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Mr Peter Bone (Wellingborough) (Con)
What recent steps she has taken on reform of the common agricultural policy.
The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
Having just heard the writ being moved, I am sure it would be the right thing to do to express our condolences to Alan Keen’s wife, Ann, whom we all remember, on behalf of the whole House.
The Government have commenced negotiations on the CAP reform proposals, which the Commission published on 12 October and which, for the first time, require the co-decision of the European Parliament. I recently met Agriculture Commissioner Ciolos, together with the Agriculture Ministers for the devolved Administrations, to ensure that all parts of the United Kingdom are taken into account.
Mr Bone
Our net contribution to the European Union in the last five years of the Labour Government was £19 billion, and in the next five years of this coalition Government it will be £41 billion—an increase of 116%, because Tony Blair gave away Mrs Thatcher’s EU rebate. At the time, he said that our net contribution would not increase because the European Union had promised massive reform of the CAP. Who was lying, Tony Blair or the European Union?
Mrs Spelman
That is precisely why the UK Government have expressed their disappointment that the proposed CAP reforms lack ambition. Although the commissioner correctly identifies food security and climate change as the two key challenges that agriculture faces, I regret that the proposals do not really address the great challenge. Therefore, we will seek to improve them to get the best possible outcome for taxpayers, consumers and farmers alike.
Mr Denis MacShane (Rotherham) (Lab)
The Secretary of State will recall that that great European, Socrates, said that a politician who does not know the price of a bushel of wheat should not be in the job. If we got rid of the CAP, we would have to have a BAP—a British agricultural policy. Knowing our farming community—a landowning community—and its control of top Tories, I suggest that the BAP would be far more expensive than the CAP.
Mrs Spelman
I think we are speculating wildly about the future of Europe. My job is to concentrate on getting an improvement in the reforms. It is important to appreciate that the underlying objective of the CAP is to provide good-quality food at a reasonable price. My Department is committed in its business plan priorities to producing more food sustainably, precisely to achieve that objective.
Andrew George (St Ives) (LD)
I am sure that the Secretary of State will agree that a primary objective must be a move from market-distorting production supports to supporting public goods, such as the environment and amenity. How much progress does she believe the CAP reforms are making in that direction? How do we ensure that that general direction of progress can be accelerated?
Mrs Spelman
That is a helpful question, as it enables me to share with the House the fact that we are on a journey with these proposals. We welcome the fact that the Commission wants to “green” the CAP. Taxpayers have every right to expect other public goods for the subsidy they provide. We feel that the “greening” proposals also lack ambition, and we want proper recognition of the fact that UK farmers go a lot further than those in a lot of other member states in providing stewardship schemes that make a real difference and provide environmental benefits that address problems such as the demise of species.
Kelvin Hopkins (Luton North) (Lab)
There is much talk of returning powers from Brussels to this Parliament and the British Government. Would the CAP not be a good policy to bring back to Britain? Could we not subsidise British farmers, even at the current levels, and save billions of pounds from our budget every year?
Mrs Spelman
The nature of the supplementary questions is ranging much wider than the remit of my Department. As I have said, my job at each one of these Council meetings is to get the best possible deal for consumers, taxpayers and farmers in the hon. Gentleman’s constituency. That is my duty.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
2. What recent discussions she has had with the Secretary of State for the Home Department on the consultation on dangerous dogs.
The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
My noble. Friend Lord Taylor, who leads on the subject of dangerous dogs in DEFRA, has been working alongside Lord Henley at the Home Office to see how the proposed antisocial behaviour measures can be best applied to such behaviour relating to dogs. DEFRA has also been developing proposals on reducing dog attacks and promoting more responsible dog ownership. This is now at an advanced stage and, subject to ministerial clearance, we will be able to make an announcement early in the new year.
Michael Connarty
That is a very helpful reply, because while the Government have been divided on this matter—DEFRA and the Home Office share this responsibility—and dithering, quite frankly, yet another very serious attack on a postman has been reported by the Communication Workers Union. Someone nearly lost most of the fingers on one hand in an attack by a dog, which was clearly vicious, in a private property. We need to deal with that problem quickly because members of the postal services who go into private property must be protected from people who keep vicious dogs.
Jane Ellison (Battersea) (Con)
Further to that reply, one of the consequences of the dangerous dogs debate has been the stigmatisation of an entire breed, the Staffordshire bull terrier, which makes up a huge percentage of the abandoned dogs that Battersea Dogs and Cats Home takes in and a vast bulk of those that are hard to rehome. Yesterday, Battersea Dogs and Cats Home launched a campaign in Parliament to reclaim the good name of the Staffordshire bull terrier. May I invite the Minister to endorse that campaign?
Mr Paice
Yes, I am happy to endorse that campaign, having been brought up as a child with bull terriers, as my parents had them—[Interruption.] I said “with”, not “by”. I entirely accept my hon. Friend’s contention that the vast majority of that breed are perfectly harmless.
Mr Speaker
Much has now been explained. We are very grateful to the Minister.
Sheila Gilmore (Edinburgh East) (Lab)
3. What recent discussions she has had with ministerial colleagues on the introduction of mandatory reporting of carbon emissions by businesses.
The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
I have had recent discussions with ministerial colleagues on the issue and I know that there is a lot of interest in it. There is an appetite in Government for it but, as the House will be aware, any policy has to undergo an impact assessment, which we are in the process of clearing.
Sheila Gilmore
There are only four months until the Government are obliged either to introduce carbon reporting or to explain why they have not. When the Members who previously sat on the Opposition Front Bench supported the proposal, they said that it would help economic growth. Why, in the present economic crisis, is it not being pursued more vigorously?
Mrs Spelman
Two things have emerged. We had more than 2,000 replies to the consultation, which showed that carbon is reported in very different ways. One challenge is to find a way in which it can be reported meaningfully so that investors know which company to invest in, because they understand the information they receive. Secondly, the Department for Business, Innovation and Skills is consulting on the content of company accounts—narrative reporting, as it is known. We need to synchronise the issue because carbon reporting would be in a set of company accounts. I perfectly understand the requirements of the Climate Change Act 2008 in that regard.
Mary Creagh (Wakefield) (Lab)
Climate change is the biggest market failure the world has seen and the Secretary of State’s decision on whether to introduce carbon reporting to correct the failure is imminent. That decision is a once-in-a-Parliament opportunity to create green growth and drive the development of low-carbon products and services across UK plc. With youth unemployment at record levels and mandatory reporting supported by Britain’s largest employers, how many jobs does she estimate would be created in the UK’s green economy if it was introduced?
Mrs Spelman
The hon. Lady shares entirely with me an appreciation of how important it is that we make progress in that area. She will have seen how the coalition Government have committed to challenging targets in order to change our economy to a low-carbon basis. In the spirit of being on the same page on this matter, I can say that I am keen to do what I can to transition the economy in that regard. On this specific question, however, I hope that the hon. Lady will appreciate that, as I said in my reply to the hon. Member for Edinburgh East (Sheila Gilmore), we need to synchronise carbon reporting in a way that investors can understand. At the moment, there are different requirements on companies to report in different ways. We need a meaningful measure of carbon reporting in the spirit of achieving that low-carbon economy.
Mary Creagh
The Secretary of State signally failed to answer my question. There is no estimate in the impact assessment of the number of jobs that the new products and services would create. When the global recession struck in 2008, Labour’s future jobs fund created green jobs for young people in wildlife trusts, country parks and green charities across the country, but they are now on the dole. Carbon reporting will help us to move to the low-carbon economy. When did she last sit down with the Chancellor, one to one, to discuss the autumn statement that he will make on Tuesday and how DEFRA will play its part in creating the conditions for green jobs and growth to tackle the crisis?
Mrs Spelman
I do not think it is my job to share in advance with the hon. Lady the content of the autumn Budget statement. As I just said, I share with her the clear vision about opportunities to create jobs if our economy is transitioned into a low-carbon economy. If her party felt so passionately about that, why did it not proceed with what she now claims we should be doing during its 13 years in office?
Amber Rudd (Hastings and Rye) (Con)
4. What recent discussions she has had with her EU counterparts on reform of the common fisheries policy.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)
As the UK fisheries Minister, I continue to have discussions about reform of the common fisheries policy with a wide range of people and organisations. They include the EU Commission, Members of the UK and European Parliaments and ministerial colleagues of other member states, as well as representatives of our fishing and related industries. I will continue to press our case for reform as negotiations develop in the Council and European Parliament.
Amber Rudd
I thank the Minister for that answer. His and the Government’s commitment to sustainable fisheries and sustainable fishing communities is well known and much appreciated. Is he aware of the real anxiety, shock and growing opposition from the smaller fisherman community to the transferable fishing concessions being proposed, given that this has been so damaging to smaller communities?
Richard Benyon
The fish in our seas are a national resource and what we are talking about, in the reform of this failed policy, is getting a fairer system for the allocation of that resource. Transferable fishing concessions in other countries are sometimes a lever towards better conservation, but I reassure my hon. Friend and fishermen in her constituency that we are not happy with the proposal that has been made thus far. We think it requires much more detail and there are certain elements of it to which we are opposed. We will keep her and the House informed at every stage.
Mr Ben Bradshaw (Exeter) (Lab)
Will the Minister accept that, however the common fisheries policy is reformed, the biggest threat to fish stocks in our waters and internationally is unsustainable commercial fishing? Given that, what is he doing to ensure that all public procurement of fish in this country, including by this place, is from sustainable sources?
Richard Benyon
I am pleased to report, if the right hon. Gentleman has not heard, that the Government are announcing Government buying standards at the highest level, commensurate with the Olympic standard, which is considered to be the relevant level of sustainability. Across Government, we will procure fish only from sustainable sources.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Will my ministerial Friend agree that one of the most exciting aspects of the proposed reforms is regional control? Will he strain every sinew to ensure that we end the exclusive competence of the EU in this regard and allow regional fisheries to control their own waters?
Richard Benyon
I entirely support the words of the Chairman of the Select Committee on Environment, Food and Rural Affairs. We have an opportunity to achieve something that we have failed to do for decades—a system that reflects local needs. It is absurd to have a common fisheries policy that from Brussels sets net sizes for fishing fleets around our coast. We have to have some form of regionalisation. We like the direction that the reforms are taking and we wish to see more detail in the coming weeks.
Mr Dennis Skinner (Bolsover) (Lab)
Is it not remarkable that in the space of a quarter of an hour the Government, who are supposed to be blazing a trail for bringing back things from the common market and the European Union, have already eliminated the repatriation of the common agricultural policy and, according to what the Minister just said, fisheries is not on the agenda, either? Are we not being led up the garden path?
Richard Benyon
It is always nice to hear from the hon. Gentleman with his cheery disposition so early in the morning. He probably did not hear my reply to the previous question, in which I said that we are talking about the repatriation of controls whereby countries around a sea basin will have greater management of our fisheries. The wider question about whether we should have a common fisheries policy at all probably is not for this forum but is, perhaps, for a higher pay grade. He is welcome to take part in the frequent debates that we have in the House on this matter.
Natascha Engel (North East Derbyshire) (Lab)
5. What her policy is on the use of electronic training aids for cats.
The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
DEFRA has neither commissioned nor evaluated any specific research on electronic training aids for cats. DEFRA is currently awaiting the publication and evaluation of recent research on the use of electronic training collars for dogs, before making any decisions on whether to introduce any proposals relating to those devices.
Natascha Engel
I thank the Minister for that answer, because 250,000 cats are killed on the roads every year. Containment fences and electronic devices help to keep cats safe, and they are completely different from the electronic collars used on dogs. Will he guarantee that, when his Department consults on banning the use of electronic collars, he will distinguish between cats and dogs and work closely with the group, Feline Friends, which is based in North East Derbyshire—my constituency?
Mr Paice
I think I can confirm to the hon. Lady’s satisfaction that we have no plans to do anything about training aids for cats. Indeed, the research on dogs that I referred to relates only to collars, not to what is known as the invisible fence. We therefore have no such proposals.
Tony Baldry (Banbury) (Con)
Can my right hon. Friend explain why the Home Office has responsibility for dangerous dogs and he seems to have responsibility for domestic cats?
Nick Smith (Blaenau Gwent) (Lab)
7. What estimate she has made of the number of green jobs that will be created by implementation of the waste review.
The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
Britain’s waste and recycling sector is valued at more than £12 billion, employs 120,000 to 150,000 people and is forecast to grow by between 3% and 5% per annum over the next seven years. The waste review set us on the path to a zero-waste economy. It will support the sector’s transition from focusing on disposal to landfill to the greater reuse, recycling and recovery of waste material.
Nick Smith
If the Secretary of State adopted a 70% recycling target, as the Welsh Assembly has, an extra 50,000 private sector jobs could be created over the next four or five years. Why does England have a lower recycling target than Wales, Scotland and Northern Ireland? It has the weakest targets in the UK.
Mrs Spelman
As I have explained before, targets in specific areas can play a role in achieving a zero-waste economy, but they can produce perverse consequences. I recently attended the Waste and Resources Action Programme conference, where it was clear that the waste industry feels that one of the things that has driven innovation and change is the landfill tax. There is no question but that the new capacity through new technology to recycle more materials is an engine of growth in the economy.
Jo Swinson (East Dunbartonshire) (LD)
I should like to press the Secretary of State a little further on recycling, particularly on the recycling of packaging, because the Government have been too timid in their packaging recycling targets so far. We have been promised a consultation this year on more ambitious targets from 2013 onwards. We are nearly in December, so will she tell us when that will happen?
Mrs Spelman
I think that the hon. Lady would agree that the Courtauld commitment has helped, through voluntary agreements with different sectors of the economy, significantly to increase recycling targets. We have recently concluded new responsibility deals on packaging with the hospitality and catering sector. As part of that ongoing progress, I remain committed to the Courtauld process further extending into the community, and of course we will consult shortly on new opportunities as they arise.
Gavin Shuker (Luton South) (Lab/Co-op)
The incoherence of those two answers serves as testament to the fact that the waste review comes from a Department of missed opportunity. Put simply, green growth creates jobs. The economy is in dire straits. Growth has flatlined; confidence has tanked; and 1 million young people stand unemployed. My question is simple: what will the Secretary of State do about it?
Mrs Spelman
The hon. Gentleman clearly was not listening to the fact that the waste industry is a bright star in the economy, with growth rates of 3% to 5% per annum. One of the reasons the industry is so successful is the constant stream of entrepreneurship and innovation, as we increasingly see waste as resource. There is continuous progress in this area, and I think that he would agree that the landfill tax has been an important regulatory driver in helping to encourage that innovation.
Pauline Latham (Mid Derbyshire) (Con)
8. What discussions she has had with (a) her EU counterparts and (b) ministerial colleagues on the implementation of the welfare of laying hens directive.
Sarah Newton (Truro and Falmouth) (Con)
12. What discussions she has had with (a) her EU counterparts and (b) ministerial colleagues on the implementation of the welfare of laying hens directive.
The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
Discussions at EU level are ongoing, and the UK is fully engaged with the Commission, other member states and the devolved Administrations on finding a practical enforcement solution. We need to protect producers across the EU who will have complied with the ban from unfair competition from those who fail to comply.
Pauline Latham
I thank the Minister for his answer. Does he agree that the concerns of the United Kingdom are being heard because of early representations by this Government? Will he commit to doing the same for our pig farmers, who risk being disadvantaged in the same way by new animal welfare regulations due in 2013?
Mr Paice
I can confirm to my hon. Friend that it is over a year since we first told the Commission that it was quite obvious that a number of countries would not be able to comply in time. She is absolutely correct that this is a precursor to an even bigger welfare issue: the ban on sow stalls, which comes in on 1 January 2013. If we do not get it right this time, it does not bode very well for 2013.
Sarah Newton
Colin Carter’s Eggs in Perranwell has invested in high standards of hen welfare, and it is understandably concerned, as I am, that cheap eggs—in particular, processed or liquid eggs, which account for 25% of the market—are coming in from parts of the EU that do not have such high standards. What is my right hon. Friend doing to prevent that?
Mr Paice
As I said in my opening answer, discussions are still going on. There is a further meeting of officials in Brussels next week, and that really is the last chance for the EU to prove that it is serious about improving animal welfare and enforcing its regulations. If, as I fear, no solution comes about next week, I will make an announcement shortly on how we intend to protect our industry.
Pat Glass (North West Durham) (Lab)
My constituent Mr Tulip and his family have spent almost £8 million bringing their farm up to the EU directive level. If the meeting next week does not go well, will the considerations include banning eggs from countries that are acting illegally?
Mr Paice
I fully appreciate that UK producers have invested about £400 million in new systems, and they are entitled to expect others to do the same; that is perfectly reasonable. As for the measures that will be taken if we do not get anywhere in Europe—and I cannot claim much optimism on that front—I will make an announcement shortly. A ban has not been ruled out, but I am sure that the hon. Lady will appreciate that there are some pretty big legal issues here.
Mr Philip Hollobone (Kettering) (Con)
Given that the British egg industry has spent some £400 million on meeting the requirements of the EU directive, and countries such as Spain, Poland, France and Italy have done everything to avoid their obligations under the directive, should not the Minister say at the EU meeting that unless the Europeans put the right deal on the table, there will be a British unilateral ban to keep out illegal eggs from other EU countries?
Mr Paice
My hon. Friend is entirely right. Some 12 member states will not be in full compliance—some to a much greater degree than others—and he is right that Spain and Poland are among those 12. As I say, we have not ruled out a ban. It is important that the other countries—member states that, like us, will have complied, including most of the northern European countries—work together wherever possible to make sure that we have maximum impact when it comes to forcing compliance elsewhere.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
9. What discussions she has had with the Secretary of State for Business, Innovation and Skills on (a) food prices and (b) support for British food manufacturing.
The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
I have, in the normal course of business, discussed food prices and support for food manufacturing as part of the Government’s growth review, and we continue to work with the Department for Business, Innovation and Skills and UK Trade & Investment to help boost growth, exports and efficiency in the whole food chain.
Catherine McKinnell
I thank the Secretary of State for that answer. Food manufacturing is very important to the north-east, especially to my constituency; firms such as Nestlé, Warburtons and Greggs play a really significant part in the local economy. What specific plans does her Department have, working alongside BIS, to support that vital sector, including through research and development and capital allowances, and by increasing exports, thereby helping to support tens of thousands of jobs in the north-east?
Mrs Spelman
All the firms that the hon. Lady mentions are household names, and indeed the food industry contributes more than £80 billion to the UK economy. As I have said, I have had representatives from the Food and Drink Federation and from agri-food businesses in the Department to ask them what we can do to help them remove barriers to growth in trade. I have very good news to report: for the seventh year in a row, UK exports of food and drink have risen.
Tim Farron (Westmorland and Lonsdale) (LD)
Uplands are a vital source of food production in this country, and the Secretary of State will know that they are supported through the uplands entry level scheme. Does she share my concern that money from the scheme is often snaffled by absentee landlords, rather than going to the hard-working tenant farmers who produce the food?
Mrs Spelman
When we announced our £26 million uplands package, one of the things we said we would do is give priority to uplands farmers who want to take up entry level schemes. We specifically spoke about the need for landlords to back their tenant farmers who want to take advantage of the scheme.
Huw Irranca-Davies (Ogmore) (Lab)
Public procurement is a key way of supporting British food production and high food standards, yet the Department for Work and Pensions sources only 11% of its food from UK producers, DEFRA is failing on its own policy for sourcing sustainable fish and the new ethical standards for food served in public institutions were ridiculed in a report this week for being even weaker than those at McDonald’s. Will the Secretary of State please stop clowning around with food standards and UK food production jobs and at least try to keep up with Ronald McDonald?
Mrs Spelman
There is no question but that the Government, through procurement choices, can make a big difference to the food and drink industry, which is one of the reasons we set additional requirements on all Departments to buy to higher standards, including sustainable fish, when we announced the guidelines for Government buying standards in September. We do not yet have figures for the most recent month, and no doubt it will take time to adapt to the changes, but the point is that there is a commitment right across central Government to buy to the highest standards that we expect from British food producers.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
10. What progress she has made in reducing the administrative burden of inspection and regulation on farmers.
The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
My hon. Friend and the House will know that the Government attach huge importance to the need to lift the burden of regulation while maintaining standards. On 3 November I announced the publication of the interim response to the independent farm regulation taskforce. We will publish a final response early next year.
Simon Hart
Does the Minister agree that this is all about trust and that, where possible, we should trust our farmers to self-regulate and impose statutory regulations only where absolutely necessary?
Mr Paice
I entirely agree with my hon. Friend. I am afraid that there appears to have been a view over the years that every farmer was a potential criminal, and farmers felt very disillusioned about that. We believe that the vast majority want to comply with regulations and can be trusted to do so, which is why we are looking at earned recognition so that we can concentrate our resources on the small minority who might not comply.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
The Minister will be aware of some initial concerns about additional administrative costs for the farming community following the introduction of the Gangmasters Licensing Authority, which has proved to be really effective and has been welcomed by farmers. Will he assure the House that there are no plans to change how the agency operates or how it is funded?
Mr Paice
The hon. Gentleman is entirely right. The GLA was set up after the tragic events at Morecambe bay and, to the best of my recollection, was supported by all parties in the House. That work is still extremely important. Discussions are taking place within Government on whether DEFRA is the right place for the GLA, so I cannot give the undertakings he is perhaps demanding, but the existence and purpose of the GLA is absolutely right and will be maintained.
Mr David Ruffley (Bury St Edmunds) (Con)
Suffolk farmers expect this Government to reduce red tape. On the May report of the regulation taskforce, will the Minister tell us what the compliance cost saving will be if his Department delivers all 200 cuts in bureaucratic processes?
Mr Paice
I am afraid I cannot give my hon. Friend a figure at this stage because we are still developing our final response. We are going through all 214 recommendations and are determined to be bold and ambitious, as we were urged to be by Richard Mcdonald. Much of the cost to farmers is the result not of complying with regulations, but of the bureaucratic burden of the process of complying, and that is what we are trying to address.
Kerry McCarthy (Bristol East) (Lab)
11. What steps she is taking to curb the hunting of endangered species.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)
No native endangered species can be legally hunted in England. Although we cannot intervene directly in legal hunts of endangered species allowed by foreign Governments, the UK pushes for international co-operation through the convention on international trade in endangered species—CITES—in order to ensure that any trade in endangered species is sustainable. The UK also strongly supports the International Whaling Commission’s moratorium on commercial whaling.
Kerry McCarthy
Will the Minister therefore join me in condemning the trophy hunting of endangered and vulnerable species such as that carried out by the millionaire banker and Tory donor, Sir David Scholey, who was pictured in The Sun recently, posing by the bloody corpse of a lion under the headline “Who’s the bigger beast?”? Does the Minister condemn that?
Richard Benyon
We recently had a debate in Westminster Hall about lion trophies and importation to the UK. There are certain areas of Africa where lion populations give real cause for concern, and we are working through colleagues in CITES to ensure that the concerns in that debate and throughout the House are raised. Yes, I will condemn any hunting of an endangered species, for whatever reason, if it puts that species at risk, and this Government have responsibility for—
Mr James Gray (North Wiltshire) (Con)
Does the Minister not agree that one of the best ways to prevent the illegal hunting of endangered species overseas is ever tougher controls on the illegal import of bush meat to the UK? What is he going to do to take that forward?
Richard Benyon
We are very concerned about bush meat and importation, and that is why we have protected funding for the work taking place at ports and airports, and for the expertise that we have, on the matter. There is also a very good case, which we have made in Britain, for being much stronger on the export or import of rhino horn which, as we know, is putting that species at very severe risk of extinction.
Mr Philip Hollobone (Kettering) (Con)
T1. If she will make a statement on her departmental responsibilities.
The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
My Department takes responsibility for safeguarding the environment, supporting farmers and strengthening the green economy. In that context, I will attend important climate change negotiations in Durban next week. The items on the agenda include sustainable agriculture, as well as the protection of international forestry. In addition, I will have a series of bilateral discussions as part of the preparations for Rio plus 20, on which I will lead, and, of course, update the House on my return.
Mr Hollobone
Farmers in the Kettering constituency continue to complain about the difficulties that they encounter in obtaining their single farm payment, especially where there have been changes to farm boundaries. I know that much has been done to sort out the Rural Payments Agency, but what more can be done to sort out that wretched organisation?
Mrs Spelman
As I am sure the whole House is aware, the Minister of State, Department for Environment, Food and Rural Affairs, my right hon. Friend the Member for South East Cambridgeshire (Mr Paice) has been working hard to improve the performance of the Rural Payments Agency, and there is indeed a strategic improvement plan to help achieve that. The target was met in June for payments, and we are making good progress towards achieving the target that is required to be met by the end of this year.
Julie Hilling (Bolton West) (Lab)
T2. The Wildlife Trust for Lancashire, Manchester and North Merseyside is concerned about the future funding of higher-level stewardship on the west Pennine moors and the Red Moss site of special scientific interest, which are both in my constituency. What assurance can the Secretary of State give that she will secure funding and not be out-negotiated by the French, or by the Treasury?
The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
I am grateful to the hon. Lady for that question, because we are very conscious that the uncertainties of the EU proposals on common agricultural policy reform are causing some landowners and farmers to worry about their stewardship payments. May I, though her and the House, assure everybody involved that the Government are determined to continue with our stewardship schemes, both higher level and entry level, and will do everything in our power to ensure that that happens? We are at an early stage of the negotiations, but we are determined that somehow—either through a transfer of money from pillar one to pillar two, or perhaps through the greening element of pillar one—we shall maintain those excellent schemes.
Jeremy Lefroy (Stafford) (Con)
T6. What discussions has my right hon. Friend had with Latin American colleagues to prepare for the forthcoming international conferences in Durban and Rio?
Mrs Spelman
I have had two in particular. I met Brazil’s Environment Minister, Izabella Teixeira, during negotiations in Nagoya, and as Brazil is the host nation I went down there to help the Brazilians with preparations for Rio plus 20 next year, and most recently, as the House will be well aware, we had a visit from the Colombian President and the Environment Minister, Frank Pearl, whom I met at the Department with a proposal for sustainable development goals, to which we have given our support in principle.
Thomas Docherty (Dunfermline and West Fife) (Lab)
T3. When the Government’s long overdue water White Paper finally comes out, will the Secretary of State confirm that small businesses, not fat cat water utilities, will be at the centre of deregulation?
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)
The water White Paper will be published in the next few weeks. It will set out a way forward for the water industry that will encourage new entrants.
Bob Blackman (Harrow East) (Con)
T9. Currently we pay our farmers not to grow crops, but at the same time the world population is growing, and half the world is in need of food. What will my right hon. Friend do to end that scandal, so that our farmers can get back to what they do best: growing crops for this country and for the rest of the world?
Mr Paice
I hesitate to challenge my hon. Friend, but that waste stopped four or five years ago. We no longer have set-aside. The worry now is the Commission’s proposal effectively to reintroduce a 7% set-aside as part of the ecological focus areas that the Commissioner proposes. We do not believe that that is the right way forward. We have to produce more food, but we must do so sustainably. As my right hon. Friend the Secretary of State said earlier, we are sorry that the proposals, so far, do not meet that challenge.
Grahame M. Morris (Easington) (Lab)
T5. May I draw the Minister’s attention to early-day motion 2273 in my name, which has attracted more than 60 signatures from Members of all sides of the House and calls for the implementation of mandatory CCTV in UK slaughterhouses? It is disturbing that around 90% of cases of animal cruelty in UK slaughterhouses do not result in a successful prosecution. Will the Minister consider introducing a pilot scheme to trial such an approach?
Mr Paice
Animal Aid believes that around 70% of slaughterhouses already have CCTV. Regarding the recent, quite proper, furore over cruelty to pigs at what was then called Cheale Meats, it is important to point out that CCTV cameras were there—albeit perhaps pointed in the wrong direction—so they are not the final panacea that some people believe them to be. Nevertheless, we are considering them as part of a wider-ranging package to ensure that there is no cruelty to animals in those last few moments of their lives.
Tessa Munt (Wells) (LD)
Does the welfare of laying hens directive present an opportunity for us to support our farmers and food producers through country of origin labelling and information on compliance suppliers and sources of egg? Will the Minister have discussions with supermarkets and other retailers on egg products, liquid and powder egg, and prepared foods, so that it is easy to buy good eggs?
Mr Paice
I can assure my hon. Friend that I have had such discussions and will continue to have them. I can assure the House that overall, the supermarkets, and indeed much of the processing sector, are determined to comply with the spirit of the legislation and procure egg and egg product only from compliant cages. As I said, I may well make a further statement shortly.
John Cryer (Leyton and Wanstead) (Lab)
T7. The Minister has consistently said that the review of the common fisheries policy is a golden opportunity, and he has said the same again today. Will he therefore make a promise to the House that the British fishing fleet will be larger at the next election than it was at the beginning of this Parliament?
Richard Benyon
That would depend on there being more fish to catch. What we seek to achieve through a proper reform is conservation measures that we can manage much closer to home, which can lead to a recovery in fish stocks and therefore an increased opportunity for our fishing fleet. I want to see a reform of common fisheries policy that means that the sons and grandsons of fishermen can see a future, because they cannot at the moment.
Mr Dominic Raab (Esher and Walton) (Con)
Mandatory greening under new CAP reform proposals would remove a fifth of land on higher level stewardship farms from food production. What representations has the Secretary of State made to the EU Agriculture Commissioner about the damaging impact that that would have on food security in this country?
Mr Paice
My hon. Friend is right to be concerned about that. As my right hon. Friend the Secretary of State said earlier, we met the Commissioner only 10 days ago and impressed on him the fact that the proposals were not in accordance with the challenges of global food demands in the coming years. I can assure him that we are not a lone voice. Listening to the voices around the Council table reveals that the vast majority of Ministers are opposed to taking further land out of production.
Graeme Morrice (Livingston) (Lab)
T8. Business groups have warned that the Government’s decision to delay the establishment of marine conservation zones will impede investment in marine industries, including renewable energy and sustainable fishery projects. Does the Secretary of State agree?
Richard Benyon
We are progressing the implementation of an ecologically coherent network of marine conservation zones, which have to be sustainable in every sense. That means that they have to be able to withstand any challenge that may be put to them, legal or otherwise, so we need to get more evidence for some of them. I can assure the hon. Gentleman that this Government remain absolutely determined to take this forward, but we need to get it right. If that means we have to take a month or two longer—or six months longer, to be perfectly accurate—that would be a better way than getting it wrong.
Neil Parish (Tiverton and Honiton) (Con)
This week has seen the launch of the ecosystems market taskforce. What are the practical implications of that?
Mrs Spelman
That is one of the commitments that we gave in the natural environment White Paper. We have asked Ian Cheshire, the chairman of Kingfisher Group, to chair the ecosystems taskforce, together with a number of business leaders and scientists. This is an opportunity to help business in this country to take the chance, with the new green technologies and green growth, to grow our economy into a low-carbon economy, and beyond that, towards all the opportunities that realising the true value of natural capital can provide.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
Will the Secretary of State give an update on the progress being made by her Government to tackle international speculation in food commodities? That is a major factor in driving up food prices, which is affecting our constituents and others internationally, and it needs to be tackled as a matter of urgency.
Mrs Spelman
The evidence regarding the role of speculation in the rise of food prices is perhaps not as clear as the hon. Gentleman sets out. The main reason for volatility in prices is that supply and demand are tight, and the best way to address that is to improve the supply of food to the market. Transparency is the key to helping to reduce volatility. We, as a Government, support greater transparency so that people around the world know who is producing what, where, and how much they have in stock. That will help to buffer prices.
Roger Williams (Brecon and Radnorshire) (LD)
The six-day movement rule and the ban on on-farm burial are particularly burdensome to livestock farmers. Since their introduction the scientific understanding of these matters has moved on. Will the Minister commission a scientific review of the regulations with a view to their relaxation?
Mr Paice
Both issues appear in the Macdonald report, to which I referred earlier and to which we will be responding early in the new year. The burial of dead animals, in particular, is controlled at EU level, and it is not entirely within this Government’s gift to change the rules.
Mr Ben Bradshaw (Exeter) (Lab)
1. What the authority is for the policy of the Church of England that services of blessing should not be conducted in church premises for those who register civil partnerships.
The Second Church Estates Commissioner (Tony Baldry)
In its pastoral statement of July 2005, the House of Bishops affirmed that clergy of the Church of England should not provide services of blessing for those who register a civil partnership. The Church of England’s response to the Government’s consultation document on civil partnerships on religious premises, which was produced earlier this year, reflected that policy and was approved by the Archbishops Council and by the Standing Committee of the House of Bishops.
Mr Bradshaw
I am grateful for that reply. Given that when the law changes to allow civil partnerships to be conducted on religious premises many Church of England priests and parishes will want to conduct such ceremonies, would it not be better for the Church of England to do what it did when it first allowed the remarriage of divorcees in church, and allow individual priests and parishes to make the decision?
Tony Baldry
In fairness, I would contend that the Church of England, led by its bishops, has to be free to determine its own stance on matters of doctrine and ethics. The Government have said that the new option to register civil partnerships in places of worship must be entirely voluntary. That means that those who think that the Church of England should opt in need to win the argument within the Church.
Laura Sandys (South Thanet) (Con)
2. What steps the Church Commissioners are taking to promote church tourism.
Tony Baldry
I was delighted recently to visit with my hon. Friend some of the historic churches in her constituency. As she is aware, the General Synod passed a motion encouraging all dioceses to support church tourism and to link with the wider national church tourism strategy. The Church is working closely with its entire group of dioceses and with the Churches Tourism Association to assist local churches in encouraging visitors, especially in the run-up to the Olympics, the diamond jubilee and Open Churches Sunday.
Laura Sandys
I thank my hon. Friend for his trip to my constituency to see some of the wonderful churches in east Kent, which are great tourist attractions. Is he able to introduce me to the people who run tourism at Canterbury cathedral, which attracts hundreds of thousands of visitors? They might be able to do more to move some of those tourists to other beautiful churches in east Kent.
Tony Baldry
My hon. Friend makes an extremely good point. Our cathedrals attract thousands of visitors each year. We need to encourage those who visit cathedrals such as Canterbury to visit the many fantastic churches full of history and heritage in the surrounding areas, such as those in my hon. Friend’s constituency.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
3. What recent discussions the Public Accounts Commission has had on ways in which the National Audit Office can be made more effective and efficient.
Mr Edward Leigh (Gainsborough)
The Public Accounts Commission discusses the NAO’s use of resources twice a year. Last November we endorsed its strategy for the three years from April 2011, which included plans to save 15% in nominal terms—21% in real terms—over that three-year period. The commission looked at the NAO’s efficiency gain in March when we examined its draft estimate. The commission will next meet on 7 December to consider the NAO’s proposed resource requirements for the three years starting in April 2012.
Mr Sheerman
Have the hon. Gentleman and the commission considered introducing the same sort of reforms that the Government have produced for the Audit Commission? Has he considered using the big five private accountancy firms more widely, or has he learned some lessons from the disaster that is the Audit Commission reform?
Mr Leigh
All that has happened so far—we will discuss this at our meeting on 7 December—is that the Government have proposed that the NAO take over from the Audit Commission solely responsibility for the preparation and maintenance of the code of practice, which sets a framework for the audit of local bodies, together with associated guidance for local auditors. The NAO will also be able, when reporting to Parliament on the activities of central Departments, to examine the impact of policies administered by local bodies. The NAO is making preparations for those potential areas of work. We will give it sufficient resources to enable it to do that work responsibly and properly.
Miss Anne McIntosh (Thirsk and Malton) (Con)
When the National Audit Office produces excellent reports, such as the recent report on flood defences, would my hon. Friend consider allowing the Select Committees concerned to debate their contents and conclusions, rather than just the Public Accounts Committee?
Mr Leigh
My hon. Friend makes a good suggestion. She knows that I was, in a previous incarnation, Chairman of the Public Accounts Committee. We were keen, and remain keen, for the National Audit Office to extend its work so that it reports not just to the Public Accounts Committee but to all Select Committees. I am happy to take her suggestion back to the National Audit Office.
Mr Speaker
The hon. Gentleman is underselling himself. He served with great distinction as Chairman of the Public Accounts Committee for two Parliaments.
Andrew Selous (South West Bedfordshire) (Con)
4. What steps the Church of England has taken to support food banks.
The Second Church Estates Commissioner (Tony Baldry)
The Church is heavily engaged in food banks across the country. There is a national network of food banking centres in towns and cities. Food banks give out nutritionally balanced emergency food to people in crisis. Food banks also offer additional support to put people in touch with relevant agencies that can offer further support.
Andrew Selous
In South West Bedfordshire, churches in Dunstable and Houghton Regis have just agreed to set up a food bank, and churches in Leighton Buzzard run a homeless service. Churches in those towns also support street pastors. Churches throughout the constituency are taking part in the “Let’s Stick Together” initiative run by Care for the Family. Does my hon. Friend agree that that is an amazing record of achievement in contributing to our local community?
Tony Baldry
I hope that churches across the country will seek to engage with and support their local communities whenever they can. The churches that my hon. Friend cites in his constituency are an excellent example. Local churches can support food banking in several ways, including through the direct giving of food donations, and through volunteering and working where necessary to step in to assist those in need. I hope that we can do that right across England.
Kerry McCarthy (Bristol East) (Lab)
Will the hon. Gentleman join me in congratulating the Bishop of London on his support for the “Feeding the 5,000” event in Trafalgar square last Friday? That organisation looks at how we can use the phenomenal amount of food that goes to waste in this country to feed people who are in food poverty.
Tony Baldry
The Bishop of London’s leadership on that initiative is excellent, and it is an excellent initiative.
George Hollingbery (Meon Valley) (Con)
5. Whether the Church Commissioners have considered English Heritage’s guidance on (a) theft of metal from church buildings and (b) replacing lead with modern materials.
Tony Baldry
The theft of metal from churches continues to be a very serious problem. About 10 churches a day suffer from theft. Insurance payouts for the theft of metal from places of worship have increased by 70%, and according to the Association of Chief Police Officers, the full cost of metal theft to the domestic economy across all sectors is upwards of £770 million.
George Hollingbery
The latest English Heritage guidance note on the theft of metals from church buildings states that
“support for the use of…non-traditional materials…would be exceptional.”
However, the guidance note on solar panel installations is relatively liberal. Does my hon. Friend agree that it is hard to reconcile the two, and does he understand why Hambleside Danelaw, an alternative roofing manufacturer in my constituency, is clear that the guidance is not in the interests of churches, their congregations or the wider good?
Tony Baldry
On the substantive issue of the theft of lead, the Church remains convinced that making cash scrap metal transactions illegal is the single move that will have the greatest impact on reducing that crime, and it is pleased to see that proposal gaining wider acceptance. Indeed, my right hon. Friend the Prime Minister said yesterday that the answer
“lies in looking at how the scrap metal market is currently regulated.”—[Official Report, 23 November 2011; Vol. 536, c. 296.]
I undertake to investigate in detail my hon. Friend’s specific point about Hambleside Danelaw, and I shall write to him.
Mr James Gray (North Wiltshire) (Con)
Is my hon. Friend aware that one of the greatest tragedies about the loss of metal from war memorials, whether they be on Church property or elsewhere, is that there is currently no central record kept of the people whose names are recorded on them? Will he undertake to ask the Church Commissioners to work with the Imperial War museum, and indeed the Ministry of Defence, to provide a central register of those whose names appear on war memorials?
Tony Baldry
I would hope that in the run-up to 2014 to 2018, the centenary of the first world war, churches across the country will not only work on updating, conserving and repairing war memorials but give thought, as many communities are, to updating the records of those who lost their lives in the first and second world wars. The theft of inscriptions from war memorials is a detestable offence, and a further example of the need to tackle the theft of metals as urgently as possible.
Andrew Stephenson (Pendle) (Con)
6. What support the Church Commissioners are providing to Christians in Pakistan.
Tony Baldry
The Church of England is very aware of the issues facing the Christian community in Pakistan. Two dioceses in the Church of England have strong diocesan links in Pakistan, the diocese of Manchester with Lahore and the diocese of Wakefield with Faisalabad. Four members of the Manchester diocese are currently visiting Pakistan. The Archbishop of Canterbury’s Pakistan focus group was formed in 2006 to keep him informed of issues of significance in relation to Pakistan, to assist him in representing his views appropriately in Pakistan, England and elsewhere, and to maintain positive relations in support of the Church of Pakistan.
Andrew Stephenson
I thank my hon. Friend for that full answer. What initiatives have been taken to increase awareness among Pakistani-background Christians and Muslims in the UK of how they can support inter-faith religious harmony?
Tony Baldry
The Archbishop of Canterbury is very much concerned about the importance of good relations among Pakistani-background Christians and Muslims in this country. When Christian leaders from Pakistan visit the UK they are introduced to prominent Pakistani-background Muslims so that they are aware of the situation, and to encourage them to use their influence and contacts in Pakistan to support persecuted religious communities. The Church of England sent a delegation of both Christians and Muslims from the UK to Pakistan in 2009 on the invitation of the Government of Pakistan, to visit Christian and Muslim community leaders, Government Ministers and officials.
Diana Johnson (Kingston upon Hull North) (Lab)
7. What assessment the Church Commissioners made of the number of dioceses which have voted in favour of the proposed legislation on women and the episcopacy.
Tony Baldry
The result of the reference of the draft legislation to the dioceses was that out of a total of 44 dioceses, 42 approved of women and the episcopacy.
Diana Johnson
How will the exceptional level of support from both the laity and the clergy be reflected in the passage of the legislation through the House?
Tony Baldry
I think that it is clear that there is overwhelming support for women bishops. The outcome of the recent vote in the dioceses will be reported formally to the General Synod in February, following which it will be asked to approve any necessary final adjustments to the drafting of the legislation. I certainly hope that during the lifetime of this Parliament it will be possible for me to bring forward a Measure to the House so that we can approve women bishops in the Church of England.
Mr David Winnick (Walsall North) (Lab)
8. What discussions the Church Commissioners have had on the effects of demonstrations outside St Paul’s Cathedral.
Tony Baldry
I understand from the Bishop of London and the chapter of St Paul’s cathedral that they are in daily contact with the City of London corporation and the City of London police, as well as with the protestors. The chapter of St Paul’s and the Church are committed to working towards peaceful solutions with the protestors and the authorities concerned.
Mr Winnick
Would not that be the best way, to have a continued dialogue, bearing in mind the fact that many if not all of the demonstrators and the people who have set in—I have visited them—feel very strongly indeed about the growing inequality of wealth in our country?
Tony Baldry
I hear what the hon. Gentleman says. Those concerns have been well reflected by the comments made by the dean and chapter of St Paul’s.
Julian Smith (Skipton and Ripon) (Con)
The London demonstration seems to be adding to an air of tension between Church and state, and there are other examples of bishops becoming much more involved in Government policy. What role can my hon. Friend play to calm that quite worrying situation?
Tony Baldry
My hon. Friend must remember and recognise that both archbishops and a number of bishops are Members of the other place: they are Members of Parliament and are entitled to have their views heard. I would suggest that every archbishop and diocesan bishop is a significant leader within their community. They are entitled to speak out and be heard by the country and the House. The Church of England is a national church and the bishops are part of the national voice of this country.
John Mann (Bassetlaw) (Lab)
9. How many churches plan to hold community celebrations for the London 2012 Olympics.
Tony Baldry
The ecumenical organisation More than Gold has been set up to help churches to engage with the Olympics. There are more than 400 Church of England More than Gold champions, which means that more than 400 churches are already organising activities using More than Gold resources.
John Mann
Would it not be appropriate for churches across the country to follow the magnificent lead of the joint churches in Bassetlaw, who are at the heart of preparing Olympic participatory activities, and are inviting the community into church grounds so that the Olympics can be fully and actively celebrated?
Tony Baldry
That is a fantastic example by the church in Bassetlaw, and I hope that every church will replicate it in all sorts of ways, such as by providing volunteers for the Olympics and hospitality programmes, hosting one of the many mission teams that are coming from overseas to help to give extra impact to activities, and linking hands with other churches to run community festivals and hospitality centres. I very much hope that every church in England will consider how they can use the Olympics as an opportunity to engage with the wider community.
Petition
(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
David Morris (Morecambe and Lunesdale) (Con)
This petition is about the granting of planning permission to an unwanted development in Bolton-le-Sands. It is signed by 1,036 people.
The petition states:
The Petition of residents of Bolton-le-Sands and others,
Declares that the Petitioners are opposed to planning application 10/00830/0UT, relating to a proposed development on Coastal Road, Bolton-le-Sands, as the Petitioners believe that there is no demand for any further development in the area as many properties are not fully occupied and many are already on the market; that there are insufficient employment opportunities in the area for any incoming inhabitants; that there is insufficient space in local schools for incoming children; that there will be increased pressure on what the Petitioners believe are already overstretched local NHS services; that the development will change the character of the area, with a detrimental impact on the landscape and residential amenities, including causing the loss of open spaces that enhance the quality of life of everyone in the area; that the development will cause a loss of grazing land and essential hedgerow habitats; that the development presents a risk to the canal and species in the canal ecosystem; that the development will result in the joining up of the villages of Bolton-le-Sands and Hest Bank and that there will be an increase in vehicular traffic on already busy roads, particularly on Coastal Road which has seen numerous accidents in recent years.
The Petitioners therefore request that the House of Commons urges the Government to use any means possible to overturn the decision of Lancaster City Council to approve the development on Coastal Road, Bolton-le-Sands.
And the Petitioners remain, etc.
[P000986]
Business of the House
(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Angela Eagle (Wallasey) (Lab)
Will the Leader of the House give us the business for next week?
The Leader of the House of Commons (Sir George Young)
The business for the week commencing 28 November will be:
Monday 28 November—General debate on political developments and security in the middle east, north Africa, the Sahel, and the horn of Africa.
Tuesday 29 November—My right hon. Friend the Chancellor of the Exchequer will make his autumn statement, which will be followed by consideration of Lords Amendments to the London Olympic Games and Paralympic Games (Amendment) Bill, followed by consideration of Lords amendments to the Terrorism Prevention and Investigation Measures Bill, followed by consideration of Lords amendments to the Public Bodies Bill [Lords], followed by a motion relating to national policy statements relating to ports.
Wednesday 30 November—Opposition day (un-allotted day). There will be a debate on an Opposition motion. Subject to be announced.
Thursday 1 December—Motion relating to BBC cuts, followed by a general debate relating to debt advice and debt management services. The subjects for these debates were nominated by the Backbench Business Committee.
The provisional business for the week commencing 5 December will include:
Monday 5 December—Business to be nominated by the Backbench Business Committee.
Tuesday 6 December—General debate on the economy.
Colleagues will also wish to be reminded that the House will meet at 11.30 am on Tuesday 29 November.
Ms Eagle
I should like to begin by paying my own tribute to Alan Keen, whose death was announced to the House this week. He was a dedicated champion of his constituents. Many of us have happy memories of Alan, especially of the Tea Room football banter that we all shared with him. My thoughts go out to his wife Ann and the family at this very difficult time.
Mr Speaker, this week you let it be known in no uncertain terms that the leaking in advance of statements is a gross discourtesy to the House. On Monday, you warned the Secretary of State for Communities and Local Government about the disclosure of his housing statement in the weekend papers. Less than 48 hours later, not only was the Government’s energy statement leaked, but the fact that there was to be a statement at all was tweeted to the world half an hour before the Secretary of State could be bothered to inform his opposite number or the House. Can we now take it that it is the Government’s intention to replace the Order Paper with the Twitter feed of The Guardian? Does the Leader of the House deplore this behaviour, and will he give me a personal assurance that it will never happen again?
On housing, the Government’s rushed-out PR blitzkrieg on Monday came the day before official figures, which they will have seen, showed a complete collapse of housing starts across Britain from 32,000 to just 454 across the entire country. In my own region of the north-west, not one single housing start was made. Monday’s cynical choreography was clearly designed to bury bad news. May we have a proper debate on the worsening housing crisis now that the full facts of the Government’s failure have been revealed?
Two weeks ago the right hon. Gentleman was kind enough to tell me that
“the Queen’s Speech will be held in May to coincide with the fixed election dates”.—[Official Report, 10 November 2011; Vol. 535, c. 454.]
But last week his counterpart in the other place, Lord Strathclyde, seemed to contradict him by saying that it could be in April. That is despite Government undertakings given by Lord Wallace during the passage of the Fixed-term Parliaments Bill that there would be a fixed day in May for the Queen’s Speech. Based on these assurances, Labour peers withdrew an amendment to the Bill which would have set the Queen’s Speech in May after local elections. Will the Leader of the House now clear up the chaos between the Government Front Benchers in the two Houses? Will he confirm that it is not his intention to stage the Queen’s Speech just ahead of election purdah? Surely he has no desire to put Her Majesty in an invidious position by using her in a politically partisan pre-election stunt in her diamond jubilee year?
Every week demonstrates that the Government’s economic policy is hurting but not working. The Office for National Statistics revealed a 3.5% real-terms fall in average incomes, while chief executives and directors enjoyed a 15% increase in median earnings this year alone. Meanwhile youth unemployment passed 1 million, showing the brutal price our young people are paying for the Government’s failed choices on the economy. Long-term youth unemployment has risen 77% since the Government scrapped the future jobs fund. As the economy continues to flatline, instead of Government action all we are hearing from the Prime Minister is his latest list of excuses. Last year it was the snow, this year it has been the royal wedding, civil servants, trade unions and employment rights—and now it is the eurozone. The Prime Minister is like an Eton schoolboy, facing rustication by his headmaster, who will say anything and blame anyone rather than take responsibility for the consequences of his actions. Will the Leader of the House now admit that these policies are not working and urge the Chancellor to announce an economic rethink that puts jobs first in next week’s autumn statement?
In opposition, the Prime Minister said that lobbying was the next big scandal waiting to happen, but after 18 months and the loss of a Cabinet Minister there is still no sign of the promised register of lobbying interests. Today there are disturbing reports that Ministers’ spouses and partners will remain free to lobby the Government for private companies under any new rules. This week, it was also revealed that a serving Conservative peer and ex-Chief Whip has been appointed UK representative for the Cayman Islands in order to oppose any further regulation of offshore tax havens. Will the Leader of the House tell us when the Government propose to address the increasingly urgent need for tough regulation in this area, and what is the Government’s position on serving Conservative peers lobbying against regulation of tax havens?
Sir George Young
May I begin on a consensual note and endorse every word that the hon. Lady said about our former colleague Alan Keen? Our thoughts are very much with Ann and the family at this difficult time for them.
On the statements and announcements earlier this week, my right hon. Friend the Secretary of State for Communities and Local Government, in response to a point of order, explained the background to what happened on Monday. Inevitably, as a background to the housing statement, other organisations were involved and their consent was needed to make the statement. Therefore it was more difficult—although equally essential—for the Government to maintain strict confidentiality about the announcement. I confirm that I deplore any leaking of statements that should be made first to the House and I am happy to remind my colleagues of the ministerial code and what is expected by you, Mr Speaker.
We inherited a deplorable housing position. The outgoing Government admitted that they did not give it the priority that it deserved. I hope, therefore, that the hon. Lady will welcome the initiatives announced on Monday by my right hon. Friend the Minister for Housing and Local Government to kick-start the housing market, to get public land into play and to make it easier for first-time buyers to buy their first home.
On the date of the Queen’s Speech, I said on 10 November:
“The Queen’s Speech will be announced in the usual way.”—[Official Report, 10 November 2011; Vol. 535, c. 454.]
I am not in a position to confirm a specific date—as the hon. Lady knows, it is subject to progress in another place—but I can confirm that all constitutional proprieties will be observed come the state opening of Parliament.
The hon. Lady did not remind the House of what action the Labour party took to deal with executive pay and the widening differential between executive pay and average pay, to which I referred at the last business questions. As she will know, we are consulting on the matter—consultation ends tomorrow—and we welcome the High Pay Commission’s contribution. We are consulting on shareholder votes on executive pay, reforming remuneration committees, including the possibility of an employee representative, greater transparency and a much stronger link between pay and performance.
I was amazed that the hon. Lady had the nerve to mention lobbying. The outgoing Labour Government refused to implement a Select Committee recommendation of a statutory register of lobbyists. In the coalition agreement, we committed to introducing that register, and consultation on the proposals will begin shortly. We would welcome any advice that she might have.
Finally, the hon. Lady mentioned the economy. I was interested to read that apparently the Leader of the Opposition will say today:
“The biggest economic gamble in a generation has failed”.
I agree, and I am glad that he has seen the light. It was the reckless gamble that he and the shadow Chancellor took in the last Parliament that got us into this mess—borrowing beyond our means, claiming to have abolished boom and bust and completely failing to regulate the banks properly. Now they want to increase the deficit by more than £20 billion. It is their economic strategy that has failed the country—it is no wonder that the shadow Chancellor, by his own admission, is often to be found in tears.
Mr Speaker
Order. As usual, there is extensive interest. However, Backbench Business Committee business is to follow, and it is important that we allow adequate time for that. Brevity is therefore of the essence—and we will be led in that important exercise by Karen Bradley.
Karen Bradley (Staffordshire Moorlands) (Con)
May we have a debate on the Work programme and the successes on the ground? Last month, I met Staffordshire Moorlands community and voluntary services, which had taken on 56 of the most difficult to place individuals and had already found full-time work for four and part-time work for two. It would be useful for colleagues to share these on the ground success stories.
Sir George Young
I would welcome such a debate. It might be possible to have one after the autumn statement if there is a debate on the economy. I welcome the involvement of the voluntary sector in the Work programme. Citizens Advice, Mencap, the Prince’s Trust and Action for Blind People will be involved in delivering the Work programme and helping to find sustainable long-term jobs for those currently out of work.
Jack Dromey (Birmingham, Erdington) (Lab)
On Monday, the Prime Minister promised a housing revolution. On Tuesday, the shocking statistics were released showing a 99% collapse in the building of affordable homes and homes for social rent. The code on the release of official statistics states that statistics should be released in a way that “promotes trust”. May we have a statement to the House on whether the Prime Minister, the Deputy Prime Minister and the Minister for Housing and Local Government knew of those shocking statistics before on Monday offering the latest false dawn to the people of England?
Sir George Young
The statistics to which the hon. Gentleman refers were put out by the Homes and Communities Agency on a date arranged some time ago, and it would have been wrong—it would have breached the code of practice on statistics—for any Minister to have referred to them on Monday.
Bob Russell (Colchester) (LD)
Signs near motorway service stations read “Tiredness Kills. Take a Break”, yet parking companies are driving motorists back on to the motorways in contravention of those signs. Is it really the role of the state, through the Driver and Vehicle Licensing Agency, to assist private parking firms that are at the limits of legality? May we have a debate on the matter? Perhaps the Home Affairs Select Committee could also investigate these rogue parking companies.
Sir George Young
I understand my hon. Friend’s concern. I hope he recognises that those signs perform a useful purpose in promoting safety on motorways by encouraging people to take a break rather than carry on driving. If there were any unauthorised benefit from those signs of the type that my hon. Friend has described, I would of course be happy to take it up with the Secretary of State for Transport.
Mr Tom Watson (West Bromwich East) (Lab)
The Metropolitan police have just announced that they have arrested their first suspect in computer hacking. This marks phase 2 of the hacking scandal. Does the Leader of the House think that there might be merit in having a debate, which would allow us to test the remit of the Leveson inquiry to see whether it is wide enough to incorporate this new sinister development as well as look at the recent revelation that the Mulcaire evidence file contains a suggestion that intelligence service profiles were part of his information?
Sir George Young
I am grateful to the hon. Gentleman for that information. If there has been an arrest, he will understand the difficulties of debating matters relating to it in this Chamber. He will know that the Leveson inquiry is sitting at this moment, looking at these issues, as is the Culture, Media and Sport Committee. I hope that there will be adequate opportunities—both in the House and outside it—to pursue the agenda to which the hon. Gentleman refers.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
Will the Leader of the House grant us a debate as soon as possible on the United Nations Intergovernmental Panel on Climate Change in the light of its recent report suggesting that the extreme weather events we were previously promised may not occur for another two or three decades and the release of several thousand more e-mails from the East Anglia university climate research unit showing that many scientists are privately lukewarmists rather than alarmists about the climate but are afraid to say so in public? Secondly, the IPCC system is being systematically abused and Government officials have been urging scientists to come out with evidence biased in the direction of alarmism lest the Government appear foolish—
Mr Speaker
Order. This is an abuse. The right hon. Gentleman is an immensely senior Member. He had heard my exhortation to brevity and wilfully defied it. It really will not do.
Sir George Young
I understand my right hon. Friend’s strong views on this subject. He will know that a statement on related issues was given yesterday by the Secretary of State for Energy and Climate Change when there might have been an opportunity for him to amplify his views. I cannot promise a debate in the short term, but I hope my right hon. Friend is successful in applying for a debate on this important subject in Westminster Hall or on the Adjournment.
Ann Clwyd (Cynon Valley) (Lab)
The report of the independent commission on and inquiry into the events that took place in Bahrain earlier this year was published yesterday. It shows what we all suspected and have heard about over the last few days—that psychological and physical abuse and torture took place there. In Monday’s debate, will the Foreign Secretary indicate the response of the Foreign and Commonwealth Office to this very good report?
Sir George Young
I am grateful to the right hon. Lady for bringing to the House’s attention this important report and what it says about the abuses and atrocities she mentioned. As she says, there will be a debate on Monday, and I will ensure that the Foreign Office Minister who handles the debate comes fully briefed to deal with the specific point that the right hon. Lady has raised.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Do the Government think that the European Union summit at the end of next week is of so little consequence that it does not require any discussion before it takes place? Does my right hon. Friend recall that there used to be a regular debate before each European summit? Why has that practice been abandoned? Do the Government think that nothing of consequence will be discussed at the summit?
Sir George Young
The practice has been abandoned because of paragraph 145 of the Wright Committee report, which specifically mentioned the two pre-European Council debates that formerly took place in Government time. The Wright Committee recommended that that debate and the other set piece debates should be transferred to the Backbench Business Committee along with the time in which those debates took place. That has now happened. My hon. Friend should go to the Backbench Business Committee with his request for a debate on this particular matter. I have to say to him that it is not as though we have not debated Europe in this Chamber: we had a debate on the petition on the referendum; we had a motion to approve the budget on 8 November; we had a motion on Croatia on Tuesday; and we had a general debate on the UK chairmanship of the Council of Europe. It is not the case that these important issues have gone by default in the Chamber.
Pete Wishart (Perth and North Perthshire) (SNP)
Yesterday the Scottish Parliament discussed the Act of Settlement, and there was broad and overwhelming agreement that the discrimination against Catholics must come to an end. When the Government consider sexual equality and the succession, will the right hon. Gentleman ensure that the House gets the opportunity to debate this ongoing discrimination against Catholics?
Sir George Young
As the hon. Gentleman knows, there will be a Bill on the royal succession, and I hope it will be possible to debate the important issues he has just raised in that context.
Mr David Nuttall (Bury North) (Con)
May we have a debate on the increasing level of crisis in the eurozone, following the news that yesterday even Germany, which everyone was hoping was going to bail out the eurozone, was able to find buyers for only two thirds of its debt bonds for the first time since it scrapped the Deutschmark and adopted the euro?
Sir George Young
My hon. Friend raises an important issue. The Government receive a wide range of advice on a number of matters, including the international economic situation and outlook. A range of contingency plans are in hand. It would be inappropriate to comment on what may or may not happen, however, or on the detail of that advice.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Two weeks ago we learned that the Home Secretary had ordered a secret pilot that left our borders unprotected. This week we learn that French company Eamus Cork Solutions, famed for sleeping guards and letting detainees wander off, has been given a contract to protect our borders, and the Government now want, at huge cost to the taxpayer, to fly volunteers in from Russia, South Africa and India to cover our borders. May we have a debate on the effectiveness of this Government’s UK border controls?
Sir George Young
As the hon. Gentleman will know, the Select Committee on Home Affairs is currently conducting an inquiry into precisely the issue he raises. We take border control seriously. We are introducing a UK border agency. The situation we inherited from the outgoing Labour Government was less than satisfactory, and we are now putting the deficiencies right.
Gareth Johnson (Dartford) (Con)
Given that striking public sector workers will in effect be saying next week that the rest of us should pay more tax to support their pensions, may we have a debate in Government time on their premature and irresponsible actions?
Sir George Young
I endorse what my hon. Friend says about the impact of this strike. I hope that, even at this relatively late moment, many of those who are contemplating striking will not do so, as a strike would have a damaging impact on the economy. Negotiations on the pension deal are continuing. It is my view—and, I think, the view of many in this House—that it is a generous offer, striking a fairer balance between taxpayer and public sector employee. The best thing that could happen would be for those involved to accept the offer that is on the table, to call off the strike action and to get on with rebuilding the economy.
Paul Flynn (Newport West) (Lab)
Witnesses before a Select Committee have said that the inquiry into the Werritty affair was rushed and inadequate, and possibly in breach of the ministerial code as it was not conducted by the only person who is the enforcer of the code: the independent adviser on ministerial affairs. As the inquiry was conducted for reasons of political expediency to avoid embarrassment for the Government, and as new evidence is available, should we not have a full legitimate inquiry conducted by the only person authorised to undertake it: Sir Philip Mawer?
Sir George Young
No, and I am sure the hon. Gentleman did not intend to cast any aspersions on the person who carried out that inquiry, Sir Gus O’Donnell. It was a full inquiry; it was not rushed, as the hon. Gentleman implied, and I think it brought the matter to a satisfactory resolution.
Tony Baldry (Banbury) (Con)
May we have a debate on deportation? On occasions too numerous to mention, when I investigate through the UK Border Agency the immigration status of people who come to see me in my constituency surgeries, I discover that they had exhausted their possible remedies many years ago and had been told they had to leave the jurisdiction. They are exhorted to leave it voluntarily, but of course they have no desire to do so but want to stay in the UK indefinitely. Until we get to grips with the whole issue of people leaving the jurisdiction who have no right to be in the jurisdiction, we will never sort out the problem of immigration.
Sir George Young
My hon. Friend is right, and he will know that in the last 15 months the Home Office has taken effective action and more people are now being deported than was the case in previous years. My hon. Friend the Minister for Immigration wants to make further progress, and I shall ask him to write to my hon. Friend setting out the further action we are taking to make sure that those who are not entitled to stay in the country leave it.
Valerie Vaz (Walsall South) (Lab)
On 3 November I raised an issue in respect of the public duty costs allowance. Uncharacteristically, I have not yet received a response from the Leader of the House as to why £1.7 million has been paid to former Prime Ministers. That money has obviously gone through the Government’s books in some way, so may we have a list of exactly what duties were performed, and whether invoices and receipts had to be provided?
Sir George Young
I am sorry if the hon. Lady has not received any information that she is entitled to. I will chase this matter up the moment these business questions finish, and make sure that she gets an answer from the appropriate Minister.
Philip Davies (Shipley) (Con)
The TaxPayers Alliance has recently published a new and compelling report called “Industrial Masochism”, which demonstrates how the carbon floor price threatens the jobs of tens of thousands of British workers as energy-intensive businesses relocate overseas. Could we find time for an urgent debate on the impact of the Government’s climate change policies on British industry, so that workers in these vital manufacturing sectors can learn why their jobs have been sacrificed on the high altar of global warming?
Sir George Young
I am grateful to my hon. Friend for his question. As he will know, following the statement by the Secretary of State for Energy and Climate Change a document was published setting out the impact of climate change policies on households and industry. I think my hon. Friend will find that that document comes to a slightly different conclusion from the TaxPayers Alliance. I would welcome a debate on this matter, as would my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) who spoke a few minutes ago, but I cannot promise that we can find time for that in the near future.
Mr Ben Bradshaw (Exeter) (Lab)
Will the Leader of the House invite the Prime Minister to come to the House to explain why he did not feel the need to declare his land deal with a major Conservative party donor and lobbyist? Following on from the question asked by my hon. Friend the Member for Newport West (Paul Flynn), what is the point of having an independent standards commissioner if his advice is never sought?
Sir George Young
The right hon. Gentleman might have put that question to the previous Prime Minister. On the first issue, my right hon. Friend the Prime Minister took the necessary advice from those at No. 10, and that advice was that he did not have to register that particular piece of property. The information is in the public domain anyway because of the Land Registry.
Greg Mulholland (Leeds North West) (LD)
There is real concern in Otley among staff, students and the local community about the conversion of Prince Henry’s to an academy. May we have a debate on the rules surrounding conversion to academy status, because at present it can be done on a single, even a casting, vote on the governing body, and consultation can simply be whatever the school says it should be? That is clearly unsatisfactory, and it needs to be changed.
Sir George Young
I say to my hon. Friend—[Interruption.] Those rules are—[Interruption.] Those rules—[Interruption.]
Mr Speaker
Order. It is very discourteous for all sorts of finger-pointing across the Chamber to take place. The hon. Member for Leeds North West (Greg Mulholland) has asked—[Interruption.] Order. [Interruption.] Order. I am not looking for, or expecting—[Interruption.] Order. I am not looking for, or expecting, any response from the hon. Gentleman, and it is not for the hon. Gentleman to sit in his place shaking his head. The hon. Gentleman asked—[Interruption.] Order. The hon. Gentleman had better watch himself very carefully. He has asked a question of the Leader of the House, and the Leader of the House is courteously responding. The hon. Gentleman will sit quietly and listen to that response. If he finds himself unable to do that, he knows what his alternative is.
Sir George Young
The rules to which my hon. Friend refers are exactly the same as those that pertained under the previous regime, and which we inherited from the outgoing Government. I will draw his concern to the attention of the relevant Department and see whether there is any role for the responsible Minister to play, but I have to say that, by and large, conversion to academy status has been welcomed by local communities.
Kevin Brennan (Cardiff West) (Lab)
May we have a debate on Lords reform? I do not know whether the Leader of the House is a fan of “I’m a Celebrity…Get Me Out of Here!”, but would not one interim solution to the overcrowding he is causing down the other end of this building be a new reality TV show, perhaps called “Peer Pressure”, as that would provide an efficient and entertaining way to cull the rapidly increasing population of the unelected?
Sir George Young
The hon. Gentleman may find that when his parliamentary career here finishes he does not end up in the upper House. I say to him that one of the problems that we inherited from the outgoing Government was the total failure—[Hon. Members: “Oh no.”] Oh yes. We inherited their total failure, after three elections where there had been overwhelming Labour majorities, to deliver on their election manifesto and reform the upper House. We have a draft Bill going through at the moment, which is being examined by a Joint Committee—I am sure that it will be interested in the hon. Gentleman’s views. The person who increased the size of the House of Lords more than anybody else was Tony Blair.
Charlie Elphicke (Dover) (Con)
May I echo the call by the shadow Leader of the House for a debate on lobbying, particularly that by trade unions? Many of my constituents have expressed concern to me, as they feel that trade union cash should not buy a vote or an amendment in this House.
Sir George Young
I would welcome such a debate. My view is that it would be in the interest of the Labour party to have a slightly weaker link with the trade unions. I think that many Labour Members, in their heart of hearts, believe that the pension deal on the table is a generous one which they would like to commend but cannot because of the links to which my hon. Friend has just referred.
Mr John Spellar (Warley) (Lab)
Can the Leader of the House clear up his confusion over the Queen’s Speech? He had previously said that it would be in May. It was claimed that the Fixed-term Parliaments Bill would create a more predictable parliamentary timetable, and during its passage Lord Wallace, on behalf of the Government, committed them to May-to-May Sessions. Yet last week Lord Strathclyde referred only to “spring”, which we know means, in ministerial terms, from the first crocuses in February to sometime in the middle of June. The Leader of the House can clear this up now, so will the Queen’s Speech be in May—yes or no?
Sir George Young
I refer to the answer that I gave to the hon. Member for Wallasey (Ms Eagle); we will announce the date of the Queen’s Speech in due course. If the right hon. Gentleman can be patient, he will find that the moment will come. The Fixed-term Parliaments Act fixes the date of the next general election in May 2015—that is a fixed event. The actual date of the Queen’s Speech between now and then depends on the progress of legislation. I hope that the right hon. Gentleman will use whatever influence he has in the other place to make sure that the Bills before it complete their passage in good time.
Robert Halfon (Harlow) (Con)
Has my right hon. Friend seen the e-petition from my constituent Mr Colin Riches entitled, “Support The Best Policy for Children; give Both Parents Equality in Law”? May we have an urgent debate on the Norgrove report and ensure that fathers have equal access to children?
Sir George Young
I am grateful to my hon. Friend for drawing the House’s attention to the independent review panel, which has just reported. My right hon. and learned Friend the Lord Chancellor is considering all the recommendations in detail and will respond in due course. We want a family justice system that meets the needs of those at the heart of the system—the children.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
May we have a debate to discuss the challenging of racism in politics? If such a debate were secured, I would like to raise the issue of the St Andrews university Conservative association burning an effigy of US President Barack Obama last Friday. Almost one third of students at the university are American. Does the Leader of the House believe that such incidents are conducive to Britain’s relationship with its closest ally?
Sir George Young
I would condemn what happened in that particular club, and I hope that there is no repetition of that incident in any organisation associated with my party.
Andrew Jones (Harrogate and Knaresborough) (Con)
Please may we have a debate about exports and, specifically, the success of British exporters? The latest data for the first three quarters of this year show a 13% increase in exports, with faster growth in exports to the BRIC countries—Brazil, Russia, India and China—especially China.
Sir George Young
I am grateful to my hon. Friend for drawing attention to one of the ambitions of our economic policy, which is to switch the emphasis on growth from spending and borrowing to investment and exports. The fact that we are not in the eurozone enables us to have a competitive exchange rate, which in turn gives our exporters a head start over those in some other countries.
Julie Hilling (Bolton West) (Lab)
Are the Government delaying the Queen’s Speech because the economy is flatlining, because they have run out of ideas or because their legislation is so bad for Britain that they cannot get it through the other place? Are we ever going to have the Queen’s Speech?
Sir George Young
The Government’s legislative programme has made good progress through this Chamber and is now in the upper House, where we are awaiting the Welfare Reform Bill, the Health and Social Care Bill and the Legal Aid, Sentencing and Punishment of Offenders Bill. I hope that those Bills will receive legitimate and proper consideration down there and then come back. When the Government have got their Bills through this House, it will then be time to give the date of the Queen’s Speech, but not until then.
Guto Bebb (Aberconwy) (Con)
May we have a debate on the maintenance of railway lines in Wales? The Conwy Valley railway line in my constituency should be maintained to route availability 7 standard. A commercial proposition to use the line to carry goods has been rejected because the line has not been maintained to that standard, thus costing jobs and investment which are much needed at this time.
Sir George Young
I am grateful to my hon. Friend for his question because, as a former Secretary of State for Transport, I am interested in promoting use of the railway. The issue that he has raised is a technical one for Network Rail, but I will raise it with my right hon. Friend the Secretary of State for Transport to see whether we can make some progress and expand that route for the use to which my hon. Friend has just referred.
Mr Denis MacShane (Rotherham) (Lab)
The Leader of the House must not keep hiding behind this wretched Wright Committee recommendation abolishing debates on Europe. I know that we have had specific debates on this and that, but the hon. Member for Harwich and North Essex (Mr Jenkin) is absolutely right to say that we need a broad debate on Europe, particularly at this stage of our historic relationship with the EU. The Backbench Business Committee carries out its Daily Mail rent-a-petition, rent-a-debate duties, but it is for the Government to provide time to discuss this vital issue for our nation’s future.
