current cap on eligible childcare costs?

Secondly, the proposed changes in support for disabled children will result in children with all but the most severe disabilities having their maximum level of support halved, leaving those families up to £1,400 per year worse off. Can the Minister help us clarify how the Government propose to support these families? Thirdly, there is the crucial issue of support for young carers. Sometimes the best intentions lead to perverse consequences, and the Children’s Society, which has developed specialised work with many young carers, has explained clearly that universal credit will substantially cut this support by up to £3,500 a year in some cases. It points out that this can be remedied by continuing to allow disabled parents who are child-dependent to receive support under the universal credit.

Finally, there is the effect of an overall cap on benefits entitlements and on how local housing allowance is calculated for out-of-work households. The Government have estimated that this cap will cost those families affected an average of £93 per week. The DCLG has suggested that the cap could lead to 20,000 families being made homeless. Furthermore, the Children’s Society has made it clear that the primary impact of this cap is not on adults but on children, with more than 200,000 of them affected. Can the Minister explain how this will help rebuild our communities and help people take responsibility for themselves and their children by getting back into work?

Time prevents the raising of other points today. We on these Benches have concerns about the aggregated effects of this legislation, taken alongside other changes to the National Health Service and to the legal aid system. The risk is that the reduction of financial deficit will threaten a huge social deficit, especially for the young. I hope this House will speak not just for the marginal people of so-called broken Britain but for the much greater numbers who fear the spectre of illness, unemployment and misfortune, who pay their taxes and rightly trust the state to prevent destitution. It is their voice, their fears, their understandable concerns that I hear regularly as a bishop and which I hope the Minister will attend to today.

16:16

[Lord Brooke of Sutton Mandeville]

My Lords, I congratulate my noble friend the Minister on the clarity with which he introduced and explained this remarkable measure, just as I thank his officials for the way that your Lordships’ House has been briefed throughout, including in their information packs. I welcome the noble Baroness, Lady Hayter of Kentish Town, to the Front Bench on this auspicious occasion and I congratulate her too on her own notable speech. Finally, it is a pleasure to follow the right reverend Prelate the Bishop of Leicester. It is not the first time I have followed him on a matter about which he knows much more than I do, but we share an affection for cricket and his county and mine are currently inextricably involved in the concluding matches of the County Championship, which is a happy bridge.

Now, nearly half a century of Back-Benchers have a handful of minutes each to analyse and also to celebrate the principle of a Bill whose complexities necessarily are legion and yet whose central purpose is the achievement of maximal simplicity. So here goes, and the thread of my speech will be the case of a single individual, our late immediate neighbour in rural Wiltshire. There is a symmetry to this spotlight because I also mentioned him in my maiden speech 10 years ago next month, to which I shall return shortly.

For the first five years we knew him, in the last decade of the last millennium, he was an agricultural labourer in a tied cottage on our mutual hill, working for another farmer neighbour. He had left school at 14 and was a true countryman, not just in terms of wildlife and country lore, but also in knowing the names of all the fields and precisely when they had changed hands down the centuries. When I entered some damsons at our village show, he quietly told me that they were not damsons but really rare plums, but I was not to worry as the judges would not know the difference. He was the oldest man in our hamlet to have been born there.

Disaster struck when he was 56 and was let go by his employer on grounds of disability at the shortest of notice. He came to us with all his affairs to help sort out what next he was due and how he would cope. The reason I alluded to him in my maiden speech, which was in a debate on financial services, was that 30 years earlier, on a loan to buy a car, he had been mis-sold insurance to protect him against unemployment, which he was still paying off. That was rapidly sorted out without my ever guessing that there were another, as we now know, £200 million of other such cases lurking in the financial woodwork.

Wrestling with pages and pages of material from a social security office 12 miles away revealed cruces of opaque ambiguity sufficient to perplex someone who had been a Treasury Minister and an inner-city MP, let alone a troubled man who had left school 42 years earlier. Happily, another neighbour brought in a public-spirited farmer from 25 miles away, acting for the Royal Agricultural Benevolent Institution, who sorted the benefits out as swiftly as I had sorted out the loan, and between us we were modest if unconscious forerunners of the big society. However, it all took a lot of time, and I can think of many of my former constituents who would have been defeated by a similar predicament to that which he faced. In our local case, the outcome was resources to help him in his disabled retirement, which were comfortable and reassuring. The principle of this Bill is to achieve the same result in a more streamlined and comprehensible way and, in the process, incidentally to create savings which can in the fullness of time be invested in public benefit.

Of course the battery of briefing we have received from outside honourable interested parties would make a colander of this instrument if all the concessions necessary for perfection were to be made. I appreciate that some will say that it is the wrong moment to try when financial resources are short, but we British are over-good at thinking of reasons for not doing something, the doctrine of unripe time being deep in our own DNA. Yet there is an obverse to that converse, since simplification will bring savings that in turn will bring nearer the time when we can afford the extra to do more. In the mean time, the Committee stage lies ahead of us for constructive ploughing. We shall not enjoy the sad dilemmas we are going to be told about, but I hope that we can treat as our watchword—as I sought to do when our neighbour was in the toils—that which the late noble kinsman of the noble Viscount, Lord Slim, who was here earlier, sagely repeated again and again in his remarkable Fourteenth Army tome, Defeat into Victory, that no news is ever as good or as bad as it first appears.

I would like to ask my noble friend the Minister to expand in his wind-up—in this respect I am following my noble friend Lord German—on the plusses and minuses of the computer scenario in support of this legislation. I chaired the government working party planning the government data network back in the 1980s, and I appointed the man who was Oflot to choose the architects and contractors of the National Lottery. I was always sorry that his initials were not AER, as he could have become Aeroflot. I remark on the bonus that we derived from the fact that the man we chose to lead the building of the government data network was later chosen by Oflot, with zero involvement of myself, to build the lottery, so we had the advantage of his having been through the previous experience. I am not pressing my noble friend for more than an update, but I think that your Lordships’ House will be the beneficiary if he were to do so. In the mean time, I shall not seek to be a barometer of his progress or of the legislative process, always remembering the moment when Anthony Eden’s father, an irascible rural baronet, came down to breakfast one morning when it was sheeting with rain outside, tapped the barometer which was set at “very fair”, and threw it through the French windows with the words, “Go out and see for your something self”.

Finally, I return to our neighbour, who in due course went into hospital and into sheltered accommodation, where we continued to visit him until he died. His tied cottage’s status was properly liquidated and its site value on the top of the hill went for nearly £300,000, which I hope my noble friend the Minister can regard as a happy omen. My one regret is that he did not live long enough to hear this modest narrative about him. Of course this Bill warrants profound scrutiny, but its principle also deserves our thorough support.

16:23

[Baroness Hollis of Heigham]

My Lords, I very much support the principle of universal credit. It was put in the “too difficult” box when I was a Minister and I think we can all see why. The benefit system was built in the Beveridge world where, as long as the man held on to his full-time job and his wife held on to him, the family was insured. To his contributory benefits were added, over time, category benefits for disabled people or children; means-tested benefits for emerging groups such as lone parents or emerging needs such as housing benefit; and, more recently, the different structure of tax credits.

The result is that most benefits and credits have different income thresholds, different taper rates, different back-dating rules, different eligibility criteria, different linking rules, different passporting arrangements, different savings caps and different payment patterns. Not surprisingly, therefore, we have error, fraud, underclaiming and overlapping built into the system, to say nothing of complexity, confusion and high administrative cost. The result is that it is a full-time job being poor. We need a robust, easily understood structure that reduces the risk while increasing the reward of working as the most effective route out of poverty. I am hoping that the universal credit will deliver this.

The issue is not the unemployed, three-quarters of whom are back in work within a year, but the economically inactive—the lone parents, people with some disability—who linger far too long on benefit. Will universal credit make it easy for them to work? You need self-confidence, resilience and a modest cushion of security to afford risk. Most lone parents and many disabled people quite sensibly prefer the security of a guaranteed low benefit income to the risk and uncertainty of somewhat higher wages should either their job or their health fold, which would then require an exhausting struggle to get back on to benefit while only two tins of baked beans remain in the cupboard. We must reduce risk. We do not need to whip people back into work. That is a complete fabrication. We need to strengthen their confidence to risk work and to seek it by removing the penalty for failure. I believe that universal credit can do this.

Obviously, we must make work worth while. Any work must pay, not as now when so many lone parents find that working between three hours and 16 hours on minimum wage loses every pound—even though a 10-hour job cleaning caravans, picking mushrooms or working in the launderette may be just what she and a would-be employer want. Beveridge’s world of either “work and wages” or “not in work and contributory insurance benefits” has now become one where many people much of the time, and most women most of the time, will need both work and benefits—dials, not dichotomies. Again, universal credit’s structure can do this for us.

I very much support the concept of UC. Like the noble Lord, Lord Brooke, I thank the Minister particularly for the care that he has taken in his seminars and his briefing papers. In best “Yes Minister” style, I congratulate him on his bravery, as well as his tenacity, in bringing it this far. It needs doing—it really does. We must reduce the risk as well as increase the reward for work by simplifying and recasting the structure. But, and alas it is a big “but”—this reinforces the point made by my noble friend Lady Hayter, in her admirable speech—the architecture is being undermined by the cuts agenda and we risk UC failing.

I shall give some examples. First, as regards second earners, we know that in one-third of poor families he is in work and she is not. Her second wage could lift them all out of poverty and, in a world of increasing flexibility and part-time jobs, it is misguided to use UC to get him to work even longer hours, which are probably not available, or to discourage her from work because UC has higher deduction rates for second earners. It is not sensible. It keeps them in poverty. It does not fit the labour market and discourages a better work-life balance between them. UC needs to follow the choices, not constrict them. Incidentally, any lone parent in part-time work who repartners is relegated to second-earner status and loses money. Either she will not declare it, which is fraud territory, or she will not repartner and her lone-parent status continues. It is not sensible.

A point on childcare has been made by several noble Lords. Helping more people is good but, within a cut or a capped budget, those working longer hours will find that their work is unaffordable. I accept that the cost of childcare presents a huge problem to the department but the Government’s proposals undermine the incentive for full-time work. That is undeniable.

As regards the changes to housing benefit, HB must be regularly reconnected to the 30th percentile of market rents because rents are rising far faster than CPI. I care particularly about the shared room rent housing benefit. A woman of 33 living in a one-bed flat who loses her job will potentially lose her home. It will double her stress as she spends time looking for a room which is safe, rather than searching for a job, which she needs. That, too, cannot be sensible.

Let us take savings, which several people have mentioned. Today, you lose JSA if you have savings over £16,000. With tax credits there is a notional income instead from your savings and no cap. With UC, the Government are going for the lowest common denominator, as in so many fields. If you are new to part-time work, you will get no help from UC until your savings have been run down to £16,000, and probably lower than that. So why save? Instead of savings giving you resilience and protection against risk, we have made saving itself risky—the exact opposite of what we are rightly doing with pensions. That is not sensible either.

ESA is to be means-tested after a year—not just on a man’s income and savings, but on that of his wife, who perhaps is a part-time carer and part-time worker. What would noble Lords do, if they were her? You would either cut your hours or drop out of work altogether, rather than see his benefit withdrawn. Then, you would both enter retirement the poorer. We have increased the risk of her not working, which is the reverse of what UC intends. That is the trouble with a household means test for UC. It makes entirely good sense for the young, unemployed couple on HB but, if a member of the household becomes disabled, after a year financial support for him is almost literally paid for by other working members of his family. That can destroy families, which no one wants.

Finally, there is the helpful input of the DCLG, requiring social landlords to fund the new building programme by increasing rents substantially, thus probably adding £2 billion to the DWP’s housing benefit bill. At the same time, the DCLG is undermining the work incentive by pushing out better-off tenants. We have increased rents, increased insecurity, reduced work incentives and a higher HB bill—really helpful of the DCLG—and then it is a complete idiocy for it to localise and cut council tax benefit, undermining universal credit rules. It sends an Exocet through UC. With friends like the DCLG, who needs an Opposition? I suggest that the Minister explores a useful trade-off—that he drops the benefit cap, which the DCLG and most of us do not want; and the DCLG in return drops the localising of council tax, which the DWP and no one wants. The Minister would have the better bargain.

I want UC to work, but unless we can rectify these issues in Committee, we will have badly damaged the two drivers behind UC: removing the risk and increasing the reward of working. Then we will be back exactly where we are now.

16:33

[Baroness Thomas of Winchester]

My Lords, I begin by saluting my noble friend Lord Freud and his colleagues, who have been determined to take the issue of making work pay for benefit claimants out of the “too difficult” in-tray and to create the universal credit, which is the engine driving the rest of this seven-part welfare reform train. To mix my metaphors, I just hope that the ship will not be spoilt for a ha’p’orth of tar and that some crucial matters will be addressed, such as childcare and children’s disability additions.

In view of the number of speakers in today’s debate, I shall concentrate on the personal independence payment, although I would like to have touched on the time limiting of ESA and the benefit cap, two matters about which I have profound concerns. Turning to PIP, as I shall call it, I do not intend to say anything at this stage about those in residential homes because we know that there is to be an internal review. In general, to say that many thousands of disabled people are fearful about the replacement of DLA with a new and supposedly better targeted benefit would be the understatement of the year. This is not surprising given the Government’s stated aim of wanting to save £1.45 billion in DLA/PIP expenditure by 2014-15.

I have been as critical as anyone about the process for claiming DLA, which involves the completion of a long self-assessment form—here I declare an interest because I receive the benefit. Although supporting reports from a doctor or consultant are supposed to be taken into consideration, they often seem to be ignored—I can give chapter and verse on that. The Government believe that the cumbersome process of self-assessment has meant that a great many people who should not be receiving the benefit are managing to claim it. However, I do not believe that anyone knows the true position, which presumably is why the Government want to reassess everyone. What we do know is that the vast majority of people who receive DLA find that it has made all the difference to how they live their lives, and I think that the Government are in danger of overstating the negative aspects of DLA. The form certainly needs to be overhauled and I am in favour of more face-to-face assessments, as long as they are undertaken by well-qualified and sympathetic people.

What is more than a bit chilling is, in the Government’s own phrase, that PIP is to be “better targeted”. That has the ring of means-testing about it, which we know is not the case. It also smacks of having a rather crude pecking order of disability, which could mean that people who genuinely need the benefit will be excluded. If we are living longer and more independently with our disabilities—hurrah for that—it is inevitable that spending on disability benefits will rise. DLA started in 1992 for in-work as well as out-of-work claimants, so year by year more people will be eligible as more disabled people live beyond retirement who started claiming well before retirement. There is no question that fraud, or even semi-fraud by people overstating their incapacity, is completely unacceptable and must be rooted out, but I fear that in future too many genuinely disabled people are likely to fall through the net because of the narrower criteria for PIP.

The crucial details of the scheme will be in the regulations, which I believe will be available in draft in October, but we know that the assessment,

“will take some account of aids and adaptations that an individual uses in their everyday activities”.

I find the whole question of aids, appliances and adaptations in relation to PIP puzzling. If you use an aid of any kind, does it mean that you do not need any extra funds to help you live your life? While you may have adapted to your situation by having, say, a manual wheelchair to get about, you cannot wheel yourself for miles—although perhaps the noble Baroness, Lady Grey-Thompson, can—and you might still need to lease a Motability car to which you are entitled using your higher rate mobility component, or you may need the money for adapted taxis. Many trains are still not fully accessible to wheelchair users and will not be so for many years. Underground stations are inaccessible, as are many other train stations throughout the country. As for buses, the service is so hit and miss that it has to be discounted. I know there are many adaptations which have nothing to do with mobility, such as hearing aids and guide dogs, but I shall concentrate on mobility aids because I know that there is a view that some manual wheelchair users may not get PIP, and because I know that the new rules for the work capability assessment are able to take mobility aids into account—quite misguidedly, I think, because of the lack of facilities for disabled people in many workplaces. I should be interested to hear why the aids, appliances and adaptations a disabled person uses might disqualify them from receiving PIP.

On assessments, I fear I may part company slightly from some of the disability organisations that have briefed us. Of course, it is vitally important to the DWP to use the social model of disability in its assessments, which, quite rightly, means that disabled people are not defined by their disability but assessed by how they live their lives. However, I also think there is a place for a person’s medical condition to be acknowledged during the assessment. For example, one of the characteristics of muscular dystrophy is tiredness, particularly towards the end of the day; another very different disability with distinctive characteristics is autism, which could be mistaken for an unco-operative attitude during an assessment. If medical experts write reports drawing attention to the particular characteristics of certain conditions, those should be taken fully into consideration during an assessment. I do not think contracts have yet been awarded to a company to carry out the assessments, but some recent reports of current DLA assessments are not encouraging. The Muscular Dystrophy Campaign has told me that, in the last month, 43 per cent of all advocacy cases that it received were about unfair DLA decisions, which are having to be appealed. I am not speaking at this point about the WCA—the two assessments are quite different, although a lot of people think there is a read-across.

Finally, I urge the Government to consider two other matters. First, PIP should be available in certain circumstances to those who become disabled after the age of 65, for example as the result of amputation. Secondly, PIP should be granted after three months rather than six. Many people suffer from sudden-onset disability, and making them wait for six months before financial help is available is simply not justified. I hope an amendment along these lines can be agreed.

I am grateful that PIP will still be a non-means-tested and non-taxable benefit. I know the Government are still listening to our concerns and that the Minister is as good a listener as anyone. I look forward to the future stages of the Bill.

16:43

[Lord Rix]

My Lords, it is important for the Government to recognise that any reform of the welfare system and tackling of the deficit should not be at the cost of undermining the ability of disabled people to live independently. The concerns I will refer to during my speech will be applicable to many disabled people but particularly to those with a learning disability, and I think at this moment it is appropriate to mention that I am the president of the Royal Mencap Society.

I intend to focus my comments on the Government’s proposals to replace working-age disability living allowance with the personal independent payment. The Government have declared that PIP will remain a benefit to support,

“the extra costs of overcoming the barriers faced by disabled people to leading full, active and independent lives”.

However, I and many disabled people fear that this most welcome announcement may be somewhat economical with the truth. Prior to the decision to reform DLA, your Lordships may recall that there was an announcement in the June 2010 Budget that the Government intended to make significant savings on future spending on the benefit of some 20 per cent. George Orwell’s gloomy prediction in 1984 may be true after all:

“‘Doublethink’ means the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them”.

In February 2010, Mencap published the findings of a survey it conducted, which asked people with a learning disability how they use the DLA and the difference it made to their lives. Some 84 per cent of nearly 1,000 respondents spent some or all of their DLA on paying for various forms of care and support, including help around the home and support for leisure activities and transport needs. Seventy-one per cent of all respondents also said that DLA made a huge difference to their lives in providing them with the support they needed.

The tightening of eligibility criteria for social care means that many people with a learning disability who currently claim DLA receive no support from their local social services—a situation that is getting worse as even more local authorities decide to reduce the numbers eligible for support. My particular concern is for those people who may be hit twice, missing the threshold for social care and potentially losing eligibility for PIP at the same time.

The Government have also stated they will focus on those with the greatest need, which on the face of it seems perfectly laudable and a worthy intention. However, as I wrote to the Prime Minister on 24 June:

“The Government’s focus on those disabled people with the greatest need also risks excluding many disabled people who still face additional costs associated with their disability. People accessing the lowest rates of DLA are often unlikely to be able to access support elsewhere, and cuts to these groups could remove vital preventative support. In the long term, this could lead to increased pressures on both social care and NHS budgets”.

Although the figures remain unclear, Disability Alliance UK has estimated that over 750,000 disabled people could lose support as a result of the 20 per cent cut in expenditure, based on the assumption that care support for the lower rate will be abolished.

Yesterday, when I asked the Minister what lessons the Government intend to learn from the work capability assessment for PIP, he responded that the Government,

“expect to make sure that the personal independence payment is focused on the needs of the individual”,

and that:

“The assessment is much more appropriate than the DLA assessment, which is, frankly, subjective and inconsistent”.—[Official Report, 12/9/11; col. 504.]

I trust that the PIP assessment will be better, for the work capability assessment has already proven to show disadvantage towards less apparent or hidden disabilities, particularly for people with a mild or moderate learning disability, whereby the level of help and support they need for day-to-day living can be difficult to determine.

However, like many other noble Lords, my principal concern with this Bill is the proposal to remove the mobility component of the PIP from those people living in local authority-funded residential care. While the Government’s announcement that they intend to delay the implementation of this policy until March 2013 is a step in the right direction, I do not feel it goes anywhere near far enough. Under Clause 83—which I and others, I am sure, wish to see amended—disabled people living in residential care could have their mobility payments taken away. As regards the way in which mobility needs in residential care homes are met, the Government claim that the rationale for removing PIP mobility is,

“to identify and remove any overlaps”.—[Official Report, Commons, 24/5/11; col. 7P.]

However, evidence shows that very little duplication exists, and removal of this benefit would severely undermine the Government’s aim to support disabled people to lead full and independent lives.

I am also concerned about the Government’s review of this decision. At the publication of the Bill, the Government announced their intention to,

“review the support given by DLA against the responsibilities of care homes, and reflect the outcomes from this review in the PIP eligibility criteria for people in residential care homes”.

However, while this may seem welcome, your Lordships should be aware this is an internal review, with no terms of reference, no call for evidence, no sessions in public and no opportunities for the public and interested parties to submit evidence. The Government have also announced that their findings will not be published in public and there is no publicly available information about the review and its remit. I fear that the era of open, transparent and accountable government in the heart of Whitehall is still in Never Never Land. Fortunately, my noble friend Lord Low is conducting his own independent review into this proposal, with the secretariat provided by Mencap and Leonard Cheshire Disability. No doubt the noble Lord will explain all this later, and I trust the Government will consider the Low review constructive and helpful as we attempt to make progress with Ministers on this issue.

While there are many other areas of the Bill on which I could have expressed my concerns, including housing benefit reforms, I am going to finish—especially as my voice is going. However, I am sure that your Lordships will refer to some of these during your speeches. It is clear that as matters stand, unintended consequences of the Bill could have severe implications on the quality of life for many disabled people in this country. I therefore urge Ministers to listen to these concerns and, of course, to respond accordingly.

16:50

[Lord Mackay of Clashfern]

My Lords, I have great admiration for the Secretary of State and his Ministers, not least for my noble friend who is the Minister in this House. I am delighted that they have tackled the difficulties of the welfare system and glad that, in principle, the noble Baroness, Lady Hollis of Heigham, who has great expertise in this matter, has embraced that principle. However, there are of course many details in the application of that principle which demonstrate why it may have been wise in her day to have it in the “too difficult” section.

I intend to speak about a matter that is only marginally connected with the Bill. It depends primarily upon inherited legislation. My right honourable friend the Prime Minister recently roundly criticised people who were non-resident parents—he referred to them as “runaway dads”—and who simply refuse to face up to their responsibilities to their children, leaving single parents who, as the Prime Minister acknowledged,

“do a heroic job against all odds”,

to manage alone. Their plight is not new. In my early years as Lord Chancellor, now rather a long time ago, I received many calls for help from mothers who had court orders for maintenance for their children but could not enforce those orders because they could not find the defendants.

Eventually, in association with my noble friend Lord Newton of Braintree, legislation was introduced and passed as the Child Support Act 1991, which set up the Child Support Agency. Sadly, it did not perform well. After the change of Government, I happened to be travelling with Alistair Darling, whom I regard very much as a friend. He said that the formula which we were using was too complicated and that it would work better with a simpler formula. Over the years, successive Secretaries of State have tried to improve the performance of this vital service. My understanding of the present Government’s policy, as exemplified by Clauses 131 to 133 and inherited legislation in force, is that demand for this vital service should be reduced and that, to this end, charges should be made on those who resort to the service—both initially and if they use the collection system.

I am entirely in favour of parents who have encountered difficulty in their relationships, for whatever reason, trying really hard to resolve the maintenance of their children amicably. Any support that the Government can make available to that end is to be welcomed. Sadly, there is a hard core of parents who will do everything that they can to avoid their liability. It is for those who are left with the care of the children that this service is essential, as the department's research itself shows. Where the absent parent is traced, I am all in favour of his having to pay for the consequences of his attempt to evade his responsibility but I cannot see any fairness whatever in charging the parent who has been left in the lurch for that service. In view of the Prime Minister's speech and its tone, I take it that he agrees with this view.

Debating the Bill will give us an opportunity to bring in amendments which deal with this, but I cannot see that the present policy is fair to the parent left with the responsibility. For that reason I hope that we will have an opportunity of reviewing this matter in Committee, because, of course, the idea of charging is not exactly new. We have to deal with something that is, to a certain extent, already legislated for.

16:56

[Baroness Morgan of Drefelin]

My Lords, like many in this House, I, too, support welfare reform. I accept that it is very difficult indeed and I am keen, like others today, to do what I can to promote an important debate on the Bill and to ensure that, following the passage of the Bill, there are no unintended adverse consequences for the quality of life of those that it seeks to serve. In particular, like the noble Baronesses, Lady Hollins, Lady Hayter of Kentish Town, and Lady Hollis of Heigham, and, of course, the noble Lord, Lord Patel, in his very important letter in the Times yesterday, I am very concerned about the intention to introduce a one-year time limit on contributory employment and support allowance for those in the work-related activity group and the proposed increase to a six-month qualification period for the personal independence payment, alongside an additional six-month prospective test, which is, of course, as we know, an increase on the three-month qualification period for DLA. For the record, I declare an interest as chief executive of the research charity Breast Cancer Campaign and, like many here, I have a very strong personal interest, as a carer myself, in the welfare of cancer patients.

When considered together, the introduction of a time limit on contributory ESA alongside the six-month qualification period for personal independence payment seems almost to create the perception that there is, perhaps, only a brief window of time in which disabled people not in the very tightly-drawn support group require support. This, I believe, is very far from reality. These are two vital benefits with the time limits or the requirements being either introduced or becoming more significant at different ends, time limits for which it is hard to comprehend the rationale and where there appears to be limited understanding of the implications.

On looking at the limit on contributory employment and support allowance, the Minister has said that he believes it is not appropriate for employment and support allowance to be a long-term benefit for those in the work-related activity group. As the replacement for incapacity benefit, it was intended to be so only for the most severely ill or disabled people placed in the support group, for whom work is not a viable option. I question the premise that everyone in the work-related group should be assumed after only a year either to have found employment or no longer to be in need of support. I question the premise that it is appropriate to move ESA for these people towards the approach taken to jobseeker’s allowance. I do not accept that this was the settled intention at the time when the benefit was introduced. We have to remember that access to the support group is very tightly-drawn indeed. Had it been clear when the support group was identified that this would be the endgame, there would have been great deal of distress at the time.

As we have already heard from noble Lords in all parts of the House, Macmillan has done an excellent job in setting out the barriers which people with cancer face and which impact on their ability to return to work, although, of course, many try very hard to do so. The physical and psychological effects of cancer and its treatment are well known in this House and include pain, fatigue, often nausea and fever as well as all the additional costs involved in living with cancer, such as the costs involved with treatment, attending hospital, parking, which is expensive, and transport to attend hospital to undergo radiotherapy. These costs are all well understood by noble Lords. The majority of cancer patients need continuing support beyond a year, so who will miss out in the future? Macmillan Cancer Support has said that 75 per cent of people with cancer need the support provided by ESA for longer than 12 months and that a cancer patient could lose their employment and support allowance benefit when it becomes means tested if their partner earns more than £7,500 a year. These are very worrying points.

In addition, the initial qualifying period will increase from three months under disability living allowance—many noble Lords have touched on this—to six months under the personal independence payment scheme. Are we saying to people that they will not be considered sufficiently in need of help with the extra costs arising from disability to qualify for the personal independence payment within the first six months of the need arising despite there also being a requirement to meet a six-month prospective test? What is the purpose of extending this qualifying period from three months for DLA to six months for PIP? The Government have not been very clear about that, although I will read the Minister’s speech very carefully. The Government have suggested that the rationale behind extending this six-month wait is to bring eligibility in line with the long-term definition of “disability” under the Equality Act 2010. However, if we look at the definition of “disability” under the Act and the subsequent regulations, this justification does not stand up. While it is the case that for the majority of disabled people covered by the definition of “disability” in the Act there is a need to meet a long-term test, paragraph 6 of Schedule 1 to the Act, headed “Certain Medical Conditions”, states:

“Cancer, HIV infection and multiple sclerosis are each a disability”.