Sir George Young
I have to say to the right hon. Gentleman that if we had not implemented the Wright Committee’s recommendations, he might well have been one of the first to criticise us for going back on a clear election commitment. The fact of the matter is that the Government have given some of the power and patronage they used to have away. We have given it to the Backbench Business Committee, which gets roughly one day a week, and it is up to that Committee to decide what it does with that time. One set of debates that was handed over to that Committee, along with the defence debates, was the pre-European Council debates. The Committee has chosen not to have such a debate. That is a consequence of setting up the Backbench Business Committee and transferring the days to it.
Kris Hopkins (Keighley) (Con)
The Leader of the House may be aware that Welcome to Yorkshire, the official tourism agency for Yorkshire, is due to lose its public funding in April 2012. May we have an urgent statement from the Minister for Tourism and Heritage, my hon. Friend the Member for Weston-super-Mare (John Penrose), setting out what the Government might do to bridge this funding gap in the next financial year, in order to protect the Yorkshire tourism industry from potentially catastrophic circumstances?
Sir George Young
As my hon. Friend will have discovered, other Members in the House think that their own county deserves generous support on funding tourism. Yorkshire was the county that received more cash than any other area of the country, and it is having to go through the same process as everyone else in adjusting to the new regime. It has an advantage, in that Yorkshire received £10 million of regional development agency funding for the financial year 2011-12, because of a three-year agreement between Welcome to Yorkshire and Yorkshire Forward, which other regions did not get. I can say to him only that there may be other sources of funding—the regional growth fund, the European regional development fund and the rural development programme for England—to which he may turn for assistance.
Heidi Alexander (Lewisham East) (Lab)
I would like to return to the issue of the housing statement and the Homes and Communities Agency figures. They show that in London the number of social rented homes started between April and September this year was just 56, which is 7,469 down on the figure for the previous six months. If the Government knew that the figures were going to be released on Tuesday, why was the statement not made on the same day?
Sir George Young
The statement was made in its own right, independent of the statistics to which the hon. Lady refers, and I do not think that she should link them in the way that she has. I hope that she will welcome what was said on Monday, which was aimed at kick-starting the housing market and doing better than the outgoing Labour Government on housing starts and housing completions.
Dr Andrew Murrison (South West Wiltshire) (Con)
May we have a debate on the very long-standing regional disparity in rail ticket pricing, particularly given the welcome investment in rail infrastructure? Sadly, that will not directly benefit many of those living in the west country, who are at risk of becoming the poor country cousins on rail transport.
Sir George Young
I have some sympathy with the point that my hon. Friend makes, because I sometimes see him on the same train as me when I go to my constituency. I will raise with my right hon. Friend the Secretary of State for Transport the issue as to whether there is a disparity between ticket prices and investment in infrastructure, and see whether there is any role for her to play in getting a more level playing field.
Ian Murray (Edinburgh South) (Lab)
The Business Secretary gave a speech yesterday on the dilution of employee rights. It was accompanied by a written statement in this House and a fleeting mention in yesterday’s Opposition day debate. He now seems to be indicating, through the media, that he did not agree with a word that he said in either his speech or his written statement. May we have an urgent statement in this House on the role of employee rights and what the Government’s intentions are by making it easier to fire employees rather than hire them?
Sir George Young
The Secretary of State for Business, Innovation and Skills was in the Chamber yesterday answering questions during his speech and he spoke in the House after he made his speech to the Engineering Employers Federation. We had an opportunity to cross-examine the Secretary of State only yesterday on precisely the issues that the hon. Gentleman has just raised.
Christopher Pincher (Tamworth) (Con)
Earlier this month, despite the considered statement of the Chief Secretary to the Treasury on 2 November, West Midlands ambulance service workers voted to strike next week, threatening to bring chaos to a service that deals in matters of life and death. May we have a debate on the implications of that strike, because I fear it will be very deleterious to the health of many people in the west midlands?
Sir George Young
I hope that people in the west midlands have listened to my hon. Friend and will reflect before they go on strike, if that is what they are planning to do next Wednesday, and on the consequences for schools and, in some cases, for health. I hope that if the Labour party has any influence it might bring that to bear on the trade unions, condemn the strikes and persuade them to abandon them and accept the generous offer that is on the table.
Alex Cunningham (Stockton North) (Lab)
The Leader of the House will be aware that a YouGov poll this week showed that 59% of people agreed with a total ban on smoking in cars with passengers, a view supported by the majority of all three major parties’ supporters. The British Lung Foundation, of which I know the Leader of the House is a supporter, says that 86% of parents support a ban when children are present. My ten-minute rule Bill on the subject is 10th on the list tomorrow and is likely to run out of parliamentary time. Will the Leader of the House please give some Government time so that we can debate that important issue and so that the House can make clear its view on a ban on smoking with passengers and children, and also on an outright ban?
Sir George Young
I commend the hon. Gentleman’s work and that of the all-party group on smoking and health, which has played an active role in campaigning and was very influential in the last Parliament in making progress on the ban on smoking in public places. I cannot promise Government support for his ten-minute rule Bill—he will have to come along tomorrow and see what happens—and I see some difficulties in trying to enforce a ban on all smoking in cars. That might have to wait until public opinion has moved on.
Henry Smith (Crawley) (Con)
May we have a debate on the equity of child benefit payments, particularly when parents are separated but still have joint child care responsibilities?
Sir George Young
My hon. Friend raises a serious issue. Sadly, more and more families are splitting up and there is an issue about whether the child benefit should go to one parent or another. I think I am right to say that at the moment it cannot be split. That is also the case with other child-related benefits. I will raise the question with my right hon. Friend the Chancellor of the Exchequer, who has responsibility for it, and see whether there is any way of coming to an arrangement whereby those benefits or tax credits are apportioned in a fair way to reflect the responsibilities that underpin them.
David Wright (Telford) (Lab)
The Leader of the House has debating time on his hands. May we have a specific debate about the provision of social rented housing in this country? There are 20,000 people in Telford looking for rented housing in the social sector and thousands of them are in urgent need. May we have a debate as soon as possible on rented housing provision? We have heard already from my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) about the collapse in the provision of new social rented homes and we need a debate urgently.
Sir George Young
As the hon. Gentleman will know, I have announced that there will be an Opposition day. Perhaps his bid was heard by his friends on the Front Bench. He will also know that waiting lists doubled under the last Labour Government and that is the problem we are now trying to address.
Gavin Barwell (Croydon Central) (Con)
The sympathy that my constituents feel for public sector workers who face a freeze in their pay and changes to their pension contributions will be significantly eroded by the inconvenience and worse that will be caused by the proposed strikes. May we have a debate on the legitimacy of those strikes, so that we can see whether Labour Members will stand up for their constituents or their paymasters?
Sir George Young
I am grateful to my hon. Friend. We are trying to get a fairer balance between the public sector employees and the taxpayer, who pays a very large percentage of the pension contributions. My hon. Friend raises a good point. I detect public sympathy ebbing away from those who are planning to strike and they would do well to reflect on that before they go ahead with their action on Wednesday.
Mr David Winnick (Walsall North) (Lab)
Would it not be useful to have a debate in the very near future on the obsessive hatred—there is no other way to describe it—that the Tory party has and always has had for the trade union movement? Trade unionists need no lectures about public service and patriotism from the Conservative party.
Sir George Young
That is a travesty of my party’s view about trade unions. I was a member of a trade union until I was expelled and described as a “pin-striped bovver boy” by ASTMS, the Association of Scientific, Technical and Managerial Staffs, back in the 1970s. The trade unions have a legitimate role to play in this country but we think that the very strong links between the trade unions and one political party are unhealthy for that party.
Andrew Selous (South West Bedfordshire) (Con)
Our constituents in care homes are among the most vulnerable we represent and the Care Quality Commission is supposed to be one of their guardians, yet its recommendations are not always implemented. May we have a debate on the important subject of how we protect those very vulnerable constituents?
Sir George Young
My hon. Friend is quite right that sometimes action is not taken. The answer is that the Care Quality Commission has a range of enforcement powers at its disposal and his message is that it should use those more often to address the problems he has described. The CQC has a range of enforcement powers that it can use to bring a provider back into compliance and in the case of the most serious failings it can cancel a provider’s registration, which would simply result in that provider’s closure. My right hon. Friend the Secretary of State for Health has emphasised to the CQC the importance of driving up standards and using all the powers at its disposal to do that.
Nick Smith (Blaenau Gwent) (Lab)
May I press the Leader of the House? Given the shockingly low number of affordable housing starts—just 454 in the six months from April, a figure that was revealed the day after the Government’s much-trumpeted housing strategy—may we have a debate in Government time on the crisis in our construction industry?
Sir George Young
I hope that the hon. Gentleman will welcome the statement made by my right hon. Friend the Minister for Housing and Local Government on Monday, which addressed the parlous state of the housing and construction industry we inherited, the action we are taking to bring public land back into use, the incentives we are giving to local authorities to develop and the help we are getting through building societies and banks for first-time buyers. We are taking effective action to kick-start the sluggish housing economy that we inherited.
Glyn Davies (Montgomeryshire) (Con)
The economy of my constituency is almost entirely made up of small and medium-sized enterprises, public support for which comes from both sides of the England and Wales border. Will my right hon. Friend programme a debate to discuss the future of SMEs and support for them, with particular reference to cross-border issues?
Sir George Young
There will be an opportunity to debate that issue in the debate on the economy that I announced at the beginning of this question session. We are determined to make more resources available to SMEs and, as part of Project Merlin, the Chancellor announced that the banks intend to lend £190 billion of new credit to businesses, which is a significant increase on the £179 billion in the previous year. We are taking other action, such as reducing the corporation tax rate for small businesses. I would welcome my hon. Friend’s contribution to that debate and the response from Ministers will set out all the action we are taking to help SMEs.
Kelvin Hopkins (Luton North) (Lab)
Research reported last week has found that 10,000 babies are born each year damaged by smoking and the consumption of alcohol and drugs during pregnancy. Some 6,000 of those babies are affected by foetal alcohol spectrum disorders. Is it not time for the Government to make a statement on and bring forward proposals to deal with this tragic situation?
Sir George Young
The Government are very anxious to drive down perinatal and antenatal mortality and we have taken a number of measures already to promote public health. The Health and Social Care Bill, which is now going through the House, will, I hope, make some progress in that direction. I will bring the hon. Gentleman’s suggestion to the attention of my right hon. Friend the Secretary of State for Health and ask whether there is more we can do to diminish the number of babies who are born damaged or, sadly, die because of excess alcohol consumption by their mother.
Brandon Lewis (Great Yarmouth) (Con)
Through the all-party parliamentary group for local growth, enterprise zones and local enterprise partnerships, it is clear that the organisations involved in enterprise zones understand the importance of opportunities for small and medium-sized enterprises in enterprise zones. Seajacks in Great Yarmouth is likely to be the first organisation to go into an enterprise zone, highlighting how important SMEs can be for growth and job creation. May we have a debate in the Chamber on the importance of SMEs, particularly with reference to opportunities in enterprise zones?
Sir George Young
I believe that my hon. Friend is the chairman of the all-party group and I commend him for his activity in that regard. I hope there will be an opportunity when we debate the economy to say a little more about SMEs. We have extended the level of small business rate relief for two years. We have a new fund of enterprise capital funds, which I hope will help, and there is also entrepreneur’s relief and other initiatives such as the enterprise finance guarantee, all of which I hope will help SMEs to grow and employ more people.
Mr Philip Hollobone (Kettering) (Con)
The National Audit Office has revealed the shocking statistic that £2 billion is owed to the Ministry of Justice by convicted criminals in outstanding confiscation orders and unpaid court fines. That figure is £400 million higher than in the previous year. Given that it is the policy of Her Majesty’s Government to reduce the number of people in prison and increase the number of criminals who are fined, may we have an oral statement from the Secretary of State for Justice, so that we can hold him to account for this shocking state of affairs?
Sir George Young
My hon. Friend raises an important issue. That figure has gone up because the courts are using the relevant provision more often than previously. Also, some of the confiscations are for very large sums indeed—I think there is one of £189 million—which explains why there has been an increase. I can tell my hon. Friend that a blitz on this, using a range of powers such as attachment of earnings, seizure of assets and other measures, is planned to try to get that figure down.
Bob Blackman (Harrow East) (Con)
Last Sunday in Hungary, legislation was passed that withdrew recognition of Hinduism as a recognised religion in the country. That threatens not only people’s right to celebrate and worship in accordance with the religion of their choice but the land-ownings of people who celebrate that religion. So far, the Hungarian ambassador refuses to take delegations representing those Hindus in this country and, equally, my right hon. Friend the Foreign Secretary has been unable to intervene in this process. May we have an urgent debate in the House on the protection of religious minorities in countries where they are threatened in this way?
Sir George Young
I am grateful to my hon. Friend for raising the issue. I understand that our ambassador would be very happy to meet him and talk it through, and that our ambassador has already raised the matter with the Hungarian authorities. As I understand it, the legislation is aimed not at discriminating against Hindus but at preventing quasi-religious organisations from benefiting from a tax break. It would be quite wrong if Hindus were penalised and I very much hope that the dialogue that my hon. Friend has with the ambassador will enable progress to be made and reassurances to be given to the Hindu community in Hungary.
Andrew Stephenson (Pendle) (Con)
The decision to extend small business rate relief until October 2012, which the Leader of the House has mentioned, has been hugely welcome in Pendle, where more than 1,000 small businesses fall into the relevant category and have benefited from paying either reduced business rates or none at all. May we have a debate on the success of that scheme and on what more the Government can do to support small businesses, which are the backbone of the British economy?
Sir George Young
I very much hope that the Chancellor of the Exchequer tuned in and heard my hon. Friend make that bid, and that he is able to take it into account as he prepares his remarks for next Tuesday. As I have said, I hope there will be an opportunity to debate the extensive support that we are giving to SMEs when we have the debate on the general economy.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
The Leader of the House will be aware that last year the House voted to raise the subsidy for post offices by up to £500 million, but there is no accountability to the House about how that money is spent, where it is spent and what criteria are used. May we have an urgent debate on that, because I believe that the Post Office is failing in its delivery of post offices, and we might be able to reopen the post offices in Wangford, Walberswick and Blythburgh?
Sir George Young
I understand my hon. Friend’s concern. I wonder whether this is a subject that the Select Committee on Business, Innovation and Skills might look at and press with the Post Office. I will raise it with ministerial colleagues to see whether we can get some accountability for the large sum she has mentioned.
Points of Order
(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mary Creagh (Wakefield) (Lab)
On a point of order, Mr Speaker. You will have heard in DEFRA questions a couple of hours ago the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Newbury (Richard Benyon), tell the hon. Member for North Wiltshire (Mr Gray) that he had protected the budget for the wildlife crime unit and for raising awareness about the need for people not to bring animal products back into this country when they go on holiday. That rang alarm bells for me because I asked the Under-Secretary how much he was contributing to the wildlife crime unit this year and he replied, in a parliamentary answer in March, that he had cut his contribution to that budget. Also, the budget for activity at airports and the “Don’t bring me back” campaign was about £45,000 under the Labour Government and has fallen to less than £25,000 per annum, so I wanted to set the House straight and to give the Minister the opportunity to correct the record as soon as possible.
Mr Speaker
I am very grateful to the hon. Lady for her point of order. My responsibilities do not extend to the financing of the fight against wildlife crime and I do not think there is a matter for the Chair here. One could be forgiven for thinking that the hon. Lady was seeking to continue the debate that took place at Question Time, but that would be an uncharitable view for me to take. Knowing her as I do, I know that she would not engage in that sort of unworthy endeavour. She has put her thoughts on the record and if the Minister were here he could respond, but he is not, so he cannot.
Thomas Docherty (Dunfermline and West Fife) (Lab)
On a point of order, Mr Speaker. You will be aware, further to the point that my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) made, of the disgraceful actions of Tory students at St Andrews university on Friday night when they burned an effigy of President Obama. The Courier newspaper has today reported that this action has failed to receive condemnation from the Tory leader and that it has received widespread coverage in the United States. On behalf of the people of Fife, may I make it clear that we absolutely condemn those actions? Has the Foreign Secretary indicated to you, Mr Speaker—
Mr Speaker
Order. I think we have heard enough. It was instructive for me to listen to what the hon. Gentleman had to say. Obviously, I have no responsibility for these matters, but the issue was aired a few moments ago and the Leader of the House’s response was absolutely explicit. As to what other members of the Government might or might not say or what statements on the subject could or could not be issued, that is not a matter for me. The hon. Gentleman is invariably like a dog with a bone and so I rather suspect he will pursue the matter if he feels so inclined, but I hope that he will not do so by trespassing on the time of the Backbench Business Committee.
Backbench Business
(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
BAE Systems
(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
Just before I call the right hon. Member for Haltemprice and Howden (Mr Davis) to move the motion, I stress for the convenience of the House that the six-minute limit on Back-Bench contributions will take effect after the speech by the shadow Minister, which I think will be the fourth speech in the debate.
Mr David Davis (Haltemprice and Howden) (Con)
I beg to move,
That this House urges BAE Systems to act to preserve the UK’s defence production skills base and, as a recipient of enormous resources over many years from the UK taxpayer, to deploy those resources in such a way as to protect the nation’s manufacturing capability.
On 27 September, BAE Systems, which is Britain’s biggest engineering employer, delivered an agonising shock to its work force. It announced that it intended to lay off 3,000 employees in its plants across the country. In this process it will be closing the production plant at Brough in my constituency, thereby terminating the jobs of almost 900 skilled workers and staff. That was a shock, but not a surprise because the previous weekend the newspapers had published a leak about those plans, which were in breach of all BAE’s codes of corporate responsibility. This cruel treatment of a loyal, decent and hard-working work force was, frankly, a disgrace. As I shall point out, that was not the only disgraceful aspect of this decision.
The symbolism of this retrenchment could hardly be starker. Both aerospace and defence are massively important businesses for the United Kingdom. BAE is by far the biggest company in either industry in Britain. The size of the cutback is grievous and grimly symptomatic of the decline in manufacturing in this country—so far, so bad—but there is a risk in this storm of statistics and grand economic strategy that we lose sight of what really matters. What matters most is the misery that the decision visits on individuals, families and communities: the destruction of their hopes and the blighting of their lives.
In Brough—a community that thinks of itself as the home of the Hawk, centred on a factory that has been building military aircraft since 1916—the shock was visible. It is one of those factories where grandfathers, fathers and sons all work, thus maintaining a proud tradition of skilled work through the generations. A number of married couples who work there met there. Therefore, after Christmas this year, whole families will be looking for work, and what a time and place to look for work. Many of them live in a part of Hull that has more unemployed people chasing every job than anywhere else in the country. In the past four years, the city and area have lost 7,500 manufacturing jobs—a quarter of all the manufacturing jobs now left there.
Brough’s closure is not only an industrial tragedy, but a human tragedy—all so painful, and all so unnecessary. While Brough was announcing job losses across Yorkshire and Lancashire, Airbus was opening a £400 million factory, which increased jobs by 650 and underpinned 6,000 other jobs. That factory makes Airbus wings. In past years, Brough and other parts of the BAE empire have made the struts, spans and other parts of wings for Airbus.
Until about five years ago, BAE maintained a stake in Airbus. The close relationship meant that Airbus components of all sorts were made by the BAE work force. That was a smart strategy. Although civil and military aviation operate on different business and economic cycles and different demands at any time, the manufacturing skills and requirements are interchangeable to a large extent. Until then, the company could switch resources backwards and forwards to whichever sector had the demand.
Despite the counter-cyclical nature of those businesses, profits were stabilised—as, of course, was employment—but five years ago, before the banking crash and the sudden constraints on public spending, defence sales looked lucrative and profitable, and civil aviation looked just a bit too competitive. Now, all is reversed of course: defence sales are hard to come by anywhere in the world, and commercial aviation is booming.
In 2006, in what must count as an astonishing piece of strategic myopia, the company made a hideously short-term decision and disposed of its stake in Airbus and withdrew from civil aviation. Britain is the country that created the first jet airliner. We now own no production capacity for civil airliners. That is not the only strategy error to hit the work force.
Over the years, BAE and its predecessor companies have had a symbiotic relationship with the Government that is all too characteristic of defence industries. In the largely cost-plus environment of defence procurement, the British taxpayer funds the development and production of weapons and aircraft. British test pilots risk their lives testing, proving and improving those aircraft. In exchange, the nation receives the aircraft, equipment and weapons necessary to defend our shores and interests, but it also obtains a defence industrial capacity that supports us in time of war.
In addition, the Government go in for defence sales support, specifically to maintain the viability of that domestic capacity. That is the theory. It seems to me that what has been happening is almost the opposite. Let us take, for example, the Harrier, perhaps the most iconic post-war British aircraft. Without it, we might have lost the Falklands war. It was developed with British taxpayers’ money and tested by British test pilots. Today, it is an American aircraft. As far as I can tell, the Americans paid little if anything for the transfer of intellectual property in the most innovative aircraft since the war, yet they now manufacture that aircraft: British money; British skill; American jobs and capability. Sadly, that appears to be happening again.
If we win the potentially huge American order for the T-X aircraft, between 350 and 1,000 advanced Hawks will be manufactured not in Britain, but in Texas. What that means is demonstrated by what has been happening with the sales of the Hawk to India. In the past decade, about 150 Hawks have been sold to the Indian air force. The vast majority of them—all except the first 24, I think—have been built in Bangalore. BAE will tell anyone, as they told the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) and me at the time, that it was a necessary offset and that it did not mean that it was moving Hawk production abroad.
I looked in the Indian papers and the defence journals that cover both sides of the story to see what is happening on that project. Ashok Nayak, the chief executive of Hindustan Aviation, which builds the Hawk in India, said this year:
“Last year, while negotiating the contract for 57 Hawks, BAE Systems wanted to give HAL”—
Hindustan Aviation—
“additional work in building Hawks in the future. HAL is looking for a large role in that build. What exactly, is still being discussed.”
That was quoted in the Indian newspaper, Business Standard, but such things are said in not just one paper. The journal Defence Now said much the same thing:
“BAE was discussing moving more production to Hindustan Aviation”,
effectively to create export sales out of India. Separately, reporting at the Paris air show earlier this year, the journalist David Donald said in another journal:
“BAE Systems envisions no problems in maintaining the Hawk’s production status for many years, with the production line in India now driving and sustaining the all-important supply chain.”
It is plain to see that, whether by accident or design, BAE is effectively moving to a position where the emblematic British aircraft, the Hawk—the Red Arrows aircraft—will be made abroad. That is where a serious part of our jobs are going now. What happened to the Harrier yesterday and what is happening to the Hawk today, if we are not careful, will happen to other aircraft in the future. In summary, successive British Governments have maintained a policy to keep a cost-effective British defence industry on British soil. BAE Systems has gained from that strategy, with the effect that we have exported those jobs and capability to foreign soil.
It gets worse. Since the 1960s, to maintain a viable defence industry, successive British Governments of all parties have operated under a set of rules, known as the yellow book, that determine which costs the company meets and which costs the taxpayer meets. It transpires that when BAE lays off 3,000 workers, the BAE shareholder will not meet the cost, as is reported on the front page of the Hull Daily Mail today: “Taxpayers face £100m BAE bill”. Given how the system works, between £60 million and £110 million—we do not yet have the total—will be paid by the taxpayer, not by BAE, to lay off 3,000 people and destroy their jobs. That is outrageous.
A policy designed to defend our defence capability is being used to make us subsidise the destruction of that capability. A policy designed to defend and protect British jobs is being used to destroy British jobs. If I were the Minister, I would not pay BAE a penny. I would tell BAE, “This is your decision. This is the outcome of your strategy. If you don’t like it, I’ll see you in court.”
I should tell the Minister that I have spoken to the Chairman of the Public Accounts Committee about this matter, and she has agreed to have a National Audit Office investigation. I hope that that helps to stiffen the Ministry of Defence’s spine. I have also discovered that BAE has already benefited to the tune of hundreds of millions of pounds from such yellow book subsidies for failure. I will ask the PAC to investigate that, too.
Mr Ben Wallace (Wyre and Preston North) (Con)
I have been following the thread of my right hon. Friend’s argument, but I point out that the issue is not entirely one-sided for BAE Systems. The previous Government signed a number of contracts based on the work throughput in a location. No matter what Her Majesty’s Government ordered, BAE Systems was guaranteed to deliver work, through the Clyde, Woodford and other sites around the United Kingdom. If the Government cancelled orders, BAE Systems had to pick up the bill, because it was a sort of Stalinist tractor factory contract that the previous Government put in place.
Mr Davis
Frankly, I will resist making this a Labour versus Tory argument, for a simple reason. For the past 10 years, when it comes to BAE Systems and employment in our constituencies, the right hon. Member for Kingston upon Hull West and Hessle and I have studiously aimed solely at protecting jobs, sometimes demurring from scoring political points. My hon. Friend the Member for Wyre and Preston North (Mr Wallace) makes a good general point, that there is a central planning approach—a bad one—but the raw truth is that it was designed to ensure that our defence capability and defence employment were stable, and would be there in time of war. That has been turned, and it has effectively been used to destroy those jobs and that defence capability.
Mr Jack Straw (Blackburn) (Lab)
Mr Deputy Speaker— who represents Ribble Valley, in which Samlesbury sits—together with many other colleagues, regardless of party, and I have sought to adopt the same bipartisan approach in our pursuit of BAE interests on our side of the Pennines. We are in full support of what the right hon. Member for Haltemprice and Howden (Mr Davis) and my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) are seeking to do. It would be terrible and hopeless if we turned this into a 2011 contest across the Pennines.
Mr Davis
The right hon. Gentleman is absolutely right on both counts. It would suit the people whose minds we are trying to change very well if we fought against ourselves on party political or geographical grounds. Much as I look back with amusement and fondness on past cricketing experiences in the wars of the roses, those wars need not be repeated here and now.
Mr Tobias Ellwood (Bournemouth East) (Con)
My right hon. Friend makes a powerful argument, much of which I agree with, but in the interests of balance, will he concede that there is another side to the coin? The Apache helicopter, which we purchased, made by Boeing, was built in the UK, not by the American work force. We also make kit that is exported: the empennage—the rear section—of the F-35, designed for an American market, is made here, and the M777 Howitzer is made in this country and exported. There is another side to the coin.
Mr Davis
There is another side to the coin, but since my hon. Friend draws me on that point, I am afraid that on one side there is a pound, and on the other there is a ha’penny. I was the Public Accounts Committee Chairman for five years, and I looked at the issue in close detail, and I have to tell him that the Americans are far more aggressive and effective than we are when it comes to protection of their intellectual property.
The proposals have all sorts of strategic implications. One of the things that we looked at 10 years ago—I am probably not breaking too many secrets—was the advanced medium-range air-to-air missile. We were not even allowed technological knowledge of AMRAAM because of the Americans’ defences, and that made it less effective for us. This is quite an area of battle. Indeed, the previous Defence Secretary made quite an issue of this, as my hon. Friend the Member for Bournemouth East (Mr Ellwood) will know, and will understand only too well. We have not fought our corner very well, and I am afraid that BAE Systems is culpable, as part of that. It has been very poor in terms of its strategic decisions on civil and military aviation, and when it comes to protecting our intellectual property.
Mr Knight
I am most grateful to my right hon. Friend for giving way; he is being very generous. He posed the question of whether what was happening was the result of accident or design. Has he not now answered that question? The answer is design—it is the deliberate decision of the management.
Mr Davis
It is certainly the consequence of deliberate decisions. Whether the management intended this outcome at the beginning, or whether it is sheer crass misjudgment, I will leave the House to judge. What I am trying to do is lay out the facts as starkly as I can, because it was long ago time to open up the process to public scrutiny.
That brings me to the decision today. The company is in the middle of a 90-day consultation period. From the start, the right hon. Member for Kingston upon Hull West and Hessle and I, and a number of colleagues—probably every Member of Parliament involved in the process—told the company that we would hold it to its legal responsibilities on a 90-day process. Those legal responsibilities involve being transparent and open, and looking in good faith at all proposals put to it. I repeat that: looking in good faith at all proposals put to it. Unfortunately I have to tell the House that, based on the company’s behaviour to date, it seems to me entirely possible that it has broken its legal responsibilities. It has not looked in good faith at all the options available to it, but I will leave it to my right hon. Friend—I beg his pardon, the right hon. Member for Kingston upon Hull West and Hessle; he is my friend—to say more on that later.
I certainly expect the company to demonstrate why it turned down the options that it was looking at before it made the decision. As far as I can see, it has not even done that. Secondly, I expect it to give proper consideration to the plan drawn up by its management to preserve employment at Brough in my constituency, albeit at lower levels. Again, I think that the right hon. Gentleman will touch on that point.
The work force at Hull are the best, in terms of attitude, productivity and skill, I saw in my 20 years in business before I came to the House, and BAE Systems senior management agree. The work force’s attitude is positive, their productivity is high, and the right hon. Gentleman and I have always been told that they are competitive on cost and quality. They deserve a proper chance.
If the company does a proper, open-minded review, and the figures do not add up—I accept that is possible—its responsibilities do not end there. We have been fortunate: the Civitas think-tank has invested £50,000 in looking at the Brough site to see what it can be used for, how the skills can be deployed, and what we can do without destroying the skills base. For that, I thank it warmly. The chairman of the Government’s skill retention taskforce came to see us yesterday, and it is at work, looking for alternatives. The Government acted within two weeks and put in place two enterprise zones, one on each side of the Pennines, to help us in all this, but if we cannot come up with an alternative, we will again lose a critical mass of skilled workers that will not be replaced once it is dissipated. That is the nub of the matter.
The job losses in Brough and on the other side of the Pennines are, to a large extent, a direct consequence of the company’s strategy over the years. The company’s profits come, to a very large extent, from taxpayer support.
Andrew Percy (Brigg and Goole) (Con)
My right hon. Friend makes a powerful point. On the legacy issue, does he agree that it is not good enough for BAE Systems to say, “We will do everything that we can to find people alternative work”? It has to make sure that that legacy remains in east Yorkshire, and that the site remains a site of employment in manufacturing for our constituents.
Mr Davis
My hon. Friend, who has been very active in this campaign, brings me to the nub of the issue. It is precisely because the company had, until five years ago, experience in civil aviation; precisely because it is the biggest employer of engineers in the country; and because of its knowledge, access, contacts and understanding of the markets, that it is best equipped to find an alternative use for Brough—full stop. That is what I—and others, I am sure—demand. It is not just Brough; I keep saying Brough because it is closest to my heart, but the company must find alternative employment and use for the assets and the work force across the country. That is what it is best equipped to do. Frankly, as far as I can see, so far it has not lifted a finger in that direction.
There has been a lot of criticism in recent weeks of high levels of executive pay. Recently, the statistic came out that, over 30 years, senior executives have had a 4,000% increase in pay. Despite severe criticism of senior management by investors and others over the years, the pay of BAE’s chief executive grew by 8,000% over the same period, double the national average. I am not one of those who believe that people should not be paid large sums of money, but I expect them to earn it. They could perhaps justify their salaries—the chief executive’s is £2.4 million—by doing a better job not only for shareholders, but for employees and the country.
Mr Deputy Speaker (Mr Nigel Evans)
Order. I inform the House that the debate will conclude at 2.30 pm.
Alan Johnson (Kingston upon Hull West and Hessle) (Lab)
It is a pleasure to follow the right hon. Member for Haltemprice and Howden (Mr Davis). As he said, for the past 14 years we have worked together to try to protect the interests of BAE workers at Brough. We have been joined in that by other Members who represent constituencies in Hull and the east riding, many of whom are here today, but he and I have been working together on it the longest.
Three consistent themes have run through all our discussions with BAE and its work force. First, there is a superb work force at Brough, as BAE has stated over and over again. Indeed, Allan Cook, who heads the Government’s talent retention unit and has a long history in the aerospace industry, having worked for Marconi, Cobham, BAE and Marshalls, told us a few days ago that he had never encountered such a talented group of workers in his entire engineering career. Secondly, there is the success of the Hawk. Since its first flight in 1976, 900 Hawk aircraft have been sold around the world. It is an iconic British product that is still in great demand, as I will show later. Thirdly, the work force have shown remarkable loyalty to, and respect for, the company. On the several occasions when the plant has been downsized, I have found the work force’s enormous respect for the company incredible.
Since the announcement on 27 September, only one of those three consistent themes has changed; I am afraid that the company has lost the respect of its work force. One long-serving employee who wrote to me—I am sure that colleagues have received similar letters—said, “Until this week I was proud to wear BAE Systems’ name but now find myself appalled by the actions of the senior management.” That kind of sentiment has been repeated by people who feel utterly betrayed by the announcement and by the way it was made.
BAE is seeking to end 100 years of aerospace manufacturing on the Humber not because of any problems with the staff or the product they produce, but because in difficult times it would rather impress shareholders with how tough it can be than impress the work force with how honourable it can be. The decision of the four Typhoon countries to slow deliveries of the aircraft was of course a blow, but the European Aeronautic Defence and Space Company and Finmeccanica are slowing production of the Typhoon in Germany, Spain and Italy without losing any highly skilled manufacturing jobs.
James Wharton (Stockton South) (Con)
The right hon. Gentleman makes the important point that this might appear to be a short-term decision that benefits shareholders in the immediate future, but does he agree that in the long term shareholders would probably rather see the retention of an important skills base that will allow BAE to compete effectively in future and secure contracts?
Alan Johnson
That is absolutely right. That is why we wanted a debate in the House with a motion setting that out, because that is precisely the message we need to put out. As I will say later, that is precisely what other serious manufacturing companies are doing.
Four countries are affected by the decision to slow delivery of the Typhoon, but only BAE in the UK has reacted by throwing highly skilled engineers out of work and abolishing a manufacturing plant. Although the company says that its announcement was forced by the slow-down in orders for the Typhoon, almost a third of the job losses are for the Hawk, an aircraft that remains popular around the world. Orders are imminent from Saudi Arabia, Oman, Iraq and the United States, and potential orders are imminent from Poland, Kuwait and the RAF in a few years’ time. When we and others, including the unions, have asked the company what will happen if they get an order for 10, 50,100 or 150 Hawks next week—this relates closely to the point that the right hon. Member for Haltemprice and Howden made about the 90-day process—its reaction has been that nothing would change. Our suspicion is that is because there is a view that it will not be the other side of the Pennines that benefits from extra Hawk orders, but Texas, India and manufacturing plants abroad.
When the unions have berated BAE on the effects on British manufacturing and pointed out that it is an important British manufacturing company, it has replied that it is not a manufacturing company, but an engineering company that chooses to manufacture, the implication being that that is the choice it has made at the moment but might not make in future. In no other major industrialised country in Europe would a company that has spent much of the past decade moaning about skills shortages be getting rid of some of the most highly skilled people in the country. In no other major industrialised country would a company whose biggest customer is the Government and whose biggest investor historically has been the taxpayer be causing such damage to a precious sector of the economy.
There is an alternative approach. Andrew Witty, the chief executive of GlaxoSmithKline, another British manufacturer that sells its products abroad, lambasts British businesses that turn themselves into “mid-Atlantic floating entities” with no connection to society. He says that his company has given a lot to Britain, but that Britain has given a lot to his company and that it would not exist without the work of British people and the support of the British Government. He is busy returning manufacturing jobs from abroad to this country. He says that his objective is to give more jobs, provide more skills and pay more taxes in Britain. It is a shame that other iconic international British companies do not follow the same philosophy.
Mark Hendrick (Preston) (Lab/Co-op)
I am well acquainted with Andrew Witty, having met him at GlaxoSmithKline’s research and development centre in China. It is now a global business that employs thousands of Chinese people, and although the company returns a lot to the UK, it also has major investments abroad in the same way as BAE Systems will have when it is employing people in India.
Alan Johnson
My hon. Friend is absolutely right. That is precisely the point. We can compare those two British companies. Around 96% of GlaxoSmithKline’s sales are abroad, but it is making a decision as a British company to invest in Britain and open manufacturing plants at a difficult time, and it is of course helped by the patent box that was agreed by the Labour and Conservative parties. It is an example that BAE should follow.
As thousands of highly skilled BAE employees contemplate a miserable Christmas, it is time for the company to engage properly with its work force in order to ensure that their important skills are retained in aerospace manufacturing and that aerospace manufacturing is retained on the Humber. We are 58 days into the statutory 90-day process, but there is no sign whatsoever that BAE is doing anything other than going through the motions. Indeed, the site director at Brough told my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) only last week that nothing would change during this consultation process. He told her that they were going though the motions. When the 90 days end on Boxing day, it will still be 27 September as far as BAE’s plans are concerned.
The unions are working hard to hold the company to its statutory obligations. The union representatives involved are very good and need no advice from me, but if I was a union rep involved in the case, I would seriously consider seeking a protective order against BAE for its lack of engagement.
We believe that BAE’s three manufacturing sites should be retained. The company should stand by its loyal work force in difficult times, so that when the good times return it has sufficient manufacturing capacity in this country to deal with the extra work.
All the signs are that military aerospace will expand dramatically from about 2016. At the very least, BAE should adopt the intelligent proposals put forward by its own executive group at Brough in order to mitigate the significant risk inherent in the company’s plans by retaining crucial assembly and sub-assembly at Brough for the duration of the next Hawk acquisition contract, thereby saving about one third of the jobs until 2016.
Mr Ellwood
The right hon. Gentleman is making a powerful speech, but will he elaborate on his statement that the defence industry expects to expand with orders in 2016? From the angle that I see the issue, the United States, NATO countries and so forth are doing exactly the opposite: this is the area in which budgets are being cut; defence is being affected.
Alan Johnson
That is true, and I will turn to civil aerospace in a moment, but all the experts in the area, including the unions handling the situation, expect that from 2016 there will be an increase, particularly in Hawk orders. We are looking at the home of Hawk in Brough, and it is going through a difficult time, but most expect that, if we can get to 2016 and through the next difficult period in this country and throughout the world, there will be significant opportunities in military engineering.
The executive group at Brough has put forward a proposal to safeguard what is probably the Saudi Arabia contract, to ensure that there are no dangers to it and, therefore, to save about one third of the work force until 2016. There is a desperate shortage of necessary skills to meet booming demand in the commercial aerospace sector by companies such as Rolls-Royce and EADS, so the retention of some Hawk work should be combined with facilitating and incentivising the transfer of packages of commercial aerospace work to Brough. It is an attractive site, with exceptional access by air, sea and land. It has the machinery, the layout and the work force that commercial aerospace companies need, and it can be utilised without causing job cuts elsewhere.
It is time for fresh thinking. As the right hon. Member for Haltemprice and Howden has pointed out, we are in the crazy position of using taxpayers’ money to destroy skilled jobs in an economy that is desperate for high-value manufacturing to expand. It is time for an ethical and, even, patriotic approach by big profitable international companies, such as BAE, to the problems that this country faces. The Government have an important role to play in such a strategy, but the prime responsibility rests with the company.
I have a final quotation from Andrew Witty. He says:
“I…believe one of the reasons we have seen an erosion of trust…in big companies is they’ve allowed themselves to be seen as detached from society…They’ve allowed it to be perceived that it’s all about money.”
BAE needs to avoid being a “mid-Atlantic floating entity” and to demonstrate that it is a British company that cares about British society and British jobs. The work force at Brough have been loyal to BAE in difficult times. BAE needs to reciprocate that loyalty now.
Mr Deputy Speaker (Mr Nigel Evans)
Order. I am going to call the Front Benchers next, but I ask them to be mindful that a number of MPs who wish to contribute to this debate have constituency interests in the matter.
The Parliamentary Under-Secretary of State for Defence (Peter Luff)
It is good to see a constituency Member in the Chair for this important debate, Mr Deputy Speaker, and I will do my best to be as brief as the complex issues raised allow.
May I say how much I enjoyed both speeches that we have heard? My right hon. Friend the Member for Haltemprice and Howden (Mr Davis) seized the opportunity for this Back-Bench debate with his usual skill and aplomb, and he spoke with passion and conviction; and the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) spoke movingly and thoughtfully. The company would do very well to listen to the concerns that they both expressed.
I must emphasise, however, the deep regret that the Government and I, personally, feel at the job losses that BAE Systems announced on 27 September. Such decisions, I hope, are never taken lightly by companies, and we fully recognise the very real impact that they will have on local industry and individual livelihoods. I emphasise also—it is clear from the debate so far—that the decision was a commercial one, made by the company, which explained that it was necessary to maintain competitiveness both in the UK and internationally. This debate is testing that rationale.
Mr Stephen Hepburn (Jarrow) (Lab)
I share the concerns about BAE that the mover and seconder of this excellent motion have expressed, because we are experiencing similar problems on the Tyne. The shock decision to switch work from A & P Tyne will have a disastrous effect not only on our region through the loss of hundreds of highly skilled jobs, but on the economy. Will the Minister urge BAE to rethink?
Peter Luff
I know the decision to which the hon. Gentleman refers, and it will of course please other parts of the country, because BAE Systems will do the work elsewhere in the UK, but I shall happily talk to him about it privately afterwards if he would find that helpful.
I do not want to labour the point, but we all know how important defence is as an integral part of advanced manufacturing in this country. It sustains about 300,000 jobs, many of which are highly skilled, in thousands of companies of all sizes. Those employed are at the pinnacle of manufacturing and engineering ability, and they do a significant job in helping to keep our country secure. The industry is a key sponsor of manufacturing apprenticeships and training, the quality of which is acknowledged by employers across a range of industries, and intensive research and development programmes also mark out the defence sector as a source of innovation and intellectual property.
The House will also be aware—this was at the heart of the two speeches that we have heard—that defence is a major contributor to export revenues. UK industry has an outstanding record of export success, second only to the US as an exporter of defence equipment and services. Despite the challenging market conditions experienced by many sectors of the wider manufacturing base, the UK has in the last year won almost £6 billion in new defence exports business. That represents an increase in our share of the global defence market from 18% to 22%, and we are committed to continuing that trend with strong support for future defence export campaigns, including the products mentioned by the Members who have spoken.
Within that vital and dynamic sector of the UK economy, BAE Systems has a significant role. It has been the MOD’s largest defence supplier for some time; it is the fourth largest supplier to the US Department of Defence, which accounts for 50% of its revenue; and it is, indeed, the world’s second largest defence company. I should like to pay a tribute to BAE Systems: its speed and adaptability in updating software for the Typhoon aircraft’s radar and defensive aids systems was one of the keys to the success of the recent action in Libya, and we owe all its staff a great debt of gratitude for that.
BAE Systems’ wider involvement, beyond Typhoon, extends to many of the MOD’s largest programmes, including the Astute submarine, the Type 45 destroyer, the Queen Elizabeth class aircraft carrier, the joint combat aircraft, general munitions and support for the armoured fighting vehicle fleet. Overall in 2010, BAE Systems’ revenue from the UK amounted to just over £4 billion, representing 20% of the company’s total revenue. So hon. Members should be in no doubt about the importance that the Government attach to the contribution of the UK defence industry in general and BAE Systems specifically to a rebalanced economy and export-led growth.
Let me turn to the specific programmes that are relevant to today’s debate. In the air, Typhoon, a triumph of European engineering, has really come of age. It is a first-class aircraft and the envy of discerning nations throughout the world. Already in service with six air forces—in the UK, Germany, Italy, Spain, Austria and Saudi Arabia—and at the forefront of the world’s media coverage following its recent exemplary operational deployment in the skies above Libya, the prospects for expanding Typhoon’s user community have never been better, and Ministers are working hard to ensure that we crystallise those opportunities.
Those export prospects meant that some changes were needed to the Typhoon programme. In May 2010, a request was made by the Eurofighter GmbH industrial consortium—I emphasise industry, not Government—to slow down the rate of Typhoon aircraft production in order to free up and sustain sufficient industrial capacity in the Eurofighter partner companies, comprising Alenia, BAE Systems and Cassidian, and to service export orders.
The UK, along with the other partner nation Governments, agreed to the industry’s proposal in July 2011—on the basis that it would not adversely affect the build-up of our own Typhoon fleet. As a result, there is now the prospect of Typhoons being made over a longer time frame, with the production lines open to 2018 rather than closing in 2015 as previously planned.
Peter Luff
In just a second.
The letter that BAE Systems sent to Members ahead of this debate does not accurately explain the reasons for the slow-down, which in turn is responsible for many of the redundancies in Warton and Samlesbury.
Peter Luff
I will return on several occasions to that letter, which was disingenuous in several respects, and am grateful to my right hon. Friend.
The MOD has also invested £190 million in shaping a potential future unmanned combat air vehicle programme. BAE Systems has been our partner in that, and it led an industry team formed of Rolls-Royce, QinetiQ and GE Aviation. An unmanned combat air system programme could form part of a cost-effective solution in air-to-air and ground-to-air combat roles. That work includes the Taranis technology demonstrator, which is a world-class project and a testament to the UK’s advanced design, engineering and technology talents. It exhibits UK manufacturing capability at its very best.
We recognise and welcome the investment that the industry is making in technologies for unmanned air systems and encourage it to continue, so that it will have products that meet our needs and those of export customers. I have to say once again that the letter sent by BAE Systems to hon. Members does not appear to do justice to the partnership nature of the programme, because BAE Systems seems to take all the credit for it. The letter refers to the significant funding BAE Systems put in, but it does not emphasise the Government’s funding or the other three partner companies involved in the project. BAE Systems should be a little more modest from time to time in the claims it makes on behalf of the company.
Graham Jones (Hyndburn) (Lab)
Will the Minister explain the situation regarding UK air flights of Taranis and unmanned aerial vehicles, because there seems to be a problem with the Government not supporting test flights and not helping BAE Systems?
Peter Luff
The whole future of the unmanned combat sector is important for the Government and lies at the heart of the strategic future of aerospace and defence aerospace. We will be considering the matter extremely carefully later in close dialogue with the companies involved. The hon. Gentleman makes an important point. It is vital that the programme succeeds. The matter is complex as it plays into the UK-French bilateral relationship, but we are determined to take it forward in the best interests of UK industry and, crucially, the defence industry.
Diana Johnson (Kingston upon Hull North) (Lab)
I listened with interest to that last point about how important the sector could be to the future of the defence industry. As an MP representing a constituency in Hull, may I ask the Minister whether he has had any direct conversations with BAE Systems about how that type of work could help to deal with the issues identified at Brough regarding future work?
Peter Luff
The short answer to that question is yes. I have obviously discussed the future of the sector with the company, but I have not done so in specific detail about Brough—in general terms, yes, but not specifically about Brough. If the hon. Lady wishes to make a suggestion to me, I will happily take it forward.
The Government need an efficient defence industry, and I make no apology for saying that. Another line in the letter to hon. Members seems to suggest that we are in some sense to blame for wanting BAE Systems to be more efficient. We want it to be more efficient for the sake of taxpayers and also for the sake of export opportunities. I make no apology for demanding that efficiency of our suppliers.
Although using open competition on the global market is the MOD’s preferred option and its default position for purchasing defence capabilities—I listened carefully to what my right hon. Friend the Member for Haltemprice and Howden said in that respect—in certain situations, the MOD has had to enter into single-source procurement for some of the capabilities we must have in the UK. In these situations, we use the yellow book—it is called that because it is yellow—or “Government Profit Formula and Associated Arrangements” to give its full title. The yellow book covers the pricing arrangements to be used in single-source, non-competitive procurement. That can include reasonable rationalisation and redundancy costs, provided they are associated with a reduction in work related to single-source procurement.
The yellow book arrangements have remained largely unchanged for more than 40 years, which is why in January this year I commissioned Lord Currie of Marylebone to undertake a root-and-branch independent review of it. The MOD is currently undertaking a consultation, which runs until the new year, on Lord Currie’s proposals. No decisions will be made on his proposals until the consultation has been completed.
Mr David Davis
The Minister is making a very courteous and informative speech that is very helpful to us. Will he ensure that the response of the Public Accounts Committee and the National Audit Office to my request that they investigate some of the yellow book operations is taken on board in that consultation?
Peter Luff
Yes. In fact, there has already been discussion with the National Audit Office about aspects of the single-source regulations. My right hon. Friend makes a very important point and I welcome what he said about that in his speech. It is very helpful indeed to have those remarks on the record.
The scope of Lord Currie’s review covers not just rationalisation and redundancy costs but a whole range of other issues associated with the process. He made his views clear on that in the document he produced, which states:
“We do not recommend moving away from the requirement that the MOD should bear the redundancy and restructuring costs associated with programme curtailment or cancellation. The alternative, whereby the contract bears such costs, would be appreciably more expensive. Faced with the possibility of bearing such costs, the contractor would necessarily need to price in a significant, possibly prohibitive, risk premium into contracts against that eventuality, over which it has little or no influence.”
Let us put those observations on liabilities in a BAE Systems context. The Brough site has historically been used for a variety of purposes, including the manufacture of the Hawk advanced jet trainers. It also has a structural testing facility used for a number of different airframes, and has been involved in the manufacture of some Nimrod MRA4 and Typhoon parts.
Some of those projects were procured on a single- source basis, but many of them were not. In the course of normal business, BAE Systems has approached us to begin discussions on payment for a share of its rationalisation and redundancy costs at Brough. We will ascertain what proportion, if any, of those costs we should be liable for under the yellow book framework. I can assure the right hon. Member for Kingston upon Hull West and Hessle and my right hon. Friend the Member for Haltemprice and Howden that our negotiations will be robust in defence of taxpayers’ interests. I am very grateful for their support in that process.
We also recognise that the Government’s procurement decisions directly impact inward investment and exportability. Our involvement as the only level 1 partner in the joint strike fighter programme has brought significant high-end work into BAE System’s Samlesbury facility and, indeed, to UK industry more widely. That site manufactures the joint strike fighter rear fuselage for Lockheed Martin, in respect not only of the UK order but of orders from the US and other international clients. That production run should continue until at least 2035 and, on current plans, supply 3,000 aircraft. Following that, the UK should be very well placed to win additional competitively placed work within the JSF production support programme, potentially valued at £30 billion. Similarly, Government investment in the assessment phase of the electronically scanned radar for Typhoon will enable a capability leap for the Typhoon fleet. That not only benefits UK armed forces well into the 21st century, but improves Typhoon’s chances of success in the highly competitive, fast-jet market.
One issue that has not been raised is the fact that the letter from BAE Systems to hon. Members alludes to the withdrawal of the Harrier aircraft, but it does not provide the context and detail for that decision. In the bipartisan spirit of today, I shall simply say that we had a very challenging financial situation at the MOD and leave it at that. It is also true that the previous Government took the decision to delete the Sea Harrier in 2006, which is the air defence aircraft. In 2009, they took a subsequent decision to reduce the size of the remaining Harrier fleet, which meant it was not large enough to achieve sustained operations in Afghanistan and maintain an adequate contingent capability for the unexpected on its own. A combined fleet of Tornado and Harrier would not be cost-effective, because retiring an aircraft type delivers significantly greater savings than running two smaller fleets.
Although the withdrawal of the Harrier was a decision we took with regret, it was effectively forced upon us. Despite that sorry affair, we have worked hard to make the most of the situation. I can tell the House today that we have agreed the sale of the final 72 Harrier aircraft frames and associated parts, which will be used as a major source of spares to support the US Marine Corps Harrier AV-8B fleet of aircraft. The value of the sale is $180 million—some £110 million—and represents a good deal for UK taxpayers and the US Government. Added to the savings made from retiring the Harrier fleet from service, that sale takes the total estimated receipts and savings to the Ministry of Defence to around £1 billion. That will enable investment in a more modern and capable mixed fast jet fleet, including the state-of-the-art joint strike fighter, and therefore be good for British jobs.
The Harrier was a marvellous piece of technology and demonstrates the UK’s significant contribution to the development of fixed-wing aviation. I pay tribute to all those who contributed to its design and manufacture, as well as to our service personnel who flew and supported them. Accordingly, I am pleased to announce that we plan to offer two Harrier aircraft to museums in order to preserve the UK’s aviation heritage.
On the points made by my right hon. Friend the Member for Haltemprice and Howden about the overseas production of British aircraft, conditions in the international marketplace do influence commercial choices and outcomes —it is not just a matter of what the Government say. It is increasingly unavoidably the case that export customers are demanding that their orders be satisfied mostly or wholly by means of local production and technology transfer. There is often a need to satisfy that critical condition in order to secure an order. That is certainly a feature of many of the potential Typhoon and Hawk export orders. My right hon. Friend regrets it—I may regret it, too—but it is a fact of life. If we want to win business, this is the way we have to do business.
The insistence on local involvement by the customer becomes even more likely and significant with larger export orders. The choice is to offer that condition or not to compete for the contract at all. That would reduce the viability of the businesses themselves and would be bad for UK employment. Last year’s deal to sell 57 Hawk to India was worth several hundred millions of pounds for UK companies, even though the final assembly was in India itself, so it is good for both sides of a vital strategic partnership for this country.
However, we also fully recognise our responsibility to those whose livelihoods are threatened by changes in the market. Work will continue for some time at Brough and the Skills and Jobs Retention Group and the Jobcentre Plus rapid response service will assist skilled workers there and at the other sites in finding new roles.
Mr David Davis
I think everybody takes the point that, in the modern defence market, there will be offset. Everybody has offset; we have offset. As has been made clear, offset arrangements do occur. It is problem when those offset arrangements become the permanent new manufacturing base for the aircraft, which is effectively what has happened with Harrier and seems at least to have been discussed with the head of Hindustan Aviation with BAE.
Peter Luff
I agree that when overseas production becomes a source of rival manufacture for export purposes, there is an issue for us. We have to accept, however, that the success of the Typhoon contract in India will depend on significant participation by Indian aerospace industries in the manufacture and upgrading of the aircraft. That is the price for winning the contract, and it is a price that we have to be prepared to pay.
Additionally on the subject of support for those who are sadly affected by these decisions, last month the Chancellor invited strong and viable proposals for enterprise zones in the areas surrounding the sites, with a view to enabling those zones to be up and running by April next year. As the right hon. Member for Kingston upon Hull West and Hessle said, attracting new industry to these existing manufacturing hubs could soften the impact of BAE’s change in structure without undermining the lives of these highly skilled workers.
Alan Johnson
We are pleased to get an enterprise zone, but we need to look at other work that these skilled workers can do; many companies would be pleased to get them. Our point is that this requires a new way of thinking. There is no reason why we cannot bring packages of civil aviation work to Brough, where there is a fabulous site and a really good work force. The alternative is that these workers have to move, which is very difficult given the housing market and all the other problems that they face with schools, families and so on. We then find very highly skilled workers ending up as taxi drivers or dropping out because they have to stay in their local area. Will the Minister consider, with Allan Cook, attracting these packages, given that there is such a skills shortage in commercial aviation?
Peter Luff
I will do precisely that with the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey); it is very good to see him in his place today supporting this debate and showing the concern for the issues raised that is felt across Government more widely. Of course, I do not have responsibility for civil aerospace. Although I happen to agree with my right hon. Friend the Member for Haltemprice and Howden about the wisdom of selling the share in Airbus, that is a personal, not a ministerial, view. I believe that there are significant opportunities for the wider civil aerospace sector resulting particularly from what has happened at Brough, and I entirely agree that BAE Systems should be creative, thoughtful and active in making those opportunities come to fruition exactly as suggested by my right hon. Friend the Member for Haltemprice and Howden and the right hon. Member for Kingston upon Hull West and Hessle.
Peter Luff
I will give way for the last time, because I am anxious to conclude and let other Members speak.
Kerry McCarthy
Filton airfield is one of the enterprise areas linked to the local enterprise zone in Bristol. Is the Minister aware of concern about the closure of the airfield, which many people think will pose a real risk to aerospace jobs in the area? Does the Department have a view on that?
Peter Luff
I am aware of the issue, but the evidence suggests that that concern, although I understand it, is probably not well founded. I believe I am right in saying that today—
Peter Luff
I give way to my hon. Friend, who might have more details than I do.
Jack Lopresti
I was concerned about the potential impact of the closure of Filton airfield on local jobs and industry, so the first thing I did was speak to local companies such as Airbus, Rolls-Royce and GKN, which all assured me that the existence of the airfield was not in any way consistent with their increased orders or viability in the long term—on the contrary.
Peter Luff
I am grateful to my hon. Friend. My understanding is that the Secretary of State for Business, Innovation and Skills is in the Bristol area today announcing additional jobs for Airbus. Although I genuinely respect the concern expressed by the hon. Member for Bristol East (Kerry McCarthy), I have heard other assurances similar to those given to my hon. Friend. However, I promise that I will keep my eye on the situation as best I can, as a Defence Minister, and I am sure that the Department for Business, Innovation and Skills will do exactly the same thing.
The defence sector and, in particular, BAE Systems have a significant role in rebalancing the economy by offering the taxpayer better value for money; and by offering the world the products, innovation and services required to compete on the global stage. However, BAE Systems must also be prepared to take responsibility for its decisions and to understand the debt that it owes to the country and the taxpayer.
Alison Seabeck (Plymouth, Moor View) (Lab)
This is an important debate, not only for the workers affected in Brough, Warton and Samlesbury, and for their families and their wider community, but for the wider UK defence industry, UK manufacturing, and all the businesses and their employees in the supply chain.
The case for this debate has been set out in stark terms by the right hon. Member for Haltemprice and Howden (Mr Davis) and my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson). Their comments, though, have to be set against the bigger picture. We have an economy that is flatlining, with the lowest growth of any country in the G7 bar Japan—which, of course, suffered an earthquake and a nuclear disaster—and the lowest growth of any EU country bar Greece, Portugal and Cyprus, yet we have a Government Department that repeatedly states that the decisions on where redundancies fall are nothing to do with it. I have to ask the Minister whether that is also the view of his colleagues in the Department for Business, Innovation and Skills, the Department for Communities and Local Government, and the Department for Work and Pensions, who have to pick up the pieces and the costs of these significant job losses.
We are talking about very skilled workers, whether in the north-west or Humberside, who have so much to offer to the company and to UK plc, and yet face a hugely uncertain future. It is far from clear whether the processes have been properly managed. It is also unclear whether the 90-day consultation process has been genuine or whether the company has been paying lip service to this requirement. I can well understand why right hon. and hon. Members and the trade unions that represent those affected speak inside and outside this place with such frustration and anger at how this is being handled by BAE as it downsizes and rationalises its footprint in the light of changing global demands. The leak in advance of its announcement is clearly unacceptable. We must understand just how much that affects the work force’s perception of the management and what had until now, as my right hon. Friend the Member for Kingston upon Hull West and Hessle said, been a very good working relationship. It is unclear what efforts have been made to relocate any of the work force and to consider alternative proposals from inside the company. My right hon. Friend, who has vast experience in these matters, posed a whole series of questions that the company needs to answer and in which the Government should take a close interest.
I know that the Minister cannot answer questions today, but I hope he will none the less give serious thought to this. I was reassured to hear him say on several occasions that he would take away issues that were raised across the Chamber. That is not least because we saw in the 1980s the loss of large defence and industrial employers and the devastating effects that that had on communities. Those effects outlast generations, as we saw in my own constituency of Plymouth—and, indeed, in Barrow, in Woolwich, and in other places.
This is a test of the Government’s willingness and ability to support British manufacturing, British defence industries and skilled British jobs, and not merely to talk of an export-led recovery. I do not mean to stray into territory that I am sure will be covered at length in the following debate, but the issues raised at Brough speak to the wider question of how the Government are failing to support British business and get the economy growing again.
Alison Seabeck
Forgive me, but I will not, because a lot of Back-Bench Members want to speak. The Minister gave way a lot, and we need to move on.
A key part of the very significant contribution that the defence industries, and indeed BAE, make to our economy is the need for a strong defence industrial strategy —one that meets our overall defence needs and protects our sovereign capability. We need a coherent plan of investment—for example, in unmanned aerial vehicle technologies—that will help to sustain the whole-aircraft skills on which this industry has traditionally been based. Labour Members have already commissioned our own review of defence procurement, and it will be interesting to see whether, in the long promised White Paper, the Government pick up on any of the themes we have suggested, which deserve further consideration. Crucial too, and touched on in our document, is the economic case for a strong defence sector able to export goods and grow its markets rather than, as we are seeing now, having to scale back its work, shrink its work force and leave the taxpayer covering the cost of unemployment.
The relationship that BAE Systems has with the UK Government, and therefore within the defence industrial base, is significant because of its substantial reach. It is a company of global significance with some 38,000 employees in the UK, one of the largest cohorts of apprentices, 10%-plus of all defence industrial jobs, and over a third of its sales market in this country. In fairness to the company, it does understand the need to protect the skills base. BAE also has some 9,000 UK suppliers, with tens of thousands, if not hundreds of thousands, of supply chain jobs therefore partly dependent on it.
We are working in a market environment in difficult financial times, and it is therefore important to understand from the Government what discussions they had with BAE prior to this announcement. The Minister touched on that. Was the prospect of offsetting potential job losses from the slowing of programmes at BAE against the mooted development by Siemens in Hull ever discussed? Siemens, of course, was in line to pick up the work that Bombardier failed to get. There is some uncertainty all around this. We should be a little clearer about which branches of Government are looking to ensure that there is sustained, ongoing skilled employment in the Humber area.
We have to have concerns when organisations such as ADS, the trade organisation advancing the UK aerospace, defence, security and space sectors, express the view that the current cuts to BAE are the tip of the iceberg. We need to be convinced that the Government are using all their tools—I realise that that is not solely the responsibility of the Minister who is present—to help those successful industries to be more productive. When the Government are the client, they must still ensure that the taxpayer gets value for money. The Government must decide whether they want to act to support sovereign capability with skilled jobs based in this country. If they do, they need to act now.
We have to look at the potential problems facing the Typhoon programme. Italy and Spain are having difficulty paying their way. I heard the Minister’s positive comments about the Typhoon programme, but we need reassurance that the Government are doing everything they can to keep it on track. We need to be sure that, along with the Department for Business, Innovation and Skills, the Department is looking at the impact of the loss of intellectual property rights, such as those associated with the Harrier and the Hawk, which were mentioned by the right hon. Member for Haltemprice and Howden. Those are transferable, and in theory that allows build programmes to happen outside the UK. Will Hawk production be shifted entirely to India? Is that an entirely desirable endgame for the British Government? I suggest that it is not.
I hope that the Minister will listen, as I shall, to right hon. and hon. Members in this important Back-Bench debate as they flag up what is wrong with the way BAE is responding to the current downturn, and highlight the ways in which the Government are not supporting British industry in this sector as Members feel they should. The Minister should not only take a direct interest in the current situation, as he has made clear that he does, but pay heed to the critical reports of the Public Accounts Committee and the National Audit Office, including any future investigations that they might undertake as a direct result of today’s debate, particularly into the yellow book. In the forthcoming White Paper, the Government should indicate clearly a positive way forward, because BAE, irrespective of the issues raised in the House today, is a significant player in the Government’s defence strategy and wider industrial strategy, particularly for fixed-wing aircraft and unmanned aerial vehicles, so it needs to be able to plan with some certainty within its own domestic market, as do all its competitors. In turn, it will be able to secure high-skilled jobs such as those at Brough into the future. We must avoid further job losses, any further loss of expertise and, of course, the poor use of taxpayers’ money.
Mr Deputy Speaker (Mr Nigel Evans)
The time limit has been reduced to five minutes in order to get everybody in.
Lorraine Fullbrook (South Ribble) (Con)
I congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) and the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) on securing this debate.
In the South Ribble area, 15% of the residents who work in manufacturing work for BAE. BAE’s presence in Lancashire is vital to the local and regional economy. The motion is about preserving the UK’s production and skills base, and there is no larger manufacturing employer in the UK than BAE Systems. BAE is important to Lancashire not only because of its size as an employer, but because of the nature of the work force, who are predominantly highly skilled workers. Some 45% of BAE’s UK work force are based in the north-west, making it by far the most important region to the company. In turn, the company is the most important manufacturing base in the region. BAE provides one in eight of the knowledge-intensive jobs in the north-west. The Warton site alone added £300 million to the regional economy in 2009.
Sadly, jobs are at risk as BAE Systems responds to changes in key programmes, most notably the slow-down of the production of the Typhoon and slower than anticipated rates of production of the F-35 joint strike fighter, and to pressures on defence budgets globally. It is essential that we all take every step necessary to support employees whose jobs are at risk, UK aero-defence manufacturing, and BAE in Lancashire.
I want to reassure my constituents that I will back them, BAE, the supply chain and subcontractors to grow the manufacturing base in Lancashire. I am proud that my constituency and the north-west have some of the most highly skilled workers in the country. We must do everything that we can to ensure that, where possible, workers who do not retain their jobs at BAE as a result of this consultation remain employed in the defence manufacturing sector, for example at Rolls-Royce or Airbus.
South Ribble needs BAE to remain competitive. I urge the Government to continue to do all that they can to support it and to ensure that it wins future business. I want to see that business carried out in Lancashire. Exports are essential. In 2009, the defence sector delivered more than £7 billion in UK exports, with £4.9 billion of that attributed to BAE alone. The Government are backing BAE and Lancashire in promoting the Warton-built Typhoon in foreign markets to help the region retain its defence industrial skills base.
Typhoon has had the opportunity to increase its worldwide demand with its prominent role in Libya, when it was said that
“Typhoon has truly come of age.”
After its performance in conflicts in Libya, where it flew about 3,000 operational hours and reported a 99% success rate against fixed targets and a 98% success rate against mobile targets, the Typhoon is now the leading contender in the two-horse race to win a deal to supply the Indian air force—a deal worth $20 billion. Securing that deal and other export possibilities, such as to Japan, Malaysia and Qatar, would secure BAE’s position as the UK’s premier defence and security company and its largest manufacturing employer for many years to come. To ensure that the Typhoon continues to be competitive in the export market in the long term, I would like to see continued Typhoon development, including into e-scan radar capability.
BAE has made a strategic decision to base its centre of excellence in Lancashire. Should BAE be successful in winning those contracts, the Typhoons will be built in Lancashire. On behalf of my constituents who work at BAE, I encourage the Minister to continue rigorously to promote the case for Typhoon overseas in any way possible.
BAE Systems has invested considerable resources in an unmanned combat air system development programme. I was fortunate to be invited to the first viewing in July last year of the UCAS demonstrator, Taranis, which receives joint investment from the Ministry of Defence and the industry. Unmanned air systems are vital to maintaining a comprehensive military aerospace design and build capability in the UK. It is necessary to sustain these industrial skills in Lancashire for the continued safe operation of the Tornado and Typhoon fleets that are in service. I would like to see another UCAS demonstrator programme, following on from Taranis.
I want to see the highly skilled pupils in Lancashire’s schools today become the highly skilled workers in the Lancashire of tomorrow.
Mark Hendrick (Preston) (Lab/Co-op)
BAE Systems is a world-leading manufacturer of defence and security products. It has bases scattered across the globe in places as distant as the United States, Australia and India. However, it is important that the UK remains at the core of its business and its base.
Before the recent announcements, BAE Systems employed 40,000 people directly. When the indirect employment throughout the company’s supply chain is factored in, about 120,000 British jobs are dependent on BAE Systems. To further demonstrate the company’s standing, it generated £9.2 billion in revenues in 2009. It made a direct value-added contribution to UK GDP of £3.3 billion and contributed more than £650 million to the Treasury’s coffers. The Prime Minister has spoken at length about wanting to support British manufacturers. No company has done more than BAE Systems.
BAE has a centre of excellence in the north-west. In 2009, a comprehensive report into the company by Oxford Economics stated:
“The North West is by far the most important region within BAE Systems UK, accounting for about half of all its UK employment.”
That is about 20,000 jobs. The report went on to make a point that has just been made by the hon. Member for South Ribble (Lorraine Fullbrook):
“BAE Systems now accounts for exactly one in eight jobs in knowledge-intensive production within the North West.”
BAE’s concentration in the north-west means that the recent announcement that the company will axe 3,000 highly skilled workers, half of them in Lancashire, is a body blow to the region, as I am sure it is in Yorkshire as well.
The Warton site, which employs more than 8,000 people and contributes more than £300 million to the local economy, will see 822 redundancies. A further 565 jobs will go in Samlesbury, and more than 100 elsewhere in the region. Many of them are in my constituency and the surrounding constituencies in central Lancashire. That is a tragedy for those employees, their families and the region. We have heard a great deal about Brough today, but to put the matter in context, more jobs are being lost in Lancashire than exist at Brough as a whole.
Contrary to some fairly derogatory remarks about the standard of the work force in Lancashire, Warton and Samlesbury are highly confident that they are capable of doing whatever work is required on any aircraft if the company asks them to undertake it. The north-west is where BAE Systems has placed the bulk of its operations, and it is where the company’s future lies. The north-west centre of excellence exists at Warton and Samlesbury, and it will be a major contributor to this country’s gross domestic product. Coming when they do, however, the changes are a particular problem for families on either side of the Pennines.
The Typhoon jet is a huge success story, which we want to be continued. As the hon. Member for South Ribble mentioned, the jet undertook its first major combat missions earlier this year, providing an invaluable service in the skies of Libya. Production of the Typhoon has taken place in three tranches, and although the previous Government signed up to tranche 3A, it has sadly been subjected to the coalition’s ill-thought-through and rushed strategic defence and security review. Rather than producing a carefully constructed industrial strategy, the Ministry of Defence is now planning to halve the UK’s tranche 3 order, and BAE will cut its annual production from 61 to 36 jets.
Last week, the Minister made the point that much of what was happening was due to the slowness of ramping up work on the F-35. Nigel Whitehead, the group managing director, has made it plain in a letter to me and other hon. Members that the main reasons for the decision were the cut in the Typhoon, not the F-35, along with the withdrawal from service of the Harrier and the decision to scrap the Nimrod. That is what the company is saying about the facts.
Mark Hendrick
I am happy to take the Minister’s intervention, because I have only 16 seconds left and I shall get some extra time.
Peter Luff
I am very grateful to the hon. Gentleman. Whatever the rights and wrongs of his argument, the letter makes it clear that that decision was taken in 2008.
Peter Luff
The decision by the four core Typhoon nations not to acquire the full quantity of Typhoon tranche 3 aircraft was taken in 2008. I do not think I can take responsibility for the last Government’s decisions.
Mark Hendrick
I think the Minister is talking about tranche 3, not tranche 3A.
It is important that people get the matter into perspective. For each of the 1,500 BAE Systems jobs lost in Lancashire, four other jobs will be lost in Lancashire as a result. It is a huge blow to the region, to Lancashire and to many hard-working families from Preston.
Mark Menzies (Fylde) (Con)
It is a great honour to follow the hon. Member for Preston (Mark Hendrick), who I know cares passionately about the jobs of the work force at Warton and Samlesbury, as I do. I thank the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) and my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) for securing this afternoon’s very important debate. We all wish that we did not need to have it, because we know only too well the impact that the job losses have had on our constituencies—not just the loss of skills, but the impact on communities and their economies.
I am very proud to be the Member of Parliament for Fylde, and for the headquarters of BAE Systems manufacturing at Warton. Warton has a proud record not just of building the Typhoon but of developing the unmanned aerial combat vehicle programme and of building the Tornado, so I wish to focus many of my comments on it.
Warton and Samlesbury truly have one of the most highly skilled work forces that I have ever had the privilege to meet. They are truly world class, and for generations they have designed and built some of the world’s finest military aircraft. One needs look no further than Operation Ellamy in Libya to see their quality. It is no surprise that many of the world’s air forces are now looking to BAE’s aircraft to form the backbone of their capability.
When I visited the Warton site last Wednesday, I was reminded that the people there are more than capable of taking on any challenge that is thrown at them. I take this opportunity to invite right hon. and hon. Members to come with me to the site to meet the unions, speak with the management and see the quality of what takes place there. I have the utmost confidence that whereas the reorganisation that is taking place at Brough means huge devastation and disruption to people there, the transfer of work from Brough to Warton and Samlesbury will be done with the utmost excellence. I know that the work force at Warton and Samlesbury would do no less.
Warton and Samlesbury is the centre of excellence not for one area but for nine, which is reflected in the training and innovation that the work force there have built up there over the years. I take the opportunity to pay tribute to the unions for the constructive way in which they have engaged in a dialogue with me and other local Members over a long period. They are practical, pragmatic and an excellent example of a group of people who do everything with their members’ best interests truly at heart.
It was my privilege to meet some BAE Systems apprentices two weeks ago at the Imperial War museum, and I am pleased that it is doing everything it can to support those young workers in their bright futures. On several occasions in the past year, I have also had the privilege to meet trade unions from Brough, and I know that the loss of the Hawk work will have come as a bitter blow to them. It is important that all Members do everything they can to ensure that the work force there are given every assistance to find alternative employment that reflects their skills. I take on board some of the comments that Opposition Members have made about how we can use those skills in the civil aviation industry, and no stone should be left unturned in that field.
From a Government perspective, it is very important that we work tirelessly to ensure that we secure exports for the Typhoon and the Hawk. Nothing is won until it is won, and we should be careful about pouring cold water on some aspects of the work share agreement, because we have not won any of the contracts yet. I ask the Minister to consider options for bringing some of the deep maintenance work that is currently done on RAF bases to Warton, and whether that would provide potential stop-gap employment. I also ask him to get some of the multinational agreements on the unmanned aerial combat vehicle that are currently being discussed buttoned down, with finance arrangements in place. It is important that the work force and BAE systems can plan strategically for the future.
Time is against me, but I wish to say that the right hon. Member for Kingston upon Hull West and Hessle is absolutely right in identifying the considerable support that successive UK Governments have provided to BAE Systems over the years. Now, BAE Systems has an opportunity to demonstrate its commitment to UK manufacturing by attracting some of the key component manufacturers to the new enterprise zones that have been set up on both sides of the Pennines. The work force at BAE Systems are truly the best of British, and it is important that both the company and the Government leave no stone unturned in putting their skills to future use.
Diana Johnson (Kingston upon Hull North) (Lab)
I, too, pay tribute to the work of the right hon. Member for Haltemprice and Howden (Mr Davis) and my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), who have championed the issue of BAE Systems for a very long time in the Humber area. I pay tribute also to all the Humber MPs who have been involved since the announcement in September about what will happen in Brough, and who have been fighting quite an effective campaign. I pay tribute to the trade unions at Brough, which provide an excellent example of a modern trade union movement that is fighting its corner very hard indeed.
In an exchange that I had with the Minister on 14 November, I asked him what he was doing to support the people at Brough who had been told that their jobs were in jeopardy. Unfortunately, he gave me a response with which I was not very happy, basically saying that it was a matter for a private company, that it was up to the company to decide whether there would be redundancies and that it was not really anything to do with him. I noticed that today, he talked about his deep regret about BAE Systems’ announcement of the redundancies at Brough, but I say to him that it is not a factory making widgets. It is a defence manufacturer that is strategically important to this country, and in an area that is suffering disproportionately in the economic downturn.
It is unusual to debate a specific company on the Floor of the House—debates are not normally about one company. There are three issues, the first of which is BAE Systems in the context of the Humber area. I am the MP for the constituency that has the dubious characteristic of having the most people on jobseeker’s allowance seeking a position—58.9 people are after every vacancy in my constituency. Any job lost in the area is a real problem for local people. The work force in Brough are highly skilled and motivated. If they lose their jobs, and if they can get other jobs locally, it is likely that they will be paid less and will not enjoy the conditions that they have enjoyed in previous years. Brough is an excellent example of manufacturing, and it would be a loss to the Humber region if it goes.
I noted what the right hon. Member for Haltemprice and Howden said about the salary of Ian King, which is more than £2.5 million this year. We should compare that with the average salary in my constituency: 40% of people in my constituency are on less than £14,000, which puts into context the importance of those jobs to Hull and the Humber region.
I hope that in the forthcoming White Paper, the Minister mentions not only the need to look at how we procure equipment, but the importance of maintaining manufacturing in the UK to its strategic capability.
Will the Minister undertake to press BAE on the following matters? First, why will the company not consider taking up the interim proposal of the unions and the executives to phase the movement of Hawk production to Warton over the next four years? That would protect an additional 300 jobs at Brough and save the company £22 million in production costs on the current contract. Secondly, how will the company manage the significant risk involved in moving production to Warton? The risk should not be underestimated—the move seriously compromises BAE’s ability to tender for aircraft contracts in future. Thirdly, will the Minister press BAE on why it will not consider allocating some of its significant naval works to the Brough site?
The Humber area is suffering with the economic downturn. My hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) mentioned the flatlining economy, but the economy is particularly bad in the Humber area—the region is suffering more than others in the country. The Minister and the Government need to consider very hard what else they can do through the Department for Business, Innovation and Skills to ensure that alternative work is brought to the Brough site.
If BAE Systems goes ahead with its decision and makes people redundant, what legacy will it leave for the community, which has served it very well for many years? People have worked there for 20 or 30 years, and whole families work there. What will BAE Systems do? What will it leave behind for that community, which will suffer if the decision to make people redundant goes ahead?
Lorely Burt (Solihull) (LD)
I shall make a brief contribution on behalf of my Liberal Democrat Back-Bench colleagues. This has been an excellent debate. It is a bit disappointing that the Opposition Front Bencher soured it by making political comments, but there we are.
The UK has the largest aerospace sector in Europe and is second only to the USA globally. Aerospace is very much the jewel in the crown. It enjoys 5% growth year on year and in 2011 turnover was £2 billion. The fact that the UK has its own defence company is very important strategically.
The right hon. Member for Haltemprice and Howden (Mr Davis) said that manufacturing is declining, but it is not declining any more. In fact, it is up 2% as a percentage of gross domestic product, and by 10% in total.
The closure of Brough and the other job losses that have been announced are a tragedy for every single family, but I understand that Brough has not had an order for the Hawk fighter for more than four years. That is a real challenge. I implore the Minister to do all he can to effect the smoothing of any job losses and to encourage the adoption of any additional services. In fact, if GKN, Airbus and Rolls-Royce can make money out of commercial aircraft, I do not understand why BAE Systems does not look at that. There is obviously money to be made.
On job losses, the hon. Member for Preston (Mark Hendrick) made the point that for every job lost directly from BAE Systems, about four are lost from the supply chain. The Government have announced the two enterprise zones, and it is important that we do not lose those skills—not just the jobs at BAE Systems directly, but the jobs in the supply chain.
I have not been intimately involved in the story of BAE Systems, unlike right hon. and hon. Members who have spoken, but there seems to be a case to answer, particularly, as the right hon. Member for Haltemprice and Howden said, for the potential misuse of the intentions of the yellow book. I welcome the Minister’s announcement that that will be reviewed, after a long period. The last thing we should be doing as a Government is allowing companies to make commercial benefit from the sad situation of job losses.
I should like to compare what is happening at BAE Systems with what happened at a company that I know rather more about from my constituency: Jaguar Land Rover. Two years ago, we were not sure whether we would lose the site in Solihull, but the company, with its determined work force, worked out a strategy. It worked well with the unions, as we have heard, and JLR is now in the good times. The announcement of 800 jobs at i54 in Wolverhampton was made just a few weeks ago, and last week another 1,000 jobs in Solihull were announced. There are new markets, opportunities and new products. That is what brought that high-level manufacturing company back into good times.
I appreciate that there are defence cuts and that BAE Systems must cut its cloth accordingly, but I hope our Minister can work with all the constituency MPs from both sides of the House to get a better outcome than the very sad one that we seem to be faced with at the moment.
Graham Jones (Hyndburn) (Lab)
I thank the right hon. Member for Haltemprice and Howden (Mr Davis) and my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) for securing this debate. The motion relates to the skills base of the UK's defence production, which many hon. Members have mentioned, and the workers who possess those skills are the most important aspect of the debate.
I have huge concerns about BAE Systems’ decision to sack up to 3,000 members of staff and the necessity of taking such action. I do not think that the Government have been particularly helpful either. Like many hon. Members, I received a letter from BAE Systems, which said that on top of the Eurofighter slow-down, one of the principal reasons for the labour force reduction was a
“slower than expected ramp up of the F35 Joint Strike Fighter Programme in the US”.
However, when asked how that related to the 3,000 job losses, BAE told my office that it was “unable to quantify” the number of jobs that have been lost as a result of the
“slower than expected ramp up”.
It therefore seems odd to assert that as a reason for job losses. I am incredibly concerned by that remark, as it seems to mean that BAE Systems is planning to sack people that it has not yet hired, which is a strange human resources model for a company that prides itself on its employment record.
Additionally, union officials representing BAE workers have told me that there are more people working on the F-35 than there were last year, and that there will be no decrease next year. In fact, BAE is still recruiting for the F-35. The Chancellor has said on more than one occasion that job losses at BAE are down to a reduced F-35 order from the US, which is not the same as a
“slower than expected ramp up”.
A reduction in projected future vacancies is not the same as losses resulting from reduced orders. I am worried that BAE is making ambiguous statements because the Government are making ambiguous statements. I pursued this in Defence questions on 14 November, but again was told that job losses were due to reduced F-35 orders. I hope that both BAE and the Government will shed some light on this point, as I am sure this House and those 3,000 people who may lose their jobs would like some clarity. I am told that there have been no reductions as yet in the F-35 orders.
I support the motion, and I want the House to make BAE aware that the reason it has been brought before the House is because of its particular relationship with the UK and taxpayers. The UK, and Lancashire and Humberside in particular, have through the years provided BAE with a great many reasons to be satisfied, and the UK taxpayer has invested significant resources in supporting the company’s operations. I would hope that BAE would honour that by continuing to invest in the labour force and the UK’s manufacturing base. We do not just want letters from BAE telling us how committed it is to the labour force. I want BAE in the UK, doing what it does best: manufacturing, exporting and employing people. The company has a great track record on employment and on investment in its staff, and I know that to be true without being repeatedly told by BAE. One has only to look at its links with local colleges and generous apprenticeship schemes.
I want BAE to recognise that it is deeply concerning to me and other hon. Members that the UK’s commitment to BAE is apparently not being reciprocated. Comments from a former Defence Minister about UK procurement moving towards “buying off the shelf”, and BAE’s huge expansion in Texas are worrying. The Government must be committed to a UK defence industry. The concerns of this House must be addressed: otherwise, BAE cannot justifiably continue to advertise itself on billboards and taxis as a company whose chief benefit to the UK is the number of people that it employs.
I want to conclude by making some remarks about the relationship with the wider economy. There is an opportunity for the Government to act. It is obvious that the Government’s plans for the wider economy are not working, and it is becoming increasingly obvious that a change of direction is required. Upgrading the e-scan radar in the RAF’s Typhoon fleet, or investment in the unmanned aerial vehicles, which we saw successfully used in Libya, could secure and create new jobs in constituencies such as mine. Given the time limit, I shall conclude there.
Mr Ben Wallace (Wyre and Preston North) (Con)
May I congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) and the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) on securing this debate? I put on record my sympathy for the members of the BAE work force who have lost their jobs or have had their jobs put under threat—by the recent announcement or, indeed, over the past few years as the aerospace industry has contracted. I also wish to place on the record my thanks to BAE as a business. Both its work force and its management invest in my constituency, not just in plant, but in the schools and the community. They do an excellent job, certainly in Lancashire, in ensuring that they support the community from which they draw their employees.
In my constituency, I have nearly 3,000 BAE workers at both Samlesbury and Warton, as well as nearly 3,000 BAE pensioners. We should remember that when we bash the BAE brand as opposed to the work force, we may damage the share price, which is as important to the pensioners of BAE, many of whom live in the UK, as it is to job opportunities.
Before coming into the House in 2005, I was the overseas director for QinetiQ, a large UK aerospace company employing 10,000 people. I worked in consortiums, because most modern aerospace is now done by consortiums and subcontractors. I have worked with BAE, Finmeccanica, EADS, General Dynamics, Lockheed Martin, and with many overseas customers, in selling Britain abroad and, supported by the last Government and this Government, in our embassies, through the Defence Export Services Organisation and Ministers, in trying to win contracts. So I come with an awareness of what the real world is like in manufacturing industries. Eurozone manufacturing, for example—not ours, I emphasise —has shrunk faster in the last quarter than it ever has since the war. We have a £34 billion black hole in our MOD procurement budget, and defence spending cuts around the world are in progress; if the US Congress cannot reach resolution, they will certainly be made in the United States. These all have a large impact on us and we have to remain competitive, as well as deliver winning contracts, here and abroad.
As for the background to the decision, we have heard before about the slow-down in Typhoon, and we do not have to repeat the economic problems of Spain and Italy, which are two of the partner nations in that project, which inevitably mean fewer shifts on fewer production lines. The joint strike fighter development delays involve both technical delays and Congress budget hold-ups. We are not in control of that process, but we are ready to do our best with the JSF. BAE and the Government have invested nearly £100 million in the Samlesbury site to manufacture parts for every single JSF—not just the British JSF, but the US JSF and everyone else’s. A joint strike fighter bought by anyone in the world will have part of its rear fuselage and some of its titanium manufacturing parts made in this country by my constituents and those of my colleagues in neighbouring constituencies.
We should not forget that we need to ensure that we secure the JSF programme in the US. The US has a $600 billion defence budget, and we must not forget that not many countries spend that much. As part of that figure, the US buys many components, not just from BAE but from many British manufacturers. The C-130 Hercules has 29% of its components from British manufacturers. It is made in America, but subcontracted in the UK. It is as important to subcontract and make parts as it is to perform final assembly and check-out.
I am afraid that I have to disagree with the analysis of my right hon. Friend the Member for Haltemprice and Howden about buying only what is made in Britain. The French have gone down that route, and their Rafale aircraft has sold precisely no planes abroad. Their aerospace industry is on its knees and they are desperate to try to privatise some of it or win orders abroad. We go head to head with them in India, and we can try to say to the Indians or the US, “No, you can’t have anything made there, you can’t final-assembly and check-out your aeroplanes there,” but we are not the only people in the ring. The French are desperate to save their aerospace industry, and there are two US contractors with dollar funds that make us look like midgets. We must do what we can, where we can: if it benefits the shareholder and the work force, that should be our priority.
What can be done? The Government can be tougher in committing to our UAV programme and ensuring that it has a long-term future, and I ask BAE to be much more transparent about increases in orders.
Karl Turner (Kingston upon Hull East) (Lab)
I start by congratulating the right hon. Member for Haltemprice and Howden (Mr Davis) and my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) on securing this important debate. I come to the debate late, not just because I have been called to speak late in the debate or because my alarm clock did not go off, but because my involvement with BAE goes back only to the last general election when I was elected to represent Kingston upon Hull East. I bow to the greater experience of right hon. and hon. Members across the House who have done huge amounts of work over the years in relation to the company.
I want to say something about the trade unions at BAE Systems in Brough. I have met them on numerous occasions over the past 18 months and they have always been very committed to the company. They are pragmatic, and are not the type of trade union that hon. Members on the Government Benches would normally like to describe. They are very sensible in what they do and, in my experience, have always been very supportive of the management. But something changed. I met trade union representatives in July. Some redundancies had been announced at Brough, but they thought that everything was going well. As far as they were concerned, nothing was on the horizon. That was also the attitude of the management at the time, but on 27 September something went wrong and 899 redundancies were announced at Brough. The impact on the individuals concerned is clearly massive, and how they found out about the potential redundancies was disgraceful. They found out the same way I did—in the media.
The work force are flexible and the trade unions are pragmatic, but from my meetings with the management I am convinced that they have already made up their minds. In my respectful submission, this so-called consultation period is complete nonsense. They seem unlikely to change their view, and why would they given the yellow book situation that the right hon. Member for Haltemprice and Howden alluded to? I am told that up to 80% of the redundancy bill will be paid for by the taxpayer, so when a trade union official said to me yesterday, “That is me paying for my own redundancy,” he was absolutely right.
The management have come out fighting. Chris Boardman claims that it is not entirely the company’s fault. He said:
“we are in a really difficult period and the recession and the action the current Government has taken has just exacerbated that”.
That might be right but the management have still acted particularly badly. The Government need to speak to them to see what we can do to save those jobs in my area.
I want to talk about the campaign being run by hon. Members and others. A few Saturdays ago, my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) and I spent some time collecting signatures for a petition. Members across the House have worked hard on this together—it has been a case of non-partisan politics—which has been helpful. The Hull Daily Mail, too, has run a campaign to protect people at Brough, and should be commended on doing an extremely good job.
Andrew Percy (Brigg and Goole) (Con)
It is a pleasure to follow my near neighbour and fellow east Yorkshire MP, the hon. Member for Kingston upon Hull East (Karl Turner). I also pay tribute to my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) and the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) for securing this important debate.
I cannot add much to the arguments about Brough so I shall talk about the impact on the local economy. First, though, I shall respond to one or two of the points made by other Members, starting with my hon. Friend the Member for Wyre and Preston North (Mr Wallace). It is a little unfair to suggest that we think that everything should be bought here in the United Kingdom or that there is some sort of magic bullet. We recognise the requirement for partnership, to which my right hon. Friend the Member for Haltemprice and Howden referred. We are asking, “Are we getting what we can out of these contracts, or is the country too subservient in this sector?”
I am delighted that the debate has not turned party political or into a Lancashire versus Yorkshire argument, which is important to me as a Percy: the Percys fought on the Lancastrian side despite being a Yorkshire family. [Interruption.] Actually, we changed sides halfway through because we like to be on the winning side.
Andrew Percy
The point is that this has not been a political debate.
I want to discuss the impact on east Yorkshire and my constituents in north Lincolnshire, a number of whom work at BAE Systems. It was brought home to me on the day of the announcement when my secretary, whose husband works at BAE, contacted me distraught about what was happening. Practically everyone who lives in east Yorkshire knows somebody who works at, or is connected to, the factory. As my colleague and near neighbour, the hon. Member for Kingston upon Hull East will attest—we were two boys at Hull comprehensives—when we went to school in the ’80s and ’90s if someone wanted an apprenticeship, they got one either at BAE Systems or at Saltend with BP. The vast majority of my compatriots and friends at school did not go to university but, like their parents, worked—and continue to work—at BAE Systems.
As Members have said on both sides, the company is rooted in east Yorkshire, and the impact of its leaving will be indescribable not just on the work force but because of the work it does in local schools and through pairing with universities and colleges. As the hon. Member for Kingston upon Hull North (Diana Johnson) said, the Humber economy is in a pretty poor state, and has been for a long time. Over the past 10 years, we have lost private sector jobs along the Humber at a time when the rest of the country was growing private sector jobs. We are in a bad state, and the consequences of losing these 800 jobs will be indescribable.
The Minister used the word “disingenuous”. That is what we all feel about BAE Systems’ actions. As the hon. Member for Kingston upon Hull East said, when we met BAE Systems in July—the unions and everyone who has spoken have attested to this—we were told that although things were tough, the company was expecting Hawk contracts and that the most recent round of redundancies had secured the site and the business for the future. We expected those contracts to be landed and those jobs to be secured.
Alan Johnson
Does the hon. Gentleman recall that the specific criterion on which BAE let staff go in the last round of redundancies to which we agreed was that it would retain those with the capability to build Hawk? That was as recently as this summer. Would it not be strange for BAE not to be aware at that time of the decision it announced in September?
Andrew Percy
Absolutely. None of us can explain how in just six weeks the whole world was turned on its head. We have sat through BAE presentations and been shown projections going years into the future—although oddly the line always ends about 2016 and we never get to see the line beyond. Despite these predictions, however, in six weeks the world was turned on its head. Members and people watching can read into that what they wish.
We have talked about the legacy issues. It is unacceptable for BAE to think that its role is simply to secure work for the Brough workers elsewhere in the country. Constituents of mine who work at BAE Systems, including the former mayor of Goole, do not want to leave the local area or uproot themselves from their families; they want to stay working in east Yorkshire. After all, along with north Lincolnshire, it is the best part of the country to live in—so why would they wish to leave? They want to remain on that site.
I say to BAE—I hope that the Minister will listen to this message and take it forward—that it has a duty to do everything in its power, even if it hits it in the pocket, to ensure that manufacturing remains on that site, if not through the production of Hawk and other aircraft, through securing other companies and third parties on the site. It cannot walk away from Brough. It cannot say, “Well, we’ve done everything we want to do. We’ll help to find them jobs.” It has a duty to secure that site, and we, as local Members of Parliament—and, I hope, with the support of the Government—will do everything that we can to ensure just that.
John Woodcock (Barrow and Furness) (Lab/Co-op)
It is good to follow the hon. Member for Brigg and Goole (Andrew Percy). I shall take up some of the points about which he spoke so well. We have also listened to powerful speeches from the right hon. Member for Haltemprice and Howden (Mr Davis) and my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson). I hope that the company will listen to them, make this consultation genuine and rethink its approach to the jobs currently set to go.
It is hard to underestimate the appalling hardship that looms for these communities. While the Astute programme in Barrow shipyard is maintaining the order book there, we remember and still feel the scar of the 10,000 jobs lost there in the early ’90s and the tale of long-term benefit dependency, which still remains with us to an extent to this day. It is not only those communities that feel the blow, as this is a hit on the defence industry across the north where synergies between the aerospace and shipbuilding industry jointly support supply chain jobs, which many people will be worried about if these job cuts go ahead.
Most of all, of course, this affects individuals. When I attended BAE’s apprenticeships awards earlier this month, I saw brilliant talent there—people who had been employed in engineering manufacturing kit to help injured troops returning from the front line who were based at the Queen Elizabeth military hospital in Birmingham. The teams from the affected sites were not clear about what their future would be or whether they would be able to remain.
Previous speakers have highlighted the company’s responsibility to rethink. I want to stress the importance of the questions facing this and future Governments about their approach to the defence industry and to maintaining our defence industrial base. In an earlier intervention, the hon. Member for Wyre and Preston North (Mr Wallace) criticised aspects of the previous Government’s defence industrial strategy as Stalinist. The right hon. Member for Haltemprice and Howden pointed to ways in which companies are still able to offshore, despite agreements put in place in certain areas. It is a great worry that current Ministers seem reluctant to take responsibility for helping to shape an overall strategy for industrial capacity.
Mr Wallace
If my memory serves me correctly, the hon. Gentleman was a special adviser in the Ministry of Defence—if not, I apologise, as I would not want to tarnish him with that accusation. Does he not think it wrong that under the last Government—it is not about party—the decision was made to underpin industrial strategy by guaranteeing work for a period, such as for 15 years on the Clyde, even if contracts were not going to be placed? That would restrict future Governments in deciding the shape of the armed forces’ and taxpayers’ money would be used to compensate for work that did not actually exist. The Government were the contractor.
John Woodcock
Agreements that secured work in the UK were really important. Where there are lessons to be learned from how those agreements were put in place, we should learn them, but the current Government have turned their back on this whole approach and that is a cause for considerable alarm. At a time when the Prime Minister and the Business Secretary are talking about reforming the Government’s overall procurement process to try to encourage more jobs here in the UK and to protect supply chains, I hope that such an approach will be meaningfully reflected in a rethink by the Ministry of Defence and in its forthcoming White Paper.
Whatever the balance of responsibility between Government and suppliers for ensuring that the current crisis is addressed and the future set more securely, we need to remember that it is not just the economic implications for areas that are important—as, indeed, they are—because what happens affects our ability to protect our country and support the front line. I have gone around and talked to companies and small businesses that are part of the supply chain about how they have been able to speed up getting vital equipment to troops on the front line for urgent operational requirements in Afghanistan. If our industrial base shrinks and we end up knocking on the door of foreign companies when we know we need new kit to ensure that we can have an edge on the battlefield, we will not have anything like the same level of guarantee that we will be able to accomplish that.
Finally, in an uncertain world, we simply cannot know what our defence requirements are going to be in decades ahead. It could significantly increase the nation’s vulnerability if we allow our prized industrial base to shrink from here.
Mr Deputy Speaker (Mr Nigel Evans)
Order. We have three more speakers. I shall allow them their five minutes each, but I strongly discourage any interventions during their speeches.
James Wharton (Stockton South) (Con)
I congratulate hon. Members of all parties on what has been a passionate and heartfelt debate on behalf of constituents right across the country. It is always reassuring when there is a consensus across the political divide on an issue of such importance.
I shall speak primarily about one facet of this decision—the policy that successive Governments of whatever colour have taken towards defence procurement and how it should be considered by BAE as it moves forward. In broad terms, there are two camps on defence procurement. There are those who believe—we have heard some of their arguments put forward eloquently today—in the strategic imperative of retaining our defence industrial production base: our capability, as a nation, of building our own defence and aerospace systems. At one extreme, that could mean everything from building the wings and canopy on a fighter jet to supplying the bullets that go in SA80 A2. That is a valid argument that retains an integrity and strategic independence for the UK, which has been valued highly by Governments for many years.
At the other end of the spectrum—the other argument put forward by the likes of Lewis Page in his book, “Lions, Donkeys and Dinosaurs”—is the suggestion and proposal that we should buy off the shelf and look to find the most effective but also cheapest option that meets our defence requirements and needs. We should not falsely subsidise an industry, as some argue, for strategic reasons when so many other countries across the world supply their defence needs by off-the-shelf methods because they do not have that home-grown capability.
The reality for BAE is that it is a company that is a product of political decisions taken over many years. It is a product of decisions taken by the British Government to retain the defence infrastructure and capability for a variety of strategic and economic reasons, including the benefits that flow from that in jobs, development, R and D, new technologies and exports. In 2009, BAE exported about £4.9 billion-worth of equipment, expertise and knowledge from the UK. That is very valuable for our economy and helpful to the Exchequer.
BAE is a product of a series of policies. This debate sends an important message to the company. If by the decisions it takes it loses the skills base that allows it to be competitive, and if it stops delivering, or reduces, the jobs benefits and economic advantages to this country, there is a danger that those who propose a more purist free-market approach to defence procurement will feel that their argument is strengthened. BAE’s great strength is that it has provided British jobs, growth, investment, technology and research. If it loses skilled workers and finds itself having to re-recruit when future contracts are secured, thereby driving up its costs and driving down its competitiveness as well as damaging our skills base nationally, it will weaken its future prospects and strengthen the argument of those who believe that we should be looking to buy more off the shelf and to rely on others to do the heavy lifting of developing defence technologies, all of which are expensive. Although at heart I am a free marketeer, I am extremely concerned that BAE might take a decision that benefits its short-term profit margin but in the long term could damage its capabilities, strategic position and ability to compete successfully for British contracts.
I am concerned that the arguments of those who do not believe in, or support, our home-grown defence production infrastructure will be made stronger by what appears to be a short-term decision that will benefit neither the company nor this country. I therefore urge BAE to listen to what Members have said today, and to look at the options available to it. I ask it to reconsider its decision at this time of great economic need for the United Kingdom, and to come to a different decision that would be better for its long-term future and that of its work force.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I speak in this debate both as a member of the Defence Committee and as a constituency Member who has an interest in the future of BAE Systems. There is a plant in Hillend in south Fife that employs more than 200 BAE workers and makes radar components for the Typhoon aircraft.
This has been a remarkably consensual debate. I have a positive view of BAE Systems; it does a tremendous amount of good work in my constituency. Last week I visited the Abbeyview day centre; for its 25th anniversary, BAE gave it a grant of about £1,800 to allow it to continue to provide support to our older citizens, many of whom are pensioners who previously worked at BAE.
The hon. Member for Stockton South (James Wharton) talked about buying off the shelf. I believe BAE, along with many other defence industry companies, produces some first-rate exports. The Typhoon aircraft proved itself superbly during Operation Ellamy in the skies above Libya, and we look forward to the arrival of the F-35 Lightning II. It is worth noting that the Lightning I, which was made by one of the predecessors of BAE Systems, BAC, was the finest jet aircraft of its generation and a testament to what British aeronautical engineering can achieve.
The Defence Committee did, however, have some concerns about the ongoing cost issues in respect of the F35. Those concerns are shared by our colleagues in the Senate Armed Services Committee. We have communicated those concerns to the Minister, and I have discussed them with him on several occasions. I know that he is committed to ensuring that BAE Systems and other companies do not allow costs to ramp up beyond control. The Defence Committee welcomes the Minister’s response to our last report. He announced that some of the Ministry of Defence’s best minds are currently working on the F-35 procurement programme.
It is disappointing that not a single Scottish National party Member has taken part in this debate. One might speculate that that is because they are part-timers, or because the SNP would, in its separate Scotland, destroy the defence industry in Scotland. Members on both sides of the House have talked about the value of jobs, and it is worth remembering that there are more than 4,000 BAE Systems employees on the Clyde working on shipbuilding. I have a number of BAE Systems staff working at Rosyth on the aircraft carrier Alliance, alongside their Babcock colleagues. They are engaged in ship assembly and refitting work. Those jobs would be lost in a separate Scotland. The SNP has offered no alternative to that.
Nor has the SNP explained what the future of the RAF or a Scottish air force would be. It has given no idea of the type or size of the Scottish air force. One can only assume it will not be buying any F-35s. It has said nothing about how many Typhoon aircraft it would purchase. We can only assume from that lack of information that it does not see a future for BAE Systems in Scotland, and that it would not offer any defence work to companies such as Babcock and BAE.
The fact that this has been a consensual debate is to be welcomed. In that spirit, I hope the Minister will promise to work with the trade unions in making the case for the defence industry in the UK. It is important that we continue to have exports around the world and that the Ministry of Defence sees part of its role as maintaining the business model for companies such as BAE Systems and Babcock. The MOD should be proactively going out and selling the virtues of the Typhoon and the F-35 Lightning II. I hope that the Minister will undertake to do that in the months ahead.
Mr Tobias Ellwood (Bournemouth East) (Con)
It is a pleasure to be the final contributor to this important debate, and I begin, as others have done, by congratulating the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) and my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) on securing it. Some interesting messages have emerged from it, both for the Government and for BAE Systems.
My right hon. Friend began by highlighting the importance of these decisions and the impact they will have on families where redundancies are involved, not only in his constituency—in Brough, which I know well, as I was married just up the road in Kilnwick—but across the country, as 3,000 jobs are going. The defence manufacturing industry can be a ruthless and competitive business, and we must bear in mind the impact on individuals, families and communities. He also mentioned that Britain no longer makes jets. That is true, but we do make an awful lot of parts. We are part of various consortiums, and that is the way forward, as it is in the car manufacturing industry. It is difficult to think of aircraft that do not utilise engines from Rolls-Royce, wings from Airbus and so on. That is the way of the world and we can at least be proud of the extent to which we are part of the great defence consortiums.
The Minister was right to remind the House that this country still has the second largest defence industry in the world, and our share of exports has indeed increased in the past year. My right hon. Friend the Member for Haltemprice and Howden also mentioned the concern that jobs involved in putting together these products, particularly the Hawk, are going to India. He countered my intervention by saying that I was absolutely right and that although we do export the M-777 and the empennage—the rear end—of the F-35, perhaps BAE Systems could look more wisely at things, particularly future upstream developments such as the Mantis, the Taranis, the Type 26 and other intelligence, surveillance, target acquisition and reconnaissance—ISTAR—assets which could be built in the UK rather than elsewhere. He also made an important point about executive pay, and restraint could be shown there.
We are being affected by an economic slow-down and that does cause a review of budgets, not least in the United States. That is why we are affected by what is happening with the F-35B, because it is American orders that are having an impact on us. That is not a decision made by our Government. However, this Government have had to make some very difficult decisions. Along with other Departments, the MOD received a cut of 7.5%. In addition, as confirmed by the Audit Commission’s report in 2009, there was a £38 billion overspend on procurement projects that had to be contained.
That raises the question about the involvement of the Government: how far do any Government get involved in the decision-making process of the defence industry, particularly in securing orders? As has been mentioned, there is a decision to be made about whether to buy off the shelf or have procurement processes. The first step is to have a strategic defence policy and a review to make sure that there is clarity about where we want to go. Let us consider what happened in Afghanistan. The replacement of the Snatch Land Rover took some time, and the Cougar, Vector, Jackal, Mastiff and Ridgback were procured off the shelf and then, in one way or another, got rid of. At the same time, BAE Systems made the RG31, a mine protected vehicle used in South Africa, and the MRAP—mine resistant ambush protected—vehicles, which were used by the Americans, but both those were ignored.
Mention has been made of the Nimrod, but that is a very sad tale indeed. The first contract was signed in 1996 for delivery in 2003, but by 2010, when the coalition Government were formed, not a single aircraft had been delivered. The cost of each aircraft had also jumped from £133 million to £455 million, which is a huge increase. This aircraft was of course based on the Comet design—it was a 1960s design. That was an appalling procurement project and eventually it had to come to an end.
I shall end my contribution by saying that I am very pleased that we are having this debate, as there are huge lessons to be learned in the procurement process. I am pleased that we have come forward with a defence industrial strategy. Redundancies are always regrettable and I hope that BAE Systems and the Government will take heed of the various messages that have come from hon. Members on both sides of the House in this debate.
Question put and agreed to.
Resolved,
That this House urges BAE Systems to act to preserve the UK’s defence production skills base and, as a recipient of enormous resources over many years from the UK taxpayer, to deploy those resources in such a way as to protect the nation’s manufacturing capability.
Manufacturing
(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Deputy Speaker (Mr Nigel Evans)
I remind the House that there is a five-minute limit on Back-Bench contributions, but not for the first two speakers, or for the Minister and the shadow Minister.
Guy Opperman (Hexham) (Con)
I beg to move,
That this House has considered the matter of the future of manufacturing.
Manufacturing should be at the heart of any long-term plan for economic growth. It is a sleeping giant that, if revived, would become the backbone of a strong UK economy. It is entirely right that, five days before the autumn statement, we should have the opportunity to debate the subject in broad terms in the House. I thank the Backbench Business Committee and the House of Commons staff for their assistance in bringing this matter before the House and, in particular, I pay tribute to my co-sponsors, the hon. Member for Huddersfield (Mr Sheerman), my hon. Friend the Member for Warwick and Leamington (Chris White) and the hon. Member for Burnley (Gordon Birtwistle), who have adopted an all-party approach to this problem which affects us all.
It is well known that I used to be a jockey and a lawyer, so it is legitimate to ask how on earth I can have any credibility in speaking about manufacturing. All MPs do, because we all have small and medium-sized enterprises that make something in our constituencies. We all have credibility on this issue.
My family came to this country as immigrants. They were engineers, specialising in gears. In May 1924, in the depths of a very bad recession, they set up Opperman Gears in a basement in Albemarle way in Clerkenwell. It had four staff—my great-grandfather and his three sons—who worked in the basement on two lathes, three milling machines and a couple of tools. They had borrowed £110 from a distant relative to set up the business. It grew rapidly and by early 1939 it moved to Newbury, where my family set up a larger firm that was able to produce the parts for the Wellington bomber with its long-term partner, Vickers.
We do not run that company any more, but I should declare that I am a shareholder in the small manufacturing business run by my father and that my family members are involved in a number of different manufacturing businesses up and down the country. I should also make it clear that I resigned my directorship of the family business in 2009 and am not paid by it in any way.
I should also declare that I am a wholehearted supporter of my local manufacturing businesses in the north-east, notably Kilfrost, EGGER, SCA, Agma and others, and their financial support allowed the charitable functions I ran this summer in the constituency. I should declare an indirect link, in that a director of one of those firms made a contribution to my association.
I hope I am doing my bit to try to create jobs. I was the second Member of this House to employ an apprentice and I urge those Members who have not to do so. She is a young lady who works in my office in Hexham and who has been with me now for nearly a year, and is doing extremely well. Members of all parties can take on apprentices—it is allowed under the rules—and I urge them to do it.
The scale of the manufacturing deficit is huge. The nations that expanded post-war specialised in and pushed manufacturing. Those nations—Germany, Japan, Taiwan, Korea and China—knew what they were doing. Today, the services sector alone can prop up Britain no longer, and there is a strong argument for greater industrialisation and changing things. We have seen the demise of manufacturing—it accounted for 20% of gross domestic product in 1997 and now accounts for 11%—and there is a strong argument for specialising not just in high-tech industry but in other industries, which are often derogatively labelled “metal-bashing”. Their products are unassuming, even if they are created by some of the most precise machines on the planet.
My constituency is in Northumberland and my four biggest non-public sector employers are all manufacturers. The north-east might be the birthplace of ships and steel, but we have reinvented ourselves. I was pleased to see SCA recognised in the Government-backed “Made by Britain” awards, which were so ably organised by the hon. Member for Huddersfield. That company employs about 435 local people in Prudhoe, including 60 apprentices. It could not be doing any more to support its local community. It does not make glamorous, eye-catching products—or perhaps some people think it does—but it produces one in every five toilet rolls in this country, as well as vast quantities of paper towels. I am sure we all agree that those are essential products.
Guy Opperman
It is, indeed, flushed with success, as my hon. Friend so ably quips from the sidelines—as always, he is on the money. The wood pulp goes in at one end of the factory and paper products come out at the other. The machinery is highly technical; this is modern manufacturing in the modern age.
In this time of austerity, I am extremely proud that the north-east has a positive balance of trade and is the only region consistently to do so. We should trumpet the fact that the North East chamber of commerce is the only regional chamber of commerce in the country. It represents more than 4,000 businesses and covers more than 30% of the region’s work force. If I had to single out one local concern that it has highlighted to me from the multitude of things it would like to be done, it would be to urge the Minister to conduct the review that it is hoped will be undertaken of the planned carbon floor price and other climate change and energy-related matters.
How are we to address the manufacturing deficit? I have three main suggestions. First, we need a Minister for manufacturing. That is not to decry the efforts of the Minister with responsibility for business or the Business Secretary, both of whom are worthy men, or those of any parties in that Department. However, the fact remains that, according to the House of Commons Library, there has not been a Minister for manufacturing since 1945.
Gordon Birtwistle (Burnley) (LD)
In my constituency, I get a lot of requests from local manufacturing companies for advice on various issues, mainly in relation to exports and where to go for help with them. Does my hon. Friend agree that a Minister with responsibility specifically for manufacturing would be a major asset to the Government and the manufacturers of this country? Businesses would be able to go directly to the person who could give them the answer they required rather than having to go through myriad Departments. People get lost in that process—even Ministers sometimes, I imagine—and if we had someone who could be accessed directly and who reported directly to the Prime Minister, that would be a major asset to the Government.
Guy Opperman
I completely agree. To put it in the vernacular, we need a go-to guy who is the one person looking after manufacturing.
Guy Opperman
Of course, it could be a woman—I accept that entirely. I was using the term generically. Such a Minister could provide co-ordinated responses to the concerns of manufacturing businesses. Having such a Minister would send out a message that this really matters. I challenge anyone to say that that is not a good idea. It is something that successive Governments have consistently failed to do, and I do not blame previous Governments for that, but doing it would send out a positive message for the future.
The second issue I want to address is banking and the chronic deficit that every Member of the House must be facing in their constituency—a lack of bank financing for businesses. Every one of us, in every constituency surgery, will regularly have businesses coming to us and saying, “I cannot get the funding I need,” or “I cannot get the borrowing I used to have.” It is a chronic problem. Much good work is done by business angels and credit unions—those hon. Members who attended the debate on credit unions yesterday will know that very positive steps were discussed there—but when it comes to bank finance, the system of the main banks is clearly logjammed. What can we do about that?
Currently, to set up a bank one needs £110 million-worth of assets—of cash, effectively—or the Financial Services Authority will not allow it. If the FSA relaxed that rule or changed the figure to £10 million, for example, then prominent local businessmen or businesses in a local community could set up a local bank.
Traditionally, the problem has always been that banks go bust, as they did in the 1920s and ’30s, because they over-borrow and over-lend in effect. If there were a restriction such that they could not exceed the money held on deposit with the Bank of England, the only loss that could be sustained would be the funds in that bank. The effect would be true localism. Someone could set up the bank of Hexham—or, in the Minister’s case, the bank of Bognor—and that bank would be specifically focused on providing small and medium-sized enterprise lending to local businesses.
The Minister for Universities and Science (Mr David Willetts)
In my case, it might be the bank of Havant, rather than the bank of Bognor.
Guy Opperman
There could be competition throughout the region. That would not be difficult. Would it not be great if we had some competition among local banks?
Andrew Stephenson (Pendle) (Con)
In Pendle, a local businessman called David Fishwick is trying to do exactly what my hon. Friend suggests. He is trying to create his own bank to help small and medium-sized enterprises in Pendle and Burnley. The regulations are so detailed and engrossing that the FSA has refused to help him, despite his instructing high-flying lawyers. So far, it has even refused to meet him to discuss the creation of a bank that would directly help small and medium-sized manufacturers in Pendle and Burnley.
Lorely Burt (Solihull) (LD)
The hon. Gentleman has obviously excited a lot of interest with his suggestion. Will he consider the American model of community banks, which have stood the test of time and served their communities?
Guy Opperman
My hon. Friend anticipates my next move, which is to say that such matters are already road-tested in other jurisdictions in other countries. Sadly, the FSA is reluctant to change its regulatory system. I have heard other examples of its failing to meet individuals who want to provide local financing—something that would be immensely good for local communities and could provide a flexible approach. Instead of being stuck with a loan from Barclays, for example, people would have a much lower flexible interest rate and adopt a much more interesting way to recuperate their finances at a later stage when the company was in profit. Banking would be local. We all know what happens when we are approached by a constituent when a business is in trouble. The decisions in relation to such financing are made not in Hexham or Newcastle or even in the north-east, but in a place such as Nottingham or Leatherhead or, ultimately, in London. That must change.
Mike Weatherley (Hove) (Con)
Does my hon. Friend agree that the banks in his example would facilitate help for some of the failures in respect of the enterprise finance guarantee scheme? There are 4.8 million SMEs, but the Government are targeting only 6,000 of them with help through the EFG at the moment.
Guy Opperman
My proposal would provide an alternative way forward for the financing that those businesses clearly need. I suggest that the Minister take it back to the future Minister for manufacturing and the Treasury, with a view to trying to move forward. I am conscious of the time, so I will not take any further interventions.
My next suggestion is an industry bank. We could extend the remit of the existing green investment bank to form a general enterprise bank, for which there are successful models in Germany and the United States. The German KFW—a product of Germany’s social market tradition—and the US Small Business Administration industry bank are specialists in long-term lending to SMEs, and they are effectively financed by their Governments, with a bottom line of commercial viability and social benefit.
The blueprint also exists in this country. What is presently 3i, which is a FTSE 100 company, was originally the UK Industrial and Commercial Finance Corporation, which had tremendous success when it was set up. On practical realisation, given that we have quantitative easing, would it not be better, instead of investing all those sums in bank bonds, for some of that money to go into an industry bank, so that it would go directly to the people who need it most and who are creating the jobs and growth that we all want and need?
I must conclude my remarks. I urge the Government to have a more pro-business policy. Others will talk of what the Government are doing and the positive steps they are taking, but I put in a plea for flexibility. There are repeated examples in my constituency of viable and successful businesses being penalised heavily for being a day late with their tax returns, or three days late with their VAT returns. Effectively, the Government are penalising those who are working the hardest to create the jobs that we need. I thank the House for its indulgence.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
My sincere apologies for arriving two minutes after the hon. Member for Hexham (Guy Opperman) started his speech, but I think I caught the gist of it. We have worked harmoniously in calling for this debate, and I am delighted that we are having it today, and that it is cross-party. The group of us who are associated with the all-party manufacturing group are very pleased about that. My interest in manufacturing has obviously been a total failure. I have been in this House for more than 30 years, and I started the manufacturing group not long after I got into Parliament. Ever since the original all-party manufacturing group started, our manufacturing sector has shrunk and shrunk, under all parties and all Governments.
I represent Huddersfield, the cradle of the industrialisation of our country. Anyone who knows anything about my part of the world will know that even today it is a centre for the highest-quality wool textiles—super-100 and super-110 worsteds and so on. It is also very well known for its engineering, for David Brown gears and many other manufacturing companies, and of course for chemicals, which come from the traditional industry of dyestuffs for textiles.
Huddersfield became an industrial town because of power. The energy coming from the fast-flowing streams from the Pennines—the Holme, the Colne and the Calder—attracted industry because that is what made the mills work. That is how we got industry in our part of the world. It was a manufacturing town. There was not much in Huddersfield; there was the old village of Almondbury, which is a bit of a market town, and an ancient place, but the modern town is 18th and predominantly 19th century. Some 70% of the population would have been in the manufacturing sector. We are now down to about 8.9% manufacturing employment in the constituency, whereas 86.7% of employment is in various forms of services; 33% is in health, education, or working for the local authority. We are lucky to have a large and successful university, Huddersfield university, which is pre-eminent in engineering, textiles and design innovation, but that does not disguise the fact that we are pre-eminently in the service sector; 87% of employment is in services of various kinds. Unemployment is at its highest level since I became a Member of Parliament.
Gordon Birtwistle
Does the hon. Gentleman agree that the collapse of manufacturing in Huddersfield, which has gone from 30% or 40% of employment to 8%, is significant given that youth unemployment is so high? Huddersfield’s colleges are training young people to be engineers and manufacturers, yet the collapse of manufacturing industry means that the jobs are not there any more for them to do. Manufacturing has been overtaken by the services sector. Does he agree that it is high time we reversed the trend towards the services sector and returned to a buoyant manufacturing sector, which could employ those young people?
Mr Sheerman
I would go 90% of the way with the hon. Gentleman, but I would not accept the word “collapse”, because we still have a vibrant, though much smaller, manufacturing sector in engineering and chemicals. The textiles, engineering and chemicals industries are still there, and have very high productivity, but the capability now is such that we turn out an enormous amount of worsted in a crinkly shed—not one of the magnificent old stone mills—that is working 24/7. I think we underrate the productivity of some of those industries.
I do not want to make Members suicidal, but let us compare the decline of the UK’s manufacturing sector with that of other countries before moving on to something more cheerful. In Great Britain around 8.8% of employment is in manufacturing. Some figures for 2008 indicate 9.8% for manufacturing and 80.8% for services. Things are very similar, if not worse, in the United States, where employment in 2009 was 8.9% in manufacturing and 83.4% in services. The decline of manufacturing in the UK has very much gone in parallel with the experience of the US. By comparison, Germany still has 18.5% in manufacturing and 73% in services, and China has 27.8% in manufacturing and 53% in services.
I want to draw the House’s attention to the UK’s balance of trade, particularly the trade deficit with Germany, which last year was £16.8 billion, and with China, which was £21.6 billion. Whatever is happening today, and despite the depressing interview with Chancellor Merkel last night, which persuaded me that we are on the precipice of a world recession, we must remember that Germany has been very fortunate and that the eurozone has been very kind to German manufacturers over this period. The renminbi, the Chinese currency, which the Chinese conveniently manipulate to give their manufacturing exports every possible advantage, has done the same for China.
I want to dwell on the future and what kind of society we want. It seems to me that we want a wealth-creating society that produces the goods and wealth that can then be shared. Some of us disagree about the levels of individual and corporate taxation, but we all agree that we have to produce the wealth in order to share it, whatever way we choose to do so. I am concerned that if we do not do something in the manufacturing sector we will not have very much to share.
What do we depend on? A core element at every level of activity is the fact that in every facet of human experience success depends on the quality of the people who do the job, their skills and commitment and their desire to do a good job. In the 10 years that I chaired the Education and Skills Committee, that came home time and again. The history of our country is one of clever and skilled people with ingenuity, determination and a hunger to do something. We have had an amazing crop of entrepreneurs. At the heart of our manufacturing problem is the fact that too many people in our country who go to university do not go into manufacturing. I remember walking across the hallowed lawns of Magdalen college with the master some years ago. I asked him whether any of his graduates went into manufacturing or public service. He replied, “Oh no, they all go into the City.” If we continue to make the City and banking the profession of choice, we will be in even more trouble than we are in at the moment.
Mr Pat McFadden (Wolverhampton South East) (Lab)
My hon. Friend is drawing attention to the place of engineering in academic ambition. Does he welcome, as a corrective to the problem, the recently announced Queen Elizabeth prize for engineering, a £1 million prize overseen by the Royal Academy of Engineering, which is designed precisely to elevate the status of engineering, creativity and innovation for the next generation of young people?
Mr Sheerman
I agree absolutely, and was going to mention that. I was also going to mention the Aldridge Foundation and Rod Aldridge, who founded Capita. He puts a great deal of money into education and is absolutely obsessed with finding entrepreneurs and giving them a chance to become successful.
We must ensure that there is reward for the risk of being an entrepreneur. We have to be open about the fact that that is what we want to reward. No one on either side of the House should fail to realise that. I do not mind seeing entrepreneurs getting super salaries. I have a great deal of sympathy with some aspects of the 99% campaign, but I do not mind people earning a great deal of money and being rewarded if they are entrepreneurs who produce jobs and wealth. I am worried when people in pretty safe and comfortable jobs, who are never going to risk anything, get millions of pounds a year. That is what I do not like.
On skills and training, the STEM subjects are neglected in our country, and we need more young people to stay with science, technology, engineering and mathematics longer.
Tony Cunningham (Workington) (Lab)
Many engineering entrepreneurs, past and present, started out as apprentices, so does my hon. Friend agree that if we put more energy, resources, money and time into apprenticeships we might see more entrepreneurs?
Mr Sheerman
I absolutely agree, and I will come on to that issue.
The slight disagreement between me and the Secretary of State for Education has occurred because I believe that young people who are not very academic but quite good at practical subjects will lose out on an opportunity if we remove design and technology as an option, focus on the more rarefied academic subjects and push the more hands-on subjects to one side.
After the Tomlinson report we lost diplomas, and that was the fault of the Blair Government, but the role of our universities is one thing that we can say is brilliant. If it was not for our universities, I would despair. They are increasingly working with entrepreneurs and the manufacturing hinterland, and that must be rewarded. We need more links between universities and further education colleges, of which there are about 450 in this country, and they really need to work much more closely, so that they turn out the young people that local industry needs. We should not pretend that all apprenticeships are three-year courses in engineering, because they are not; the average length of an apprenticeship is one year to 15 months, but they are not good enough; they are not proper apprenticeships.
On design, anybody who wants to know or who cares about the creative industries should look at Sir George Cox’s review of them and their relationship with enterprise, innovation and manufacturing. If we were to ask him, “What is the one thing that could transform this country’s manufacturing success and wealth creation?” he would tell us, “It’s the supply chain and how this country and its Departments procure. At the very heart of making a great change, it’s procurement that will do it.”
I could have covered other things today, but I finish on this point. In this country, we are still pussyfooting around competition. I have grown up to be a free trader, with the belief that we are a trading nation and should not have any barriers to trade, but I am changing my mind. I do not believe that this country, at this moment in time, with the imbalance in exports and imports between ourselves and Germany and China, can possibly accept the situation for much longer. Something pretty dramatic has to be done, especially when research increasingly shows that China, that wonderful, not very democratic industrial nation that is growing very fast every year, conducts a form of economic warfare against any area where it feels there is competition.
Let us look at the way in which the Chinese seek raw materials, resources, minerals and rare earths. An expert from a university told me yesterday, “If you want to know who’s going to move into Afghanistan in 2015, it will be the Chinese, because Afghanistan has more of the rare earths that China wants than anywhere else.” The Chinese will be there in 2015, as they already are in Africa and throughout the world, and they are also manipulating currencies and targeting specific industries in a way that we have only just begun to comprehend.
So there is economic warfare, and it is about time that the Treasury, with other Ministries, was conscious of this: manufacturing matters in this country. We need skills and entrepreneurs, but we have to have fair competition with competing nations.
Mr Deputy Speaker (Mr Nigel Evans)
Order. As we are approaching the festive season, I will play an early Father Christmas and set the time limit at 10 minutes.
Graham Evans (Weaver Vale) (Con)
I congratulate my hon. Friend the Member for Hexham (Guy Opperman) on securing the debate. Apart from a brief spell stacking shelves in my local Co-op in Poynton, I have worked in the manufacturing industry for my entire career. Interestingly, my first manufacturing job as a young man was working for BAE Systems on the mark 3 airborne early warning Nimrods. After a lot of taxpayers’ money, that was rightly cancelled because it was over budget and out of date and did not work.
When Britain was described as the workshop of the world nearly a century and a half ago in 1870, the UK accounted for almost half—46%—of the world’s manufacturing output. Today, that title has been bestowed on China, which produced a fifth of the world’s manufactured trade in 2007. The term seems to have lost some of its meaning over time, as has the notion of Britain as an industrial nation.
Everyone appears to believe that the UK is doing fine when it comes to manufacturing, citing the fact that we are the fifth largest manufacturer in the world in terms of value of output. That attitude has bred complacency and allowed successive Governments to believe that they are doing enough to maintain that position. However, that belies the truth. If we measure manufacturing in terms of per capita value added, we realise that Britain is only around 12th in the international league tables, and suddenly the picture changes dramatically.
It is clear that if we are to rebalance our economy, much more must be done to push us up the rankings. That means providing support for all forms of manufacturing, rather than just the high-tech sectors that seem to be so fashionable at the moment. It has been calculated that those sectors make up only 14% of British manufacturing and it has been argued that the support for manufacturing should be based on value, not the complexity of the product. For example, the UK still produces basic metal turbine blades, but they are cut by some of the most precise machines on the planet. The product is simple but very high value, thanks to the advanced production process.
There is no question but that such a shift must take place. The financial crisis made most people aware that the UK cannot rely on the financial services trade surplus to prop up the industrial trade deficit. However, it is less well known that, according to the Office for National Statistics, even the financial sector’s maximum export volume of £55 billion in 2008 was eclipsed by manufacturing’s £195 billion of exports.
The problem is twofold. First, our manufacturing ability is only rivalled by our insatiable appetite for other people’s goods. That has led to the latest trade in goods deficit of almost £100 billion—a new record. Secondly, Britain has grown complacent. Our manufacturing output has remained constant for the past 13 years under Labour, which is a reduction of £3.5 billion per annum in real terms.
Where did it all go wrong for UK industry? Contrary to popular assumptions, although some deindustrialisation did occur under Margaret Thatcher, the bulk of the factory closures came later. Indeed, when Labour took office in 1997, manufacturing comprised exactly a fifth of the UK economy. By 2007, it had declined to an eighth. In comparison, under the whole of the Thatcher Administration, the decline was 3.3%. The loss of our manufacturing capabilities is a very recent concern, which should fill us with a certain level of optimism.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
So far, the debate has been conducted on a reasonable cross-party basis. However, given the fact that the hon. Gentleman has made a political assertion, can I point out that in the black country, at least four huge manufacturing employers—Round Oak steelworks, Patent Shaft steelworks, Bean Cars and Cannon—were closed during the Thatcher era? That had a devastating impact on the level of employment in the black country.
Graham Evans
I am grateful for the hon. Gentleman’s intervention. At the beginning of my speech, I made the point that all Governments of all political persuasions have contributed to the overall decline. I take on board the closures in his constituency. All Governments need to learn the lessons of the past, but that does not mean that we should underestimate the problem.
Let us consider energy-intensive manufacturing sectors, which include the chemical, steel, glass and paper production industries among others. The chemical industry is of particular importance in my constituency, where Tata and INEOS Chlor are still major employers in Northwich and Runcorn. According to Waters Wye Consulting, policies such as the EU’s emissions trading scheme and the unilateral carbon price floor mean that the average energy-intensive company’s energy bill will rise from £3 million now to £17 million in 2020—an untenable level for the majority of these firms, which simply cannot afford to continue production in the UK. Proponents of these policies argue that energy-intensive sectors account for only 1% of GDP and so do not matter. If we quantify that figure, it equates to a potential loss to the UK economy of £15 billion and 290,000 jobs. More widely, the Royal Society of Chemistry claims that £220 billion of GDP and 5.1 million jobs are partly reliant on UK chemical research alone. Clearly, the visible threat to UK manufacturing is only the tip of the iceberg, but the problem is that most people do not realise that.
British industrial decline, relatively speaking, is in sharp contrast to the experiences of our neighbours—in particular, Germany. German long-term support for manufacturing means that it now possesses the economic clout to dominate Europe. Given the UK’s and Germany’s widely different starting positions 60 years ago, it is clear that it has done something that we have not, and that something is valuing industry. From post-war restructuring to reunification, Germany has always recognised that manufacturing was the backbone of its economy and therefore never enacted policies that would endanger it. Indeed, political infrastructures were set up to nurture industry, especially mittelstand—or, as we refer to them, small and medium-sized companies or SMEs. Foremost among those tools stands KfW, the state-backed bank that ensures that mittelstand can access funding even when the commercial banks are unwilling to lend. The value of such an institution was seen in the financial crisis. According to its accounts, in 2010 KfW financed a record €28.5 billion for SMEs, amounting to approximately 94% of all its commitments for the year. Without KfW, the potential for many extra jobs and exports would have never been realised for Germany.
It is hard to understand how far the value of German industry goes. Youngsters are encouraged from an early age to appreciate the importance of making things.
Gavin Williamson (South Staffordshire) (Con)
Does my hon. Friend agree that one of the key elements of Germany’s success is its investment in research and development? We need to be encouraging that. Jaguar Land Rover is building a new factory in my constituency and investing in R and D, and the Government could go a long way towards helping that by reviewing R and D tax credits, which the Treasury is considering at the moment.
Graham Evans
I agree with my hon. Friend. We have a reputation for very good, world-beating research and development, but it goes beyond that—when we have discovered these things, we still have to ensure that we make them in this country.
The Germans try to ensure that their young people appreciate manufacturing. Eliciting such a response from British children, compared with their counterparts in Germany, is increasingly difficult as they grow up. Initial curiosity about industrial work might be dismissed as selling themselves short by parents and teachers, and by the time the most able leave school, university is the only option, with apprenticeships considered by some to be second rate. The closest many of the next generation get to manufacturing is printing off a computer document. Little wonder that youth unemployment hit 1 million last week; many do not have the skills needed by manufacturers, thus further encouraging those manufacturers to relocate their businesses elsewhere, to the increasing detriment of British growth. As I have repeatedly said in this Chamber, we need to educate our children in a manner that will enable them to become the engineers, scientists and entrepreneurs that this country needs to pay its way in the world.
With the average age of those in industrial employment at 40 and rising—50 in some sectors, such as chemicals—drastic action is required. British manufacturing is at a crossroads. It can grow, bringing jobs to those who need them and contributing to reducing the deficit, or it can decline further, with valuable businesses permanently lost. There is reason to believe that the former positive outcome is more likely if we commit to making it happen. The Government have made a strong start. That this debate is happening is hugely positive and shows that we recognise the seriousness of the problem. The solutions that we need involve major changes both culturally, in widening our appreciation for manufacturing, and practically, in creating a more positive environment for industry. Let us make it in Britain. Let us make Britain great again.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I have taken part in a number of debates on this matter over the years, including as a Minister in the previous Government and as an Opposition spokesman after the election. Such debates often follow a similar pattern. Labour Members talk about the great wave of industrial closures that happened in the 1980s. We had a flavour of that a minute or two ago. Government Members are tempted to say that manufacturing declined as a proportion of GDP under the Labour Government. It all gets a bit familiar. Whatever the rights and wrongs of those arguments, they are united by two things. First, they tend to look in the rear-view mirror. Secondly, they take little account of the huge wave of globalisation and the enormous technological advances of the past 20 years.
Nobody can underestimate the importance to every developed economy, including ours, of the opening up of China as the factory of the world. To try to pin that on any single Government is to miss the point. No country is immune from its effects. Whatever product one makes, the chances are that it takes fewer people to make it today than it would have taken 20 years ago. It takes fewer people and fewer person hours to make a car today than it did 20 years ago. It is therefore not surprising that the number of people employed in these activities has declined.
It is good that this debate is focused on the future of manufacturing. We should avoid the rear-view mirror stuff that sometimes characterises these debates if we can. Any honest debate about the future of manufacturing has to begin by acknowledging the power and reach of globalisation and the power of technology, rather than pressing the rewind button or taking us on a nostalgic tour of the past.
Tony Cunningham
There is a company in my constituency called New Balance, which is the only running shoe manufacturer in the United Kingdom. It sells its running shoes to China. It does that because of the quality of the product. Is that not the way to compete?
Mr McFadden
That is a good example. I know that my hon. Friend is a keen runner. In my more conscientious days, I have also done some running. New Balance is an excellent product. He shows that globalisation is a two-way street, not a one-way street.
The emphasis on the past that sometimes characterises these debates can lead to an over-pessimistic discussion about decline and loss. Let us be honest: we make less than we used to, as is clearly shown by the figures. However, I also believe that we make more than we think and more than we sometimes give ourselves credit for. The point made by my hon. Friend the Member for Workington (Tony Cunningham) shows that, and there are other examples. We still make about 1.5 million cars a year, most of them for export. We have heard news today that Toyota has again chosen the UK as the base for a new model, which I understand will create up to 1,500 jobs. We also have a hugely successful pharmaceutical industry with a strong balance of trade surplus.
Although we had a debate earlier about British aerospace that centred on the loss of jobs, that sector as a whole is strong and is an important earner for us. Only this week, Goodrich, a company in the constituency of my hon. Friend the Member for Wolverhampton North East (Emma Reynolds), won a contract to maintain landing gear systems for the United States air force. That company has already taken on 200 people this year, and it aims to keep hiring in the period to come.
Valerie Vaz (Walsall South) (Lab)
I thank my right hon. Friend for giving way and the hon. Member for Warwick and Leamington (Chris White) for securing the debate.
May I bring the House’s attention to another success story, which is in my constituency? Chamberlin and Hill has actually won contracts back from China for making castings for turbo-charged engines.
Mr McFadden
My hon. Friend makes a very good point. Chamberlin and Hill is a company that I know well and a fine example of what the Germans would call a mittelstand—a medium-sized company—that is doing very well. What is its slogan? It is “Difficult things, done well”, I think, and it does indeed do them extremely well.
As we heard a moment or two ago, we have all been delighted by the news that Jaguar Land Rover is to locate its new engine plant on the boundary of Wolverhampton in the constituency of the hon. Member for South Staffordshire (Gavin Williamson). That investment of more than £300 million will mean more than 1,700 new manufacturing jobs directly, but many more than that in the supply chain and indirectly in the wider economy. In a sense, Jaguar Land Rover is a microcosm of the story of globalisation. Its Indian owner, the Tata group, is investing heavily in new models that are being sold in a number of new markets, which are growing because there is a growing middle class keen to buy high-quality, prestige vehicles. That is also why it is hiring more workers in the constituency of the hon. Member for Solihull (Lorely Burt).
I use those few examples to illustrate that although there has been decline and closure over the years—in my constituency we saw more than our fair share, with the closures of Stewarts and Lloyds, Sankey’s and many others some years ago—the story of manufacturing in the UK is not always one of decline and loss. We need to believe more in what we still make, and resolve to value more the activity of making things. In a short debate such as this, there is not much time to discuss the detailed policy prescriptions that might make that happen, but I should like to mention a few things that we could do to support manufacturing more.
First, as I have said, we can challenge the culture of decline and loss. As a country, we should resolve to be the best place in the world for engineering. That might not mean that we are the biggest manufacturing economy in the world, but we should resolve to be the best place for it. That resolve should be shared by Government, our universities and our top companies, and it should fire the imagination of the next generation about the huge benefits that creativity, innovation and making things can bring.
As we heard a few minutes ago, one positive step in that direction is the Queen Elizabeth prize for engineering, which has just been announced and which the Royal Academy of Engineering will oversee. The Royal Academy is right to emphasise that the benefits of engineering go way beyond pure manufacturing and contribute far more than we think to our wider economy. I personally believe that the boundaries between a rigid manufacturing sector and services are becoming outdated. Rolls-Royce, for example, talks about “manu-services” and about earning as much from maintaining and servicing products as from just making and delivering them. We need to do something about the national resolve on manufacturing.
Secondly, we have to get tax policy right. I want to heed the advice of my neighbour, my hon. Friend the Member for West Bromwich West (Mr Bailey), not to be too partisan, but I say gently that I cannot see how cutting investment allowances helps the Government’s stated aim of rebalancing the economy, at a time when the life cycle of products is getting shorter. It is a £3 billion-a-year hit on manufacturing, to fund a corporation tax cut for banks and other businesses that do not always invest. It seems to me to run completely counter to Government rhetoric about supporting manufacturing. The Government should be making it easier for manufacturing companies to take investment decisions, not more expensive as that change to the tax system does.
Thirdly, we need an active industrial policy. We have become too defensive of the accusation that the Government should not pick winners. There is nothing wrong with a nation looking at the changes that are to come—be they for a low-carbon economy or a more digitally connected world—and resolving that the UK must have the capacity to make the most of them. The Government are a big market player. That should be a priority not only for the Department for Business, Innovation and Skills, but for the Ministry of Defence, the Department of Health, the Department for Education and many other Departments. All should think about their budgets and activities in terms of industry policy, but far too often, they do not do so. The Department for Business, Innovation and Skills should not be the only bit of the Government that thinks about business and industry—thinking about business must be done far more broadly across the board.
Finally, we ought to rethink our definition of making things. It is a touch old-fashioned in the digital age to think of making things only as making things that we can see or touch. Our country is a world leader in creative industries. The truth is that change has meant that people who might have become engineers or involved in manufacturing in the past are now making other things. Our TV formats are exported around the world; our football teams are watched around the world; the computer games that are developed and made in the UK are played around the world; and our musicians are listened to around the world. Everyone involved in those activities is also involved in making things, so our definitions have fallen behind the reality of the modern economy and what we as a nation are good at. Times have changed and creativity has been bent to new ends.
If we think about making things in that broader sense, we will throw into sharp relief the sense of loss and decline that can characterise such debates. My plea is therefore to think about making things in the broader sense. What we need in future is both belief and action to back that belief. If we have those, we can make many more things in that broader sense in times to come.
Gordon Birtwistle (Burnley) (LD)
I congratulate my colleagues who called for this debate and thank the Backbench Business Committee for accepting and giving us a lengthy amount of time for it at short notice.
The future of manufacturing products is inextricably linked to the future of manufacturing growth and wealth. If we have a strong manufacturing sector, we will have a strong economy that will create growth and prosperity for the country.
I have a personal interest in manufacturing. I left school at 15—I did not pass my 11-plus or get any GCSEs—and went to be a craft apprentice at a local company in Accrington that manufactured textile machinery. That was an enthralling event. I had to go to night school three nights a week until I was 25, where I secured two HNCs. Unfortunately, that does not happen any more, but young people go into manufacturing and get other types of education.
Mr Willetts
I should like to assure the hon. Gentleman that I meet young people who are doing HNCs and HNDs at their local colleges to be trained to work in British business, including in manufacturing. We should take pride in the fact that people still get those qualifications, which are valued and recognised. Indeed, part of the Department for Business, Innovation and Skills commitment is to continue to recognise those qualifications.
Gordon Birtwistle
I am grateful to the Minister for that assurance and I hope that that continues.
When I started in manufacturing some 53 years ago, manufacturing was 40% of the country’s gross domestic product and a balance of payments surplus was delivered every month. What on earth would the Chancellor think of having a constant balance of payments surplus now rather than the negative position we have? As manufacturing was so big, lots of apprenticeships were available through local companies that delivered the products that the country needed. The unemployment rate for young people was very low. When I left school, I applied for many apprenticeships throughout Lancashire. Most young people with whom I went to school achieved an apprenticeship in some industry or other. The vast majority of people in those days did not go to university; many people would have liked to have gone, but they could not, so they spent their time being apprentices and learning skills in the old-fashioned way by making things and having a trade.
I do not want to make this political, but I have to point out that under the last Labour Government, manufacturing fell from 22% to 11%. Even Mrs Thatcher did not achieve such a drop—she only managed to get it from 25% to 21%. Manufacturing has a number of variables to overcome. They include how the industry is perceived by young people, the lack of skills, and the lack of investment and of research and development. One of the biggest challenges to manufacturers in my constituency is finding enough skilled workers to carry out the incredibly technical jobs that are available. More must be done to change the image of industry to make it attractive to young people. I know that those who undertake skilled apprenticeships will end up with great jobs working on interesting projects, earning decent salaries and probably with a job for life.
A lot of damage has been done over the past 10 years to the image of manufacturing and vocational courses. A priority for the Government and for our successful and well-known manufacturers is changing the perception of manufacturing, especially among the young. We have become a country relying on a fragile financial sector and on the service industries. If young people were asked what they thought manufacturing was, they would probably respond that it is dirty and grimy. That is not the case. We need to show young people that there is more to manufacturing—that it is about maths and science, about design and innovation, about robots and computers. Manufacturing and technology in the food industry, for example, are phenomenal. There are so many different areas in the manufacturing sector and they are all innovative and exciting sectors to work in.
Controlling the supply side of our skills deficit is but part of the problem. As important is ensuring that both new entrants and existing employees in manufacturing are sufficiently upskilled to meet the demands of British employers. The preparation work needs to begin in schools. We know, for example, that pupils who take three separate science subjects at GCSE are more likely to study science, technology, engineering and maths later in their educational careers. If we can tackle the problem at source, and improve the rigour of the subjects and the number of pupils studying them, it will have a cumulative impact on the calibre of graduates entering the job market.
Lorely Burt
Does my hon. Friend agree that a great way to get youngsters more excited and involved is to have closer collaboration between employers and schools, so that children can see what it is they aspire to do, and therefore choose to take the subjects to which he refers?
Gordon Birtwistle
I totally agree with my hon. Friend and I will come on to an initiative in my constituency related to that suggestion.
In my constituency we have Burnley college, a joint FE-HE campus working with local firms to train highly skilled youngsters to be ready for the world of work. We are also getting a university technical college that will bring young people into the industrial life. Burnley college has made huge leaps in changing the perception of manufacturing locally among young people, and if the model the college uses were introduced across the UK, it would go a huge way towards really changing the perception of manufacturing at a national level. More schools and colleges need to start joining up with local businesses to provide youngsters with the knowledge and experience that will help them in the world of work. Too many children do not have any experience of working, or of the personal and other skills required. I will continue to encourage the Government to introduce impartial careers advice from the age of 11. Indeed, we should start careers advice long before young people go to secondary school.
Graham Evans
Is the hon. Gentleman aware of the Manufacturing Institute’s Make It campaign, which is specifically designed to enable young people in what used to be year 3—now year 9, I think—to experience as they take their options the delights of working in the manufacturing industry?
Gordon Birtwistle
Yes, I am aware of that, and it is a great thing. I encourage the Government to encourage such things, and we should also give careers advice to young people at 11.
Manufacturing must cease being perceived as a career avenue for low achievers, and the Government must work harder to ensure that perception and reality are closely matched. The culture in our schools must change, and the Government can help with that. There is so much emphasis on how many children can get to Oxbridge but there is never a fanfare about how many get on to high-skilled training programmes in the manufacturing industry, such as those with Rolls-Royce, BAE Systems or Aircelle in my constituency. Business must recognise that a new role is emerging, and UK manufacturing must ensure that it sells its career and employment possibilities to young people.
Trade finance also plays a huge role in the export cycle, but small and medium-sized enterprises often find raising the finance overly complex because of the myriad requirements on both financial institutions and Government agencies. The manufacturing industry in Burnley would like the Export Credits Guarantee Department to work more with financial institutions on initiatives to support exporters, particularly small businesses, many of which would love to export but find it difficult. For example, What More, an SME in my constituency that makes plastic buckets, washing-up bowls and lunch boxes that are sold widely in Tesco, is taking on the Chinese. The Chinese used to control that market but the company now exports to 38 countries, including China, and would like to export further afield. What More tells me that with an export credit guarantee it could export to another 25 countries. It employs 160 people and has invested £16 million over the past few years.