That is a strict definition. This provision by which people with cancer are automatically deemed disabled in accordance with the Act is confirmed in the guidance to the Act as well. That guidance states:

“The Act states that a person who has cancer, HIV infection or multiple sclerosis (MS) is a disabled person. This means that the person is protected by the Act effectively from the point of diagnosis”.

Therefore, if the Government intend to align their provision with that in the Equality Act, this is a very poor point of comparison.

Will the Government review the eligibility for PIP for people with cancer and other sudden onset conditions? If there must be a qualifying period, at the least a move towards a three-month initial qualifying period followed by a nine-month prospective test seems more humane and more people focused. As the Minister said in his eloquent opening remarks, our aim should be to focus less on arbitrary process.

Finally, I wish to raise a concern that has been raised with me by CLIC Sargent about the impact of the disability living allowance reform on 16 to 18 year-olds. We must not lose sight of the needs of young people in this age group with cancer. Can it be right that young people in this age group are being treated as adults in the move to the personal independence payment? We need to remember that DLA is at present the only benefit available to young people with a health condition such as cancer, whatever their situation. They, of course, are much less likely to have the financial independence that adults may have. I hope that the Government will think very carefully about reviewing the position of young people with cancer.

Like the noble Lord, Lord Rix, I have many concerns about a whole host of issues covered by the Bill. I look forward very much to working with others in Committee to improve the Bill.

17:05

[Baroness Tyler of Enfield]

My Lords, I support many of the objectives of the Bill, in particular the Government’s stated aim of simplifying the current, highly complex welfare benefits system and increasing fairness within it. I fully accept that for most people work is the best route out of poverty and that work must pay and be seen to pay. Therefore, I welcome the simplification of the system that will result from the introduction of universal credit and congratulate Ministers on the progress that they have made so far.

That said, I have a number of serious concerns about the impact on families and children of the changes to the benefits system, particularly the hardship that they will create for some of the neediest and most vulnerable. As with any changes to a hugely complex system, some of the consequences may be unintended, but—from my reading of the Bill—others are part of the policy intent. For this reform package to achieve widespread support it must both look and feel fair. I want to highlight, therefore, some areas which I think are socially unjust and seem to fly in the face of the Government’s other commitments to be family-friendly, to reduce child poverty, to tackle intergenerational disadvantage by early intervention and to promote social mobility.

There are many areas that I should like to talk about but in the limited time available I shall focus primarily on the impact of the benefit cap on children and families. This policy is designed to ensure that a household on benefits does not receive more income than the average working household. I understand the arguments for this, including the importance of creating incentives for work and promoting fairness between those in work and those receiving benefits, as well as the need to reduce the rapidly growing benefits bill. As we have already heard, the cap on benefits for out-of-work households is expected to be set at around £500 per week per household for couples and lone parents. The Government estimate that approximately 50,000 households will be affected by the cap, losing some £93 per week on average in benefits.

At the level at which the cap is currently set, there are serious risks in the policy which may not be properly understood and which have so far received too little public debate. What are the facts and figures? Of the 50,000 households whose benefits will be reduced by the policy, the majority will be families with children—often large numbers of children—and those who live in areas where housing costs are high. The Children’s Society, whose work is highly respected, recently estimated that the number of children affected could be more than 200,000, and that 80,000 children could be made homeless. Thus the cap will have a disproportionate impact on children. How can this be fair?

It is instructive to look at the nature of the households most likely to be affected. Broadly speaking, they are one-third couples and two-thirds single women—generally single mothers. Ninety per cent have children and 60 per cent will have more than four children. What type of communities will be most affected? Certainly, people living in places such as London, where housing is more expensive, will be affected, as will some religious and ethnic groups, as they tend to have larger families, and people in private rented accommodation. What is likely to happen as a result of the cap being set at this level? Families will be far more likely to have to move abruptly to cheaper areas, which risks children having to move school, possibly in the middle of the year, thereby disrupting their education and their current support networks. Families could end up splitting up—they may indeed decide to create two households instead of one, as both parents would then be entitled to up to £26,000 in benefits.

Two groups yet to be mentioned are foster carers, who perform such a socially valuable and vital role, and kinship carers, who might be an aunt or an uncle taking in a child from another member of the family to avoid the child having to go into care, with all the trauma and expense for the state that that creates. These people, too, may be disadvantaged. I understand that the Government are planning to make special provision for foster carers to recognise their unique role, and I look forward to hearing the details from my noble friend the Minister, particularly in relation to housing costs.

Families who can will continue to pay their rent, of course, but they will have less money to spend on food, clothes and other essential items. Families who will not be able to pay the rent may be evicted and become homeless. Children are a priority group for council housing, so that will lead to pressure on temporary accommodation. There is also a very real danger of at-risk children simply disappearing from the scene. That, as we all know, has real child protection and safeguarding issues. I would very much welcome hearing from Ministers what plans the Government have to ensure that that does not happen and that we do not have another tragedy as a result.

Finally, there will be a reduction in mixed communities, as poorer families are moved out of expensive areas. That is particularly likely to be the case in London. That may lead to social segregation between the rich and the poor which would be worrying in terms of social cohesion and pressures on public services in some poorer areas.

In summary, the cap as currently set impacts disproportionately on children, large families, women and various black and ethnic minorities. The last two groups, as we have already heard, are already having a tough time in a tough jobs market. A little discussed fact that has not been raised so far is that the benefit cap will affect couples substantially more than lone parents. Indeed it could damage incentives to enter into new relationships—for example, for two new lone parents thinking of living together and setting up a household—and it could risk breaking up families, a matter very close to my heart as chief executive of the charity Relate, which is a declared interest, and to the heart of the Government. Surely this couple penalty is an unintended consequence of these reforms. I welcome hearing the Minister's response on that point.

Like others, I am deeply concerned about the reduction in financial support to an estimated 100,000 disabled children under the universal credit, to young carers where a child is trying to look after a sick or disabled parent and the proposed reduction in support for childcare. There is no time for me to go into any detail. I would simply say, as other noble Lords have said, that support with childcare is a hugely important issue, particularly for those on benefits who need to enter the jobs market at this difficult time.

There are a number of ways in which we can mitigate some of the concerns that I have highlighted in relation to the benefit cap, particularly the level at which it is set. Those would include calculating the figure using average earnings of families with two or more children, various grace periods and transitional arrangements, perhaps linking the cap to levels of conditionality set out in the work-related requirements of the Bill and perhaps exempting certain benefits from the calculation of the cap. I look forward to hearing my noble friend's response to these points.

17:13

[Baroness Campbell of Surbiton]

My Lords, we have a mighty task on our hands. I apologise for not staying for the marathon of this debate and I thank the House, and especially the Minister, for letting me go home to bed early.

None of us are in any doubt that the welfare system is in need of reform, but we must do it with care. We have to do it with wisdom and, more importantly, reliable information—people’s human rights depend on it. It is my greatest hope that this noble House will do its very best to scrutinise and amend the Bill away from ill considered political demands and media pressure.

The Minister, the noble Lord, Lord Freud, has definitely demonstrated his desire to create a welfare system that enables all kinds of people to live with dignity and make their contributions to society. I believe that he wants a fairer, simplified system, which motivates more disabled people to take paid work and be active citizens. I am grateful that he has fought hard to taper benefits and to negotiate with the Treasury not to reduce the budget, especially that for access to work. Unfortunately, I fear he might have been less successful in his work on DLA, which is the area of the Bill that I will concentrate on today and in even more detail in Committee.

I should declare an interest as a DLA recipient. During the past 30 years, DLA, which in the olden days was called attendance allowance and mobility allowance, has enabled me to pass many milestones. Without it I would not have attended university. I used it to pay the cleaner to get me up in the morning and to put me to bed at night. That was the only allowance I had. I used it to get a job and to stop living with my parents—in short, to live independently. Along with millions of other disabled people, I will be affected by this Bill. The allowance was given to me for life and I am about to have my assessments again—I already have 25 other assessments. That is something to look forward to.

If disabled people are to be independent and take on responsibilities like work, they must be given an equal playing field. Equality legislation alone will not provide this. Providing financial support to disabled people to be equal citizens has been a fundamental principle demanded from successive Governments over my lifespan. It has lifted us from being passive recipients of care and welfare to independent people with life opportunities. It is a cultural shift that has resulted in fulfilling relationships, education, work and greater happiness for millions of British citizens.

Something must be desperately wrong to cause these same citizens to write so many letters and e-mails to Members of this House, begging us—yes, begging us—to reconsider the proposed replacing of DLA with personal independence payments. We reform to make people's lives better. So are they right to feel so scared? To be honest, I still do not know. There is so little detail regarding this reform.

Last week, I joined colleagues on the Joint Committee on Human Rights for a visit to Essex Coalition of Disabled People. The visit was part of our inquiry into independent living for disabled people, which will provide a good measure for this reform.

At this point, Baroness Grey-Thompson continued the speech for Baroness Campbell of Surbiton.

ECDP is a large, regional, disabled membership organisation, a centre for independent living. It has a remarkable record of involving and listening to large numbers of disabled people. It tailors its services to respond to the needs, wishes and experiences of those disabled people. One if its members, Hazel, was able to give the JCHR insight into the fears produced by the changes proposed in this Bill.

Hazel described her life as funded by a fragile construction of different benefits, a personal budget and voluntary support. She believes she is in danger of losing her higher rate DLA under the new proposals. She told us, “My life is like a house of straws. Once you remove one tiny straw, the house collapses. It's taken me years to feel independent and in control, to feel like an able-bodied person, to be human. If I lose out from the changes, I will stand to lose everything. Where's the sense in that?” All Hazel wants is for her human rights to be respected. Does PIP do this?

Let us start with the term “personal independence payment”. What does this mean? Can the Minister tell me whether his Government see independence as a medical barrier for assessment or a socioeconomic barrier? From what I have gleaned so far, the PIP assessment is largely a functional assessment of one's medical condition. It bears little relation to what many disabled people need to live independently, and largely ignores higher costs of living.

Physical or mental capability has only a small bearing on whether a disabled person is dependent or independent. For independent living to be a reality, a person needs choice and control in their life. Disabled people make choices about how to spend their DLA, demonstrating maximum control over their lives and thus becoming independent. For instance, the mobility component is not just about physically getting from A to B. The money might be used to pay for travel insurance, which can be astronomically more expensive for disabled people than for the non-disabled traveller, thereby inhibiting their mobility. Who on these Benches paid £1,500 for travel insurance to go on holiday this year? I did. That is the average extra cost that people with severe respiratory impairments must meet to go abroad. Assessing functionality can never determine economic inequality.

I ask the Minister to reconsider comments that he made during the 11 May debate on the new PIP assessment. He said that a person climbing Mount Kenya on prosthetic limbs should not be treated as disabled, for they are doing something that many of us cannot do. That is an extreme example, but it can be understood in two entirely different ways. I am sure that it was intended as a compliment and an acknowledgement of personal achievement. However, it tells us nothing about the additional costs of disability that people living with amputations must meet. Some amputees experience periods of excruciating phantom pain during which they are unable to work. Others experience extra costs in the form of transportation and housing adaptations. I am not sure whether the Minister believes that one can cease to be disabled by physical prowess alone.

Many consider appointment to this House to be evidence of accomplishment. Is that sufficient for the Minister to determine that I, too, am not disabled and therefore do not need DLA? Of course not—but that is what the assessment is in danger of leading us to. I do not wish to embarrass the Minister, but I will assure him that DLA has been, and continues to be, vital in enabling me to live independently and work towards my goals. Personal achievement must never be a yardstick against which we measure entitlement.

At this point, Baroness Campbell of Surbiton resumed.

From my mailbag, it is obvious that many disabled people expect to lose their independence. Do the Government believe that returning disabled people to levels of dependence last seen 30 years ago makes good economic sense? Disability Alliance and other notable organisations in the Disability Benefits Consortium have clearly demonstrated the knock-on costs to the Treasury in the form of increased health bills and a drop in revenue from those who will fall out of work. Will the Minister tell the House who is working on the cost-benefit analysis of the proposed changes? Where is their modelling? I ask him not to answer me by directing me to existing impact assessments. It is not there: they tell us nothing about this. Perhaps the impact assessments discussed in the Minister's opening remarks might address this. I am not confident, but I look forward to seeing them.

DLA reform, including the review, has not been co-produced with experts such as the National Centre for Independent Living. The Government have elected to revert to old forms of consultation, merely inviting contributions from such organisations rather than working together. The noble Lord, Lord Rix, expanded on this. I ask the Minister to read again the Government's independent living strategy. Disabled people know better than anyone the solutions to overcoming barriers to independent living and providing a good assessment framework. I ask the Minister to consider re-establishing the DLA/PIP advisory group that was sacrificed during the bonfire of the quangos. Noble Lords will remember the Government's disability rights task force that developed the most successful and significant disability legislation of this century: namely, the Disability Discrimination Act. Without the structure of co-production, I fear that we will be locked into arguments rather than shared solutions.

As I have run over my time, I will finish by saying that the term “personal independence payments” is disingenuous and should be discarded. It is obvious from the PIP proposals so far that the Government know very little about independent living. “Disability living allowance” describes the benefit well. It is about living. Let us keep the title—and keep living.

17:25

[Baroness Wilkins]

My Lords, I, too, declare an interest as I have received DLA since its inception. Luckily, having reached the age of 65, I will escape the Government’s proposals for the time being. When I became disabled in the mid-1960s, just about the only disability support on offer to take part in everyday life was an invalid trike—the blue Noddy car. For me, that symbolises what was then the extent of expected integration. Little was expected of disabled people and unless your family had money and resources you led a very limited life. Disabled people had low expectations and were not much in evidence.

Over the following years, political pressure slowly increased with the rise of the disability movement and the range of support needed by disabled people to become contributing citizens began to be addressed. The Noddy trike morphed into the mobility allowance, then into DLA, which added personal care, and that developed into incorporating people with communication needs and learning difficulties, lacking arm movement and so on, until most recently when blind people became entitled to the high rate for mobility and care.

That support is what has enabled disabled people to work and contribute to their communities. It is why you see disabled people on the streets, living independent lives. We now expect to be treated as equal citizens. The lengthy DLA claim may not be simple but it represents progress. It reflects the very real complexity and diversity of the extra support needs of disabled people’s lives. Disability living allowance is a complex benefit because disability is hugely complex and any reform needs to be done with great awareness of that complexity if it is not to leave disabled people more deprived and impoverished, denying millions the hope of living the independent lives that we have come to expect.

That awareness is sadly lacking from this Bill, as we heard from the noble Baroness, Lady Campbell, just now. As all noble Lords’ post bags and mail boxes have shown, disabled people live in great fear of it being enacted. There are many issues concerning the introduction of PIP which we will need to return to in Committee. For now, I draw attention to just one, in Clause 79. That proposes to double the current qualifying period for eligibility for support from three to six months. The Disability Benefits Consortium is concerned that this will diminish the preventive impact of DLA, pushing many more people into debt as they try to manage the costs of their impairment. As the noble Baroness, Lady Morgan of Drefelin, so eloquently pointed out, Macmillan Cancer Support and other cancer organisations are particularly concerned that it will have a devastating impact on disabled people who have sudden onset, long-term conditions such as cancer, stroke and spinal cord injury.

The first six months of these conditions can be the period when extra costs, especially for travel and parking for treatment and family visits, are greatest. Specialist treatment centres are often far from patients’ homes. Macmillan Cancer Support cites a cancer patient in Devon who regularly had to travel 125 miles for radiotherapy. The Minister for Disabled People has made it clear that the proposed change in the qualifying period is not financially driven but to align the definition of long-term disability in the Equality Act. Will the Minister reconsider allowing people with certain conditions, who face the sudden onset of a disability and immediate additional financial costs, to receive an early assessment for PIP?

There are so many aspects of this Bill which will have a disproportionate impact on disabled people and I hope to take a full part in Committee in trying to alleviate them. For now I will concentrate on the proposals for housing.

The Bill’s proposal for a household cap on benefits comes in addition to the local housing allowance caps being introduced from this year. As we have heard, according to leaks from the DCLG, officials estimate that this will make 20,000 families homeless, forcing people to move away from their support networks, moving children from school and pushing families to places with lower rents—lower rents because there are fewer jobs.

This second wave of cuts to housing benefit will undermine the housing safety net for people who lose their jobs and need temporary financial help so that they do not lose their home as well. It will affect people who are working, but who are on very low incomes, as well as those unable to work, and that, of course, means that it will disproportionately affect disabled people. Shelter, among other organisations, has called for housing benefit to be removed from the housing benefit cap. What is the Minister’s response?

There are harsh new size criteria on all working-age tenants in social housing who receive housing benefit. The Bill allows the Government to reduce the amount of housing benefit to people of working age in social housing if they are considered to be underoccupying their property. The callousness of these criteria is chilling. Each person or couple living as part of a household would be allowed one bedroom, except for under-16s of the same gender and under-10s of different genders who would be expected to share bedrooms. If the household is judged to be underoccupying its home by one bedroom it would lose 13 per cent of its housing benefit, but it would lose almost a quarter— 23 per cent—for two or more bedrooms.

Think what this means for couples who are in ill-health and are having disturbed nights from severe pain, constant coughing or laboured breathing, when the only thing that keeps that relationship from breaking is the possibility of a night's sleep. Two-thirds of the people who will be affected are disabled, which is almost 500,000 people, according to the equality impact assessment. With disability come large items of vital equipment: mobile hoists, bulky wheelchairs and their spares; exercise equipment; oxygen storage; and boxes of incontinence supplies. Where are they to be put if a couple has just one bedroom? What of disabled people who need an overnight carer? Is the carer expected to sleep on the floor? It is estimated that 100,000 of the disabled people who will be affected currently live in homes that have been specially adapted for their needs. If they are forced to move, new adaptations would have to be paid for, if they are not to be homeless, so what saving would the Government be making from this measure?

I believe that disabled people have every reason to fear this Bill. Its most alarming aspect is the Government’s willingness to risk the consequences of such a massive change. With their heavy reliance on secondary legislation, they cannot know the full impact of their proposals or how they interact with each other. We know from the equality impact assessments that disabled people will bear a disproportionate amount of the cuts and that no mitigating action is proposed. I hope that we can take that action in Committee.

17:33

[Lord Wigley]

My Lords, I hope the Minister heard and took to heart the two immensely informed contributions from the noble Baronesses, Lady Campbell and Lady Wilkins, that we just heard. I declare an interest as vice-president of Mencap Wales. Colleagues who served in the other place at the same time as me will know of my involvement with disability issues. Those initially arose because of the disability challenges that we faced as a family. I know that many noble Lords have similar and even more far-reaching experiences at first hand, as we have just heard. In our case, it was the experience of losing two sons, Alun and Geraint, who suffered from physical and mental handicap and died at the ages of 12 and 13. I know that some noble Lords have the ongoing challenge of supporting disabled children who will probably outlive their parents with all the heartache that entails. My wife Elinor and I were spared that torment. We saw closure of the direct, day-to-day struggle of coping with disability in our household, although there is truly never such a thing as closure because the experience—the joy and sadness—of parenting a disabled, dying child never leaves you.

It is this background that affords me a little insight into the desperate concerns of disabled people and their carers at the implications of the Welfare Reform Bill. We were lucky in that both our children qualified for the highest level of the then attendance allowance and mobility allowance, and that enabled us to employ a young, full-time care assistant who lived with us as a family. Without that facility, it would not have been possible for me to undertake my work or for my wife to keep in touch with her career as a professional musician, which helped both of us to bear the pressures we were under and enabled us to give our other children, Eluned and Hywel, the support they needed. After we had lost both boys by the spring of 1985, I came to realise the enormity of the cost of coping with disability. Although we had by then naturally lost the income from the various allowances to which we were entitled, I found myself for the first time in a decade able to pay my way. That is the reality of disability. Implicit with it is a very substantial day-to-day cost in coping with its consequences. That is why so many disabled people and their carers are petrified—yes, sick with worry—about the implications of this legislation.

My direct experience is now 25 years out of date, as is, I suspect, the experience of many of us who bring experience to this Chamber, but the generality of that experience still holds true and the perspective of time reinforces the message. That is why I shall be pressing the Government in Committee concerning a number of issues relating to these questions. The danger is that the new regime of personal independence payments replacing DLA will force many unwell people to submit to the indignity of yet another examination with all the insecurity and distress that that causes. I am concerned that the Government’s target is to cut the number of DLA claimants by 20 per cent when the assessed fraud level of DLA is only 0.5 per cent.

I fear that the Bill fails to address the central problem of getting people into work; namely, the lack of available suitable jobs. Job creation is a greater problem than unwillingness to work, particularly among young jobless people, and the challenge of getting appropriate work that is just not there for disabled people. The Bill needs to be amended to ensure that claimants with dependent children will not face sanctions if they are not able to work, and there is a need to challenge the Government’s intention to limit the new ESA to just 12 months, even for people suffering from long-term or variable illness, which the Government admit will hit some 700,000 people. What will be the position of young people who have been disabled from birth since they will not qualify for the contribution-based element of ESA?

Finally, no one denies the need from time to time to review the welfare benefits system to simplify it, speed it up and make it fairer. However, what would be totally unacceptable would be for vulnerable and dependent people to bear the brunt of government spending cutbacks. There are much broader shoulders in our society who can bear that pain. In the detailed consideration of this Bill, that is the angle from which I will look at the amendments and at the future of this legislation.

17:38

[Baroness Stedman-Scott]

My Lords, I begin by declaring an interest as CEO of the employment charity Tomorrow’s People which aims to help people get and keep a job and to help them to focus on their destiny rather than their history. I hope that in relation to universal credit this Bill will help people to get extra focus on their destiny. In addition, before I joined your Lordships' House, I worked on the reports, Breakdown Britain, Breakthrough Britain and Economic Dependency, all of which were undertaken in conjunction with the Centre for Social Justice.

In my experience of working with unemployed people, they want to work. As the noble Baroness, Lady Hollis, said, they do not need to be whipped. They want to be independent and to make the choices in their lives that they see those in work making. The difficulty comes when trying to make the transition from welfare to work when the system in place does not generate sufficient incentives to work. I draw noble Lords’ attention to a conversation I had with a young couple a few weeks ago. They had a child. The mother of the child had a part-time job working 19 hours a week. She wanted more hours because she wanted to be able to do more for her family. She managed to get another job which meant an increase to 29 hours a week, and she took the increased hours at the weekend so that childcare could be managed. You would think that it was something to celebrate. In front of me, her partner said, “Well, if you didn’t work, we wouldn’t have to pay the rent”. This is what we need the new system to stop. The principle of the universal credit is most welcome. It will simplify the current system, and I hope that the introduction of the new single taper, which will withdraw support as earnings rise rather than stop them altogether, will make the statement that work must pay a reality. At the moment, the withdrawal of benefits when somebody gets a job is all or nothing, resulting in people asking, “Why should I bother?”. This, I hope, changes things greatly.

However, I urge the Government to make sure that the changes which will affect unemployed people under the universal credit are communicated effectively and professionally. We must turn every stone to make sure that they are fully conversant with the flexibilities and opportunities that are presented to them, and help and support them through their journey back to work. It would be a travesty if we failed to do this. It is critical that all front-line staff, either from the DWP or indeed the various providers that interface with unemployed people on a daily basis, are well trained and that there is no opportunity for confusion or lack of clarity on these significant technical and cultural changes.

The introduction of the universal credit is long overdue, but I fear that the question we have not asked is: how are we going to support our unemployed people in the most effective way during their period of economic inactivity at the same time as introducing these changes? This is not a question for the Bill but it is something we must give thought to. If the jobs are not there, and the magic wand of the Minister cannot create them, what are we going to do to make life better for people during this period?

Like many of your Lordships, I have received several briefings on this Bill. They raise some understandable concerns and I would just like to mention one: childcare. One of the greatest obstacles faced by people looking to return to the labour market is that of affordable, quality childcare. The provision of childcare is not covered in this Bill but it will seriously affect the ability of people to take a job if it is not in place.

I greatly welcome the principles behind this Bill but it involves major changes that will need to be carefully worked out. I thank the Minister for the consideration that he has given in the briefings to the feedback we have given him. My father had the politically incorrect job of furrier—he made fur coats. He said the advice his first boss gave him, whether he was making an expensive mink coat or one of less expensive skin, was always, “Measure twice and cut once”. With all the proposed changes that this Bill brings to welfare reform, we would all do well to adhere to this advice.

17:43

[Lord Touhig]

My Lords, I will focus my remarks on Part 4 of the Bill, which will bring in a new benefit called the personal independence payment to replace disability living allowance. In particular, I will consider the impact of the changes on people with autism.

Disability living allowance is a key benefit for many people with autism, designed to meet the additional costs of their disability. The National Autistic Society has said that reform of disability living allowance could offer an opportunity to ensure that the needs of people with autism, who are some of the most vulnerable in our society, are better understood in the allocation of benefit. It has welcomed the increased focus on participation, communication and the ability to plan and make a journey, all outlined in the consultation documents on the reform as well as in the draft regulations. However, the National Autistic Society, along with other disability organisations, has serious concerns that the objective of a 20 per cent cut in projected spend on the award seems to be the main driver for change. If this is the case, a significant number of adults with a disability will lose out.

Our fear is compounded by the Government’s stated intention to focus benefit on those with greatest need, which is yet to be defined, and with the proposed introduction of a new assessment process, including face-to-face interviews. Like many noble Lords, I share the National Autistic Society’s concerns about the introduction of face-to-face assessment for the new benefit, particularly given the experience of the work capability assessment. The National Autistic Society followed a group of people with autism through the work capability assessment process and found that the medical assessment was a particular barrier to having needs fully and properly assessed. Face-to-face assessments for people with autism are problematic and can be extremely stressful.

Autism is a lifelong developmental disability that affects the way a person communicates with and relates to another person. Areas of difficulty include an inability to understand the nuances of language, facial expressions or tone of voice, and a propensity to take everything literally. In light of this, an interview with a stranger asking questions that you may not understand or be able to answer accurately due to the language barrier is hardly the best method of assessment. But the many different types of communication barrier also mean that an assessor untrained in autism may not pick up on the difficulties faced by the person with autism or Asperger’s syndrome. For example, if an individual on the autism spectrum has known about their interview for weeks, they may spend those weeks practising what to say in order to come across well in a way that will perhaps not truly reflect their actual communication struggles. They may come across as not having any noticeable communication difficulties and therefore be wrongly assessed.

People with autism also often lack insight into their condition and may not have a good understanding of what areas of their daily life they need help with. They could also fail to mention real areas of difficulty because they do not comprehend their importance or because they are eager to please. However, an assessor with no knowledge of autism is very unlikely to understand this. An effective diagnostic assessment of someone’s communication skills would often need to be carried out over a period of several hours, across different days and in different environments. A half-hour session with a stranger is far too blunt a tool to make a proper and fair assessment.

There are particular concerns, as other noble Lords have already mentioned, about who will carry out these assessments and what training their staff will have with autism. How we can be assured that the staff who will carry out the assessment will have adequate training in autism? Autism is particularly poorly understood among health professionals in this country. Indeed, research by the National Audit Office in 2009 found that 80 per cent of general practitioners did not feel that they had enough knowledge and training in autism. Can the Minister explain what the Government intend to do to ensure that adequate and specialist training for assessors is in place so that adults with autism can have their needs comprehensively and fairly assessed?

Organisations representing people with disabilities have been encouraged by government pledges in Written Answers and in response to the disability living allowance consultation that they understand that face-to-face assessments are not suitable for everyone. Indeed, the Minister stated in Lords Questions on 10 March this year that where it is not “realistic, helpful or appropriate”, the Government would not insist that applicants for personal independence payment be seen face to face. Could the Minister clarify what this means and commit to putting safeguards in the Bill to ensure that individuals for whom it is inappropriate are not put through face-to-face assessments unnecessarily?

As well as the limited timeframe, other factors make it difficult for proper scrutiny of the Bill to take place. The draft regulations provide no indications of the points that would be awarded for each of the criteria. Essentially, Parliament is being asked to scrutinise clauses for the personal independence payment on the basis of regulations that make it far from clear who will qualify for the benefit in 2013. That makes it extremely difficult to estimate what the impact on people with disabilities will be.

I therefore have two further questions for the Minister. Will he commit the Government to introducing biennial reviews of the implementation of the benefit to ensure appropriate scrutiny of the operation of the benefits in place? Will he also commit to ensuring that all regulations relating to the personal independence payment will be subject to affirmative resolutions so that this House and the other place can be given the opportunity to scrutinise the regulations?

For the sake of public finances in the medium and long term, for the sake of the integrity of the new benefit, but—most especially and in particular—for the sake of many people on the autism spectrum for whom DLA is their only lifeline, I ask the Minister to seriously and comprehensively review both the process and the assessment criteria for the new personal independence payment and ensure that, when introduced, it will be fit for purpose.