It is critical that the Government, as a big purchaser of manufactured goods, buy British-made goods. I was extremely disappointed by the decision on the Thameslink contract. I do not know how it happened. I was not a Member of Parliament during the consultation and quotation on the Thameslink trains but I was concerned that the contract was placed with Germany. I do not understand the European rules but I was extremely concerned. Importing trains when we make our own does not stack up. I am pretty sure that the Germans and the French do not import their trains. They seem to find a way around these rules to ensure that the same does not happen there. Furthermore, a £1 billion order for Chinook helicopters was sent direct to Boeing despite there being a helicopter company in this country with a licence to build Chinooks. That would have saved us £500 million on our balance of payments.
I have a couple of suggestions for the Minister. First, we should return the capital allowances scheme to enable companies to invest and get the capital allowances on the new equipment that they buy. There would be a massive investment in new plant and investment if the capital allowances were returned. Secondly, as my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) said, tax rebates on research and development should be increased in line with the rest of the world and with what is needed in this country.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
My constituency borders that of my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), so if my remarks echo his it is because of our shared experience of black country manufacturing and the challenges that it faces. My constituency, consisting of Oldbury, Tipton and Wednesbury, was at the heart of British metal-bashing for centuries. When Britain was the workshop of the world, the black country was the centre of that. It has a proud manufacturing tradition, and I am equally proud to say that, even given the hard times that the industry has gone through, there are still more foundries in my constituency than in any other in the country. The number of people employed in traditional manufacturing, while nothing like what it was, is still higher than in most areas of the country. My constituency is thus second to none in having an interest in the particular theme of this debate.
I know that many people, particularly within the black country business community, welcome the Government’s rhetoric on boosting manufacturing, rebalancing the economy and securing export-led growth. I certainly share both the Government’s and the local business community’s enthusiasm for all of those. I think, however, that we need to measure this with a touch of realism.
My right hon. Friend the Member for Wolverhampton South East made it clear that although we might want to extol the virtues of manufacturing, we must not do that to the detriment of the contribution made by other sectors of the economy, particularly our creative industries, which are world leaders and provide a significant proportion of our national output and a large number of employees. This applies to our service industries as well. Although manufacturing might have declined relatively, that is partly because we have an expertise in the service industries that is recognised throughout the world and provides potentially exportable market opportunities.
Manufacturing has a crucially strategic role. Although it provides something in the region of only 11% of national output, it provides nearly 50% of our exports. If we are to export our way out of recession, the service industries might play a significant part, but we cannot overlook the potential of manufacturing industry. It contributes something like 74% of research and development. The more R and D there is, the more competitive we become: the two are crucially linked.
We must recognise that without having more R and D and without providing a higher value-added manufacturing base, we might not be able to generate the levels of employment that we have had historically in manufacturing. We might well pursue policies to help businesses expand manufacturing as a proportion of our national output, but that might not necessarily result in a huge increase in the number of people employed because as we become more competitive and productive, we might be using fewer and fewer people to achieve it. That can sometimes blur the distinction between manufacturing employment and service employment—hence the reference made by my right hon. Friend the Member for Wolverhampton South East to “manu-services”. Increasingly, as our high value-added manufacturers export abroad, they follow it up with service contracts, which provide a lot of employment for people who are technically in a half-way house between servicing and manufacturing.
Mr Sheerman
I know that my hon. Friend, as Chairman of the Select Committee, has a great deal of knowledge on this subject. I wonder, however, whether we are avoiding the fact that Germany is also good at services and at design and many other things, yet it still has a manufacturing base that is twice as big as ours. That is why I keep coming back to “It’s Germany, isn’t it?” that we need to copy.
Mr Bailey
My hon. Friend is quite right—for a whole range of reasons that, unfortunately, time constraints prevent me from developing. Germany has a far stronger manufacturing base than we do, and a much stronger manufacturing culture throughout the country. I would like to discourse at length on that, but time constraints prevent me from doing so.
Notwithstanding the German experience, it is generally recognised that our expertise in some of the service industries may well give us greater export opportunities to countries such as China. Because of Germany’s expertise in manufacturing, it has done very well in what we might term the first wave of exports to China, but we may do better now because of our superiority in some service industries.
David Morris (Morecambe and Lunesdale) (Con)
I serve on the Science and Technology Committee and we recently examined how the Germans fund their new technology infrastructure. They have the Fraunhofer institutes, which have been running for more than 100 years. We are now trying to emulate that through the Turing centres. German manufacturing is good, but ours could be equally good, if not better.
Mr Bailey
That issue was recognised by the previous Government, and measures were being put in place to replicate that approach in the context of the British industrial scene. The current Government are, to their credit, taking that up.
Bank lending is a hugely significant issue for small and medium-sized enterprises in my constituency and nationally. The Merlin targets are not being met. That, combined with low consumer confidence and low business expansion expectations on the basis of the domestic market, means that companies are not applying for loans because they do not feel positive about future market opportunities and because they are wary of the banks making their credit lines even more difficult than they already are. That is having a stultifying effect on the ability of small businesses to expand.
Quantitative easing in order to address that issue may, indeed, keep interest rates low, but I have yet to meet a bank that knows how that will help SMEs directly, and I have yet to meet a business that knows how it would make any difference to its relationship with its local bank. Although lower interest rates may be welcome in general, that will not necessarily feed through to more investment in small businesses. I am concerned that the effect low interest rates are having on pension fund incomes could lead to some manufacturing businesses having to pay more into their pension funds, thereby diverting money from other areas in order to sustain their pension levels. This could be a counter-productive step, therefore.
There is now a lack of provision in the crucial area of small grants and loans for small businesses that want to expand to take the market opportunities that will be available to them. The regional development agencies will not be reintroduced—that is a debate for another day—but they did provide small loans to businesses that wanted to expand. Those loans are gone now, and they are not being replaced by the banks. The regional growth fund is not yet delivering for small businesses. If we are to expand the capacity of manufacturing SMEs in the time that they have available to make an impact on employment, that vacuum needs to be filled. Either local enterprise partnerships must be given more powers or the RGF needs quicker and more localised means of distributing money.
Mr Bailey
No; I am sorry, but I am running out of time.
I reiterate the points made about research and development tax credits and capital allowances—they might go some way to dealing with that problem. As they have been mentioned, I will not repeat the discussion of the issue.
The second issue to address is skills. As has been said, Tata has invested £300 million in Jaguar Land Rover in a site to the north of Wolverhampton, with enormous employment potential locally. The concern within the industry is that the extended supply chains of small and medium-sized enterprises that could service JLR may have a shortage of skilled apprentices, and I have already mentioned the potential need for capital investment to improve the capacity to meet the demand from JLR. I have no doubt that JLR will attract all the people it needs, because it is a high-paying iconic company that is very attractive to everybody. It will be the SMEs in the area that will need to recruit, and we need to expand our vocational skills base to ensure that that happens.
The Government have rightly concentrated on apprenticeships. However, there is emerging a picture of apprenticeship provision that will not necessarily address that need. First, a high proportion of the new apprentices are over 24, and there is considerable concern that these are just Train to Gain people rebadged. There is nothing wrong with Train to Gain, because it has an important role to play, but it will not necessarily meet the skills need that it is directed at. Secondly, there is increasing evidence of private providers coming in with short-term courses, which do not meet the historically longer-term need for training in a particular industry to meet capacity. I believe that the black country local enterprise partnership is examining the issue to try to scope out the skills provision that will be needed and ensure that it is provided. That LEP will be able to its job far more effectively if the Government were prepared to back their localism agenda by providing it with the resources to assess the skills need and to deliver on it locally.
Madam Deputy Speaker (Dawn Primarolo)
Order. I am keen to make sure that every Member who has indicated a wish to speak in this debate—
Madam Deputy Speaker (Dawn Primarolo)
You may sit down, Mr White, as I will not forget you and you do need to know this before you start speaking. I am going to change the time limit, because if we have 10-minute speeches, we will not get everybody in. I am therefore reducing the time limit to eight minutes per Back Bencher from you onwards, Mr White. However, you have the great joy of being called next, so the Floor is yours.
Chris White (Warwick and Leamington) (Con)
Thank you very much for that warning, Madam Deputy Speaker.
May I, too, start by thanking the Backbench Business Committee for securing time for this important debate? As co-chair of the Associate Parliamentary Manufacturing Group, alongside my friend the hon. Member for Huddersfield (Mr Sheerman), I have a particular interest in this area of policy. I was pleased to hear from earlier speakers who were able to bring their own experience to this debate, for example, my hon. Friend the Member for Hexham (Guy Opperman) and the hon. Member for Burnley (Gordon Birtwistle). I am also pleased that Westminster is being visited today by the leader of my local district council, who also has a background in manufacturing industry. Perhaps it would not hurt too much if more Members of Parliament had a background or personal experience in manufacturing, engineering or industry itself.
If we do not secure both a rebalancing of our economy towards manufacturing and growth in the sector, the UK will be very much the weaker, not least in my constituency, which is home to names such as Ford. Things have changed very much over time. My area has one major manufacturing works; the reason why we no longer have soot on our food is because Flavel, which won an award at the Great Exhibition, managed to change that by an innovative process and, to this day, the factory is still producing cookers in my constituency.
As the right hon. Member for Wolverhampton South East (Mr McFadden) said, we need to look forward. What does a prosperous manufacturing sector need? It needs a large skills base, a strong communications network, a focus on exports and the opening up of new markets. There has been progress on the first point. In Warwick and Leamington, we have 210 additional apprenticeships compared with last year. Great thanks must go to places such as Warwickshire college for managing to secure that.
Young people need to be encouraged to make a positive choice to take up careers in manufacturing. As the hon. Member for Huddersfield said, if that is to happen, design and technology must play a much greater part in our schools. We need to build on it through our entire education system. We cannot just wait until young people are 16 before they begin thinking about careers in the sector—it should thread right through our education system.
We cannot afford to fall behind other countries in this vital area. We should be under no illusion: competitors like China and India will be doing more, not less, to educate their young people in those subjects. The national curriculum is under review and I hope that the Department for Education will consider the importance of design and technology for the future of our economy and work with organisations such as the Design and Technology Association to ensure that D and T remains at the heart of the curriculum.
I believe that if we are to see long-term progress for manufacturing, we need the Government to be at one with the sector as a whole. Given the importance of manufacturing to our economic future, it makes sense that, as has been mentioned, the Government should create a dedicated Minister for manufacturing, and I would support the creation of such a Minister.
Mr Sheerman
Does the hon. Gentleman agree that if that Minister for manufacturing was linked to a clear long-term strategy for manufacturing, that would be even better?
Chris White
I very much agree. A Minister and a strategy could go hand in hand.
We need a strategic vision for manufacturing, with measurable targets of success so that we can see how our efforts at rebalancing our economy make headway and whether more needs to be done to help the sector. A Minister for manufacturing, tasked with creating a cross-departmental manufacturing strategy with targets and measurement tools to plot success or failure, would be a good start.
The Government, for example, could make it their goal to boost manufacturing to 15% of our GDP by 2015. This “15 by 15” target would send a powerful signal and boost confidence in the manufacturing sector as a whole. The mere creation of a Minister and a strategy will not bring about growth and jobs, but it will signal the Government’s intent, give manufacturers a voice in the decisions on economic policy, better co-ordinate Government manufacturing policy and ensure that manufacturing is properly considered across all Departments.
The UK is now the ninth biggest manufacturer in the world, unfortunately down two places on the previous year. We need to recognise that although we need to promote high-tech manufacturing we cannot ignore the rest of the industry. To quote a recent report,
“‘low-tech’ does not mean ‘low-value’”.
A Minister with responsibility for all manufacturing could ensure that it was not ignored and that we had a strategy in place that benefited all manufacturers.
If we are to remain at the forefront of manufacturing globally, businesses need to be able to access the funds that they need to compete and grow. I therefore also support the creation of a bank for industry, similar, perhaps, to the green investment bank. We should not be content to allow Britain to slip down the league any further and we should make it our goal to climb back to the top of the table.
Nick Smith (Blaenau Gwent) (Lab)
All too often, the issue of defence management is sidelined, so it is good that we discussed BAE Systems earlier. I see this debate as an opportunity to emphasise the importance of defence manufacturing and procurement, which a colleague mentioned earlier.
I have been lucky enough to be a member of the Public Accounts Committee for the past 18 months, during which time we have focused partly on questioning top Ministry of Defence officials, making defence one of our Committee’s themes and, crucially, visiting our country’s manufacturing base by going to Govan in Glasgow and Rosyth in Edinburgh where our new Queen Elizabeth-class aircraft carriers are being built. In doing that work, we have considered a number of instances in which the MOD has not secured value for money in procurement. I raise those instances today because I think they undermine our manufacturing capability and make the work of our armed forces much more dangerous.
As a country, our priority should be to provide our troops with the equipment they need for the best possible value for money. Having a sustainable skills base is vital for that. In Britain, we have a thriving defence manufacturing industry, as I saw for myself at this year’s Defence and Security Equipment International exhibition. We have skilled engineers and fantastic research and development skills. Under the Labour Government, firms such as BAE had the opportunity to invest as the defence budget increased by 10% in real terms. The defence industry provides valuable exports for our country, as well as important skilled jobs. Having the latest technology can also be valuable as it gives our troops an edge on the battlefield.
What are the key figures? Defence spending has been cut, meaning we have £2.63 billion less to spend on our military over a five-year period. This leaves 7,000 fewer members of our armed forces needing armour, four fewer frigates to equip and 40% fewer Challenger tanks to arm. As a result, we cannot afford to sustain our domestic capability to produce the kit we need. Last year’s strategic defence and security review was criticised by the Select Committees on Defence and on Public Administration. It was seen as a tug of war between the Ministry of Defence and the Treasury.
Cost-effectiveness is important. Initially it was hoped that the decision to change the type of aircraft flown from the new aircraft carriers would save money. However, it has resulted in a multi-billion pound refit for the carriers because catapult and trap technology have to be added. That type of indecision can rapidly increase costs for manufacturers and, ultimately, for taxpayers. It also means that we will not have carrier capability until 2020 and that the carriers will not be fully operational until 2030.
The best way to ensure value for money in procurement is by ensuring there is genuine competition in the tendering process. One way in which the MOD has discouraged competition is by gold-plating its procurement plans. Yes, our soldiers should have the best equipment, but that can lead to delays and leave our soldiers without the kit they need for a very long time. Competition is key in achieving value for money in defence manufacturing. Competitive tendering has been the Government’s aim, but National Audit Office figures show that fewer than 20% of the current major projects nearing their service date were awarded through genuine competition. Some 40% of contracts, representing £8.7 billion a year—these are big numbers—have been awarded by single-source procurement, under which the MOD invites only one firm to tender. There is a danger that by excluding firms from the tendering process we are reducing our skills base and our capacity to produce certain equipment in the long term as firms build up monopoly status.
In conclusion, the best way for us to maintain domestic manufacturing capability is to have a number of firms with the ability to produce the equipment we need. That would protect more jobs throughout the industry, enable us to achieve better value for money and provide an incentive for firms to produce good-quality equipment on time. The point about being on time is particularly important. In future, both Government and industry must work to ensure that we have sustainability in our domestic defence manufacturing industry. Then we will better protect and arm our brave servicemen and women.
Andrew Stephenson (Pendle) (Con)
I am delighted to contribute to the debate and I pay tribute to the hon. Members who helped to secure it. Some very interesting points have been made. I have already spoken to my hon. Friend the Member for Hexham (Guy Opperman) about individuals’ being able to set up their own bank, and I know that we have constituents who share the desire to diversify lending to small and medium-sized enterprises in this country. The debate has already been very productive.
In my maiden speech, I said:
“I am proud to represent a seat with a higher proportion of the work force employed in manufacturing that than in any other constituency in England, and I am delighted that manufacturing is back on the national agenda.”—[Official Report, 17 June 2010; Vol. 511, c. 1108.]
In the short time that I have today, I should like to consider what has been achieved in the 17 months since I made that speech and what more can be done to support manufacturers, particularly in Pendle and east Lancashire.
A couple of weeks ago, I was delighted to attend the Lancashire Telegraph business awards. It was a night that helped to highlight the best of manufacturing and engineering in east Lancashire, when the prestigious business of the year award passed from one Barrowford-based company, ACDC Lighting, to another, Merc Engineering, both of which are located in my constituency. I have visited those companies, which are both tremendous examples of fast-growing smaller firms that are constantly innovating, winning new orders and expanding their operations.
In Pendle, those companies are not the exception to an otherwise gloomy manufacturing picture. There are other businesses, such as Protec in Nelson, which has just installed all the fire alarm systems for the Olympic games stadium and venues; Hope Technology in Barnoldswick, which produces top-of-the-range components for bikes used by the best cyclists; and Kirk Environmental in Nelson, which is a leader in green technology. I have enjoyed visiting all those local manufacturers, as such businesses drive the local economy and will get the British economy out of the state it is currently in.
As Pendle’s MP, my No. 1 priority is jobs and supporting our local manufacturers. As someone who ran my own small business until I was elected to the House, I understand the pressures that companies are under in these tough economic times. Last autumn, the Government launched the £1.4 billion regional growth fund, which has directed investment towards many manufacturers in Lancashire and the north of England. Particularly important to Pendle is the £8.8 million to reopen the Todmorden curve—a transport improvement that residents of east Lancashire have been calling for for more than 40 years.
The Government have also agreed to fund the Regenerate Pennine Lancashire bid for an additional £7.5 million in business support. Its Accelerating Business Growth in Lancashire scheme is designed to meet the needs of local manufacturing SMEs by offering them capital investment for expansion projects, including premises, plant and machinery. There was a successful bid from North West Aerospace Alliance, which I shall meet again in a few weeks’ time.
Those regional growth fund announcements came just two weeks after the Government said that they would back the bid from the Visions Learning Trust to open a new £18 million university technical college in east Lancashire—a huge investment in ensuring that our young people have the skills that employers are looking for. That is great news on top of new figures showing that 810 people have taken up apprenticeships in Pendle in the past 12 months—a 70% increase on the number in the last academic year and a bigger proportional increase than in either the north-west or the rest of England.
All this comes on top of policies such as cutting corporation tax and red tape for manufacturers, promoting exports and getting the banks to lend more money, but there are some areas where I believe that Ministers could perhaps go further, a crucial one being support for the aerospace sector. I am delighted to have just been elected as treasurer of the new all-party parliamentary group on aerospace. Aerospace is crucial to Pendle’s manufacturing base. The UK aerospace industry is the second largest in the world. It is worth more than £23 billion and employs thousands of people in Pendle in highly skilled jobs, working for firms such as Rolls-Royce, Euravia or Weston EU. That sector of the economy is vital to Pendle and growing in terms of orders and jobs, but the long-term future of the aerospace industry in the UK cannot be secured without a long-term commitment to research and development. Ministers are already working closely with trade organisations such as ADS on the issue. I hope that the Minister will propose specific policies to help the aerospace sector.
Another issue that I should like to discuss is empty property rate relief—a problem that, of course, stems from the previous Government’s reforms. It has been raised with me time and again by manufacturers in my area. John Getty, the managing director of PDS Engineering and the president of the East Lancashire chamber of commerce, recently singled this out as the biggest concern to many local businessmen. In east Lancashire, industrial unit after industrial unit has been pulled down because owners simply cannot afford the rates on old mills and buildings. The effect, when some of the small and medium-sized enterprises that I mentioned look to expand, is that there will be nowhere left for them to do so. I have written to Ministers on the issue many times. I appreciate that the Government have prioritised rate relief for small businesses for the time being, and that benefits more than 1,000 small businesses in a constituency such as mine. However, on behalf of the east Lancashire manufacturing community, I ask that the issue of empty property rates be looked at again in the near future.
In conclusion, with the exception of the two key issues that I mentioned, the Government have, over the past 18 months, made huge progress in supporting manufacturing, through their approach to investment in infrastructure, grant funding, taxation policy, skills and apprenticeships. Solid foundations for our economic recovery are being laid.
Chris Williamson (Derby North) (Lab)
I congratulate and thank the hon. Members for Hexham (Guy Opperman), for Warwick and Leamington (Chris White), and for Burnley (Gordon Birtwistle) and my hon. Friend the Member for Huddersfield (Mr Sheerman) for securing the debate. I have been greatly encouraged by the quality of the debate and the consensus across the Chamber. It gives me some hope that manufacturing does have a future after all.
This country has a wonderful manufacturing heritage, and the constituency that I represent in Derby was the cradle of the industrial revolution. It is home to the world’s first factory, and to Rolls-Royce and Bombardier—the railway industry has a great heritage there. Just outside the city there is Toyota, which is one of the biggest, if not the biggest, car manufacturer in the UK today. We have a great manufacturing base, a great heritage, and a great reputation in this country, and particularly in Derby, for high-tech manufacturing skills. Promoting manufacturing as an occupation of first choice for our young people is key. We need to do more to encourage young people with skills to go into manufacturing rather than the service sector or finance, as they have done.
I was encouraged by the Prime Minister’s commitment to rebalancing the economy in favour of manufacturing industry, and was particularly pleased when he brought his Cabinet to Derby to emphasise that commitment, but there was a rebalancing of the economy in the 1980s. The Government of the day turned their back on manufacturing to some extent and used financial services—the big bang in the City—as an alternative engine of economic growth. We were fixated on the financial services industry for far too long, and when the crash came we were overexposed as a consequence.
The Government have recognised, perhaps rather belatedly, the importance of manufacturing, and it is important that they demonstrate their commitment to it. I reiterate a good point made by the hon. Member for Pendle (Andrew Stephenson), who is the new treasurer of the all-party group on aerospace—I am its newly elected secretary, so we are certainly singing from the same hymn-sheet on that issue—about research and development. As the autumn statement approaches, it is absolutely key that the Chancellor seizes the opportunity to demonstrate the Government’s commitment to manufacturing and aerospace.
The UK is the second biggest aerospace centre in the world. If we are to retain that position, the Government need to demonstrate their commitment to aerospace through investment in, and support for, research and development. Although Rolls-Royce has its roots in Derby and is the city’s largest employer—indeed, in the past 12 months it has recruited 900 additional members of staff, which is extremely welcome news—it is, in the end, a global company, and has factories in all four corners of the world. We must not be complacent, and I reiterate the point made by the hon. Member for Pendle on research and development.
The other thing the Government must get right is procurement. I cannot contribute to a debate such as this without mentioning the Government’s decision to appoint a German company as the preferred bidder to build the Thameslink rolling stock, rather than Bombardier. It is not too late to revisit the decision, as they are only at the preferred bidder stage and, despite Minsters’ protestations to the contrary, the invitation to tender documentation gives the Secretary of State the opportunity to stop the process and retender. There is no reason why the retendering process would take two to three years, as he has suggested, because the procurement of new trains before and after privatisation was carried out in just six months.
I urge the Government to reconsider their decision, even at this late stage, because although smaller contracts will hopefully come Bombardier’s way, such as those for Southern trains and the eVoyager carriages, we could still lose the ability to design trains in Derby, and if we lose that we lose the ability to design trains in the United Kingdom as a whole. Winning those two smaller contracts might put off the day when Bombardier pulls out of the UK, but it might not secure the train-building industry long into the future. It is absolutely key that the country that gave the world the railways continues to be able to build the trains that run on British railway lines.
Hon. Members on both sides of the Chamber, myself included, have mentioned globalisation. Globalisation can be a threat or, as I prefer to see it, an opportunity. We need to seize the opportunities presented by growing markets in China, India, Brazil and other parts of the world. Although we should not seek to compete on low wages, we should seek to be ahead of the game when it comes to the high-tech skills that this country has in abundance. We must nurture those skills and invest in them through research and development and investment in education, by encouraging young people to go into manufacturing and by looking not only at the opportunities available through support for our railways, aerospace and other existing industries, but at climate change as another opportunity. Engineering skills could be the salvation for tackling climate change and creating huge new employment opportunities in our country through geo-engineering solutions, which are being spearheaded by the Institution of Mechanical Engineers.
I am fairly optimistic and delighted at the cross-party support we have seen today. I hope that Government Members will use their influence to persuade the Government to invest in research and development and reconsider their decision on the Thameslink rolling stock programme.
Jessica Lee (Erewash) (Con)
I am delighted to participate in this extremely important debate and thank the hon. Members and colleagues who secured it. I also thank my hon. Friend the Member for Hexham (Guy Opperman) for his fine opening speech.
The constituency of Erewash, which I have the honour of representing, is in the heart of the east midlands manufacturing base. The east midlands has the highest employment level in manufacturing in the United Kingdom. We have been manufacturing products in Erewash for over 300 years. It is the base for one in five of the 2,400 firms in my constituency. To put it another way, 30% of the jobs in Erewash rely on the manufacturing sector.
The range of products is also diverse, and it has developed as the technology has changed over the years. We have made everything in Erewash, from pencils to lace and drainage covers to railway carriages—the list goes on. Indeed, the town’s contribution to manufacturing has continued in peacetime and wartime. At the Stanton Gate works, 873,500 bomb casings were produced during world war two, and my late grandfather, who grew up and worked in nearby Nottingham, was an engineer on the local railways all his life and one of the many engineers asked to help in factories throughout the war, producing, making and helping us to win world war two.
One industry with a proud legacy in Erewash, especially in the town of Long Eaton, is furniture making. In recent years, there has been a resurgence in the trend for Union Jack-themed home accessories and furniture, and I confess that in the Lee household the occasional Union Jack cushion has appeared from time to time, but to me it is a great symbol, because it shows that we support British products and furniture makers, such as Meadowmead in Long Eaton. I am an active member of the all-party group on the furniture industry, and I will continue to do all I can to support the industry.
High-tech engineering and educational suppliers are also successful. We have companies such as TecQuipment, which provides sophisticated engineering training products that are then exported to universities around the globe. We also have Atlas Composites, whose carbon composites are used by top companies, also around the globe.
Being located between Derby and Nottingham, Erewash is a significant supplier to larger companies such as Rolls-Royce and Bombardier, and I note the comments of my hon. Friend the Member for Pendle (Andrew Stephenson) and am delighted to hear about the recently formed all-party group on aerospace. If an application form is sent to me, I shall happily join that group, as it is important.
Through the Industry and Parliament Trust, several MPs recently visited Rolls-Royce. It is an extraordinary site, and I encourage all Members to go. The hon. Member for Hartlepool (Mr Wright), who is seated on the Opposition Front Bench, also attended, and that day everybody was completely mesmerised and impressed by the company’s workmanship, expertise and groundbreaking work.
Indeed, Rolls-Royce is responsible for 2% of the nation’s GDP, and through its encouragement of apprenticeships and its employment, in particular, of skilled graduates from around the globe it has created a fantastic working environment. For the overwhelming majority of employees, once they start working for Rolls-Royce they simply do not want to work anywhere else, a fact that is reflected in the small number of people who ever leave.
The lace industry has also been important in Erewash, and I have spoken about it several times in the House, but I cannot let this opportunity go by without mentioning again Cluny Lace in Ilkeston, the last traditional lace manufacturer in the country. That company made part of the lace on the Duchess of Cambridge’s wedding dress, and we were honoured and delighted to participate in that great day.
I agree with the hon. Member for Derby North (Chris Williamson) that a debate about this topic could not really pass without local MPs mentioning Bombardier. Supply-chain firms in Erewash will be particularly affected by the decision, but we are all agreed in the House, and I am pleased that the Government take the view, that we must review the procurement rules that the previous Government put in place and ensure that we make the best for this country of the procurement process.
I think that I am the first woman MP to participate substantially in the debate, so I should not let this opportunity pass without mentioning women and encouraging them to go into manufacturing and engineering. I have been working with a school in Erewash, and we are looking to set up a scheme. We are going to have an open day, involving as many schools as possible, to show young women and girls currently at school why careers in manufacturing and engineering can be exciting for them—and the wealth of opportunities and interesting careers that they might not have considered.
I was delighted by the Government’s recent announcement of 5,000 new mentors to encourage women entrepreneurs. The scheme should include manufacturing as well, and I look forward to seeing how it develops.
In conclusion, I particularly welcome one other Government proposal: the “Make it in Great Britain” exhibition, which will take place at the Science Museum next year. We need to do all that we can to showcase what we make in Britain and see what we do best. I will be doing all that I can to take schoolchildren from my constituency to visit that exhibition.
We are united in the House about improving manufacturing. The Government have made a good start, but there is much to do. We must celebrate what we do best, talk up the whole of manufacturing in this country and build on those successes to create strong foundations for the future.
The Minister for Universities and Science (Mr David Willetts)
It gives me great pleasure to respond to the debate. I congratulate the hon. Members who tabled and secured the debate: my hon. Friend the Member for Hexham (Guy Opperman) who began with an excellent speech, my hon. Friend the Member for Warwick and Leamington (Chris White) and the hon. Members for Huddersfield (Mr Sheerman) and for Burnley (Gordon Birtwistle).
This is a very important debate, and I welcome the fact there has been very little partisanship. There have been a lot of shared themes, which I hope to touch on in my remarks. Perhaps the main difference is almost a temperamental one, between the people who take a more optimistic view and those who take a more pessimistic view. I am certainly with the optimists. We can be proud of the revival in our manufacturing sector that is already under way.
Instead of drawing attention to the overall statistics, perhaps I can reflect on the announcements that we have had this week, which tell us what is going on. Today, the Prime Minister has been able to welcome Toyota’s plans to build its new generation family-sized hatchback at its UK factory in Burnaston near Derby during his visit there. That investment of £100 million will secure many jobs. In addition, Airbus has today announced 200 extra engineering jobs at Feltham, and Nestlé has announced a £110 million investment at its Tutbury plant, which will involve 300 extra jobs. Those are today’s announcements. Yesterday, Coca-Cola announced a £50 million investment in a new bottling facility at Wakefield and other investments as well.
If one considers the build-up of announcements, there is clearly the sense that a revival is under way in our manufacturing industry. It has been very encouraging to hear from hon. Members on both sides of the House about the strong support that there is for manufacturing. There is a recognition that the future of our economy must include manufacturing, just as our proud history has manufacturing at its heart.
My hon. Friend the Member for Hexham made an excellent opening speech, and I shall briefly respond to two themes that he touched on, particularly as they were picked up by other hon. Members. He called for there to be a Minister for manufacturing. Let me make the role of the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), clear. Incidentally, he is not here to respond to the debate because Ministers are fanning out across the country today as a result of all the excellent news on manufacturing. The Prime Minister is in one part of the country, my hon. Friend the Member for Hertford and Stortford is elsewhere and, of course, the Secretary of State is somewhere else.
My hon. Friend the Member for Hertford and Stortford, who deals with business and enterprise, has the following responsibilities: aerospace, the defence sectors, the automotive sector, professional and business services and the delivery of the advanced manufacturing growth review. In addition, he is the architect of our next manufacturing summit in Bristol, and he has overall responsibility for manufacturing and materials. Although he does not have the word “manufacturing” in his ministerial title, he is for all practical purposes our Minister for manufacturing. Several Members have asked: who is the go-to Minister? He is the go-to Minister for manufacturing and he does an excellent job. Of course, the Secretary of State also has a clear personal commitment to manufacturing. My view, therefore, is that there is a key Minister in the Government with that responsibility and a Secretary of State with very strong personal commitment to the subject. We are all, as Ministers in BIS, working on this and trying to contribute in our different ways and with our different responsibilities, whether they be for universities, research, science, high tech, skills or apprenticeships.
A second question put by my hon. Friend the Member for Hexham concerned access to bank finance. That subject is raised regularly in the House, as I often notice in BIS questions. His particular point, which has been pursued by several Members on both sides of the House, is about whether we can do more to enable new banks, especially new small banks, to set up. One of the key recommendations in the report by the Independent Commission on Banking was that we should look at barriers to entry, which are too high. It should be easier for new entrants to come in and set up banks, and we are now pursuing that recommendation. There has already been a round table meeting with challenger banks—the banks that want to come in and do more. The Chancellor himself touched on the subject in a major speech on the subject on 3 October.
Given my responsibilities for research, high tech and science, I have been frustrated by the time it has taken to establish Silicon Valley bank, which originates, as its name implies, in silicon valley and is a specialist in venture debt that lends to start-up businesses at early stages. I was told that it took it a year just to assemble the paperwork that was necessary for the Financial Services Authority approvals process, and another year for the FSA to consider that paperwork. We in BIS, and the Government as a whole, with the Treasury in the lead, are absolutely persuaded by the argument that we need to think about whether we have ended up with a system that has barriers to entry that are too high. That is why we are looking to see how we can pursue the recommendations of the Independent Commission on Banking.
Guy Opperman
Would the Minister be interested in facilitating a meeting with the FSA and the Treasury? While I have no doubt that BIS may be fascinated by the idea of local banks and better business banking, the Treasury and the FSA seem a little more reluctant to oil the wheels, if that is the right term.
Mr Willetts
Perhaps such a meeting could be arranged through BIS or the Treasury. Lowering barriers to entry is one way of ensuring that a market is dynamic, that new entrants can come in and that innovation happens, and that is as true in banking as it is in the rest of the economy. My hon. Friend’s suggestion of a meeting is very welcome.
We heard a range of excellent speeches. I congratulate the hon. Member for Huddersfield on his contribution and welcome his support for Huddersfield university. Although my hon. Friend the Member for Weaver Vale (Graham Evans) is no longer in his seat, I pay tribute to the excellent work that he has done in support of Daresbury, which I have been happy to visit with him. It is a crucial R and D centre for the future where we are committed to strong investment and which has enterprise zone status. We heard from the right hon. Member for Wolverhampton South East (Mr McFadden)—
Mr Sheerman
The Minister said that we have a Minister for manufacturing; we will have to think about that, because some of us were not convinced. Two themes that have come out of the debate—I am sure that the Minister will get round to them—are the need for a long-term strategy for manufacturing and the role of Made by Britain. Does he endorse Made by Britain, and does he think that all Members of Parliament should find a fine design or product in their constituency? We are over halfway there, so will he support our going even further?
Mr Willetts
The hon. Gentleman says that he is not convinced. I think that if the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford, who has responsibility for business and enterprise, were here, he might have shed a quiet tear at that, because there he is, doing all this work in the Government and being responsible for all these sectors, including manufacturing and delivering the advanced manufacturing growth review. There are arguments about the titles that people should have, but the reality is that he does an enormous amount for manufacturing.
On strategy, if the hon. Gentleman looks at the growth review that we published with the Budget, he will see that there was a range of specific commitments, ranging from our advanced manufacturing review to commitments across a host of manufacturing sectors. We are doing further work on the future of manufacturing through the foresight exercise that my right hon. Friend the Secretary of State is leading. Manufacturing was a crucial strand of the growth review and there is now a forward-looking exercise in the foresight framework.
I will briefly take the House through some of the things that we are doing to strengthen manufacturing, which as I said were covered in the Government’s “The Plan for Growth”. Lowering business taxes is fundamental. That is why we are planning to cut corporation tax year on year. Although some people have criticised our decisions on the structure of corporation tax, it is worth remembering that we have legislated to extend the capital allowances and short-life assets scheme for plant and machinery from four years to eight years to improve the tax incentives.
We are also backing innovation. Several Members from both sides of the House have referred to the importance of the research and development base. I am particularly pleased that we have been able to draw on the lessons from Germany, which has been referred to favourably on both sides of the House, and to learn from its Fraunhofer institutes. Those were a model for the technology innovation centres that we are setting up with £200 million, even in these tough times. We have already identified some of those centres, notably in advanced manufacturing. Indeed, my right hon. Friend the Secretary of State is opening the National Composites Centre in Bristol today. That is the new home of world-class innovation in the design and manufacture of composites. We have also announced that there will be technology innovation centres in cell therapies and offshore renewables, and that there are more to come. We are trying to plug the gap between the pure research in universities and the commercialisation for which individual companies are responsible—the so-called valley of death. The technology innovation centres are one way in which we can plug that gap.
We are also committed to improving our performance on exporting. That is why we launched the national export challenge, a series of initiatives to help SMEs take the first steps to break into new markets. Currently, only one in five companies in Britain export. We want to increase that to one in four. That means reaching out to mittelstand businesses, or SMEs, that have not thought about exporting. That is why we have set UK Trade & Investment the target of doubling its client base to 50,000 businesses in the next three years.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I have heard a lot of compliments about UKTI. However, when I met my local enterprise partnership earlier this week, the concern was expressed that UKTI reacts to requests, perhaps from bigger companies, rather than having a proactive strategy. Do you have any thoughts on how that might change?
Mr Willetts
In the absence of Madam Deputy Speaker responding to that challenge, I will. The Prime Minister urges all of us in his Government to be as proactive as possible whenever we go abroad, ensuring that we are properly equipped with a sense of the key business opportunities that are relevant to the particular mission that we are on. We have asked UKTI to set out what we call a high-value opportunities programme to identify really big projects around the world where there are opportunities for British companies and suppliers to invest and provide. We are systematically reviewing the high-value opportunities provided by large-scale projects around the world, which we believe British companies can take advantage of by going out and battling for contracts. We are improving the tax system, we are backing R and D and innovation and we are committed to improving our performance on exports.
David Mowat (Warrington South) (Con)
I have been listening carefully to the Minister’s points about how his Department is helping parts of the manufacturing sector. Many manufacturers tell me that the big issue for them is differential energy prices. Can he assure the House that his Department is on top of that issue, and that we will not lose process manufacturing in particular to countries such as France and Germany, and of course to the far east, due to high electricity prices and high energy prices in general?
Mr Willetts
I can assure my hon. Friend that the Department is very well aware of the particular pressures facing energy-intensive industries, and we are considering them very carefully.
Mr Sheerman
The Minister has mentioned tax twice. When I talk to manufacturers and people in the business sector, they ask why the Government want a blanket cut in corporation tax rather than something that would actually give a tax break to innovators and entrepreneurs.
Mr Willetts
We are also providing specific support for innovators and entrepreneurs, for example by increasing the value of the R and D tax credits. We are doing specific things, but the coalition’s overall philosophy is that if possible, we like to bring down the basic rates of tax in a simpler tax system. I think that is an admirable objective.
I do not want to take up too much time, because I know that other Members still wish to speak, but I will briefly go through some of the other things that we are doing, in addition to the lengthy list that I have given—I will not repeat it, but I am sure hon. Members agree that it is very impressive.
Several hon. Members have mentioned apprenticeships, and we can be very proud of the rate of growth in their number that we have delivered. We now estimate that the really extraordinary figure of 440,000 apprenticeships have started in 2011. I pay tribute to my hon. Friend the Minister for Further Education, Skills and Lifelong Learning, who we all know has an intense personal commitment to apprenticeships. We are absolutely committed to their being of high value. Level 3 equivalent is a minimum, and in July the Prime Minister announced a £25 million fund to support up to 10,000 advanced and higher-level apprenticeships in companies, particularly SMEs.
Of course, we announced only last week a package to encourage small firms to take on their first apprentice, with an incentive payment of £1,500 for up to 20,000 apprentices aged 16 to 24. There are still too many regulatory burdens and too many problems of red tape, and we have made it clear that companies do not need to add extra health and safety burdens to the basic framework that all employees should have. We are committed to reducing bureaucracy, speeding up processes and boosting employer engagement in apprenticeships.
We are also committed to supporting and improving the image of manufacturing and engineering, which several Members have mentioned. There is much mythology about manufacturing and engineering. I am sure that Members of all parties find when they go around manufacturing facilities that they are very different from the oily rag image of manufacturing that too many people still have. They are sophisticated places in which highly skilled workers work with large amounts of sophisticated equipment. That is why, with my responsibilities as Minister for Universities and Science, I am very pleased with the increase in the number of science, technology, engineering and mathematics graduates.
Another announcement just in the past week is that the university of Lancaster is reopening its chemistry department, which was closed in 1999, because of the increase in the number of students coming forward with A-levels in the relevant subjects and because the university believes that in our new regime, it will be able to attract more students as it breaks free from the quota controls of the past. We have secured further investment in skills that are related to the improvement in the image of science and engineering.
As has been mentioned, there is also the new Queen Elizabeth prize for engineering, launched by the Prime Minister, the Deputy Prime Minister and the Leader of the Opposition earlier this month. We thank the range of private sector partners who have contributed to the endowment of the prize fund. There will now be a £1 million prize, awarded biennially by the Royal Academy of Engineering.
Mr Sheerman
The Minister mentioned £1 million and we have 1 million young unemployed people. Will he join my right hon. Friend the Member for South Shields (David Miliband) in his call for every young unemployed person to be given training and a job? Is there not room for such an imaginative proposal, which would boost manufacturing and everything else in our country?
Mr Willetts
With both the Work programme and the increase in the number of apprenticeships, we are discharging our obligation to young people. Of course, more can always be done and we are absolutely committed to doing everything necessary to help young people into jobs.
Let me conclude by assuring the House that the Government are committed to encouraging and supporting British manufacturers. We are determined to create the environment in which they are free to thrive and compete in a global marketplace. The points that have been made by hon. Members, and particularly by those who called the debate, are well made. The Government absolutely understand the importance of skills, innovation and R and D, and the importance of ensuring that the barriers to bank lending are torn down. All that added up makes it clear that we have a strategy for manufacturing, which will be at the heart of our agenda for rebalancing the economy. I very much congratulate hon. Members on their interventions, which I welcome.
Mr Iain Wright (Hartlepool) (Lab)
I agree with the Minister that this has been a good and important debate. Manufacturing is not discussed in the House as much as it should be, which is perhaps a reflection of the perception of manufacturing more widely in the country. People could be forgiven for believing that Britain used to make things but does not any more. I therefore congratulate the hon. Members for Hexham (Guy Opperman), for Warwick and Leamington (Chris White) and for Burnley (Gordon Birtwistle), and my hon. Friend the Member for Huddersfield (Mr Sheerman), on securing this interesting and vital debate.
I agree with the Minister that the debate has been relatively consensual—the House should not worry; I will break that. The debate has been split not by party, but between optimists and pessimists. I am a bit of both. I am proud of the fact that our nation engineered the first industrial revolution. We became the workshop of the world. By the eve of the first world war, we produced one quarter of the world’s total manufacturing output.
To go back to my earlier comments, there seems to be a consensus out there, put forward by the media, that this country has somehow lost its grip on manufacturing and closed its factories one by one or sent them over to China. Today’s debate has made a good start in dismissing such myths, because we still make things. Indeed, as the Minister rightly points out, there is much to be optimistic about. Output from British manufacturing reached an all-time high, even adjusting for inflation, not in 1867 or 1907, but in 2007. In the decade 1997 to 2007, UK manufacturing achieved a 50% increase in labour productivity, which is the best rate of progress we have seen in our country’s history. Despite that perception out there, we remain the world’s seventh largest manufacturing nation. Our manufacturing is based predominantly on high value-added activity, including the production and manufacture of toilet rolls—in that high value-added activity, we are world leaders.
In high-technology manufacturing, the UK is second only to the US in the developed world. In some industrial sectors, our companies are some of the best anywhere on the planet, including in aerospace, which several hon. Members mentioned, and in automotives, oil and gas, chemicals, pharmaceuticals and bioscience.
As the hon. Member for Hexham will know, the north-east region has a world-class, efficient plant in Nissan, with all the supply chain opportunities that that provides. As the Minister rightly pointed out, today’s announcement that Toyota will build its new car plant in Burnaston is particularly pleasing, especially after the disappointments in that city for Bombardier, on which my hon. Friend the Member for Derby North (Chris Williamson) has been an absolute champion.
We in the north-east have always valued manufacturing. My constituency of Hartlepool has been particularly strong from the start of the industrial revolution in the 1840s and 1850s right through to the post-war era. We have huge potential now in some world-class sectors such as offshore wind, nuclear and biotechnology, but we need to grasp the opportunities. Global trends mean that British manufacturing should have considerable opportunity in the next few years. Rising incomes for households in many developing economies will create billions of extra customers to whom British firms can sell their goods—a point that was made by my hon. Friend. The need to manage global resources more efficiently and the move to a low-carbon economy will provide new markets for new and innovative products designed by ambitious firms in environments conducive to stable and certain R and D and capital investment. New technologies such as life sciences will revolutionise health care and the way in which drugs are developed, patented and brought to market. Despite the difficulties and issues that I have with the Minister about the science budget, I know that he is a champion of science, and Britain, with its strong science base, should be a leading global player in such fields.
Today’s debate has allowed the argument to be somewhat more sophisticated than is normally the case. We often see the argument in very blunt terms: we used to do manufacturing, but now we only do services, and we need to go back to making things. As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said, there has been a tendency in the structure of such debates to look in the rear-view mirror. In the past 60 years, this country has often chosen the stark model of economic sectors, selecting a service-based economy over manufacturing. That has meant that, despite our remaining a strong manufacturing nation, the sector constitutes only 11% of our economy, compared with 20% for Germany. As my hon. Friend the Member for Huddersfield said correctly, we have lurched too far away from manufacturing over the last 30 to 40 years. Manufacturing should constitute a much bigger share of our economy, but it should not be an either/or situation; nor should it be at the expense of our service sector. There should not be an artificial distinction, because services growth boosts manufacturing, and vice versa.
I can think of no finer example than Rolls-Royce, whose Derby plant I visited last month, as did the hon. Member for Erewash (Jessica Lee). The company is synonymous with British excellence—indeed global excellence—in engineering and manufacturing, but as we found out on our visit, it now derives half of its revenues from services, in providing long-term customer service contracts. The long-term revenues to be derived from such services are reinvested in manufacturing capability.
Mr Sheerman
I just want to correct a possible misapprehension. The members of the all-party manufacturing group are not rear-view mirror people: we actually believe that our manufacturing sector is superb in many aspects. It is just that we want to grow it and invest in it, as well as to encourage more entrepreneurs to lead it. That is the purpose of this debate. We are not negative: we are positive, and I congratulate my hon. Friend on choosing a product made by Britain, and I hope that every hon. Member will join the Made by Britain campaign.
Mr Wright
I absolutely agree, and my hon. Friend and I share the view of my right hon. Friend the Member for Wolverhampton South East that we should be bold and ambitious about manufacturing. We do not hark back to the past, but we want to engender that spirit of enterprise, innovation and ambition to ensure that we are the best engineering nation anywhere on the planet, that people can go into a career in manufacturing engineering secure in the knowledge that it is rewarding and produces products that we can sell to the rest of the world, and that Britain leads the world in that area.
Guy Opperman
May I take the shadow Minister back to the future? Does he agree that the idea of local banks, as outlined by several hon. Members, and an industry bank such as KfW, should be supported by Opposition Members?
Mr Wright
I listened closely to what the hon. Gentleman said in his excellent contribution, and in a moment I will mention the problems that companies—especially manufacturing companies—have in accessing funds that would allow them to grow, especially in export markets. I have a particular suggestion to put to the Minister on whether the Government are trying to do anything about that.
I hope that I have mentioned the huge potential and the enormous scope for us to be a leading player in manufacturing and engineering in the 21st century. None of that is inevitable, of course, and nor will it happen by chance. In the era of the most intense global competition imaginable and with economies such as China—known for its low-cost manufacturing—anxious to move up the value-added chain, Britain needs to put in place the best possible policy framework to ensure that our ambitions are realised. In the words of Richard Lambert, the former director-general of the CBI, the Government, particularly the Department designed to champion British growth, enterprise and industry, need to provide
“a vision of the kind of economy we want to have in ten years time and what it’s going to take to get from here to there”.
Instead, however, a leading global manufacturer has stated flatly:
“The government is not giving us a reason why we should be in the UK in 10 to 15 years’ time.”
The Government are not doing all that they can to allow British manufacturing to fulfil its potential. Worse than that, decisions taken by Ministers in the Department for Business, Innovation and Skills in the past 18 months have ensured that British manufacturing has taken a backward step. Our economy has grown by just 0.5% in the past year compared with 1.5% in the US and 2.3% in Germany. Export activity is stalling, and both output and sentiment are at their lowest levels since the height of the recession two years ago.
That situation is confirmed by today’s publication of the CBI’s industrial trend survey, the briefing on which reported:
“UK manufacturers reported a weakening in order books in November, with export orders in particular deteriorating significantly… As a result, firms expect a fall in production over the coming quarter”.
Not all of this is the Government’s fault, but an awful lot of it is—far more than BIS Ministers will acknowledge. BIS, charged with being the Department for growth, is weak and out on a limb in Whitehall. Whether trying to secure a stimulus for the economy—we will see what happens on Tuesday with the autumn statement—or support for the UK train manufacturing industry, the solar panel industry, Sheffield Forgemasters or long-term investment in oil and gas, the Secretary of State always plays the game but always loses. Worse than that, though, he always loses by putting the ball in his own net. The CBI’s director-general, John Cridland, described the appalling decision, which the House debated yesterday, on feed-in tariffs and the threat to the solar panel industry as
“the latest in a string of government own goals”.
Richard Harrington (Watford) (Con)
I agreed with much of what the hon. Gentleman said until he claimed that the Government should take much of the blame over the past few months. I must return his mind to the fact that more than 1 million manufacturing jobs were lost under the tutelage of the previous Government. I would like to hear his comments on that.
Mr Wright
I do not know whether the hon. Gentleman has been following my comments but, over a 40 or 50-year period, we have lurched too far away from manufacturing to the service sector. In the past 10 or 15 years, though, productivity in manufacturing has risen faster than ever in this country. My right hon. Friend the Member for Wolverhampton South East touched on these matters. Given the rise of China and other players, globalisation and the fact that we were the first country to industrialise, it was almost inevitable that there would be a relative decline. However, our manufacturing industry has declined too far, too fast, and we need to do something about that on a cross-party basis. Nevertheless, there has been great cause for optimism over the past 10 to 15 years.
Mr Sheerman
This has been a refreshingly all-party discussion but I want to come back to feed-in tariffs. The industry in green technology and green innovation is growing dynamically and people in my constituency in the business know that the feed-in tariff had to be modified, but for God’s sake why not give them six months to adjust, rather than allowing companies to go out of business and lose all that growth?
Mr Wright
My hon. Friend is correct, and to conclude this part of my speech, I shall quote the director-general of the CBI with specific regard to that decision on feed-in tariffs, which was taken without notice to the industry. In keeping with our football metaphor, the director-general said:
“Moving the goalposts doesn’t just destroy projects. It creates a mood of uncertainty that puts off investors. They wonder what’s coming next…Industry trust and confidence in the government has evaporated. This bodes poorly for investment in future initiatives…A new industrial policy needs to recognise the real-term costs of bad decisions and should set out a clear path that investors understand and can believe in.”
We certainly agree with that, as the country has not got the clear strategic direction we need from this Department. We sometimes get warm words; we often get welcome, albeit ad hoc, announcements. Industry, however, is uncertain of the strategic direction in which the Government and this Parliament want to take the country in manufacturing.
Mark Hendrick (Preston) (Lab/Co-op)
Coming back to the point about job losses, many manufacturing jobs were lost under the previous Government over the 13-year period, but some of them have moved, as the Minister said, to the far east and elsewhere. Many of these jobs were not particularly high-skilled, and modern technology and manufacturing has moved on. The problem was that those jobs were not replaced quickly enough by more modern, hi-tech skilled jobs. That is the challenge the Government must face for the future.
Mr Wright
I heartily agree with my hon. Friend. My questions for BIS Ministers relate to having an active industrial policy. Where is the assessment of the sectors in which Britain has unique competitive advantages and of where we can sell our unique products to the rest of the world rather than lamely following the rest of the pack? Where are the clear milestones along the way that would allow investment and business decisions to be taken with some degree of certainty and stability?
A recurring theme of today’s debate has been the role of research and development and associated capital allowances. Again, I want this country to be the best place for any investor in manufacturing to invest in research and development, but R and D tax credits, the industry tells me, are not working. What can we do on capital allowances and R and D spend? When can we expect some clear vision from the Government about the road map that is needed as part of an effective and active industrial policy? We have had welcome announcements about funding for technology and innovation centres—I think the Minister mentioned them in his remarks—but the ad hoc decision is a diluted version of what was set up and planned under the Labour Government, with businesses now unclear about how they fit into the bigger picture. The Department promised us its manufacturing framework document over a year ago, but it has still not been published. Where is it?
Another common theme has been the concern—expressed by the hon. Members for Hexham and for Burnley (Gordon Birtwistle)—about the inability of manufacturers to secure access to finance for growth. The Secretary of State’s initiatives have not worked. Project Merlin has not secured its aims and the regional growth fund is not delivering on the ground. In the space of 55 seconds—I timed it—in yesterday’s debate, the Secretary of State went from claiming that as a result of the RGF,
“factories have been built and the jobs are being created”—[Official Report, 23 November 2011; Vol. 536, c. 333.]
to acknowledging, in response to the Chair of the Select Committee on Business, Innovation and Skills, that he could not provide a figure on the number of jobs created by that fund at all. Will the Government look again at this crucial issue of access to funding?
Many companies are sitting on a pile of cash on their balance sheets, largely because they have little confidence in economic prospects, but is anything being done by this Minister and the Department to free up some of that cash to provide much needed finance to manufacturers? I hope that the Minister will intervene to provide a degree of clarity on that; otherwise, I am happy to wait for the Chancellor’s autumn statement on Tuesday.
Several hon. Members mentioned the huge opportunity for export markets. We have been behind the curve in emerging markets for some time. The CBI and Ernst and Young have just published a report, which demonstrated that UK businesses tend to rely on the US and continental Europe for their main export markets. The report quotes the chairman of a Mexican automotive parts manufacturer, stating:
“Overall I think the UK and its companies should pick the right battles and the right countries, and focus on specific sectors within those markets. There’s a lot of goodwill out there that’s not been exploited.”
Will the Minister respond to that and set out what has been done—he touched on it in his opening remarks—to strengthen our export capability? Time and again, firms say that they cannot exploit their potential by gaining access to export finance, that the range of such finance is limited and that things such as the export credit guarantee do not specifically address business needs. How can the Government address that?
Industry states that the supply chain to UK manufacturing needs to be improved. That is crucial in ensuring that British manufacturing is competitive in global markets throughout the world. The Secretary of State acknowledges that. In his speech to the Policy Exchange last month, he talked about how
“Government can support UK supply chains across a number of sectors critical for future growth.”
Since then, however, we have had no information or detail, or even an announcement as to when we might be given any. Industry is crying out for that as a means of boosting its competitiveness, so it would be helpful if the Minister could provide further detail.
Mr Bailey
Given the potential to expand the supply chain in the west midlands through the Jaguar Land Rover development and the possible repatriation of the supply chain for many of the Japanese manufacturers because of the problems in Japan, does my hon. Friend agree that the Government must come up with measures to bridge the capital funding gap, so that small businesses can exploit these opportunities?
Mr Wright
I entirely agree. One of the central themes of my remarks is that we have a huge opportunity, and that in the long term we can thrive as a leading manufacturing nation, but first we must overcome some very serious short-term difficulties involving finance and both domestic and international demand. Despite the warm words and fine rhetoric from the Government, I am not convinced that we are addressing the issues that industry wants us to address.
Manufacturing can play a leading part in Britain’s 21st-century economy, but in order to succeed in the modern era we need an active industrial strategy of partnership, where the join between industry and Government is not visible. Instead, we have a Department and a Government who lurch from one ad hoc announcement to another, via a series of wrong industrial policies. We need something better and more ambitious, so that we can tap into this country’s enormous potential and ambition in manufacturing, including in innovation. I want Britain to be the best place anywhere in the world in which to carry out manufacturing, but in order to secure that for the long term we need Government to act now.
John Stevenson (Carlisle) (Con)
I am delighted to have the opportunity to take part in this important debate, and I congratulate the Members on both sides of the House who secured it. The subject is central to the economic well-being of this country. Manufacturing matters both locally and nationally.
On the local scene first, in my constituency of Carlisle there are five major manufacturing plants, as well as many smaller manufacturing businesses. Those five major plants are big employers; between them they employ between 3,000 and 4,000 staff, producing for national and international markets world-class products, such as Pirelli tyres, Carr’s water biscuits, Quality Street—whose tins of sweets we all have at Christmas—and, most important of all, the humble custard cream. Manufacturing also matters nationally, as it is a key part of our past and must be a key part of our future. We have to start making things again.
It was interesting to hear the shadow Minister, the hon. Member for Hartlepool (Mr Wright), talk about being an optimist and a pessimist, because before this debate, I concluded that our country has reasons to be pessimistic, reasons to be realistic, and, most important, reasons to be optimistic. If we are pessimistic, we can look back and consider that in 1980 manufacturing accounted for 24% of our economy, but the figure now is just 11%. Over the last 14 years we have lost 1.7 million jobs in manufacturing. We now rank between the sixth and the ninth largest manufacturing country, and we are sliding down that list. We rank 18th highest for machine tools investment, which is lower than Mexico. Germany has nine times more investment in plant and machinery than the UK, and many areas of our manufacturing have completely disappeared or have greatly reduced, such as textiles.
We have to be realistic. This country has less than 1% of the world’s population and we are no longer the engine-room of the world. Other countries will inevitably grow their manufacturing sectors and become larger manufacturing producers than us, and we have to accept that. We also have to accept that low-cost countries are hard to compete with in many ways. Technology and productivity also mean that fewer workers will often be required to produce the same amount of output. Although we must not lose sight of the fact that manufacturing is only part of our economy, it is important. Our trade gap was £100 billion but that reduces to about £37 billion when we take into account the surplus from services.
We have reasons to be optimistic about the future of manufacturing: Britain remains a major manufacturing country; manufacturing contributes £140 billion a year to our national economy and provides 55% of our exports; we remain a major force in aerospace and pharmaceuticals; and our manufacturing industry is innovative. We often forget about the food and drink industry, but it is our largest manufacturing sector, producing 15% of our output. It also produces 8,000 new products annually and it has survived the recession extremely well. Indeed, by 2017 it will need to recruit about 137,000 people just to replace those retiring.
We also need to take into account investment. There is investment going on in this country: £500 million from BMW; £192 million from Nissan; and the £55 million that Coca-Cola announced just yesterday. Business does want to invest in manufacturing and it wants to invest in Britain. I am pleased to hear the Minister being positive about manufacturing and demonstrating that the Government are interested in manufacturing and want to be proactive. I congratulate them on the “Make it in Great Britain” campaign, which is to be warmly welcomed.
We must also remember that the nature of manufacturing is changing. It is becoming more high-tech and more skilled, and that might be favourable to a country such as ours. In the future, there will be growing markets. We have talked about the BRIC countries—Brazil, Russia, India and China—but other countries in Asia give us opportunities for the future. As countries become wealthier, there is a diminishing gap between the emerging and the mature markets. That also gives us an opportunity to be more competitive in the global market and to tackle the new markets that are being created. So I believe that there are reasons to be optimistic about the future. To misquote Mark Twain, the reports of the death of manufacturing are greatly exaggerated.
What can we do and what do we need to do to ensure that British manufacturing has a prosperous future? Clearly there is no panacea, but a combination of issues and ideas can help manufacturing. Undoubtedly, the Government have an important role to play and it is good to be reassured by the Minister that they are aware of the issues in manufacturing and want to support it. I am talking about things such as reducing unnecessary regulation, adopting a sensible tax regime, the Government supporting, talking about and promoting manufacturing, and helping the supply chain and helping with energy costs. The Department for Business, Innovation and Skills is to be congratulated on its support for that.
We have had real successes. On skills, apprenticeships are being created up and down the country. The number has increased by 300 to 1,000 in my area, and that is to be welcomed. We have also seen the expansion of the university technical colleges and the targeted funding through the regional growth fund—for example, £2 million is going into Pirelli, with its plant in my constituency. Central Government form just one part of government; local government, which is another part, also has a role to play, for example, through the planning system. I welcome the changes in that area, but local government must take those opportunities, and be sensitive to business and help it. Local authorities are often property owners and they also have an opportunity to help business and support its development. Industry must also help itself. It must take responsibility for research and development investment, long-term planning and the training of its staff, and it must help to promote its own image. Engagement by the industry with councils, schools, colleges and universities is equally important.
I shall conclude by saying three things. First, I fully support and endorse the idea of my hon. Friend the Member for Hexham (Guy Opperman) that there should be a Minister for manufacturing. Such a person would be the champion for manufacturing, working across Departments and ensuring that manufacturing is heard and has a loud voice within government. Secondly, education and skills are vital, and I know that the Government are working hard in that area. I am talking about skills that industry actually needs: the skills that will help us to develop our manufacturing sector for the future. Finally, probably the most important thing we need is a cultural change. We need it in Government at a national and local level, in schools, in the press and in the public’s view of manufacturing. If we have a national cultural change, I believe that manufacturing can have a prosperous future.
Craig Whittaker (Calder Valley) (Con)
As more than 19% of the people who live in the Calder Valley work in manufacturing, it is no wonder that I spend so much of my constituency time visiting fantastic manufacturers and local businesses. If the hon. Member for Huddersfield (Mr Sheerman) classes Huddersfield as the cradle of manufacturing, without question Calder Valley is its family home.
We have not only many small niche and high-end manufacturers who supply locally and internationally but many world-leading firms that fly the flag for Britain. They include companies such as Heights, which supplies graphic arts equipment to major photographic companies, such as Kodak and Fuji, and Calrec, which supplies high-quality audio consoles to television studios all around the world, even to Japan. Hon. Members will all be pleased to know that the consoles that allow the nation to watch “The X Factor” every week come from Calrec in Hebden Bridge. We also supply 40% of the European market’s caravan industry with caravan looms made in Elland by BCA Leisure. They are Great British companies, flying the Great British flag. The fantastic thing that I am hearing from our local manufacturers is that we really are starting to fly, especially those who manufacture to export.
The absolute evidence of that is the huge investment we are seeing in new machinery, jobs and factories in the local area. No fewer than four brand-new factories are about to open. Boxford Ltd, which manufactures computer-aided design—or CAD—based lathes for education is about to move into its purpose-built £6 million new factory next week. That was delayed by a month because of a huge order received from Argentina, which was not following the lead of America or Europe in the way that the hon. Member for Hartlepool (Mr Wright) suggested earlier.
Decorative Panels is in the process of building its £8.5 million factory to incorporate two new factories for production and it will be up and running in April. KT Hydraulics should also be fully operational by February with its £2.5 million factory and Heights, which I mentioned earlier, has just got planning permission to double the size of its current factory up in Wainstalls. That is all evidence that when companies are stable and low geared, they make a difference to our economy.
There is a but, however. Although the companies are doing well and investing in our future, this really is a tale of two halves. At the business breakfast forums I hold every eight weeks—I have done so for the past three years—there has been a unanimous chorus about the banks. Many Members have mentioned the banks and how they are doing business. The banks would have us believe that they are lending money to businesses and I have no reason to doubt them, but the only problem is the conditions that they are imposing on our businesses, normally at huge cost.
I recently visited a local manufacturer that is a subsidiary of a larger world player in electronics. It supplies a large proportion of the Korean market and 20% of the Japanese market and recently got a fantastic deal from a bank that perfectly met its business needs. The bank was the Silicon Valley Bank in California. Why? Because in the words of the managing director of that company, it totally understood the business and its business needs.
I was also asked recently to attend a meeting with another local manufacturer and its bank manager. The company borrowed £100,000 several years ago to buy a building and a further £50,000 more recently to expand the business. Business is up by 20% this year. After sitting through the meeting for two hours listening to the bank manager sing the company’s praises and even saying he wished all his customers were like it, I left for another meeting only to learn later on in the day that the bank manager had said after I had left that the bank would like to take a debenture over its fixed and floating assets and have a joint and several guarantees from the directors. It was explained to them that that was all to the benefit of the directors as it would move them down the queue when the bank came asking for its money back. That is the type of thing that I hear week in and week out from my manufacturers.
Calder Valley manufacturers are among the world’s best. Indeed, in many cases, they are the very best at what they do. They do not want a hand up or handouts—just a plain, old-fashioned level playing field. They tell me week in and week out that they will do their best to get on and play their part. We need the Government to put pressure on our banks to look at their practices and to get to know intimately what their local customers do. For far too long, business account managers in banks liaise with customers but then decisions about financial transactions are made by faceless people who are often miles away and have no idea or clue about what the businesses that are asking for the loans do. That needs to change. If it does not, the manufacturers that are still in business will turn more and more to banks such as the Silicon Valley bank, which, in the words of a Calder Valley managing director,
“totally understood our business and our business needs.”
The current situation cannot be good for manufacturers, business or the country as a whole.
We accept the need to charge full business rates on empty buildings. That was mentioned earlier and would have been my third example had I more time. Some businesses might need to benefit from an extension or a deferment plan; otherwise some of the businesses that are really struggling are going to fold. It is clear that our manufacturers in Calder Valley are a beacon for our economy. Let us make sure that we can facilitate greater growth by listening to our manufacturers, by putting pressure on the banks and by helping manufacturers when they need support.
Mike Weatherley (Hove) (Con)
I shall be brief and hope not to take up the full eight minutes I have been allotted. I want to concentrate on smaller manufacturers. My hon. Friend the Member for Warwick and Leamington (Chris White) might be interested to know that I come to the debate with a certain amount of expertise. First, I am a chartered management accountant and that profession is geared towards manufacturing. In addition, I was previously the owner and finance director of a manufacturing company in East Sussex. While I was there, we won a Queen’s Award for Export, a Queen’s Award for Enterprise, and Sussex company of the year. The company exported to 48 countries worldwide and had five satellite offices overseas. I pay tribute to my previous business partners Hugh Burnett and David Westcott and to all the staff at Cash Bases.
The two areas I would like to highlight today are staffing and finance. When I owned that company in the late ’90s we had enormous trouble recruiting staff at all levels. We even laid on buses from outlying areas. That was in the boom years after the Conservatives had put the economy on a good financial basis but the shortage of both skilled and unskilled workers was exceptionally high. The fact that our education system was, and almost certainly still is, geared towards service sector jobs rather than traditional engineering and machine operation is to our detriment. I recognise many of the points that the hon. Member for Huddersfield (Mr Sheerman) made about education, so I shall not revisit them. I appreciate the apprenticeships that the Minister mentioned earlier, but we need more of those to cover the skills gaps.
A far more worrying issue, which is a huge hindrance to growth generally but manufacturing in particular, is the availability of funds, which my hon. Friend the Member for Calder Valley (Craig Whittaker) mentioned. The banks can give very small loans but when the requirement creeps over the £10,000 mark, it gets very difficult. The enterprise finance guarantee scheme is supposed to fill the gap between equity investment and the lower levels at which banks are lending, but it fails on two counts. First, the banks do not like it and will not lend with the 25% risk factor. Secondly, the amounts being loaned are just too small.
There are 4.8 million SMEs in this country, but the Government are currently targeting loans at only 6,000 for this year. In comparison with previous years, the amount of funding has decreased. There was £1.3 billion in 2009-10 and £700 million in 2010-11, and the figure has gone down to £600 million for 2011-12. They are not just grants; they are loans that the Government get back.
I recognise what the right hon. Member for Wolverhampton South East (Mr McFadden) was saying about the creative industries. To my knowledge, not a single small firms loan guarantee has been given to the music industry, and that is a great shame. In the first half of 2011, just 1,779 firms were successful in obtaining such loan guarantees, and the average amount is just under £100,000 per loan.
My second point is the funding gap. Anything under £5 million is difficult to finance. When I purchased the company in Newhaven, East Sussex in 1997, we bought it for £4.2 million. The venture capital company that backed us then has said that it would not back a similarly low investment again. Anything under £5 million is considered totally uneconomic. That and the funding for small businesses trying to grow our industries need to be addressed.
Exports are another financing-related issue. I was pleased to hear what the Minister said about the Government’s growth targets. I will certainly hold the Government to account to try to reach the levels that we would like to achieve. However, funding for exports is not balanced sufficiently when compared with inward investment. Of course, inward investment is good for a short-term fix for jobs, but we must substantially address the fact that exporting is an important part of any recovery in the long term.
In summary, the enterprise loan guarantee scheme must be improved. The 25% collateral that the banks require puts them off making proposals. Indeed, the amount available under such schemes must be increased to get closer to where equity investment becomes sufficiently realistic. Lastly, let us not forget the staffing implications. We must gear towards manufacturing, not just the service sectors.
Mr David Ward (Bradford East) (LD)
We have heard advice to not go back in time, but I should like to go back 170 years to 1840, when two thirds of the country’s wool products were made in Bradford. In fact, by 1850 it was the world capital for wool. In 1876, when Sir Titus Salt died, 100,000 people lined the streets during his funeral to commemorate his work. Now, of course, Saltaire village is a world heritage site, but the huge mill closed down in 1986.
Some hon. Members might be aware of the Jowett motor car, which was produced in Idle in Bradford. Idle is where I live. I was in fact, yes, the Idle councillor for 26 years. Jowett closed and was taken over by International Harvester, which closed in 1983. I get quite cross when I hear people who are old enough to remember the ’80s recession compare this one to that one. There is no comparison. When International Harvester shut, the council estate in the ward that I represented had 70% male unemployment and men who did not work again and had children who did not work. That was the scale of things in those days.
I shall explain the relevance of those two examples. Salt’s mill was brought back to life by the brilliant work of the remarkable Jonathan Silver. It is now the home of the Saltaire art gallery, where David Hockney has an exhibition. More pertinent to the debate is the fact that it is the home of Pace plc, which is the largest Yorkshire technology company and has more than 500 staff there. The International Harvester site became a large Morrisons complex, with a shop for itself and a large retail outlet. Particularly important to this debate is the fact—not many people understand this—that Morrisons is a large food manufacturer. In fact, it provides 5,000 food manufacturing jobs. Those are examples of two important sites that were part of Bradford’s previous manufacturing glory and have had a second life.
I ought to compliment both Morrisons and Pace on the fact that, like Titus Salt, they are reinvesting in the community. Top graduates from Pace visit schools in our deprived communities as part of the Teach First programme to put something back into the community. Morrisons offers a university degree in food manufacturing, and is providing work for 1,000 homeless people across the country. The textile industry still exists in Bradford. We have Haworth Scouring, which is the largest wool-processing business of its kind in the world, and some 70% of its produce goes to China for carpets.
I praise Labour as much as I possibly can whenever it is warranted, to try to ensure that I have some credibility when I point out the things that it did wrong. In Bradford, between 1998 and 2008, we lost 15,000 manufacturing jobs—or 40%. That was at a time when there were 40 successive quarters of growth in the economy. I say that not just to have a go at Labour, but to point out why this debate is crucial. I do not for a second believe that that was the deliberate intention of the Labour Government; it happened in error as a result of neglect. We need to understand why this debate is so important; it is so that we have a focus on the future, as was said earlier, and the future must include manufacturing.
Bradford is not just about manufacturing. It has a financial services sector, and that, thank goodness, kept us going through some of the dark days. There is Yorkshire building society and Provident, which was formed in 1880 in Bradford. Provident’s representatives were here yesterday, along with representatives from Westfield and Morrisons, to sell Bradford to the City.
We are UNESCO’s first city of film; we have a tourism offer; and we have wonderful theatres, universities and colleges. We are not just about manufacturing, but the future of Bradford must lie in a successful, thriving manufacturing sector. We have the largest single-site chemical plant in the UK, but most of the manufacturing businesses—71%, or 1,300 of them—have fewer than 10 employees. The newly created Bradford and Airedale Manufacturing Alliance is contributing to the regeneration of the manufacturing industry through networking, providing new business opportunities, looking at co-operative working, and the spreading of best practice, advice and guidance. There is very much a renaissance taking place.