17:51

[Lord Low of Dalston]

My Lords, this is a very important Bill. It could well be a Bill which defines the coalition every bit as much as the Health and Social Care Bill. It certainly deserves the same treatment. At its heart is the introduction of universal credit, which brings together the majority of in-work and out-of-work benefits and tax credits for people on a low income, with the aim of simplifying the benefits system and getting people off welfare and into work. Allied to measures which limit the amount of time for which people can remain on contributory employment and support allowance, and benefit from more generous levels of support, this is the Government’s flagship policy for addressing poverty. As such, by incentivising work and reforming a welfare system which has kept people in a state of dependency and out of work for too long, in making it pay to be in work, this would seem to have much to commend it. But there are losers as well as gainers.

Tony Blair is reputed to have asked what you had to do to save £1 billion on welfare and been told that a million people had to lose a thousand pounds. The Government’s welfare reforms are aimed at saving £18 billion. That is an awful lot of people who have to lose a thousand pounds—or rather more if you want to reduce the number of losers. Many of these losers are disabled people, the most vulnerable in our society, whom the Government have pledged to protect. At this point I ought to declare my interest as a disabled person myself, president of the Disability Alliance and a vice-president of RNIB.

The enhanced disability premium and severe disability premium will not be replicated within universal credit. As a result, disabled people living alone without a carer will be worse off; without the disability addition, so will parents with disabled children who are out of work. Research by the think tank Demos has shown that, far from being protected from the worst of the cuts, disabled families face losses of £2,000 to £3,000 over the course of this Parliament. Overall, it estimates that disabled people will lose £9 billion in welfare support.

The Government propose that the range of premia will be replaced by two additions reflecting the ESA components, and it is intended that the weekly rate of the support component equivalent will rise in stages from £13.40 today to £74.50. But the Disability Benefits Consortium estimates that if, instead of this, the severe disability premium and the disability addition were retained, a higher proportion of the childcare costs of disabled children were met and disregards payable to certain groups were made additive—so that, for example, someone who is both a lone parent and disabled was entitled to two disregards—the losers could be protected without resulting in extra cost.

However, this would undermine the entire logic of the scheme. Incentivising work means penalising the condition of not working, and making it, in the language of the Poor Law, less eligible. The most flagrant example of this is the proposal to time-limit contributory ESA to claimants in the work related activity group to one year. The DWP estimates that, by 2015-16, around 700,000 people will lose their entitlement to contributory ESA. On average, their income is expected to drop by £36 a week. About 60 per cent of these will be able to receive income-based ESA, but the rest will lose their benefit entirely if they do not meet the means test. Indeed, 400,000 will have to lose their benefit if the Treasury is to make the planned savings of £2 billion. The loss will be more for some than others, but it is estimated that 280,000 will lose their entire benefit, currently worth £94.25 a week.

There are five things wrong with this. First, in the great majority of cases, the people we are talking about do not want to be dependent on welfare. They do not choose economic inactivity; they are not the “undeserving poor”; they want to work. Secondly, their impairments often make it very difficult for them to do so. Thirdly, where this is not the case, or the difficulties can be overcome, prejudices, or sometimes just the reasonable apprehensions of employers, can present an insuperable barrier. Fourthly, in the current state of the economy, there just are not the jobs. In all these circumstances it can be quite unrealistic to expect people to find a job within a year.

The DWP has estimated that of those on contributory ESA and in the work related activity group, 94 per cent will take longer than a year to find work. Cutting off the enhanced level of support after a year is a breach of faith with people, many of whom will only have become disabled towards the end of their working life and will have paid their national insurance contributions for perhaps 30 or 40 years. Add to this the indignity of ever more draconian assessments by people who palpably do not understand the realities of disability—highlighted so graphically and eloquently by the noble Baronesses, Lady Campbell and Lady Wilkins—and it is not difficult to understand the fear and anxiety being expressed by disabled people at the present time.

The Disability Benefits Consortium quotes a disabled person who trenchantly articulates this complex of interacting issues:

“I don’t want to be declared not fit to work as I know there is work I can do despite the problems that Parkinson’s can cause. But there is no guarantee that I will find a job in 12 months. It could take me much longer. I’ve worked all my life and have paid for decades into the system on the understanding that there will be support if I need it. To be told that all of this support could have an arbitrary time limit is both unfair and stressful”.

There are many aspects of this complex Bill that it has not been possible even to touch on. Others have and will speak about them. I am afraid that I will have to disappoint my noble friend Lord Rix for today, until my review of the funding of mobility for people in residential care is further advanced.

I have concentrated on ESA because it is so emblematic of the approach that this Government are taking toward welfare. Ministers appear oblivious to what is happening at the coal face; instead, they proceed with all the messianic zeal of Poor Law commissioners, careless of who gets rolled over by the juggernaut of reform. Indeed, the casualties are a necessary part of the reform. We will need to see many changes before this Bill is fit for purpose, but nowhere more than in relation to contributory ESA.

The Liberal Democrats have a motion before their conference next week which opposes the time-limiting of ESA. I hope that our Lib Dem colleagues will be taking note and realising that there is more about this coalition’s programme which needs eviscerating than its reforms of the NHS. I hope, too, that Ministers will be listening so that we do not have to regard the Conservative Party, this time with its Lib Dem accomplices, as the nasty party once again.

18:00

[Lord Feldman of Elstree]

My Lords, I am delighted to rise for the first time in your Lordships’ House in support of this Bill. I should like to begin by expressing my thanks to the Members of this House for their kind and generous welcome. I should also like to thank all the officials and staff for their courtesy and unfailing helpfulness to me and my family, particularly on the day of my introduction. Finally, I must thank my two supporters, my noble friends Lord Harris of Peckham and Lord Wolfson of Aspley Guise, both of whom have been an inspiration to me. They have in common a work ethic that drives them to commercial success and a strong sense of social responsibility that manifests itself in the time and energy they dedicate to their numerous charitable works.

It is a well known Jewish proverb that “God created man because he loves stories”. This place, its traditions and its Members are all about stories—stories of our nation and stories of some of the extraordinary men and women who have graced these Benches. My story is far less interesting and important than the vast majority of them. Nevertheless, I believe that it contains a small message for this debate. At the turn of the 20th century, my great-grandparents came to this country to flee the pogroms and persecution of eastern Europe. They had nothing bar the few possessions they could carry with them and the values that they carried in their hearts. My grandmother, the youngest of eight children, to this day tells of the times they spent in their small flat in the East End, sharing one bedroom and two beds—girls in one and boys in the other—sleeping head to toe.

What sustained them in those difficult times, and enabled each of them to make their mark on this country, were three values in particular. First, they had a strong work ethic not only to lift themselves out of poverty but also because they understood that a person’s work is central to their sense of who they are and their place among their community. They wanted to be the best that they could be. Secondly, they put their family at the centre of their world. It was the main support structure for the nurturing of their children and the care of the elderly. Thirdly, they understood their responsibility to the wider community; namely, those who could not work or take care of themselves either because they were too sick or too old. They took this idea very seriously and as their circumstances improved, successive generations, in particular my parents, have been involved in numerous charitable and social causes.

On both sides of the family, a common thread—if noble Lords will excuse the pun—was a connection to the clothing business, both in manufacturing and retail. I found out today that I share this history with my noble friend Lady Stedman-Scott. More than 100 years later, I am still in this business, although I have to say that my parents did everything in their power to keep me out of it. I was privately educated and I attended a fine university. I trained and practised as a barrister in the chambers of the noble Lord, Lord Grabiner. As he may well recall, it was only after my father’s sudden and unexpected illness some 15 years ago that I returned to the family firm. His advice to me at that time was clear and unequivocal. He told me to put my family first and to go and sort out the business. I am sure that my great-grandparents would have agreed with that.

By happy coincidence my co-chairman of the Conservative Party, my noble friend Lady Warsi, has a very similar story. She is the daughter of immigrants who arrived with nothing and built a successful business. She qualified and practised as a lawyer and before her entry into politics worked in the family firm. It has been my great good fortune to work with her and I thank her for her kindness and support over the past year.

The Bill before this House today is for good reason considered to be a central part of the legislative programme of this Government. It makes a start at dealing with a problem that has troubled generations of politicians and political thinkers across all parties; that is, the problem of long-term unemployment and a welfare dependency. The effects of this have been debilitating to millions of people in this country. As your Lordships are aware, there are families where no one has worked for three generations and almost 2 million children grow up in homes where nobody works.

The Secretary of State for Work and Pensions has given this serious thought. In his years in opposition, he conducted detailed research through the Centre for Social Justice. The results of his research are clear and the values underpinning this legislation mirror almost exactly the values that my family brought with them from eastern Europe, to which I referred earlier.

First, the Bill recognises that it is absolutely essential to try to place the work ethic back at the centre of people’s lives by making work pay for those able to work but who are currently dependent on state support. It does this by the introduction of the universal credit, which will help to remove the perverse incentives that make people better off sitting at home and claiming benefits than seeking a job. Benefits will be moved away from those who simply do not want to work but are skilled in working the system.

Secondly, the Bill makes an important start in placing the family back at the centre of British life by addressing the couple penalty, which heavily penalises unmarried partners who choose to live together to bring up their children. Finally, it tries to ensure that the limited resources now available to the state are used to take care of those in society whom we have a duty to protect because of disability, sickness or lack of opportunity for employment.

In my view, these reforms are well thought out and built on firm principle. They try to blend practical necessity with compassion. They look to the underlying causes of problems in our society, which were manifested most recently in the rioting in our cities; that is, the sense of rights without responsibilities and the sense of entitlement without endeavour. I believe that this Bill will place us back on the right track.

In preparation for this speech, I was drawn to an article for the Times written by the noble Lord, Lord Sacks, as a reaction to the murder of James Bulger in 1993. He reflected on the appropriate response to that tragedy. The mood at that time was strikingly similar to the mood in the country today, that of uncertainty and moral introspection. He implored:

“The worst thing we could do now would be to get lost in an argument about who is to blame: the individual or society, politicians or religious leaders. What we need is imagination, not recrimination”.

I am not sure that in 1993 or thereafter, despite the best intentions of all political parties, we displayed sufficient imagination. I believe that this time we are on a better and a bolder course.

18:06

[Baroness Meacher]

My Lords, I congratulate the noble Lord, Lord Feldman of Elstree, on his very pertinent maiden speech. With a legal background as a commercial barrister, the noble Lord’s contributions to the House will surely be incisive and hard hitting. As the former managing director and chief executive of his family’s textile manufacturing business, he brings invaluable commercial expertise, and as the organiser of the operations and fundraising for David Cameron’s leadership campaign, he is clearly someone who expects, and achieves, success. Noble Lords, particularly Cross-Benchers, will I am sure gain great confidence if they find him on their side of an argument. Again, I congratulate the noble Lord, Lord Feldman of Elstree, and welcome him to the House of Lords.

I begin my remarks on the Welfare Reform Bill by applauding the Government and, most particularly, the Minister for some of the valuable reforms in this Bill, which include: the serious attempt to simplify the system—anyone who knows about welfare benefits knows the importance of that objective; the integration of the universal credit and Inland Revenue databases enabling truly automatic benefit adjustment—what could be more important?—in response to earnings changes; and the two-year window for automatic reinstatement of benefits if a job does not work out. All three are vital changes to reduce the risk of taking a job for people, in particular those with mental health and other fluctuating disorders. I will focus my attention on those groups because I believe that they are the most difficult to help. I say clearly that I have serious and considerable concerns about the Bill, albeit that I recognise its strengths.

As other noble Lords have pointed out, one of our great difficulties in debating this Bill is in distinguishing between the impact of the cuts and the impact of the structural changes. I believe that it is a combination of both that will threaten the stability of the lives of vulnerable individuals and the very fabric of communities. The housing benefit changes are among the most threatening. Many other noble Lords will address those issues and, therefore, I will not do so.

The new personal independence payment presents very severe risks for people with mental health problems. The Minister has been clear in emphasising that benefits will be focused on those in greatest need. Who can disagree with that? But we know that assessing people with mental health problems is far harder than assessing those with physical disabilities—in part, because mental health problems fluctuate from day to day and from week to week, as everyone knows. Atos and jobcentre staff have all been confounded by these problems. I understand from the Minister that the assessments for PIP will be based on, but different from, the assessments for ESA. This gives me some assurance but I remain most concerned about this issue. How many mentally ill people will be wrongly deprived of their benefits, with disastrous consequences? That is something we need to address in discussing the Bill.

I have been involved in a small way with the excellent work of Professor Harrington and a group of mental health charities to improve the descriptors used in the assessments. I am also aware of the planned improvements in the assessment process for ESA, using a report from the claimant’s preferred clinician and having the final decision on ESA entitlement made by Jobcentre Plus staff rather than Atos. Perhaps the Minister can confirm that these elements of the assessment process for ESA will apply also to personal independence payments. I think and hope that they will.

In the end, the validity of the decisions about whether a claimant with bipolar disorder or agoraphobia should be entitled to PIP will depend considerably on intelligent decision-making by well trained and highly skilled Jobcentre Plus staff. My biggest fear is that, under financial pressure, the DWP will have underpaid, underskilled and overworked staff making these key decisions affecting people's lives.

In a discussion with carers of severely mentally ill people in east London last week, they talked about their recent reassessments for benefit and described being “terrified”—their word not mine—because the interviewers had no idea or understanding about the conditions with which they were dealing. One carer referred to a report following an assessment that completely misunderstood the mental disorder of her son. Can the Minister give some assurance about staff training and pay? You cannot get decent staff unless you pay them.

The Bill significantly increases the use of conditions and sanctions for claimants of employment and support allowance. We all know that there are individuals and families for whom a life on benefits has become the norm and for whom a strong conditions and sanctions regime is essential in their own interest to try to re-establish them in an independent life. However, such a system presents huge risks for people whose minds are not clear. A severely depressed claimant may not do what a severely physically disabled claimant would take for granted: open letters, read them, understand them, realise the need to respond and so on. For someone lying in bed wanting their life to end, none of these conditionality requirements will be met—and what then?

Certainly people using secondary mental health services most undoubtedly benefit from undertaking work-related activities, so much of this Bill is common sense and we all agree with the principles. The trouble is, when you look at the application the panic starts. Inappropriate conditionality and sanctions can easily be counterproductive and fairly disastrous. For this very substantial group of ESA claimants, the regime must be supportive, skilled but not frightening.

On a different issue, for this group of claimants the option of having the rental element of universal credit paid direct to the landlord is vital. I understand the principle of encouraging independence and getting people to pay for their own rent, but we have to find a way forward for this group and maybe others that noble Lords may highlight. Failure to find a resolution to this problem for this group will lead to more homelessness and hospital admissions. How many more psychiatric hospital beds can we afford?

The plan to limit contributory ESA to 12 months for people in the work-related activity group is a further matter of concern. The issue is perhaps assessment for the support group. If employers are not going to take people on, they will not get a job within 12 months. That needs to be part of the thinking in assessment for the support group.

I am running out of time. For claimants with mild to moderate anxiety or depression, the availability of good-quality CBT is going to be essential if the Government are to reduce radically the numbers of that group on ESA in a caring way. For people addicted to drugs or alcohol, special benefit conditions need to be established. Regular interviews and job applications simply will not work. I applaud the Minister for removing the provisions in the previous Welfare Reform Act, but we need to do more work on that group.

In conclusion, I hope we can agree solutions to these problems, without resorting to votes, through discussion and greater understanding. I look forward to working with noble Lords to improve the Bill and ameliorate the hardship which will, without any question, result if the Bill goes through as it stands.

18:15

[Baroness Sherlock]

My Lords, I want to examine the extent to which the Bill meets its objectives, particularly for families with children. My interests are in the register but I was a non-executive director of the Child Maintenance and Enforcement Commission and I was an adviser in the Treasury during the development of tax credits.

The Bill describes a revolution in the benefits system. The Minister might look an unlikely revolutionary, but he said today that this is the most radical reform of the welfare system since its invention. So a revolutionary he certainly is. I wonder whether there is a poster of Che Guevara tucked away in his office somewhere in Richmond House.

This is going to be the biggest change we have ever seen in the welfare system. The White Paper said:

“The Universal Credit will have a simple structure designed to provide a basic income for people out of work … make work pay ... and help lift people out of poverty”.

I will back a system that does those things, as will many noble Lords, but we must test whether it will. First, will universal credit be simple? No. It will be unified but not simple. By bringing together so many benefits, the process of applying for universal credit may be more complicated for some people who want access only to limited parts. I understand that. It may be inevitable as simplicity in the benefits system is often bought at the expense of fairness. Child benefit is simple but not fair, certainly if that is all there is. Tax credits are fair but even I would concede that they are not simple. Finding a single system that brings together fairness and simplicity is a great challenge. In particular, it puts a premium on smooth implementation to balance the inevitable structural complexity. Having been involved with the development of tax credits, I freely offer the Minister some advice that was hard-won by me during my time in the Treasury. Each front on which you pursue reform in a major structural change increases the chances of one of them failing and the whole thing falling over. I would urge the Minister to take that to heart and counsel him to stagger the reforms. Start, if you must, with universal credit, but get that sorted first before even contemplating moving on to the CSA or abolishing the Social Fund or introducing in-work conditionality, otherwise we risk jeopardising the entire system.

Secondly, will universal credit make work pay and support people in work? Tax credits were designed to do just that. Working tax credit was designed around people in work. It was meant to look like work. It was run by the Revenue, paid through the wage packet, based on prior year earnings, with no conditionality other than a minimum hours rule. The treatment of savings was fair, like in the tax system. Nobody was debarred for having savings but income from savings was taken into account. In merging these two systems, as my noble friend Lady Hollis pointed out so eloquently, too often the lowest common denominator has won out.

Will a father saving for a deposit on a house who is eligible for tax credits be denied any universal credit once his savings reach £16,000? What about a mother who is getting a divorce and gets some of the proceeds from the sale of the marital home but not enough to buy again any time soon? She will be expected to run down those savings, feeding her family from them, and so never getting back on the housing ladder unless she marries someone else. She had better make sure he does not have any kids or the benefit cap will kick in. What of a couple who both work part-time to share childcare. Will they face in-work conditionality when they might not have set foot in a benefits office for years? I worry about the characteristics of this system and how worker friendly they are going to be.

Will work pay? I was pleased that the Secretary of State for Work and Pensions gave a clear pledge that,

“people will be consistently and transparently better off for each hour they work and every pound they earn”.

Let me highlight two worries. Many noble Lords have mentioned childcare costs. The options that the Government have canvassed are fairly unattractive because all reduce the maximum amount of childcare help that can be claimed. The Minister may correct me, but if either option is implemented, some parents could be worse off if they increase their hours. They could be trapped in part-time work, making it hard to lift the family out of poverty and some could even find that work does not pay at all. We need specific assurances from the Minister that work will continue to pay at least as well as now, even if you have high childcare costs, and that no one will be put into the position of being forced to work more hours without being given the money to pay for the childcare they will need in order to do that.

The second area I worry about is the proposal to leave help with council tax to the discretion of local authorities. If the DWP cannot control how much council tax help is offered, how quickly it is withdrawn or how it is means tested, how will it be possible for the Secretary of State’s guarantee to be met? I should be grateful if the Minister could explain that to the House.

Will these reforms lift people out of poverty? Many noble Lords know that this week an IFS report has predicted that the people who will suffer most from tax and benefit changes are families, especially poor families with children, with the poorest decile suffering income losses of more than 8 per cent over the next three years. I want to look particularly at the effect of the benefit cap, so eloquently explained to us by the right reverend Prelate the Bishop of Leicester and by the noble Baroness, Lady Tyler. The charity Family Action has said that the cap is likely to push more families into poverty. The Children’s Society has said that it will affect nine times as many children as adults, so it is clearly a measure aimed directly at families with children. I have heard this explained as being necessary to stop, for example, a benefits scrounger living in the kind of house that no decent working family could ever afford to live in. But if we think about that for a moment, it makes no sense. There are already limits in the housing legislation on how much housing help can be given, just as there are limits on every other individual benefit. So an overall benefit cap will have a particularly unfortunate effect on those who happen to catch more than one of those tripwires. If you happen to have more than two children and live in an expensive urban area, you are the kind of person who will be hit. A Parliamentary Answer in another place revealed ministerial estimates that around 70 per cent of those who will be affected by this are already living in social housing; they are already in the cheapest accommodation. Where are those families meant to go?

Finally, I want to comment on the proposal to change dramatically the child support arrangements. The Bill and the response by the Government to their earlier consultation document make it clear that the intention is to put significant barriers in the way of any single parent who wants to make a claim through the statutory system. Those who do make it through the gateway will have to pay a fee just to be allowed to apply for the money to which they are entitled in law. If they get through and the money is then paid through the statutory system, both parents have to pay a fairly hefty proportion of that money—private money—to the DWP for the privilege of getting what is meant to be paid by one parent to the other. The noble and learned Lord, Lord Mackay of Clashfern, made a clear argument on this. There is nothing the parent with care can do to influence the other party to pay directly or to co-operate other than going through the state. Why is she then to be penalised? This is money that currently she receives directly to feed, clothe and buy shoes for her children. Why should some of that money be handed over to the state, potentially up to 32 per cent of the total amount, simply because the other party will not co-operate? That seems to be dramatically unfair.

There are many other questions that are yet unanswered, and the hour is getting late. However, I want to flag some issues that will come up during the Committee stage. What will happen to passported benefits such as free school meals? What will be the effect of stopping the automatic payment of money for children to the main carer, usually the mother? What about disabled children—potentially as many as 187,000 of them, so the charities tell us—who could lose up to £1,400 a year? What of the impact on 17 and 18 year-olds?

I understand that we cannot get all the detail right and I heard the persuasive appeal made by the noble Lord, Lord Brooke of Sutton Mandeville, that we should ensure that we do not allow the best to be the enemy of the good. I have heard the Minister say in previous briefings that we must focus on the structure, not on the detail, and that there may be more jam tomorrow. But children growing up now will be affected in the future by the incomes of their parents today. The very least we must ask of the Minister is that he should demonstrate to the House how the Government will achieve their own goals of simplicity, making work pay and tackling poverty. If he cannot do that, we are entitled to ask whether the revolution is justified. Perhaps the poster of Che Guevara should come down.

18:24

[Lord Bilimoria]

My Lords, from 1999 to 2001, I served on the New Deal Task Force of the then Department for Education and Employment, and thereafter from 2001 to 2007 I served on the National Employment Panel in the newly formed Department for Work and Pensions. When I look at Britain, I see a country that is so wealthy that we have been able to spend 50 per cent of our GDP on public spending—spending approaching £700 billion a year which enables every citizen of this country to access a welfare system and public provision that provides free school education, free health at the point of delivery, and access to all the areas covered in this Bill, including unemployment benefit, housing benefit and childcare benefit. Our welfare and pensions bill alone, as the Minister has said, is £200 billion a year, which is by far the largest element of our public expenditure.

Given our economic situation, the Government are of course trying to bring public expenditure down, but I believe that they are making cuts where they should not be. It is not appropriate, for example, to make cuts in our defence expenditure or to harm our competitive advantage in areas such as higher education. But in the area of welfare the Government are doing absolutely the right thing in attempting to reduce the giant burden of these costs, which have been escalating over the years. It is an area where, in many ways when standing back from it, a detached observer could quite reasonably ask, “Why, during the boom years until 2007, was welfare spending increasing? Why, with the advances in medicine and health, were more and more people claiming disability living allowance? Why, when reports from the Office for National Statistics show an increase in the number of workers in the UK who were born abroad from 1.9 million to 3.5 million since 1997, were there just 25,000 more British-born workers in employment in 2009 than there were in 1997?”.

During my several years working in welfare reform, it became very apparent to me that the system we had created in this country was too complicated and had resulted in a culture of welfare dependency and a culture of welfare entitlement, as the noble Lord, Lord Feldman, said in his excellent maiden speech. It was a system where, more often than not, it did not pay to work, as all the benefits combined often yielded more of an income than working. Also, the risk of taking a job and losing those benefits—in particular, housing benefit—along with the enormous bureaucracy involved in getting all the benefits back in this complicated welfare system, was a huge deterrent to working. The Government’s universal credit will try to address this, but is it going to be able to deal with the benefits trap? The Government’s plans have already been criticised for the way in which they are trying to phase in centralised control of housing benefit. At the moment these are dealt with by local authorities, but in future they will go through the universal credit. Are the Government going to be able to administer this in a fair and practical way?

Another shocking observation during my years of working in welfare reform was that our labour force in the UK showed a huge reluctance to move in order to get a job, or even travel to a job—sometimes as close as going from one borough to another in London. Do the Government believe that their proposals are going to help improve the mobility of labour? After all, we have millions of European Union workers in this country who have travelled thousands of miles to get a job.

Along with simplification, one of the objectives of these reforms is to reduce fraud and administrative costs. But to me this seems like Groundhog Day. I remember that 10 years ago we had the formation of the Department for Work and Pensions with exactly the same objectives: delinking education and employment by putting social security together with employment. Those objectives were noble and logical. As people came in to collect their welfare support, you would be able to work with and try and get those individuals back into work, and you would be able to clamp down on fraud and abuse of the system. But what is the reality 10 years later? We still have an estimated £5.2 billion in fraud and error overpayments in the benefits and tax credits system—after the billions spent on reorganising, splitting up and putting back together giant departments employing some 125,000 people. The DWP needs a huge budget of £2 billion a year just to run all this.

Where are our priorities when we are cutting the higher education teaching budget by a few billion pounds, resulting in student fees being tripled and cutting one of this country’s key competitive areas—one in which, along with the United States, we are the best in the world? In our biggest spending department, these figures would be lost in the roundings. The Government’s implementation of universal credits and all these reforms is going to require huge new IT systems. Given the track record in implementing giant IT projects—let us look no further than at the NHS—and to reinforce what was said by the noble Lord, Lord German, do the Government really believe that they can deliver all they are promising for the £2 billion that they have budgeted?

I also remember that some of the best and most effective delivery of welfare to work initiatives was by private sector firms. However, it is unclear what the Government’s plans are in regard to using the private sector to deliver their reforms. What are they?

Throughout my experience working with the Government in welfare to work, we used to refer to the “Australian Example”. I had the opportunity to meet Prime Minister John Howard, who personally explained to me how his Government made what they thought would be an unpopular decision by clamping down on the abuse of their welfare system and bringing in tough measures of getting people who could work into work, including compulsory voluntary work while they were on benefits looking for work. They found that the working, tax-paying population were really happy and supportive of the Government’s toughness—the scheme ended up being popular. Therefore, it is no surprise that a recent ONS survey showed that 53 per cent of people in this country believe that the current welfare system is too generous. That has gone up from 38 per cent a decade earlier. This should give our Government the confidence to pursue their proposals. From my experience in welfare to work, there is no question but that a working society provides, in every way, a healthier and better life; that work is not only necessary to provide and contribute to society but is good for people as such.

One of the recent Indian high commissioners here remarked to me that, in his experience of having been a diplomat around the world, he felt there was a lack of hunger and drive in this country. Although we are the most amazing and resilient country in the face of terrible adversity and tragedy—which is something that has been proved for centuries—if we look in the mirror, we will see that our welfare system now has one out of four working-age adults not working. As things stand, work often does not pay. On the other hand, we must make sure that those who genuinely cannot work—those who are disabled—are looked after, and the Government must reassure us that their plans will not jeopardise this. We have heard that a lot in this debate, and will continue to, because recently there has been justifiable criticism regarding the DLA and compensation for carers. In addition, what are the Government doing in these reforms to address the needs of veterans, both old and young?

Do the Government really have confidence that what they are proposing will not only drastically reduce this multi-billion-pound area of spending, but produce a system that provides support for those who cannot work and makes sure it does all it can—in a fair and firm manner—to ensure that those who can work do work; and that work pays?

18:33

[Lord Ahmad of Wimbledon]

My Lords, I welcome this Bill and there is a sound premise in what I say. It has noble intent; it seeks to simplify a very complex system; it seeks to decrease bureaucracy in the assessment of benefits, which has gone on for far too long; it increases transparency; but most importantly, as we have heard, it incentivises work. There is that look on a person’s face as they secure their first job, and we in this House—indeed within Parliament—must seek to do all that we can to facilitate that particular hope. I also believe that it is timely to tackle the benefits culture which, unfortunately, does prevail in many parts of society. For these reasons, I welcome the principle of the universal credit. It simplifies and confronts a creaking system before it breaks down. Most importantly, it ensures that claimants aspire to do more—it incentivises work. In very simple terms, taking six income-related benefits and replacing them by one is surely to be welcomed. It reflects and tests individual circumstances.