To conclude, as a Bradford MP I have a duty to speak out and remind Members of the history of places such as Bradford. Without manufacturing, there would have been no Bradford as we know it, and manufacturing must be an integral part of the future. The message to the Minister is please not to let places such as Bradford down. Bradford is ready to rise to the challenge, and to make its contribution to rebalancing the economy. It is a new dawn in Bradford, but in that new dawn manufacturing must be centre stage. I understand that manufacturing is 3% of the economy in London; it is 13% in Bradford. A total commitment to manufacturing is therefore not only part of the very welcome rebalancing from the service sector to manufacturing, but a crucial part of rebalancing from the south and the south-east to the regions. That is long overdue, and those of us with an interest in manufacturing, and all of us with an interest in the north, are impatient for that.
David Morris (Morecambe and Lunesdale) (Con)
I am delighted to be called to speak in the debate, not only to highlight the needs of my constituents and the manufacturing industry, but to support my room-mate and hon. Friend—he is not right hon. yet, but headed that way—the Member for Hexham (Guy Opperman). I like to think that I have taught him everything he knows.
My constituency is heavily reliant on energy production and manufacturing. Like many north Lancashire constituencies, we make high-spec components for clients in the energy, defence and constructions industries. When we watch programmes on television about the amazing engineering feats involved in BAE Systems, in nuclear submarines at Barrow-in-Furness and in the nuclear power station at Heysham, in all likelihood the vital components we see will have been made or designed in my constituency. North Lancashire has a skills base that allows it to compete favourably with areas that have low labour costs. Manufacturers in China and India, for example, are unable to offer their products with a 10-year guarantee because they are often not of the same quality. The situation is similar to that of BMW in Germany: it has never produced the cheapest cars but is popular because of its build quality and reliability. Our manufacturing sector is struggling not as a result of a lack of orders, but because of the perennial problem of recent years: lack of money.
Any manufacturer of high-quality components needs to invest large sums in three keys areas: machinery, IT packages and training. It is worth going through each in turn. On machinery, I was talking recently to a manufacturer in my constituency who used to import 5,000 plumbing hoses a year. The products were no cheaper to order from China than they were in UK, but placing an order gave 30 days’ credit and the outlay is lower than buying a machine. It took the company several years to save enough money to buy the machine needed to make the hoses, but once it did it began making 7,000 a year. Obviously, British workers were employed to operate the machine, cutting unemployment in the constituency. Whatever we do in this difficult economic period, we must find a way of ensuring that businesses are able to access money and buy vital machinery.
On IT packages, the modern computer developed from an idea that came out of Bletchley Park during the second world war. We have always been world leaders in IT, but as computer packages have become more sophisticated the costs have risen. Although the packages save staff time and improve productivity, they also require capital outlay. I have heard plenty of examples of manufacturers being unable to turn ideas into viable products because the IT package required is just too expensive. I am not complaining about IT costs per se, as the people who design the products deserve to be properly paid. My complaint is once again that banks and the old regional development agencies were so poor at supporting businesses with the capital they needed to buy the products in the first place.
On training, I suppose a purist accountant would not view training as capital expenditure, but manufacturers are often required to pay for expensive training before a product is ever made. In practical terms, that means that lack of credit and poorly administered grants have an impact. Training for some IT packages can cost £1,500 per member of staff. When a company needs large numbers of staff to be trained, it is easy to see how costs soon mount up.
I have laid out three problems, but what are the solutions? First, we must accept that for small and medium-sized enterprises the regional development agencies simply did not work. They were too unresponsive and too focused on larger businesses. Many companies that I have spoken with got the impression, rightly or wrongly, that RDAs would step in only if a product would fail without them. That makes sense on paper, but in reality it is not about a product falling; it is about how quickly it can be brought to market and where it is made. Grants were not always available for speculative investments such as the machinery, IT packages and training I have mentioned. Things need to change and enterprise zones are a step in the right direction.
I know everyone will agree that we also need to get credit moving. I have now accepted that the big six banks cannot or will not help. We need greater diversity in our banking sector, so that the big banks are forced to serve business better. We need a regulatory environment that encourages more banks to enter the UK market and encourages more British companies to establish banks.
“Made in Britain” is still a mark of quality throughout the world, and our products still command a premium that makes our manufacturing viable. From the new plumbing system at Sidra hospital in Qatar to the A380 super-jumbo jet, British manufacturing is a vibrant part of our economy. Contrary to popular myth, we are still the world’s seventh largest manufacturer, but without solutions to the capital outlay problem we will never reach our full potential. We must give our companies the money that they need, because it is vital to invest in the future and in manufacturing. They maintain our skills base and are vital to the diversity of the British economy.
We should take this debate forward and act upon it. I again thank everyone for taking part in it, and my hon. Friend the Member for Hexham for bringing it forward in the first place.
Richard Harrington (Watford) (Con)
I, too, congratulate my hon. Friend the Member for Hexham (Guy Opperman) on bringing about this debate. I also congratulate the Minister on his comments so far and, in particular, the shadow Minister, the hon. Member for Hartlepool (Mr Wright), not only on his contribution, but on the resilience of his bladder, which has enabled him to stay in his place for such a long time. It is always a pleasure to see him. On these occasions, it is difficult to think of something to say that is different from the contributions that other Members have been making for what seems like 25 hours. But I shall do my best.
I was born into a family with a modest factory, and I saw the decline of British manufacturing through my own experiences and my own eyes, because my father was similar to most small manufacturers of clothing in Leeds, near to the constituency of the hon. Member for Bradford East (Mr Ward), and he had a similar business to those in Bradford. He was put out of business by imports, but we have to look beyond that and ask, “Why has manufacturing failed?” [Interruption.] The shadow Minister shakes his head, but it has failed, and I will explain why.
Manufacturing has failed as a type of business for entrepreneurs to go into as a start-up. We all know that in Britain most large businesses started off not with big foreign investment, which has been very successful, but with people deciding to start businesses in a small way and to build them up to medium-sized businesses and then into some of the great businesses, such as those that the hon. Gentleman mentioned in Hartlepool.
Manufacturing has failed for three reasons. First, there has been a failure of capitalism in this particular field. Members might think it strange to hear a Conservative Member using Marxist terminology—[Laughter]—particularly for the amusement of the hon. Member for Huddersfield (Mr Sheerman)—but I mean that although a lot of capital has been employed in businesses in this country, comparatively little has been used by manufacturing. That is because capital is invested to obtain a return, and in my generation manufacturing enterprise has not generally led to significant returns.
Capital that belonged to families has grown in other ways. My father is a classic example of a person who, having found that his business was worthless, sold a small site to property developers and probably made more money than he could have in years of business. That is the story of many family manufacturing businesses in this country.
Secondly, there has been a failure of management. The hon. Member for Huddersfield, in an excellent contribution, mentioned being shown around Magdalen college, Oxford, where he was told that the bright undergraduates were going into the City. When he made that point, he was looking at my right hon. Friend the Minister, who I remember from my time was in fact at Christ Church rather than Magdalen, but I am sure he accepts that in our generation exactly the same thing happened.
Why did people go into the City? First, those people who were business-minded went, perfectly reasonably, into businesses where they felt they could make a lot of money. Secondly, and to draw another a Marxist analogy, for more than 100 years the class system in Britain looked down on manufacturing industry, so all that people such as my father, who was in manufacturing, wanted was for their sons not to have to put up with what they had put up with. These days people would say that manufacturing is not “cool” or “culturally acceptable”, but for many years has fallen, let us say, out of fashion.
Craig Whittaker
I have a lot of empathy for what my hon. Friend is saying. I mentioned in my speech the companies Boxford, Heights, BCA Leisure and Decorative Panels, all from the Calder Valley. They started from very small premises indeed and have built up. Does he agree that the biggest problem at the moment is that the banks just are not investing in research and development?
Richard Harrington
I very much agree with my hon. Friend’s intervention, but that issue has been covered in other hon. Members’ speeches, and in the remaining time I am trying not to mention it for that reason—valid though it is.
The reality is that for bright young people, manufacturing is not, by and large, something for them to go into. For some reason it is different in the United States. Very bright graduates—the brightest that Harvard and other places have—could always join firms such as Ford, General Motors and IBM. At those companies, they could expect to make as much money—if it is, indeed, money they are interested in—as the people who joined Goldman Sachs or such firms in Wall street or the City. We have not had that here so, in my experience—and that of the hon. Member for Huddersfield at Magdalen college and of the Minister at Christ Church college—people who were interested in making a lot of money from our generation did not go into manufacturing.
I have mentioned capital and management. The third issue is labour. I am not falling into the ridiculous trap of saying, “It’s the fault of the unions and the workers that we don’t have manufacturing.” Nevertheless, the issue of labour is a contributory factor. In Watford, where we have a few very good manufacturing companies, notwithstanding that there are 3,000 people on jobseeker’s allowance in the constituency, manufacturers have a problem getting unskilled labour because they cannot get people who will do night shifts and consistently do the kind of work that is expected. It is not dangerous work, but it is fairly mundane. Consequently, they have to import labour from Poland.
It is not right in the remaining nanosecond I have left to go into detail about the benefit culture, but we have to accept that if manufacturing is going to return, we must have people who believe it is a perfectly respectable and proper occupation to work in a factory. We want them to, and they should be properly rewarded for doing so. However, we cannot have a situation in which people feel it is not the right thing to do.
Manufacturing has been the victim of imperfections in capital and in management, its status in society and the attitude of labour towards it. Such a situation needs to be corrected, but that should be done on the true basis of entrepreneurship, which relates to people who may be called greedy by some. They want to make money, but they will pay their taxes and employ people as a by-product. It is a great thing to employ people but, for somebody going into business, it is a by-product rather than the reason they are doing it. When manufacturing becomes easier than property development, easier than the City, easier than management consultancy, easier than the law or, indeed, politics, it will come back—but only then.
Guy Opperman
I thank colleagues who have contributed to the debate, in which there has been a cross-party optimism about the fundamentals of manufacturing. It is a noble profession and a wonderful sector to work in. There is optimism for the future of manufacturing, and that is what this debate is about, rather than the past.
There has been an understanding of the past difficulties from which successive Governments and businesses down the years have suffered and of the present problems of globalisation, the Chinese influence, energy prices and the extent to which the state is struggling with the debt and difficulties faced by each country in the eurozone, particularly this one. There has been recognition that we must subsidise and support individual businesses and manufacturing organisations, whether with a form of capital allowances, R and D, tax credits or the like.
Although there is a tradition for men to be involved in manufacturing, I was particularly heartened to hear my hon. Friend the Member for Erewash (Jessica Lee) contribute so robustly to the debate. As a female Member of Parliament, she spoke very eloquently of the role of women entrepreneurs. I strongly support the view that this is a profession not only for men but for women. I apologise to all women for saying, when I described the need for a Minister for manufacturing, that we needed a go-to guy; of course, it could just as well be a go-to woman.
Guy Opperman
Or gal, as my right hon. Friend on the Front Bench so eloquently puts it. The learned Minister has intervened on many previous occasions, and we have another bon mot at last.
I listened to the 19 speakers who contributed to the debate. We finished, last but by no means least, in Watford, having journeyed north to Morecambe and the bay, taken in Bradford East and Hove, and travelled back up to Yorkshire and Calder Valley and then on to Carlisle and Hartlepool. At this stage, the Minister appeared. I must apologise to him, because I think I said that he was from Bognor. Of course, I have nothing against Bognor—everyone loves Bognor—but he is the representative of Havant, as we all know, except the hon. Member for Hexham. We then journeyed to Erewash, Derby North, Pendle, Blaenau Gwent, Warwick, West Bromwich West, Burnley, Wolverhampton South East, Weaver Vale, and then to Huddersfield and up to the finest constituency of them all—which is, of course, Hexham.
The future of manufacturing is worth our taking up the debating time of the Backbench Business Committee. The three co-sponsors of the debate—my hon. Friends the Members for Warwick and Leamington (Chris White) and for Burnley (Gordon Birtwistle) and the hon. Member for Huddersfield (Mr Sheerman)—have done so much to try to put manufacturing back in the frame in the House of Commons, and that is the right thing to do. It is noticeable that we are already receiving press coverage on the need for a Minister for manufacturing.
There seems to be widespread agreement that the banking system needs reform and improvement so that these businesses, which we all so cherish and want to receive support, receive that support, whether it is from a local bank or an industry bank such as that championed so well by the Germans with the KfW model. Such possibilities give businesses an endless ability to thrive in future. We all agree that that is the model for the way ahead. I look forward to the forthcoming meeting with the Financial Services Authority to discuss the local bank project. The Government should clearly be picking winners; manufacturing is a winner, and it has a very good future.
Question put and agreed to
Resolved,
That this House has considered the matter of the future of manufacturing.
Proposed Development on Coastal Road, Bolton-le-Sands (Lancashire)
(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
David Morris (Morecambe and Lunesdale) (Con)
This petition is about the granting of planning permission to an unwanted development in Bolton-le-Sands. It is signed by 1,036 people.
The petition states:
The Petition of residents of Bolton-le-Sands and others,
Declares that the Petitioners are opposed to planning application 10/00830/0UT, relating to a proposed development on Coastal Road, Bolton-le-Sands, as the Petitioners believe that there is no demand for any further development in the area as many properties are not fully occupied and many are already on the market; that there are insufficient employment opportunities in the area for any incoming inhabitants; that there is insufficient space in local schools for incoming children; that there will be increased pressure on what the Petitioners believe are already overstretched local NHS services; that the development will change the character of the area, with a detrimental impact on the landscape and residential amenities, including causing the loss of open spaces that enhance the quality of life of everyone in the area; that the development will cause a loss of grazing land and essential hedgerow habitats; that the development presents a risk to the canal and species in the canal ecosystem; that the development will result in the joining up of the villages of Bolton-le-Sands and Hest Bank and that there will be an increase in vehicular traffic on already busy roads, particularly on Coastal Road which has seen numerous accidents in recent years.
The Petitioners therefore request that the House of Commons urges the Government to use any means possible to overturn the decision of Lancaster City Council to approve the development on Coastal Road, Bolton-le-Sands.
And the Petitioners remain, etc.
[P000986]
Local Pharmacies
(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Huw Irranca-Davies (Ogmore) (Lab)
May I thank you, Madam Deputy Speaker, and your good offices for granting this Adjournment debate on a subject that affects hundreds if not thousands of people right across the country in England, Wales, Scotland and Northern Ireland? I hope to encourage, support, prompt, cajole and beat the Minister—in a very nice way—to put some urgency into this matter, which I know he is aware of and is working on. I think that we need to do more. I can understand why this issue has not grabbed the headlines that other health-related issues have.
A very wise MP once said to me, “Don’t go looking for issues. They will walk though your door.” That is exactly what happened. A female constituent came through my door about a year ago and said, unbelievably—it was unbelievable and I had some scepticism about it—that she could not get Femara, a cancer treatment drug. I said that that simply could not be the case because it is a readily available drug. It is not a drug that is not prescribed or that there is any shortage of. She left feeling a little disgruntled, but I agreed to take up the issue.
I contacted the chemist, who said that my constituent was absolutely right. They said, “I cannot get hold of it in my own stocks, I cannot get hold of it locally by ringing other chemists and I cannot get hold of it from my regular distributors. I actually have to ring the manufacturer.” Even having done that, there was a delay before it was delivered, leaving somebody without their cancer treatment drugs. The implications of that are not only physical and medical, but emotional.
Having looked into the matter further, it appears that this is a widespread concern. Like most people, I assumed that if a drug was a prescribed medication, it would be widely and freely available. I did not know about the systemic problem that we face in the UK in ensuring the supply of life-saving medicines. If one looks behind the façade of normality, one can see clearly the pressure on the pharmaceutical drug supply chain from manufacturers, through wholesalers and distributors, to pharmacists and right down to individual patients.
The Minister will be aware that today there are problems with about 50 products. Those medicines treat a wide range of conditions including cancer, Parkinson’s disease, schizophrenia, depression, asthma, diabetes and high blood pressure. All of those products seem to be in short supply due to the problem in the supply chain. In the midst of coming to terms with a serious medical condition, the last thing that I, the Minister, you, Madam Deputy Speaker, or anybody would want to face is the fear of not being able to receive their treatment or of having it interrupted because of a problem in obtaining the medicine. Yet that is the precise situation for too many people on a daily basis.
It is our community pharmacists on the front line who see the overwhelming reality of this problem. I know that the Minister will recognise that when pharmacists cannot get hold of a drug for their patients, they work hard behind the scenes, under the calm waters, often in a Herculean effort, to ensure that nobody is left without their vital medicine. I have seen in my constituency the hoops that pharmacists are obliged to jump through to obtain medicines on such occasions. All too often, they have to ring round other pharmacists in the hope that they have the medicines available, spend time on the phone to the wholesaler or the manufacturer, or send faxes with copies of prescriptions to manufacturers in the desperate effort to find supplies on the day for their patients. On too many occasions, they are told that there is no stock available from the wholesaler or the manufacturer. Despite the time spent on that wild goose chase, pharmacists still try to provide the multitude of other services that the NHS and we ask of them.
Margot James (Stourbridge) (Con)
I congratulate the hon. Gentleman on securing this debate on such an important topic. Is he aware of the survey conducted as recently as this month by Lloyds Pharmacy of its pharmacists, which confirmed the point that he is making? It found that 50% of the pharmacists surveyed were spending between one and three hours a week trying to source medicines, and that 16% were spending between four and six hours a week doing so—almost a day of their working time.
Huw Irranca-Davies
Absolutely. The hon. Lady makes a very good point. I am aware of that survey, and I will touch on it. This is not a party political issue at all, it is very much cross-party, and I know she has a real interest in and specialist knowledge of the matter. We can help the Minister by suggesting to him some ways forward.
The Lloyds survey to which the hon. Lady refers was of 400 pharmacists, and it showed that 80% of pharmacists were unable to dispense items, or had had to call their local GP surgery, for four or more prescriptions a week. For 26%, that number rose to more than 10 prescriptions a week. On average, half of pharmacists surveyed were spending at least one to three hours a week trying to resolve stock availability problems for patients. That includes ringing around other stores, contacting suppliers and liaising with prescribers. Critically, as she said, 16% spend at least four to six hours a week doing so, and 8% spend more than six hours a week chasing down stock.
Another survey that has been undertaken, of which the House may not be aware, is a 2011 preliminary survey on medicine supply shortages by Chemist and Druggist online. It found, echoing those earlier findings, that 93% of respondents were spending more than one hour a week sourcing key medicines. It found that 54% were spending more than two hours a week doing so, and that 10% were spending five hours or more. If they are doing that, they are not providing the front-of-counter services that we want them to, such as helping people with minor ailments and providing other assistance. That survey also found that 90% had had to ask GPs to change a prescription in the face of shortages, and that 70% had found getting hold of branded medicines even harder in the past year than in previous years. Those figures mirror those in the previous survey the year before. The problem is at least as bad as it was a year ago, and possibly getting worse.
Let me personalise the matter. I spoke to a community pharmacist from Rasharkin in Northern Ireland this week, who told me:
“Supply chain issues are becoming an increasing problem as I continually have to telephone the manufacturer directly for stock. For example today”—
Monday 21 November—
“we had four prescriptions outstanding for a drug for depression; we had ordered these electronically through the manufacturer’s chosen supplier five days ago but the stock has still not arrived. We had to telephone the manufacturer for stock today and they insisted we supply copies of the prescriptions. I refused as I believe there are issues here with patient confidentiality. They agreed to send only a partial order. Two of the above patients will be without their medication until the supply arrives, the other two have enough to keep them going for a few days.”
Patients in that situation are all too often left with only a small supply, and sometimes with none of the medicines that they need. Research by the Patients Association found that half of those surveyed had had to wait two or more days to get their medication when there were stock availability problems, and that two thirds felt from their personal experiences that medicine shortages were definitely having an impact on people’s health. That situation will see real harm caused.
The Chemist and Druggist 2011 survey has already found tangible incidents of harm caused to patients by a lack of available medicines. To cite some examples, it found incidents of a pharmacist having to refer a patient back to hospital because of a shortage of drug supply; patients describing themselves as “stressed and upset”, and suffering severe emotional trauma; a patient experiencing difficulties with anxiety that had previously been controlled by their medication; and a diabetic patient suffering a hyperglycaemic episode while waiting for their medication.
The evidence showing the problems in the supply of medicines to local pharmacists is clearly overwhelming. The reality for patients, including the one who came through my door a year ago, is frightening. Despite the hard work of pharmacists everywhere, the results could be fatal. We must avoid that. The situation was noted by the all-party group on pharmacy this week when it announced that it will hold a full-scale inquiry into the continuing problem of shortages in NHS medicines.
The reasons for the shortage in the supply of such crucial medicines, as in any situation, are varied. First, as the Minister will know, European competition policy promotes a free market in medicines. The trade is legal and encouraged by the EU. With the weak pound, there is money to be made—by pharmacists, wholesalers and others—by selling drugs to those in Europe.
The Association of the British Pharmaceutical Industry states that the recent Medicines and Healthcare products Regulatory Agency announcement that it will repeal section (10)(7) of the Medicines Act 1968 to prevent pharmacists from trading without a wholesale licence is an important step in the right direction, but it will not solve the problem. Experience has shown that supply in the market well beyond what is needed for UK patients does not solve the problem of shortages at pharmacy level —it simply results in more stock being diverted overseas.
The second reason is the number of wholesalers. There are now 1,800 wholesale dealer licences in the UK. Additionally, according to the British Association of Pharmaceutical Wholesalers, six years ago, a pharmacist could order from their chosen wholesaler almost any medicine manufactured, but nowadays, they need to order from at least two or three wholesalers, which means two or three deliveries at different times of the day, with two or three times the paperwork.
Thirdly, quotas put in place by manufacturers to control demand are crude and lack the flexibility to meet ordinary fluctuations in demand. In one case, a pharmacy was restricted by a quota to 28 days of supply for a medicine, meaning that it was unable to fulfil 56-day prescriptions. To overcome such situations, pharmacists must place so-called emergency orders directly with the manufacturers for stock to be delivered individually in unscheduled deliveries, which often arrive via courier companies one or two days after the identified patient need.
Increasingly, patients are forced to wait while the pharmacists make daily emergency orders with various manufacturers. They often have to go through quite intrusive audit questions to prove they have a genuine patient need. On top of that, the patient has to await delivery. Another pharmacist—from Gwynedd—said of this unacceptable situation:
“In many instances after phoning our wholesalers and the manufacturers and even…specialist wholesalers, we are eventually able to source the drug, but it doesn’t arrive for 2 to 3 days.”
In March 2010, the then Secretary of State, my right hon. Friend the Member for Leigh (Andy Burnham), held a summit meeting of all industry stakeholders and formulated an action plan. In February 2011, the Department of Health published guidance, but as we approach 2012, a solution is still not in sight, unless the Minister brings some clarity today. The guidance is a step in the right direction, as recognised by Pharmacy Voice, but it is not the silver bullet—there is no silver bullet. Problems remain and it is time for further affective action to be taken.
What should that action be? We should update the regulations on patient access to medicines to make them fit for purpose. Currently, there is a duty to supply, but no time scale in which to do so within the UK. Other EU nations, including Belgium, France, Finland, Germany, Greece, Hungary, Italy, Norway, Portugal and Spain, have implemented a patient or public service obligation—I prefer the phrase “patient service obligation—on the manufacturers and wholesalers to ensure that community pharmacists can get medicines to their patients when and where they are needed. It is time for the UK to implement its own, albeit adapted, version of a patient service obligation. The Minister might be hesitant to do that, but we place obligations on distribution network operators to connect people to the national grid to ensure that they receive an uninterrupted supply of electricity, and yet we have no obligations on an uninterrupted supply of medicines.
There are different ideas on what would constitute a patient service obligation, but let me suggest some principles that might underpin one. First, all those who supply medicines, whether manufacturers, distributors or dispensers, should have a duty to ensure that the medicine supply chain is economically efficient in line with the clinical needs of patients, so it delivers to them on time. Secondly, all those who supply medicines should have a duty to ensure that patients can easily and quickly obtain the medicines they need and to prioritise the supply of medicines to UK patients. Thirdly, medicine supply arrangements must be sufficiently robust and stable to guarantee a continuous supply to patients, including the rigour needed to absorb any short-term disruption—for example, through extreme weather conditions, as we saw last year.
Such a patient service obligation would receive support across the supply chain from manufacturers, wholesalers, pharmacists and patients. The National Pharmacy Association and the British Association of Pharmaceutical Wholesalers are already on board, and the Association of the British Pharmaceutical Industry is keen to learn more. Indeed, the Government have not ruled out a patient service obligation. I see no reason why active discussions between all interested parties—the manufacturers, wholesalers, pharmacies and patients associations —cannot begin immediately, brokered by the Minister and the Department of Health. Perhaps the Minister would like to know that a recent Pharmacy Voice survey has shown that such a move would find considerable favour with the public.
It is time for the Department of Health to lead on this vital issue. The evidence is overwhelming and the urgency palpable. Everyone is ready to find a solution and ensure that the aims of a patient service obligation—ensuring that no one goes without their vital medicines—are more than just an ambition, and become a reality. I hope the Minister in his response—I know that he is aware of the critical nature of this issue—can assure the House of his intention to act on this issue with real urgency.
The Minister of State, Department of Health (Mr Simon Burns)
May I begin by congratulating the hon. Member for Ogmore (Huw Irranca-Davies) on securing this debate? I know that he has been assiduous in highlighting this important issue in his constituency and beyond, and anyone who doubts that need only have listened to his speech—or read it in Hansard tomorrow—to know about his commitment to, knowledge of and passion for this issue of genuine concern in many areas. It is also a pleasure to see my hon. Friend the Member for Stourbridge (Margot James) in her place, as I know that she has a long-standing interest in the subject, having secured a debate on the pharmaceutical situation earlier in this Session.
I assure all hon. Members that I am sadly all too aware of the difficulties that pharmacists and members of the public have had in obtaining some prescription medicines. It was particularly moving when the hon. Gentleman spoke of the experience of someone he knows who regrettably had trouble getting hold of one of her medicines, Femara, which is used to treat breast cancer. We freely discuss policy at meetings and in the Chamber, but those discussions suddenly seem very distant when we are confronted with the reality of what it means to be unable to access a drug. I am aware that some pharmacists have had difficulties getting Femara, but those difficulties have recently been greatly reduced following the expiry of the patent earlier this year. The generic version of Femara is now widely available under the name letrozole. I know that it is of little consolation to the hon. Gentleman’s friend, but what it does mean is that other people will not have to go through the same heartache as that lady.
I am also aware of how frustrating it is when such problems occur with other drugs—not simply cancer drugs—because for people who need them at the time, they are equally important. The coalition Government have already taken action and we will take further action if necessary.
Supplying medicines to patients requires a complex, international infrastructure. There are around 16,000 licensed medicines covering tablets, capsules and injections, and different dosages, and nearly 900 million NHS prescription items are dispensed every single year. As hon. Members will appreciate, it is a vast undertaking. Given that complexity and scale, there are difficulties from time to time, and not only the UK is affected: recently the US has had problems of its own. There are many different reasons why patients might have problems getting hold of their medicines, and they range from difficulties in obtaining raw materials to manufacturing problems and the overseas sale of medicines intended for this country. I would like to speak about all of these.
Supply issues can arise as a result of parallel trade, as the hon. Gentleman mentioned. That is when medicines are bought at low prices in one European country and then resold at higher prices in another. When the euro got stronger relative to the pound, exporting UK medicines to other European countries become more profitable. At the moment, parallel trade exports are therefore reducing the supply of medicine available to UK patients. I stress that this parallel exporting is legal and can be carried out by anyone who holds the necessary licences under the medicines legislation. Indeed, in the past, UK patients have benefited from medicines being imported to this country by the same process.
I cannot stress firmly enough that there are existing legal duties on manufacturers and distributors, within the limits of their responsibilities, to maintain a suitable supply of medicines to pharmacies so that the needs of patients are met, but regrettably a minority of operators in the supply chain are thought to be putting profit before patients. I know that this is not condoned by the majority of those in the supply chain. Indeed, manufacturers and pharmacies have to fill the gap that these practices create.
Manufacturers have introduced quotas to try to target supply but this reduces pharmacies’ flexibility to meet unexpected patient need. Pharmacies use contingency arrangements to get medicines directly from the manufacturer rather than from their usual wholesaler. We have recognised this in NHS funding for community pharmacies but it still annoys the majority that are putting patients first. I understand that that is frustrating for many parts of the supply chain and can lead to delays in some patients getting their medicines. However, the Department of Health, the Medicines and Healthcare products Regulatory Agency and the supply chain stakeholders—manufacturers, wholesalers and pharmacies —are working together to reduce the impact on patients.
In order to address the issues with supply, the previous Government set up a ministerial summit in March 2010. A wide range of organisations and individuals participated, including those representing pharmacists, wholesalers and doctors. The summit agreed a package of tough actions to be taken forward in collaboration with the industry and other partners. This Government have taken forward many of the actions proposed by the previous Government. We continue to work with all parts of the supply chain to make sure it functions as well as possible through collaboration and collective agreement rather than by increasing the regulatory burden.
Actions taken forward following the summit include: publishing updated guidance on the legal and ethical obligations placed on manufacturers, wholesalers, registered pharmacies and others involved in the supply and trading of medicines in December 2010; publishing best practice guidance agreed by stakeholders of the supply chain clearly stating that under normal circumstances pharmacies should receive requested medicines within 24 hours—if all members of the supply chain followed this, patients might get medicines more quickly—and developing and maintaining a list of products in short supply published on the Pharmaceutical Services Negotiating Committee’s website so that no one trading in these products can say that they are not aware of supply difficulties.
On top of that, MHRA site inspections and follow-up inspections have been conducted and progress has been made, including through written undertakings to comply with the agency’s recommendations. To date, no breaches of the regulation have been established.
Huw Irranca-Davies
This is not a new phenomenon. As the Minister said, the previous Government recognised it, set up the taskforce and introduced proposals on which this Government are acting. The difficulty is that the system is not working properly, despite the best will in the world. I understand the one-in, one-out rule and the necessity to avoid an undue regulatory burden, but a light-touch approach would be welcomed by most of the industry. A manufacturer told me the other day that he was producing 140% of the needs of the UK but there was still a shortage of the drug that he was supplying. Surely a patient service obligation would fit the bill by ensuring that certain things have to happen. It has been done in most other European countries.
Mr Burns
I am grateful to the hon. Gentleman, and I will come to that point a little later in my remarks.
As I was saying, exporting medicines is only one source of supply difficulties. Problems such as obtaining raw materials or problems with manufacturing processes can also cause supply problems. The increasing concentration of pharmaceutical manufacturing has made the situation worse. A medicine may be made only in one or two sites globally, which means that there is not much flexibility if problems are experienced at a particular factory or manufacturing site. Production schedules have to be planned months in advance and if one company has a shortfall, suppliers of alternatives may be unable to make up the shortfall at short notice.
The current trend in the supply chain of pharmaceuticals over the past few years is to move towards a “just in time” set-up, which results in lower stocks of medicines throughout all parts of the supply chain. This trend has resulted in significant savings, but requires more active and reactive stock management. Again, the Government work closely with pharmaceutical companies, wholesalers, pharmacists and the NHS and have well-established procedures to manage these risks.
The Department of Health published joint best practice guidelines with the Association of the British Pharmaceutical Industry and the British Generic Manufacturers Association in January 2007. The guidance gives companies advice on what to do in the event of a shortage and recommends early communication with the Department about possible shortages that might affect patient care. This allows us to work together to explore whether any action can be taken to reduce the impact on patients.
The Department has also created a small buffer stock of some medicines to help manage shortages during pandemics and other emergencies. We are also taking action through the European Commission’s falsified medicines directive to strengthen the supply chain against the risk of counterfeit medicines. This aims to improve the reliability of the medicines supply chain and to respond to the increasing threat of falsified medicines entering it.
As a direct result of the arrangements I have described, combined with the diligence and professionalism of most of the supply chain, patients overwhelmingly have access to the right medicines in a timely and efficient manner. We are continuing to monitor the situation very closely. Of course, we are not prepared to be complacent. That is why we are working so closely and collaboratively with the supply chain, monitoring and intervening as appropriate.
The hon. Gentleman’s intervention was about the public service obligation. I am aware that some—like him, and quite honourably—would prefer to see a public service obligation placed on the medicines supply chain to maintain supplies of medicines. As I have said, it is already the case that manufacturers and distributors must ensure continuous supplies of medicines to meet patients’ needs. Failure to do so could put them at risk of regulatory action or criminal prosecution.
Some other EU member states have a very precise definition of how soon medicines should be received, but we are cautious about going down that road. It would vastly increase regulation on the industry and drive up costs across the board. This is why, as I have said, we have chosen to go down the route of best practice guidance instead. Best practice arrangements exist; they have been agreed with all parts of the supply chain and they have been very successful in minimising the impact of shortages. It is a much more flexible approach than statutory regulation.
In conclusion, I am grateful to the hon. Gentleman for raising this issue—one that will be relevant to all Members across all party divides, as well as to every single community and individual person. It is an issue of true universal interest and concern. I assure the hon. Gentleman that the coalition Government are absolutely committed to patients getting their medicines as quickly as possible. We are also certain that in the supply of medicines, everyone in the supply chain has their part to play, including manufacturers, wholesalers, pharmacists, prescribers and patients. The Government will continue to work closely with all those involved in the supply chain, making sure patients receive their medicines in a timely manner and without any unnecessary complications. This is not an issue that will be discussed just once and then forgotten. We are determined to keep a watchful eye on the situation to see if there are ways to improve it and minimise disruptions or problems for patients, ensuring that they get the best service, to which they are entitled.
Question put and agreed to.
Westminster Hall
(12 years, 11 months ago)
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backbench business
(12 years, 11 months ago)
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Extradition
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Mr Dominic Raab (Esher and Walton) (Con)
It is a tremendous pleasure and privilege to speak under your chairmanship, Mr Rosindell, for, I believe, the first time. I thank the Backbench Business Committee for allocating time for a debate on this subject in Westminster Hall. I welcome the presence and participation of the Immigration Minister and thank him in advance for engaging proactively on such an important issue.
The Home Office is often berated for letting too many people into the United Kingdom, so it is something of a novelty for Ministers to face the reverse criticism. Yet, as the Joint Committee on Human Rights, of which I am a member, pointed out in its most recent report on extradition, there are flaws in and widespread concerns about our extradition laws. There are concerns about the UK-US extradition treaty of 2003, in which paragraph 3(c) of article 8 sets different evidential thresholds for the two countries. The United States did not ratify the treaty until 2007, but for clarity, my understanding is that it has relied on the lower burden of proof available to it since 2004.
Lawyers can bicker about whether there is a substantive difference between the requirement that the US has to satisfy—the reasonable suspicion test—and the requirement that the UK has to satisfy, which is showing probable cause. The fact is that, in operational terms, since 2004, 24 Britons have been extradited to the United States under the new arrangements, and just one American has been extradited to Britain. In practice, in the way they affect our respective citizens, the arrangements have practically been all one way.
The main problem, in my view—others will speak about the individual cases of their constituents—is the absence of any discretion to allow the UK to decline extradition in cross-border cases, having taken into account the interests of justice. That has been the problem in the case of Gary McKinnon, which is equally, or more about the injustice in dispatching a young man with Asperger’s syndrome hundreds of miles from home on allegations of computer hacking, when he was apparently searching for unidentified flying objects, than about the alleged offence or the evidential threshold. More misfit than terrorist, he should not be equated with some high-level al-Qaeda suspect or gangster.
Mr David Burrowes (Enfield, Southgate) (Con)
I congratulate my hon. Friend on securing this incredibly important debate and on raising the case of my constituent, Gary McKinnon, at an early stage. My hon. Friend has already mentioned the issue of disparity. Does there not seem to be a self-evident statistical disparity? I understand that, in the past 40 years, three suspected terrorists were extradited from the United States to this country, in comparison with the situation facing Gary McKinnon, who is being prosecuted on the basis of alleged terrorism.
Mr Raab
I thank my hon. Friend for that historical context, and I certainly accept it. It is important to have a practical, operational background about the numbers of cases, so that the debate does not become a dry, lawyer’s debate about the terms of the treaty or the Extradition Act 2003.
We have legislation in place to inject a dose of common sense and discretion into the McKinnon case and other such cases. The Government ought to bring that into force as a matter of priority.
I understand the US’s concern. I have spoken to officials from the US embassy, and I understand their concerns regarding the treaty’s operation. They make quite strong arguments about the discrepancy between the evidential thresholds. None the less, in the US’s extradition treaty relations with, to name but a few, Brazil, Mexico and Australia, the domestic authorities in those countries have the right to decline extradition in these and much wider circumstances. Why should Britain, a stalwart ally, not request such a modest adjustment?
The problems created by the European arrest warrant have proven to be even more serious and far more widespread than those created by the US treaty. First, there are cases that are exemplified by the case of Andrew Symeou. Andrew, a British student, was whisked off to Greece under a European arrest warrant for involvement in a fight at a nightclub that left another man dead, which is a serious offence. Andrew was extradited, despite eye-witness accounts that he was not at the club at the time.
Fast-track European Union extradition is based on the assumption that standards of justice are adequate across Europe. We all put our faith in that assumption, but I am afraid that the Symeou case and many others show that that assumption is a sham and a fraud. We cannot understand the operation of the EAW without understanding that fraud—the assumption that all the justice systems operate to a similarly high standard.
Let us look at the Symeou case. Greek police beat identical statements out of witnesses, which were then retracted. Andrew Symeou spent almost a year in squalid prison conditions before being bailed. He was left with a flea-ridden blanket in a cell exposed to a sewer and crawling with cockroaches. He was abused by guards and witnessed another prisoner being beaten to death for drug money. The trial proceeded at a snail’s pace, with court translators who spoke scant English. He was eventually cleared in June this year, after a two-year ordeal, and he was left to rebuild his life.
The independent Baker review, commissioned by the coalition to look into the operation of our extradition relations, makes absolutely no recommendations for preventing such horror stories being inflicted on other innocent people—I use the word “innocent” advisedly, although that was clearly the case for Andrew Symeou. The Symeou case highlights the need for a higher evidential threshold—a prima facie test—to militate against the risk that fast-track extradition goes ahead on manifestly tainted evidence or spurious grounds.
The Baker report merely suggests that, over time and with effort, the justice systems and prison conditions across Europe will get better. All of us in the Chamber may well hope for that, but that view is naive at best and reckless at worst. I urge the Government to ignore that legalistic and simplistic analysis and think about what innocent people such as Andrew Symeou actually go through in real life.
Nick de Bois (Enfield North) (Con)
I am grateful to my hon. Friend for giving way on that point about my constituent. I, too, congratulate him on securing the debate.
While in prison, many of Andrew Symeou’s human rights were fundamentally breached. Does my hon. Friend agree that unfortunately, the Scott Baker report clearly believes that, because there is mutual recognition and all EU members have signed up to the European convention on human rights, we are not right to presume any fundamental breaches of human rights?
Mr Raab
That is exactly the point, and exactly why the assumptions that underwrite the European arrest warrant are fraudulent. I cannot think of any other way of putting it.
It is not good enough just to sit back and hit and hope on the Greek justice system getting better. For one thing, it may be getting worse. Transparency International’s corruption perceptions index is a well regarded measure of standards of justice in national administration and legal systems. On a score of one to 10—one being the most corrupt—Greece has fallen from 4.2 to 3.5 in the past 10 years.
Even if there were grounds for optimism that the Greek justice system would improve over time, which we all hope for, we need to protect our citizens right now—not in five or 10 years’ time, but today. That is why we need an amendment to the European arrest warrant framework decision, a prima facie test, a proportionality safeguard, and the other recommendations made by the Joint Committee on Human Rights.
In fairness to the Baker review, it acknowledged the case for an amendment to the EAW to accommodate a proportionality test, which is one of the other crucial safeguards that are required. However, in other areas the report ignores, almost wholesale, major flaws in the current arrangements. It casually disregards evidence that shows that warrants are being issued for investigation rather than for prosecution.
That important point is best illustrated by the evidence given by Michael Turner to the Joint Committee. Michael Turner set up a property business in Hungary in 2005. When it failed, as some business ventures do, he paid off his staff, filed for bankruptcy and returned to Britain. Three years later, he was extradited to a Hungarian jail, accused of defrauding on certain administration fees. He was detained in a prison that was formerly run by the KGB. He has now been allowed to return home, but he remains under investigation. At the time of the extradition, the Hungarian authorities assured the UK courts that they were ready to prosecute: that this was not a hit and hope; they were trial-ready. Yet six years after the alleged offence took place, Mr Turner has not been charged with any crime whatever. The extradition that threw his life into turmoil was little more than a hit and hope fishing expedition. Again, the Baker report remains oblivious, if not blind, to the basic injustice and the human toll that that kind of ordeal takes on those affected. I am talking about not just the victims but the families.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
I congratulate the hon. Gentleman on securing this debate. During the course of his research, has he had the chance to look at the case of Babar Ahmad, who is a constituent of my right hon. Friend the Member for Tooting (Sadiq Khan), the shadow Justice Secretary? My right hon. Friend is in his place in this Chamber, but protocol restricts him from speaking in this debate. Babar Ahmad has been in detention for seven years. Can the hon. Gentleman qualify the validity of the fact that Babar Ahmad has not been able to be extradited, deported or tried in the UK, but languishes in a detention centre?
Mr Raab
I thank the hon. Gentleman for his remarks. I want to be careful about what I say about the Babar Ahmad case. We must bear in mind the fact that, whatever the nature of the allegations—some of the individuals in the cases that I have mentioned are plainly and demonstrably innocent—we are dealing with that basic principle of British justice that a person is innocent until proven guilty. We are losing sight of that in this country. Irrespective of the nature of the allegations against Babar Ahmad, and I do not deny for one second that they are grave, the period of pre-trial detention is unacceptably high and should be looked at carefully within the scope of the UK-US treaty in relation to both the “most appropriate forum” safeguard and the other safeguards that might be available.
Jane Ellison (Battersea) (Con)
I thank my hon. Friend for securing this debate. I wonder whether it is helpful to intervene on behalf of the Backbench Business Committee. As there is such enormous interest in this debate and in the issue of Babar Ahmad, we are more than happy to take further representations from other Back-Bench Members for time in the Chamber to return to this subject in the event that all Members do not get the chance fully to explore the issue today.
Mr Andy Slaughter (Hammersmith) (Lab)
The hon. Lady has partly addressed my point. Given the number of hon. Members present today, does the hon. Gentleman not share my concern that this is a matter that should be debated on the Floor of the House? We need to debate both this issue and the issue of Babar Ahmad, for which an e-petition of more than 140,000 signatures was collected.
Mr Raab
Certainly, we need to have a debate in Chamber time and on a votable motion. I hope that we can deal with all the individual cases within the scope of the broader policy issue about the UK-US treaty and the European arrest warrant. If there is enough support from hon. Members across the House, I will return to the Backbench Business Committee to seek what we originally asked for.
Mr Dennis Skinner (Bolsover) (Lab)
If we had a vote today, we would carry it, but of course we cannot have one because we are not in the main Chamber. I agree with my hon. Friends who have already expressed the view that we ought to have this debate in the House. The Attorney-General, the Solicitor-General, the Deputy Prime Minister and the Deputy Leader of the House all commented when they were in opposition that they supported what we are here today to do. Therefore, let us get this debate into the main Chamber and then we can carry the vote if they will deliver.
Mr Raab
I am sure that is correct.
Going back to the Baker report and the issue of extradition under the European arrest warrant for the purposes of investigation rather than prosecution, the report effectively denies that EAWs are being used in cases where there is “insufficient evidence”. That is an astonishing conclusion; it is really remarkable. It is just one example of where the Baker review would have been assisted if it had interviewed the victims. It did not do that. However, under the chairmanship of the hon. Member for Aberavon (Dr Francis), the Joint Committee on Human Rights did, and we gleaned as a result not just the legal technicalities and the operation but the human toll on those affected, particularly the innocent—but actually everyone. If we stand up for the principles of justice, we stand up for them across the board and the presumption of innocence is a cornerstone of British justice.
The Baker review should have heard the personal side of the trauma endured by Michael and his family. Instead, and this is really disappointing, Michael’s case merely gets a solitary mention in a footnote at the bottom of page 279. The review’s response to the broader issue of whether European arrest warrants are issued for investigations and not prosecutions is really to point out the blindingly obvious. It concludes that it should not happen under the terms of the framework decision, but that will be no comfort to the Turner family, because it does happen and it is happening and it will happen again unless we put a check in place.
Either we can and should amend the Extradition Act 2003 to make it explicit that extradition for investigation is barred or we need to pursue amendment of the framework decision itself. Given that we do so on other grounds, that would be a sensible course to take.
On other occasions, the EAW system has proved truly Kafkaesque for its victims. The case of Deborah Dark, a grandmother of two, best illustrates that. She gave evidence to our Committee. She was acquitted of drug offences in France more than 20 years ago. Without telling her, the French prosecutors appealed and a two-year jail sentence was imposed in her absence. Seventeen years later, on holiday in Turkey, she was stunned to be arrested at gunpoint. After a three-year legal ordeal, French investigators finally dropped the case. Traumatised, Mrs Dark told the Joint Committee:
“I had been walking around for over 20 years as a wanted person and I did not know.”
That major flaw would be remedied by the specific recommendations put forward by the Joint Committee, which considered all such cases and looked at the impact on the victims as well as taking advice on both law and policy from a range of non-governmental organisations.
There are many other victims, such as Edmond Arapi, and many other controversial cases, such as that of Babar Ahmad.
Karen Bradley (Staffordshire Moorlands) (Con)
I congratulate my hon. Friend on securing this important debate and on raising the case of my constituent, Edmond Arapi. Mr Arapi was convicted in his absence of a murder that took place in Italy while he had evidence that he was actually 1,000 miles away in Staffordshire Moorlands. He has since been fully cleared and is currently pressing for compensation. Does my hon. Friend agree that wherever there is a miscarriage of justice, compensation should be paid? It should be paid to compensate the Arapi family for their financial loss and the emotional trauma that they went through.
Mr Raab
I wholeheartedly agree with my hon. Friend. Compensation should be paid by the country that has made the mistake. The Arapi case shows that a proportionality test, while important, is not the whole game. A charge of murder is very serious; it is not a frivolous allegation. In that case, the facts were completely out of kilter with reality. A prima facie test and some of the other safeguards would enable a basic check to be made before the extradition takes place or the process is completed.
I want to leave time for other MPs to make speeches on specific cases or on the wider policy issues at stake. I have just one final point about the European arrest warrant. It is the most important point and it has been raised by other Members. The EAW blindly assumes mutual trust in the justice systems of many countries deemed substandard if not rotten by the likes of Transparency International and others, but because it does so, innocent British citizens are also denied the full protection of the Human Rights Act and the European convention. For example, it is far harder for an innocent British national to cite disruption of family life, under article 8, as grounds for resisting extradition than it is for a foreign criminal to block deportation on the same grounds. That is a dangerous legal and policy discrepancy that will damage public confidence in our justice system if it is not remedied. There are various flaws in the current arrangements. As I mentioned earlier, I intend to go back to the Backbench Business Committee to ask for a debate in the Chamber on a votable motion if there is sufficient support for it in our debate today.
I would be very grateful if the Minister could say what progress has been made in considering the conclusions of the Baker review and the recommendations of the JCHR, as well as the views of the numerous non-governmental organisations that have expressed an interest in this subject. In particular, can he give any indication of when the Government are likely to make concrete proposals of their own? In my view, the hit-and-hope counsel of the Baker review is just not good enough and I urge Ministers to be bolder than that. Protection of civil liberties ought to be the glue of this coalition; it ought to be an area of common ground. Indeed, it ought to unite all parties and I am hugely pleased to see so many Members from across the House, from all parties, including the smaller ones, in Westminster Hall today.
We need to implement the recommendations of the JCHR covering both the European arrest warrant and the UK-US treaty, because at the end of the day we can read the Baker review and judges and lawyers can all give their legal opinions, but as elected and accountable law-makers we in this House are charged with the duty of preserving British standards of justice and we have the ultimate responsibility for protecting our citizens.
Andrew Rosindell (in the Chair)
Eleven hon. Members have indicated that they wish to speak in this debate. If everyone can keep their remarks within 10 minutes, I hope that all Members will have the chance to speak.
Mr Andy Slaughter (Hammersmith) (Lab)
Thank you, Mr Rosindell. I will certainly keep within those limits. I only want to make two points essentially, both relevant to the case of Babar Ahmad, which has already been raised, perhaps not surprisingly, in interventions on the hon. Member for Esher and Walton (Mr Raab), who secured the debate. May I be the first to congratulate him on bringing a very important debate to this Chamber with the hope, which I think has been generally expressed today, that there will be a subsequent debate in the main Chamber in which more Members can take part?
I first became acquainted with the Babar Ahmad case five years ago. Members of his family were constituents in my former constituency of Acton. I was going to say former and subsequent constituency of Acton, but that would be to presume many things, including the actions of the Boundary Commission and the electorate. With the Leader of the House here—he is still very well thought of in that constituency, which is quite rare for a Conservative—I will not presume in any way on those lines.
The fact that my initial acquaintance with the Babar Ahmad case was five years ago speaks volumes in itself. Although I no longer represent that area, I still receive a great deal of correspondence about the case. Again, perhaps that is not surprising, given the fact that, as has already been indicated, more than 140,000 individuals have signed the e-petition specifically relating to the case.
I must pay tribute to my right hon. Friend the Member for Tooting (Sadiq Khan), who represents the family of Babar Ahmad and who I know has worked tirelessly with them, including Babar Ahmad’s father and other family members who are present today, to ensure that the case remains at the front of everyone’s mind.
Gavin Shuker (Luton South) (Lab/Co-op)
I am extremely grateful to my hon. Friend for giving way and I too pay tribute to Babar Ahmad’s constituency MP, our right hon. Friend the shadow Secretary of State for Justice.
My hon. Friend mentioned that there were 140,000 signatures, and it would be easy to assume that many of the people who supported the petition came from one particular community—the British Muslim community; but is he aware, as I am, that many people across this country who do not come from that background are equally chilled by the experience of Babar Ahmad, particularly as he has been held for seven years?
Jeremy Corbyn
The hon. Member for Esher and Walton (Mr Raab), who secured this debate, quite rightly concluded his remarks by saying that the fact that Babar Ahmad has been in prison for so long was damaging to the image and traditions of British justice; that is absolutely true. I think that the media have missed the point; perceptions, particularly in the Muslim community across the whole country, are that Babar Ahmad has been so badly treated because of his faith and religion, suffering terrible abuse as a result. I have had a large number of contacts and e-mails from people who attend local mosques, as well as from people who attend churches and other organisations, and who are deeply concerned that somebody should languish for eight years in prison on a case that cannot be brought to court in this country, all because of the very strange arrangement that we have with the United States. Does my hon. Friend agree that if we do not mend the arrangement, this will be the image of British justice, not what we want it to be?
Mr Slaughter
As so often, I agree with everything that my hon. Friend has said, and I will discuss the length of incarceration in a moment. However, I think that my hon. Friend was also perhaps alluding to the circumstances of the treatment of Babar Ahmad: he was first arrested in 2003, and by the time he reached the police station he had sustained at least 73 forensically recorded injuries, including bleeding in his ears and urine. Six days later, he was released without charge. As we know, he was subsequently paid £60,000 compensation by the Metropolitan police for the assaults, although there was no apology and, I think, no admission. That would be shocking enough in itself, but of course in August 2004 Babar Ahmad was rearrested and he has remained in custody ever since.
I am addressing my comments effectively to the text of the petition, not to the offences alleged against Babar Ahmad but to the case that is being put by his family and the 140,000 people who have signed the petition, which I shall read as it is fairly short:
“Babar Ahmad is a British Citizen who has been detained in the UK for 7 years without trial fighting extradition to the USA under the controversial no-evidence-required Extradition Act 2003. In June 2011, the Houses of Parliament Joint Committee on Human Rights urged the UK government to change the law so that Babar Ahmad’s perpetual threat of extradition is ended without further delay. Since all of the allegations against Babar Ahmad are said to have taken place in the UK, we call upon the British Government to put him on trial in the UK and support British Justice for British Citizens.”
That is the petition that has attracted 140,000 signatures.
The word Kafkaesque is somewhat overused in the media and in Parliament too, but it probably does apply to this case, where somebody has been arrested and held in high-security prisons for seven years without—clearly—any charge and without, as far as we are aware, any intention by the British authorities to charge. Therefore, the petition asks that the British prosecuting authorities take the lead and make a decision to go ahead and charge him here, if there is sufficient evidence to do so.
The excellent report by the Joint Committee on Human Rights that was published in June deals with many of these issues; a key one is forum. We know that there is provision on the statute book that would allow a forum test to be introduced. The introduction of such a test would immediately deal with cases such as that of Babar Ahmad and resolve the issue. Again, I strongly believe that the House should have an opportunity to make a decision on that matter if the Government are not prepared to make that decision.
Babar Ahmad’s situation is intolerable. It has been described by one of the judges who considered the case as an “ordeal”. As I have already said, I am making no comment at all, and indeed the petition makes no comment at all, about the strength of the evidence about the nature of the offences, because that evidence has not been made publicly available. I am making a comment that somebody—a British citizen—has spent seven years in high-security prisons without any charge being brought against them. That fact alone should shock all Members who are present in Westminster Hall today.
Fiona Mactaggart (Slough) (Lab)
My hon. Friend has stressed the fact that Babar Ahmad has been in prison for seven years. I do not think that everybody who is concerned about his case recognises that that is the equivalent of the time served by someone sentenced to 14 years in prison. According to the sentencing guidelines, that is the kind of sentence issued to someone who is found guilty of grievous bodily harm, or carrying a weapon that they had previously brought to the scene, and so on. Normally, it would be very serious offences that would acquire such a long time in jail.
Mr Slaughter
I entirely agree and that is why I say, notwithstanding the points that have been made about the need to address the substantive issue as well as individual cases, that Babar Ahmad’s case is unusual for that particular reason. Although I have a great deal of respect and sympathy for other hon. Members who have spoken on behalf of their constituents, or about other issues that have been raised with them, I do not believe that there is any case that is as extreme as Babar Ahmad’s, because of the simple fact that somebody has lost their liberty for that time, which—whatever the outcome—will never be regained.
I conclude on the point that there seems to be general agreement. The number of Members present shows that this debate is worth while, and that it needs to go further if the Government are not prepared to act. I am afraid that there has been some shuffling of responsibility between the Backbench Business Committee and the Government, particularly in relation to the Babar Ahmad petition, which, with 140,000 signatures is, I think, one of the top three. We have had debates on the Floor of the House on important issues that have arisen from petitions with fewer signatures, so there is a clear case for Babar Ahmad’s detention to be debated there too. We can then see both from Members’ contributions and in a vote whether they feel the same antipathy as me, my right hon. Friend the Member for Tooting and others about how the case is proceeding—or rather not proceeding. As things stand, more years could pass without resolution of the case, and we, as people who are here to protect the constitution of this country, should all be deeply ashamed of that. If nobody, including the Backbench Business Committee and the Leader of the House, is able or prepared to deal with the matter, Members collectively should insist that it is debated and voted upon on the Floor of the House.
Richard Drax (South Dorset) (Con)
I, too, congratulate my hon. Friend the Member for Esher and Walton (Mr Raab) on securing the debate, which is a wonderful opportunity to put our cases. I am here to represent my constituent, Michael Turner, who lives in Corfe Castle in south Dorset, who has for too long been the victim of an outrageous injustice in the form of the European arrest warrant. Let us be clear from the outset that that legislation, flawed though it is, was meant, as I understood it, to deal with terrorism and serious crime.
Michael’s story begins in 2002 when he and a friend set up a marketing company operating out of Budapest. Regrettably, it folded in 2004. The Hungarian authorities allege that the two men acted fraudulently, leaving customers out of pocket to the tune of £18,000—not a huge sum. The two men denied the charge of fraud, and still do. In November 2008, after Hungary had joined the EU and Britain had signed up to the European extradition treaty, the authorities came for Michael.
Here in the UK, Michael fought extradition until 2009, when Mr Justice Collins overruled his appeal in the High Court and ordered the two men to hand themselves over to the Hungarian authorities. Michael’s barrister, Hugh O’Donoghue, was “outraged” at the decision, believing that the European arrest warrant was incorrectly interpreted and used. On Monday 2 November 2009, Michael and his partner went to Gatwick airport voluntarily, and were handed over to Hungarian special forces, who wanted to wear balaclavas to avoid being identified. The two men were assured that they would be allowed to call home as soon as they arrived, but no such call was forthcoming. They were refused bail on the ground that they would abscond—this when they had gone to Hungary voluntarily—and they were locked up, incommunicado, at a police station for three days before being moved to Veniga prison.
Michael’s family had to find a Hungarian lawyer to locate him. Even the Foreign Office did not know where he was, stating, in an e-mail to me, dated 4 November 2009, two days after Michael had been sent to Hungary:
“We were not initially aware of the case as the Hungarian authorities had not been in contact to notify us of Michael Turner’s detention.”
A judicial mess of scandalous proportions had begun, but far worse was to follow.
Locked up in this former KGB jail on the outskirts of Budapest, Michael was separated from his partner and friend, and placed in a small cell with three other prisoners for 23 hours a day. Here he remained for the next four months, without charge. That in itself is surely a breach of human rights—and how often do we hear that expression? His initial request to call the consulate was refused. The authorities had to be reminded that a call to the consulate was a right, not a privilege. He was allowed a one-hour visit per month and one shower per week—he had to basin-wash in his cell for the other six days. Having reading material, and receiving and sending letters, was made difficult for him, and he was continually shouted at in a language he did not understand.
The appalling conditions soon began to wear him down, as I am sure we can all imagine. Soon, and inevitably, it was being suggested that if Michael pleaded guilty his stay in prison would be shortened, but he rightly and bravely stayed silent. Anyway, why should he plead guilty when he thinks, and is sure, that he is innocent?
Behind the scenes, many people were trying their best to help Michael, and I must pay tribute to the Earl of Dartmouth, a UK Independence party MEP, who visited the prison, and Fair Trials International, which is doing what it can to help. It seems extraordinary to me—and I am sure to all hon. Members present and to millions of people in this country—that when so many illegal immigrants cannot be extradited to their countries because of their so-called human rights, it appears that a British citizen can be handed over almost on a whim.
None of us is sure why Michael’s four-month incarceration in that hellhole ended as abruptly as it did, but on the morning of 26 February 2010 the prison door opened and Michael was free, with no explanation or apology, and still no charge. In April 2010, he returned voluntarily and very courageously to Hungary to answer more questions. He was told that the police had interviewed more than 500 witnesses and that they needed more time for further investigations and interviews. It is thought that if the case does get to court, it will take about a year to cross-examine all the witnesses.
Michael returned to the UK and there was still no charge. This appalling case hangs over him like the sword of Damocles. The emotional, physical and financial cost is hard to gauge; the distress has been appalling. Unable to move on with his young life, Michael waits for Hungarian justice to take its course—a course that has seen my constituent subjected to imprisonment, psychological torture, huge expense, unrelenting stress and an understandable loss of faith in this country’s ability to look after her own. Hungary’s judicial system is not on a par with ours. It is primitive, bureaucratic and clearly unjust. In this country, as my hon. Friend the Member for Esher and Walton said, someone is innocent until proven guilty, but it would seem that that is not the case in Hungary.
Finally, I support my hon. Friend’s call for the Government to strengthen the protection of our citizens who are subject to extradition requests by implementing the recommendations of the report published in June by the Joint Committee on Human Rights. I am delighted to hear from my hon. Friend the Member for Battersea (Jane Ellison) that the Backbench Business Committee will be pushing hard to get the issue into the main Chamber, so that we can continue to debate this crucial and essential point.
Zac Goldsmith (Richmond Park) (Con)
Thank you very much, Mr Rosindell, for allowing me to sneak in at the last minute. I congratulate my hon. Friend the Member for Esher and Walton (Mr Raab) on securing the debate. He mentioned the well-known case of Gary McKinnon, and I want briefly to add my support to his cause.
That case, and some of the figures we have heard in the debate, show that we exist in an imbalanced relationship with the United States. That is reinforced by the fact that the Prime Minister and the Deputy Prime Minister were so reassuring on this case while in opposition, but now seem to feel at least that they do not have the power or the authority to follow through with some of those reassurances. That has to be addressed.
I am here to speak about a case that has already been mentioned briefly—that of a constituent of mine, Deborah Dark. She was arrested in 1988 in France, on suspicion of drug-related offences, and held in custody for eight and a half months. She was eventually found not guilty by a French court, and was released and returned to the UK, where she tried to get over the fact that she had wasted eight and a half months in jail.
Nearly 20 years later, in 2007, Deborah travelled to Turkey for a holiday, but instead of being able to enjoy it, as she would have expected, she found herself stripped at gunpoint at the airport by Turkish police. According to the police—whose behaviour, incidentally, was unspeakably disgusting and life-changingly appalling—they were acting merely on a tip-off from Interpol. That was the only explanation she was given; they did not elaborate in any way.
As we would expect, Deborah wanted an immediate explanation when she arrived in the UK. She called the police and was told there was no outstanding arrest warrant; they shrugged their shoulders. She asked the Serious Organised Crime Agency and was told it had no records on her either. Helpfully, it added that her arrest might have been a mistake.
Time passed and, with extraordinary calm, Deborah accepted that explanation. Then, in 2008, she travelled to Spain to visit her father, who had retired there and who was unwell. She tried to return to the UK after her holiday, which lasted a few weeks, but she was arrested at the airport. She was taken into custody by the Spanish authorities and told that she faced extradition to France.
That is when the penny began to drop. Seventeen years before, the French prosecutor had appealed the verdict clearing Deborah. That happened without her knowledge. She had been found guilty, without anyone bothering to tell her. In her absence, she was sentenced to six years. I repeat that she was never summoned to appear in court, never asked to defend herself and never given an opportunity to do so. She was never told that her acquittal had been overturned; these things happened entirely without her knowledge.
That was in 1989. More than a decade later, the French authorities issued their European arrest warrant, meaning that EU member states were compelled to arrest Deborah and send her to France to serve the sentence. As it happens, she refused to consent to the extradition and was granted an extradition hearing. Fortunately, the Spanish court chose not to extradite her, on the basis that so much time had passed and she was unlikely to get a thorough, proper or fair trial. After one month in custody, she was released from prison, and she returned home. However, it was not over.
When Deborah arrived in the UK, she was arrested by the British police at Gatwick airport. Again, she refused to consent to extradition, and she was released on bail, pending another hearing. In 2008, extradition was again refused, for the same reason—the passage of time.
Despite being cleared by two courts, however, Deborah remained subject to the European arrest warrant in other EU states until 2010, when the French finally withdrew it. Until that moment, she was, in effect, trapped in the UK and unable to visit her family in Spain for more than three years, all because of a conviction that she was never allowed to contest.
I have chosen to speak about Deborah not only because her case is horrific and she is my constituent, but because there are hundreds of examples of the European arrest warrant failing. Julian Assange, the boss and founder of WikiLeaks, is a well-known figure. He faces extradition to Sweden, despite the fact that he has not been charged anywhere or for anything, and despite the fact that the extradition is being demanded by a private prosecutor, described as a partisan prosecutor—in other words, they are not a member of the national judiciary or a formal representative of the state.
The system clearly needs changing, and it needs changing soon, because the number of such cases is rising. One thousand people were subjected to the European arrest warrant last year, and the figure grows every month. A remedy suggested by Fair Trials International would involve applying the principle of mutual recognition to the European arrest warrant. That would mean that once one member state had refused to execute a European arrest warrant, as happened with Deborah, it would automatically be withdrawn, along with any alerts on EU and international police databases. That remedy would have prevented Deborah from being subjected to her grim groundhog-day experience.
One alternative that has been proposed—including, I believe, by Fair Trials International—is that we raise the bar to capture only the most serious cases, and I certainly go along with that. As my hon. Friend the Member for Esher and Walton said, that is what this tool was originally designed for. I am sure there are alternatives, but I am no expert, and it is for the Government to identify the most appropriate steps. What is certain, however, is that the system needs radical and rapid reform to prevent such appalling abuses from happening again.
Yasmin Qureshi (Bolton South East) (Lab)
I congratulate the hon. Member for Esher and Walton (Mr Raab) on securing the debate. I also congratulate the Backbench Business Committee on allowing it. I hope there will be a more detailed debate on the Floor of the House.
I want to talk about the UK-USA extradition treaty and the European arrest warrant not because I have constituents who have been affected by them, but because—I suppose I have to declare an interest here—I am a lawyer who has dealt with criminal cases and who has an interest in human rights generally.
Like other hon. Members, I accept that we need extradition proceedings and a European arrest warrant. What we are concerned about, however, is how those provisions are used in practice. I want to talk, first, about the UK-USA extradition treaty, which was signed under the previous Government. Secondly, I want to talk about the practical ways in which European arrest warrants can be improved to ensure that they are issued in proper circumstances, are based on evidence and include safeguards. Thirdly, I want to touch on the recommendations of the Joint Committee on Human Rights, which has looked at the issue in depth. I urge the Government to accept those recommendations.
I am surprised that action on these matters has been delayed. When Ministers and other Government Members were in opposition, and these issues were discussed, they objected vigorously to them. In fact, the Deputy Prime Minister described the USA-UK extradition treaty as “lop-sided”. As my hon. Friend the Member for Bolsover (Mr Skinner) said, many eminent members of the Government were critical of the provisions and opposed them. I am surprised that changes have not been made, given that the Government have been in power for 18 months.
Sir Scott Baker is not correct when he states that the treaty has not operated unfairly. A key difficulty is that UK nationals cannot test the veracity of the evidence being used to seek their extradition. However, a US citizen facing extradition to the UK can challenge and test the evidence produced to extradite them. That is one reason why so few US citizens have been extradited to this country. They are therefore able effectively to challenge the evidence presented to them, when we are not.
Another argument, which Sir Scott Baker also uses, is that the treaty is not unfair to UK citizens, but why was there a need to negotiate a separate treaty with specific provisions with the USA? We have treaties with other countries that do not have such provisions, and those treaties require a greater burden of proof before people are extradited to those countries.
In my previous life as a prosecutor, I would toddle off to Bow Street magistrates court—it has now closed—to try to get extradition warrants. The documents I presented included information about the exact nature of the charges; the indictment had to state specifically what the offences were for which the person was being extradited. The documents also had to include the evidence being used to back the application. Furthermore, a senior member of the Crown Prosecution Service had to certify that that was proper evidence and that there was a proper case for extradition.
Finally, as soon as the person was extradited to the UK, committal proceedings had to commence immediately, and all the paperwork and evidence had to be served on the person. That ensured that somebody who was extradited to the UK was tried expeditiously. None of those guarantees is being given to UK citizens. Why are British nationals being given less favour than US citizens? It is completely wrong that the Government are still set on this course and have not changed the provisions.
On the European arrest warrant, I do not have an objection to the fact that it exists; my concern is how it is used in practice. When somebody has been extradited to another country, it often takes time to see whether the warrant has been applied wrongly, as in the case mentioned by the hon. Member for Richmond Park (Zac Goldsmith). In that case, the warrant was wrongly issued in France; the authorities had not realised that the person against whom it had been issued was unaware of the fact that there had been an appeal against their acquittal and that they had been convicted. Such negligence and such errors will occur, so I ask the Government to reconsider negotiating the basis on which European arrest warrants are issued.
The state should issue much stricter rules and guidelines to courts and judges on when to issue arrest warrants. For example, the evidence should be available, the person should be dealt with and looked after properly, and there should be procedural safeguards. Those are the things that are required—as well as that the offences on which people are extradited must be serious, not minor. Also, it should be possible to withdraw arrest warrants. I understand that in Poland once a warrant has been issued it is impossible to withdraw it.
Jeremy Corbyn
I understand the point that my hon. Friend makes, but is not the real problem the completely different standards of the legal systems across the European Union, and, indeed, the Council of Europe area, which, together with the virtual automaticity of the European arrest warrant, mean that we just mask the inadequacies of the current system and many people suffer miscarriages of justice?
Yasmin Qureshi
I agree, and that issue highlights the importance of how arrest warrants are implemented. Procedural safeguards must be put in place. There must be stringent requirements. Warrants must not be handed out as a matter of course, so that someone can come to court and say, “I want an arrest warrant,” without anyone looking properly into what has occurred. In our country, when police officers go to court to ask for arrest warrants, the magistrates, or the judge, look at what is presented to them and then they might agree to those things. In a nation state such as England, someone who is arrested in Watford, for example, knows that their case can be resolved quite quickly if there are procedural irregularities. Errors can be sorted out quickly. However, in a foreign country—with a foreign language, jurisdiction and everything else—it is not as easy to sort out mistakes. It may take months. That is why it is so important that warrants should be issued properly in the first place, using strict procedures.
The Joint Committee on Human Rights has presented some good, practical solutions that will help British nationals. It has suggested the forum provision, which would allow British judges to decide whether an individual case should be tried in this country, or whether there is a need for extradition. The cases of Babar Ahmad and Gary McKinnon and others have been mentioned, and one interesting thing about all those people is that their alleged offences are deemed to have occurred in this country. What is wrong, therefore, with our prosecuting them? Why cannot our prosecuting authorities do it? If there is evidence, they should be prosecuted. No one says that the people concerned should not be prosecuted. We all believe that if there is evidence against someone there should be a prosecution.
From what I have been reading about the case of Babar Ahmad—he is not my constituent, and I recognise the hard work done on his behalf by my right hon. Friend the Member for Tooting (Sadiq Khan)—what he did is supposed to have occurred in this country, and he has effectively spent nine years in prison. As my hon. Friend the Member for Slough (Fiona Mactaggart) said, that is comparable to a 14-year prison sentence, whereas if what is alleged against him had been proved, it might have carried only five or six years maximum. He has thus effectively served a sentence.
The important thing in that case, and in those of Gary McKinnon and others, is that the evidence apparently being used against them was found by the British authorities. That is especially true in Babar Ahmad’s case: when he was arrested there were supposed to be allegations, information or evidence against him, which form the basis of the extradition case. If that evidence is so cogent and good, there is nothing to stop the British authorities prosecuting Babar Ahmad in England. If that is not happening, there is a reason for it, which is presumably the fact that there is insufficient evidence against him. I worked in a prosecuting authority for about 10 years, and if there was evidence we would prosecute. If there was not, we did not. In my opinion, that explains what is now happening.
I understand the sensitivities of the USA because of the problems that it has had, but those sensitivities should not mean that the liberties and rights of British nationals should be put aside for the interests of another foreign state that will not give reciprocal rights. The USA may have its own political agenda, and its own agenda as to why it wants Mr Ahmad. If the extradition goes through, Babar Ahmad will probably spend the rest of his life in solitary confinement or in high-security prisons in the USA, so his life will be destroyed. I therefore urge the Government to rethink the issue of the forum provision and allowing our judges to decide whether cases should be tried here. In cases where there is evidence against someone, our prosecuting authorities should be the ones to try them.
Mr David Burrowes (Enfield, Southgate) (Con)
What has today’s debate in Westminster Hall—on a matter worthy, as other hon. Members have said, of debate in the main Chamber—to offer? There has been a review by eminent lawyers and judges, who after consideration have given their weighty views on extradition. One outcome of the review—unintended, I hope—has been, certainly according to commentators, to pit judges against politicians, in what is almost a parody of self-serving, lobbied politicians and venerated, balanced judges with their measured approach. On that basis, there is no contest, and the Government should simply follow the recommendations in the weighty report.
It seems to me that, on a cross-party basis, we all say no to that. The Attorney-General has made it clear that the report is offering guidance, and that is all. It is for Government and, as we will say loud and clear today, for Parliament, to set the clear parameters of extradition. We should not lightly discount the strong views of Parliament. The June report from the Joint Committee on Human Rights has been mentioned, and it should be given due consideration, as should previous parliamentary votes on forum and the many previous debates.