For this evening’s debate, I wish to focus on two elements. The first is children and childcare support. My maiden speech in your Lordships’ House was based on the need for parenting, because it determines success in early life. Early intervention is something that we have debated quite widely in the House. I know that the Minister and the Government have already said that they will continue to look at supporting children and child support, and I know that the Minister has done so. However, I would also like to hear from him that he recognises the valid and genuine concerns which have been raised over the support for, and needs of, families, in particular support for childcare, which can vary very considerably depending on where you are in Britain. Childcare support in London is markedly different from support in other parts of the country. I totally accept that the aim of the Bill is to incentivise work and to ensure that a family benefits from parents who are in work, not out of work. We need to ensure that it does, and that when both parents are working, whatever the family unit, they are not financially worse off as a result of childcare costs than if they had remained on benefits.

The second element is disability living allowance. Aside from my business interests, I spent 10 years in local government as a councillor. I have been involved in different parts of council work. However, one of the most rewarding elements is looking at our elders in society. They have done their bit and contributed to the economy of our country and it is time we took our responsibility towards them seriously. I believe quite strongly that the issue of the disability living allowance, and its mobility element, must be looked at. In many cases, this is the window to the world for those who have retired to homes and use this particular allowance to ensure their mobility, whether it is through providing wheelchairs or transport costs. We must protect this. I look forward to our discussions and debates in Committee over how we may best protect our elders—and I use that term quite deliberately, because a society is judged by its respect and reverence towards its elders. Its status in the world is judged in terms of how it deals with its elders. Britain has a proud tradition of doing that, and I hope that this Bill continues to protect that very tradition.

I do not wish to keep your Lordships’ House long, and I know that we will be discussing many matters in much more detail in Committee. However, let me reiterate that I welcome this Bill. Welfare reform is required. I also maintain, given the contributions that we have already heard from many noble Lords, across all sides of the Chamber, that this Bill will be enhanced during its passage through your Lordships’ House by the customary reasoned, measured and persuasive arguments that we see in this House. I welcome the Bill as it proposes the necessary reform of our welfare system, based on noble intent and research, and driven by the need to make our benefits systems work for the people who need it most; and because, ultimately, it is geared at incentivising work. In my view, it is both timely and necessary.

18:39

[Baroness Turner of Camden]

My Lords, this is a very complicated Bill. It is not very easy to understand since so much detail is left to regulations or to decisions by the Minister. What is clear, however, is that the Government are intent upon utilising the so-called reforms to get people into work rather than living on benefits. It is therefore not possible to consider welfare reform without reference to the economic environment in which it has to operate.

Ministers seem to find it surprising that some people find it more lucrative to live off benefits—which are not exactly large—than to take one of the jobs on offer. That indicates to me that we have a low-wage economy in this country. Small employers—and often larger ones—will often complain about employment law, but these employers are benefiting from low wages, and the taxpayer is subsidising employers who do not pay a living wage. I would make employers pay higher wages—after all, better-paid employees would spend more money and thus stimulate the economy, and there would be less reliance on benefits. I speak as a former trade union official of course, and I do not expect this Government to agree with that.

A civilised society does its best to provide support for vulnerable citizens and for those who from time to time in a working life require some form of assistance. Our present system originated with the Beveridge report following the Second World War, and subsequent Governments have generally supported that system. It does, however, need simplifying. Far too many people do not claim benefits to which they are entitled: there are said to be unclaimed benefits of around £16 billion a year. Nevertheless, the present Government claim that there is too much fraud, saying that only 7 per cent of people claiming ESA are too sick to work—therefore, they say, the welfare system is broken. This is hotly disputed by the Disability Benefits Consortium, and it points to the very large number of appeals which have been successful.

The Government seek to replace a range of benefits, as we know, with a universal credit, and there will be additions for disability. The work capability assessment will be used to assess eligibility for disability additions. Disability organisations have expressed concern at the proposed use of the WCA to assess disability additions. They say it is a blunt tool with which to measure barriers to work; it often inaccurately assesses disabled people as fit to work when they are not able to do so.

There is however a particular issue here, which requires a response from the Government. As we know, the Government clearly want people to work if they are capable of undertaking it. However, I have recently been informed that the Remploy factories which exist to provide work for hundreds of disabled people are being threatened with closure. There was a crisis meeting about this in Scotland last week, but this does not only apply in Scotland: Remploy factories throughout the UK are apparently threatened with closure. These factories provide a supportive environment in which disabled people are able to cope and to earn a living. So on the one hand we have this Bill, with the clearly expressed intention of getting disabled people into suitable work, and at the same time there is the closure of the main and highly respected employers in an era of low employment. These employers offer precisely what one would expect the Government would want to maintain. It is therefore hardly surprising that the unions—including my own, because we organise the Remploy staff—are very angry. Can we have a statement from the Minister about the Government’s intentions here?

I return to the issue of universal credit. I understand that it will be accompanied by new conditionality regulations and stricter sanctions. Claimants will have to comply with these in order to receive benefits. The fear on the part of many of the people who are disabled and have written to me is that this will result in a worsening of their conditions. The Government also intend to replace the disability living allowance with the personal independence payment. Again, there appears to be provision for a six-month qualifying period, which could leave many struggling to survive financially until accepted, and again, much of the detail is apparently to be in regulations.

A part of the Bill which has led to much correspondence is that related to housing costs. The Bill gives the Government a new power to introduce cuts to the amount of benefit people can receive if they are deemed to have additional space in their council or housing association home. For many, a spare room is a necessity. Moving to a smaller flat or house may simply not be possible. It will do nothing to cope with overcrowding—a particular problem in London—and this could hit many disabled people, some of whom have had adaptations made because of their disability. It is badly targeted, and in my opinion it should be dropped from this Bill.

It is similar to the other policy to which the Government are attracted, under which housing benefit is related to the market rate for the area concerned. This would result in large areas of London becoming places where only the very well-off could live. In my area, for example, the rent in a housing association home or a council flat is in the region of £150 a month. Similar sized accommodation in the private sector will cost £500 a week—clearly beyond most low-paid working families. This section of the Bill must be thoroughly examined.

There are many other aspects of the Bill to which we must pay attention—benefits for single and separated mothers; child benefits; benefits for the young—but I am sure that there will be the opportunity in Committee and at Report to deal with the issues about which many of us will have received detailed briefings from many organisations.

18:45

[Lord Kirkwood of Kirkhope]

My Lords, it is a pleasure to follow the noble Baroness, Lady Turner of Camden; her experience is always of great value to the House. I also congratulate the noble Lord, Lord Feldman, on his powerful maiden speech, which will repay careful study.

I arrived at this debate with a 15-minute speech as is allowed under the Companion but, as the noble Lord, Lord McNally, announced that we only have seven minutes I have cut the first eight minutes of my speech. Unfortunately, that was the half of the speech that was a paean of praise to the Minister of State, so I am left with seven minutes which will look really quite critical. That is not my fault; it is the business managers wot did it.

This has been a very good debate. It is a shame that we are only getting seven-minute contributions, because it is a very complicated Bill. I acknowledge, as others have, the energy and enthusiasm of the Minister of State. He really has put an enormous amount of his own personal time and energy into this, and so have the Bill team. I concur with others who say that we have all been able to get access to some of the complications and technicalities because of the efforts that they have made in making information available, and I hope that will continue.

I hope that we will take this Bill into Grand Committee. In Grand Committee we would have a much better chance of looking at the relative benefits between gross and net tapers—some of us spend time thinking about these things—and we could have a much better quality of consideration, particularly of the technical aspects of this Bill. However, we need time: there is no equivalent of seven-minute speeches in Committee. We have got to do this seriously, so I look to the Minister of State for support when he is confronted by the business managers to get the time that we need. If he does not give us the time, I promise him we will just take the time, so it is better to continue with his idea of co-operation, which he has been absolutely splendid in fostering so far. However, if he starts to close down debate, particularly in Committee, I for one will not take kindly to that.

I agree with the noble Baroness, Lady Hollis, when she said that she detected the fingerprints of the Treasury all over this; we have both been in this business for a long while. I agree that the structure and the architecture of the Bill are perfectly defensible—I will say a word about that in a minute—but it is at risk of being prejudiced because of the degree to which these cuts have come on the back of it. I perfectly well understand that the Treasury needed cuts because the universal credit proposed in the Bill needs funding to pump-prime it. It has not got as much money as dynamic benefits. The dynamic benefits report of 18 months ago was very compelling: it is a very robust argument about what can be achieved if you invest in the system and have tapers that really make a difference and make work pay. It is marginal as to whether this Bill will actually achieve its objective the way it is currently cast. It is open to other Governments of course, and as my noble friend Lord German was saying we have some expectation that once we get through this period of austerity, which you cannot ignore, then we might get into a better position where we can make the Bill even better than it is at the moment. The Treasury’s influence is malign, and while I myself am in favour of supporting the architecture I will do everything I can within the Committee structure to mitigate some of these cuts.

I have a word in passing about the pressure group community, which has been very good at supplying information to us in a very useful way. I counsel them to think about mitigating this Bill. Understandably, some of them are taking very high-flown positions, as if there was no economic difficulty and this was all dead easy. That is what they are there to do, and I do not criticise them. I have read all their briefings, but I have not been able to respond to them all because they have been coming at me like stuff out of a cement mixer for the last two or three weeks. I am sure that is not unusual and that all my colleagues are in the same boat. However, I counsel them to spend some time thinking about how they might help the Committee mitigate some of the worst features of the Bill in how it bears down on benefit expenditure.

This point has not been mentioned before: while it is of course a simplification to collapse benefits into the universal credit—I support that—because of its technical difficulty the benefit system will not be simple after it. I implore the Minister to make sure that he takes full advantage of the capacity of the Social Security Advisory Committee when it comes to the regulation-making stage of this Bill, because it has great knowledge in length and in depth. It has a wealth of experience, is objective and does excellent work. I have some amendments in mind for the Committee where we might think about how to integrate the work of that social security committee even better into our considerations of the Bill, because it is not just the Committee stage that we are dealing with. We will be having regulations and affirmative debates for many months and years, and the SSAC has a track record which we ignore at our peril.

I counsel the coalition Government about overclaiming. I do not really mean the Minister of State, but there are people talking about a revolution. However, integrating working-age benefits between those in work and without it is dead obvious. It is said that this is all a great revolution but people such as Professor Roy Sainsbury at York have been talking about it for years. There are a number of different ways of doing it, so there is actually nothing new about any of this. Universal credit plus the work programme is very important but let us just keep the heid, as my granny used to say in Glasgow, and not get too carried away with it.

I want to talk briefly about how we capture the volumes of money that are being spent in the welfare system. It is sensible to invest in social protection. The well-being of our population is something that I am prepared to spend money on but we talk about it in the abstract—in billions of pounds. If it is looked at in terms of the public sector percentage spend or indeed as a share of national wealth, I do not think that the spending is out of control. It has certainly ticked up in a way that Governments cannot ignore and therefore I support some bearing down on the current levels. However, when we talk about it we should be talking about the percentage of public spend. The number of pound notes in every 100 that we spend on welfare should be looked at more carefully because that gives us a much better idea of what these systems are costing. The public know nothing about the relative costs of the different benefits, so public opinion is not a helpful guide on that matter.

The IT situation concerns me; I have said that to the Minister of State privately. I have been involved in some of the past reforms and they have all fallen over when they go up in scale. The pilots always work and the professionals who design these things are always very clever and convincing. However, when it goes United Kingdom-wide—when you scale it up from a few hundred thousand cases being put through a computer to 60 million—it falls over. Doing this over the next two years is impossible. That is my view and I hope I am wrong. I have said that to the Minister in spades and his enthusiasm is still undimmed. I am lost in admiration for his confidence in what he is doing but I think it is wrong. If it all works by 2017, I will buy him a drink and apologise—and from a Scotsman, a drink is actually quite something.

I want to finish with a single thought. The noble Baroness, Lady Sherlock, my noble friend Lady Tyler and others made impassioned pleas about the benefit cap, which is a step too far for me. I give the Minister fair warning that I cannot support the benefit cap as it is currently cast and I hope that he will look at it very carefully. There are lots of reasons: for example, 70 per cent of those people are in social housing and 206,000 children will be the people who will carry the can for it. However, for me it is actually a question of principle. We have a system of entitlements in our social security system and, if you have the entitlements, you get the benefit. Here is an arbitrary system coming in and overlaying that by saying, “Well, you may well be entitled to it but we think it's too much”. Parliament should not let that pass without some comment because it cuts straight across everything that we have known in the social security system since I started coming to Parliament, when I was thinking about the supplementary benefit system, which shows your Lordships how long ago that was. That cap is not fair and is an idea which I struggle with. I understand the need for deficit reduction but I cannot follow the Minister in the direction of a household benefit cap as it is currently cast. I want there to be no doubt about that but I am happy to continue the discussion and look forward to the debates in Committee.

This is an important Bill. We have to be careful how we implement it. We are looking at an economy that is performing poorly, with inflation and people's household domestic costs rising. The social rental sector is getting worse, not better. Yet there is one situation for households in this country that would be worse than dependency, and that is hopelessness. If we are not careful, some of the low-income households in our country will be subjected to hopelessness as a result of some of the measures in this Bill.

18:56

[Baroness Howe of Idlicote]

My Lords, I join the noble Lord, Lord Kirkwood, in his concern that the traditional practice of reasonably sized contributions from noble Lords has once again been put aside and a meagre seven minutes advisory per speaker suggested in its place. I notice that he has gone well over that time limit, which gives us plenty of opportunity to follow his example. There will clearly be a great deal to do in Committee and at other stages of the Bill in your Lordships’ House—not least as much of the Bill was apparently not discussed at all during its passage in the other place.

Perhaps the most remarkable thing about this Bill, with its principal aim of simplifying benefits and making work more attractive and much more worth while than living on benefits, is that practically all welfare rights pressure groups, think tanks and involved charities and many individuals are theoretically in favour of such an approach. Rightly so, as who would want a system which continues to encourage family dependency if jobs are genuinely available and wanted?

The snags emerge when we begin to look at the detail, particularly when families and children—even more important, when disabled adults and children and those with mental health learning difficulties—are involved. The closer one examines the huge volume of evidence, including many individual histories written in fairly despairing terms, the more obvious it becomes that the most vulnerable and least able to cope will be hardest hit. Even though there may have been some unnecessary scaremongering, the concern of many third-sector organisations and others working with such families will be to hear reassurance from Ministers as to how clearly essential and necessary support will be maintained. There is also the problem that unless the local authority finance for these essential services is to be ring-fenced, a localism approach may indeed be creating a postcode lottery.

I shall mention one or two issues. On housing for example, the plan to require those in receipt of public support to move to different accommodation if they have an unused bedroom is one concern. The noble Baroness, Lady Wilkins, overwhelmingly made the case here. Reassurance from Ministers will be needed that special arrangements will be possible or extra funding available for more expensive accommodation, if the private sector is the only alternative to a compulsory move. One worry is the understanding that the severe disability premium is to be scrapped, yet surely that kind of situation is exactly where extra help is essential. This may be one of the areas being looked at, but the Children's Society’s view is that it could mean a loss of up to £2,876 per annum for such families.

There is also a need to look at other issues that will affect the likelihood of those with caring responsibilities obtaining a job and at the effect of recent positive measures. It is good news indeed, for example, that the Government are actively involving and encouraging third-sector participation, not least by ensuring that when both sectors are competing for caring contracts, the system does not allow the public sector a tax advantage.

The change in the retirement and pension age will also have a huge impact. As we know, Ministers are eager to raise the retirement age even earlier, but closing the gap between men’s and women’s retirement age also means that women must work longer and therefore will have less time for any caring role. Finding jobs that will allow time for disabled caring responsibilities will become increasingly difficult unless more positive action is taken. Have the Government, for example, thought about a scheme that would reward businesses that make special efforts to provide flexible working opportunities for such families? I would be glad of an answer from the Minister.

Again, frankly, the likelihood of older women, whether carers or not, being able to find jobs, full or part-time, into the intermediate economic future will be minimal, and that situation needs facing. Barnardo’s and its associates, which have sent your Lordships detailed briefings, are also concerned about a number of problems. Family and friend carers, for example, who are bringing up a child who would otherwise be in local authority care, should, they think, be exempted from conditionality requirements under universal credit for a year. Also, from October 2011 carers will have to be available to work when the child is five rather than seven years old, with all that that means for extra childcare costs. Childcare costs, as the Minister knows, are seen as a major obstacle to women working. So, as the Bill progresses, it will be increasingly important for the Government to convince voluntary organisations and family and friend carers that the combination of their proposed changes will not result in even higher numbers of children in care and higher overall costs for the state.

I make one final point: there will be a great need to ensure that it is the main carer of the child, the vast majority of whom will be women, who will continue to receive whatever allowance is due to the family. This is an issue of particular concern for Platform 51 and other such organisations and is vitally important when one looks back to the past and realises that this sum has often been the only money the carer has had in order to ensure that the family is fed.

19:03

[Lord Whitty]

My Lords, on the one hand, the Government must be gratified that they have received almost universal support for the final objective of the Bill: the simplification of the whole welfare system. On the other, they must be quite concerned that it has probably provoked an almost unprecedented amount of lobbying on the actual implications for particular groups of benefit claimants and for the system as a whole. The whole experience in life, for most of us, is that simplification costs money, at least in the short term. Yet the Ministry is attempting to do this at the same time as delivering to the Treasury significant savings in order to offset the deficit. It is conceivable, and desirable, that in the medium to long term this will produce savings because the incentive to go back to work will be greatly increased, and therefore those on benefit at the margin will not be on benefit any longer. However, that will take a long time, and in the present economic and social circumstances, the effects of those changes will take the Minister well beyond the point where the noble Lord, Lord Kirkwood, has just offered him a drink. At least four years needs to be added to 2017 before we will be able to see the long-term benefits. That is the problem that the Government are in.

I want to concentrate on one aspect of the Bill—and maybe draw some conclusions as to how to manage this process—namely housing benefit and related housing matters. I have always taken an interest in housing benefit. The noble Lord, Lord Brooke, referred to his maiden speech. My maiden speech referred to housing benefit and how we needed to reform it. Not a lot has been done and, as the noble Lord rightly said, the cost has significantly risen. There is, however, a difference between housing benefit and many of the other benefits that the Government are attempting to wrap in to the universal credit system. Some of the entitlements are the same, and it has some of the dysfunctions of the other benefits, but the amount spent on housing benefit is based not on the individual circumstances of the claimant, or his or her household, but on the circumstances of the housing market, or the quasi-housing market, in the area in which he or she lives. It is therefore different from the other parts of the benefits that we are folding in and it is a little difficult to propose, as a major feature of the Bill, that housing benefit should be treated the same.

There are other aspects of housing which are dealt with in the Bill. Reference has already been made to the issue of requiring benefits to be paid to the claimant rather than allowing the option of paying them direct to the landlord. I can never understand why Whitehall always thinks that if you leave more of their own money to the poor, they will manage it better. It never happens with the rich. For many poor people, having direct deduction from their benefit into their rent and council tax is the equivalent of our more bourgeois use of direct debits and standing orders. Many of our own abilities to manage our finances would be seriously undermined were we not to have that facility, but many of these people will not have the full range of bank accounts to help them with whatever they might wish to do.

Reference has also been made to council tax benefit being separated from housing benefit. That is complicated for people who have hitherto applied for both on the same basis and could lead to unfairness and to different local authorities operating it in different ways. They are, of course, effectively retaining the same basis of housing benefit for the pension part. Creating a housing credit element of pension credit will actually retain that proposition for those households who are of pensionable age, but of course that could mean differential treatment for the same amount of income for equivalent households in equivalent properties. Combined with other government proposals on altering the eligible rate criteria and effectively introducing a target for social rents in housing associations and council property of 80 per cent of the market rate, this will actually cause extreme difficulty in many areas of housing stress, particularly in central London but also in other cities and in some rural areas as well.

The Explanatory Notes explain that,

“regulations will provide for a claimant’s liability to pay rent to be treated as an amount other than the actual amount of the liability”.

In other words, as the noble Lord said earlier, we are going to pay them less than they are entitled to on some notional formula of a target and then of a cap. Meanwhile, of course, the whole benefit system is changing and the provision of social housing is also being covered in a different part of the legislative jungle, the Localism Bill, which we have been debating in recent days and which abolishes the life tenure for social housing; introduces a new system, in parallel, of affordable rents and requires a local authority to have tenancy strategies; and, indeed, changes the whole basis of social housing finance by abolishing the housing revenue account arrangements. It also does other things such as diluting local authorities’ responsibility for homelessness.

In all these interventions in the housing market there is a completely transformed situation against a background whereby every part of the housing market is seriously dysfunctional. The statistics summarising this were repeated in proceedings on the Localism Bill; namely that the formation of households is running at twice the rate at which new dwellings become available. That affects the whole range of housing tenure. It therefore affects the poorest who are attempting to retain or gain access to all three main areas of housing tenure and raises some very basic questions.

Government intervention in the housing market has shifted over the past 25 years from supporting the supply side, through the supply of council housing and home improvement and regeneration grants, to supporting the demand side by paying individuals. At the end of the 1980s the ratio was 80:20 in favour of supporting the supply side; it is now 80:20 in favour of supporting the demand side. Is that sensible? Should we not rethink the whole of government intervention in this area, certainly over the medium term? I suggest that the Government take the provisions in this Bill on housing benefit, the provisions in the Localism Bill on social housing and related matters, the changes that they are proposing in relation to planning to make housebuilding easier, put them all together and look at them carefully to determine what the totality of our housing strategy should be. If they did that, it might be easier in the long run to incorporate whatever succeeds housing benefit into the universal credit. If, however, they try to deal with one side of the matter without dealing with the other, I am afraid that they will not meet their objectives either of simplification or of saving money. I leave that thought with the Minister. He perhaps ought to set up a commission to look at the matter—I would be willing to serve on it—but we ought to look at the totality of housing. I see that I have overrun my time but I hope that the Minister will take note of what I have said.

19:12

[Lord Morris of Handsworth]

My Lords, we can all agree that an effective welfare system must be designed to promote the basic well-being of those in need. Rightly, the state demands a quid pro quo—work for those who can and support for those who cannot. However, this arrangement is not as balanced as it might sound because for the balance to be maintained work must always trump welfare, but that demands that there are jobs for people. With unemployment at 8 per cent or more, cutting benefits to make work pay is not a joke for those who are unemployed and struggling to find a job. Of course, there will always be people who try to beat the system. However, to give the impression, as did the Chancellor, that the unemployed see welfare as a lifestyle choice is plainly wrong.

I want to concentrate on the impact of the Bill on the housing sector. I declare an interest as chairman of Midland Heart Housing Association. I start by looking at what is described as “actual rent”. Actual rent is the amount paid by a tenant irrespective of whether they are in the social or private rented sector. The Bill gives powers to the Secretary of State to set the level of housing benefit with no regard to the actual rent being paid. For many housing benefit means the difference between sleeping under a roof and, in some instances, sleeping on the pavement. These new powers for the Secretary of State will have two significant consequences. First, the gap between the benefit paid and the actual rent charged will put at risk security of tenure for many. Those who rely on benefits and cannot afford to fund the shortfall will have their independence and choice further reduced. The reality will be a greater risk of people being forced into poor quality overcrowded homes or being trapped in a cycle of homelessness.

The second downside is that the gap between benefit and actual rent will mean uncertainty for social housing providers who will be left on the horns of a dilemma. What do they do? They have the choice between evicting tenants or funding the shortfall, which in turn will leave less capital to build much needed social housing. That is the dilemma which will be faced by many social housing providers.

The new draconian measure in the Bill—the underoccupation penalties—will mean that the Government can cut housing benefit for social housing tenants who have an unoccupied room. According to the DWP’s impact assessment, this will affect an estimated 670,000 social housing tenants, more than half of whom are disabled. Many disabled tenants live in adapted, specially designed, supported and sheltered housing. Will they be evicted and, if so, where will they go?

Finally, I wish to say a few words about the Social Fund. Much could be said about that fund and other benefits but no doubt our discussions in Committee will be informed by noble Lords’ practical experience. They have the expertise to deal with these issues and ensure that a Bill emerges from Committee which meets the Government’s objectives of cost reduction and supporting those in need. The Social Fund supports families and individuals in crisis when they need financial assistance. However, the Bill abolishes the discretionary Social Fund and replaces it with local provision. This vital safety net for families in severe crisis should be made into a duty on local authorities. If they are to deal with that issue, the provision needs to be secure. There is a view that this fund should be securely ring- fenced to avoid it becoming a Social Fund postcode lottery.

In conclusion, much has been said, and much will be said in Committee, with the aim of improving the Bill. However, I repeat that an effective welfare system must promote the basic well-being of those in need. Sadly, as the Bill stands, it could destroy the safety net for the very people it seeks to protect. The responsibility lies with your Lordships' House to ensure that that does not happen.

19:19

[Lord Patel]

My Lords, before I come to my main points, I should like to make a brief comment on something that the Minister said in his opening speech. He spoke of the impact of the proposals on people with cancer, mentioning Professor Harrington’s review and saying that he had listened to advice from organisations such as Macmillan Cancer Support. As welcome as the Minister’s reassurances are on the Government’s commitment to readdressing the anomaly between how people undergoing different types of treatment are dealt with, he is, I am sure, aware that this is a very different issue from another about which Macmillan has said it is seriously concerned: the time-limiting of employment and support allowance to 12 months. The concern is not that people will not be supported while they undergo treatment but that the Bill pays no regard to how long cancer patients take to recover sufficiently in order to be able to return to work. It is about this that I should like to speak.

The Government’s proposals to time-limit contributory-based employment and support allowance to 12 months are unfair and wrong. They will leave thousands of cancer patients without financial support at a time when they need it most. Before going into the impact that the proposals will have on cancer patients, I shall outline the kind of people we are talking about. Of course, people who are terminally ill or so severely debilitated that they are in the support group will be protected, and so they should be. I am talking about cancer patients who have undergone debilitating treatments such as chemotherapy or radiotherapy and are in the process of recovering from their illness.

In my experience, 12 months is simply not long enough for many cancer patients to be well enough to return to work. Yes, survival rates for cancer have improved, and for many it is no longer the death sentence that it once was, but it still takes a considerable time for a person recovering from cancer treatment to be fit again for work. Treatments such as chemotherapy and radiotherapy can be highly debilitating, often more so than the cancer they are treating. The side-effects of these treatments can be severe and long-lasting. It is not uncommon for cancer patients still to be reporting pain and extreme fatigue years after a treatment has ended. I know that many in this House will understand that.

There are also serious psychological barriers that patients have to overcome in order to be able to return to work and to support themselves. Of course, cancer patients have a particular incentive to return to work—for many, a return to work is a return to normality—but in order to do so without further risk to their physical or mental health they need the right support and they need time.

Those who have incurable cancer and are in the last two to three years of their life, but who are not yet defined as “terminally ill”, often find themselves in the work-related activity group, with no prospect of recovery. However, the Government are still proposing to take support away after one year. In defence of this proposal, Ministers in the other place have highlighted that, after one year, those who lose their contributory ESA will be eligible for continued means-tested support. But what does this mean in reality?

Many in this House will already be aware of the concerns raised by Macmillan—about which I wrote yesterday in a letter to the Times—about the serious financial impact that the change will have on many cancer patients. Macmillan has warned that an estimated 7,000 cancer patients a year, too sick to be expected to work, will lose up to £94 a week as a result. This is because anyone who has partner and who earns as little as £150 week will not be entitled to anything under the means-testing rule.

In addition to my opposition to this proposal, I also have grave concerns about how the Government intend to implement it. First, it will be retrospective. Come April 2012, anyone who has already spent a year or more in the WRAG will lose their contributory benefit immediately. Secondly, the 13-week assessment phase will count towards the time limit. Thirdly, the Government's proposals have not taken into account those with a fluctuating condition. Any time spent in the WRAG or assessment phase will be aggregated and count towards the 12-month period.

Despite the overwhelming arguments against Clause 51, the Government are pressing ahead. It is not because rigorous analysis has shown that 12 months is sufficient time for patients to be ready to return to work; the Government's own figures say that 94 per cent of people will need the benefit for longer than a year.

This is not the only worrying aspect of the Bill, which passed through the other place unchanged. Some proposals, such as the reform of the disability living allowance, will further increase the financial pressures on people diagnosed with cancer by ensuring that they have to wait twice as long before they can get crucial support with extra costs related to their condition. CLIC Sargent, the charity for children with cancer, has raised concern that the Bill is particularly hard on 16 to 18 year-olds with cancer, who will effectively be treated the same as other adults despite being far less likely to have financial independence.

Every day, 10 families are told that their children have cancer. Treatment begins straightaway, and so do the side-effects. A study found that 83 per cent of families incur significant extra costs, with 68 per cent experiencing worrying financial difficulties. Several aspects of the Bill impact negatively on 16 to 18 year- olds. The examples are: the extension of the qualifying period; changes to the disability living allowance; removal of the youth conditions for employment and support allowance; and changes to the disability premium within child tax credit, income support or universal credit.

Perhaps I may illustrate the impact of the Bill with the story of Lucia, a young lady whom I met and a person of great presence, courage and fortitude. She was diagnosed with acute lymphoblastic leukaemia when she was 15 years old. She was unable to walk more than a few metres. She was admitted to hospital. A day later, she began two-and-a-half years of chemotherapy.

All her treatment was received 40 miles away from home, with her family travelling at least once a day to care for her. While she was an inpatient, her family was informed by a CLIC Sargent social worker that they might be eligible for DLA. Although they were initially reluctant, financial pressures, with Lucia’s mother having to give up work, meant that they had to apply for a grant. Their application was successful only after an appeal. That was in spite of Lucia being unable to walk and reliant on a wheelchair, needing help with personal care, having to travel five days a week for treatment and being occasionally admitted to hospital. It was also in spite of the added cost of food, transport, clothing and home adjustments.

Being diagnosed at 15 and needing treatment at 18 meant that Lucia fell between child and adult categories. After a year of DLA, she was awarded a lower rate, as her treatment was deemed less intense. That was despite there being no change in her health status or treatment. Who makes these decisions and how are they made?

Now, four years after her treatment has ended, she needs help again. Although her leukaemia is in remission, the treatment has left her with bone damage in her knees, rendering her unable to walk or stand for any length of time. She hopes that her claim for DLA will be successful.

I hope that the Bill can be amended to reform the system for 16 to 18 year-olds, alongside reform of that for under-16s, and to extend the qualifying period of six months. I know that the Government are looking at this, particularly as it applies to cancer patients, and I hope that the Minister will have some positive answers. I hope to bring forward amendments in Committee and that other noble Lords will support them.

19:28

[Baroness Donaghy]

My Lords, I shall concentrate on the potential impact of the Bill on self-employed people, with perhaps a few words on kinship carers, referred to earlier by the noble Baroness, Lady Tyler.

The coalition has acknowledged that the self-employed are a group which “is often difficult to map”. We still have no clear indication of how they will be treated by the universal credit system. The 4 million self-employed people who contribute £21 billion in added value to the UK economy and the Federation of Small Businesses are concerned that self-employed people will be considered to be earning a set wage, calculated at the national minimum wage for reported hours worked. This is not only unrealistic, it is likely to discourage self-employment and is itself open to abuse by underreporting working hours. Small business owners starting up for the first time often do not start earning until much later. Most start-ups fail within the first three years of operation and it is essential that we support those willing, as the Federation of Small Businesses put it,

“to take that plunge into entrepreneurship”.

The coalition Government have previously stated that they encourage a more dynamic private sector. Encouraging more people to go into self-employment will help to guarantee the long-term economic growth of the UK economy and offers opportunities to reverse the current high levels of unemployment. How will the universal credit affect self-employed people and what measures will be taken to ensure that it does not act as a disincentive to set up a business? Under the current system, someone who starts up as self-employed will be entitled to full working tax credit as long as the work that they are doing is seen to be in expectation of payment—the business has to be reasonably viable. The universal credit will deem people to earn the minimum wage even if they have been unable to take a wage out of the business during the starting-up period. That means that people will lose money if they start their own business.

The only incentive here is to give up or slip into the informal economy. How often will the self-employed be expected to fill in tax returns in order to receive the universal credit, as their working hours will be outside the PAYE system? How will the Government minimise any extra work for small businesses? The Government will know that various organisations have raised concerns about the proposals for the self-employed. Citizens Advice has said that,

“this is clearly the difference between being able or not to set up in business”.

It has outlined a telling case study where one woman would be £61 a week worse off under the new system. The National Association of Welfare Rights Advisers and the Low Incomes Tax Reform Group believe that the Government should use a similar model to that already used for working tax credit which, by using a measurement of self-employed profit within the tax system, takes account of loss-making periods and investment in premises, equipment and machinery for business.

I am aware that the coalition has indicated that the rules on the treatment of the self-employed will be set out in regulations and that they are still,

“looking for the best way of doing it”.

I have some appreciation that putting this on the face of the Bill might hinder flexibility. However, when the regulations are eventually produced and if they do not tackle the issues that I have raised—namely, avoiding disincentives to self-employment, reconsidering the proposal of the minimum wage as an income floor and facilitating the collection of information about income which is easily adjustable as circumstances change—an important principle will have been lost: the Welfare Reform Bill was supposed to improve things. The new system will be worse than the current system and self-employment will have additional burdens placed on it by a supposedly red-tape-cutting Government.

We need an indication at least of intentions towards this group of people—an outline of what the regulations might say, an assurance that the definition of income from self-employment in universal credit is aligned with that used in the tax and credits system, and an absolute assurance from the Government that they are on the side of entrepreneurs.

As the noble Baroness, Lady Drake, is committed to the other parliamentary business at this time, I want to say something about kinship carers—a subject that she would have covered in more detail. There are around 200,000 kinship carers in the UK and an estimated 300,000 children who would otherwise be in care being raised by family members. Many such carers will be affected by the conditionality requirements and the cap on benefits. This will unintentionally undermine many kinship carers’ capacity to care for the children by requiring them to look for work, increase the hours that they work or cap the benefits that they can claim. If only 5 per cent of the children in kinship care were to enter the care system, it would cost the taxpayer £500 million every year. It costs £40,000 a year per child to be placed in independent foster care.

Kinship carers should be exempted from conditionality requirements under universal credit for 12 months after the children move in. The increase in the state pension age for women from 60 to 66 will mean that an increasing number of older grandmother carers will be expected to be available for work under the conditionality requirements. These people are taking on responsibility, not avoiding it. The Bill should present an opportunity to support kinship carers not add new barriers. Thank you.

19:35

[Baroness Stowell of Beeston]

My Lords, I will limit my remarks to the parts of the Bill relating to the proposed universal credit and the benefits that it replaces. In doing so, I will focus in particular on the long-term unemployed.

I do not think it is an exaggeration to say that our benefits system is broken. Indeed, from the comments made by others today, it seems that many noble Lords agree. As it stands, it establishes dependency, destroys incentives to work and entrenches poverty. That is not good for the people who receive benefits, it is not good for the people who pay for them, and it does not say a lot for the political classes presiding over the system.

The evidence shows that public opinion about our benefits system does not divide along party lines. The simple fact is that too many people who get up every day to go to work see their neighbours and others who are like them in nearly every way except that they do not get up and go out to work because they do not think, apparently, that they have to. Allowing that to happen has had a profound impact on our society in several ways. We have diminished people's willingness to support a benefits system which needs to be there to care for the genuinely vulnerable and those who find themselves suddenly and temporarily out of work. We have provided a breeding ground for hostility towards people who make their way to the UK to take advantage of our broken benefits system. What is really bad about that, let us be clear, is that the people who suffer most from that hostility are those who come to the UK to work hard and want to contribute through their drive and ambition. What is really worrying is that we have also weakened people's belief in the democratic process itself because they look at us and see that we have allowed this to happen and go on for far too long.

When we get to the Committee stage, I hope that we do not lose sight of this bigger picture because the Bill—the new universal credit, the benefit cap, which I support, the work programme and the changes that will make work pay—may finally be the first step on the road to recovery. I say first step because, while I support the Bill, I see it as only a framework for us to build from. I know that some Lords might not agree with me, but I am pleased that much of the detail will be covered by regulations and secondary legislation because I am sure that we will need to experiment and trial different aspects of the Bill over the next few years. This applies particularly to the conditions and sanctions that we set and the way that we categorise claimants.

Some people get a bit windy on the topic of conditions and sanctions, but I genuinely do not understand why. If we accept, as I think we do, that people are only reacting rationally to this current system of welfare—some people are playing the system that we have created because they can, not because they are inherently bad—if we change the incentives so that it pays to work and we apply firm conditions and sanctions to the receipt of benefits so that they are not seen as a soft option, surely people will respond just as rationally. Why would they not? My concern is making sure that the conditions that we set go far enough so that they provoke a radical shift in rational behaviour.

During our scrutiny over the next few months, we will debate anomalies and we will want to mitigate the risk of unintended consequences. During this time, we will also hear of many hard cases. Of course, we must listen and make sure that the benefits system is able to respond to them with compassion and respect. However, let us not forget the old truth that hard cases make bad law. If we build the new system by using the exceptional as the benchmark for the average, the new system will be as broken as the current one and it will not help those it is intended to support.

The Bill gives us the opportunity to show people who have been on benefits for a long time that we want to help them and that we are serious about doing so. It gives us the opportunity to show that helping people means getting them to the point where they can earn their living and other people's respect. Indeed, anyone earning their living, in whatever kind of job, not only earns other people's respect but deserves it. Just as importantly, this Bill allows us, finally, to show those already trying hard to earn a decent living that they are the ones doing the right thing.

We need, of course, to combine welfare reform with economic growth, real jobs and better education for our children. I believe that this Bill is a big step towards correcting our welfare system, which has been broken for far too long. For that reason I support the Bill.

19:41

[Baroness Gale]

My Lords, I will be focusing my speech on the impact that the provisions of the Bill will have on people with Parkinson's and their carers. I declare an interest as chair of the All-Party Parliamentary Group on Parkinson’s Disease. My concerns are that the Government’s reforms could mean that people of working age with Parkinson's will miss out on the financial support on which they now rely. Nearly 10,000 people of working age with Parkinson’s receive disability living allowance and a Parkinson’s UK survey of 2010 found that the DLA was used by people with Parkinson’s for absolute essentials. For example, it pays for the extra cost of electricity for heating the home, for support and help in the home and for transport costs. They describe it as a lifeline.

The Government propose to replace the DLA with a new benefit for those of working age, the personal independence payment. The focus of PIP will be on those with greatest need. That includes moving from the existing three DLA care rates to only two and it is possible to surmise that people with Parkinson’s on the lower DLA rate are more likely to lose out completely. Will the Minister give an assurance that no one with Parkinson’s who currently receives the DLA will lose their benefit and that the important benefits to which the DLA is linked, such as the blue badge or the mobility scheme, will now be linked to the PIP?

This is not the only way in which the reforms will impact on those with Parkinson’s. By wanting to reassess everyone of working age who receives the DLA and then reassess people routinely, rather than make indefinite or long-term awards, the Bill clearly fails to recognise the nature of a progressive, fluctuating condition such as Parkinson’s. Most people with Parkinson's are already on indefinite awards of the DLA and that is in recognition that their symptoms will not improve. To put them through a face-to-face reassessment and periodic reviews will cause anxiety and distress. As someone with Parkinson’s put it, “This is a recipe for continual harassment”. Will the Minister assure your Lordships' House that people with Parkinson’s will not be put through the anxiety of face-to-face reassessments if sufficient written evidence already exists and that, once in receipt of PIP, anyone with Parkinson’s already receiving the highest rate of PIP should not be subject to periodic retesting? Face-to-face reassessments are notoriously inaccurate for people with fluctuating conditions. People report that the assessor sees them on a good day and assumes that that is how they are all the time. Under the new proposals, assessors will not take into account life-limiting symptoms of Parkinson's, such as problems with getting out of bed, moving around indoors, the risk of falls, and night-time care.

There is much concern about the need to report changes in circumstances for a fluctuating condition such as Parkinson's. People are extremely worried about these proposals. Recently, one man wrote:

“Don't let the government take DLA away; it’s too good a benefit to lose, and a lifeline for disabled people. DLA can continue to be improved, and refined to meet any requirement. Just don't let them take it away, or abolish it, just because they couldn’t save enough money by keeping it”.

He ended by signing his name and underneath wrote:

“Severely disabled for 20 years and terrified”.

During the Summer Recess, I had the privilege of shadowing a Parkinson’s nurse in Bridgend for a day. She really impressed me. She was so dedicated and it was easy to see that she loved the work she does. I asked her whether patients had said anything about the Welfare Reform Bill and the DLA. Her answer was that they are petrified. A briefing I received recently—like other noble Lords I have received many briefings on this Bill—ended by saying:

“The situation for the sick and disabled in this country is pretty dire”.

People with Parkinson's are incensed about how people receiving benefits, such as the DLA, are being portrayed in the media, yet are fearful of being reported as frauds just because they have had a good day. One man said:

“I am sick to death of the Government, certain UK newspapers, et al ‘informing’ the nation that ‘there are so many lazy people who are not ill’. I have been called a ‘fraud’ just because I have had a good day. Anyone who is jealous of me, or thinks I am lazy, can have my DLA, as long as they take the Parkinson’s with it. I have worked all my life. I have paid into the system for an insurance I hoped I would never need—but unfortunately I do. I wish perhaps that people would just think about that”.

I hope that the Minister will think about that tonight.

What sort of coalition Government is this that people in this country are petrified and terrified of these proposals? I have never heard anyone speak this way about any government proposals or about any Government. People might be unhappy or they might not like something but on this people are saying that they are petrified and terrified. Something must be wrong for people to feel this way. I hope that the Minister will reflect on what people with disabilities such as Parkinson’s are saying as it is a progressive illness for which there is no known cure. People do not recover from Parkinson’s.

As their illness progresses, people with Parkinson’s generally have carers. Often it is a family member or friend. Informal carers stand to face a double whammy under this Bill as a carer's allowance is dependent on the person with Parkinson’s being eligible for the higher or middle rate of the DLA. The Government have done little to make the situation any clearer for carers about which rate of PIP might be linked to the carer’s allowance. Can the Minister give an assurance to carers that both new rates of daily living PIP will lead to eligibility for carer’s allowance so that no carer will lose out in the change from the DLA to the PIP? Please give them some hope so that they can continue with their caring responsibilities without all these unnecessary worries.

19:49

[Baroness Falkner of Margravine]

My Lords, I declare an interest as a non-executive director of Hyde Housing Association, as described in my entry in the register. I am also a trustee of Hyde Plus, the social regeneration charity established to provide practical assistance to some of the most vulnerable of our residents. We are a large housing association. Nevertheless, my comments tonight will be my own: I will not be speaking for either of those bodies.

Before I begin on the substantive parts of the debate, I pay tribute to the maiden speech of the noble Lord, Lord Feldman. As an immigrant who arrived on these shores some 75 years after his grandparents did, I recognise the values he spoke of extremely clearly. They are the values that many immigrants who come to these shores identify with. They will be affected by some of the provisions of the Bill. It was a fabulous maiden speech and I hope that we will retain the values articulated in it throughout our deliberations on the Bill.

This is a radical reforming Bill, designed to leave Britain's welfare state in a better state than we found it. However, its success will be measured ultimately both through its emphasis on an increase in the efficiency of the system—and surely, when one looks at the figures of what we spend, we can come to a consensus, as I think we have today in the House, that there is an element of waste in the system—and on its foundation in fairness. In his book Them and Us, Will Hutton defines fairness in Britain as a belief that one should receive one’s due deserts in proportion to whatever good or bad one has contributed. However, the emphasis must be on proportionality, and that is what on the whole the Bill does, although I have some reservations.

You cannot have fairness without accepting that life deals with us through lady luck. Those who have had the luck of a healthy life, good educational opportunities, and the good fortune to have had economic independence to make the right employment choices, are there to a great extent through their personal capabilities—I am a liberal, so you would expect me to say that—but also because of who they are and where they were born. Recognition of the element of luck in framing our lives demands that we contribute to the ill luck of those who have not enjoyed the things that we have. It was this recognition that led Beveridge—yes, I am from the party of Beveridge—to design a welfare state safety net. In the intervening years, the safety net has turned into a web of increasingly intricate, incomprehensible and untransparent rules that absorb huge amounts of the time of benefits officers, legal advice centres and other bureaucrats, while the people who need the safety net are turned into mere recipients of what are known as “entitlements”.

We know also that capitalism needs to have a relationship with concepts of justice. Just as personal worth and effort cannot be the whole story of success, so, too, we know that injustice is not a given. Much of it can arise from the lottery of life, and it is our duty to act on it and to reduce it. This is why the Bill is so important. We know that it will impact on vast numbers of people, some of whom will undoubtedly be disadvantaged in the short term by its changes. However, moving to a universal credit will be fairer and simpler, thus freeing funds in the longer term to spend more wisely. It will also work to reduce disincentives. I also welcome the change to make payments monthly, which will assist households in budgeting and prepare them for the monthly payment regime of those in employment.

My particular area of interest in the Bill is housing in general, and social housing in particular. In her opening remarks, the noble Baroness, Lady Hayter of Kentish Town, referred to the dearth of small household units. Other noble Lords referred to the overall shortage of social housing. We also know that, because of demographic changes in the composition of households, such as rising population and rising longevity, the pressure for additional social housing located in the right parts of the country will continue. We also need to acknowledge the wasted opportunity under Labour in times of plenty of not addressing the chronic overall undersupply of housing in this country. Housebuilding fell in 2009-10 to its lowest level since World War I —137,000 units. The required supply is around 200,000 units per year, according to the IPPR, leaving a gap of some 63,000 units.

The social housing sector has seen similar underinvestment, with years of diminishing investment by taxpayers in the affordable housing that is an essential element of the safety net. It is against this backdrop of tighter government grants, alongside a tightening of credit in the capital markets, that housing associations are asked to provide more affordable housing. One change—the withdrawal of the payment of housing benefit directly to landlords—will impact significantly on the social housing sector. Arrears are bound to increase with direct payments to residents. The level of risk that housing associations incur will rise. If predicted income is not guaranteed or readily quantifiable, the price of money borrowed by RSLs will also increase. Credit agencies will downgrade our status and borrowing for building in certain parts of the country might rise by as much as 100 basis points. The Government's stated desire to increase the supply of housing—in particular social housing—will not therefore be met.

I understand that the Minister is contemplating reducing the risks to housing associations by stepping in after four weeks of arrears to revert to direct payments to social landlords. This would be welcome, but would entail greater bureaucracy for both RSLs and the DWP. Its impact would have little effect on the capital markets’ or financial institutions’ assessment of risk, and therefore on borrowing costs. Several questions also arise from the proposals concerning choice, efficiency and value for money. I look forward to debating this point with the Minister in Committee.

A further issue concerns the household benefits cap. My noble friend Lord German today set out the relevant figures for households both with and without children. While I understand that the Government arrived at a cap of £26,000 per year on the basis of median income, this is far too blunt an instrument to do credit to what is in many respects a good Bill. We cannot find it fair to use a straitjacket to measure household costs, irrespective of where the household is, how large or small it is or what alternatives its members have to substitute income through employment and related means. I hope that factors such as actual housing and transport costs will also be taken into account to allow for regional if not local variation in the setting of the cap.

This bold Bill, with its radical restructuring of welfare, is very welcome. However, it is in the conviction that the scrutiny of this House will improve it further that I look forward to debating it in Committee.

19:58

[Baroness Grey-Thompson]

My Lords, I understand the need for reform of the welfare system, and I support a system that is more simplistic and better able to deliver what is required to those who need it. I am pleased to hear that the most vulnerable and those in greatest need will get the support they deserve, but it must not be at the expense of others who need it to live equally.

My concerns cover a number of areas. Like many in your Lordships’ House, I have been contacted by many disabled people who are terrified that this is the first step towards an insurance-based, perhaps Americanised system which will further discriminate against those in need. I am concerned that the Bill will leave a significant number of disabled people in a precarious position where they do not get the help and support that they require. Under the new system, those people may not be considered disabled enough to be supported, but may be considered by society to be too disabled to play a full part in it.

As many disabled people as possible should be in work, but many will still experience discrimination in the workplace, will be in the lowest paid jobs, and will struggle to reach their potential without support. The new system may provide those in low-paid work with a higher earnings disregard, but it looks likely that a narrower group will be able to access this than those currently receiving the disability element of working tax credit. We need to ensure that this group is able to make the transition into real work and to have the right support until this is possible. I believe that the ethos of support needs to change. Perhaps now is a good time. Until now, to get support has been about proving what you cannot do. We need to look at what people, whoever they are, can achieve if the correct mechanisms are in place.

Disability is not homogenous. Even two people with the same impairment—for example, with my level of spina bifida—will have very different needs, depending on their upbringing, on where they live, on their education and on what support they have around them. The Joseph Rowntree Trust has estimated that it costs 25 per cent more to be a disabled person in the UK due to housing costs, aids, transport, et cetera. Being disabled puts a great burden on the individual and their families.

The media coverage of disabled people is already varied. Disabled people are either portrayed as athletes or as work-shy benefit scroungers. There is not much in the middle. The reality is that we know that the rate of abuse of the current system is 0.5 per cent. From my own personal experience, I know that if I am recognised as “the one who used to be the athlete” or as someone in your Lordships’ House, I am generally treated extremely well. However, if I am seen as “that woman in a wheelchair”, or more usually, “that wheelchair”, then my treatment can often be somewhat less favourable. Recently, on returning to the UK by air, I had a difficult experience, when I was left sitting on the plane for a time. I was removed, left at the gate, then left sitting in an airport without any mobility and very nearly crawled through passport control because I wanted to get home. As it was, I missed my connection and an hour and a half later I managed to get to where my bags were and finally to my wheelchair.

I am very concerned that the 20 per cent cut to working-age DLA expenditure, although estimated at £1.3 billion, will affect the care and mobility support that disabled people can access, and increase reliance on council services. I have great concerns that this could radically change people’s ability to work and push the problem into other areas, such as health.

Those who will fall outside the system could be pushed into a ghetto from which it will be hard to escape. I wonder how far away we are from a point where we have the “deserving disabled”, who require support, and the “undeserving disabled”, who are left in limbo. Growing up, I did not see many disabled people. They existed but they were locked away in schools and care homes—and I never want to return to that. We have to ensure that disabled people are still allowed to be independent.

Take me, for example. I am relatively healthy—perhaps not as fit as I used to be. Without the support of DLA I might have been able to learn to drive at 17, but I would not have been able to afford a car or insurance. I would not have been independent. I would not have moved away from home. I would have found it nearly impossible to go to university and I would have struggled to become an athlete. Because of the support that I had then, I am now able to give back. I am fortunate that I am now in a position to buy the equipment and support that I need, but 99 per cent of disabled people are not.

If we are to support changes, much more needs to be done to ensure that discrimination in the workplace disappears and that there is an improvement in public transport, which outside London is not generally that accessible. If I want to travel by train, I am meant to book the exact train time 24 hours in advance. Can anyone imagine a non-disabled commuter having to do that every single day? This is the unseen reality that disabled people face.

Like many in your Lordships’ House, I am concerned about the DLA removal from residents of council-funded care homes. Many disabled people living in residential homes use this component to pay for either a mobility aid, such as a wheelchair, or travel costs to see family and friends. If this is removed, we remove people’s freedom. I listened to the Minister’s opening remarks and look forward to future discussions in this area.

We must also have faith in the PIP assessment process and, as was clear from listening to the remarks of the noble Baroness, Lady Campbell of Surbiton, disabled people do not. Many of these assessments are complicated, but they must take into account all the medical evidence that is available and use the best documentation. They must ensure it is done properly the first time, and that the use of appeals is not a delaying tactic in providing the support required.

I also have concerns about time-limiting ESA to one year. I will refrain from commenting now, with the constraints on time that we have, but I acknowledge the speeches of the noble Baronesses, Lady Hollins and Lady Morgan of Drefelin, and the noble Lord, Lord Rix. Will the Minister assure us that all disabled people will continue to get the support that they need to live equal lives? Can I have his assurance that we are not dooming a generation of disabled people to a life of hardship? Does he consider that I have disability-related costs? People like me are afraid that we will lose vital allowances. Will we?

Yes, we are in tough economic times and there is a need for change, but we need to ensure that these changes help disabled people fulfil their potential and not hold them on the first rung of the ladder.

20:05

[Baroness Healy of Primrose Hill]

My Lords, I too would like to raise an issue of grave concern to the families of adults with an autism spectrum condition. The National Autistic Society estimates that there are 350,000 working-age adults with autism in the UK, of whom just 15 per cent are in full-time employment. This Bill will have a profound impact on their lives.

Many of these adults are relying on disability living allowance, which under these proposals will be replaced by a new benefit of personal independence payment. The proposal to cut £1 billion from the projected spend on disability living allowance over the next three years is causing them and their families alarm, as my noble friend Lord Touhig has mentioned. As one parent of an adult with Asperger’s syndrome says:

“Without DLA I can say with absolute assurance my daughter would have to give up her entire independence”.

She goes on to say that this could lead to the return of her daughter’s depression and suicidal thoughts.

Families are especially concerned about the new assessment criteria and descriptors to receive the new benefit. They have grave doubts as to how the new assessment process will work and about the standard of training of the assessors. As one mother of an adult son with Asperger’s wrote to me of the PIP assessment:

“I am now very concerned that unless huge changes are made to both the questions and the way in which the assessment is carried out it will not reflect the complete needs of adults with autism”.

People with autism suffer four main areas of difficulty, which are worth restating: all forms of social communication; recognising or understanding other people’s emotions and expressing their own; understanding and predicting other people's behaviour; and sensory issues which can greatly impact on their ability to function at home and especially in the workplace. These difficulties make finding and retaining employment very challenging. Those with autism have a need for routines and an aversion to change. Periods of change cause a great deal of anxiety and can be very difficult for them to manage.

These are the reasons that people with autism and their families fear that the proposals in the WRB, however well intended, will result in real crisis for many who are struggling to participate and integrate into everyday life. The Government should not underestimate the cost of medium and long-term impacts that would be caused by people with autism losing their DLA or PIP entitlement. These would include the increased demand for mental health services, increased demand for primary care services, loss of employment, and the costs of homelessness and family breakdown. Many families feel that government-provided services make no accommodation for their loved ones’ unique set of requirements. They believe that this Bill will not improve the position of autistic adults. The Government will need to spend time assessing their needs and reassuring them that the proposals will be able fully to take into account the needs of adults with autism, some of whom are the most vulnerable in society.

The National Autistic Society estimates that over 60 per cent of adults with autism rely on their families for financial support and 40 per cent live at home with their parents. Sixty-three per cent of adults with autism report that they do not have enough support to meet their own needs. As a result of this lack of support, a third of adults with autism have developed a serious mental health problem. The parents of these adults live in fear of what the future holds for their children when they are no longer alive to care for them.

This Bill is in danger of reducing the independence, standard of life and dignity of these we as a humane society have a basic duty to protect. Many people have contacted me, as they have contacted other noble Lords, about the proposals in this Bill to express their fear of what it will mean for their lives. I have been struck not only by the severe difficulties they face but also by the sheer determination they express to get on and live useful, independent lives to the best of their ability with just a little help from the state.

If we are to learn from the mistakes of the past, the Government must acknowledge the genuine concerns of those families caring for and supporting their autistic adult members. They need to recognise that everyone with an autism spectrum condition will present differently. Some of these adults are more able than others but they all have autism, which affects them in vastly different ways. The Bill needs to reflect this reality.

There are a number of faults that need correcting. The National Autistic Society believes that the descriptors do not adequately reflect the complexity of autism conditions. This could mean adults with high-functioning autism or Asperger’s syndrome would not qualify under the criteria and would be unfairly affected. The draft regulations do not take into account some of the specific needs of people with autism and, as a result, a significant number of adults with autism will fail to qualify for the new benefit.

There are omissions from the criteria for adults with autism. Safety and the ability to understand hazards and danger are not spelt out in full in the draft regulations, and nor is the fact that some adults with autism display challenging behaviour that may result in damage to property, yet it is unclear how these would be taken into account in the current criteria. A one-off interview is not an effective diagnostic assessment of autism-spectrum conditions. Such conditions can change over hours and in different environments. Face-to-face assessments will add unnecessary anxiety to the individual, who has probably already been subject to numerous assessments and tests, as my noble friend Lord Touhig has already so eloquently explained. The pressure group Act Now points out that the purpose of the Autism Act 2009 and Fulfilling and Rewarding Lives: The Strategy for Adults with Autism in England is to lay the foundations for the change that is much needed for adults with autism, but families fear that this Bill fails to recognise the strategy by not addressing the complex needs of people with autism.