The problem with the review is that it seems to betray a lack of appreciation of the shared responsibility that we have for extradition. It is an issue for politicians, Government and Parliament, not so much through party politics—the parties are properly reflected across the debate today—or through the activity of the lowest form of lobby-fodder, whether domestically or internationally on the sidelines of summits: the issue involves politics because extradition is the shared responsibility of accountable, elected politicians, who safeguard, together with the judiciary, the rights of UK citizens, in relation to liberty and security. The fact that extradition involves the surrender of the liberty of an individual, and giving up that citizen to the full force of the law of another country, must involve politicians as a matter of principle.
The review relies heavily on the argument about the risk of costs, complications and delays. We need to rise to meet the challenge by ensuring that we have an efficient but fair and just extradition system, with the appropriate safeguards. Not to do so is to abdicate our responsibilities. Indeed, it is that abdication, because of inadequate legislation under the previous Government, on which prosecutions, courts and politicians followed through, that has led to an unfair and inefficient extradition system. It was a profound cause of the nightmare of my constituent Gary McKinnon. I commend the Home Secretary, however, for being the first Home Secretary to take responsibility, remove the matter from the courts’ hands, and review the medical evidence.
I pay tribute to Gary McKinnon’s mother, Janice Sharp, who this week, quite properly, was awarded the Liberty “Close to Home” award for her passionate and sustained campaign for her son, and her campaign to reform extradition for the sake of other UK citizens. The Baker review made reference to Gary McKinnon’s case, but I believe it was misrepresented. The reality of the situation that he faces was not reflected in the somewhat dismissive, even cynical, comments about him. He has in effect been on bail for 10 years. That must be one of the most unwanted records for any British citizen in this country. Normally, we would only find such a situation under a despotic regime like Burma’s, not in Britain, the home of the rule of law.
We must recognise that Gary McKinnon’s life has a reality not reflected in weighty tomes. He lives in a largely hidden world, in a permanent state of fear. It is fear not of justice—he has always been open and willing to face justice in this country, including prosecution and, if appropriate, sentencing—but of extradition. His Asperger’s syndrome and mental illness put him in a 24-hour nightmare of anxiety, depression and suicide risk. As I said to the Prime Minister in a question earlier this year, his life is hanging on a thread. I did not exaggerate his case then, and I do not now. Gary McKinnon will not be extradited to the States because, as I am reliably informed, if a final decision were made to extradite him, he would take his life. Hon. Members need not take my word for it; they can take the word of his doctors.
The medical evidence was not considered by the Baker review. Obviously, it was not within the review’s primary remit, but the review has misrepresented Gary McKinnon’s position. I must make it clear that the review has no direct relevance to his future; that is being considered by the Home Secretary, on the basis of the medical evidence before her, to establish whether his human rights are being breached. However, without sight of that compelling medical evidence, which I have seen, and an appreciation of the evident breach of Gary McKinnon’s human rights, it is not possible for the review to represent his case fairly. If the Baker review had considered the medical evidence, I would defy it not to see Gary McKinnon’s case as an example of how woefully we have let down British citizens time and again, as we have heard today.
Gary McKinnon’s case is an example of the problem with extradition law, and it continues to highlight what the Baker review missed. Lessons to be learned from his case include, first, the need for proper judicial oversight to avoid undue political influence. We saw through Wikileaks how previous Prime Ministers effectively used Gary McKinnon as a political pawn in meetings with the United States. A forum bar would give courts the proper opportunity to make a judgment about the interests of justice, consider proportionality and medical evidence and make the right decision.
Secondly, prosecution authorities in dual criminality cases need to be able properly to consider whether enough transparent information has been passed between jurisdictions to account for the fullness of criminality, in order to determine the best venue for prosecutions. Thirdly, we need an Executive safeguard with appropriate judicial involvement and a shared responsibility to have better clarity and focus, in order to allow the Home Secretary to recognise her responsibility in terms of extradition—that might be in terms of human rights, or it might have to do with intelligence that comes to light in this or other countries—and make the right decision. That is necessary so that we can respect the rule of law, as I am sure Members across the House want to do, and the idea of an accountable Executive and Parliament.
We must also not ignore the treaty. British citizens in this country were sold down the river by the negotiations. Why have the Netherlands and Israel, for example, been able to negotiate agreements with the United States that any of their citizens extradited to the US and convicted there will be repatriated and sentenced in their home country? We do not have such an agreement. We must rely on assurances, promises and hope.
This is an issue of responsibility that includes a question of trust. Strong words have been said over a number of years on behalf of my constituent, including by Ministers before the election. The Prime Minister said:
“Gary McKinnon is a vulnerable young man and I see no compassion in sending him thousands of miles away from his home and loved ones to face trial. If he has questions to answer, there is a clear argument to be made that he should answer them in a British court. This case raises serious questions about the workings of the Extradition Act, which should be reviewed.”
That was relevant in 2009, and it is relevant in 2011.
The Minister present, after I raised my urgent question during the previous Parliament, said
“is it not a breach of his human rights to send a man with Asperger’s and depression to face a possible 60-year sentence?...It is, of course, horribly ironic that it would be illegal to send someone to another country to face an explicit death sentence.”—[Official Report, 1 December 2009; Vol. 501, c. 978.]
Let Gary McKinnon be a living and last reminder of how we have reformed extradition, not a dead reminder of how we have failed British citizens.
Sir Menzies Campbell (North East Fife) (LD)
It is a pleasure to have the opportunity to speak in this debate. I congratulate my hon. Friend the Member for Esher and Walton (Mr Raab) on securing it. Like others, I believe that this debate should be held in the main Chamber. We are discussing fundamental constitutional rights. There is only one forum where those rights should be discussed, and that is the Floor of the House of Commons. The Leader of the House was with us a little while ago, and I have no doubt that he heard what many Members said, but I shall make a point of going to see him after this debate to reinforce the view that the Chamber is the place for such issues.
I first took an interest in these matters in July 2006, when at Prime Minister’s questions in two consecutive weeks, I sought to interrogate Tony Blair. I said then what I say now: the extradition treaty with the United States puts United Kingdom citizens in a position of disadvantage compared with their US counterparts. It is implied that the United States embraced the treaty, but that is not true. The Senate waited until autumn 2006 before ratifying it. The purported reason was that the strength of the Irish lobby in the United States was such that senators were concerned that the treaty, if ratified, might cause alleged terrorists from Ireland in the United States to be extradited to the United Kingdom. The treaty did not have an immaculate conception.
The treaty is wrong in principle. Extradition is based on the principle of reciprocity. For a state to give up one of its citizens to another jurisdiction can be justified only by the confident knowledge that citizens of both states have equal rights. I know that, here in the United Kingdom, the representatives of the United States have some reservations about what I and others are saying today. They need have no anxieties. I wish not for a levelling down but a levelling up. I seek equivalence, not exceptionalism.
I have sought to test the integrity of my position by asking myself what a United States member of Congress would do if the positions were reversed. We all know that such is the strength of feeling on Capitol hill about such issues that, if United Kingdom citizens were in a better constitutional position than Americans, there is no member of Congress who would not seek, as we do, to protect their own citizens. One thinks, for example, of Robert Byrd, the longest serving senator in the history of the United States and a constitutional expert to his fingertips. Faced with the situation that we face, I have absolutely no doubt how vehement and articulate his opposition would be.
Richard Fuller (Bedford) (Con)
Does my right hon. and learned Friend agree that it is precisely because of the traditions of jurisprudence and respect for habeas corpus in both the United Kingdom and the United States that it is extremely important that we work together to level up the rules on extradition, as he says, so that we can send a message to other countries that are trying to achieve the same level of justice to which we have aspired and that we are achieving?
Sir Menzies Campbell
I agree entirely. I can say this as a Scots lawyer, because we have a civil law rather than a common law system: one important export, even as long ago as our colonisation of the United States, was the common law. Habeas corpus is a fundamental principle of the law in the United States. Not only in federal law but in the laws of each state, habeas corpus occupies exactly the same important position, as my hon. Friend suggests.
I fancy that there is not much patience in the Chamber for an analytical exercise in the interpretation of the Baker report, but in order to provide some further reading to Members who have not yet had the opportunity to do so, I refer them to part 7, pages 231 to 243, paragraphs 728, 729, 735, 739 and 742, the burden of which is that the Baker report concluded that there was no significant difference between “reasonable suspicion,” which is the standard applicable in the United Kingdom under the treaty, and “probable cause,” which is the standard necessary in the United States and which is enshrined in the fourth amendment to the United States constitution.
I have the misfortune to disagree with the conclusions of the Baker report. I believe that probable cause is a requirement that has to be met before any United Kingdom citizen should be extradited to the United States. Why do I believe that? Because before surrendering a British citizen to a foreign jurisdiction, the state—our state—should reasonably require to ensure that there is a case requiring to be answered, not a suspicion. To borrow an illustration from my own experience as a prosecutor and from domestic law on both sides of the border, suspicion justifies arrest, but suspicion does not justify charge or prosecution. Probable cause, in my view, is necessary before prosecution can be justified.
I think that my argument is underpinned by the conclusions of the Joint Committee on Human Rights, to which reference has already been made. It concluded, rather as I have suggested, that it is necessary that the standard of proof on both sides of the Atlantic should be the same. Those arguments are properly set out on page 4 of the report. That the issue might require adjustment of the treaty was recognised by the Committee, whose Chair, the hon. Member for Aberavon (Dr Francis), is present, and by Baroness Neville-Jones, who gave evidence on behalf of the Government and who appeared to be optimistic that adjustment could be achieved.
I am persuaded by one other element of the consideration of these matters. There is a considerable predisposition on the part of the courts of the United States to invoke extraterritorial jurisdiction to an extent that we simply do not apply in this country. We have, therefore, in practice, no reciprocity in the application of extraterritorial jurisdiction. It is my view, however, that if the significant difference in the approach in the United States is, as we know, common, that is all the more reason that the standards of proof should be equivalent.
Let me deal quickly with three further issues. First, on the matter of forum, it is surely correct in principle that there should be an effective statutory presumption that a case be tried in the country where the crime is committed, and that only in the most special circumstances should there be a departure from that principle. Secondly, on legal representation—this is also recognised by the JCHR—someone who is being sought to be extradited needs good representation not just in this country, but in the country to which they are extradited. We know that the availability of public funds, or indeed of public defenders, is to different standards in different states of the United States.
Finally, on the application of the Human Rights Act 1998, which is, of course, a statutory requirement for the Home Secretary, I do not believe that there is any justification for the Baker committee’s recommendation that the Home Secretary’s authority on that should be transferred to the legal system. Baker says that there should be a removal because of delay being caused if it is invoked and because determination of extradition should be exclusively a judicial process. That, I think, fails to understand the nature of extradition, notwithstanding the detailed historical analysis that the Baker report contains. Extradition is diplomatic in the first instance. It becomes judicial and ultimately it is political.
In exercising that power, the Home Secretary is not acting ultra vires; she is exercising the power conferred on her by Parliament—the same sovereign Parliament that resolved that other parts of the procedure should be exercised by the courts. I see nothing wrong in principle with the Home Secretary exercising a power conferred on her by Parliament additional to the powers of the court. Parliament has chosen not to grant exclusive jurisdiction in matters of extradition to the courts, as Parliament is entitled to do. The truth is that the Home Secretary is exercising an administrative function in furtherance of the duties incumbent on her by the Human Rights Act.
It has been suggested that it would perhaps be helpful if the considerations that the Home Secretary is obliged to take into account were more fully described in legislation, such as the health of the person being considered for extradition, which is relevant to the speech we heard a moment ago by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes), the impact on family life, the quality of treatment that a person might receive in the penal system, and, of course, the proportionality of the likely sentence that might be imposed.
Charlotte Leslie (Bristol North West) (Con)
I thank my right hon. and learned Friend for giving way and my hon. Friend the Member for Esher and Walton (Mr Raab) for securing this debate. We have talked a lot about extradition treaties between the USA and the UK, and the European arrest warrant. Does my right hon. and learned Friend agree that there is a case for looking at extradition treaties with countries in category 2 territories, such as South Africa, where my constituent, Shrien Dewani, may face trial, and at considerations such as the health of the person and whether they will face a fair trial, given, in the case of my constituent, the high media coverage that his case has received in the country to which he may be extradited?
Sir Menzies Campbell
My hon. Friend underlines the need for the Home Secretary to have the jurisdiction and the discretion that the law presently allows. It is a powerful argument in support of the view that that discretion should remain.
I have not sought to deal with any particular case or set of circumstances, but my interest in this matter was first aroused by the case of the NatWest three, one of whom, Mr Gary Mulgrew, was a constituent of mine. I think that one has to be careful about changing the law in response to particular cases—there is an old legal dictum that hard cases make hard law—but today this is an opportunity to define principle, and I for one am delighted that so many Members have chosen to be present for that purpose. I look forward to the occasion when we have a resolution on the Floor of the House to which we can give effect.
Dr Hywel Francis (Aberavon) (Lab)
It is a pleasure to follow the right hon. and learned Member for North East Fife (Sir Menzies Campbell). We both appeared before the Backbench Business Committee in support of the hon. Member for Esher and Walton (Mr Raab), with the full support of my right hon. Friend the Member for Leicester East (Keith Vaz), who is the Chair of the Home Affairs Committee. I congratulate the hon. Member for Esher and Walton on securing this important debate on extradition. I speak as Chair of the Joint Committee on Human Rights and am very pleased to fully support the hon. Gentleman. He is a member of my Committee, and I am delighted that he has strongly supported its unanimous and wise recommendations.
It is almost a year since the Committee announced our inquiry into extradition. The Baker review began a couple of months before our inquiry. My Committee’s intention was not so much directly to influence that separate process, but to set out for Parliament the human rights implications of current extradition policy, so that a more informed discussion could take place when the findings of the Baker review emerged. That has now happened and this debate is, I hope, just one part of that informed discussion. As many hon. Members have said, we hope that discussion will continue and take place somewhere more appropriate. I will say something about that in a moment.
It is disappointing that this debate is taking place in Westminster Hall. It seems to suggest that human rights issues are, somehow or other, not mainstream or important but peripheral, or that extradition is a small matter affecting very few people, most of whom appear to be deserving of whatever treatment they suffer in the countries to which they are extradited. That is not the case. We all know the cases that have attracted, quite rightly, a great deal of public attention: Gary McKinnon in terms of the UK-US extradition treaty, and Julian Assange in terms of the European arrest warrant. I should place on record my gratitude, as Chair of the Joint Committee on Human Rights, for the way in which so many hon. Members today have spoken up in support of their own constituents.
There are many less well-known cases that deserve attention. There are cases that include flagrant injustice, unfair treatment and even mistaken identity, as we have already heard. My Committee was privileged to hear the moving evidence given by many of the people involved, such as Andrew Symeou, Deborah Dark and Edmond Arapi. Nor are we dealing with only a handful of cases. In 2009-10, 699 UK citizens were surrendered to other European Union countries under the European arrest warrant alone.
I must emphasise that human rights are massively important. This is a human rights debate, and debates on human rights should attract the attention of as many hon. Members as possible, and should be a matter for the main Chamber. It is very gratifying, as a number of Members have already said, to see so many Members here today supporting human rights. Extradition engages a number of different human rights: article 3, prohibition of torture, or inhuman or degrading treatment; article 5, right to liberty and security; article 6, right to a fair trial; article 8, right to respect for private and family life; and article 14, prohibition of discrimination. We have heard many examples of what we would consider breaches of those human rights this afternoon.
Extradition agreements are vital, and this country has benefited from agreements that enable us to bring foreign citizens or absconders to justice here in the UK. Citizens of one state must not be immune from the laws of another. If you are accused of a crime, you must face justice, and it may be right to do so in the state where the crime was committed. However, does our shared common legal framework and belief in human rights mean that we can rely on the operation of justice equally across Europe or, indeed, across the world?
We cannot take comparable standards of justice for granted. Our inquiry showed that although the European arrest warrant has brought benefits in terms of a quicker, more streamlined system of justice in Europe, it does not have the right safeguards to guarantee human rights protection; nor does the US-UK bilateral extradition treaty, as we have already heard. It is an important feature of our system that some rights may be qualified, and that there is a just and proportionate balance between the interests of the state and the interests of the individual; for example, in freedom from discrimination, and the right to privacy and family life.
Some rights engaged by extradition are the most fundamental: liberty and security, and the right to a fair trial—both of which are only qualified in times of war or public emergency—and freedom from torture, or inhuman and degrading treatment. That is, of course, an absolute non-derogable right. Our Committee’s report highlighted areas where human rights are at risk, and set out the changes that would provide the robust protection needed. First, we said that Parliament should be asked to commence the “most appropriate forum” safeguard in the Police and Justice Act 2006. That would require the judge to consider whether it is in the interest of justice for the individual to be tried in the requesting country, and to refuse the extradition request if it is not. There should be a requirement to show a prima facie case, or a similarly robust evidential threshold, which would mean that a court could refuse extradition if it was not satisfied that a country had shown that there was a case to answer. A proportionality principle should be added to the EAW, to ensure that the human rights implications of extradition are not disproportionate to the alleged crime.
The Government should ensure that the human rights bar is effective in practice as well as in law. Although the bar requires the judge to consider whether extradition is compatible with the human rights of the individual concerned, the threshold set by case law here is very high indeed, allowing material such as reports of the UN Committee against Torture to be regarded as evidence of possible human rights abuses. That would strengthen protection.
Access to legal representation needs to be reviewed. Present provision is patchy and often woefully inadequate. We need to ensure that other EU member states do not use the EAW for purposes of investigation—or, as some hon. Members have already said, fishing expeditions—rather than trial. Finally, in relation to the notoriously asymmetrical UK-US extradition treaty, the Government should level the playing field. The proof required when extraditing a person to the US must be raised to the same standard as that required when extraditing from the US to the UK.
The Baker review has now reported. It might seem churlish to take issue with a review that seems to be so comprehensive, but many members of my Committee, and I am one of them, are disappointed to note that in many areas the review has not drawn the same conclusions as the Committee’s report. However, we are encouraged that the review supports my Committee’s conclusion about the need for better legal representation for those subject to extradition proceedings. Likewise, the review finds that any future amendment to the framework decision underpinning the EAW should include a proportionality test to be applied in the issuing state. That broadly echoes a recommendation from our report.
The Baker review also came to similar conclusions to my Committee on the issues of excessive pre-trial detention, maintaining current limits at the discretion of the Secretary of State, with sentences served in the UK for those whose custodial sentences are 12 months or less. That gives the Committee some hope that there might be areas where the Government can move more quickly when consensus suggests a clear and simple path. I do not intend to analyse or criticise the review on areas where its conclusions differ from those of my Committee. We may decide to revisit the whole area in the light of the review’s findings.
Unfortunately, the Baker review and my Committee’s report diverge on some of the most important aspects of extradition, such as forum, the requirement for a prima facie case, and the fairness of what seemed clearly to the Committee to be an unbalanced US-UK treaty. It is gratifying to hear so many hon. Members supporting my Committee’s position, rather than the Baker review.
Penny Mordaunt (Portsmouth North) (Con)
On the point about the forum bar and the other test that the hon. Gentleman has described, one of the criticisms of that in the panel was that, in addition to adding extra cost, it would delay the process. Does his Committee have a view, where extradition is justified, about whether having those safeguards would in any way impede that process?
Dr Francis
I am sure my Committee has a view. I am a bit anxious not to get involved in individual cases, but as I have already indicated, my Committee is strongly in support of the principle of extradition. What we are debating today are the flaws and weaknesses in the processes. The Government have a unique opportunity to address the issue, and I am grateful to the hon. Lady for the points that she has made.
I wish to probe the Government on their intentions, as do many hon. Members here today, and on the timeline for decisions to be made in this area. I have no doubt that the Government may well hurry a little more if we have the opportunity to debate the matter in the Chamber.
When the Baker review reported, my Committee agreed that I should write to the Home Secretary to seek information about when the Government would respond to the review and to my Committee’s report. This week, we received a reply that was broadly unhelpful: a response will be made “as soon as practicable”. Can the Minister give some sense of what that expression means?
The Attorney-General was asked about the review and its findings in the main Chamber last week. When he referred to them as “guidelines”, there was some speculation that he was implying that the Government were distancing themselves a little. That may or may not be the case, but can the Minister spell out whether, when the Government consider the review’s findings, they will also be considering not only my Committee’s report, which comes to different conclusions in some areas, but other important reports, which have been mentioned this afternoon, by such bodies as Justice and Fair Trials International?
It would be good to hear from the Minister that the Government consider the matter urgent, and as far as we are concerned, judging by the strength of unanimous feeling this afternoon, it is urgent. Some changes can be made quickly, even if others might take longer to decide upon and resolve. The rights of our citizens must be protected against the sorts of injustice that have traumatised so many people and their families, many of whom gave evidence to our inquiry.
[Mr Edward Leigh in the Chair]
Charlie Elphicke (Dover) (Con)
Welcome to the Chair, Mr Leigh. I congratulate my hon. Friend the Member for Esher and Walton (Mr Raab) on securing an extraordinarily important debate and the Backbench Business Committee on doing such great work to ensure our chance to have this discussion. I want to keep my remarks brief, because so much has been said in the evolving consensus of the debate. In particular, I pay tribute to the hon. Member for Bolton South East (Yasmin Qureshi) and my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) for their powerful contributions.
There has long been a tradition that Parliament is the last backstop for the liberty of the subject and the protection of the rights of property. It is right for us to be deeply interested in the liberty of our electors and citizens, and it is particularly great to see in the Chamber the shadow Justice Secretary, the right hon. Member for Tooting (Sadiq Khan), who has remained in his seat throughout the debate and who has been such a powerful advocate for his constituent, Babar Ahmad. There seems to be a strong, cross-party feeling that things are simply not right.
To pick up on one issue, if people are in the UK and commit a crime in the UK, the deep, natural sense that we all—the person in the street—have is that such people should be prosecuted in the UK for that act, if it is an offence in this country, and not be taken away from home, loved ones, community and everything familiar to be prosecuted in a foreign country. In particular, I have long found the US-UK extradition treaty troubling.
Chris Bryant (Rhondda) (Lab)
May I issue a slight corrective? Everyone thus far has talked about British nationals being extradited. Quite often, a request under a European arrest warrant, or for that matter an extradition request, is for a non-British national. One reason for the number of European arrest warrants from Poland being so high is that a lot of them are for Polish people whom the Polish Government want to take back to Poland.
Charlie Elphicke
The hon. Gentleman makes a fair point, but I am concentrating on our citizens and our electors.
The situation has long troubled me: in principle, if people commit an offence in this country, they should be prosecuted in this country. Many of us feel that way. According to paragraph 4 of article 8 of the treaty on extradition with the States:
“If the offense has been committed outside the territory of the Requesting State, extradition shall be granted in accordance with the provisions of the Treaty if the laws in the Requested State provide for the punishment of such conduct committed outside its territory in similar circumstances.”
Perhaps I am an old-fashioned lawyer—that is my background and training—but I feel deeply that the right forum for prosecution in such a case is in the UK and that people in this country should be tried by their peers. Perhaps I am old-fashioned, perhaps it is our jurisprudence and long legal tradition, but that is how I feel, as so many of us do.
Chris Bryant
One area in which we in this country have changed direction slightly in the past few years—rightly so, and I suspect the hon. Gentleman would agree with me—is sexual offences, possibly committed in a country such as Thailand by a British national, that might not be prosecuted in Thailand, but could be in this country.
Charlie Elphicke
The hon. Gentleman makes the case for the extradition of a British citizen to another jurisdiction where the offence was committed and, arguably, if a sexual offence was committed in Thailand, the right forum for the case would be where the offence took place. I am speaking, however, about when the actus reus of the offence is alleged to have taken place in the UK—in particular, in internet-type cases—so the evidence, and the proper forum, would seem to be in the UK. That is my deep sense of how things should be: if a crime is committed in the UK, it should be prosecuted in the UK. One should not be seized from the UK, as the NatWest three famously were, and sent before a jury in Texas. Having been a partner in an American law firm and having talked to colleagues, my understanding is that Texan juries are simple: people from Texas get a good hearing, but if people are not from Texas, it is a bit more hit and miss. One needs to be cautious in such cases.
Another thing that I and many people feel strongly about is reciprocity, in particular the remarks in the Scott Baker report about probable cause versus reasonable suspicion. That takes us to paragraph 3(c) of article 8 of the treaty. It says
“for requests to the United States,”—
it is only to the United States—
“such information as would provide a reasonable basis to believe that the person sought committed the offense for which extradition is requested.”
That “reasonable basis to believe” finds its origin in the fourth amendment to the US constitution, which was passed in 1791. Interestingly, in our jurisprudence that principle found its heart and motivation in the famous, landmark case of Entick v. Carrington in 1765. I feel that in our Parliament we sometimes forget our finer and more enduring principles, while the Americans seem to embed them slightly more effectively. The Scott Baker report states, in effect, that there is no real difference between probable cause and reasonable suspicion. I do not share that conclusion.
The table in paragraph 7.30 on page 237 of the Scott Baker report, which I am sure everyone has read in great detail, clearly states of requests to the United States:
“Information satisfying the probable cause test”,
but of requests to the United Kingdom it states:
“Information satisfying the reasonable suspicion test”.
Is there a difference between probable cause and reasonable suspicion or not? Scott Baker says not.
Let us look at more of the detail. The Scott Baker report then mentions the definition of “probable cause” in paragraph 7.35 on page 239:
“A well-known definition of probable cause is, ‘a reasonable belief that a person has committed a crime’… The Oxford Companion to United States Law defines probable cause as, ‘information sufficient to warrant a prudent person’s belief that the wanted individual had committed a crime’.”
We are talking about the difference between reasonable suspicion and reasonable belief, and I say that belief is a rather higher test than simply suspicion.
Let me give an example. An hon. Member’s Order Paper has gone missing in the House and the Member thinks that a colleague has taken it—but which colleague? There are so many around. The Member sees the Order Paper, or part of it, poking out of a colleague’s jacket, so the Member has a reasonable belief that that colleague has taken it. If the Member does not see anything and merely suspects the ne’er-do-well in the next seat, that is reasonable suspicion, because that colleague has done that kind of thing before. Belief is a higher test than suspicion, and there is strong feeling of concern—rightly—that the treaty does not have the degree of reciprocity that it should have.
Another matter that I feel strongly about, because I believe strongly in the liberty of the subject and the proper testing of any case, is the fact that there should be the old prima facie test that we used to have. I know that that would raise the objection that it leads to long hearings and so on, but why should we not have the same test for extradition as for a committal for trial of the old style? That seems to me to be the right way to go, because we should be cautious before sending our citizens abroad. I appreciate that that may cause difficulties with the European arrest warrant, because it is bound up with the wider European issue, where angels fear to tread. However, leaving that aside, we have wider discretion with other countries, and perhaps we should consider firmer testing of the proof, particularly with jurisdictions where we are unsure whether they will provide the proper level and quality of information and fair trial, and when we worry that they might not be entirely straightforward and honest about their level of evidence. Today, we have heard about cases in which there has been concern about the level of evidence.
I would like the Minister to provide some clarity. I understand that 24 British citizens have been extradited to America, and that one American has been extradited to the UK. Given that the treaty was entered into to deal with terrorism, how many of those 24 cases involved extradition for terrorist-related charges, and how many did not? That is germane to how correctly the House was led when the treaty was introduced. It was told at the time that the treaty covered terrorist activities, but not wider activities.
The Secretary of State should have a backstop power to decline to authorise extradition, and reintroduction of that should be considered to provide extra, discretionary protection in favour of liberty of the subject. We should be super-cautious before sending any of our citizens to face trial in another jurisdiction.
Tom Brake (Carshalton and Wallington) (LD)
I will be brief, first because, regrettably, I have a prior engagement. I apologise to the Minister and the Opposition Front-Bench spokesman for being unable to be present when they respond to the debate. However, I will read Hansard carefully, because the Minister has a dilemma. An independent review has taken place, and probably all right hon. and hon. Members who have spoken wish that the outcome of that review was slightly different. I hope that Hansard will reveal how the Minister intends to take the matter forward.
My second reason for being brief is that many right hon. and hon. Members have made pertinent and cogent points, and have explained why the situation is not palatable or acceptable. In particular, my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) set out the concerns with the clarity and precision for which he is renowned. I hazard to say that he used an analytical and forensic approach, something that he thought the Chamber would have no appetite for, but I think it did. There is clearly an appetite in the Chamber today for the matter to be pursued in the House in the near future, with a debatable motion that can be voted on. I would welcome that.
The Liberal Democrats have a history of supporting campaigns to prosecute UK citizens in UK courts, and most notably in cases such as the NatWest three in 2006 and that of Gary McKinnon. My right hon. and learned Friend played a central role in pushing that. In 2009, while in opposition, our leader, the Deputy Prime Minister, said that Gary McKinnon’s extradition would amount to a travesty of justice. He also said that the US-UK extradition treaty is lop-sided. I support that position and agree with that description. The treaty is lop-sided, and the same could be said about the European Union and the European arrest warrant. However, we must adopt a balanced approach to those arrest warrants, and right hon. and hon. Members have referred to cases in which constituents have been extradited, describing the impact on them. Equally, some hon. Members know of British citizens such as a constituent of mine whose son was seriously assaulted in Greece and nearly died as a result. Those who were believed to be responsible were British citizens who were subsequently extradited to Greece using a European arrest warrant. We must adopt a balanced approach.
It is clear from the debate that right hon. and hon. Members on both sides of the Chamber believe that agreements, particularly with the US and the European Union, have stripped the UK of many discretionary powers, and have arguably sacrificed the rights of British citizens for the sake of better relations with the EU and the US.
One contribution that I should highlight is that of the hon. Member for South Dorset (Richard Drax), who is no longer in his place. He made an unfortunate reference to “so-called” human rights. As citizens, we have intrinsic human rights, and referring to “so-called” human rights denigrates our fundamental rights, which we should be proud of.
Sir Scott Baker’s report explains that, in his view, there is much confusion and misunderstanding about how extradition works, and he rebuts the calls for a change in the law, particularly in cases such as that of Gary McKinnon. I do not agree with his findings, but the review is independent, so dissent is legitimate, if not encouraged. That is why I shall read carefully what the Minister says about that independent review.
Keith Vaz (Leicester East) (Lab)
I understand that the Deputy Prime Minister, in his capacity as leader of the Liberal Democrats, has set up a party review under the chairmanship of the right hon. and learned Member for North East Fife (Sir Menzies Campbell). Can the hon. Gentleman tell the House when that review is likely to report?
Tom Brake
I thank my right hon. and learned Friend, who has responded in true ministerial mode. The panel will respond as soon as possible.
Sir Scott Baker’s conclusions do not take into account the emotional strain that is put on individuals and families involved in extradition cases. His findings draw conclusions about, for example, whether a forum bar would have been used in historic cases, which are difficult to substantiate. He also suggests a periodic review of arrangements with certain countries, such as Russia or Azerbaijan, with which I feel very uncomfortable. I welcome the fact that my right hon. Friend the Deputy Prime Minister, the leader of the Liberal Democrats, has asked my right hon. and learned Friend to set up a panel, which will report as soon as possible.
I will not refer to the Joint Committee on Human Rights, because many other hon. Members have done so. I shall simply conclude by thanking Sir Scott Baker for his review, although I do not accept his findings. I therefore welcome and endorse the panel that is being established under the leadership of my right hon. and learned Friend. I hope that that panel will make recommendations to address the imbalances that we identified in opposition and which, because we have taken no action so far, remain and must be rectified.
Keith Vaz (Leicester East) (Lab)
It is a pleasure, Mr Leigh, to follow the right hon. Member for Carshalton and Wallington (Tom Brake) on this important subject. I join others in congratulating the hon. Member for Esher and Walton (Mr Raab) on securing this debate. I agree that it would have been better to have this debate on the Floor of the House. These important matters have been of concern to many Members, hence the large number of right hon. and hon. Members who have attended the debate.
I want to re-emphasise the decisions taken so far by the Home Affairs Committee. Before I do so, I want to commend the excellent report of the Joint Committee on Human Rights. It was fair and balanced. It provided Members with an insight into the struggles faced not only by individuals, but by members of families who support those individuals not only in the normal legal process, but against Governments of other countries. It certainly will help my Committee in the work that we do.
I have an apology to make. We started our inquiry into extradition a year ago, but unfortunately events in the Home Affairs Committee tend to gather pace and different issues occupy us. We were therefore not able to conclude our report, partly because of the Committee’s heavy workload, but also because we were waiting for the outcome of Sir Scott Baker’s review. I am pleased to tell the House that Sir Scott Baker will be appearing before the Committee on 20 December. We have been trying to get him before us for a while, but we thought it best that he should report first before we questioned him on his conclusions. This debate will provide us with a great deal of information about individual cases, which I hope will assist the Committee and Parliament once we publish our report in February.
I am delighted that the Liberal Democrats will be having their own review. Judging by what the chairman of the panel has told the House today, I have a fair idea what the conclusions will be even before the review has begun. It would be very odd if we had conclusions from a review chaired by the right hon. and learned Member for North East Fife (Sir Menzies Campbell) that were different from what he has said today and different from the principled stand that he took on the Gary McKinnon case. It would certainly be a shock to us all if they were different from the words of the right hon. Member for Carshalton and Wallington, and the words of the Deputy Prime Minister when in opposition, when he was clear that in his view Gary McKinnon should not be allowed to go to America to face trial.
Sir Menzies Campbell
I am loth to cause a shock to the right hon. Gentleman. He can assume that my views have been formed for a long time and are unlikely to be changed. However, there is an important element, to which I made reference earlier, about how one would effect the changes in the treaty arrangements between this country and the United States to ensure that a system that we find acceptable was put in place.
Keith Vaz
The right hon. and learned Gentleman is absolutely right. That is the fundamental basis for what should happen next. There is consensus across the House about what is wrong with the treaty. I have spoken to previous Home Secretaries under the previous Government, one of whom expressed regret about the way in which the original treaty was negotiated. The next step, therefore, must be to look again at the treaty and see what changes can be made.
We have heard some extraordinary stories—I should say case histories, not stories—from the hon. Members for South Dorset (Richard Drax) and for Richmond Park (Zac Goldsmith). We have heard about the excellent work by my right hon. Friend the Member for Tooting (Sadiq Khan). The Home Affairs Committee listened carefully to the evidence given by the father of Babar Ahmad when he appeared. He spoke with great dignity. If someone’s son has been in custody for as long as Babar Ahmad, I would expect anger and outrage, but the way in which he gave evidence to the Committee was absolutely commendable.
The hon. Member for Enfield, Southgate (Mr Burrowes), who is not in his place at the moment, has done an outstanding job in protecting his constituent and in advancing the cause of Gary McKinnon. I do not think that we would have been discussing these issues had it not been for the case studies that we have had in Tooting and Southgate.
The Home Affairs Committee has unanimously written to the Minister. We wrote to the previous Minister with responsibility for immigration and the previous Home Secretary under the previous Government to urge them to write to the United States to express a view and conclude this matter. That is my plea to the Minister. We are told that politics is not included in such matters because of their legal nature, but we know that the Prime Minister spoke to President Obama about these matters when the President came to the United Kingdom, so there is politics in this. I cannot see why it has taken 18 months for the Home Secretary to make a decision about this case. I have written to her regularly on behalf of the Committee. Each time she has replied to tell me that the medical evidence cannot be agreed, but the medical evidence, as we have heard from the hon. Member for Enfield, Southgate, has not changed over the past 18 months. I hope that we can reach a conclusion on this. Once we conclude on Gary McKinnon, and then when we hear the views of the Deputy Prime Minister, we will know the coalition Government’s position on the Act and the treaty. That is why the McKinnon case is so important.
I hope that we will have closure on this matter. I hope that right hon. and hon. Members who have other cases will be able to get satisfaction. I do not know whether our report will be as brilliant as the report of the Joint Committee on Human Rights, but I hope that, when we report in February, after we have taken evidence from Sir Scott Baker, we will be able to assist the House in deciding what the next steps will be.
Caroline Lucas (Brighton, Pavilion) (Green)
Let me add my congratulations to the hon. Member for Esher and Walton (Mr Raab) on securing this important debate.
I am grateful to other hon. Members who have made a strong case for the radical reform of the UK’s extradition treaties by citing the powerful case studies of Deborah Dark and Gary McKinnon and far too many others. Like other hon. Members, I want to use the opportunity of today’s debate to raise the case of Babar Ahmad. As other hon. Members have said, Babar Ahmad, a British citizen, has been detained in the UK for seven years without charge or trial. He is fighting extradition to the USA under the Extradition Act 2003, which, incredibly, does not require the presentation of any prima facie evidence.
Babar is not alone in his ordeal. The poet, Talha Ahsan, is another UK citizen who has also been held—his case is related to Babar’s—without charge and without trial under our shocking extradition arrangements. He is now entering his sixth year of imprisonment. I pay tribute to the courage and bravery of Babar and Talha’s families in fighting for justice for their sons. Before I go on, I want to join others in paying tribute to Babar and Talha’s MP, the right hon. Member for Tooting (Sadiq Khan). He is here today, but, as a member of the shadow Cabinet, he is not permitted to contribute to this Back-Bench debate. As we know, he stands firmly by both Babar and Talha and their families and has done so since their ordeals began.
As hon. Members know, in June this year, the Joint Committee on Human Rights urged the Government to change the law, so that Babar Ahmad’s perpetual threat of extradition was ended without further delay. Since all the allegations against Babar Ahmad are said to have taken place in Britain, Babar’s father has started an e-petition to call on the Government to put him on trial in the UK and support British justice for British citizens. As hon. Members will know, over 140,000 people supported that e-petition and, although today’s debate is welcome, it is not enough.
There are three key reasons why we need a full debate on a votable motion in the main Chamber. First, I am grateful to the hon. Member for Battersea (Jane Ellison), who is no longer in her place. She sits on the Backbench Business Committee, and gave an assurance that it would look again at the possibility of holding a full debate in the main Chamber. That is important because of the level of grass-roots support for the e-petition on Babar Ahmad. The campaign had no formal organisation; there were no big newspapers behind it and it was basically an outflowing of grass-roots outrage that saw the families involved going from door to door in south London, out in the cold and the rain, standing outside supermarkets, churches and mosques, and making videos of each other signing the petition—many of those videos were posted on YouTube. It was an example of democracy in action.
The petition gained astounding support in such a short time because this is a shocking human rights case. People are rightly appalled at the simple but extraordinary fact highlighted in the petition: a British citizen is being held, without charge and without trial, in a maximum security prison, and that has gone on for over seven years. I have long lobbied for the closure of Guantanamo Bay, and as we approach the 10th anniversary of its existence, the cases of Babar and Talha remind us that one of the most fearful things about it—people being held without charge and without trial—is happening on UK soil at the behest of the US.
I appreciate that the Backbench Business Committee may find it difficult to devote parliamentary time to every petition that passes the threshold of 100,000 signatures, but this was a genuine grass-roots campaign. If we do not have a full debate in the Commons, we risk alienating the more than 140,000 people who signed the e-petition following efforts by the families involved. Those families want a debate on a votable motion in the main Chamber, as do the campaign’s many supporters. Officially, of course, all parliamentary Chambers are of equal standing, but in the eyes of the general public there is a difference between Westminster Hall and the main Chamber of the House of Commons. Critically, that difference comes down to whether there will be a vote and, quite rightly, Babar Ahmad’s supporters want to see their MPs take a stand on the issue.
Secondly, Babar’s family have been deeply moved that, in the midst of a recession, more people have expressed their concern to Parliament about a British citizen being detained for over seven years without charge or trial, than have shown their anger about rising fuel prices. We will send a negative message to all those who have engaged with the e-petition process if we do not take the matter forward with a debate in the main Chamber.
One of our strongest tools for combating the threat of terrorism is vigorously to protect justice, democracy and human rights. Every time we undermine the values that we purport to protect, with legislation such as the Extradition Act 2003, we run the risk of adding to the sense of alienation that we know is felt by many of our young people. Over 140,000 people have told Parliament that they want MPs to engage more with such issues.
The third reason for having a debate on the Floor of a House and a vote is that we urgently need to change the law. The detention without trial of Babar and Talha undermines our democracy.
Chris Bryant
Will the hon. Lady be clear about what she wants the vote to be on?
Caroline Lucas
I would be happy to take advice from other hon. Members on that, but a vote should consider the design of this country’s extradition treaty, so that it is not imbalanced, as it currently seems to be. I would like such a vote to refer directly to Babar but I understand why others may not. This is a point of general principle, illustrated clearly by the case of Babar Ahmad.
Members have heard the circumstances of Babar Ahmad’s arrest in 2003, and the fact that he sustained at least 73 injuries, all later documented by police and independent doctors. He filed a formal complaint, stating that he had been subjected to horrific physical, sexual and religious abuse by the arresting police officers. In March 2009, the Metropolitan police force finally admitted liability in the royal courts of justice in London and said that it had carried out the assault on Babar Ahmad in December 2003. The then Metropolitan Police Commissioner, Sir Paul Stephenson, admitted that Babar had been the victim of a
“serious, gratuitous and prolonged attack.”
In March 2009, Babar was awarded £60,000 compensation by the High Court. He is now, however, in his eighth year at a top-security prison, even though he has been found to have no case to answer in this country. The US has alleged that Babar was running a website that solicited funds for terrorist organisations, including al-Qaeda and Chechen rebels. That is a serious accusation, and there should, of course, be a trial. Babar and his family desperately want the case to stand trial but wish that to take place in the UK, not in the US, so that he can clear his name. That is partly because Babar is a British citizen and accused of having committed crimes in the UK, and partly because going to the US would separate him from his family, friends and legal representatives, and seriously undermine his ability to mount a strong defence.
Babar’s lawyers point out that other comparable prosecutions are proceeding in the UK. Nevertheless, in July 2004 and December 2006, the Crown Prosecution Service declared—as did the Attorney-General, Lord Goldsmith, in September 2006—that there was “insufficient evidence” to charge Babar Ahmad with any criminal offence under UK law, and that he should be extradited to the US. Last night, in a shocking turn of events, Babar’s lawyers received a letter from the CPS, which admitted for the first time that it was never given the evidence that was sent to the US, apart from “a few documents.” The bulk of the evidence was shipped straight to the US by the police. Astoundingly, although we had previously been led to believe that the CPS had viewed all the evidence and judged it insufficient to bring the case to trial in the UK, we now have a confession that it had not even seen all the evidence, let alone investigated it properly. A proper decision has not been made on whether a prosecution can go ahead in the UK.
After talking to the lawyers involved, I understand that the CPS knew all along that it had not been given all the evidence. However, it let Babar Ahmad languish in a maximum security prison with the threat of extradition to the US, under the false belief that the CPS had seen all the evidence against him. If that is the case, it is appalling and raises serious questions about why evidence that should have been given to the CPS was not produced, and why Babar was not told about it. Who directed and authorised that circumvention of the CPS, apparently in deference to and at the behest of the US?
The issue is simple: either there is evidence or there is not. If there is evidence, a prosecution should go ahead in the UK. The CPS must immediately obtain a copy of all the evidence, which was gathered in the UK by UK authorities, and it must then review that evidence together with its decision on whether to prosecute in the UK. Given the new revelation from the CPS, it seems—appallingly—that UK authorities deferred to the US, thereby subverting the process that should have been followed and denying Babar Ahmad a trial in this country. Because of the seriousness of the case, it is appropriate to call today for a full public inquiry into what has gone on.
On 10 June 2007, the European Court of Human Rights ordered the UK Government to freeze Babar Ahmad’s extradition until it had fully determined his final appeal. The European Court has declared that Babar’s application is partially admissible and now awaits further observations from the UK Government on the life sentence without parole, in solitary confinement in a supermax prison, that Babar faces if extradited to the United States. The final decision is expected before the end of the year.
It is astonishing that the previous Government passed an Act that does not require the presentation of any prima facie evidence by the US when they wish to extradite a UK citizen. That must be changed urgently, and the way to start such a process is by holding a debate in the main Chamber and having a vote as soon as possible.
In addition to enormous public support, this case also has cross-party backing, together with the support of the Joint Committee on Human Rights, the Home Affairs Committee, and 100 senior barristers and solicitors who wrote to the Leader of the House this week, requesting that the matter be properly debated in the main Chamber of the House of Commons. Today’s revelations by the CPS make the case for a full debate with a vote even more urgent, and I hope that the Government will look favourably at the issue.
Nick de Bois (Enfield North) (Con)
I am conscious that I will be the last person to contribute before the winding-up speeches. A lot has already been said, and I will not repeat points for the sake of repetition, as I believe may have happened previously. Having read the Scott Baker report, my goal is to seek assurances from the Minister that he will engage with the report so that we avoid a passive and compliant acceptance of it. I am sure that he recognises the strength of feeling among hon. Members.
The reason for my concern is summed up in point 1.11 on page 11 of the weighty document that is the Scott Baker report. It simply says:
“Apart from the problem of proportionality, we believe that the European arrest warrant… has worked… well.”
Given the lack of evidence submitted in relation to the Scott Baker report from those who have been on the receiving end of miscarriages of justice—that is how I regard the way they were treated—we would do well to urge the Minister to take into account anecdotal evidence and to lend more weight to it than it seems to have been given in the report.
One reason why I was keen to speak is that I wanted to give voice to my constituent Andrew Symeou and his family, whose nightmare came to an end only earlier this year following a three-year process in which Andrew was finally extradited in 2009 after an arrest warrant had been issued in 2008. He subsequently spent one year in jail in Greece, where he was refused bail simply because he was a foreigner. On top of that, by the time he was rightly found innocent of all charges, there had been a massive cost to his family, whom I have been privileged to get to know very well. They put their lives on hold when they went to Greece to support their son while he was in jail for a year. That gross misuse of the European arrest warrant meant that Frank Symeou’s business inevitably suffered; indeed, he no longer has that business. There was a direct cause-and-effect relationship between the two things. I place on the record my immense admiration for the way they stood by their son, fought bureaucracy, fought their corner and ultimately won the justice that Andrew deserved. Andrew is determined, rightly, to see that we get changes to a system that he believes should not be allowed to administer justice of the sort that he went through.
The right hon. and learned Member for North East Fife (Sir Menzies Campbell), who is not in his place, said that he felt that hon. Members were not ready for a forensic, detailed analysis of the 480 pages in Scott Baker’s report. That means that I have wasted a lot of my bedtime reading, but I would like to draw attention to two or three things that point to why the report is wrong to assume that, apart from the problem of proportionality,
“the European arrest warrant scheme has worked reasonably well.”
I shall draw again on real-life anecdotal evidence. I feel that, throughout the review, Scott Baker managed to overlook that anecdotal evidence and has all but rejected many of our concerns.
Let us first examine the concerns regarding the mistreatment of a fugitive’s fundamental human rights. For example, quite important in a trial or a prosecution process, as I am sure hon. Members agree, is the right to have proceedings carried out in one’s own language or with a full translation. I hope that hon. Members share my shock that, although Andrew Symeou was given a translator on the opening day of the trial, it was clear when opening statements were being made that the translator could not even tell the difference between the words “juror” and “witness”. Worse, the translator summarised one set of remarks by saying, “Well, it was something like that. I hope that that will do for you.” That is not the best method of giving confidence to a defendant and it does not meet the requirement to provide a full translation of proceedings. It should be noted that the translator in question was being paid barely £14 a day. I am forced to conclude that that does not necessarily buy the best translation services.
In point 5.53 on page 138 of this weighty volume, Scott Baker says:
“We are also of the view that as a starting point it is not inappropriate to begin with an assumption that surrender to another Member State of the European Union will not involve a violation of human rights.”
He therefore assumes that everything will be okay because the countries that sign up to the European arrest warrant have signed up to the charter of human rights. I submit that that is repeatedly highlighted as a failing.
Let us examine one other area of the review. It does not necessarily relate directly to my constituent, but it points to one of the weaknesses in the report. I am referring to the question of dual criminality. I will not bore hon. Members by going into that in detail—I will assume a degree of understanding—but essentially, under the European arrest warrant scheme, people can be extradited for acts and behaviours that, no matter how abhorrent we may consider them—xenophobia is the most well known example—are not criminal offences in the UK. That flaw has already been highlighted in the work done by the Joint Committee on Human Rights, but Scott Baker’s conclusion is, “Well, yes, we note that”—I paraphrase of course—“but given that it has not been an issue in the last few years, we’re not worried about it.” It worries me that people recognise that something is not quite right, but because nothing has really gone wrong in the past, it is okay. That is like a mechanic noticing a flaw in an aircraft’s landing gear but not taking corrective action, because as far as he is concerned, up till then the plane has always landed safely with the wheels coming down. It does not build confidence.
I am surprised, as I am in relation to other matters—I will not go into them, given the time—that we have not used the review to think about other possible problems that have been highlighted, but, because we may not have come across them, have been dismissed. That is not a satisfactory way to proceed.
I endorse what was said about the nonsensical situation of a court not needing to examine prima facie evidence before a fugitive is extradited. That is considered by the review, but no alternative is reasonably suggested. Again, my concern stems from the case of my constituent, Andrew Symeou. My hon. Friend the Member for Esher and Walton (Mr Raab) highlighted the fact that there were clear discrepancies in the evidence. Clear evidence was presented to the court that showed a change in the statements of witnesses—witnesses who were first in Greece and put under a lot of pressure, but then returned to the UK and immediately withdrew their statements. There was some evidence of abuse as well.
The court noted that, but made it clear that, with the European arrest warrant, this is simply a tick-box exercise—so long as the boxes are ticked, it is not within its remit to pass judgment on the quality of that evidence. Therein lies the problem; that is where we should try to raise the bar. Much has been said about the opportunity to do that. I endorse the support given for a forum bar. That must be examined to introduce a level of security for our citizens in what is a critical affair for them.
My overriding sense and concern is that the European arrest warrant scheme has—not by malicious design; I understand why it was set up—made a particular substitution in the interest of expediency. Of course, we all know the flaws that existed long before it came along. I am thinking of the Costa del Sol—Costa del Crime—and so on. However, in the interest of expediency, the scheme is prepared to accept it as reasonable that there will be disproportionate effects and potential miscarriages of justice. I submit that we should not tolerate that. Not one British citizen should have to go through what my constituent and the others whom we have heard about went through in the interest of expediency and process, however well motivated and well intentioned it was.
I had hoped and expected that the Scott Baker review would be a wholesale rethinking of the UK’s extradition arrangements. Going by today’s debate, it does not appear to have lived up to anyone’s expectations, which I am disappointed by. I remind Members of a comment made before the election that indicated what members of our Front-Bench team thought—that the UK’s extradition arrangements were “a mess”. It is reasonable to conclude that our hopes for Scott Baker now are that while we can learn, listen and take on board what he has said, we must not lose sight of our duty to ensure that our citizens have the right process of justice. That must not be sacrificed on the altar of expediency and process, no matter how successful those might have been with some serious crime. We must find a way through the problem so that we do not end up with fundamental abuses of individuals’ rights, such as those of my constituent, Andrew Symeou.
I hope that we reform the UK’s extradition arrangements so that they are fair and balanced. I am not saying that there is no need to have in place a system that speeds up an extradition process, but fundamentally, I urge Ministers to protect British citizens, rather than sacrifice them on the altar of expediency.
Chris Bryant (Rhondda) (Lab)
It is a delight to serve under your chairmanship, Mr Leigh, although I rather liked the moment when you were sitting behind me as though you were my Parliamentary Private Secretary; that would have been a unique combination, and we would have had fascinating debates in our team.
I warmly congratulate the hon. Member for Esher and Walton (Mr Raab) on securing this debate. He always manages to secure debates, and the debates are never uncontentious. At the rate he is going, I suspect that he will be the next leader of the Conservative party, but having said that, I have probably destroyed his career.
I agree with right hon. and hon. Members that it is unfortunate, to say the least, that a part of our debate this afternoon is a tagging on of a matter that has been raised by a petition, which has been supported by more than 140,000 people. I have my personal criticisms of the way in which the e-petition system was set up. There are problems in that what the public want may not necessarily be what an individual Back Bencher wants the Backbench Business Committee to advance. However, the topic has its own specific importance and should be debated properly on its own.
I have asked the hon. Member for Brighton, Pavilion (Caroline Lucas) about the nature of the question that one should ask, as that is an important principle. Our debate is in Westminster Hall, immediately next to a place where Parliament regularly used to decide on the guilt—it was nearly always the guilt, rarely the innocence—of people, who were then sent off to face the death penalty. Notwithstanding that fact, it is a good principle that Parliament and elected politicians do not decide on the innocence or guilt of any individual; I am sure that she was not saying that they should. They can decide on matters such as whether they or the House have been lied to and whether there has been a breach of privilege.
Some people have been moving towards the view that we should take some kind of vote on the issue, which I think would be difficult to do. It would also be difficult for us to vote precisely on the question of whether someone should be prosecuted. It is not for this House to decide whether the British prosecuting authority should prosecute. I wholeheartedly support the idea that we have a proper debate on Babar Ahmad in the main Chamber, and also on the wider issues of extradition, the extradition treaty and the European arrest warrant, probably on a votable resolution. However, it would be inappropriate to breach the basic principles that I have set out.
It is a delight to see the Chair of the Select Committee on Home Affairs back in his seat. He sent me a lovely note earlier to say that he was off to another meeting and might miss my “brilliant” speech—though I note that he had added the word “brilliant” afterwards. I think he sent the same note to the Minister.
It is important that we proceed with further debates on another occasion on substantive motions. I recognise the fact that my right hon. Friend the Member for Tooting (Sadiq Khan) has sat here throughout this afternoon’s debate. That is part of the ongoing care that he has been taking of his constituent, which many Members in the debate have recognised.
We have to acknowledge some important first principles. Extradition is a vital part of ensuring the security and safety of people in our own country and around the world, and ever more so today. Perhaps in the 17th and 18th centuries, British people could have evaded justice in this country by going abroad, and vice versa. I do not believe that anyone in the Chamber believes that that should be the case today, especially in a world where people cross borders far more frequently and where crime can be conducted from one country in another country far more easily. It is all the more important that we have a sane and sensible process of extradition.
One of my criticisms of one of the most unfair imbalances relates to the relationship between the United Kingdom and Russia. Russia will not extradite—because its constitution refuses to allow it to do so—any Russian national ever, come what may. I believe that Andrey Lugovoy should have been extradited to this country a long time ago for the murder of Alexander Litvinenko. I do not think we will ever see justice for Mr Litvinenko’s widow, who suffers, in many ways, exactly the same deprivation of justice that many have referred to in the cases where British people have been extradited abroad.
The UK issued 1,295 European arrest warrants in a relatively short period of seven years. Out of those, there have been 581 surrenders to the UK. Sometimes, they have been British nationals in other countries who have committed crimes. The hon. Member for Enfield North (Nick de Bois) referred to the Costa del Crime. British prosecuting authorities being unable to pursue justice had been a permanent feature—people could go off, live in Spain and never come back to the UK. I am glad to say that the Costa del Crime has been closed down. One of the people involved in the 21 July attempted bombings in the United Kingdom was brought back to the UK from Italy swiftly by virtue of the European arrest warrant. Similarly, a large number of IRA terrorists were brought back to the UK by the EAW. We should not chuck the baby out with the bathwater. There were 179 returns from Spain and 117 from Ireland, which is quite important to us.
Of course, extradition should not always be granted. Notwithstanding the many cases that have been referred to this afternoon, many requests are not granted. There were 4,325 requests to the UK, and only 3,107 were granted. Indeed, quite a lot from Russia have not been granted, because they were determined to have been based solely on political considerations and not truly on the pursuit of justice. That is why the two clauses regarding the two categories of countries relating to human rights are important.
Nick de Bois
Can the hon. Gentleman clarify whether some of the applications were not exercised in full or executed simply because the authorities could not find the people, as opposed to finding reasons not to extradite?
Chris Bryant
The honest truth is that it is a right old mix. That is why, as we consider the matter, there is a danger that we proceed only on the basis of what the hon. Gentleman referred to as anecdotal evidence of individual cases, rather than properly garnered substantive evidence that covers the whole realm.
I know the case of the hon. Gentleman’s constituent very well; I have met the family. When the hon. Gentleman’s predecessor was a Member of Parliament, I answered debates. At the Foreign Office, we tried as much as possible to rectify the problems with Greek justice. His constituent’s case was far from a unique example, not specifically regarding extradition, but regarding British people facing justice in Greek jails, in a criminal justice system that was falling apart at the seams in many ways. The Foreign Office had a difficult job to do in trying to ensure that those people got justice.
Charlie Elphicke
The hon. Gentleman cited the case of Russia. Does he think that, in such dealings, reciprocity is an important underlying principle that we should follow?
Chris Bryant
Yes, of course I do. It is always quite difficult to achieve perfectly because people have different criminal justice systems. If we proceed on the basis of English common law, we end up with a different sort of process than we would if our whole justice system were based on the Napoleonic code. This is where we need to do more work on the European arrest warrant. I would not want to get rid of the EAW because, broadly speaking, it has worked to our benefit. There are elements of it, however, that have not helped. It seems bizarre, for instance, that 1,659 of the cases that are sought from the UK are from Poland and 355 from Lithuania. The rumour is that they are all to do with sheep rustling and so on, but because there is a different prosecutorial regime in Poland and in Lithuania, we need to get to a system of proportionality in the advance of European arrest warrants. If we do not, we simply will not have the reciprocity to which the hon. Gentleman refers. We also need to do more to help other countries to develop a strong criminal justice system that meets the threshold for justice and impartiality to which we, in this country, aspire. That is obviously an important part of what we need to work on in relation to new countries coming into the European Union.
I also believe that justice in relation to extradition needs to be exercised on a fair, balanced and relatively swift basis. If we take completely out of the equation the nature of the allegations against Mr Ahmad, the fact that he has been in prison for so long without any form of trial, charge or anything at all is manifestly unfair and unjust. It is not because the Americans want him to be kept there—they would like to be able to proceed with the prosecution and come to a resolution of the case. It is because the European Court of Human Rights is taking a phenomenally long time to resolve its issues, which is why I support substantial reform of how the Court operates so that there can be a degree of swiftness in relation to extradition. In a sense, slow justice is no justice.
When we were in government, we made it clear that the US and the UK ran different but parallel systems. The Baker review agrees with what Patricia Scotland said when she was Attorney-General. If there is to be a change in the balancing requirements between the two countries, it must be based on hard evidence. Some of the numbers that have been advanced this afternoon in relation to the US are not, I think, right. In so far as I am aware, there have been many more requests to the UK than there have been from the UK to the United States of America. However, I think only one request to the US has been denied since 2004. Of course more British people go to the United States regularly than there are Americans who come to the United Kingdom, so the imbalance in the numbers is partly to be expected.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
indicated dissent.
Chris Bryant
The Deputy Leader of the House is shaking his head. If he has other statistics, I will be happy to give way to him.
The Government have a problem. The Conservative party and the Liberal Democrats made a series of commitments when they were in opposition to change the treaty to ensure that Gary McKinnon would not be sent to the United States of America. As I understand it, the Government were going to rely on the Baker review, but that review has provided exactly the opposite answer to what they expected.
Chris Bryant
The Minister is shaking his head. Perhaps he will correct my impression in a moment.
Mr Burrowes
I rise in reference to Gary McKinnon. I am not aware of any suggestion from the Government that the Baker review is linked to Gary McKinnon because any measure would have to be applied retrospectively. The only determination in relation to Gary McKinnon relies on the review’s work with respect to medical evidence. It is important for us not to talk down the opportunities for Gary McKinnon on the back of the Baker review. It is primarily on the basis of the medical evidence that his case is being considered.
Chris Bryant
The hon. Gentleman makes an important correction. I apologise for that conflation of views. We have the Baker review now. I am sure that hon. Members are far more interested in hearing from the Minister about what the Government will do about this than in hearing from me.
Chris Bryant
I thank the hon. Gentleman for that. I have a series of questions for the Minister. What timeline are the Government setting themselves for proceeding with this matter? As every month goes by, there are more extradition requests and more people are brought into the system. What do the Government intend to do in relation to Gary McKinnon and what timetable are they proceeding along? What estimation have they made of the Baker report? Do the Government agree with any of it? Do they intend to commission a new report? What standing will the report by the right hon. and learned Member for North East Fife (Sir Menzies Campbell) have in relation to the Government’s position?
The Minister for Immigration (Damian Green)
It is a pleasure to sit under your chairmanship for the first time, Mr Leigh. I join everyone else in congratulating my hon. Friend the Member for Esher and Walton (Mr Raab) on gaining this debate. He and I have fought on the same side in many civil liberties battles over the years and will continue to do so. I thank him for the thoughtful tone of his introduction, which infused the debate and continued up to and including the speech made by the hon. Member for Rhondda (Chris Bryant) on behalf of the Opposition. I am happy to assure my hon. Friend the Member for Enfield North (Nick de Bois) that we will indeed take very seriously the points that have been made in the debate. As my right hon. and learned Friend the Attorney-General said in the House last week in respect of the extradition review, the Government are currently considering what action to take on these issues. As he made clear, we welcome these debates and the representations that have been made.
We have seen a number of high-profile extradition cases in recent years. The surrender of a person to another country to face trial is always a challenging and difficult process both for the person concerned and for his or her family. What is vital, and what the Government have said repeatedly in the context of the extradition review, is that we strike the correct balance between seeking redress for victims of crime, while protecting the fundamental rights of suspects brought to justice. That is the underlying principle that lies beneath today’s debate and it is why the debate is so useful. As has been said repeatedly this afternoon, a number of issues linked to our extradition arrangements have been of long-standing concern to Parliament.
Since the Extradition Act 2003 came into force, there have been numerous debates in Committees and on the Floors of both Houses. The issues range from the UK’s extradition arrangements with the United States, the forum bars to extradition and the European arrest warrant and they have all been debated at length. In addition, there have been various public debates and campaigns on specific cases and issues relating to extradition. A lot was said under the previous Government by the then Opposition parties about these issues. On coming into government we recognised that there were long-standing and deeply held concerns that we wanted to address. That is why the coalition’s programme for government document made a clear commitment to
“review the operation of the Extradition Act–and the US/UK extradition treaty–to make sure it is even-handed.”
In September 2010, the Home Secretary announced an independent review of the UK’s extradition arrangements. The review was chaired by Sir Scott Baker, a former Lord Justice of Appeal who presided over the inquests into the deaths of Princess Diana and Dodi al-Fayed. Sir Scott was assisted by two lawyers, David Perry QC and Anand Doobay, who between them have a wealth of experience of extradition from both a prosecutorial and a defence perspective. That independent panel undertook an extensive examination of the issues, including a very thorough and careful consultation process, with a range of parties representing all shades of opinion on the subject.
It is clear from this afternoon’s debate that the conclusions that the panel reached are not attracting universal assent. It has been very interesting to hear the views that have been expressed this afternoon, and I promise the House that those opinions will be given the most careful scrutiny before we reveal to the House the action we propose to take in response to the extradition review.
We have learned this afternoon that my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) and his commission on behalf of the Liberal Democrat party will publish a report on extradition; I think he said that it will be published as soon as possible. We discovered that the Home Affairs Committee is to publish a report in February. Clearly, the debate is not at an end and there will perhaps be a plethora of further responses, all of which will feed into the Government’s own consideration of the Scott Baker recommendations.
Although I am responding to the general part of today’s debate on extradition, it is important that I refer to some individual cases, not least because the case of Babar Ahmad is cited specifically in the context of today’s debate and, as has been said several times, the shadow Justice Secretary has sat here throughout the debate. He is enforcedly silent because of the rules of the House, but I know that he has been playing a most proper and energetic role defending his constituent’s interests in this case.
I appreciate that my hon. Friend the Member for Esher and Walton said that he did not want this to be a dry lawyer’s debate. I have never been accused of being either dry or a lawyer, but I am afraid that I am forced to go into the legal undergrowth in the Babar Ahmad case, and indeed that of Gary McKinnon.
I will start with the background on Mr Ahmad’s case. He was arrested for extradition purposes in August 2004. His case was dealt with under the Extradition Act 2003. Under the normal scheme of that Act, extradition hearings take place before a district judge at the City of Westminster magistrates court. The court found that there were no bars to Mr Ahmad’s surrender, whether on human rights or any of the other grounds that the court considers. Accordingly, the district judge sent the case to the Home Secretary for a decision under the 2003 Act as to Babar Ahmad’s surrender. As part of that process, it was then open to Mr Ahmad and those acting for him to make representations as to why he should not be surrendered. Following due consideration, it was decided to order surrender. At that point, Mr Ahmad had a statutory right of appeal against the decision of the district judge to send the case to the Home Secretary and the decision of the Home Secretary to order surrender. That appeal took place in July 2006 before the High Court and judgment was given in November that year, when the appeal was dismissed. There followed a petition for leave to appeal to the House of Lords, which in June 2007 refused leave. In that way, Mr Ahmad exhausted all the available domestic avenues for contesting the request for his extradition.
Mr Ahmad then applied to the European Court of Human Rights. On 12 June 2007, that Court imposed a stay on his extradition, and on 8 July 2010—three years later—the Court declared his case partially admissible and it remains under consideration by that Court. The e-petition on behalf of Mr Ahmad calls for him to be put on trial in the UK, since the allegations against him in the United States relate to alleged conduct that took place while he was in the United Kingdom. The Government note the concern of petitioners on this issue, but it is not for the Government to decide if and when someone should be prosecuted in the United Kingdom. The decision as to whether to bring a prosecution is a matter for the independent prosecuting authorities—
Damian Green
I will give way shortly; let me finish going through the detail.
To date, the prosecuting authorities have decided not to prosecute Mr Ahmad in the UK and in terms of the extradition request the courts in the United Kingdom have held that authorities in the United States have jurisdiction in relation to the offences of which Mr Ahmad is accused, and that they are entitled to seek his extradition. Mr Ahmad’s case has been exhaustively considered by the UK courts and they have concluded that there are no bars to his extradition.
Caroline Lucas
I am grateful to the Minister for giving way. Can he say whether he believes that the latest information we have—that the CPS apparently did not see all the evidence before it went to the US—changes the analysis that he is putting forward? How will his Department follow up the matter? It seems pretty shocking to me if the CPS has essentially been saying that there is insufficient evidence to try Mr Ahmad in the UK, yet now we discover that it has not even seen all the evidence.
Damian Green
The hon. Lady made an extremely interesting point earlier; when she revealed it a few minutes ago, it was the first I had heard of it. Obviously, all involved will need to look very carefully at the evidence that she is bringing forward.
Mr Ahmad is now challenging extradition before the ECHR. The Court has asked a number of questions in relation to the case and both sides have submitted observations on those points on several occasions. The review panel highlighted in its report cases that awaited a decision by the ECHR and the amount of time that they had been before that Court. It recommended that the matter of the delay is taken up by the Government urgently, and that the Court should be encouraged to give priority to cases where extradition has been stayed. The Government are considering that recommendation along with the others made by the review panel, but the United Kingdom has previously pressed, and will continue to press, for the Court to reach its decision as soon as possible.
Understandably, many concerns have been expressed, both today and over the years, about the length of time that Mr Ahmad has been detained in custody awaiting the outcome of the extradition request. Again, I obviously appreciate the concerns about this issue, but Mr Ahmad has been detained at all times on the order of the court. He may, of course, apply for bail at any time and a decision as to whether to grant any application for bail is also a matter for the court.
As I have said, we continue to press the ECHR to reach its decision on the case as soon as possible, and where the Court seeks observations or clarifications from the Home Office on the representations in the case, they are provided as soon as possible. We are acutely aware of the time that has passed since the extradition request was first made and of the importance of dealing with the matters raised as quickly as is consistent with fairness to all sides.
Concerns have also been raised in respect of the case of Gary McKinnon and I hope that it will be useful if I also update the House on his case. Mr McKinnon’s case is different from Mr Ahmad’s case as it falls to be decided by my right hon. Friend the Home Secretary. I will briefly explain the reasons. Mr McKinnon has exhausted all rights of appeal under the Extradition Act 2003 and in his case the ECHR refused an application to impose a stay on his extradition. However, the Home Secretary is under a duty under the Human Rights Act 1998 not to act in a manner that is incompatible with a person’s rights under the European convention on human rights. Therefore, she must consider whether, as a result of events occurring after the extradition proceedings, it would be contrary to the convention for a person to be extradited. The sole remaining issue, therefore, is whether extradition is compatible with Mr McKinnon’s convention rights. The Home Secretary sought the independent advice of the chief medical officer, who has provided the names of two experts she believes are well placed to provide evidence on the relevant medical issues. Those experts have now been instructed to review the various reports that have been submitted in Mr McKinnon’s case. They will prepare a report that will help the Home Secretary to determine whether or not extradition would contravene Mr McKinnon’s convention rights.
The case is taking time to resolve. Obviously, it would not be appropriate for me to go into the detail, but as Members will appreciate there have been a number of issues relating to the case that have been the subject of lengthy discussions. We hope that the experts will report as soon as possible. However, this is not an easy case and there are a number of issues that will need to be considered in depth. I am conscious of the long and energetic campaign mounted by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes), and I know that he appreciates the frustrations of all involved at the length of the case.
Members on both sides of the House have raised concerns about specific European arrest warrant cases, and although the EAW is dealt with operationally by the Serious Organised Crime Agency and not the Home Office, a number of significant cases have been brought to our attention. The extradition review, although not referring specifically to cases, has dealt with a variety of high-profile issues that the cases have highlighted. I assure Members that we will take those issues, and the circumstances of the individual cases, into account when considering the range of EAW issues, many of which were dealt with in considerable detail by the extradition review panel. In particular, I share the concern of my hon. Friend the Member for Esher and Walton about European arrest warrants being issued for trivial offences. I know that other EU member states and, indeed, the European Commission, share that concern with the British Government. As part of the review process, we are considering what action we should take to address the issue. In the meantime, there are ongoing discussions with our Polish counterparts to encourage their prosecutors and courts to consider whether the issuing of an EAW, in the way it has been done in the past, is a proportionate step to take.
My hon. Friends the Members for South Dorset (Richard Drax) and for Richmond Park (Zac Goldsmith) said that they supported the concept of the EAW but that it had to be properly implemented, and when the Home Secretary announced the extradition review we recognised that there were serious concerns regarding that. The Baker report looked at that area in considerable detail and made recommendations on proportionality, pre-trial detention and, in certain cases, the possibility of people serving sentences in the UK rather than being extradited. In reaching its conclusions, the extradition review panel took evidence from a wide range of parties, and we will be looking at it very carefully.
Many Members raised issues about UK and US extradition figures, including the hon. Member for Bolton South East (Yasmin Qureshi), my right hon. and learned Friend the Member for North East Fife and the hon. Member for Aberavon (Dr Francis) who chairs the Joint Committee on Human Rights. Between 2004 and July 2011, the US made 130 extradition requests to the UK, seven of which have been refused by UK courts, and the UK made 54 requests to the US, none of which has been refused. In the same period, 27 UK citizens were extradited to the US and 18 US citizens to the UK. To clear up a point of confusion, the UK-US treaty covers all types of criminality; it was not agreed simply to ensure that people suspected of terrorist offences could be brought to justice. Indeed, no one has been extradited in either direction for terrorist offences since 2004, because in the case of extraditions to the US, the cases, including Babar Ahmad’s, are being considered by the European Court of Human Rights in Strasbourg, due to the human rights issues they raise.