I urge the Government to consider three important improvements. First, the Bill should include an offer of a communications advocate; secondly, it should provide for a proper and detailed transition plan individually tailored to each person's needs, which is vital for people with autism; and thirdly, where expert reports are available, they should be used in place of a face-to face assessment and the intense anxiety it creates, and adults without such reports should be assessed by an appropriately trained professional who understands autism. If the Government are serious in their efforts to achieve a better system then surely they must build a structure that truly helps our citizens to lead fulfilling and rewarding lives.

20:11

[Baroness Flather]

My Lords, I found this Bill very difficult to understand. I have no experience in this field, and I am not connected to any organisation or to any of the issues that have been mentioned by many noble Lords, but, like everybody else, I have received a great deal of correspondence and I have tried my best to read as much of it as possible.

I have always felt that our welfare system should first and foremost be looking after the most vulnerable. That goes without saying. What is the welfare system for? It is to look after those who need it most. What many of us resent is feeling that it is sometimes used by people who should not be using it. It is sometimes used fraudulently, and we sometimes see people who are fit and healthy not working when jobs are available. If there are no jobs available, that is a different matter, but they have preferences and say that they will not take this job or that job, but taxpayers should have some preferences as well about who they would like to pay for.

As far as the vulnerable, the elderly and the disabled are concerned, I wholeheartedly support all of what has been said, and I look forward to the amendments that will come up to improve the Bill. My husband is very disabled, although fortunately we have not had to depend on benefits, but every little bit that he gets is helpful. It is very sad when one partner in a couple is disabled and gets worse and the other partner who tries to be a carer gets older. That is our case, because I can no longer look after my husband.

If somebody has drug dependency, they are on benefits and they also get paid for their drugs. What reason is there for them to get off drugs? Not only are they treated as disabled but they have their drugs paid for. There is no incentive to get off drugs. These sorts of things worry me, and I hope that they will be looked at.

I was extremely pleased to hear the Minister say in his opening remarks that the benefits of a person who takes a job will be protected and their universal credit can be reinstated if the job does not work out, because I have often felt that people are afraid to take a job because they are afraid that it will be very difficult to get their benefits reinstated. In fact, if I had seen the opening remarks of the Minister and the noble Baroness, Lady Hayter, I would probably have understood the Bill a lot better, but I did not hear them until I came here.

I want to introduce an utterly controversial idea. I expect that it will not find much favour, but it has been on my mind, and I am often controversial in what I say. I feel that people should not be getting the full raft of benefits for any number of children. I feel that the first two children should get a full raft of benefits, the third child should get three-quarters and the fourth child should get a half. I say this, especially after the recent riots, because we need to give responsibility for bringing up children back to the parents. It is very easy to produce a child, but it is not very easy to bring it up. I hear parents saying, “The school should teach them that,” or “The school should do that”, as if the state should take care of everything. The school has so much less time with a child than the parents do. I think it is time to make parents responsible for at least some part of bringing up their children.

The minority communities in this country, particularly the Pakistanis and the Bangladeshis, have very large numbers of children and the money that follows the child is an attraction. Nobody likes to accept that or to talk about it because it is supposed to be very politically incorrect. Well, I am politically incorrect, and there is no doubt that six or seven children give you a far larger income than three or four. I think it is about time that we stop people using children as a means of increasing the amount of money that they receive or of getting a bigger house.

In the countries of origin, these people—Pakistanis, Bangladeshis and even Indians—have large families because there is no safety net. When you get old, it is only your children who are going to look after you. That does not apply here. Every old person will have their pension and will be looked after. It is time to introduce the pattern of this country and to tell people that they must start following it. At the bottom of the education league tables are the Pakistanis and Bangladeshis, and top of the league are the Chinese and Indians. Indians have fallen into the pattern here. They do not have large families because they are like the Jews: they want their children to be educated. This is the other problem: there is no emphasis on education in the Pakistani and Bangladeshi families. If there was, there would be no problem. But we have a large number of young people, particularly young men, who have very few skills and very basic education and they are not really skilled to do any work even if the work were available.

It concerns me that we do not say anything, we do not do anything and we do not send any message that this is not acceptable. Having a child is easy; bringing up a child is difficult. The recent riots have told us that parents need to take responsibility for their children.

20:19

[Lord Boswell of Aynho]

My Lords, I welcome the Welfare Reform Bill. I believe that it represents significant progress in social policy. In particular, it will help to make work pay—an aim that is clearly shared by all sides of this House.

It is estimated that the Bill has the potential to lift 350,000 children and 600,000 adults of working age out of poverty. It will eliminate six separate benefits and reduce the opportunity for fraud and error. These are great prizes and strategic advantages. Of course, I accept that any changeover on anything remotely like this scale cannot be ideal. Whatever benefit system we have is governed by the inexorable iron triangle of the number of people covered, the rate of taper on the withdrawal of benefit and the overall Exchequer cost.

In this case there are also particular issues of timing. The first is the need for overall cuts in public spending, particularly on programmes that are prospectively exploding, like DLA. Even if the change to universal credit is going to incur substantial upfront and continuing costs, we are spending for the advantage we get. There is never an ideal time for reform but at least we have the opportunity now and the courage of the Minister and Government to devise the architecture and grasp the nettle of the basis of this change.

Another factor, of course, is that the labour market is soft but, even so, the private sector has shown some potential for creating additional jobs, just as in parallel we must support those who are coming forward to employment. There are also loose ends to be tied on the administrative side, as there are interactions with many other benefits—for example, for carers who remain formally outside the system. At the same time the universal credit is going to sweep up previously discrete benefits like housing benefit, which attempt to cover the many and varied circumstances of our lives; for example, outside the benefit system there are annually over 10 million job changes and some 3 million changes of address.

Finally, the system has to be made conceptually administerable and, through IT, technically deliverable. Like many other Members of this House, I have received extensive, thoughtful and sensitive briefings from outside bodies rehearsing a wide variety of difficulties as they see them. I accept that my noble friend the Minister, who spoke with a great deal of sensitivity and care today, is working hard to expose the issues to us and to deal with the problems as they arise, and also to explain the rationale of government decisions where there may be hard decisions to take. To be fair, I think many of the objections that have been laid have been in relation to potential notional future setbacks rather than immediate issues.

However, rather than delve into detail now, I shall just indicate my particular interest in families with children. Children are at best indirect beneficiaries of the benefit system; they cannot make their own choices or be autonomous. On enforcement of child maintenance support, I incline to the view expressed by the Select Committee in another place, and echoed eloquently by my noble and learned friend Lord Mackay of Clashfern this afternoon, that parents who have done their best should not be penalised by an administrative charge even if it means taking more off delinquent parents who have not been prepared to comply. More widely, the pattern of childcare costs varies very sharply, particularly regionally and in London. It would clearly be wrong to sanction lone parents when childcare costs for them are unaffordable.

As a former chairman of the Conservative Disability Group, I should also record that I am bound to be taking an interest in many of the disability issues that have been discussed in the context of the Bill. I will also, as an ex-Education Minister, want to say a little bit about the 16-hour rule and the changes there, and about some of the awkward transitions and interaction with the education system. I also note a point that has been mentioned by other noble Peers today about the transfer of discretionary payments to local authorities. Whatever the conceptual case for this—and Beveridge, who is often quoted, wrote a book before the First World War on the possibility of using agents for discretionary payments—if we remove the element of discretion from the Social Fund, other than simply for the budgeting of loans against expectation of benefit, we need to ask what the future of the Social Fund is. I think Ministers have sort of said something about that, but I cannot see why a clutch of regulated benefits would need separate badging.

If we are going to secure an overall beneficial outcome from the Bill we need to proceed very carefully and with no false sense of haste or triumphalism. This is perhaps my main message to Ministers. I hope that they will pay particular attention to the possibility of overlapping dates—not everything needs to start at once. They should also pay attention to the vital transitional arrangements. There needs to be within the regulations enacting the Bill sufficient flexibility if not to reverse direction—which I do not seek—then at least to be able to flex and modify policy as detailed inputs and wrinkles are revealed. We also need to build up an improving picture of the overall impacts; for example for disabled people, in the context remembering that some of their support is passported through the programmes of other government departments or agencies while their physical services, on which they may well depend, are also inevitably subject to budget stringency and present difficulties.

All this, however, is no counsel of despair. I believe strongly that the Bill provides a basis for dynamic change by tilting the scales from dependence to properly supported and incentivised work. This can bring both social and economic benefits, but if we are to scale this Everest of achievement, we cannot do it in one bound from our present base camp. The Bill sets the objectives, but it does not by itself represent the achievement. In this process, including the long and very full Committee stage we need, we will have to work out where we are going, and every step in the implementation of this must be well considered for its consequences and systematically secured as we move from base camp to camp 1 and up to the summit. In doing that, however, it is the right thing to do and we must be resolute in pressing its direction.

20:26

[Lord McAvoy]

My Lords, we have had a number of really excellent contributions from very experienced people this evening—in particular from my noble colleague Lord Kirkwood, whose contribution was certainly worth listening to. I intend to concentrate on housing and hope to cut two or three minutes off my speech, and if the noble Lord, Lord Kirkwood, would regard those few minutes as off-setting his, I hope he will regard them as a gift from me—although some of his colleagues may say, “Beware of Tommy bearing gifts”. But you never know.

Like many colleagues, I, too, have a number of briefing notes, particularly from Scotland. There was one from Sense Scotland with which I certainly agree. It said: “We are concerned that the focus in the Welfare Reform Bill as proposed is on cutting costs rather than on the principles of a fair and equal society, although reference is made to fairness in the proposals without specifying what it means for people in their day to day lives”. We have been told this evening that the country cannot afford to pay for benefits; we have been told that the country is in a terrible state financially, so therefore these measures have got to be taken. There was not a word about the bankers, not a word about the people in the financial world who brought this situation about and still get their large bonuses, not a word about tackling them. It is all about tackling the people on benefits; that indicates the priorities of the Government.

I said that I was going to concentrate on the housing aspect of the Bill, and another briefing note I received was from Caritas Social Action Network. It says that,

“the Bill will enable the Government, through secondary legislation, to enact proposals relating to housing benefits”.

That is what I want to deal with. The noble Lord, Lord Freud, wrote in a letter to Archbishop Nichols in July 2011 that,

“based on the most recent impact assessment, the Government is still unable to estimate how many people will be left without accommodation”.

As for under-occupancy, I was brought up with my mother from the age of seven and we lived in a house which, in the current situation, would have been taken from us. We would have been forced to move because of the under-occupancy rule. We would have had to leave the community in which my mother and I were born and brought up. God knows where we would have gone or the condition of the house to which we would have been sent.

The under-occupancy rules will result in a large group of people being prodded and poked out of their houses and made to go elsewhere because they cannot afford to stay. Their housing benefit will be cut because they allegedly have been given too much. I am not sure whether the Government realise that the social engineering in which they are participating will create a large group of people who will be alienated from and by society. They will be treated differently and as people who are not quite of society or of the country. Severe discrimination could take place and it would be criminal. I will be blunt. The situation will affect people who have no understanding of how a whole swathe of working class people live. I am no social liberal and do not condone benefit fraud—I am quite hard-line on that—but I have to say that, measured on the scale of the situation created by the bankers and financiers, this is an overreaction. This is setting up an Aunt Sally. It will single people out and society will pay a price for it.

I am well aware of the limitations of this place. I support this place as a revising Chamber and not as a place for defeating the Government of the day. The noble Baroness, Lady Meacher, is correct, and we hope that there will not be any votes in Committee or at any further stages because changes will already have been made. I was also pleased to hear the noble Lord, Lord Kirkwood, mention the time factor, although I do not think that he will have to push too hard. The noble Lord, Lord Freud, has indicated that he favours 12 days in Committee, with which I would go along.

In short, I hope, as the noble Baroness said, that we get change. I feel frustrated and angry about the owner-occupancy rules but I accept the limitations of this place. I hope that the two minutes that I have cut will go some way to helping my colleagues.

20:32

[The Earl of Listowel]

My Lords, in the brief time available, I should like to address the principle of universal credit, the impact of the Bill on foster carers, and the training and support of staff dealing with adults with mental health issues. There will not be time for me to speak about housing benefit but I am concerned about the impact of the changes on families, although I welcome the introduction in the other place of a commission to look at those changes. I believe that I am right in that.

I am very grateful to the noble Baroness, Lady Hollis, for so eloquently putting the principle of universal credit and explaining its importance in getting adults into work. My noble friend Lord Bilimoria, among others, spoke about the importance of work to the soul and to the spirit. I have no doubt that there is work and work, but in terms of breaking the isolation that many people experience and of giving people a sense of purpose and feeling that they have a contribution to make, work is very important to our society. That aspect of this Bill is extremely welcome and has been too long delayed.

Perhaps I may give an example. Tomorrow evening, at the Tallow Chandlers Hall, some of us will celebrate the work of the National Grid young offender programme. Over the years, it has trained more than 1,500 young people from the criminal justice system. It has taken them into employment as fork lift drivers and pipe layers. Among these young men, reoffending has reduced from 70 per cent to well below 7 per cent. For the first time, many of them have found in their mentors—older men who have taken an interest in developing their skills—a kind of father figure and a good, positive male role model. One sees these young men, perhaps fathers with young children, and thinks to oneself that they will be there for their children and will set the right example. Of course, this will also take families out of poverty.

Several years ago, the noble Baroness, Lady Hollis, talked about the importance of ensuring that mothers get into employment. If mothers are employed, it is far more likely that their daughters will themselves enter employment in their teenage years. There is so much to welcome in this aspect.

I am concerned about the impact on foster carers. Children are taken into care because of abuse in their family, which may include neglect, or because of particular disabilities they may have. Sometimes they have to be fostered because of the impact that the care system has had on them. There has been a long-standing shortage of foster carers and we need an adequate range to get the right placement for the right child. We need foster carers who are prepared to take sibling groups. It is a challenging prospect, but many families around the care system have large families and it is important to keep siblings together where possible.

I turn to social work support. We still have a shortage of social workers and variable quality, though it is improving. We still have social workers tied down, spending 80 per cent of their time on paperwork rather than dealing with families. I welcome the attention that the Government have given to the concerns of foster carers. I welcome the letter from the Minister, Tim Loughton, to Robert Tapsfield, the chief executive of the Fostering Network, the voice of foster carers in England and Wales. He assured him that the Bill will not have an adverse impact on foster carers. Robert Tapsfield met the noble Lord, Lord Freud, recently and I welcome the statement yesterday evening addressing a number of his concerns.

Two outstanding issues remain. One concerns the under-occupancy penalty. I would be grateful for the Minister’s reassurance that foster carers will not be penalised. They need to keep one or two spare rooms for their foster children. I would also like reassurance about staff. There should be statutory guidance on training them to deal with foster carers. They are a small group within the larger system and need particular attention and treatment.

I shall say a little more about staff who deal with mental health issues and foster carers. My noble friend Lady Meacher spoke eloquently about the need to care for often vulnerable adults and to train and support staff properly. I was grateful that the Minister arranged for my social worker colleague to speak to Ross James in his department about training and supporting staff. The culture of the organisation is so important in terms of ensuring that people continue to show compassion and understanding to these vulnerable groups. One looks at the success of the Youth Justice Board over the past 10 years and how the treatment of young people in the criminal justice system has been turned around. At the top of that institution is a board whose directors include the chief executive of the Children’s Society, Bob Reitemeier, and a judge from the youth court, and it is led by a former chief executive of a local authority. These are people who know social care issues well.

If one looks at the immigration system, where there are perhaps similar issues about encouraging people to return to their country of origin if their asylum claim has been disallowed, there is again experience on which we can draw. We can also learn from mistakes, such as at Yarl’s Wood, where the prison service was given charge of these families with their children without any input from the social care arena.

This sort of work can be draining for people on the front line—we see this particularly in the health service —and they need support. They become so fatigued that they can no longer use their discretion in an appropriate way. They must not be overworked and underpaid in the way described by my noble friend. I would be grateful for an opportunity to meet some of the staff who will be delivering this service, as well as the senior management of these agencies, in order to learn more about the culture that surrounds the payments made and the provision of help in this area.

I conclude by saying that, as the noble Baroness, Lady Hollis, pointed out, we need to give people in this situation the confidence to go into work. Most will want to work and to break the dreadful culture of dependency. Work is important to the human spirit. It combats isolation, which can lead to all sorts of mental health issues. It is important for people to feel that their life has a purpose. I welcome the Bill and the principle behind it, although I have many concerns about its application. I look forward to working with colleagues and the Minister in Committee.

20:40

[Lord Skelmersdale]

My Lords, I am rather tempted to start my speech with that part of his speech that the noble Lord, Lord Kirkwood, left out. Be that as it may, many noble Lords have made the point that this Bill starts the greatest single reform to the social security system since 1942. I note that the Minister and indeed Barnardo’s, in its excellent brief, called it “radical”. I would call it revolutionary. It is not, of course, that there have been no reforms since 1942. We have, though, arrived at a system that is costly, confusing and error prone both to the potential recipients and DWP staff. I agree completely with the noble Baroness, Lady Meacher, in her plea for good training of DWP staff. My noble friend Lord German and my former temporary boss, my noble friend Lord Brooke of Sutton Mandeville, also made the point about the difficulty of operating social security for recipients and DWP staff alike.

Looking at the Beveridge report, from whence modern social security arose, two things struck me. Paragraph 9 of the introduction states that:

“The state, in organising security, should not stifle incentive, opportunity [and] responsibility”.

I am grateful to my noble friend Lord Feldman, in his excellent and philosophic speech, and to the noble Lord, Lord Bilimoria, for speaking on this point. A little later, in paragraph 22, the report makes the point that:

“The insured persons should not feel that income for idleness, however caused, can come from a bottomless purse”.

Of course we would not use these exact words now, political correctness being what it is, but the points are nevertheless well made and form the basis of this Bill. The Government, very naturally, want to steer as many benefit recipients as possible into work, a policy which was adopted by the last Labour Government. That will not be easy as people are wedded to their current entitlements and the various add-ons and passported benefits that have crept into the system over the years. We have heard about many of them in this debate, not least from the noble Baroness, Lady Hayter.

What we have in this Bill is a system that is simple and easy to operate, which is something that no one can say of the current situation. The important thing about these new arrangements is that financially, even at the minimum wage, the withdrawal taper is reduced so that a single person is always better off in work, and a couple with two children only loses out, on my calculations, by working between 17 and 18 hours a week. Working for 16 or 19 hours is okay, but 17 or 18 hours is not—or at least that is what the White Paper says. So to all intents and purposes, as my noble friend Lord Freud almost said, the benefit trap disappears. Not only that, but it is intended that the introduction of universal credit will not mean a reduction in a recipient’s current benefit. To me, as my noble friend Lord Freud knows, the trick has always been to achieve a single out-of-work benefit coupled with the adoption of a permanent disability benefit. That is why I am not troubled by the proposal to limit contributory employment and support allowance to one year as opposed to the current two years. After one year, it should be possible to assess whether the incapacity is permanent for, say, the next three or five years before a new assessment is made. I was struck by something said by the noble Baroness, Lady Hollis. She spoke, as I understood her, as if the withdrawal of contributory ESA would mean that there would no longer be any state financial support. That, of course, is quite wrong.

I accept though, that there are debates to be had and questions to be answered on when the reassessment should start. Should it, for example, be after nine months with no change of benefits until the 12 months is up; or should it be after the full 12 months, in which case what happens to the benefits until the assessment is made? For myself, I prefer the former, but like so much in this Bill, I await developments once we see the statutory instruments that flow from it. In this connection, I am grateful to my noble friend for saying that we will be able to see as much information as is available, well before our consideration is completed.

A certain amount has been said about working mothers. Of course, this is a subject that we are returning to after dealing with it previously in the Bill and statutory instrument, which I am sure the noble Lord, Lord McKenzie of Luton, will remember well. The key for working mothers, of course, is affordable childcare. The noble Baronesses, Lady Meacher and Lady Hollis, I and others asked—or quizzed, I should say—the then Minister as to whether this would be available. He said words to the effect of, “Don’t bother your little heads about it, all will be well”. I ask my noble friend Lord Freud whether that statement has borne fruit, and the situation is such as the noble Lord, Lord McKenzie of Luton, predicated.

This debate has shown that the House is in favour of a universal benefit. The noble Baroness, Lady Hollis, put it well and most of us have followed her. That is fine, but the noble Baroness uttered a very loud “but”. This reminded me of a phrase I uttered in a pantomime in my amateur dramatics days: “But me no buts”. I know enough of my noble friend Lord Freud to know that he will examine all our buts, to which he knows we will all require answers if he is to secure his Bill. I look forward to receiving them in the remaining stages.

I make one plea to the Minister, for him to abide by an acronym that I invented last night. The beauty of universal credit is in its simplicity. I urge him therefore to abide by KISISS, which stands for Keep it Simple in Social Security.

20:48

[Baroness King of Bow]

My Lords, we all believe in welfare reform, making work pay and simplifying the benefits system; and I am sure none of us envies the Minister his job. However, these reforms cut benefits to the point where they undermine the principles of the welfare state and remove the final safety net from some of the most vulnerable people in Britain. I confess I am shocked by the Bill’s consequences as it currently stands. I also have another confession: I am one of those Labour politicians who knows there are genuinely enlightened Conservative politicians. That is something I simply would not have believed as a child. Lib Dems, of course, have often espoused the same progressive social policies that I believe in. In fact, I remember many occasions when Lib Dem MPs stood alongside me and other Labour Back-Benchers between 1997 and 2005 to challenge our Labour Government’s record on housing—in particular they lambasted Ministers for not doing enough to support private tenants, especially those on housing benefit.

What are we to make of those same Lib Dems now backing Tory plans to drive a coach and horses through the housing safety net? This Bill will, in effect, drive the poor out of inner London; it will leave thousands facing eviction and homelessness. Do not take it from me: research done by the University of Cambridge for Shelter found that cuts to LHA will lead to 134,000 households either being evicted or forced to move. Or take it from Conservative Mayor Boris Johnson, who was moved to describe these cuts as “Kosovo-style social cleansing”. I thought that was taking it a bit far, but DCLG seemed to back up some of his concerns. Its modelling calculated a likely 20,000 extra homelessness acceptances as a result of the total benefit cap—and that comes on top of the 20,000 additional acceptances already anticipated as a result of the other changes to housing benefit. DCLG helpfully summarised the situation, saying that,

“it is likely that the policy as it stands will generate a net cost”.

So there we go. Not only is it going to cause untold human suffering by forcing people out of their homes, but it is going to cost us money. It just does not add up.

This dose of truth obviously did not go down too well at the DWP. The Minister even took the trouble to write to my own local newspaper, the East London Advertiser. I am sure he was writing to local newspapers up and down the country, but none the less the East London Advertiser got news, fresh from the horse’s mouth, that:

“Scare stories that housing benefit changes will force thousands of London families from their homes are nonsense and are causing unnecessary distress”.

And yet his own department’s impact assessment tells a different story. It is a story of unnecessary distress, and it will ruin lives. In Tower Hamlets, the DWP impact assessment shows 1,900 households affected by the move from the median to the thirtieth percentile of local rents. In English, that means those households lose on average £20 to £30 a week.

The impact assessment also shows that 970 families were affected by the caps already introduced in April. Those households lose, on average, £20 to £30 a week, depending on property size. I know the Minister has suggested that these families will be able to negotiate a lower rent with their landlord. If he genuinely believes this, I implore him to give us some evidence. If he feels that this may not be the case, that landlords will not will not just throw up their hands and say, ‘Oh, okay, I’ll lower your rent’, I say in all sincerity that maybe he will give those tenants some rights to challenge their landlords, because otherwise he is literally casting them adrift. He might also wish to let them know whether, if they cannot make up that shortfall, they should use their jobseeker’s allowance or child benefit to cover these shortfalls.

The week before the Minister’s letter appeared in the East London Advertiser, in the Answer to a Written Question I tabled on the numbers affected by his reform to the shared room rate of local housing allowance, he stated that,

“320 claimants in Tower Hamlets would have their local housing allowance reduced”,

adding that:

“The average loss per loser is estimated at £109 per week”.—[Official Report, 29/6/11; col. WA 440.]

Can the Minister tell me how someone on jobseeker’s allowance of £65 per week can find an extra £109 per week to pay their rent? With all respect, I truly believe the Minister is not inhabiting the real world. That is the most respectful way I can put that issue. I suspect the Minister may fall back on the usual claim that these single people should all move into shared housing, or that his £20 million discretionary housing payment fund will help them bridge the gap, but neither claim bears scrutiny and if I had more time I would explain why. Should the Minister wish to let me describe the reasons why I do not feel they stack up, I would be delighted.

The Minister has made a small concession to help a few hundred vulnerable, homeless Londoners living in hostels. That is very important, and I welcome it, but again what about everybody else? In Tower Hamlets, the pressure on the discretionary housing payment budget is already so intense that the initial length of awards has already been cut from 10 months to just four months, and that is before a lot of the other cuts have impacted. Whatever its theoretical advantages, the universal cap of £26,000 introduced by Chapter 1 of this Bill will undoubtedly make a bad situation far worse. I recognise that this cap is superficially attractive in its simplicity, and I am attracted to it myself. It is the level of the cap that I disagree with, and as my noble friend Lady Sherlock stated concisely, fairness has been sacrificed for simplicity. It just is not fair that parents will be left with the stark choice of paying their rent or feeding their kids. It also is not fair that Clause 68 increases the local housing allowance in line with CPI inflation, meaning that in real terms the costs of private rented housing will not be covered. That puts claimants on the rack and tightens the screw year on year.

However, there is something in this Bill that I object to even more strongly: the unforgivable scrapping of the discretionary social fund and its replacement with a system of hand-me-down or in-kind charity. As someone who helped many constituents make those applications, I understand the benefits and weaknesses of those schemes but let us be clear that the benefits far outweigh the weaknesses. The reforms which Yvette Cooper suggested last March were adequate to address those problems. Instead, the Bill pushes the poorest further into debt.

The argument should not and cannot be reduced to deficit reduction. I accept the need for deficit reduction. What I reject with some outrage is that the Bill seeks to reduce our national debt by increasing the personal debt of the very poorest. If you are going to take money from people’s pockets, take it from people like us in this Chamber. Do not take it from people who have not got the money to buy a bed, a fridge, a cooker or a cot because if you do, you either force these people to live in conditions that shame this country—like those of the family I visited, where the baby sleeps in the bath—or force them into the hands of loan sharks and an inescapable debt trap. The Government have dumped the responsibility for this on local authorities without any guarantee of funding or any requirement to continue the current eligibility criteria.

I will discard the last page because I understand that I have reached the time limit. I am sorry to get exercised about this but it is like watching a slow-motion legislative car crash. I have not even had time to touch on a plethora of desperately worrying issues: the unfair repeat assessments for the long-term sick and disabled; the impact on foster carers and kinship carers; or the use of a private company, Unum insurance, which was found guilty in America of harassing and defrauding social security claimants.

Putting all that to one side, my final point is directly to the Minister. I am sure that he did not come into politics to disadvantage Britain's poorest kids, force people out of their homes, reduce the childcare support for hard-pushed parents or strike genuine fear and despair into the hearts of disabled people up and down the country—but that is what this Bill currently allows for and it is the legacy which the Minister risks. If safeguards are not forthcoming, social historians may look back on the history of the welfare state and pinpoint this Bill as the tipping point in the slide towards a feral state. I sincerely and genuinely hope that the Minister will take account of the grave concern in this Chamber and make significant changes to the Bill.

20:58

[Baroness Murphy]

My Lords, having worked so happily with the noble Baroness, Lady King of Bow, in east London I am sorry to tell her that I disagree with almost all the points that she has just made. I support the provisions of the Bill. The Government are promoting the necessary cultural change in the benefits system which the vast majority of people in this country want to see. We need a shift in the expectations of what the state will do for us, and a radical shift in attitudes to choices enabled by the state which generate unintentional moral hazard. However, one thing that we seem not to have talked about sufficiently is the fluidity of dependency in populations and how quickly behaviours change as opportunities and threats change. I am talking not about changes in people’s levels of disability but about population changes and how they respond to situations.