My right hon. and learned Friend the Member for North East Fife made a point about the Home Secretary’s power to take decisions in this area. It is a matter of lively debate as to what quasi-judicial powers politicians should have, but it is important to make clear what considerations should be taken into account. In a case involving extradition within the EU, there is no role for the Home Secretary; in a case involving extradition to another country, her role under the Extradition Act 2003 is limited to considering the death penalty, speciality—the protection that ensures that someone can be tried only for the offence for which they are extradited—and onward extradition, which deals with whether the state has given consent when someone has previously been extradited or transferred to the UK. There is, however, a duty on the Secretary of State under section 6 of the Human Rights Act 1998 to ensure that extradition does not breach someone’s human rights, as I explained in the context of the Gary McKinnon case. During the statutory extradition process, human rights are considered by the courts, but if a human rights issue arises after the end of that process the Home Secretary must consider these issues.
I wish to leave some time for my hon. Friend the Member for Esher and Walton to respond to the debate, so I will close by reiterating that we will take note of not just the many interesting comments and points made today, but also the various reports of the Joint Committee on Human Rights and the reports we are expecting from my right hon. and learned Friend the Member for North East Fife and from the Home Affairs Committee. It is precisely because so many authoritative reports are being produced that I cannot respond to the question that various people have asked about an exact timeline for when we will come to a decision, but this has been an extremely valuable debate, and will play its own part in allowing the Government to develop the response that we will, as the Home Secretary has said, produce as soon as is practicable.
Mr Dominic Raab (Esher and Walton) (Con)
It is a great privilege to speak under your chairmanship, Mr Leigh. I pay tribute to many colleagues on both sides of the House who have participated in the debate. I thank my three co-sponsors, the Chair of the Joint Committee on Human Rights, the hon. Member for Aberavon (Dr Francis), the Chair of the Home Affairs Committee, the right hon. Member for Leicester East (Keith Vaz) and the right hon. and learned Member for North East Fife (Sir Menzies Campbell).
There have been many incisive contributions, and some harrowing stories of cases and of the ordeals that victims have been through. The hon. Members for Hammersmith (Mr Slaughter) and for Brighton, Pavilion (Caroline Lucas) talked about the Babar Ahmad case in particular. Clearly it is of great concern that we have had someone languishing in detention without trial for seven years. My hon. Friend the Member for South Dorset (Richard Drax) talked about the Michael Turner case and his four months in detention in appalling conditions, and my hon. Friend the Member for Richmond Park (Zac Goldsmith) spoke of another appalling case, that of Deborah Dark. I have met Deborah Dark; she is incredibly courageous.
My hon. Friend the Member for Enfield, Southgate (Mr Burrowes) talked about the Gary McKinnon case and the wider issues affecting the US treaty, and I join him in paying tribute to Gary’s mother, Janis Sharp, who is a phenomenon and a force to be reckoned with. My hon. Friend the Member for Enfield North (Nick de Bois) talked about the case of Andrew Symeou, and in particular made a point about the devastating impact on his family, which must be taken into account. Other colleagues raised broader issues about the operation of our extradition arrangements, and the hon. Member for Bolton South East (Yasmin Qureshi), with her considerable professional experience, focused on the practical reforms we need.
My hon. Friend the Member for Dover (Charlie Elphicke) said that Parliament is a backstop for the liberty of our own citizens, and we should never lose sight of that. The right hon. Member for Carshalton and Wallington (Tom Brake) gave us a very cogent analysis of the Baker review, and the shadow Minister, the hon. Member for Rhondda (Chris Bryant), made some important points about the constitutional proprieties in the House of Commons, the value of extradition, of which we should not lose sight, and the case for a Chamber debate on a votable motion. If it is appropriate, I should also like to recognise the presence and support of the shadow Secretary of State for Justice, the right hon. Member for Tooting (Sadiq Khan), even though he is constrained and cannot speak in the debate.
I welcome the Minister’s speech. He has been a staunch defender of civil liberties and has given us some useful clarification about his thinking. The Government deserve some credit for commissioning the independent review, even though almost every Back-Bench speaker has, I think, expressed reservations about it and has urged the Government to look more carefully at the recommendations of the Joint Committee on Human Rights.
I wish to pick up on two points. The first is about forum and the importance of its being decided by judges, transparently and openly, and not by prosecutors, who even with guidelines engage in a bit of haggling. The second point is about the European arrest warrant. It is not just trivial cases. Some of the charges are very serious, but the evidence is woefully lacking and there ought to be an opportunity at a very basic level to challenge it.
We have rare cross-party consensus on this issue. We have a unique opportunity, and I hope that the Government can take it.
Question put and agreed to.
Written Ministerial Statements
(12 years, 11 months ago)
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ECOFIN (18 November 2011)
(12 years, 11 months ago)
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The Financial Secretary to the Treasury (Mr Mark Hoban)
The Economic and Financial Affairs Council—Budget was held in Brussels on 18 November 2011.
The following items were discussed:
Preparation of the Conciliation Committee meeting with the European Parliaments
The Council reached a final position on the 2012 EU budget, as part of negotiations with the European Parliament via a concurrent Conciliation Committee meeting. In particular, it was agreed that EU spending (payment appropriations) in 2012 should total €129.1 billion, some €4.0 billion below the level advocated by the European Parliament. The level of commitment appropriations, which limits the value of new contractual obligations to disburse EU funds in current or future years, was set at €147.2 billion for 2012.
As part of this process, the Council also adopted the Letter of Amendment No. 2 to the Preliminary Draft Budget for 2012, which handles mainly administrative costs relating to the expected accession of Croatia to the EU, and the Letter of Amendment No. 3 to the Preliminary Draft Budget for 2012, which concerns updates for estimated needs for agricultural expenditure and international fisheries agreements.
Separately, the Council agreed to adopt Draft Amending Budget No. 6 to the General Budget 2011, which increases the level of EU funds by €200 million in 2011 in order to reflect the possibility of overspending on some programmes during the remainder of this year.
Outcome of the Conciliation Committee meeting with the European Parliaments
The Government supported the Council’s overall position on the 2012 EU budget, which delivers on the Government’s principal aim to freeze EU spending in real terms next year. This outcome delivers real budgetary restraint at EU-level, supports ongoing efforts to consolidate public finances across many member states and respects the principles of sound financial management. It also delivers on the Prime Minister’s letter from December last year, signed jointly by France, Germany, Finland and the Netherlands, that called on the Council to step up progressively its efforts to curb annual growth in EU spending.
In the Government’s view, the Commission did not present satisfactory forecasts to demonstrate that extra funds requested under Draft Amending Budget No. 6 to the General Budget 2011 were necessary. Unfortunately, this is another example of poor EU budgeting. This Government are committed to improving financial management in the EU, as well as delivering budgetary restraint. Therefore, the Government voted against this in-year adjustment, in order to signal its ongoing dissatisfaction with EU financial management.
Any other business
No substantive issues were raised under this agenda item.
Housing Market Renewal (Legacy)
(12 years, 11 months ago)
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The Minister for Housing and Local Government (Grant Shapps)
The last Government’s housing market renewal pathfinder programme imposed large scale Whitehall targets for demolition and clearance across the midlands and the north of England. The centrally driven schemes were often resented by local communities and created as many problems as they solved. This top-down approach has not worked, often resulting in blighted areas where large scale demolition and clearance projects have been stopped in their tracks, leaving some families isolated in abandoned streets.
There was widespread public controversy over an obsession with demolition over refurbishment, the lack of transparency of the pathfinder quangos, large profits by developers, the demolition of our nation’s Victorian heritage and perverse incentives being given to run down neighbourhoods.
The designation of areas for demolition effectively increased deprivation in those areas; many social landlords prepared the ground by “voiding” and boarding up properties. In turn, this undermined the housing market as mortgage lenders were unwilling to lend in such areas. Areas were effectively managed into decline—to make the notional benefits of wholesale demolition more attractive, ensuring a larger windfall gain for the state.
Local communities in some of the most deprived areas of the country were told they would see a transformation of their areas, which in reality amounted to bulldozing buildings and knocking down neighbourhoods, pitting neighbour against neighbour and leaving families trapped in abandoned streets. This was wrong.
As campaigning group Save Britain’s Heritage has remarked:
“From the start, pathfinder showed an appetite for destruction....The classic English terraced house was demonised as “obsolete”. Whole neighbourhoods were declared surplus at the keystroke of a consultant’s laptop. Bureaucratic arrogance reduced communities to inmates of a “Zoo”—Zone of Opportunity—for house builders. Statisticians assumed compulsory purchase and eviction for demolition were acceptable measures for householders in a property-owning democracy. Quite predictably, the cure turned out worse than the disease”.
The coalition Government are taking a different, more localist, approach. We are putting residents, local businesses and civic leaders in the driving seat and providing them with local rewards and incentives to drive refurbishment and renewal.
On 31 January 2011,1 announced a £5 million growth and housing market renewal transition revenue fund. The primary aim of this fund was to help safeguard and develop expertise and capacity in key growth and former housing market renewal locations.
But I also want to implement measures to tackle the “ghost streets” created by the last Government’s programme. On 9 May 2011, I announced a £30 million capital fund to help families trapped in abandoned streets resulting from the pathfinder demolition schemes. This funding was targeted at the five most challenged former housing market renewal areas—Merseyside, East Lancashire, North Staffordshire, Hull and Teesside—where the lowest quartile house prices have remained well below the average for that part of the country, and where surrounding housing markets are weak. As part of their bid, local councils were asked to set out clear exit strategies showing how former housing market renewal commitments could be unwound or transferred to other regeneration schemes.
In response to the bids from local authorities, I have decided to make an additional £5.5 million available—bringing the total fund to £35.5 million. This means that all families in streets or blocks that are more than 50% vacant will be helped. This £35.5 million fund will be match funded by local councils in these five areas, giving overall funding of £71 million.
Council | Total Capital Grant* |
|---|---|
Hyndburn | £2.3m |
Blackburn with Darwen | £1.8m |
Burnley | £1.4m |
Pendle | £1.4m |
Hull | £3.3m |
Liverpool | £9.3m |
Sefton | £3.4m |
Wirral | £2.7m |
Stoke-on-Trent | £3.6m |
Middlesbrough | £2.4m |
Hartlepool | £2.0m |
Stockton-on-Tees | £1.5m |
Redcar and Cleveland | £0.3m |
Total Capital Payments | £35.5m |
*Rounded to the nearest £0.1 million |
The payment of this transition funding and unwinding of remaining housing market renewal commitments therefore draws a line under the last Government’s flawed programme.
However, it is important that we continue to support housing and regeneration in places which have previously experienced severe housing market challenges. My Department and the Homes and Communities Agency will continue to work closely with all former housing market renewal areas, whether or not eligible to bid for the transition fund.
In addition to ending the Whitehall obsession with demolitions, we are taking a series of steps to get empty homes back into beneficial use, as outlined in the Government’s housing strategy published on Monday 21 November.
Abortion (Costs)
(12 years, 11 months ago)
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The Parliamentary Under-Secretary of State for Health (Anne Milton)
In response to detailed enquiries about the information provided in answer to previous parliamentary questions on the cost of providing abortions in the NHS in England the Department has concluded that it should change the methodology it uses to produce estimates of the costs of abortions.
There are discrepancies between the activity figures for abortion returned to the chief medical officer and the data submitted as part of the reference cost collection, which is the Department’s wider collection of NHS cost and activity data. As a result of this, and the lack of detailed information about the price NHS organisations pay to independent sector providers for the provision of abortion, we will, in future, estimate the costs to the NHS of providing abortion using the activity figures provided to the chief medical officer and an average of the national tariff paid within the NHS for procedures including abortion. This is likely to overestimate total costs as we are aware that contracts with independent sector providers are generally at a lower price than the national tariff.
The table below shows the data used to produce previous estimates of abortion costs and the revised approach:
Time period: | 2009-10 financial year | Activity: 2010 calendar year Tariff: 2010-11 financial year | ||||
|---|---|---|---|---|---|---|
Sources: | Reference cost collection4,5,6 | CMO abortion statistics6,7 Payments by Results Tariff | ||||
Reported activity | Unit Cost (£) | Total cost (£m) | Reported activity | Tariff (£) | Total cost (£m) | |
NHS1 | 118,000 | 695 | 83 | 64,000 | 680 | 44 |
Independent2 | 18,000 | 420 | 8 | 109,000 | 680 | 75 |
Total3 | 136,000 | 660 | 90 | 173,000 | 680 | 118 |
Notes: 1NHS provider 2NHS funded but delivered by independent sector provider 3The totals may not sum due to rounding 4Published on the Department’s website— http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_123459. The NHS data are from the “NHS trust and PCT combined reference cost schedules”. The independent data are from “Non NHS provider schedules”. The following HRGs have been included—MA17C, MA17D, MA18D, MA19B AND MA20Z. 5Not all spontaneous abortions are included (HRG MB08Z) 6England data 7The 2010-11 Combined Daycase/Elective and Non-Elective Tariffs have been used. |
NHS Operating Framework for 2012-13
(12 years, 11 months ago)
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The Minister of State, Department of Health (Mr Simon Burns)
Sir David Nicholson, the NHS chief executive, is publishing “The Operating Framework for the NHS in England 2012-13” today, which sets out the priorities for next year.
The NHS operating framework is an annual publication that outlines the business and planning arrangements for the NHS. It describes the national priorities, system levers and enablers needed for NHS organisations to maintain and improve the quality of services provided, while delivering transformational change and maintaining financial stability.
There are four key themes in the document for this year:
the NHS has put quality of care for older people at the head of its priority list for 2012-13. They will get better care and be treated with more dignity. And the friends and relatives who care for them at home will get more support;
the need to maintain the NHS’s continued strong performance on finance and service quality, including ensuring that the NHS constitution right to treatment within 18 weeks is met;
the need to create the foundations for sustainable delivery against the quality, innovation, prevention and productivity (QIPP) challenge; and
the need to complete the transition to the new delivery system set out in “Equity and Excellence: Liberating the NHS”.
The NHS operating framework sets out the practical steps that need to be taken to carry the NHS through a strong and stable transition over the next year, maintaining high quality standards and financial grip, as we move towards the new modernised system envisaged in “Equity and excellence: Liberating the NHS” (Cm 7881).
A copy of “The Operating Framework for the NHS in England 2012-13” has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.
Equality and Human Rights Commission (Annual Report)
(12 years, 11 months ago)
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The Secretary of State for the Home Department (Mrs Theresa May)
I am today laying before Parliament the Equality and Human Rights Commission’s 2010-11 annual report and accounts. Copies will be available in the Vote Office.
Dartford-Thurrock River Crossing (Changes)
(12 years, 11 months ago)
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The Parliamentary Under-Secretary of State for Transport (Mike Penning)
On the 30 June the Department for Transport launched a consultation on proposals to change the charging regime at the Dartford-Thurrock River Crossing. The consultation closed on 23 September.
The consultation made reference to increasing the charges during November 2011 and again in April 2012.
I am pleased with the number of responses received and the level of engagement from local communities. In recognition of the number of representations made and to allow the Department time to carefully consider the responses further, I can advise that there will be no increase in either November 2011 or April 2012.
A final decision on the timing of future rises and a full response to the consultation will, subject to Cabinet Committee clearance, be announced early next year.
Strategic Road Network (Review)
(12 years, 11 months ago)
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The Secretary of State for Transport (Justine Greening)
As the House will know, as part of the spending review settlement in October 2010, the then Secretary of State agreed to carry out an independent review to examine whether Government have the right approach to operating, maintaining and enhancing the strategic road network.
Alan Cook, the non-executive chairman of the Highways Agency has led this review and has today published his report. The report can be found at: www.dft.gov.uk/publications/strategic-roads-network and an electronic copy has been lodged with the House library.
I am grateful to Alan and his team for producing such a comprehensive report and welcome its publication. The review report proposes some fundamental reforms to how the network should be managed, the role of Government in relation to the network and the future relationship between the Department and Highways Agency, including the agency’s status.
Although I must carefully consider the report before providing a full and informed response, I intend that my response be made as soon as possible, in order to enable the agency and Department to move forward with certainty and confidence regarding any changes that are to be made. My response will therefore be completed in early 2012.
I recognise the potential benefits that greater financial autonomy may bring and I am also pleased to see that Alan is of the view that road users’ needs are put at the heart of considerations around specifying future performance requirements for the network. This is an important step in ensuring the network meets the real needs of users as a key customer of the network.
UN Convention (Persons with Disabilities)
(12 years, 11 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)
I am pleased to announce that today the first United Kingdom Government report on implementation of the UN convention on the rights of persons with disabilities was submitted to the United Nations.
This is an important milestone. The report sets out the progress we have made across the United Kingdom and the approach to delivering the Government’s commitment to equality for disabled people.
Going forward, the Government are now developing a new disability strategy to take forward the obligations of the UN convention, and to ensure disabled people have the opportunity to fulfil their potential. We will involve disabled people in this process and I will be setting out my approach shortly, with a view to publishing the strategy next year.
I am also pleased to announce that the Government are withdrawing the UK’s reservation entered against article 12.4 of the convention. This reservation was entered because the existing social security benefit appointee system lacked appropriate safeguards in the arrangements to enable the appointment of a person to collect and claim benefits on behalf of someone else. Following the development and piloting of a proportionate system of review to address this issue, which involved disabled people, we introduced the system in October this year and it is being rolled out to cover all appointees. We believe that we have met the requirements of article 12.4 and accordingly the reservation entered against this article will now be withdrawn.
Work Capability Assessment
(12 years, 11 months ago)
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The Minister of State, Department for Work and Pensions (Chris Grayling)
The Government are pleased to announce the publication of Professor Malcolm Harrington’s second independent review of the Work Capability Assessment (WCA), the second of five such annual reviews required by statute.
This is a substantial and thorough review of the WCA which the Government welcome. It details how the WCA has improved over the last year and makes a number of recommendations to further improve the process. Alongside the review, the Government are publishing their response setting out how we will implement Professor Harrington’s recommendations.
The WCA is a key part of our ambitious welfare reform programme. It seeks to identify people with the potential to work so they can make more of their lives and enhance those of their families, rather than abandoning them to a life on benefits.
Professor Harrington’s first review found that the WCA was not broken but set out a series of recommendations to improve each part of the process. In his second review he has found that the WCA has improved and commends the Department for the way it has implemented the recommendations from his first review. He also highlights areas where further work is required, building on changes to date, to continue to improve the WCA.
We are committed to continuing to review the WCA and to make changes where necessary to ensure it is as fair and effective as possible. We have invited Professor Harrington to continue in his current role as independent reviewer for a third and final year and to make further recommendations to us as appropriate by the end of 2012.
Copies of both documents will be available later today in the Vote Office.
House of Lords
(12 years, 11 months ago)
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Violence against Women and Girls
(12 years, 11 months ago)
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Baroness Gale
To ask Her Majesty’s Government what measures they will take to reduce the level of violence against women and girls in the United Kingdom.
Baroness Verma
My Lords, the Government’s action plan on tackling violence against women and girls was published on 8 March 2011 and we have already delivered in several areas. We have provided over £28 million of stable Home Office funding until 2015 for local specialist services and £900,000 until 2015 to support national domestic violence helplines. We are also providing Ministry of Justice funding of £10.5 million over three years for local rape support centres, and £18.5 million to support vulnerable victims and witnesses.
Baroness Gale
My Lords, I thank the Minister for her positive reply. Does she agree that it is a national disgrace that in the United Kingdom one woman is raped every nine minutes, two women are killed by their partner or ex-partner every week, and up to 3 million women suffer some form of violence every year? Does she further agree that prevention is the key in order to reduce such violence? Will she have talks with every government department so that we could have a long-term, well funded education campaign involving schools, churches, the wider community and all strands of government, including the devolved governments, to ensure that boys and men are taught to respect girls and women? We should aim to send out a very strong message that violence against women is totally unacceptable.
Baroness Verma
The noble Baroness raises some very important issues. The Government have taken it upon themselves to make this a cross-government issue. We are working across all departments to ensure that, wherever possible, the impact of any effect on women and girls is taken into consideration when developing policies.
The noble Baroness is of course aware that through the Department for Education we are working with schools on campaigns to raise awareness of young people in particular to challenge the acceptability of violence in teenage relationships. Through the PSHE review, we will be looking at how best we can ensure that young people know about their own requirements with regard to consent within sexual relationships, so a lot is going on. I know that the noble Baroness is concerned, but I want to reassure her that the Government are doing a lot towards the issue.
Lord Boswell of Aynho
My Lords, will the Minister recognise that this is a matter not only of depressing statistics—disastrous as they are—but of culture and education and of involving men just as much as women? In that context, will she consider taking a leaf out of the practice of the Parliamentary Assembly of the Council of Europe, on which the noble Baroness, Lady Gale, and I both have the privilege of serving, where parliamentarians of all countries and genders are prepared to make a public commitment against these practices, or even borrow the practice of some national Parliaments where a specialist committee of men is set up to involve themselves in actively dealing with this sort of issue?
Baroness Verma
My noble friend is absolutely right. Of course, it is about ensuring that men and women will be part of the solution to this culture change. I will take back what my noble friend said about the convention in Europe, but a lot of work is going on in this country where men are at the forefront of trying to ensure that we tackle the vile problem that we have in society. We will never be able to solve the problem unless both men and women are signed up to it.
Baroness Gould of Potternewton
Will the Minister indicate what support and advice have been given to local and other relevant authorities to provide positive programmes to support children who have experienced domestic violence? I ask the question particularly in the light of the report that came out this week published by Refuge and the NSPCC that showed that there were enormous gaps in that service.
Baroness Verma
The noble Baroness raises an important point. I have also read the report. I reassure the noble Baroness, and noble Lords in the House, that we take these issues very seriously, which is why we are working closely with the Department for Education. We also want to ensure that those who provide front-line services, who are there to recognise violence or sexual abuse when they happen, have the guidelines and information to hand.
The Lord Bishop of Ripon and Leeds
My Lords, following that question, and in view of the predominance of violence by young men during the riots of the past summer, will the Minister comment on the need to protect boys from violence so that they do not grow up in a culture where violence becomes endemic? Does she agree that violence of any sort against children is wrong?
Baroness Verma
The right reverend Prelate is absolutely right. Of course, while we are concentrating on violence against women and girls today because of the international day tomorrow, it is right that we tackle all forms of violence, and I pay tribute to my noble friend Lady Newlove for the work that she is carrying out. We take these things incredibly seriously. By working collectively across government, we will ensure that we can respond in a more proactive way than has been done before.
Lord Elystan-Morgan
My Lords, while appreciating the seriousness with which the Government regard this issue, does the Minister agree that the best service that the Government could give to battered women is to amend the provisions in the legal aid legislation now before this House, which creates massive obstacles before legal aid can be granted in domestic violence cases? Does she agree that there is an irony that, in fact, the standard of proof required to get legal aid in the first place is often higher than that required to succeed in a civil court?
Baroness Verma
My Lords, the noble Lord of course knows that when the legal aid Bill comes before us, we will have some in-depth responses. I will leave it to that debate before answering.
Baroness Hamwee
My Lords, does the Minister share my concern about something of a “canteen culture” which persists among junior police officers, who are often the first point of contact for an abused woman? Does she share my concern about the need for training of junior officers in domestic violence issues, so that the good work done by ACPO and the Home Office filters down?
Baroness Verma
My noble friend is absolutely right. That is why we are working very hard with police forces across the country to ensure that they are made fully aware of how they need to respond, very sensitively, to issues of sexual and violent abuse.
Baroness Royall of Blaisdon
My Lords, 76 per cent of ex-partner murders have stalking as a lead-up to the event. Does the Minister agree that actions must be taken now to stop this murder in slow motion? Would the noble Baroness further agree that, while county councils are clearly having to make cuts too deep and too fast, they absolutely should not make cuts to street lighting because of the serious implications for women and their safety?
Baroness Verma
My Lords, very briefly, I inform the noble Baroness that we last week launched a 12-week consultation on stalking to see if it will become a specific offence. A lot is going on, but I will of course write to the noble Baroness on the other issues that she has raised.
Employment Law: Unfair Dismissal
(12 years, 11 months ago)
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Lord Clinton-Davis
To ask Her Majesty’s Government what plans they have regarding the future of the law on unfair dismissal.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, recruiting a new employee is an important decision for any employer so we need to balance very carefully flexibility for the employer and security for the employee. The Government therefore intend to increase the qualification period for unfair dismissal from one to two years to help give firms the confidence to take people on. We will also be seeking more evidence, particularly on whether further steps in this area would help boost the confidence of micro-businesses to employ people.
Lord Clinton-Davis
Why is the noble Baroness so mealy-mouthed about this issue? It is a disgraceful report, allowing employees to be dismissed without any explanation at all. Adrian Beecroft—a multimillionaire, venture capitalist and donor of more than half a million pounds to the Conservative Party—said that some people will be dismissed simply because their employers do not like them. Is that acceptable?
Baroness Wilcox
We are concerned with the aim of extending the qualifying period in order to improve business confidence in recruiting staff and giving more time to getting the work relationship right. That is why we are doing it. I do not know how I can respond to the other part of the question. Adrian Beecroft was asked to contribute his thoughts to government to support our work examining the burden of employment-related law and he gave them. There are things in there that I think might be very much his own personal viewpoint, because that is what he was asked to give.
Lord Jenkin of Roding
My Lords, is not the issue here one of maintaining a balance between those who are in employment and fortunate enough to have jobs and those who are looking for employment and could be taken on if employers were readier to take the risk? The risk of having a case taken to an employment tribunal actually deters a lot of new recruiting, particularly by small firms.
Baroness Wilcox
My noble friend of course has long experience in this House and I am delighted to hear him ask a question. It is worrying that small companies tell us that they are nervous about employing people. That should not be the case. We need jobs for our young people and for people who have been long-term unemployed. We need our new, coming companies to be confident to employ people. I have been an employer at a small company and a large company, and extending this period means that you have time to get used to each other and to learn the job. Very often people take more time than others to get used to that. We do not think a year is long enough and therefore we will be extending it to two.
Lord Martin of Springburn
Drawing on my own industrial background, I put it to the noble Baroness that two years is far too long. We have come a long way from the days when a worker who had a complaint was told, “If you don’t like it, there’s the door”. We are in danger of going back to those days.
Baroness Wilcox
Other rights, including “day one rights” such as the right not to be discriminated against, are unaffected and will continue to be so. We are trying to see whether this particular piece of work will get more people into employment and will work for smaller companies, which are nervous and which do not very often have big HR departments to help them. We need to get the trust back between the employer and the employee and I think that this will be a good way to do it.
Lord Myners
My Lords, the Minister has spoken about the need to create more employment for young people. How is the Minister going to ensure that new employment opportunities for young people are not achieved at the risk of displacing the employment of older people?
Baroness Wilcox
That is a very interesting question. We are obviously serious about tackling youth unemployment. We have very high youth unemployment. But I am slightly older, and am still employed, and I would like to continue to be so, if that is possible. The balance is that the employer will use the talent that he has got to keep his business profitable. If his business is not profitable and he goes out of business, then nobody has a job.
Lord Tebbit
Would my noble friend remind the House of the period for which an employee has to work before he or she is completely free to break their contract of employment by going on strike, as we shall see many civil servants do next week?
Baroness Wilcox
Gosh. I am afraid that I do not have the details of the answer to that question, but I will write to the noble Lord.
Lord Young of Norwood Green
My Lords, can the Minister explain how watering down people’s rights at work by doubling the service requirement to claim for unfair dismissal from one to two years is a substitute for a credible plan for growth? As the Chartered Institute of Personnel and Development, the professional body, has confirmed, that is not the way to boost jobs and growth. There is no empirical evidence to suggest that such a move will boost job creation and it is highly likely that this change will lead to more people bringing discrimination claims instead, which have no service requirement. Can the Minister confirm that the two-year proposal is part of a consultation process? She seemed to be describing it as a done deal.
Baroness Wilcox
Yes, it is part of a consultation process, and we believe it is the way forward. The previous Government did not, I think, have a particularly good record. This has become more and more of a question, and we feel that ACAS and other bodies that can help in discussions before problems get too large would be a much better way than having to lose a job, start a job and have a relationship between an employee and an employer that is not working. We think that there are ways to do this other than going to court.
Transport: Fuel Prices
(12 years, 11 months ago)
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Lord Steel of Aikwood
To ask Her Majesty’s Government whether they plan to take action regarding the retail price of fuel at motorway service stations.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, the Government believe that the prices that an enterprise charges for its products and services is primarily a commercial matter for the enterprise concerned. Any competition concerns relating to the pricing of goods, including the retailing of petrol at motorway service stations, would fall to the Office of Fair Trading to investigate as the responsible competition authority.
Lord Steel of Aikwood
My Lords, I am grateful for that Answer, but is the Minister aware that prices at motorway stations are currently at about 10p a litre above those available elsewhere? This surely cannot be right. Will the Government consider referring the matter to the Office of Fair Trading or, on the other hand, copying what is done in France, where on the approach to a service station there is a notice board indicating the supplier and the price not only at that station but at the following two, and in that way promote competition?
Baroness Wilcox
I am very interested in the second part of that question. That sounds a very good idea, and I shall take it away if I may. My answer to the first part, of course, has to be that the Government believe that the best guarantee of a good deal for consumers is an open and competitive market—so what he suggested at the end of the question would be very helpful. However, if there is a concern that petrol prices at motorway service stations are affected by anti-competitive practices, the responsibility falls back to the Office of Fair Trading, and the Government really cannot interfere with that.
Lord Campbell-Savours
Do those high prices reflect high rents being paid by petroleum companies for motorway sites to the Department of Transport?
Baroness Wilcox
In answer to the noble Lord’s question, we believe that the best guarantee of a good deal for consumers is an open and competitive market. I cannot answer it any more clearly than that.
Lord Cormack
My Lords, could my noble friend answer the question that the noble Lord just asked? Are the high prices, which the noble Lord, Lord Steel, outlined, in any way attributable to the franchise costs charged by government?
Baroness Wilcox
I do not have the answer for that directly. I will go back and get the result, but I have to repeat that the Office of Fair Trading would be very quick to see if there were difficulties on either side in this argument.
Lord Bradshaw
My Lords, will my noble friend tell us when the Office of Fair Trading last investigated motorway fuel prices? The office has spent huge sums of money and time investigating bus fares, but motorway service station prices affect far more people.
Baroness Wilcox
No, I do not know the answer to that question about the last time that it looked. All I know is that it will constantly be looking and if there is enough worry around the area it will, I am sure, look at it.
Lord Brooke of Alverthorpe
Will the noble Baroness confirm that the number of staff engaged by the Office of Fair Trading has been reduced?
Baroness Wilcox
I would imagine that everybody is tightening their belts. No doubt it, too, has had to reduce, as have all government departments following the terrible debts that we incurred when we came into government.
Lord Davies of Oldham
My Lords, given that the 10p excess which is often charged by motorway service stations is a very high fraction of the actual cost of the fuel, and that the companies are therefore getting a much greater return than elsewhere, should the Government not look at this matter as an issue of urgency?
Baroness Wilcox
As I think the noble Lord knows, the Government cannot intervene where the Office of Fair Trading should be acting.
Viscount Simon
My Lords, I have not checked it for quite a number of years, but is the noble Baroness aware that there is, or used to be, a website on which you could access the price of fuel that was closest and cheapest to motorway services?
Baroness Wilcox
That is a wonderful answer. Once again consumers, if they have the right amount of information, can make those choices.
Lord Armstrong of Ilminster
My Lords, while the noble Baroness is looking at the possibility of displaying prices of fuel stations further down the motorway, will she also look at the possibility of allowing those who provide the fuel at motorway services to say on the notices outside the motorway station who they are? You can say where the coffee comes from, and who is providing that and other services, but you do not seem to be able to say who is providing the petrol.
Baroness Wilcox
My Lords, that is a novel idea. I will take it back and write to the noble Lord.
International Monetary Fund
(12 years, 11 months ago)
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Lord Barnett
To ask Her Majesty’s Government by how much they expect to increase their contribution to the International Monetary Fund.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, at the G20 Britain, and all the other countries, agreed to ensure that the IMF continues to have resources to play its systemic role to the benefit of its whole membership. We stand ready to contribute within limits agreed by the House and set out in the International Monetary Fund Act 1979. However, there is currently no agreement about the timing, extent or exact method through which IMF resources will be increased.
Lord Barnett
In thanking the noble Lord for his Answer, I remind him that the Chief Secretary to the Treasury said on 6 November that he expected our contribution—which is the Question I asked—would be up to £40 billion. Perhaps the noble Lord could answer that as well. He and the Government recognise the need to provide funds for the IMF. Indeed, the Prime Minister said in the House on 7 November that it would be irresponsible to walk away from helping the IMF, but that it must not be used for a bailout. Can the Minister explain the difference between helping for a bailout and helping for a crisis—a very serious world crisis?
Lord Sassoon
My Lords, in answer to the first question, the position under the International Monetary Fund Act 1979 is that the limits agreed by Parliament currently stand at 38.8 billion SDRs, or about £38.3 billion. That is where the £40 billion figure comes from.
On the question of what the IMF is there to do, it is to look at the overall systemic risks in the world and support individual countries. It is not there to support countries in one particular zone as opposed to others or to support currencies. It is there to consider, under its criteria, country by country, where support might be needed.
Lord Newby
My Lords, in view of the failure of the German authorities yesterday to auction off debt, do the Government believe that the time has now come for the development of a Eurobond to provide a long-term stable approach to raising funds for the whole of the eurozone?
Lord Sassoon
My Lords, we are at risk of straying a bit far from the question about the IMF, but there are a number of serious points here. First, with respect to Germany or any other countries, one should not read too much into one particular bond sale that does not meet its target. That has happened to a number of countries over the years, including the UK. As for what the arrangements will be for the eurozone, we continue to wish that the eurozone makes as much progress as it can, as urgently as possible, to put the arrangements in place.
Lord McFall of Alcluith
My Lords, given that the eurozone crisis is potentially more damaging than the one of 2008, is the Minister aware of the IMF statistics that show that over 50 per cent of the Italian, German and French debt is held by non-residents, thereby ensuring that if there is a crisis it will not be confined to the European continent? Is there not a case for more urgent consideration with the IMF to ensure that it and the UK play their part in this global crisis to ensure a better and more stable economic future for the citizens of this country?
Lord Sassoon
The IMF does and will continue to play a pivotal role in these systemic issues. There was no agreement at the G20 for an increase in resources for the IMF because, understandably, the US and other key non-European countries want to see the euro area core’s willingness to contribute to the eurozone crisis before they commit. Meanwhile, the IMF has $400 billion available to lend, but I agree with the noble Lord that there is an urgent need to resolve all these interlinked matters.
Lord Blackwell
My Lords, does my noble friend agree that it is undesirable for the IMF or indeed any other agency to fund the debts of any particular country unless that country has a sustainable plan to restore its international competitiveness?
Lord Sassoon
I very much agree with my noble friend. The IMF’s lending programmes are indeed conditional on programmes of that kind.
Lord Harrison
Given the fact that we help our fellow European countries in the contribution that we have made to Ireland, the IMF and the EFSM, what is the philosophical and practical difference between contributing to the EFSF—which is not wholly confined to the euro 17—and contributing to the future EFSM or, for that matter, any other acronym that may come along to help?
Lord Sassoon
It would be unproductive to be drawn into the history of the arrangements that the previous Government committed this country to, but we could go into that if noble Lords want to. This Government are completely clear: we will support the IMF on a bipartisan and all-party basis, as we have always done since its inception. It must be for the eurozone countries to put in place their mechanisms for future support.
Lord Dykes
My Lords, does the Minister not agree that in view of the deep urgency of this crisis, which the noble Lord, Lord Barnett, referred to—indeed, the United States is the most irresponsibly indebted country of all in the whole IMF system—there is a growing case for a significant increase in these facilities and for working with the eurozone for the good of the whole world? Otherwise this problem is going to grow and grow, including in non-euro countries.
Lord Sassoon
My Lords, I would just reinforce to my noble friend that at the G20 Britain and all the other countries agreed to ensure that the IMF continues to have all the resources that it needs. There is no lack of commitment to the IMF having those resources. We now need to see what proposals develop. I agree that the situation cannot drag on for ever.
Lord Davies of Oldham
My Lords, the noble Lord has cited the resources that are already available to the IMF but many commentators foresee that they will be inadequate to meet the depth of this crisis. If the IMF seeks to raise further funds, will the Government be contributing?
Lord Sassoon
My Lords, I have made it completely clear that we have headroom under the current law and the statutory instruments that were passed by Parliament in July 2010 and July 2011. We have always contributed to the IMF and we will continue to support it.
Business of the House
(12 years, 11 months ago)
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Lord McNally
That the debates on the Motions in the names of Lord Sugar and Baroness Pitkeathley set down for today shall each be limited to 2½ hours.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, I beg to move the Motion standing in the name of my noble friend Lord Strathclyde on the Order Paper.
Lord Barnett
While the noble Lord is on his feet, I wonder if he could reply to a business question. On 8 November the Leader of the House, the noble Lord, Lord Strathclyde, promised a debate on Europe. When will it take place?
Lord McNally
I am reliably advised that the debate is included in the forthcoming business and will be held on 1 December.
Lord Cormack
My Lords, will the debate be held on the Floor of the House or in the Moses Room? Most of us feel that it should be on the former.
Lord McNally
By agreement with the usual channels, it will be held in the Moses Room.
Government Procurement Policy
(12 years, 11 months ago)
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Lord Sugar
My Lords, I am encouraged to see so many of your Lordships joining this debate. Government procurement is an important issue. After all, as taxpayers, it is our money that is being spent every day, and we have the right to ensure we are getting good value. Before I move on, I should like to state that, pursuant to the Code of Conduct, I have registered with the Table Office any relevant interests that may arise from those listed in my name in the House register of interests.
Government expenditure was in the region of £238 billion on procurement in the past year. I believe that this was spent on a whole range of items and services, from paper clips to guided missiles. In referring to getting good value for money, I shall break this down into three categories, the first and most obvious being that the best prices should be obtained for any product or service required by the Government. The second is value for the country and the third is value for SMEs.
Starting with real value for money, your Lordships will agree with me that the world has moved on a lot as far as internet connectivity is concerned. For that reason, there is simply no longer the need for local purchasing. Centralised purchasing should be implemented immediately. I regret to say that, from my experience in running so many businesses, when you place the task of procurement in the hands of unqualified people, it is similar in some cases to letting kids run riot in a sweet shop. The main issue, of course, is that it is not their money, and it is amazing how irresponsible some people can be when spending other people's money as opposed to their own. Obviously, that is stating the obvious.
In August 2010, Sir Philip Green was asked by the Prime Minister to carry out an efficiency review. He published his findings in October 2010. The report spoke of inefficiency and waste in government spending. One of its observations was that it was impossible for the Civil Service to operate efficiently with current processes in place. Expensive IT contracts were for too long with no flexibility; there was no motivation to save money or to treat cash as one’s own—the point that I have just made; there was no process for setting and challenging detailed departmental budgets; and, most importantly, there are inconsistent commercial skills across departments. The report gave factual examples of variations of up to 80 per cent across central departments in prices paid for the same product.
For a commercial person like me, these issues are very easy to resolve. What I am about to suggest will be controversial but very commercial. My assumption is based on the fact that a centralised group of real procurement professionals purchasing the same goods and services obtained in the past for £238 billion would be able to procure the exact same amount of goods for £200 billion. I am of course putting to one side the fact that maybe a lot of the stuff should never have been ordered in the first place, but that is another story.
It is here that a controversial issue arises. There is a need to recruit professionals from private industry and offer not just an exciting challenge. More importantly, they should be able to earn what they can earn in the commercial world as well as having bonus targets. These people would in turn have to employ others. This new group should then be responsible for training existing public sector staff to deal with business effectively to get the best possible value for money for the public purse. Hypothetically—I am just dreaming here—if this group of procurement experts costs £50 million a year, that sum pales into insignificance against my forecast saving of £38 billion given in the earlier example.
The reason why the issue is controversial is down to the following question: would the Government have the guts to do this, or would they be frightened off by headlines about the head honcho in charge of procurement earning X millions of pounds a year? One can see a certain national newspaper carrying the headline: “Fred Smith earns £X million a year, while Joe Bloggs in the north-east of England struggles”. Of course, that newspaper would not be interested in the £38 billion being saved because it does not make good headlines. So I ask the Government to consider the implementation of this idea, to rise above the inevitable external criticism and to do the sensible commercial thing.
My second point is value for the country. So many government contracts are awarded to foreign companies or companies that pay little or no tax in this country. Now, I know that we are all fully aware of the requirements under EU rules and regulations on procurement, but I am sure that your Lordships will not be surprised when I cite our cousins in France, who seem magically to manage to be very patriotic when it comes to dishing out orders from their Government.
There are examples of ECJ rulings that have allowed for European countries to widen the criteria for what they see as the “most economically advantageous tender”— more commonly known as MEAT—which should not be based on price alone. Both France and the Netherlands have used this for environmental and social benefits. In 2000, the French Republic was taken to court by the European Commission for failing to comply with European procurement legislation. The case referred to the construction and maintenance of school buildings.
The European Commission’s main objection was the use of an award criterion that required contractors to recruit local workers from a project specifically to combat unemployment. The ECJ defended the French and ruled that a contracting authority can use the fight against unemployment as an award criterion. Dare I say that this could have been used in the recent Bombardier case, thereby saving 1,400 jobs in Derby? Instead, the decision was made that the train carriages would be produced in Germany. This is where I think this Government could learn some serious lessons from our European counterparts. I am sorry, but if I was in charge of procurement I would have fought tooth and nail to keep that Bombardier deal in this country.
When it comes to government procurement of information technology products, many of us will have noticed that in many government offices, hospitals and other government-run establishments desks are littered with computer equipment made by a certain Japanese and German partnership. There is a funny story here. Some of your Lordships may recall a British computer company, ICL, which was Britain’s equivalent of IBM many years ago. That company was eventually sold to a Japanese company, which in turn associated itself with a famous German company. Many years ago the then Government rightly awarded a lot of their IT business to ICL, a British company. That made sense. However, your Lordships may be interested to hear that the Government are still entrenched in contracts dating back years, which originated with ICL but are now enjoyed by this foreign entity. It is what I call “grandfathered-in” contracts. There has been a total lack of flexibility in using and assessing other supply chains.
I apologise for raising the conflict of interest issue again but I do so merely to demonstrate what is going on. I have one of the few computer companies that still produce computers in this country. We supply certain government-run organisations and schools and employ about 200 people. We are typical of many other companies in this country in that regard. I would like to make it perfectly clear that I am not touting for business but merely using this example to show the scale of what I am talking about. If we were awarded a tenth of the computer and IT system services that the Government purchase in the course of a year I would have to employ at least 350 to 400 more people. I have made this point clear to those involved in procurement, but it seems that the penny has still not dropped. As I say, my example is most probably not unique. I am sure that the same point could be made by people in other industries.
I am certainly not advocating that the Government should pay more for British-assembled products. The process of winning government contracts still has very strict criteria on price, quality and delivery but the priorities are wrong. If my company employed another 300 to 400 people, thus removing from the Government the burden of having to look after some of those people through the unemployment benefits system, it would outweigh some of the minor additional costs that may have to be paid to smaller companies trying to compete with the giant foreign organisations that simply dump products in Britain.
My IT company is inundated with inquiries from young school leavers requesting work experience and wanting to get into the IT field. We simply cannot take them on as we have no work for them. Even if apprenticeship schemes or other allowances are available, there simply comes a point when the company has to face harsh commercial reality.
The Government must support British companies and find a way to make the procurement process work for the country, as the French and other European countries have done. The most economically advantageous deal may not always be about the cheapest price. There are wider social impacts to consider, and this is about what the Government should be doing to support jobs and our UK businesses.
The third and final element of value for money relates to SMEs—the small to medium-sized enterprises. I heard the Government say when they were elected that they were going to ensure that at least 25 per cent of contracts are awarded to SMEs. To date, I understand that figure is about 7 per cent. However, there seems to be another 25 per cent rule, which is that an SME cannot bid for a contract if its value is more than 25 per cent of its turnover. This seems crazy because the SME may be the market leader, yet the contract has to be placed with larger companies that do not have the same expertise.
The Government say that they are angry with the banks for not lending to SMEs. Well, they can encourage such lending by making sure that orders are given to SMEs to impress the banks into lending them money. When government contracts are handed out to large organisations, there should be clauses clearly stating that they must give a certain percentage of the contract out to British SME subcontractors.
I am sure the Minister will advise your Lordships’ House that many of the issues I have raised are already under control and that I should not despair. Indeed, I am aware that, coincidently, the right honourable gentleman the Minister for the Cabinet Office held an event on 21 November entitled, A New Way Forward. The agenda showed that the Government had acknowledged many of the things that I have raised today, particularly in respect of IT. As an example it stated that businesses should understand the Government’s intention to,
“move away from large projects that are slow to implement or pose a greater risk of failure and to end the oligopoly of large suppliers that monopolise its service provision”.
That is fighting talk and exactly what we would like to hear. I have had the good fortune to meet some senior civil servants from the Cabinet Office who have politely debated these issues with me, and I am somewhat impressed with the approach they have taken to date but, with the greatest respect, they may also be the first to acknowledge that these plans will not be achieved with those who are currently responsible for procurement. This Government need to engage serious professionals, centralise their procurement processes and get a genuinely better deal for SMEs in the UK.
I have opened up a whole host of topics to which I am sure your Lordships participating in this debate will add, and I await with interest the comments of the speakers who will follow. I beg to move.
Lord Lee of Trafford
My Lords, I congratulate the noble Lord, Lord Sugar, on securing this important debate. I also declare a number of shareholdings in defence companies that are listed in the Register of Lords’ Interests, because I shall talk about defence procurement.
The problems and complexities of defence procurement have been with us for many years. Twenty-five years ago, when I was a junior Defence Minister, we were spending £1 million an hour, every hour, on equipment for our Armed Forces. One of my officials at that stage told me that we could probably have built the whole of the then naval requirement in the Vickers yard at Barrow, and we did not need the half dozen other naval yards. We had a substantial problem of overcapacity.
As a Minister, I was subject to a substantial amount of lobbying in the Division Lobbies in the other place—not least by the noble Lord, Lord O’Neill, who is sitting in his place and from whom we will hear later. Fairly, he lobbied hard for orders for the Scottish yards. We started a NATO frigate programme that got nowhere. We ordered three new conventional submarines that were never used and were subsequently sold. We had major problems with the Nimrod software, and I remember calling in the head of Ferranti. The then Secretary of State, Michael Heseltine, now the noble Lord, Lord Heseltine, brought in Peter Levene, now the noble Lord, Lord Levene, at a salary unheard of in the 1980s of £100,000 a year to bring competition into defence spend and to move away from single sourcing. Incidentally, today 40 per cent of contracts are still placed on a non-competitive basis, amounting to about £9 billion a year.
In 1997, the NAO reported that the 25 largest defence equipment projects under way at that time were £3 billion over budget and, on average, entered service three years late. By 2009—12 years later—the situation had got worse. Bernard Gray, in his report commissioned by a Labour Government, concluded that the MoD was running a “substantially overheated” equipment programme, with,
“too many types of equipment being ordered for too large a range of tasks at too high a specification”.
On 9 July that year in your Lordships’ House I said that,
“in the private sector, if one trades when one knows that one’s operation is insolvent, that is a criminal offence. At the present time, the Ministry of Defence, frankly, is bust. There is a yawning gap between resources and commitments”.
The noble Lord, Lord Drayson, replied:
“My Lords, I am afraid that I do not recognise at all the characterisation that the noble Lord has just set out”.—[Official Report, 9/7/09; col. 760.]
I think it is accepted that when the coalition Government came to power there was an unfunded liability over the next 10 years of about £38 billion. The noble Lord, Lord Davies, who will speak a little later, may well comment on that. I am not endeavouring to make any party-political points, because the problems of defence spend and procurement transcend party politics. I think it is accepted that we have had too much gold-plating, too much specification-changing, too many personnel changes in contract responsibilities and too little co-operation with our European allies on procurement issues. The EDA—the European Defence Agency—estimated that there were 16 separate procurement programmes for armoured vehicles alone. Only days ago, the NAO’s Major Projects Report concluded that we were overrunning by £6 billion on 15 major projects over the past three years, including a £1 billion cost increase on the Astute submarine programme. Of course, we know that £3.4 billion was spent on cancelling Nimrod maritime patrol aircraft.
We also learnt very recently that the MoD had spent something like £550 million on consultancy fees, with one firm, AlixPartners, apparently charging at the rate of £4,000 per consultant per day. In broad-brush terms, industry negotiators have run rings around the MoD over the years. I have tabled a Written Question, which is awaiting answer, asking the MoD to list the six highest salaries that it pays to civilians. My guess is that these will be relatively modest, given the size of the MoD budget. My question is: should we offer really competitive salaries to recruit the best—a point made by the noble Lord, Lord Sugar—and perhaps not need to spend anything like so much on consultancies?
I am encouraged by the number of new initiatives to improve defence acquisitions that are currently under way, including: the establishment of a new major projects review board; a review of single-source contracts by the noble Lord, Lord Currie; a new material strategy, including options for the future of defence equipment and support organisation under Bernard Gray; and reviewing and renegotiating up to 500 contracts with a value of £8 billion. That is all very laudable; let us hope that significant improvements are achieved.
On jobs and employment, defence spend sustains something like 300,000 jobs. Leaving aside for another day the whole question of R&D spin-off and the operation of SMEs—I think that my noble friend Lord Palmer will refer to SMEs a little later—at present there is a presumption that there should be off-the-shelf purchasing wherever possible. At a time of considerable economic difficulty in this country with high unemployment, we have to be very careful to balance value-for-money purchases with jobs at home. Indeed, that has always been the case.
In conclusion, I would like two things to happen: first, greater industry consolidation across the defence sector, particularly in Europe, because only then will we begin to see a real rationalisation of defence equipment and procurement among our European allies and ourselves; and, secondly, if possible, cross-party agreement to the spending of a specific percentage of GDP on defence, coupled with a Treasury commitment to a guaranteed 10-year funding programme, as there is in Australia, thus giving a firm base on which long-term procurement commitments can be entered into.
Lord Bhattacharyya
My Lords, I thank my noble friend Lord Sugar for securing this debate. I am pleased to declare my interest as chairman of Warwick Manufacturing Group at the University of Warwick.
The Government are Britain's biggest customer. As we have heard, the Government spent almost £240 billion last year. State procurement decides the fate of many of the private sector firms that Britain urgently needs to expand. Britain, having a small internal market, in global terms, must export to survive. That can be difficult for firms in specialised markets with low UK volumes. Procurement can be the scaffolding on which such firms build as they grow. Today, Britain has one of the lowest business investment rates in research and development in the developed world. So our main challenge is for procurement to support innovation, research, and product development.
Encouraging innovation through procurement has long been an issue for policy-makers, going all the way back to Harold Wilson's Ministry of Technology. Many noble Lords will recall those debates and will know that policy delivery has rarely matched the rhetoric. That is because our focus has too often been on government processes and structures and not on encouraging business to innovate. We need a procurement system that encourages commercial innovation, which means designing in risk, experimentation and failure.
The Government are bad at taking risks. That has created a plethora of partnerships, pathfinders, pilots, and bureaucracies, all designed to stop failure. Yet, in seeking to avoid risk, we end up accepting second or third best, or even avoiding innovation completely. The chance to use procurement to grow then gets lost in the thicket of excuses: state aid, European rules, the need for tendering and all the rest. What gets forgotten is that we must make British business competitive before tenders are bid for. Then, no matter what value rules apply, UK firms will have a good chance. Business needs volume to invest in the R&D that will make them competitive. This is especially important if the Government pursue a decentralised procurement strategy, where there is a danger that fragmentation leads to business refusal to invest. This makes support for procurement innovation essential if firms are to develop the products that appeal to government customers, both domestically and in export markets.
Britain has a strong science base to support such innovation. We lack consistent funding in the gap between blue-sky research and commercial exploitation. This exploratory development phase is a weakness for British business. Procurement policy could transform this. In America, this is achieved through a programme called Small Business Innovation Research. SBIR takes 2.5 per cent of all federal research spending, and directs it to support business innovation in key government procurement areas. It makes straightforward grants for both exploratory and commercialised projects. It is low bureaucracy and innovation-focused. This programme works. It has seen the emergence of successful US companies like Qualcomm and iRobot. In the UK, we have a similar programme, the Small Business Research Initiative, but it is tiny compared to America's. We should take this programme and use it to transform our approach to innovation in procurement. We could tax a small proportion of all UK procurement budgets to support an innovation fund. This would mean that procurement projects had British innovation designed in, whatever the scale of the procurement. If directly top-slicing procurement budgets and reallocating funds to research cannot be made to work, reducing emphasis on the R&D tax credit in favour of encouraging innovation by small businesses may be an alternative, because very few small businesses get any R&D tax credit.
Once we have secured a funding stream for innovation, we should worry less about structures and focus more on letting businesses lead. Intermediary institutions are vital to business R&D, whether they are university- based, commercial providers or Fraunhofer-type institutes; but too often we have seen government create technology programmes that have little appeal for business. Government should decide what procurement innovation paths they want to support, from health to aerospace; deliver research capacities in these areas; and then let businesses innovate without interference.
To achieve this structural shift, we should expand the Technology and Innovation Centres programme to provide a lead for innovation in every key government procurement area. The primary role of the TICs would be to distribute resources to business-focused intermediary research bodies in order to develop laboratories and research facilities in areas of procurement innovation.
To ensure that the TICs are commercially oriented, the aim should be to move them to the private sector as they mature. They should look to make a return on their capital investment by taking a slice of the research income that their partners generate, enabling them eventually to seek commercial funding. That way, those running TICs will have incentives to favour research groups with a track record of helping businesses successfully innovate in procurement areas.
On the business side of the equation, the SBRI should offer research support to businesses which seek to develop solutions to our long-term procurement challenges. Those businesses should be free to choose where to invest their grants—with profit-making, public or charitable bodies—so long as they work with a procurement TIC partner. Some research projects will prosper, others will fail. The key is that businesses will be free to choose partners who fit their needs and can help them find solutions. Procurement should be an investment in our national future. If we focus on innovation, it will be.
Lord St John of Bletso
My Lords, this is an opportune time for a debate on this issue. It comes just three days after the speech by the Cabinet Office Minister, Francis Maude, on proposals to radically overhaul and improve public procurement. It also comes at a time when all government departments are under pressure to cut costs and when small and medium-sized enterprises are in desperate need of better access to bid for government business, which will call for less red tape.
I am grateful to the noble Lord, Lord Sugar, for giving us the opportunity to debate this important issue. No one in your Lordships' House is better qualified, given his vast commercial experience. I also thank the House of Lords Library for the excellent briefing pack on this debate. As a member of the House of Lords Information Committee, I hope that many Members who recently joined your Lordships' House will avail themselves of the tremendous support provided for these topical debates by the Library.
My interest in the subject of this debate goes back to the Gershon review of 2004, which both set and achieved an ambitious target of efficiency gains across government departments and the wider public sector. Procurement was clearly the largest area in which gains were made. Just as important, the review focused on increasing productive time. Undoubtedly, huge savings in costs and efficiencies followed from the review; but there is a lot more to be done, which is where I will address my few comments.
Every year since then—this is my other reason for speaking in the debate—I have hosted a series of lunches and dinners with members of the purchasing departments of public and private sector organisations in order to exchange knowledge, experience and success stories, and also to learn from errors. That is why this issue is very important. The noble Lord, Lord Sugar, made the point about having effective and strong procurement managers. Clearly, in the past, procurement managers in the public sector have been severely impeded by bureaucracy and red tape emanating not just within the United Kingdom but also from Brussels.
My other interest in this debate has been my desire to promote greater access for SMEs to compete for government contracts and services—by which I mean enabling them not just to be cheaper but to act more expeditiously. With the revolution over the past 10 years in online business this process can and should be a lot more efficient in both cost and time. As the noble Lord, Lord Sugar, mentioned, procurement accounts for £238 billion, or almost 35 per cent, of public sector expenditure. With the budget deficit, efficient and better procurement is essential, not a luxury.
Sir Philip Green's efficiency review of public spending emphasised credit ratings, buying power and the need to leverage spend as well as to mandate centralised procurement for common categories. Very importantly, he also highlighted the need to produce and use accurate data and to simplify and minimise demand and specifications. Although there are clear advantages to centralised purchasing and bulk buying, which allow prices to be driven down and minimise waste and administration costs, there also are dangers which the noble Lord, Lord Sugar, did not outline. I shall raise two very small dangers. First, I believe that innovation might be stifled—by which I mean that if all decisions are made centrally there will be very little room for new initiatives and alternative plans and products. Secondly, differences in local needs might be ignored. There is always a danger that a “one size fits all” attitude could become a matter of “one size does not fit anybody”.
Many SMEs still find the whole process of public procurement too onerous and decide to opt out. My question is: what can the bigger suppliers do to encourage SMEs to get involved through innovative partnering agreements? One of the key objectives must be to procure for an outcome with some flexibility. Procuring for the outcome rather than for the particular product allows suppliers the space to come up with new methods and equipment to solve a particular problem. To enable that, the Government need to put in place financial mechanisms that can cope with payment by results.
We also need to look at cross-departmental incentives. Many outcomes can benefit more than one government department; for example, getting people back to work eases the strain on the health service and others, not just the Department for Work and Pensions. Yet how does one incentivise one department to invest money in a project that will benefit others? Time restricts me from elaborating on this proposal, but what is needed is a budget and payment system that can manage this cross-section benefit.
My time is rapidly running out. While there has been a lot of debate about the benefits of PFIs, I believe that public/private partnerships have an extremely important role to play, with the private sector carrying some of the financial risks of new projects. This is strengthened by payment-by-outcome approaches, but several problems need to be addressed.
I believe that there are huge opportunities but equally huge challenges. Better information is essential. How do you incentivise different departments? The scale and complexity of the public sector is such that there is clearly not a common solution to procurement strategies. Technologies can and should make a huge difference to procurement. I believe that more dialogue between public and private procurement managers could be part of the paradigm shift required in the public sector. A professor at Henley Business School aptly summarised the situation when he said:
“No other aspect of government could release so much money, so readily and with such little political disagreement or social detriment ... Public procurement, with a few notable exceptions, is massively under-led, misunderstood, and under-focused”.
This transformation of procurement as a discipline is long overdue.
Lord Puttnam
My Lords, I, too, thank the noble Lord, Lord Sugar, for making this important debate possible. He managed to set out the principal issues in an honest and typically pugnacious way. The thrust of his speech that particularly impressed me was his insistence that we stop pretending that we are goody two-shoes and start to play the procurement game in the way that it is successfully practised in France, Germany, the Netherlands, Canada and, by the most sophisticated and unyielding protectionist of them all, the United States.
He also made what I believe to be a crucial point in stressing that the most economically advantageous deal may not always be the cheapest price and that there are wider social impacts to consider. To put it another way, I suggest that the overriding aim of successful procurement should always be driving costs down while driving value up. It is this concept of where true value lies that turns procurement from a job or a task into an art, or certainly a craft—one that is able to look right across the value chain and understand the full implications of its remit.
Perhaps I may put a little flesh on that assertion by offering your Lordships an example of what I mean from not all that many years ago. Here, like the noble Lord, Lord Sugar, I must declare an interest, but it is one of those interests that in my judgment adds rather than detracts from the experience that I bring to this House. I am very proud to be the senior non-executive director of Promethean, a British company, founded in Blackburn, and one of the two global leaders in interactive classroom technology.
About eight years ago the then Government sensibly took the view that advances in education were very likely to be technology-driven and that a window of opportunity existed for the UK to become a world leader in the provision of educational hardware and software. Significant government resources were found and a serious procurement programme, amounting to well over £500 million, was put in place. As usual, no particular favours were shown to UK suppliers, that being the ideological stance of the then Labour Government. I should stress that the commitment to procurement from global markets was at that time both fashionable and ideologically driven—wrongheaded in my view but, to its credit, entirely genuine.
In respect of Promethean—and this was long before I joined the board—what was being offered was a very advanced piece of technology together with a pretty comprehensive training package, sufficient to allow the teacher to familiarise him or herself with the full educational potential of the product. As the government procurement process began to bite and the price was squeezed, something had to go. It could have been the R&D commitment to future innovation. Happily, the company decided to protect that. What went instead was the training package. And with what result? For the next few years, white boards, from a variety of manufacturers, were being purchased and shipped to schools, colleges and other institutions in which nobody had the skills to use them. I would guess that hundreds, maybe even a few thousand, found their way into cupboards or were simply never taken out of the wrapping paper for fear of embarrassing staff who were simply never offered the training, and the resulting confidence, adequately to use them.
Procurement in its crudest and most unimaginative form had done its job, but far from creating real value—certainly, value as any one of us would understand it—or helping to build a successful UK-based business, let alone improving the education of an entire cohort of children, it had managed, in effect, to defeat the entire purpose of the exercise. Happily, much of that damage has since been rectified by a generation of enthusiastic and digitally literate heads and teachers, but several vital years and myriad opportunities were lost through the practice of what the noble Lord, Lord Sugar, rightly describes as ill thought-through procurement policies.
I have a dream, and it is a dream that has recurred time and again since my arrival in your Lordships’ House some 14 years ago. That dream is to read a government response to a thoughtful, well argued and thoroughly constructive report by a committee of this House which is similarly thoughtful, similarly well argued and, most important of all, equally constructive. On this occasion the report in question is that of the Science and Technology Committee, entitled Public Procurement as a Tool to Stimulate Innovation.
As I see it, intelligent procurement is all about asking the right questions and understanding what might be the ultimate, long-term national objective. That will not necessarily be the same objective as that of the Treasury, which is invariably tied to a far more short-term view. The report of the committee to which I refer asks all the right questions in a polite and reasoned way. The Government’s response is equally polite, but by my reading falls well short of the degree of urgency and commitment that the committee seeks. The committee makes it clear that it intends to return to this subject next year. I seriously welcome that assurance. But when it does, and assuming that it is as disappointed with progress as I rather expect it to be, I hope that it will follow the example of the noble Lord, Lord Sugar, and be prepared seriously to take the gloves off.
The committee’s hand was strengthened earlier this week by Vince Cable’s welcome announcement of the appointment of Phil Smith, the chief executive of the technology company Cisco, as the new chair of the Government’s Technology Strategy Board. As the committee’s report makes clear, the TSB is ideally placed to influence and maybe even drive through many of its recommendations. In my judgment, the board could not have a better ally in whom to entrust the change of culture that both the committee and the noble Lord, Lord Sugar, are pressing for. I would suggest that this House should commit itself to offering Mr Smith every possible scrap of support in delivering the improvements in policy and practice that are being argued for in this extremely well-timed debate.
Perhaps I may finish with this observation. I find it very strange that for a debate on an economic subject which all but obsesses, and has obsessed over the years, the Conservatives in opposition and in government, they have not put forward a single spokesperson. I am sure that the noble Lord, Lord Wallace, will more than adequately reply for the coalition, but it seems odd that a subject of such enormous importance and which is so central to many elements of Conservative philosophy is not seen to be important enough for them to put up a speaker.
Lord Kestenbaum
My Lords, I too congratulate my noble friend Lord Sugar on calling urgent attention to this matter. At a moment of deep anxiety for the British economy, this debate could not be more timely. The first thing we should do today is lay to rest the myth which says that you only have a pro-business environment if the Government leave the stage. As many noble Lords have said, let us just consider the United States. Many of the high-tech entrepreneurs who I have been involved with in this country have taken their inspiration from Silicon Valley. The conventional wisdom is that that is a place where government do best when they are invisible, and yet the opposite is the case. Procurement has been the major factor in the growth and development of Silicon Valley. Military spending funded the generation of microwave technology companies that were a mainstay of the region before the semiconductor industry arrived. It is no exaggeration to say that whether it is the GPS navigation system we all use or internet protocols the public procurement of technology has been the basis of the most transformational global innovations of recent decades.
The first point I wish to stress is just how underexploited the procurement lever is here in Britain when it comes to driving innovation. It is a huge worry, because particularly now the Government are telling us all the time of the need to drive economic growth while at the same time curbing public spending, and yet the buying power is just not maximised. Let us consider the opportunities. As the blight of worklessness increases, we know broadly where the new jobs will be. All the evidence shows, again and again, that innovative, high-growth firms will produce the jobs of the future. NESTA’s recently cited research into high growth shows that just 7 per cent of businesses in the UK have been responsible for half the jobs in the past decade, and the characteristics of these job-creating businesses are those which are most likely to innovate.
In my own experience recently, first as CEO of NESTA and now as chief executive of Lord Rothschild’s family investment interests, my colleagues and I have been privileged to back some of these great young tech entrepreneurs. Through doing that we learnt what these growing small businesses value above all. Capital is important to them, but above all, these young companies value customers; customers are the key. These companies thrive on customers because they are the lifeblood of the most promising parts of our economy, who in turn will be the lifeblood of our recovery. But too many of them will remain small, without customers, at a time when banks have no interest in this risky end of the market and when venture capital houses are on the prowl for the next high-profile buyout. But it is the most significant customer of all, the Government, who are more likely to make a tech business viable than anyone else.
By way of example, while head of NESTA, I was delighted to learn that one of our investments, a UK tech start-up, was bidding for a government contract for its experimental silicon chip. Imagine my surprise when I found out that the Government in question were not ours but the Government of France. Our company proceeded to tell me how other Governments, of France, Japan and other countries, were so much better sources of these kinds of contracts and that French and Japanese competitors usually benefited from them. After all, they had early customers at an early stage.
As noble friends have suggested, we have made modest steps in transforming government budgets from blank cheques to intelligent, demanding customers. Yes, the SBRI does attempt to open up public procurement of R&D to a wider audience of small businesses. Yet with all the progress made, let us be honest: it is on a tiny scale, a mere pinprick at a time when new customers are life and death to the 99 per cent of firms in the UK that employ fewer than 50 people. Surely it must be time to build these programmes up to a real, meaningful scale that would have great and lasting impact. As the noble Lord, Lord Puttnam, said, the TSB, whose board I have the privilege of sitting on, suggested recently how small tech companies might step up to the task of solving major national challenges if significant procurement budgets were diverted differently.
I have focused my remarks on procurement as the single most significant lever that any Government have to drive innovation and thereby create growth. But permit me one final wider observation. It continues to prove exceedingly difficult for small businesses to win these R&D contracts. That is not, as my noble friend Lord Sugar has correctly observed, because the budgets are not available. It is because too often, government departments are consistently unwilling to accept the risks of financing early-stage technology development, mostly because they do not understand the risks. Surely government departments must start to frame their procurement needs as genuine commercial challenges for small businesses to solve, rather than as bureaucratic hoops to jump through.
Here is the rub: no amount of small programmes, often timid in scale and often initiated with great fanfare and then quietly closed 18 months later, will succeed without genuine, consistent and ambitious leadership from the very top—from ministerial level. That will produce an aggressive, ambitious national programme which runs through government that does nothing other than force a procurement revolution. Yes, we should create incentives, as my noble friend Lord Sugar has suggested—real incentives for those who take risks and get it right
This is a revolution and this procurement revolution needs to be driven, cajoled, inspired and incentivised. It is no exaggeration at this time to say that in large measure, our economic growth will depend on it.
Lord Palmer of Childs Hill
My Lords, I, too, compliment the noble Lord, Lord Sugar, on securing this debate on government procurement policy. The trouble may be that there are a number of policies, most of which are not delivering what is required at the right price. I have seen this in local government, in defence procurement and in procurement in the construction industry—the industry which is supposed to contribute to leading us out of the recession.
The Strategic Defence and Security Review was published a year ago and said that it would fundamentally re-examine how the MoD was structured and managed. Nowhere is this more needed than in its procurement policies and their implementation. The MoD, in deciding its procurement policies, must have a clearer idea of what wars and battles it could be required to fight. There are large items of equipment in various war theatres, and we always end up with the difficult decision about what to do with the equipment at the end of the engagement. As an example of how not to do things, the building of two aircraft carriers which, it appears, no one knows what to do with—we do not have aircraft that can use them—is a prize example of poor procurement policy. The Member of Parliament for the area embracing one of the dockyards said:
“To rip up these contracts worth millions at this stage would not only be financial madness, but political suicide and I hope the coalition government sees sense”.
He is right, but because the previous Government made unbreakable contracts for ships that no one really wants, they will be built. Is that procurement policy or procurement madness? Our home-based defence industry complains, through its trade association, that the MoD has yet to define its indigenous capability requirements, which leaves the acquisition process unguided on what should be procured onshore, and industry with little on which to base investment plans.
The UK's requirement is for a continuously available critical mass of core skills in disciplines such as systems engineering, plus design and development engineering, that can rapidly be placed on a war footing. Assured off-shore access—which my noble friend Lord Lee describes as “buying off the shelf”—alone may be inappropriate for a number of reasons. It invites, as the noble Lord, Lord Sugar, said in another context, home-based inertia. It leads to the fading of skills. It jeopardises the need to maintain a critical mass in the support environment, and it could be subject to political restraints, legal challenges in other countries or third-party regulatory regimes which, together, cannot guarantee the necessary level needed in a national emergency.
ADS, the defence trade organisation, maintains that the majority of equipment costs for the MoD are now incurred in maintaining and upgrading existing systems through life, rather than in the acquisition phase. This means that “Through Life Capability Management” implications must be taken into account during acquisition. So what is needed is an effort to predict what could be needed in 2012 and beyond to work with UK industry to promote a holistic approach to decision-making. Short-termism does not help the MoD, the defence industry or the country.
Good procurement is needed not only in defence. The current economic crisis has created what some see as an opportunity to transform how our public infrastructure is procured and delivered. Much attention has been given to the future of the economic recovery, starting with the construction industry. At least one of the UK's largest construction businesses has strong beliefs on how the construction industry can help the Government to achieve our objectives of reducing the fiscal deficit while maintaining a platform of economic growth by actually reducing—reducing—the costs of construction. The basis of how to achieve this result is in how public infrastructure assets are procured.
Where possible, our Government should group its infrastructure procurement into programmes by geography and type, so that cost-reduction targets can be set over periods of five years. The Government should select the successful bidder or bidding teams on their ability to deliver the acceptable cost and their ability to deliver the cost reductions over a defined period. Bidders would need to accept that projects would not proceed unless the acceptable cost and cost reductions were achieved. The construction industry believes that, in that way, public sector procurement costs will be significantly reduced. Small and medium-sized enterprises will benefit through the supply chain and, with programmes of work defined over a future period, there will be significant opportunities for training and apprenticeships.
A number of noble Lords have referred to small and medium-sized enterprises. Listening to what other noble Lords have said, I throw into this debate that, since January, the Treasury has awarded a total of 16 contracts and put notices on the contracts finder, where there is a total of just over £12 million—none of which has been awarded to small or medium-sized enterprises. The Department of Transport has advertised 122 contracts with a value of more than £135 million on the contracts finder website since May 2010. Of those contracts, only £125,000 went to small businesses: under 1 per cent. Other figures are equally damning.
I never say that a project, be it in defence or construction, should take place purely to make employment, such as with useless aircraft carriers. However, where a contractor agrees to carry out the work and to employ local labour, it must surely weigh heavily in a successful bid. With such improvements in procurement processes, there could be guarantees in the use of SMEs, local employment and apprenticeships. If someone finds a way to do something cheaper and give better quality and value, be they SMEs or large enterprises, then they will prosper and increase market share—until, of course, their competitors catch up, seeing what they need to do in order to compete.
We must tackle why it costs a business twice as much to win a UK government contract as it costs to win a French government contract. We must ask why we often take sensible European laws and apply them overliterally, making the tendering process far more complicated than it needs to be.