The vast majority of people in receipt of benefits are merely making ends meet in ways that make legitimate sense to them. They have no alternative but to depend on the benefits to which they are entitled. However, there are huge numbers of people who do not consciously think about alternatives, because they do not have to and at present have too little support to do so. In my professional life as a psychiatrist I have witnessed many people with mild and more serious mental health problems who had to give up work during a very bad period, but who should have been assisted and coerced—in the best sense of the word; there is such a thing as good coercion—back into the workplace for the sake of their future health; and whose life has been blighted for many years after a brief episode of illness by a system which allowed them to remain unwell and workless, and indeed insisted that they should, in order to qualify for help. I have also seen in my own family how a modest chronic disability can unconsciously perpetuate dependence. Of course, the vast majority of people in receipt of benefits do not consciously make these choices, but some unconsciously make choices that are in no one’s best interests—if I can pray in aid another Freud.

I have a slightly different approach to the conditionality issues. The major problem with implementing conditionality—which can be so helpful for people to move them on to a different state, and remind them of the threat of this thing which will move them on to a different place—is how it is implemented in the DWP outposts in jobcentres and so on, by staff. Putting in the universal credit system—which we all want to see; it is very noble and sensible—and implementing it fairly will be a challenge. My noble friend Lady Meacher has articulated very well the difficulties with training, particularly in relation to some mental health problems, autism and some mild degrees of learning disability, where people are trying to access work and so on. Those problems are so serious that it is not just the culture of the dependent population that needs assistance to change; it is the dependence of the officers—of those who apply the system—that needs to change. If some of the assessment doctors continue to be reported as being unlistening, dismissive, unsympathetic and poorly trained, the Bill will not work.

I turn to the specifics in changes in disability provisions. I have, of course, read the multiple briefings from organisations working with people with various types of disability and I am surprised that more of them do not welcome the shift from disability living allowance to the more personalised personal independence payment, which is better focused on people’s individual circumstances and does not assume that disability is a fixed, unchanging matter. I have to say that I do not think that the disability support organisations have necessarily been very helpful in assisting people through the realities of how this will work. Enormous anxiety has been generated about the assessment and its efficacy, the interpretation of regulations and how sensitive the assessment tools and descriptors can be made. Of course, it is going to be difficult to get it completely right and we look forward to hearing how Professor Harrington’s second report, which is now apparently available, will change matters again.

There are quite marked differences in the proportions of different populations within the United Kingdom on DLA, which needs some thought. We have heard about the increasing level of the use of disability living allowance. For example, in Scotland there are, I think, something like 6 per cent more people on DLA. It is said that this is because of a different population level of disability in Scotland, due to cardiovascular and cerebrovascular disease, but the age range of disabilities simply does not add up. The reality is that there is different interpretation of the rules north of the border. In many other parts of the country there are variations which do not take account of the fact that we need better assessment and recurrent assessment. I do not think it is right that people should be assessed once and left where they are. You lose all opportunities to continue to implement effective support if you do not assess people on a regular basis. Therefore, I completely disagree with the notion that people should not have to go through an assessment, because it gives them an opportunity to get the help that they need.

The housing benefit system has received much attention so I shall keep my remarks on it brief. I have looked at the analysis of the situation in London carried out by Shelter and the University of Cambridge Centre for Housing and Planning Research. I think that 100,000 households in London that are on housing benefit may theoretically be obliged to move to lower rental areas. However, the analysis does not take sufficient account of the possibility of the rental sector changing its rents. In fact, the map that has been drawn up shows that only three boroughs are affected—one is the City of London, which is a very tiny place where very few people live, and the others are Kensington and Chelsea and Westminster. I suggest that many noble Lords in this House cannot afford to live in Kensington and Chelsea or Westminster.

I see that the noble Baroness, Lady Turner of Camden, is in her place. In fact, it has been demonstrated that Camden is one of those areas where the people we are discussing will still be able to afford to live. There is ample opportunity to assist people through a transitional phase. However, I hope that the Minister will say how that might be done. Much has been made of the polarisation of rich and poor neighbourhoods but that has been going on in London since the early 18th century. A mixed neighbourhood does not comprise exceedingly wealthy pockets being situated next door to profoundly impoverished pockets; that does not seem to me a mixed community. After all, these social goods of a mixed community are not available to working people on low wages who are paying taxes and trying to live in London but who do not receive benefits. I find it difficult to understand why the noble Baroness thinks that that social good should be made available to those who are dependent on benefit.

We need the cultural shift that I have mentioned. Many changes need to be made to the Bill but its basics are profoundly right and I support it.

21:08

[Lord Sheikh]

My Lords, this Bill is one of the boldest attempts to repair and restructure a welfare system that has essentially failed taxpayers and jobseekers. Welfare reform is an important plank of this Government’s programme. The current system has resulted in welfare provision that is not always distributed to the recipients who are most in need. It is also a system that favours reluctance among some people to work rather than to seek employment. That system is simply not sustainable.

The centrepiece of this Bill is the universal credit award. It has been reported that the universal credit has the potential to lift more than 350,000 children and 500,000 adults out of poverty. In streamlining the current system, the universal credit will provide clarity and accountability as opposed to the multifaceted approach. A simplified system will make a valuable contribution towards the fight against benefit fraud. It has been estimated that this type of fraud costs the taxpayer £1.5 billion per year.

I welcome the clearly defined boundaries within Part 1 of the Bill, as it details the sanctions that will be put in place if claimants fail to comply with the requirements of the universal credit award. I support the Government's efforts to tackle the current situation surrounding housing benefit, which has seen claims rise by £10 billion over the past 10 years. A move towards an annual uprating in line with the consumer prices index will contribute towards greater stability in rents. It has been estimated that the change will generate savings of approximately £300 million a year. The current system unintentionally allows a number of registered social landlords to encourage welfare dependency among clients for their own financial gain.

It can be argued that the most significant aspect of the universal credit is its potential to encourage unemployed people to find work while ensuring that they are not left out of pocket by doing so. Much debate has focused on the conditionality to be introduced with universal credit, requiring claimants to look for work with appropriate sanctions. As an employer and chairman of companies, I feel that we need to encourage people to work. People should work principally for two reasons: first, to earn a living and, secondly, to obtain job satisfaction. I shall therefore concentrate on matters relating to work.

Our welfare system should align incentives to ensure that those who demonstrate a willingness to work are not less well off than those who resist opportunities to earn. It is a tragedy that nearly 5 million people of working age in the United Kingdom are on out-of-work benefits, with almost 1.5 million having received them for more than 10 years.

We have one of the largest workless populations in Europe, and just under 2 million children living in households with nobody working. The current system penalises people for looking for work. The majority of people on benefits do not wish to be recipients for the remainder of their lives, but we need to consider carefully the process of transition so that they are not penalised in the interim period.

The most effective mechanism for relieving poverty is work. Work is good for people's mental health, their physical health and their general well-being. These benefits have been demonstrated repeatedly. Dependency is not liberating; it constrains people and prevents them achieving their ambitions. People have become trapped in our welfare system and they need to be freed.

This Government have shown their commitment to helping individuals find long-term employment through the work programme. Approximately 2 million children are living in households where those of working age are unemployed. Unemployment and a heavy reliance on benefits have devastating effects on our economy and our wider society. These adverse effects often include high levels of personal debt, anti-social behaviour and solvent abuse. The current system fosters a dangerous culture of dependency and lethargy.

The Department for Work and Pensions has estimated that the reforms proposed by the Bill could reduce by 300,000 the number of households where those of working age are unemployed. It is also thought that the changes could improve the net incomes of 700,000 of the country's lowest paid workers, as they will be able to keep a greater portion of their earnings. The Bill encourages social mobility while tackling the causes and effects of poverty and unemployment.

I turn to the new sanctions regime in the Bill. I welcome the fact that all those claiming benefits will have to sign a claimant contract, including a pledge to turn up for appointments and interviews and take up reasonable offers of work. By introducing more appropriate financial sanctions, the new regime will provide the necessary spur to the minority of claimants who fail to comply.

The provisions in the Bill encourage social mobility while tackling the causes and effects of poverty and unemployment. These elements suggest that there will be wider gains to the British economy. The Bill raises questions not of political allegiances, but of fairness. I welcome the Bill and the Government's resolve to get this right.

21:15

[Lord Knight of Weymouth]

My Lords, I start by paying tribute to the ambition of the Minister and his Bill. I know that the Minister is motivated by the very best of intentions in trying to tackle a system that is complex and needs continual reform. Certainly, the principles of the Bill are difficult to argue with, although it feels as if they have been ranked. He listed the three principles. I would rank them in the order of affordability, because he has to answer to the Treasury, followed by dealing with dependency, which is important. I am afraid that fairness appears to come third.

My worry for him and for the reform is that, to coin a phrase, it is too far too fast. As a department, as well as focusing on welfare reform, the Minister should focus on employment and work. The clue is in the title. We have an unemployment problem and if we really want to bring down the benefit bill, tackling unemployment is something that we need to take seriously. He should look, for example, at what the noble Lord, Lord Hall, has published in terms of the evaluation of the Future Jobs Fund in London with the Culture Quarter Programme, which had a 73 per cent success rate in getting people into permanent employment or full-time training. I substantially agree with the noble Lord, Lord Sheikh, and with the excellent maiden speech of the noble Lord, Lord Feldman of Elstree—I pay tribute to him—who said that work works. I think that the noble Lord, Lord Bilimoria, said the same. The Minister also needs to concentrate on the work programme. A lot of other things must be done alongside this important reform.

When we were in Government, we were committed to a single working age benefit. That should be the staging post for a more prudent and pragmatic way of going forward—tackling all those things that I described and then trying to simplify the benefit system before then taking something that is assessed on the basis of households and merging it with a taxation system that is based on personal assessment, which complicates things unduly. I will come to that.

I hope that the universal credit works. The noble Lord, Lord Skelmersdale, paid tribute to its simplicity. In many ways, the Minister is trying to design a swan—something that looks beautiful in its simplicity, but we all know underneath will be working frantically in a complicated way to move forward. Other noble Lords have spoken about those who will potentially lose out as a result of this reform if what looks like an ugly duckling grows up to be a duck rather than a swan. I hope it becomes a swan.

Rather than repeat some of the points that have been made—I thank all those who have corresponded with me principally by e-mail—I want to focus on the risks that need to be addressed in the context of delivery. There are two. The first relates to merging household and personal assessment, which particularly relates to IT. The Government have produced some excellent briefing and I thank them for that. I remember that in his first emergency Budget the Chancellor announced huge savings by cutting consultancies and big IT projects. I genuinely hope that, with this enormous IT project, on which this whole set of reforms is dependent, he is employing some good consultants. I hope that he is ignoring Francis Maude and getting some good capacity in. Much as I believe that in Joe Harley, the CIO at DWP, he has a really good guy who can help the Minister to oversee this from the department's point of view, he will need all the help he can get to make this work.

The briefing that the department has given me talks about agile development for the IT system. Certainly, I do not have a problem with developing the IT and business solutions together so that you can get the IT designed as you go along. Then you can do the things that you know will happen right from the outset rather than waiting for the whole thing to be designed, producing a specification and having a long delay. I certainly agree with digital by default, although it has to answer some questions around inclusion and ensuring that there are still people who can deal face-to-face with those who have complex needs and those who are struggling to do things digitally.

Other questions remain. The system that is being developed in respect of benefits has to bolt in with HMRC’s real-time information system which, I gather, is on track to be up and running for October 2012. We all know that Governments have had some problems with IT in the past—the NHS is the best possible example. However, the tax credits system is another one. It is a great system, at the root of this reform, to make work pay, but we have problems with it. In the end, as an MP, I knew more about the problems than I knew about the successes, even though there were many great things that we got out of tax credits.

Once you bolt together HMRC and DWP, you create vulnerabilities in terms of risk. Then you add into that the other system that is being developed which is for self-employed people so that they can self-declare income. That will be the fallback IT system if the HMRC system does not work. We can ask questions about whether self-declaration of employment in real time will work and whether it will deal with possible fraud and error, but the integration of those three IT systems against a very tight timetable needs close scrutiny. I hope that the Minister will look at the report from the Public Accounts Committee in the other place, which was published today. I hope that he is learning lessons from the NHS IT programme and from the problems that we had with that and with tax credits. I hope that, ultimately, he will produce and publish for us to scrutinise an analysis of the risks that are attached to the IT programme. The Permanent Secretary in his evidence to the Public Accounts Committee had a bit of a Rumsfeld moment when he talked about the unknown unknowns in respect of risk when you are doing something in a way that Whitehall has not done before. If that risk register can be published, if the project milestones and the target dates attached to those milestones can be published and there is a report to Parliament on the progress, I am sure that this House will be very grateful to the Minister for giving us some confidence about how this crucial part of the process goes.

I shall quickly touch on one other subject, which is the centralisation of housing benefit as part of these reforms. Yes, I worry about those staff working in local authority offices who are doing benefit assessment, but I understand that there may be a significant saving that has already been scored with the Treasury through centralisation. My worry is that individuals will have crucial documents to prove their identity and their income, which they will have to send off to a DWP processing centre with the potential for those to be lost. We know from casework and from our interaction with the real world that that happens. I worry that there will be a duplication of some of the information that local councils will have to gather in respect of council tax benefit, which is now being localised, thanks to Eric Pickles. I worry about the complex cases of some individuals, where a default to online with support from telephony might not be sufficient to understand their needs. I also worry about some loss of local expertise.

I ask the Minister to consider whether individuals could go to council offices with their key documents, as we do when we take our documents to the post office to submit an application for a passport, to get them checked for their council tax benefit applications. That information can be collected electronically and put into the wonderful IT system which I think I have already said I hope will be a success. You would have a halfway house between some sensitivity around local processing and a central system. When the individuals in local council offices who are doing the interviews spot someone who has complex issues attached to their case, they could set up an appointment there and then with someone locally from the DWP, or perhaps from Jobcentre Plus, who can come and do a one-to-one interview to make sure that we get it right first time. We all know that in difficult cases, if we get it right first time it makes things a hell of a lot easier than trying to fix it after we have got it wrong.

With those comments, I will sit down. I wish the Minister well in his reforms and wish the House well in amending the Bill and the reforms so that, to some extent, we slow it down to get it right.

21:25

[Baroness Finlay of Llandaff]

My Lords, there have been many admirable speeches tonight. They must have given the Minister much food for thought. As a patron of Foodbank Cymru, I fear that we will see a rise in the number of people who beat a path to our door because they are in financial crisis and cannot even put food on the table.

In the short time allocated, I will address the situation of people who become suddenly and catastrophically ill, and what happens to them and their families. Before I do that, I will say that the clear aim of the Bill is to get more people into work. This principle was underpinned by the very elegant speech of the noble Lord, Lord Feldman, whom we all welcome. The Bill refers to assessment in considering a person's physical or mental condition. Of course, these are so often integrally linked, which is why the findings of Sir Donald Acheson’s independent inquiry into inequalities in health are so relevant. He states:

“Some of the excess morbidity and mortality associated with unemployment may be a result of people in poorer health being more likely to become unemployed, rather than vice versa … It does … illustrate the double disadvantage that people with chronic sickness or disability may face: their ill-health puts them at greater risk of unemployment, and the experience of unemployment in turn may damage their health still further”.

My noble friends Lord Patel and Lady Morgan of Drefelin highlighted the problem for young people who suddenly find themselves ill with life-threatening disease. They referred to the mismatch for 16 to 18 year- olds that must be addressed. I am sure that amendments will be tabled to that effect.

I understand that those with cancer, HIV and MS will be eligible for PIPs from the time of diagnosis; that is when the clock will start ticking. However, what about those with other neurological diseases, those with massive injuries such as head injuries, the loss of a limb or any sudden, catastrophic disease, or those who are seriously ill with conditions that are difficult to pin down at the time of diagnosis but which fluctuate and make progress rapidly? Huge expense is often incurred at the moment that people lose their health, particularly with a diagnosis such as cancer, which demands punishing chemotherapy, often very rapidly, or where there has been a road accident and massive injury has occurred. The costs of heating, transport, food and childcare suddenly rise in an uncontrollable way. Waiting three months for the DLA is already hard enough. Why make it much harder by creating a six-month qualifying period? Many have argued tonight for the year to be redefined as a three-month qualifying period followed by a nine-month prospective test period. It would cost the same. I hope that the Minister will take away the consistent message that has emerged in the debate.

The mobility component of the DLA is critical to keeping people well. Those in residential care are not being double funded. The joint report of 27 charities, Don’t Limit Mobility, makes that clear. For some who live in residential homes and the young, severely disabled people in supported residence, taking away the mobility allowance is like locking the door and throwing away the key. One person said:

“Without it, I would be severely depressed like I used to be … My independence is my most prized possession”.

One case that we must consider is that of the young single parent who suddenly becomes ill and whose ex-spouse does not provide child maintenance. In Wales, 68,500 parents—half of all single-parent families—need the Child Support Agency to obtain child maintenance. According to the Bill, such parents will now have to pay a registration fee and a levy on each payment, suddenly making their situation even worse, while they will have to wait six months to be eligible for PIP if they become suddenly ill. If that young parent needs an electric wheelchair to carry on coping with his or her family, they will not be able to get one without the mobility component. The noble Lord, Lord Kirkwood, spoke of hopelessness. Indeed, that is a real danger, as so many people are terrified of how they will be able to live, fearing becoming imprisoned by their condition. They fear the assessment process, rather than believing that a personal independence payment will help them to keep living.

Carers of the seriously ill are not mentioned in the initial impact assessment. Can the Minister tell us how many of the current 500,000 recipients are likely to lose carers’ allowance and how many of those will be women, given that 73 per cent of those claiming carers’ allowance are women? Can he also explain how the three levels of DLA transferred over to the two levels of standard and enhanced in PIP will act as a gateway to carers’ allowance in the future?

The tripwire of all this change will be how the assessments are done. Many feel that ATOS is not fit for purpose—harsh words, I know, but 40 per cent of its rejection decisions go to appeal and 70 per cent are overturned. Many find the assessments humiliating and degrading, and medical statements are often ignored. Some die before lengthy appeals are heard. I hope that the new assessment processes will be better. Sometimes, one thinks that they could not get much worse. Even the pilots are revealingly complex, showing that a subtle nuancing is required to meet individuals’ needs.

Concluding on a positive note, I am glad that the Government have continued with the DS1500 principle. The terminally ill cannot wait for assessments and their changing conditions mean that a single snapshot assessment is not appropriate. But as the Royal College of Physicians told the Select Committee of the noble and learned Lord, Lord Mackay, prognosis is a probabilistic art. Sometimes those with fluctuating conditions appear to be dying, imminently, but do not die at the time anticipated—al-Megrahi is a clear public example of this. Can the Minister reassure us that under the new system those in receipt of the benefit will not find it stopped if they happen to be alive at six months and will not be expected to repay it if they live longer? Also, should they go into an unexpected remission and cease claiming, will they be eligible again when they face dying? The intention behind this Bill is to make our welfare system affordable but it will be the traps that we have to address.

21:33

[Baroness Gardner of Parkes]

There is nothing left to say on this Bill. Everyone has made the most marvellous, wide-ranging statements. A theme that is coming through clearly—that people should be encouraged to work, do their best, have an aspiration and stand on their own feet wherever possible—is in theory a wonderful idea. We all know that that is true. The difficulty is when it comes to applying these things. I have always declared that I have a daughter with a physical disability and another family member with learning difficulties. My daughter tells me that every form that you have to fill in now is 35 pages long. As a dentist, I remember that people had to fill in 25 pages if they wanted help with their set of false teeth. At the end of the 25 pages, you were told how many prison visits that you could have. It was a sort of one-form-covers-everything—many pages that were totally irrelevant to a lot of people. They had no idea how to fill it in. They always brought it in and you had to do it for them.

In those days, another issue was whether the payment came straight to the dentist or went to the patient. When it went to the patient, you often did not see it. I can understand the suggestion now that housing benefit might go straight to the landlord. That is a terrible situation, particularly for those on housing benefit with private landlords who are in some cases crooked and demanding a great deal of extra money in cash from them, as well as their housing benefit. Landlords are getting eviction orders against them all. When you go into an estate agent, as I did with someone who has just had a notice that they have to move out and that the bailiffs will be coming shortly, the estate agent makes very clear that, even if the rent is within the £250 a week, no private landlord wants to have anything to do with housing benefit cases. That is terrible, and something must be done about it. It worries me that if the money is going to be paid directly to the landlord, the tenant cannot in any way pretend that they are not a housing benefit case because the landlord will see that when the money comes. It is very difficult. I think it might be wise to bring in flexibility about whether the money goes directly to the tenant or to the landlord. It is a major problem. I have had this from local councils as well. They have told me that they have done research and found that in central London landlords do not want to know you, so I am very worried for people who will be hard hit by housing benefit changes.

Returning to the principle of the Bill, my noble friend Lady Stedman-Scott made an excellent speech. She has worked at finding jobs for people who have often been out of work for a long time. I think that is wonderful. My noble friend Lord Sheikh said how good it is for people to work. That is true. There are advantages in having a job not only physically but in the morale-building effect it has on you because you feel you are making a contribution to society and to your own life.

A point made by other noble Lords is so true: we should hasten slowly. The noble Baroness, Lady King, made this point. If we try to do everything in five seconds, we are not going to succeed. It is so complicated that it will take a tremendous amount of work to sort it out. The noble Baroness, Lady Finlay, made the point that we are going to need a degree of flexibility. There are going to be cases that come suddenly out of the blue, and someone will have to look after those people. We cannot rely on charities to do it because they are finding it harder and harder to cope. It is a problem.

On mobility and the new personal independence payment, it is terribly important that people should be encouraged to be independent, but there has to be recognition of things we have mentioned, such as heating costs. I have raised them in Questions in your Lordships' House over many years, and the Answer is always that it is all taken into account in the money you get. Whether we are paying our own bills or someone else is helping us with them, heating costs are alarming if they are jumping at 18 per cent, 20 per cent or more. It is really quite concerning because a lot of people, particularly people who are a bit immobile, can easily die of hypothermia.

Years ago when I was on the local council here in Westminster, we introduced the free bus pass. Now I know that Ken very cleverly called it the Freedom Pass and everyone thinks he started it, but we had it going at least 10 years before that but were not smart enough to get the credit for it. Our main reason for doing it and for everyone getting it free, because at one time we talked about charging people for it, was that it was going to cost so much to assess people that it was cheaper just to give them the pass. We also thought it was better than any social service to keep people mobile and able to move around. I still hold the view today that if you can keep people able to go and do their own shopping, it is much better than having to give them a carer to help them do it, but where the carer is the only answer, we have to do that.

I am always very impressed when the Minister answers any questions on these issues. He has very clear thinking and understanding, but he has a huge job on his hands to satisfy the world and the people in this House. The job ahead will have to be done very thoroughly. As my noble friend Lady Stedman-Scott said earlier, her father, the furrier, said you want to cut only once, not twice.

21:39

[Baroness Lister of Burtersett]

My Lords, as a member of the night shift, I will inevitably cover issues already eloquently discussed by other noble Lords, but I shall do so by focusing on some of the Bill’s gender implications and drawing on the work of the Women’s Budget Group, of which I am a member.

First, simplification is one of the main aims of the Bill and has long been the holy grail of social security reform. The Bill bears out an earlier warning from the Social Security Advisory Committee that there is a limit to the simplification that is possible with means-tested benefits. The closer we study it, the more we see how new complexities spring up, hydra-like. While the Minister may be a self-styled revolutionary, in the words of my noble friend Lady Sherlock, I fear that he is no Heracles. Where universal credit represents a welcome breakthrough is in the integration of in-work and out-of-work support, thereby potentially reducing the insecurities associated with the transition into and out of paid work. That is very important. That is about the only positive thing I am going to say, I am afraid.

Means-testing will be extended as a result of the arbitrary time-limiting of employment and support allowance for those in the work-related activity group. A disabled woman who has written to me—one of many—voicing her fears about the Bill’s overall impact on sick and disabled people, asks, “What do we do then?”. The Government’s answer is: claim income-related ESA. However, 34 per cent of men and 46 per cent of women affected will not be eligible. Where they have to depend on a working partner instead, their financial autonomy will be eroded. This matters to people. Indeed, Professor Roy Sainsbury told the Public Bill Committee in the other place that in research with claimants,

“individual assessment spontaneously arose as a thing that people were very keen on”.—[Official Report, Commons, Welfare Reform Bill Committee, 23/3/11; col. 16.]

Women’s financial autonomy is also likely to be eroded as a result of measures that reduce incentives for some second earners, as my noble friend Lady Hollis of Heigham has already talked about. A new separate earnings disregard for second earners would go some way towards addressing this and I would welcome the Minister’s views on that possibility.

We should also note Carers UK’s concerns about the loss of a bespoke disregard for carers. Furthermore, we still do not know what is proposed for childcare costs, which is one of many gaping holes in the Bill that must be filled before Committee. The attempt to fit a childcare quart into a funding pint pot will aggravate the work disincentive for second earners and lone parents, as we have already heard. The disincentives faced by many second earners will encourage what we academics call a male breadwinner model. This sits uneasily with the Government’s very welcome goal of encouraging shared parenting. It is also very short-sighted from a dynamic perspective. If a woman is in paid work while living with a partner, she is better equipped to remain in the labour market should that relationship break down.

Research demonstrates the extent to which women remain the main managers of poverty. This means that women are likely to bear much of the burden of measures such as the abolition of part of the Social Fund and the introduction of a benefits cap. I am concerned about both, but will focus for now on the cap. I have been struck by the number of noble Lords from across the House who have raised very serious concerns about this cap. I hope that the Minister is getting the message. The 50,000 or so households that stand to be affected will receive less than Parliament has decided is necessary to meet their basic needs, as the noble Lord, Lord Kirkwood, has eloquently explained. The Secretary of State has justified the cap in the name of fairness, claiming that it is about those who we believe should be able to go to work but are not doing so. However, it will apply to some groups that are not even expected to work.

In the other place the Minister claimed that the cap is about ensuring that there is a level playing field for everyone, but this is not a level playing field. The benefits and tax credits received by working families are being ignored. If they were all taken into account, official figures show hardly anybody would be affected by the cap. As a number of noble Lords have said, it is particularly unfair that child benefit is not added to the comparator earnings but is treated as income for the purposes of the cap. Could the Minister please explain to the House how this can possibly be justified?

The Minister also assured the committee in the other place that the cap is not about creating hardship, but hardship will be created, as the Centre for Social Justice has pointed out. Hardship could also result from the proposal to pay benefit monthly rather than fortnightly on the grounds that this is in line with the demands of modern life, and we have to prepare people for paid work. However, over a fifth of workers—and a higher proportion of low-paid workers—are still paid weekly or fortnightly, according to the department’s own figures. While the earlier switch from weekly to fortnightly payments may have caused few difficulties, the leap from fortnightly to monthly is much greater.

Nearly two in five families with children—the lowest income fifth—already run out of money regularly. So this is not a problem for a small minority to be solved as proposed by appropriate budgeting support and more frequent payments in exceptional circumstances. Again, it is women, as the managers of poverty, who will bear the main brunt. I hope that the Minister will be open to persuasion on an administrative matter that has significant consequences.

Another payment issue of great concern to many organisations is that the whole of the universal credit will be paid to one partner with, in particular, no routine provision for payments for children to be paid to the main carer, usually still the mother. Not only will this in many cases represent a further erosion of women’s financial autonomy, but also research that I and others have carried out shows that income is not always shared fairly within families and that money labelled for children and paid to the main carer is more likely to be spent on the children. As Fran Bennett of Oxford University warns, payment into a joint account—a so-called “nudge”, as the Minister has said—is not necessarily the answer, because research shows that joint accounts do not guarantee both partners equal access.

We see here an inconsistent approach to public and private dependency which could undermine some of the Government’s own objectives. A driving motivation behind the Bill, as we heard from a number of noble Lords, is to address what in my view is a damagingly inflated problem of public welfare dependency without any regard for the consequences of private economic dependency within the family. This could create a new couple penalty as the fear of a loss of financial autonomy and security could discourage women from committing to a new relationship.

In conclusion, while I was focused on the Bill’s potentially damaging impact on women, this also has implications for children, given the link between women’s and children’s poverty. I hope that in this House we will be able to deliver the concessions necessary to protect women, children and disabled people and achieve the fairness that the Minister assures us this legislation is supposed to be about, but at present signally fails to deliver.

21:48

[Lord Best]

My Lords, my set-piece speech was going to cover a number of housing issues. To my slight surprise, housing has featured in an awful lot of your Lordships’ contributions and my speech is virtually redundant. Even at this late hour, however, I might be able to add one or two new points, because a couple of new reports have come out in the past 48 hours, specifically to help our debate today, dealing with housing benefit reforms, the restrictions and the cuts. Having a total benefit cap which impacts on housing is probably the seventh, or just possibly the eighth, restriction on housing benefit. With this underlying intention of the Government of saving some £2 billion per annum from the housing benefit bill, the question has always been: will that burden of an extra £2 billion fall on the tenants or on the landlords? The hope has been that the landlords will reduce rents to the new levels and that it will not be the tenants, who are, after all, some of the poorest people in this country, who will suffer from the benefit reductions.

The report that came out yesterday from the British Property Federation and the Chartered Institute of Housing looks at whether benefit reductions will lead to landlords reducing rents. The report takes it on a historic basis as well as a contemporary one. I am afraid that, although we must await the much more extensive research project which the Minister has put very properly in hand—I have congratulated him on doing so—it does not appear that benefit reductions will lead landlords to reduce rents. Therefore, the burden and the pain of cuts will fall upon very poor households and may impact on homelessness.

The second ingredient I was going to explore concerns the payment direct of housing benefit to social housing landlords or the local housing allowance to private landlords and the new measure which involves the benefit being paid instead to the tenant. The tenant would handle the money and would have to pass it on to the landlord in due course. A National Housing Federation report that came out today has done an opinion poll of tenants to see how they feel about the independence that this would give them and the preparation for work that this might help with. However, the outcome of this opinion poll is that 93 per cent of tenants felt strongly that their rent should go to their landlord. Perhaps they think that they do not want the temptation of using that rent for something else or simply want the convenience that the rest of us have with mortgage payments being made by direct debit to the building society and thus not giving us the temptation of handling that money.

We have to reckon that some people have difficulties of their own and that their budgeting could be very complicated. Some will have debts and sometimes people who are after them to repay those debts will be a lot nastier than social landlords. Today’s opinion poll confirms that paying rent to the landlord is a sensible option. Picking up on something said by the noble Baroness, Lady Gardner of Parkes, is it so likely that landlords will accept tenants at all unless the rent is paid directly to that landlord?

The third ingredient on which I was going to speak at more length is the penalty if one is found to have a spare room somewhere in one’s property in social housing if you are under pensionable age. It is expected that 670,000 households will be discovered to have a spare room and will be required therefore to downsize to something smaller or to face the cost of a reduction in their benefit, averaging between £8 and £11 a week. It will be taken from the other benefits that they receive and will be calculated without regard to any housing costs. Those averages are, of course, averages and in some areas the cost per week would be very much higher.

This seems to be a cruel reduction in people’s entitlements when one bears in mind that it may be physically impossible for some people to move to a smaller home. Of the people affected, 180,000 are in two-bedroom accommodation and would be required to move to a single-bedroom place. But, last year, there were only 68,000 vacancies in social housing in one-bedroom accommodation. Even if we allocated all the one-bedroom accommodation to people who were downsizing, which we cannot do because we have a lot of other people in priority need, it would take several years before people could move down from their two-bedroom property to a one-bedroom property. In the mean time, to penalise them seems very unfair. I am afraid that I do not have a new report out to tell noble Lords about that third ingredient.

I hope that the Minister will take account of the fact that so many of your Lordships today have hit upon housing and housing benefit reforms as a really important aspect of this Bill. Indeed, we will put amendments before him, which we hope he will consider favourably.

21:55

[Lord Kennedy of Southwark]

My Lords, as noble Lords on these Benches have said, the Opposition support many of the broad principles in the Welfare Reform Bill. On the face of it, these Benches could agree with many of the opening remarks of the noble Lord, Lord Freud. Universal credit is a welcome simplification of the benefits system. We all want measures to support people getting back into work, we support sanctions for people who persist in refusing to look for work, and we can support careful, considered reform of disability living allowance. All these reforms can build on the actions the Labour Government took to make work pay.

However, the Bill is a lost opportunity for real progress. I sincerely hope that the noble Lord, Lord Freud, is in listening mode. These Benches have major concerns about how the reforms have been proposed and the negative effect they will have on the living standards of millions of families and children. The Bill is not clearly thought through and in reality is an attack on family budgets which will have billions of pounds taken away under a smokescreen of reform. I hope the noble Lord, Lord Freud can explain why the Government have chosen to bring forward legislation which is so light on detail. Would it not have been better to wait and detail the proposals more clearly? We all want to get people quickly back into work, but to achieve that you need some jobs for them to get into. Failure to provide realistic opportunities for employment throughout the UK will mean that unemployment levels will rise and the welfare bill will be difficult to rein in.

Noble Lords will recall that we have been here before. It is very simple. If we can get people back into work, that will reduce welfare costs, but the Bill does not help in that regard either. The number of people chasing each vacancy can vary greatly, but even in areas that have more jobs on offer, you can be looking at one person chasing every five or six vacancies. So I worry that the Bill just does not take into account the reality of the situation people can find themselves in but instead takes a blinkered view.

There are a number of other issues. As the noble Lord, Lord Best, said, direct payment to claimants is not always in the interest of the benefit recipient. There is much to be said for payment to providers on behalf of the claimants. We have to recognise that people sometimes struggle to keep a grip of their household budget. Rising prices and the change in benefit rates from RPI to CPI all add to pressures on families. With direct payments of benefits into bank accounts, have the Government considered the problem of banks levying charges when account holders are overdrawn and recovering them as soon as funds from the DWP appear in the account? Charges taken direct from the claimant’s account will mean people will have even less money with which to meet their obligations. How will that help a family which is struggling to make ends meet?

As my noble friend Lord Knight of Weymouth said, proposals to remove local authorities from administering the housing benefit elements of universal credit need detailed scrutiny by your Lordships’ House. At present, the proposals run the risk of not saving money but actually costing more and increasing hardship and worry. At present, local authorities have achieved a high level of performance, which has reduced errors and speeded up claims. Should the Government not be allowing more localisation and less centralisation? The Institute of Revenues, Rating and Valuation, in evidence to the Department for Work and Pensions, urged the Government to listen, take a realistic approach and use local authorities in this regard. They have a track record of delivering and have the necessary skills and expertise. Can the noble Lord, Lord Freud, tell the House how a reformed administration of the system, overseen directly by the Department for Work and Pensions, will improve on the situation at present? How does the noble Lord envisage that measures to mitigate risks in the change will be implemented? What will be the process for the DWP to start a new claim? Will all new claimants be expected to send all their documents to the DWP? What if documents go missing? How will the new system mitigate against fraud? Does the Minister not understand the problem that over or underpayment will cause to claimants, as people seek to budget effectively?

Often housing benefit services are combined with council tax benefit and other benefits as part of a general benefit service. Can the noble Lord, Lord Freud, confirm that these local authority contracts will be allowed to run their course and local authorities will not be placed in the invidious position of having to seek to end these contracts early with all the resultant expense that that will entail. At this stage, I fail to see how not allowing local authorities to retain responsibility for administering the housing benefit element of universal credit is not a good thing. The system is administered well. If we move away from that expertise, the Government must put in place protections for people so that they are not disadvantaged and the situation made worse by this change.

In conclusion, I ask the noble Lord, Lord Freud, where the Government took soundings from before they brought these proposals to Parliament. Did they look at how systems are operated abroad? If they did, which systems did they look at? Much could be done with this Bill if the Government are prepared to listen and to work with noble Lords. There could be much merit in these proposals, but the devil is in the detail and the consequences for individuals and families on the lowest incomes appear to be grave indeed.

22:00

[Lord McKenzie of Luton]

My Lords, this has been a powerful, knowledgeable and passionate debate, as it should be, given the issues at hand. I congratulate the noble Lord, Lord Feldman of Elstree, on a very impressive maiden speech, and I look forward in the future to more of his contributions, and indeed to his stories. I had expected to hear about the iron triangle, but not from the noble Lord, Lord Boswell. I had not expected to hear a treatise on the family sizes of the Pakistani and Bangladeshi communities, and hope that I do not again.

I thank the noble Lord, Lord Freud, for the manner in which he introduced the Bill, for the extensive surrounding briefings and for the accessibility of the Bill team. I thank him again for his promise of further information, and it would be good to have a schedule of what is upcoming, particularly in relation to the Committee timetable. We acknowledge that the Minister is a pioneer and a true believer in the universal credit, and someone who is always evidence-led in his approach to policy. But his difficulty is that what is before us is a proposed credit that is not universal, and a universe in which there are too many black holes. I see the noble Lord not so much as a Che Guevara but perhaps as a Captain Kirk boldly going forth with a few warp factors involved. Of course, the universal credit provisions sit alongside measures that are known and which are deeply concerning. These arise in the context of the £18 billion of cuts to benefits before the universal credit sees the light of day, so assurances that there will be no losers, frankly, ring a little hollow.

We have had the timely and devastating report from the IFS which concludes that the Government’s economic strategy will give rise to greater inequality and rising child poverty, putting into reverse progress made in the years of the last Government. Indeed, if unchanged, the Bill will help to deliver this outcome for the Government. It is an outcome that, apart from those right at the very top of the income scale, will see the poorest 30 per cent hit the hardest. As my noble friend Lady Hayter reminded us in a fantastic speech from the Front Bench, the rhetoric of parts of Government—I exonerate the noble Lord from this—is increasingly in danger of stigmatising benefit recipients with a benchmarking always made against “hardworking families who pay their taxes”. I am bound to say we heard a little of that from the noble Baroness, Lady Stowell, implying that in order to receive benefits, you must be feckless, workshy and happy to live off the state, no matter that your circumstances may have changed because of a family bereavement, ill health, the worsening of a disability, the closure of a workplace or being forced to move because of housing benefit changes—or, as the right reverend Prelate the Bishop of Leicester said, because of simply making a mistake.

We are in support of a welfare system that recognises the benefits of work, supports people into work or closer to the labour market, and with an obligation on people to engage with the system and sanctions for those who refuse to look for work. These principles underpinned our approach to welfare reform when in government, with advice, of course, from the noble Lord, Lord Freud, in his former life. We know that the vast majority of claimants want to work, but they face job shortages and barriers to employment, so the Government have their part to play in promoting growth and job creation.

Of course, these barriers are not only lack of jobs but lack of skills, and sometimes employer attitudes to employing people with disabilities. A benefits system that provides in- and out-of-work support, and that has a single taper rate, a simple system of disregard and a single payment has the ingredients that could forge a political consensus, as my noble friend Lady Hollis said. However, having these components does not of itself justify the claim by the Secretary of State that there will be no losers and that work will always pay. It depends on the detail. There is a limit to simplicity, because the system must respond to the complexity of the lives of claimants, as we heard from my noble friends Lady Lister and Lady Sherlock; and of course, as my noble friend Lord Whitty said, simplification costs money.

We know that we have a taper rate of 65 per cent rather than 55 per cent, as the noble Lord, Lord German, would wish, because it was imposed by the Treasury; and that nearly 2 million workers will have a worse marginal effective tax rate as a consequence. We know that the savings cap will take thousands out of universal credit altogether, which is why we will seek to remove it during the passage of this Bill. Many noble Lords have commented on the lack of clarity about childcare—what we tragically do not see is a recognition of childcare as an investment to help parents access employment, reduce reliance on benefits and enable career development. We will continue to press for answers in Committee.

We also have no answers on how passporting to other benefits would work, although the passport in from PIP in respect of carers’ allowance is, as I understand it, work in progress. As my noble friend Lady Donaghy said, there is a lack of detail around self-employment, other than the unreal notion that someone starting a business will earn at the minimum wage from day one. We know that the Government have more work to do on payment issues, especially for joint claims, to take account of unequal distributions of finance in some households and to ensure that money allocated for children actually reaches them.

We have the outstanding issue of how direct payments to RSLs in respect of housing support can be made. It is only when these matters, and many others, are resolved that we can make our judgment on the universal credit. Although there are benefits in having a single payment source, it places even greater emphasis on the delivery systems being robust, because it is all or nothing. We have heard concerns expressed by the noble Lords, Lord Kirkwood and Lord Bilimoria; and my noble friend Lord Knight, in a very incisive contribution, effectively made the case for Parliament having reassurance before this finally proceeds.

Separating council tax benefit and housing benefit creates the worst of all worlds: a credit that is not universal, and the need to unpick local authority systems currently coping well with both—many of which, as my noble friend has just said, have been jointly outsourced. Local authorities are having to cope with this at the same time as the challenges of huge cuts in resources, increased homelessness and while picking up the pieces of the discretionary Social Fund—the latter without ring-fenced resources. Can the Minister tell me what assessment has been made of the capacity of local government to respond to these challenges, including that of devising new rebate systems with 10 per cent less money? How will this fragmentation help individuals access specific advice? The calculation of housing costs within the universal credit is delegated to regulations, but we know that this facilitates the uprating of housing allowance by CPI, separating actual rent levels from the housing support available.

The Bill covers just some of the changes to housing benefit that this Government have introduced. Our debate today has illustrated the extent to which noble Lords are appalled by the so-called under-occupancy provisions relating to social housing, ignoring the needs of foster carers, irrespective of where there is available smaller accommodation with equivalent security of tenure, regardless of whether people can afford to move and ignoring the expense to follow from replicating adaptations when disabled people are forced to move. These are illogical, wretched provisions that must be exposed and opposed. Even Mr Pickles has recognised that this will increase homelessness and cost money.

Many noble Lords have also commented on the benefit cap, an arbitrary measure which lacks an evidence base or indeed a clearly stated aim. We must use Committee to clearly challenge the basis for the figures and the perversity of including housing support in the calculation. There can be no more damning critique of this proposal than that of the Children’s Society, which says that 200,000 children would be affected by the proposal, and more than 80,000 children made homeless. I simply cannot believe that the Minister himself will find this acceptable, or the Treasury that it is cost effective.

We have heard from many noble Lords in this debate the fears that the policy in this Bill will have a massive impact on the lives of disabled children and adults, people with long-term conditions and their carers. These concerns have been highlighted by reforms to DLA set in the context of a reduction target of 20 per cent in expenditure mentioned by the noble Lord, Lord Rix. We are not unsupportive of reform to DLA, provided it is undertaken fairly, but what is important—and we have heard this from many noble Lords—is that there is a full opportunity in Committee and otherwise to scrutinise the proposed assessment criteria, the process and the structure of the benefits. As the noble Baroness, Lady Campbell, said, the lack of coproduction in this is to be regretted.

Many noble Lords again expressed particular concerns about the assessment process. The noble Baronesses, Lady Meacher, Lady Campbell and Lady Grey-Thompson, the noble Lord, Lord Wigley, and my noble friends Lord Touhig and Lady Healy raised questions about how the assessment would work in issues relating to people with mental health, fluctuating conditions, autism and Parkinson’s disease. I am bound to say I had a sense of déjà vu in all this. When we were discussing the work capability assessment we had a team of excellent officials from the department and extensive work with stakeholder groups testing the process, but we know what history tells us about what happened to the WCA and the extent to which it has taken time to put it together. We do not want a replication of that. We will also want to know how it works before it has been applied to existing DLA recipients.

The noble Baroness, Lady Hollins, my noble friends Lady Hollis and Lady Morgan and others gave us graphic descriptions of the effect of proposing a one-year time limit on contributory ESA—a limit which is to be imposed retrospectively. As we did in the other place, we will seek to get this extended to two years. We will further seek support for the qualifying period for PIP to be three months, as is currently the case for DLA. It is time for an end to the lingering confusion of DLA mobility for those in residential homes, and to ensure that it is protected.

Under the universal credit, the gateway to extra support for adults with a disability will be through the ESA. What this means is that there is no extra help within universal credit for those found fit for work regardless of their level of disability. The demise of the severe disability premium means less help for disabled people if they live on their own without a carer, and parents of all but the most severely disabled children will have their means-tested extra support cut in half. Moreover, the higher proportion of childcare costs of disabled children in less well-off families will be lost. Whatever the final proposals on childcare, does the Minister accept that these families are currently likely to miss out? We will seek to amend the Bill to ensure that any new disability addition to the universal credit for disabled children is no lower than that they currently receive in the child tax credit system.

Several noble Lords raised the issue of child maintenance: the noble Baroness, Lady Finlay, the noble Lord, Lord Boswell, the noble and learned Lord, Lord Mackay of Clashfern, and my noble friend Lady Sherlock. The legislative basis on which charging could proceed in fact is set down in the Child Maintenance and Other Payments Act 2008, but we will not allow our legislation to be prayed in aid for charging PWCs for routine access to the statutory system on a basis which will inevitably deter parents with care from using a lifeline to maintenance. We will also challenge the veto which non-resident parents have been given over a right to prevent PWCs accessing the statutory system. Of course, we support the encouraging of parents to reach their own arrangements but not for the gateway to act as a barrier to that system. Perhaps the Minister can tell us about the research which underpins the approach that the Government have adopted and the extent of the support services which can be brought to bear.

This is a great upheaval of the benefit system and it is being accompanied by a legal aid Bill which puts welfare benefits and employment out of scope, while limiting housing advice—quite unbelievable. The Bill presents us with many challenges. If it proceeds through your Lordships' House unamended, some of the most vulnerable people in our society will face serious hardship. Their day-to-day existence and their aspirations for the future will be diminished. Our task is to confront the Government with the consequences of what they propose, pursue the detail of the glaring gaps in the universal credit, scrutinise what detail is available on the PIP and the draft regulations and amend the Bill where we can—and to continue to argue the case for a fair, progressive, compassionate and sustainable welfare benefits system.

22:16

[Lord Freud]

My Lords, I thank everybody who has spoken today. There have been some truly excellent contributions. I need to congratulate my noble friend Lord Feldman on his remarkable maiden speech, which I think we all enjoyed. We look forward to many more equivalent contributions.

The Bill deals with some really important matters and I am extremely pleased that the debate has been both informed and committed. I may not have enjoyed some of the things I heard but it has certainly been extraordinarily well considered. I think I can claim that we share a consensus on the need for reform and that there has been a great deal of general support for the principles underpinning the Bill. We all believe that the welfare system should be fair; we all agree that it should be affordable; and we all share the aspiration of a welfare system that incentivises people to work, releases people from the net of benefit dependency and ensures that work pays. There has been a little debate about the order of priority from the noble Lord, Lord Knight, among others, but I think that we can all agree with those main principles.

The discussion is about how we get from here to there and I know that the detail of that will be heavily scrutinised in Committee, which is absolutely right. I also expect that our debates in Committee will be just as informed as they have been today, and I assure noble Lords right around the House that I will be listening with extraordinary care to the informed views of its Members. I have had a large number of specific questions relating to particular clauses and scenarios. There is no way that I can deal with them all in the time that I have today but clearly we will have ample opportunity to go into great depth in all those areas, so to the extent that I do not deal with an issue now I know that we will come back to it.

Perhaps I may remind the House of the commitment that I made in my opening remarks. Over the next few weeks I shall publish a great deal of detailed information which was previously provided in Committee in another place. It will include notes on every regulation-making power in the Bill, full policy briefing notes and, where possible, illustrative draft regulations which will go into considerably more detail than has previously been published. In addition, as we approach each section of debate in Committee I will ensure that officials from the Department for Work and Pensions are available to host briefing meetings for noble Lords. These sessions will be a further opportunity to go over the detail of each clause before it is debated in Committee. I hope that both these sessions and the additional information that will be published will be of use to the House and will go a reasonable way to answering many of the questions and specific points raised today. Clearly, we will pick up the outstanding issues in Committee.

Let me try now to summarise in my closing remarks some of the identifiable themes that emerged this evening. The most disturbing thing that I heard today was the concerns of many noble Lords about the anxiety of disabled people. The noble Baronesses, Lady Murphy and Lady Gale, talked about how people were terrified, or petrified, and that worries me more than anything I heard. We are committed to supporting disabled people to exercise choice and control and to lead independent lives. There has been a growing consensus that the disability living allowance has not been delivering and, as I said in my opening remarks—actually, I think that I said it yesterday—it is inconsistent and confusing and does not reflect, in particular, the needs of people with non-physical impairments, such as mental health conditions. Our intention is that the personal independence payment will focus support on those individuals who experience the greatest barriers to remaining independent and leading full, active and independent lives. The intention of the reforms is to ensure that the benefit is sustainable for the longer term, with a more objective assessment of individual need, and that it will be responsive to changes in people’s conditions.

In answer to the question that was raised by a number of noble Lords, including the noble Baroness, Lady Finlay, and the noble Lord, Lord McKenzie, about the relationship with the carer’s allowance, I can reassure the House that the personal independence payment’s daily living component will be part of the gateway for receipt of carer’s allowance, but only when we have completed the modelling and testing of the assessment criteria will we be able to update the impact of the new PIP assessment on carer’s allowance recipients and the rate of daily living allowance to be actually used. We published the initial draft of those assessment criteria in May. These were developed in collaboration with a group of independent specialists in health, social care and disability and we drew on a wide range of relevant expertise. The aim of the criteria was to look at the ability of individuals to carry out a range of everyday activities. I think that there are currently 11 separate criteria and, for example, the introduction of communication will ensure that we take the effect of impairment of hearing, speech and language comprehension into account much better.

My noble friend Lady Thomas asked what account the assessment criteria will take of the successful use of aids and appliances. We recognise that aids do not remove an individual’s disability and that there may be ongoing costs. We know that it is vital to get these assessment criteria right. Over the summer we heard the views of disabled people and organisations. We met with around 60 organisations and received about 170 other written responses. We tested the draft criteria by reviewing them with 1,000 people who are on DLA to see how they worked. The findings and the testing will be used to produce a second draft of the assessment criteria and the regulations later in the autumn in time for us to use them when we consider the relevant clauses in Committee.

The noble Baroness, Lady Meacher, asked who will make the final decision on the assessment. I can confirm that that will be the DWP decision-maker and not the medical assessor. I can also confirm that all claimants, particularly those with mental health conditions, can be accompanied at the face-to-face assessment. As I have said in the past, the default position is a face-to-face assessment but I am conscious that in some circumstances that is counterproductive. A number of Peers are worried about autism and how that will be handled.

Several noble Lords have commented on the extension of the qualifying period of PIP to six months. While there has been reasonable support for the principle of an overall qualifying period of 12 months, there is concern that a longer qualifying period will adversely affect certain groups of disabled people, particularly people who have had strokes and those with a recent diagnosis of cancer. My honourable friend the Minister for Disabled People and officials have engaged with disability groups during the summer and the Government are continuing to look closely at the issues they have raised in regard to this change.

The other issue that is of great concern to noble Lords is the time limiting of ESA for those in a WRAG, particularly for cancer patients. The noble Lord, Lord Patel, with his direct experience of this issue, made a moving speech on it. The contributory ESA was always intended to be a benefit which provided temporary support for those in work-related activity. With the right support it is reasonable to expect people in this group to return to work; that is what this definition aims to do. In our view a time limit of one year strikes the right balance between the need to restrict access to contributory benefits for those under pension age while allowing those with longer term illnesses to adjust to their health condition. It is, of course, double the length of time for which the contributory JSA applies. I must emphasise that severely ill or disabled people in the support group, which includes many people with cancer, are fully protected and will continue to receive contributory ESA indefinitely. Income-related ESA will also be available for those with little or no alternative resources. My department has been working with Macmillan Cancer Support and others to ensure that we support people who are diagnosed with cancer in the most sensitive, fair and appropriate way.

A number of noble Lords raised deliverability and IT—I am thinking in particular of my noble friends Lord German, Lord Kirkwood and Lord Brooke, and the noble Lord, Lord Knight. I am aiming as soon as I can to give a much more extensive demonstration of the IT, because what is happening is very interesting—it will not be in the Chamber because a lot of graphics are involved. Our aim is to process and implement the majority of claims automatically. By pulling the benefits and credits together, we break the factor of so many different organisations delivering them. It will not require large-scale IT, and it is absolutely not an IT development on the scale of that the NHS, which was cited by a number of noble Lords. We are already under way on the design and development. The agile process means that, rather than delivering the system in one go and then testing it, we are constantly testing how it works. The scale of the IT is similar to that for the ESA, which was successfully delivered by the previous Government on time and on budget in October 2008. We will not rely on last-minute testing. It is a fascinating area, and I commit to doing something quite elaborate on it.

Another area that received considerable attention today was the benefit cap. Powerful contributions were made by the noble Baronesses, Lady King and Lady Lister, and my noble friend Lord Kirkwood, who is amazingly still in his place tonight despite his bad back. Let me be clear: the cap is being introduced for a number of reasons. It will address some of the problems of welfare dependency, add to the incentives to move into work and promote fairness between those people who are out of work and rely on the benefits system and taxpayers in work who pay for it. There is an important principle here: people should not expect a life on benefits getting more money from the state than people in similar circumstances could earn in work. This is the legacy of a system where people are not always better off when they get a job, which is one of the fundamental problems that we are trying to fix with the universal credit. The introduction of a benefit cap will mean that households on out-of-work benefits will have to make the same decisions as families in work with regard to the lives they lead and the areas they can live in. People will have to take responsibility for their decisions in the light of what they can afford. We have said that we will consider ways of easing the transition for families on existing benefits and are looking at exactly what might be needed. In doing so, we shall be mindful of the points that have been made on this issue today and throughout the passage of the Bill to date.

Housing has provoked much more interest around the House than is normally the case, possibly to the slight surprise of specialists such as the noble Lord, Lord Best, who is one of the gurus on the topic. Over the past 10 years, housing benefit expenditure has roughly doubled in cash terms. The Government are convinced that it is absolutely necessary to take steps to manage this expenditure. We have already introduced legislation to ensure that people who make new claims for housing benefit in the private rented sector are prevented from claiming excessive rates of local housing allowance. The Welfare Reform Bill introduces further measures to control expenditure and to ensure that housing benefit is fair and affordable.

Noble Lords have spoken about the changes that we are making to housing benefit in the social rented sector. In England alone, around 5 million people are on the social housing waiting list and over a quarter of a million households are in overcrowded conditions within the social rented sector. Yet at the same time, something approaching nearly 1 million extra bedrooms are being paid for by housing benefit. That is simply a luxury that we can no longer afford.

It is not fair to the taxpayer and not fair to those in housing need. The demand is such that we must do all that we can to make better use of our limited social housing stock. We need to do more to tackle the high rate of under-occupation, encourage more people to move as well as help those who want to move but have so far been unable to do so. If people continue to live in a property larger than they need, we will expect them to make a reasonable contribution to its cost through a reduction in housing benefit.

On the connection between the CPI and the LHA uprates, I must point out that we are committed to that measure for two years; 2013-14 and 2014-15. If it then becomes apparent that local housing allowance rates and rents are out of step, they can be reconsidered.

Many noble Lords including my noble friends Lady Stedman-Scott and Lord Ahmad, the noble Baroness, Lady Hollis, and the right reverend Prelate the Bishop of Leicester, raised concerns about childcare and how it fitted with the universal credit. It is a critical issue and we are taking the time to ensure that we get it right. The impact assessment showed that an average family with children is more likely to have a higher entitlement under universal credit, and the combination of higher disregards and a single taper will make work pay. If childcare costs are taken into account, some families may face a higher effective marginal deduction rate, but that is the same as happens in the existing system. It is not because of the universal credit. But I absolutely accept the point that noble Lords have made right around the House that we need to get this right and make sure that the way that we structure and fit in childcare is absolutely optimised.

The impact of this Welfare Reform Bill will be greater than the sum of its parts. The introduction of the universal credit will mean around 2.7 million households will have a higher benefit entitlement. For more than 1 million households, that will amount to more than £25 per week. We anticipate that introducing a simplified welfare system will lead to greater take-up of benefits, potentially lifting 600,000 adults and 350,000 children out of poverty. The combined effects of welfare reform could mean up to 300,000 fewer workless households. That is at the core. The reason for this is as the noble Baroness, Lady Hollis, said so eloquently: we are de-risking being out of work compared with being in work.

A point that I think noble Lords still have not really accepted—or perhaps not on the other Benches—is that when the pure universal credit comes in, in its entirety, it will put more than £4 billion each year into the pockets of the poorest people in this country. I know that there are other cuts which noble Lords do not like, but on the universal credit, we have had to invest a lot of money each year and the Treasury has supported that to make the system work.

The welfare reform and the contents of this Bill are about much more than money. The reform is aimed at changing the state of our nation. Taken together, these measures will radically alter the mindset of dependency. They will create work incentives to drive positive behaviour. They will deliver a welfare system that is fair, flexible and firm. In essence, it will bring real, lasting change by directly affecting attitudes and behaviour. This Bill is a real opportunity to make a difference to the lives of some of the poorest, the neediest and the most vulnerable people in our society. It is an important and necessary piece of legislation. I commend the Bill to the House and ask for it to be given a Second Reading.

Bill read a second time.

House adjourned at 10.42 pm.