Lord Hunt of Chesterton
My Lords, I thank my noble friend Lord Sugar and the other speakers for their remarks about how government procurement needs to improve fast, first, to make government services more effective and, secondly, in order for the Government to support and stimulate UK industry, commerce, technology and medicine. It is important to note that procurement is the purchase not only of goods and services but increasingly of research, software and manpower. I declare an interest as a government scientific consultant and as director of a consulting company that is not growing, but that is deliberate. We are providing all sorts of information to companies that are growing. It is rather hard work, growing a company.
The key to the effective use of procurement to the development of industry, commerce and technology is for the Government to have long-term plans, as the noble Lord, Lord Palmer, has just pointed out, and to consider at the outset how they will be implemented in partnership between the private sector and relevant departments and agencies. In addition, the process of planning procurement should always think of the long-term export possibilities of the decisions, an aspect of policy that needs emphasising. Can the Minister give us some assurance that this aspect of procurement is now firmly on the government agenda? Furthermore, this should be part of the job description of departmental and agency managers. I used to be head of the Met Office. Of course, at no point in my job description was there anything to do with procurement efficiency or improving British industry, unlike that of my colleagues in other countries.
Procurement must also be at the highest standard internationally. Harold Wilson knew this when he initiated government programmes in the 1960s. He was perhaps the last technocrat in No. 10. He realised that it was absolutely vital to have advanced electronics. The transputer came from that. It was interesting to be on the House of Lords committee when we heard from, for example, the managing director of ARM—one of the most successful British software companies—that that came out of Harold Wilson’s programme on transputers.
Over the next decades, there will be huge investments, both in the UK and globally, in various areas, such as coastal defences, for which the Environment Agency is responsible, high-speed trains, carbon capture and storage, and innovative types of nuclear power. Will these investments lead to the greater competitiveness of UK companies? Only if the Government specify high standards and encourage innovative solutions.
The lack of funding for UK privatised and public laboratories—again, unlike what happens abroad—makes this more difficult. Already, other European and Asian countries in the areas that I just mentioned are raising the technical standards in these projects which the UK is not currently planning to follow. Therefore, these other countries will become more competitive in future. For example, the Netherlands is integrating coastal defences with coastal wind power. Norway’s work on carbon capture and storage has higher environmental standards than are planned for the UK. China has more than 600 engineers working on hybrid nuclear; we have a small company that is trying, with China, to begin in this area. In these areas, there will be world expertise in the UK, but it may not be used in the UK if we are not encouraging these advanced solutions.
The UK Government are still not publicising as vigorously as they might on their websites what they are sponsoring, particularly from contractors. In some cases, where there has been some advertising of advanced technology by the Cabinet Office, it is rather strange that the relevant UK companies have not been mentioned. Noble Lords may have heard the remark that I have mentioned before and which many companies in other countries have made that if any small company survives in the UK it must be jolly good.
I will just touch on the indirect aspects of government procurement, which has become increasingly important and has changed significantly since the 1960s. At that time, of course, Parliament regarded it as essential for all organisations in government to have their own very substantial research programmes. Parliament said that the electricity generating board should spend 10 per cent of its turnover on research—of course current electricity companies spend much less that that. I was privileged in the 1960s to work in the world-class Central Electricity Generating Board laboratories. Americans used to come and were amazed at the high-level research that was being conducted there. I was also, incidentally, branch secretary of the local trade union, the EPEA, which shows how these things go together.
The United Kingdom then looked like France, the United States and the Netherlands today, with their world-class government and industrial laboratories. What is to be done? The Government, instead of having their own laboratories, now have to rely on ad hoc advice from consultants and universities, neither of which have the experience of unbiased government experts. The Government need to have a very rigorous programme of using external advice to make their decisions. Of course, this should include international advice. For example, DfID, having eliminated its own natural resources lab—subsumed into the University of Greenwich—now funds much of its advice from centres in the United States or relies upon NGOs such as the ODI.
I hope that the Minister will explain how this procuring of expertise is managed so as to get the best advice about major procurement programmes and the business of government and regulations. One fears that a few big names are often used. I will give noble Lords a little story. When I was head of the Met Office, we asked a very large consultancy company—let us call it WP; you might imagine who that was—to advise the Met Office how to improve its financial controls, which it said would require the installation of a new system that would cost £1 million. On this basis, the Met Office then asked companies to say whether they would bid for this. The company said, “Oh no”, and that it would now cost £2 million. Fortunately, this was the 1990s and the Government had an excellent lab called DERA, the Defence Evaluation and Research Agency. We went down the road to them and we got the job done for half a million. Of course, DERA does not exist any more and doubtless you would have to go back to “WP” and get a very expensive answer.
I believe that we now need much more serious vigilance in real-time monitoring of such contracts, since we have moved to the present position.
Lord Broers
My Lords, I add my congratulations to the noble Lord, Lord Sugar, on obtaining this debate. It is an extraordinarily important topic today and I agree with all his specific suggestions. However, I wish to speak on the broader issue, as discussed by the noble Lord, Lord Palmer, of how we can, as a nation, ensure that we are in a better position to provide and maintain more of our own infrastructure. The noble Lord, Lord Sugar, mentioned Siemens supplying our rail rolling stock rather than Bombardier, which, while not a British company, at least manufactures in the UK. However, the problem is of course much wider than just railways. We are having to turn to overseas companies to supply most of our renewable energy sources and our new nuclear power stations as well, and, if we go ahead with it, our high-speed rail network too. This will further increase our current account deficit in manufactured goods and do nothing to alleviate our serious unemployment problem.
Many of our industrial companies cannot compete with overseas suppliers, despite the significant advantages of being local suppliers, because they have quite simply not kept up in research and development. At the same time as we have held, even advanced, our position in science, we have steadily slipped down the R&D tables in investment and achievement to seventh place. The noble Lord, Lord Bhattacharyya, has already mentioned this. There is nothing inherently lacking; several of our high-technology companies are thriving and well ahead of their competitors, but there are not enough of them and huge gaps are left in our ability to manufacture what we need, especially to meet our energy and transport needs.
To correct this failing, we must do more to ensure that our capabilities better match our needs, and government procurement can play an important role in doing this. Intelligent procurement combined with joined-up planning, as practised by several of our European and American competitors, would put us in a much stronger position. Joined-up planning is a long-term issue, as the noble Lord, Lord Hunt, has just said. Government should not only be thinking 10 and 20 years ahead in planning what infrastructure will be needed but making sure that we will have the industrial capacity to manufacture a significant fraction of it ourselves. I am not trying to suggest that we should do everything—we are a relatively small nation and that would not be sensible—but if we cannot supply a significant fraction of what we need, we are going to further aggravate our financial and employment problems.
The Chinese and Indian economies are growing and their trade balances are healthy because they have geared up to build their own power stations and transport systems. They do not have to get others to do everything for them. This also strengthens their ability to export, and thereby balance their need to import materials and essential commodities. In contrast, our own energy and transport policies seem to be developed without any effort to match them with our industrial capabilities. We do not seem adequately to involve industry in the planning process. By that, I do not mean having a few very senior executives acting as non-executive advisers—they are no doubt valuable, but at another level. What is needed is the involvement of the engineers who set and understand in detail the research and development operations of their companies and that can advise on what is and is not feasible. These experts also need to learn what the Government are planning so that they can comment on whether their companies are likely be in a position to supply it.
There are two ways in which we can do this. First, the TSB, which the noble Lords, Lord Puttnam and Lord Kestenbaum, mentioned, has responsibility for using taxpayers’ money to provide leadership in strategic research and development. It should be able to ensure that appropriate manufacturing capabilities will be available in the future. Its emphasis tends to be on good research to support the long-term development of emerging technologies rather than ensuring state-of-the-art capabilities in existing technologies, although it has the ability to do this as well. In fact, the TSB’s knowledge transfer networks provide an excellent mechanism for getting industrialists together with the Government to provide joined-up planning. I declare my interest here as unpaid chairman of the TSB’s Transport KTN. This evening, I am meeting senior members of the rail, automotive and marine industries to explore the possibilities of a technology innovation centre for transport.
Another mechanism that we have to ensure timely industrial planning is our network of chief scientific advisers. At present, they are seen mainly advising on science rather than engineering, but there is no reason why they should not play a larger role in joining industry with government. This issue was addressed by one of our recommendations in the Science and Technology Select Committee’s recent report, Public Procurement as a Tool to Stimulate Innovation, which says:
“We recommend that CSAs should have responsibility for encouraging engagement with industry (including both suppliers and potential suppliers) and academic communities with a view to promoting the procurement of innovative solutions … This role should be incorporated into departmental objectives”.
I see CSAs playing a more active role in ensuring that government policy in energy and transport is linked with future industrial capabilities.
If we go on planning our future infrastructure without regard to whether we can produce it ourselves, we are throwing away perhaps our best opportunity to solve our financial and employment problems. I ask the Minister to reassure us that the Government will use all the mechanisms available to them to restore our ability to have British workers build our future infrastructure.
Lord Anderson of Swansea
My Lords, my noble friend Lord Sugar made a typically robust and wise opening speech, drawing on his vast commercial experience, and what a reservoir of experience throughout the House has been revealed by this debate. My only interest to declare is that I am a Welsh Peer and I tend to look at elements of public procurement in terms of the fairness in the regional spread, including to my own nation. The aim of procurement generally of course is to obtain the best value for money. In the private sector, that is done in a fairly narrow way; in the public sector, the procurement has to meet a number of other objectives, including regional policy. This is one area that I wish to touch on in one narrow corner of the vineyard.
I draw your Lordships’ attention to one distinct area, the procurement for the 2012 London Olympics. I am grateful to the Financial Times Newcastle correspondent, Chris Tighe, for the figures that she gave me, which she reproduced in the Financial Times on 14 November. My conclusion, which I invite the Government to share, is that the figures that are available display a deep cause for concern, and a failure on the part of government since the initiation of the Olympics to ensure that the Olympic Delivery Authority spread the contracts widely throughout the country. It is now, of course, too late, because the greater part of the contracts have been allocated.
The amount spent by the ODA is substantial: so far it is about £6.5 billion. The total will be just over £7 billion, with a £2 billion contingency. Overwhelmingly that is taxpayers’ money, which could have been used for broader public purposes. Clearly, the Games authorities were aware of their public responsibilities. The noble Lord, Lord Coe, gave this pledge, in 2005, that the Games would,
“provide a unique opportunity for businesses across the UK”.
The chairman of the ODA, John Armitt, said in 2008,
“businesses from all over the UK are already winning ‘economic gold’ with millions of pounds worth of London 2012 work … We want to work with the best of UK plc to successfully deliver the games—the largest project this country has seen for generations”.
So the commitment is there from the leaders and the amount of public funds is substantial, but what is the result—the record? The ODA has agreed thus far 1,500 direct tier 1 contracts—that is, with main suppliers; it estimates that another 50,000 will have been or will be generated through the supply chain. The only contract figures available are therefore for tier 1. That has not been volunteered by the ODA with some excess of transparency but has been made clear by parliamentary Questions in another place. As a percentage of the total value, London has received 54 per cent of contract value; London, the south-east and the east of England together account for 83 per cent of contract value. Scotland has received 0.4 per cent, while Northern Ireland has received 0.28 per cent, the north-east 0.19 per cent and bottom of the table is Wales with 0.01 per cent. That means that less than 0.9 per cent of the total value is accounted for by expenditure in Scotland, Northern Ireland, the north-east and Wales.
I can imagine the Government’s response. “Ah”, they will say, “you are deluding yourself. Look at the cascade down the supply chain; there will be many firms in the north-east, in Wales and Northern Ireland that benefit”. But there are no more robust figures available to support this assertion that there is a spread or cascade to the nations and regions of this country. It seems logical to conclude that the overall percentage of the subcontracts is broadly similar to that of the tier 1 contracts; how could it be otherwise? Only the first tier is within government control, and on the figures available they have surely massively failed on the broader public policy criteria and interests. It has hardly helped us in Wales to receive 0.01 per cent of the spend at a time of massive public expenditure cutbacks and high youth unemployment, when Wales has been largely neglected.
The Government may try to put a gloss on these figures and take refuge in anecdotal evidence and the cascade effect, but the figures that are available are clear and the overall conclusion must surely be that there is a major missed opportunity and it is now too late to redress it. How can I begin to persuade businessmen, unions and the public in Wales that the Government have ensured that they have a fair slice of the cake, particularly when National Lottery funds were diverted to the Olympics—funds that might otherwise have led to projects within Wales? So the result is totally contrary to the professed regional policies of the Government. Surely there is no way in which to hide the manifest failure, save by obfuscation, pious hopes and platitudes.
Lord Sutherland of Houndwood
My Lords, I thank the noble Lord, Lord Sugar, for a vigorous and, dare I say it, characteristically incisive introduction to this important debate. At the beginning, I want to declare an interest. I work with a Malaysian conglomerate, YTL, which is currently working with a vigorous, small young British company in IT, Frog, which is based in Halifax and is doing marvellous things in the provision of IT in the area of education. The other way round, interestingly, we are seeking to procure for that company as part of a broader deal an arrangement to provide IT services for all Malaysian schools. That would be a major thing for such a bright young company, and we wait to see the outcome. There is talent in this country, and that is a good example of how it can be harnessed to international sale of services as well as to the purchase of services locally.
In this debate, I want to offer noble Lords a case study of public sector procurement in which I had to carry out an investigation, and put it in the context of current government policy, which will inevitably lead to much greater need for procurement expertise in the public sector. Those two policies to which I referred, which are mirrored elsewhere, are in health, where many of the services that we now get directly through public sector activities will be procured from other sources. Equally, in education, academies and free schools will have increasing powers of purchase and procurement. I rather approve of this policy, but on the other hand it means that there will be a need to ensure that in the process of procurement in the system we are competent and fit for purpose.
The case study, which bears on both of those—and Ministers should beware and read this—relates to something that happened in July 2008 when an American company that provided a major examination portfolio for English schools’ SATs failed to meet the terms of its contract. Increasing panic spread through the various agencies involved. The fact that at least four different agencies were involved is one of the messages to come from this. The commissioning agency was the Quality Curriculum Authority; within that was a non-statutory subsidiary, the NEA, which ran that side of the business. There was also the statutory subsidiary in Ofqual, which was meant to be an independent regulator but was none the less within the major quango—and then there was the Department for Education, then titled the Department for Children, Schools and Families. Those four all had an interest in this procurement and its correct outcome. You can imagine the panic when it became clear that the delivery of the test results was going to be significantly late. Those are the results for those aged 11 for which parents, pupils, teachers and school league tables wait, and which pupils progressing to secondary school require as a clear picture, so they can take them and be assigned a proper educational syllabus in secondary school.
The panic was great, but what was the initial reaction? Of course, it was to procure someone to carry out an inquiry—procure with a small “p”. That was me. There were some comic elements to that small “p” procurement, but I will not spell them out today. The job, as I saw it initially, was to look at what had gone wrong with the process in the examining system and to rate answers to these questions. Was it efficient? Were the results that eventually came through safe? Finally, what do we have to do to make up for the shortfalls of the process in question?
However, it quickly became apparent that I had to push further back into the process of procurement. This major American company, which had been brought in to carry out that important element of the British examining and assessment system, failed. What was wrong with the procurement? Fundamentally, there was one very considerable thing wrong: by and large, with no disrespect, those responsible for the procurement were amateurs. They were on the quango board or were officials within the quango—officials with strong education experience and a degree of oversight from within the Department for Children, Schools and Families. With no disrespect, those amateurs were recruited because they had other admirable qualities, but in this area they did not have the necessary expertise.
The lessons from this were, first, that procurement in the public sector will increasingly be for services, not just for items such as missiles, schools, new hospitals and so on. Secondly, when amateurs go through a system of procurement they are either dreadfully incompetent and amateur, in which case they get tripped at the first hurdle, or they do what these groups did: they played it by the book, the whole book and, lastly, nothing but the book. All the ticks were in the boxes. I examined very thoroughly the process. It is laid out in my report that 11 stages of the process were all gone through formally and correctly. They got good due diligence on financial matters from one of the big four companies, which investigated the company in question—again, that ticked all the boxes.
Informally, however, what did they not do? As became apparent, and as the then shadow Secretary of State Michael Gove pointed out with some delight, they did not check the web or the press reports. They did not look at what was being said in the lively American press about this company. For example: “Mismanagement by ETS”—that was the company—
“led to over 4,000 teachers being wrongly failed. This led to a shortage of teachers”,
in the USA. It had to pay $11 million in compensation. There are plenty more quotes in the report if your Lordships really want them; that is just an example. Did no one within the QCA have sufficient international contact or nous to pick up the telephone and ask a colleague in the States, “What is this company like?”? The press reports were clear, yet these informal checks had not been made. It was played by the book, as they did on the European journal and the new system whereby competitive dialogue was introduced. All that was correctly done but it was a major failure in procurement.
Another major failure, I suggested, was that because there were four different elements involved, there was not adequate clarity of where the lines of responsibility ran. Yes, they lay with the board of the QCA but in its final minute, in which it approved this contract, it noted:
“The Chairman also suggested that the process be used as a case study to share best practice amongst other divisions”.
If only—that was what went wrong. There were not sufficient lines of communication and there was a degree of amateurism, although with strict propriety. Nothing untoward happened but it was not clear where the responsibilities lay. I rest my case.
Lord Davies of Stamford
My Lords, I fear I must start by refuting and rejecting, I hope definitively, two very unscrupulous pieces of propaganda. They are complete falsehoods in both cases but they get mentioned far too frequently. One of them was mentioned this morning by the noble Lord, Lord Lee. I am sorry about that, because he is a man whose judgment I greatly respect and who knows a lot about this subject. It is absolutely not true that we in the Labour Government left a legacy of a £38 billion deficit—a so-called black hole. It is complete rubbish. You can only get to that figure if you assume that over 10 years, we would not have increased defence expenditure even in nominal or cash terms.
In other words, for 10 years you would have had a real-terms reduction in defence, year-on-year. Obviously, we were not planning to do that; we were increasing defence expenditure at 1.5 per cent in real terms. Even the new coalition Government are not doing that. Disgracefully, they are freezing defence spending in cash terms at the moment while saying that in the latter half of this decade, from 2015, they will be increasing it by 1 per cent per annum. On nobody’s assumption would you get £38 billion. That is absolutely untrue and fanciful. It is a disgraceful figure.
The second thing that I want to nail is the suggestion that we did not do everything we could to equip our troops in Afghanistan properly. That is a particularly unscrupulous suggestion. As history shows, at the beginning of any campaign you do not have the right equipment because the enemy, the terrain and the tactics are new. It takes a bit of time to get your act together, but we did that. We were 100 per cent committed to doing the best for our Armed Forces there. Gordon Brown asked me to do that and supported me 100 per cent.
I had a meeting every month in my office on counter-IED. We looked at a whole range of detection techniques, electronic countermeasures and protection systems. I invested deliberately right across the board in any and all of them that had any chance whatever of success. I think that I ordered nine types of armoured vehicle in my time as Defence Procurement Minister, several of them specifically conceived for Afghanistan: Mastiff 2, Jackal 2, Ridgeback, Coyote, Wolfhound, Husky and Warthog. I saw them all working extremely well last weekend in Afghanistan. My first decision was to re-engine the Lynx helicopter so that it could fly 365 days a year; that was done within a few months. I ordered the Wildcat, which I see in the latest NAO report is 100 per cent on time. I ordered 22 Chinooks, and this Government have cancelled half of them. They blame us for not equipping the Armed Forces properly, which is a bit rich when they then cancel half of the Chinooks. That shows the kind of basis on which these untruths are, I am afraid, being promulgated.
I want to make four points—or five if I have time—drawing the attention of the House to some aspects of defence procurement which are insufficiently appreciated. The first concerns buying off the shelf. I had the discipline in my time, which I hope is continuing, that whenever we looked at early requirement we looked first to see whether we could buy it off the shelf. If we needed to develop it, we looked to see, secondly, whether we could collaborate with another country and, thirdly, whether we could incorporate characteristics to make it exportable to third markets. Indeed, on some occasions I cancelled developments in favour of off-the-shelf solutions—for example, I cancelled the future helicopter project and spent the money on the Chinooks.
In many cases, however, that is not the appropriate thing to do because, by definition, in buying off the shelf you are not buying tomorrow's technology and may not even be buying today's technology. You do not necessarily have complete control of the technology that you are buying. You will not necessarily get all the source codes and will not be able to integrate new sensors and weapon systems. You will not be able to modify the goods in the way that you hoped you might and you will not necessarily have the long-term support, so it is not always the right thing. We in this country must, absolutely fundamentally, always make sure that our fighting men and women have the best that money can buy, or that can be found. That means we have to fight a capital-intensive war, never a labour-intensive war, so we have to go for the best and that often means development.
My second point is that if you go for new development, it is absolutely impossible to know in advance how much it is going to cost. By definition, you are at the frontiers of science and technology and no one can tell you how long it will take and how difficult it will be to solve those problems. Clearly, you have to have a budget for disciplinary reasons. You could put in an enormous contingency provision but you can end up putting in so many of those that, if they had a chance of being sufficient, you would have half your defence budget consumed by those provisions. That would not be sensible. You just have to accept that in defence procurement you will have uncertainty about the costs of development programmes. The first of its class or type will be a prototype. It will not be called that because you cannot junk a £1 billion destroyer or a £100 million fighter aircraft; you have to use it. It becomes a serviceable system but, nevertheless, you are inevitably treating it as a prototype.
The third point, which emerges from that, is that in order to develop new projects and technologies you need to have a long-term relationship of confidence with an industrial partner. You need to be able to work on an open-book system, to have flexibility with them and to have complete commitment from them to make sure that the system or weapon works in practice, over the long haul. That means an industrial strategy. We had some very good relations with the industry in my time; I shall just cite BAE Systems, the Astute class submarine, complex weapons and our relations with MBDA, Talis and Finmeccanica, which were ideal. I am very sorry to see that the present Government do not seem to want to continue with the industrial strategy that we had, although they do not say what kind of industrial strategy they want. Incidentally, we are talking here about what is, next to the pharmaceuticals, the greatest and most internationally competitive aspect of British manufacturing industry.
Because of time I shall pass to my last point, which is an important one. I see from the NAO report that the Government are wasting half a billion pounds by extending the production schedule of the Astute class submarine. As everyone knows, we had to do the same with the aircraft carriers, although I have to say that as a result of my intervention the delay and the cost were much less than they would have been if we had adopted the original Defence Board advice. If you extend the production schedule, you extend the fixed costs for your suppliers for a long time, which is extremely expensive.
That is a very stupid way of running a railway—no private business would do that. A private business would budget for and appraise investments on the basis of present-value comparisons. Present value would also enable you to seize current market opportunities. For example, I inherited a budget of well over £1 billion for six naval tankers. I discovered that I could buy them commercially on the market—the market being very depressed in 2008—for something like £50 million each, saving £500 million or £600 million. I could not do that because it would have meant bringing forward that expenditure into an earlier year. Equally, I could not lump all the systems for Astute boats 4, 5 and 6 together because that would have meant bringing those purchases forward, but seizing a market opportunity in that instance would have saved £300 million or £400 million a year.
We ought to have a present-value system of accounting. I made quite a lot of progress before the election in persuading the NAO of that, and some progress in persuading the Treasury. Obviously, under a present-value system, if you bring something forward it costs you more in the short term because you increase the present value, so using up more of your budget. The budget should be on a present-value basis and the Defence Procurement Minister should be able to bring things to operate within that strict net present-value budget, seizing market opportunities and ensuring that the taxpayers’ money is not spent wastefully, as too often it has been.
Lord Haskel
My Lords, in his characteristically robust speech, my noble friend Lord Sugar told us that the Government spend about £238 billion a year on procuring goods and services. In doing so, he and other noble Lords say that the Government should be active, supporting and helping our economy and helping to shape markets. I agree.
As the noble Lord, Lord Sutherland, said, an active Government must be a skilled purchaser as well as supporting innovation and good design, not a Government who look for the cheapest, most readily available, most risk-averse purchases—a very attractive option at this time of cuts. Being a purchaser that supports innovation and new design is right because in the long run that is better and cheaper, and we are in it for the long run.
The noble Lord, Lord St John of Bletso, reminded us that this week the Government announced that they wanted to speed up the procurement process. If the Minister wants a quick fix, he should speak to his noble friend, the noble Lord, Lord Feldman. Many years ago the noble Lord started the Better Made in Britain exhibitions, where large retailers and others exhibited imported goods and invited UK suppliers to come along and bid. He organised 25 of them and, yes, I went along and won some business. Government procurement always featured because it was one way that the Government had of showing British industry whose side they were on—basic, perhaps, but certainly quick, and they probably helped cut prices.
As other noble Lords have said, though, life is more complicated than that. The right way for the Government to get good value and create jobs and for the nation to benefit is to behave as an intelligent lead customer. My noble friends Lord Kestenbaum and Lord Davies explained how in business you should always look for a good lead customer—a firm that works with you and understands the market so that it can guide the specification and design, support the development and eventually test and validate the product. This is particularly important for early-stage companies that may have a good idea and something new, but lack a route to market.
That applies not only to innovation in technology; it applies equally to innovation in design. They must go hand in hand. Earlier this month, your Lordships debated the creative industries, speaking of their excellence and how they defined the UK in the eyes of the world. So why do they not play a much larger role in the procurement process? Presumably, imaginative, sensible and continual innovation in design is equally important to the public sector as to the private sector. Design is much more than an expensive additional process for making something look good; it drives fitness for purpose and raises the quality of use. Good design is not expensive. Raising design standards improves our quality of life, and who would say no to that?
What is required is a procurement process that not only acts as an intelligent lead customer but encourages the search for innovative design, all within European Union and World Trade Organisation rules. That can be done. My noble friends Lord Bhattacharyya and Lord Kestenbaum spoke of the Small Business Research Initiative Scheme, operated by the Technology Strategy Board. My noble friend Lord Bhattacharyya told us that the scheme was unashamedly copied from the hugely successful US scheme. SBRI was relaunched in April 2009. It operates under pre-commercial procurement rules. It does not involve state aid but delivers funded research and development contracts in the form of a challenge to find an answer to a need or issue in the public sector where the solution is either unknown or not good enough. The challenges can be for the product, for the knowledge gleaned from research or simply for a better or more economical design—procuring for the outcome, as the noble Lord, Lord St John, called it.
Since April 2009 there have been 78 competitions, generating some 640 contracts to a value of more than £43 million. Many of these contracts have gone to small or even micro companies. Some noble Lords have dismissed this as being tiny. It is not so tiny when you compare it with the recent government scheme to bolster exports by small and medium-sized enterprises, which had four takers, or the Business Growth Fund, which had one project.
Often the key to these new developments are new or improved materials. I declare an interest as honorary president of the Materials Knowledge Transfer Network. We encourage all our 4,500 industry members to bid for these and other public procurement challenges. This has resulted in the development of innovative glazing for windows and walls for public buildings that varies the transparency of the glazing automatically to control light and heat transfer. As a result, the UK has a strong position in architectural glass such as e-glazing.
There are many more examples of the way this system works. I join my noble friend Lord Puttnam in regretting that there are not more speakers on the Conservative Benchers who could tell us about it. My special interest is in technical textiles. Through the scheme, the antibacterial hospital gown for the NHS that controls the spread of MRSA has been developed, as has unobtrusive monitoring of health and drug delivery.
Current competitions include DEFRA looking for a small-scale anaerobic digester. Operation research and analysis to help the MoD make better decisions— I am sure that the noble Lords, Lord Lee and Lord Palmer, and my noble friend Lord Davies would all say amen to that. A competition that concluded recently was to deliver assisted living lifestyles at scale, the benefits of which we can all look forward to.
This system works. It benefits the private sector and public procurement. It enhances our quality of life. It is a matter of political will and personal determination to get it to work. Let us see the Government get on with it.
The Earl of Erroll
My Lords, as a taxpayer I have an interest in not seeing billions of pounds of our hard-earned money being siphoned off, primarily to the USA, in excess profit by prime contractors. I probably ought to declare an interest because I help one or two small companies, but none of them is bidding for large government contracts and I will not talk about any of them today. Flexeye, the risk intelligence company, may have some government contracts, but I shall not use any of its experiences when I mention some of the pitfalls a little later. I want to make that quite clear.
This is a time of great hope. As my noble friend Lord St John of Bletso said, Francis Maude made all the right noises and was full of good intentions in his speech last Monday across the road. The problem is that it is easy for things to die a death in the implementation. I am trying to think about how we get innovation into government contracts. Innovation tends to come from the less large companies. Unfortunately, SME has connotations of tiny companies, although at the top end and middle of the “M” they are quite capable of dealing with very large government contracts quite happily. However, they are being tarred with that brush as micro-businesses at the bottom.
How can we get such companies into government contracts? We might try to learn some lessons from the past. I found the PASC report from another place, which was issued on 28 July 2011, very interesting. I have not read the whole thing; it is enormous. However, I read some of the oral evidence from 15 June in volume 2, including that of Martin Rice from Erudine, which has since disappeared, very sadly. However, that is a typical example of a medium-sized company with some innovation.
There is also an interesting comment in the report, which I shall deal with quickly. The PASC noticed that most of the top procurement people in the Cabinet Office, who were running things such as the Office of Government Commerce—which became Buying Solutions and is now called the Government Procurement Service—came from Accenture. I thought about whether this was sinister and decided that it probably was not. The top consultancies attract the brightest people, who know what they are doing. Because the Government lacked the internal expertise to deal with these complicated, new and fast-moving things, they hired the best. However, the trouble is that these people come in inculcated with the belief that only larger organisations are capable of delivering government contracts. Unfortunately, in reality, high performance is not being delivered, which is a great shame.
How do we do something about it? I am told that Vince Cable called the usual suspects—all the prime contractors—into a room and told them to reduce their bills by X per cent. I do not know how much it was. They all went away feeling duly chastened, but do we really believe that they will not claw that money back over the next few years? It is bound to happen.
I look at some of the ways in which the rules make it impossible for the smaller company. A company that I know very well supplies interim managers at a strategic level—heads of HR, CIOs and so on—at around 35 per cent of the cost of the big companies. To do that you must be qualified under a particular framework agreement and the only one open to SMEs was in general management. Suddenly, at the end of 2010, it was cancelled and the company was told that it had to go through one of the prime contractors. Therefore, it went through the DWP’s CIPHER framework, which is run by Capita. The company was then advised that it had either to hand its people over to the incumbent prime contractor or to fire them. For it to be okay for its people, the company handed them over. That is not very good business.
When the DWP was looking at putting contracts out to tender in 2010, it broke its large contract for the rewrite of the system into four or five lots to make it smaller. Some innovative pilots were carried out by various people but these were ignored and, at the end of the day, the DWP handed the contract back to the main incumbent, with the little sop that one other company should handle the legacy system so that there were not too many complaints. Many smaller companies waste a lot of money—six-figure sums in some cases—on tendering. They came to me to talk about it. It is a terrible waste of time and money. This is the challenge. The average OJEU tender takes about 18 months, I am told.
However, there is hope for the future, which is what I prefer to think about. I disagree with the noble Lord, Lord Sugar, who introduced this excellent debate, in one area. I think we must have some local spending. Where you have a regeneration project in certain local authority areas, in some cases it is only local businesses that can supply stationery, services and all sorts of things like that. Years ago I tried to help local authorities with their procurement policies in relation to one company. I noticed that we could easily achieve huge savings through the central buying people. They had got lazy and were charging probably an extra 20 per cent in profit because they had to fund themselves. It was another layer of the procurement process and introduced greater inefficiency, so sometimes central buying does not work. We seem to alternate between central buying, which gets lazy, and repatriating procurement locally. When that becomes inefficient, procurement goes back to being done centrally. Government and everything else is a bit like that, I am afraid; we keep going through these big cycles.
Under this new scheme, 25 per cent of the contract value is supposed to go to SMEs. However, we will have to wait until next spring at the earliest to learn what the new frameworks will say. Knowing government slippage, I bet it will be the summer. How many companies will go bust between now and then while we churn away? What will these frameworks say? The devil is always in the detail. People could very easily be written out of the system. We must make sure that this new proposed dynamic e-marketplace for contracts worth less than £100,000 is open to anyone. We should not suddenly put in subtle things that somehow prevent SMEs qualifying.
I must finish in a second but there is another major point. Because government procurement always wants to compare like with like, it is not open to innovative ideas. It wants to have the tender absolutely locked down for comparison. If you propose an alternative, cleverer, innovative solution, which might be cheaper, you immediately disqualify yourself from the procurement and from the tender. That does not help. It was also commented that, in many cases, 20 per cent of the programme is used to deliver most of the project. It is all these “nice to haves” that cost the money and really inflate the cost. If we drop those, focus on what is really required and handle the exceptions manually, we will probably save huge amounts in some government systems. We must move to agile development methods in which we get feedback from the real world as things develop. We have to stop just developing up front. Flexibility and an ability to change are absolutely essential in this fast-paced modern world. However, it will be very difficult for the Government, who like to deliver certainty and predictability, to handle that.
Lord O'Neill of Clackmannan
My Lords, I thank my noble friend Lord Sugar for securing this debate and doing us the courtesy of indicating in advance what he would talk about. I will not follow him today; I should like to discuss some of the procurement issues surrounding the construction industry. It is an industry that accounts for some 8 per cent of our GDP and involves 230,000-plus companies, the overwhelming majority of them very small. Forty per cent of the industry’s budget is accounted for by government procurement, or certainly by public expenditure, be it through local authorities, health boards or central government itself. I declare my interest as chairman of the Strategic Forum for Construction, which seeks to advise the Government on certain aspects of the construction industry.
I realise that we are debating this subject some five days in advance of the autumn Statement. We have been advised in advance by Francis Maude that there will be a pipeline for construction projects so that the industry can prepare itself, either to bid or to do work, over the next three years. This is to be welcomed. One can only hope that the pipeline will be long and very wide. More often than not, it is to the construction industry that we look for economic stimulus and a pick-up in the economy. However, the other side of this coin is that the Government will be looking for a 20 per cent reduction in construction costs over the next three years. In the pit of a recession, the industry will have to get itself together in ways that will enable these savings to be made.
It is fair to say that there has been much improvement in the construction industry of late. Therefore, in some respects, the challenge of cost savings of the kind that have been indicated will not be quite as difficult to achieve as some people might have thought in the past. However, it would be criminal if these savings were to be achieved by scrimping on materials or through unnecessarily and potentially dangerous speeding up of construction times, both of which, although understandable, are not defensible and very often have serious implications for the lifetime costs of a project, which are rarely given adequate consideration by those who procure on behalf of us, the people whom we entrust with that task.
I also hope that, in this pursuit of cost reduction, we will not see some delaying of payment processes, because, as I said at the beginning of my remarks, the overwhelming majority of firms in the construction industry employ fewer than 10 people. They live on order books which, in good times, can be 12 weeks and which, in times which are not bad, are about six. At the moment, some of them are surviving—those who do survive—on three-week programmes of work. These people depend on speedy payment. We had from the previous Government, and I think that it is the intention of this Government to sustain it, an undertaking that payments to firms through the public purse should be achieved within 30 days wherever possible. I would like to think that it would be incumbent on major contractors who are in receipt of these payments to pass them down the food chain to the smaller players. It would be helpful to hear such a reassurance today.
There is no silver bullet to achieving greater savings or efficiencies—today’s debate has indicated the shortcomings of so many aspects of this—but I would like to identify one source of what might be greater efficiency in procurement in the construction industry: building information modelling, or BIM in the shorthand of the industry. The construction industry has come rather late in the day to what engineers would have called CAD/CAM in the past—the digitalisation of construction plans and the involvement of everybody in seeing three-dimensional pictures of what a building is going to look like and what its specific requirements will be. Hitherto, this has been the preserve of architects and the engineers. It is fair to say that, in a number of instances, architects and engineers have started to embrace it. In 2010, a McGraw-Hill survey suggested that some 35 per cent of these people are now using BIM techniques, but only 23 per cent of contractors, of whom only 7 per cent are employing them on 30 per cent of their projects. So we are talking still about a relatively small area of the construction industry. However, if you go abroad, to the United States and to North America generally, you will find that this is more than the order of the day. A few months ago, I had the opportunity to visit Japan to look at how they were building their nuclear power stations. All of it was done using three-dimensional, and in some instances four-dimensional, screen work.
BIM would mean that all the cards were no longer in the hands of architects, designers and engineers. The work could be accessed by people further down the supply chain, who could point out that, if they did not build something in quite the way prescribed, they would be able to insert the boilers, the pipework or the wiring systems far more easily. And so you would not have what is known as “emerging work” coming up, the cost overruns or the delays. It would mean that you got it right first time, that you took the time to plan it in such a way that you would not be desperate to cut the first sod but rather to do the work in a rigorous way.
There is no end of academic papers being produced on this subject at the moment, but the interesting point is this: to do this will require the client in the first instance to be far more rigorous and precise in the detailing of the specifications which the contract will have to include. It will also put the architects, the designers and the engineers on their mettle to make sure that they do it. If we could get that, we could get the savings, we could get the extra work and we could get the stimulus that this country so desperately requires in its presently dire economic circumstances.
Lord Young of Norwood Green
My Lords, I, too, thank my noble friend Lord Sugar for creating this opportunity to debate a subject of vital importance, especially in today’s economic circumstances, against a background of government policies that are not delivering the growth that we need but delivering, unfortunately, the highest level of unemployment for 17 years. I congratulate my noble friend on his customary and characteristically robust analysis, and I look forward to the ministerial response to some of the points that he raised. I am not sure that centralised purchasing is the total answer, but there are certainly savings to be made—we saw that in the recent Green analysis. I am certain that my noble friend is right to call for a more holistic analysis that goes beyond the lowest price. He made a valid point also about the restrictions that still exist in relation to SMEs.
To pay our way in the future, we need to build an economy that works; we need private sector growth, more people starting businesses and growing businesses succeeding in business. But we need that to work with public investment and procurement. To set this new direction, government cannot just stand at the sidelines. Government must use every tool purposefully and consistently to shape and support this business environment, from competition policy to taxation, and from regulation to procurement. That means developing institutions for collaboration and support, making sure that the right finance is in place, as well as the research base, the skills base and the other elements that support innovation and growth. It means investing in infrastructure, offering certainty in the policy environment and giving businesses the confidence to invest. It is active government, shaping markets, growing key sectors of the economy and supporting the growth of more companies which build value over time, invest long term, innovate, offer good jobs, pay fair wages, and train.
Governments cannot tell individual companies what strategy to pursue—we know that that will not work—but nor should they be indifferent to the choices that they make. There are many businesses already pursuing these strategies—it can make good business sense—but the policy environment does not always mean that this is the case. The challenge for policy-makers is how to create the framework so that that which is good business—socially valuable, sustainable—is also that which is most profitable, good business always being good business. This brings me back to procurement: getting it right so it can shape that environment and enabling procurement to play a critical role in the economy that we need for the future.
In government, we took steps to improve the way in which services are procured. In 2006, for example, we launched the Supply2.gov portal to make it easier for SMEs to access government contracts. In 2008, we commissioned a report on using public sector procurement to encourage SME growth. In the Pre-Budget Report, we committed to advertise government contracts worth more than £20,000 via a single, free online portal; to introduce measures to reduce bureaucracy and make opportunities more transparent for small businesses; to standardise the qualification criteria and encourage innovation by specifying outcomes rather than prescribing solutions; and to help SMEs get a fair deal when they were subcontractors.
Just before we left office, we set in the 2010 Budget central departmental targets to increase the proportion of central government procurement spend that goes to SMEs by 15 per cent throughout the supply chain. I know that this Government have a deep-rooted aversion to targets, but as we have heard a number of noble Lords say in this debate, it is all very well saying that one is going to encourage SMEs, but the track record to date shows that there is a lot more progress to be made.
This Government have sought to build on that legacy: they want 25 per cent of government contracts to be delivered by SMEs and to eliminate pre-qualification questionnaires for all central government procurements under £100,000. They have sought to introduce a one-stop shop that displays every central government tender opportunity and they want to iron out wasteful practices and unnecessary complexity in procurement processes. These measures are welcome but there have been contradictory signals too. The Government’s own adviser, Sir Philip Green, suggesting ways that government procurement would squeeze out SMEs and delay payments is an example. In recent months we have seen the case of Bombardier, which brought into focus the failure of the Government to recognise the significance of this procurement to our future competitive success, the consequences of which have placed the future of the train manufacturing industry in the UK in jeopardy. We believe it is essential that there is a UK-based train-building industry capable of designing, building and, of course, winning orders for those trains. We are urging the Government to outline the strategy for ensuring that this can happen, including for the new Crossrail rolling stock. We want to see UK rail manufacturing in a position to win these orders, not put at a disadvantage following the Thameslink decision.
This draws me to the fundamental question we need to consider—how we ensure that procurement is an engine for growth and how we improve the processes but, critically, the ambition that procurement can unlock. The Government are unfortunately missing this opportunity in our view. With £240 billion to spend, the Government are by far and away the UK’s biggest single consumer. Procurement can and should be a driver of growth, driving innovation, opening up markets, creating new markets and opening up to new businesses and new ways of doing things. That means putting procurement centre stage. We know that that has not always happened across government, local government and in the public sector. We must ask how we can demand more of procurement. How can this buyer power be leveraged to support the kind of economy we want to see? How can we make every single pound of spending create the most value to our economy and society? I suggest that it can be done in the following ways. We should build broader objectives into public procurement contracts, as we did with the Olympics. Construction contracts included clauses requiring the training of apprentices, creating 350 new apprenticeship places. For the life of me I cannot understand why the Government will not act in this area. There is no legal prohibition against doing that. When we have more than a million unemployed young people, it seems to me that every apprenticeship place that we can create is vital. Haringey is doing this; through its procurement process it has opened up business to SMEs and created new employment opportunities for many long-term unemployed people, while saving £8 million over five years. EU law is often put up as an obstacle to so-called “social clauses”, not least because they can limit competition. However, they do not have to, as the noble Lord, Lord Sugar, and other noble Lords have said. This is an area where we need to explore the full potential and test the boundaries rigorously and robustly. Other countries manage to do it and we have heard references to French and Dutch examples.
We need to create markets for innovative products and services. My noble friend Lord Haskel referred to the importance of innovation in design. When in government, Labour created the Small Business Research Initiative, using procurement to create markets for innovative companies which often lack financial backing during exploratory development phases. However, it remains very small; it is worth between £10 million and £15 million a year. By contrast, the US SBIR programme, on which it is modelled, has now been running for almost 30 years and is worth $2.5 billion a year. Properly scaled, we should probably have a programme worth something like £240 million in the UK.
I have already talked about Bombardier so I will not develop that further. However, I was grateful to my noble friend Lord Davies for giving a more balanced assessment of where we are going on Labour’s defence industrial strategy. I know from my experience of being a member of the Armed Forces’ Pay Review Body for four years that our record in ensuring that the forces had the best possible equipment was well appreciated. Labour's defence industrial strategy, which gave certainty to the UK industry, is being replaced by a commitment to buy off the shelf. There are arguments about whether this really is cheaper given the costs of adaptation. My noble friend Lord Davies demonstrated the importance of having a very strategic analysis in the area of defence.
This has been a very wide-ranging, important and constructive debate. I cannot possibly hope to deal with all the points that were raised. My noble friend Lord Puttnam said that there were ways of driving costs down and value up and mentioned the Promethean experience and the interesting incorporation of Phil Smith of Cisco on to the Technology Strategy Board. I share his optimism on that front. My noble friend Lord Kestenbaum made the important point about the need for government investment in vital areas such as global positioning satellites or the development of the internet protocol. Without those seed-corn investments it is doubtful whether important progress would have been made in those areas.
Lord Young of Norwood Green
I see that time has caught up with me; the noble Baroness does not have to remind me of that. I look forward to the Minister’s response.
Lord Wallace of Saltaire
My Lords, this debate has ranged widely. I thank the noble Lord, Lord Sugar, for drawing the House’s attention to such an important issue. Procurement is central to the Government’s programme for reform and efficiency in public services and, as the Autumn Statement will make clear, to the growth agenda. I thank all noble Lords who have spoken in the debate and will do my best to address many of the points that have been raised.
In October 2010, in a debate on Sir Philip Green’s report, the noble Lord, Lord Sugar, argued that,
“it is time to centralise buying and to bring in some kind of head honcho from the private sector who knows what they are doing and pay them the right amount of money, which they would be paid in a large organisation”.—[Official Report, 14/10/10; col. 593.]
Our head honcho—the government chief procurement officer, as we prefer to call him—is John Collington. John is a highly respected procurement professional who joined the Civil Service five years ago after having spent 25 years in the private sector in a number of senior commercial and supply chain roles, operating on a global basis. He is well paid. He is not paid on the scale of the CEO of one of our major banks, but then the Government are not entirely happy with the scale on which our major banks are paying their current CEOs.
Since then the Government have embarked on a new procurement strategy to reform the way in which they buy those goods and services which they need to fulfil their responsibilities. The strategy focuses on having a centralised approach to the purchasing of common goods and services, appointing Crown representatives—of which there are now nine—to work with the Government’s largest suppliers, removing the red tape that stops SMEs competing for government contracts, improving our procurement technology and, above all, investing in our staff to improve our procurement capability. The noble Lord, Lord Kestenbaum, called for a procurement revolution. This is under way.
The scale of government procurement should be set out. Central government procures some £62 billion of supplies a year. The wider public sector, including local government, procures some £168 billion and the total public sector procurement, including that of arm’s-length bodies, is some £230 billion. Some of that is accounted for by commodities and some by services. Then there are the major long-term contracts for infrastructure construction, manufactured systems and trains, armoured vehicles and aircraft carriers. These do not, of course, require entirely the same approach. There are unavoidable tensions between central control and local diversity and—as the noble Lord, Lord Anderson, pointed out—between the squeeze on costs and the political requirement to achieve regional balance where that is possible. I should say that the Olympic Delivery Authority has done extremely well in delivering on time and within cost. I regret that the regional balance has not been as good as it should be but on other criteria it has been a remarkable success.
Much of the criticism in this debate has been about the practice of the previous Government regarding, for example, the ETS and the other enormous IT contracts, and the vast expenditure on consultants. The Government are setting out to be a lean Government in procurement. If I may say so, it is a lean Government in every single aspect through and through. As noble Lords will know, the Government Car Service has been considerably pruned. Ministers are now walking twice as much. I have not yet assessed how much weight they have lost but we are a leaner Government, I think, than our predecessor was in that respect.
Eighteen months ago the Government promised to drive out inefficiency and unjustifiable costs from all parts of central government, including procurement. As part of that drive, in just 10 months we have saved £3 billion from reduced discretionary spend and smarter procurement that has allowed departments to protect essential front-line services and jobs. This has included more than £870 million saved by cutting departmental spend on consultants; nearly £500 million saved by reducing spend on temporary agency staff; some £400 million saved by taking stronger control of our marketing spend; some £360 million saved by centralising spend on common goods and services; and £800 million saved from renegotiating deals with some of the largest suppliers to government. Last March, for example, we announced that nine different commodities would be jointly purchased by October: energy, office supplies, professional services, travel, fleet, telecoms, IT commodities, print, and advertising in the media. I am very happy, as a Yorkshire resident, to say that the domestic travel component was awarded to a small enterprise based in Bradford—so it is not merely a matter of large suppliers. A month later John Collington announced that, over the next four years, this new procurement model is estimated to cut 25 per cent from the £13 billion spend on common goods and services in central government.
This is a very good start, but we also need to do away with the unnecessary bureaucracy that adds wasteful time and costs to the procurement process. Following a lean review of the procurement process, we are adopting a new approach to sourcing that focuses on those practices that add value to the way that government procures goods and services.
Another major step forward has been the transformation of the Buying Solutions trading fund into the Government Procurement Service. This organisation is now established as the delivery arm of the centralised procurement strategy, delivering expert sourcing and category management for common goods and services. It is focused on delivering savings to the taxpayer and increasing the proportion of spend that is centralised. For major projects we have established the Major Projects Authority, which, with the pre-existing Major Projects Review Board, takes particular account of defence procurement, major infrastructure procurement and IT.
The noble Lord, Lord Davies of Stamford, made a characteristically robust speech. I look forward now to his speeches in the way that I used to look forward to those of the noble Lord, Lord Gilbert, who would always robustly tell us how well defence procurement had taken place while he was a Minister and how appallingly it had deteriorated since he left. The only problem, I say to the noble Lord, Lord Davies of Stamford, is that he left the MoD 10 years after the noble Lord, Lord Gilbert. Perhaps he should consult the noble Lord, Lord Gilbert, on how they could better reconcile their narrative next time round.
Over the past six months the Government Procurement Service has already made significant progress. It has developed centralised strategies for energy, office solutions, professional services covering consultancy, contingent labour, legal services, and so on. It has driven much-improved data and significantly increased the transparency of operations and performance through a procurement executive board. It has moved central government customers on to the first centrally let commercial arrangement—the government office supplies contract. The Government Procurement Service has established a process for using surplus income to fund Government Procurement Service and government procurement improvements, with four key investments made to date. The procurement service has managed procurements, extensions and renegotiations of contracts worth approximately £3.6 billion in annual value.
We are conscious that Britain does not compare well with Germany, France and the Netherlands in the relationship with suppliers. Perhaps I may quote the speech made by my colleague Francis Maude on Monday. He said that,
“the British public sector has taken a speed dating approach”
compared with those countries’ mutually beneficial long-term relationships. We are aware of that and looking at it, and we very much hope to improve the relationship. I say to the noble Lords, Lord Broers and Lord Hunt of Chesterton, that we are also well aware of the role that this long-term relationship can play in encouraging innovation and, in particular, new innovative companies.
The noble Lord, Lord Sugar, made a number of remarks about not sending contracts to foreign companies that pay little tax in this country. I say to him that it is not only foreign companies that, in some cases, do not pay very much tax in this country; some of our major domestic media companies do not either. One has to remember that Siemens employs a large number of people in manufacturing plants in this country, and therefore the question of what is and what is not a British company has become a little more complicated. We are also well aware of the French, German, Dutch and other examples. What the noble Lord, Lord Puttnam, called the procurement game is, therefore, something that we intend to learn.
Moreover, we are working not just with the biggest companies. In February this year, the Prime Minister outlined measures to open up the way that government does business in order to ensure that small and medium companies, charities and voluntary organisations are in the best possible position to bid for contracts. Since February we have delivered the following building blocks aimed at supporting SMEs. We have eliminated the use of pre-qualification questionnaires in 15 departments for procurements below the EU threshold of approximately £100,000. Evidence suggested that the length of those pre-qualification questionnaires was one of the biggest inhibitions to small companies in applying for government contracts. The two departments still using pre-qualification questionnaires are doing so only for security reasons. We are also now publishing all central government tenders and contracts through the Contracts Finder website. More than 2,000 tenders have been published, of which 50 per cent were flagged as suitable for SMEs, and more than 30 per cent of contracts listed were flagged as awarded to SMEs. We are also piloting a new e-sourcing solution, the Dynamic Marketplace. Nine departments have signed up and more than 500 suppliers have registered, providing themselves with free and easy access to opportunities below the EU threshold. We have even introduced a “mystery shopper” scheme to allow suppliers to report bad procurement practice by government purchasers. More than 100 cases so far have been received and dealt with under the scheme.
I say to the noble Lord, Lord Sugar, that there is no 25 per cent rule regarding the turnover of SMEs in bidding for public procurement contracts. Consideration is given purely to the financial viability of SMEs bidding for contracts, and we are aware of the need to encourage SMEs in all ways. In July 2011 we published the first SME progress report and departmental action plans outlining how departments are supporting SMEs. We ran an Innovation Launch Pad, which received 351 proposals from SMEs. Two of the best companies have since won new business with government, and we hope that others will do so as well. To help with suppliers’ cash flow—a point raised by the noble Lord, Lord O’Neill—the Government aim to pay 80 percent of undisputed invoices within five days. That is not on the same model as supermarkets. In all new contracts we require main contractors to pay their subcontractors —which are more often SMEs—promptly.
We have also taken steps to raise the competency and professionalism of public sector procurement staff. We are building a training programme that will increase the skills of the Government’s key procurement professionals in line with the use of lean techniques. This will become a prerequisite for procurers who lead on major procurements for government. We have also implemented a two-way commercial interchange pilot programme with industry to bring private sector expertise into government and interchange with our procurers who will benefit from experience of private sector best practices.
I therefore respectfully suggest that in the 13 months since the debate on the Green report, this Government have done far more to transform public procurement than the previous Administration managed to do in 13 years. However, we are not resting on our laurels. We recognise that there is still more to be done, and we have a clear programme to do it.
I turn to the question of EU rules, which clearly need to be substantially reformed. We welcome the European Commission’s intent to publish proposals to simplify the procurement directives by early 2012, and in our response to the Commission’s Green Paper on the modernisation of EU public procurement policy we have called for significant simplification to free up public procurement markets and enable a light-touch, modern regulatory framework. We have been in active dialogue with the Commission on these proposals. This is a once-in-a-decade opportunity to simplify the procedures, cut red tape, embed transparency, and increase cross-border competition to the benefit of citizens, business and public authorities across the European Union. As a priority, we must ensure that these reforms catalyse and drive growth.
Alongside this work, in July the Government stated that we would consider whether the UK was best applying the EU procurement rules and managing our procurements in order to meet our strategic needs, cost effectively, in the long term. We will be publishing more details as part of the growth review on 29 November.
Three days ago, at the Cabinet Office conference on 21 November, my honourable friend the Minister for the Cabinet Office unveiled a radical package of measures that will change how our Government buy from the private sector in a way that supports business and promotes growth. The Government will provide an open door for current and future suppliers to discuss forthcoming procurement opportunities, cutting the time taken in the procurement process. We will work with industry to identify and address any key capabilities needed to meet future demand. We have published a pipeline of £50 billion of potential business opportunities across government, giving an unprecedented view into the Government’s expected future requirements and helping business to build the confidence to invest long term in plant, machinery and people.
We aim to make it 40 per cent faster to do business with government—another issue which matters enormously to smaller companies. All but the most complex procurement processes will be completed within 120 working days from January, compared with the average of 200 days now. By engaging earlier and more openly with business and the wider supply chain, government will be able to reduce the time taken during the procurement process and provide the greater certainty and visibility of this forward pipeline to unlock investment. We will require all civil servants responsible for running major procurements to be trained in the Government’s new approach.
The noble Lord, Lord St John, talked about the advantages of payment by results and procuring for outcomes. As he will know, a number of experiments on this are going on in different sectors. It is something that we are well aware of. We intend to experiment with it further and we hope to benefit from it more in the future. As Francis Maude said on Monday, we will follow the example of our EU neighbours and, indeed, of best practice in the private sector by making it easier for our suppliers to do business with us.
The Government Procurement Service, now based within the Efficiency and Reform Group in the Cabinet Office, will continue to implement the category strategies and deliver centralised contracts in the core category areas. Only last week, we awarded the central government travel management services contract—that is, the domestic and international contract—which is projected to save the Government some £20 million, equating to a saving of approximately 30 per cent against the existing arrangement. I shall not mention which airline I flew with the last time I went on government business, but that is part of the saving.
The Government are committed to continuing the work that we have started, to promoting growth, to increasing savings and reducing bureaucracy, to making public procurement a slick and efficient process, and to making government a reasonable and straightforward customer for businesses to work with.
Lord Young of Norwood Green
The one question that the noble Lord has not addressed on which I should welcome some comment is why in public procurement contracts we do not stipulate, as the previous Government did, that it is a perfectly reasonable quid pro quo to indicate how many apprentices there are and what training they will be undertaking. I thought it disgraceful when I discovered a very large government contract with a company that did not have a single apprentice on its books. I would welcome the Minister’s response to that.
Lord Wallace of Saltaire
As the noble Lord will know, the number of apprentices has increased considerably in the past year, and this is something to which we are paying a great deal of attention. However, on his specific question, I shall investigate and write to him.
Lord Sugar
My Lords, I thank the noble Lords who have contributed to this debate, many of whom have endorsed some of my sentiments. The Minister is right in pointing out that the head honcho to whom I referred is John Collington. I referred to having met somebody in the past whose thoughts and plans I found quite interesting. When I mentioned recruiting someone from industry, I was thinking more of the former CEO of Tesco rather than someone who had worked for the Football Association, which is where Mr Collington came from.
The noble Lord, Lord Lee, made the very good point that some external commercial people run rings around those who are in charge of procurement in government departments. My noble friend Lord Puttnam referred to waste in procurement with items that never get used, and the noble Lord, Lord Sutherland, made an excellent point in concluding that the culprits were amateurs in the procurement department.
I hope that all the comments from noble Lords have not fallen on deaf ears. Once again, I thank everyone for participating.
Baroness Garden of Frognal
My Lords, I remind noble Lords that the next debate is timed. Back-Benchers have seven minutes, so when the Clock shows seven, their time will be up.
Funding of Care and Support
(12 years, 11 months ago)
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Baroness Pitkeathley
That this House takes note of the report of the Commission on Funding of Care and Support and the future of social care.
Baroness Pitkeathley
My Lords, it is a pleasure and an honour to introduce this debate about the future of social care and to move the Motion that the House takes note of the Dilnot commission report. I am grateful to all noble Lords who have put their names down to speak and I hope they will not mind me calling them, in the context of discussing social care, “the usual suspects”. I mean that as a term of the greatest respect. However, it is a disappointment that there is no speaker from the Conservative Benches apart from the Minister.
Certain reports are so significant in the development of policy that they are known by a single name. Your Lordships will think of Beveridge or Wolfenden. In the field of social care, the names that spring to mind are perhaps Seebohm, Griffiths and Laming, and certainly many of us believe that Dilnot should join that illustrious number. I pay tribute to the Government for setting up the Commission on Funding of Care and Support and the future of social care, and to Andrew Dilnot for his extraordinarily important report. I include thanks, too, to his colleagues Dame Jo Williams and your Lordships’ very own Lord Warner—my noble friend—not only for their contribution to the report but for their continued work to have it accepted and implemented. Their diligence and sheer hard work are enormously appreciated.
The commission was set up to investigate the problems of the current system of adult social care in England and to develop ideas for reform. So what were the problems that the three musketeers, as some have called them, were to investigate? The current system of care and support is seen to be in crisis, severely stretched or broken, depending on where you sit. All agree that “something must be done”.
Of course, it is not the first time that such feelings have been expressed. Let us remember that social care has never been free at the point of delivery as healthcare has been, and the question of who pays—the individual, the family or the state—has occupied politicians for years. Twelve years ago, my own Government set up a royal commission on the subject and recommended that all care should be free. I am delighted that the noble Lord who chaired that commission is to speak in this debate—his second outing of the day—as is one of his dissenting members, and I look forward very much to hearing their views.
The problems in summary are as follows. The system is not fit for purpose. It was set up originally for a country in which men died at the age of 66, shortly after retirement, and women died before they were 70. The new statistics—for example, that 11 million people alive today will live to be 100—are of course a cause for celebration, as is the fact that so many more people are living longer, albeit with greater degrees of disability. This means that we are spending inadequate amounts on care and support, both publicly and privately.
Social care funding has failed to keep pace with demographic change. Since 2004, while spending on the NHS has risen by £25 billion, spending on social care has risen by just £43 million. To cope with rising demand and static resources, councils have increased charges for care services and rapidly raised eligibility criteria, with the percentage of councils providing support to those with moderate needs decreasing from 50 per cent in 2005 to 18 per cent in 2011, as eligibility criteria were raised to cover only those with substantial or critical needs. This has been compounded by recent local government spending reductions, with social services directors reporting £1 billion cuts to services this year and warning that the same level of cuts or even greater ones will have to be made next year. Our public provision is largely seen as providing poor services for poor people, and there have been several examples of this in recent months, most notably yesterday’s distressing report from the EHRC.
However, we should never forget that much good care is still provided to individuals within the system because of the dedication and skill of thousands of workers. Those workers and their agencies have had some success in recent years with the personalisation of services, promoting independence and early intervention. There are pockets of great service to be admired, and we should always remember that, but in general the care and support system is perceived to be starved of cash, failing to meet the volume of need, unfair and a lottery, especially for people with middle incomes, for the simple reason that if you die neatly without needing to use care services, you pay nothing, but if you become disabled through a long-term illness such as Alzheimer’s, you may need expensive services at full cost for many years, involving thousands, sometimes hundreds of thousands, of pounds. So people who own a home and have modest savings are hit very hard. The system is also extremely confusing. It is difficult to find your way around, different in different parts of the country, not portable when your location changes, and so on.
Moreover, caring families as well as the individual needing care suffer at the hands of the system, which for them is too complex, costly and unfair. Family members end up sacrificing their careers, finance and their own health in order to provide care to disabled or older loved ones, getting little or no help from a social care system and finding that services are of poor quality and expensive. However, if you have a carer you are luckier than the frail older person living alone whose total social care is a 15-minute visit once a day—twice if they are very lucky—which is not enough to keep them clean and comfortable, let alone cared for. These problems are only going to get worse if nothing is done. Within 20 years the number of over-85s will double and the number of people living with lifetime disabilities will grow too. Relatively fewer people will be working and paying taxes to help pay for support.
Apart from the practicalities of money and how it is all to be paid for, we have other changes in society that affect what we expect from social care. People want and demand greater choice and control than is often offered by our current system, and people’s expectations about standards of care are rising. The Dilnot proposals were published on 4 July and they aim to change the way that social care funding is raised and spent, extending entitlement to public funding for social care in a way that is acceptable and sustainable to taxpayers.
The key recommendations will be familiar to your Lordships. The contribution of an individual to their social care in their lifetime, which is currently unlimited, should be capped. After the cap is reached, individuals should be eligible for full state support. It is suggested that the cap should be between £25,000 and £50,000. The means-test threshold over which people are entitled to full costs should be raised from £23,000 to £100,000. Further, there should be national eligibility criteria, and portable assessments should be introduced. All those who enter adulthood with a care and support need should be immediately eligible for full state support without a means test. A new information and advice service should be set up to guide families through what they need to know.
The cost is estimated to be about £2 billion, although that figure is disputed. Of course, it is a large sum but not if you compare it with the £170 billion that social security costs or indeed the £119 billion which carers contribute to the coffers every year. In these difficult financial times there is of course a question of how money is to be found, but perhaps a better question is what will happen if that money is not found. We shall certainly see more reports of the kind which the noble Baroness, Lady Greengross, presented to us yesterday.
The unanimity of support for the Dilnot proposals is as great as I have ever seen. In my Second Reading speech on the Health and Social Care Bill, I reminded your Lordships that if you want to bring about change you have to build a consensus. There is no doubt that such a consensus now exists. That consensus is that it is inescapable that the future funding of social care has to be based on a combination of individual and state responsibility and contribution and that these proposals offer the prospect of a lasting settlement based on a partnership approach. That is not to assert that there is unanimity on every aspect of the Dilnot proposals. People are concerned about the level of the cap, about the fact that hotel costs are not included in the calculations, and about whether the life insurance product market will really be stimulated. I have no doubt that other noble Lords will speak about these concerns. Nor should we assume that the commission provides a total answer to the social care problems I have outlined, but these reservations do not detract from embracing its general thrust. The consensus that now is the time and that the general direction of the Dilnot report is right surely cannot be gainsaid. It would be sad and a failure of all of us involved in these important discussions if we allowed disagreement about details in the report and the valid arguments that are put forward to get in the way of action.
If you want to bring about change, another thing that you have to do is to make people, individuals, Governments, political parties and society itself see what they are going to gain as a result of the changes. What will they get out of it? That surely is clear. We will spend existing resources better. It will improve the integration of health and social care systems. When people’s need for social care is not met, they will turn to the NHS, resulting in increased numbers of emergency admissions or delayed discharges. The inconsistency between fully funded NHS care and means-tested social care the delivery of an integrated care system. Recent statistics from the Department of Health show an 11 per cent rise in the number of hospital bed days lost to bed blocking—I thought we had seen the last of those terms—so the costs have risen from £483,000 to £537,000 per day. In addition, if we adopted these proposals, the rights and responsibilities of individuals and agencies would be clear to the public. If people were clear about their future personal liability they could plan how they would meet care costs up to the level of the cap, wherever that was placed. We would also stimulate the care market to provide more choice for families and incentives for business.
The government consultation process on the report is under way and is to be commended. The engagement process is about to conclude. It has been helping people to put their views, and the leaders of the discussion streams will indicate the priorities for change. I hope that the Minister will be able to tell us more about the process of putting those priorities into action. I know that the Government are committed to a White Paper in the spring, but it cannot be stressed too strongly that action is needed, with the greatest possible dispatch, to take advantage of the near consensus around this issue at the moment. We hear rumours of the Treasury having misgivings about the cost of the proposals. Will the Treasury be involved in the decisions about putting the identified priorities into action? I hope the Minister will tell the House the answer.
Another cause for concern is how the Law Commission proposals on social care, which again have been widely welcomed, will be dealt with. I do not have time now to go into these in detail, but they would create a stronger legislative framework, are compatible with the Dilnot proposals and together would form the basis for a White Paper and subsequent legislation. Do the Government intend to combine their response to the Law Commission proposals with their response to the Dilnot report? The chance to do so has been called a once in a lifetime opportunity. It would be tragic if the opportunity were missed. Therefore, it is vital that we harness not only the consensus in the care sector clearly set out by the 52 organisations in the Care and Support Alliance but the willingness of political parties to cross party political divides in the interest of finding a solution to the social care dilemma. We must find political consensus. My own party has suggested ways of facilitating this. My noble friend on the Front Bench will say more about this and I hope that the Minister will respond to these suggestions.
In conclusion, the Minister for Social Care, in a debate on 10 November in another place, said that,
“when the decisions are made … I hope we will be in a position to legislate at the earliest opportunity. Social care has languished … in the ‘too-difficult-to-do’ box for far too long. We are the Government who are committed; we see the urgency and the need. I hope that together we can get the cross-party lead that results in the changes which are long, long overdue”.—[Official Report, 10/11/11; col. 181WH.]
Amen to that. I hope that the Minister today will give an equally strong commitment. We must not fail to grasp the opportunity that Andrew Dilnot and his colleagues have given us. I beg to move.
Baroness Barker
My Lords, I thank the noble Baroness, Lady Pitkeathley, not only for the characteristically thorough way in which she introduced the debate but for securing it in the first place. She is absolutely right that the timing is of the essence. Many noble Lords have buried themselves deep in the Health and Social Care Bill. I was going to observe that perhaps today was light relief for some of us—but it is not. Everything that we will discuss today has an impact on the National Health Service. We have known for so long—and it has been confirmed by every report that the noble Baroness talked about—that if we do not sort out the system of social care, which we know does not work, it will inevitably build up costs for the National Health Service. As ever, it is a great shame that while people are passionately vocal about changes in the NHS, there has been something of a silence on social care, which never gets the same level of reaction despite being so important.
I will not go into great details on the reports. I will focus for my seven minutes on things that have to happen now. It is clear that the public know that they are likely at some point to need social care. However, they do not know the likelihood of that happening to them. We know that for people aged 85 and over, of whom there are a growing number, the figure is three out of four. According to an ABI survey, 51 per cent of the public do not know who will pay for their care; 21 per cent think that their family might pay for it; and 19 per cent think that the Government might pay for it. They have no idea where to go for independent advice. Those are the key issues that we must work around.
We must recognise that this is a generational issue. One’s ability to afford social care depends entirely on whether one has property. That is the determining factor. There is also an age factor. People aged 85 and over at the moment will have to pay for social care from their savings or capital. Those who are 65-plus and already retired will have to try to secure an annuity. As we know, the private market so far has failed to develop appropriate products. People of working age who want to plan for their future social care needs will either have to come to some kind of annuity arrangement or hope that in future insurance products will be made available.
As the noble Baroness, Lady Pitkeathley, said, it is crucial that politicians come together now to agree which parts of the Dilnot report they will accept, and the criteria and level of funding, so that individuals can know with some degree of certainty what the likely state contribution to their care will be, and private companies can come up with forms of insurance that are sustainable. That will take considerable time and is an urgent matter.
The noble Baroness, Lady Pitkeathley, mentioned in passing the Law Commission. She is absolutely right. The Law Commission report is critical to this. It calls for two things: a new statute and regulations that set out community care criteria and eligibility, and the process of assessment for individuals. The importance of community care assessment is something that people in the world of community care understand, but nobody outside it does. It is fundamental to this issue. If individuals cannot tell at what point their care needs will be recognised, accessed and taken forward, we cannot begin to build insurance products that will help people to plug the funding gap.
I will make a further point that has not come out in either of the documents. It is crucial that there is a system of care assessment that runs alongside but is completely independent from any form of financial assessment. In future, people will have to undergo both processes, but one must not contaminate the other.
I mentioned property. It is inevitable, given the generational distribution of property ownership, that equity release and the ability of individuals to release resources that are tied up in capital will become increasingly important. At the moment we do not have equity release products that are deemed to be safe. Nobody who wishes to go down the route of funding their own care in that way knows where to go for reliable advice. I ask the Minister whether the work done on equity release by the Joseph Rowntree Foundation in 2006 is being revisited, and whether the Government are engaging with the FSA on how they might build an equity release market in future that people will be able to trust.
Members of your Lordships' House conducted a seminar in which Andrew Dilnot introduced his report. He spoke to a pretty tough crowd. One political point was raised by the noble Lord, Lord Campbell-Savours, who is not in his place. He challenged Andrew Dilnot on whether his report was not a subsidy to people who were well off. That is the outstanding political point. Andrew Dilnot made the fair rebuttal that healthcare in the NHS is a system of pooled risk and we do not draw the distinction. That is the only substantive political point that was raised against the Dilnot report. I hope that if the noble Lord, Lord Campbell-Savours, agrees that the system that has been devised is equitable across the piece, all parties should be able to agree.
We have been here before. We have been very close to reaching agreement. Some weeks ago Ed Miliband said that he would be willing to take part in cross-party discussions. It is very easy to make such a statement and then find some reason, process or proposal that you cannot agree with. This requires political consensus and courage from all parties. It will take a degree of sustaining. It requires all politicians to convince the media that this is the correct way forward. If we do not agree this now, we will be back in 20 years debating the same issues, and the situation will be worse for the individuals concerned.
Baroness Bakewell
I, too, support the Dilnot recommendations and ask for a White Paper in the new year and action from the Government. I thank my noble friend Lady Pitkeathley for bringing forward the debate. I am sure that we will learn many intricacies, given the expertise in the House.
I will explain from my own experience why this is so important. I recently made a “Panorama” that told the story of someone in her mid-50s who had moved into the family home to care for her mother. Her mother's health deteriorated and she went into a care home. The family home had to be put up for sale and the dutiful daughter was left without either a home or an inheritance. These stories have proliferated in the media and have outraged people who wonder how such things are allowed to happen.
Before the Dilnot commission, there was a very unattractive political skirmish when the previous Government proposed a tax on an individual’s estate. It was denounced in the press and elsewhere as a death tax, and the proposal died. This proposal must not die. It has to be faced. It deals with issues of death and inheritance. Perhaps that is why we have shirked it and spoken less absolutely than we need on the matter. The old fear loss. They fear the loss of their contemporaries. They fear the loss of their capabilities, and they deeply fear the loss of their home and their savings. They fear these things more than other generations that have not got there yet, but such worries impact on the health and well-being of an older generation, and that is a consideration for the health of the nation generally.
There are several popular misunderstandings about this situation that get perpetuated by the press—I am sorry if I am guilty of that, and I hope I am not. When I go to make programmes, people often say to me, “I’ve paid taxes all my life. Why am I not cared for when I am old?”. This refrain has given it a very high profile in the media. It was always understood that the National Health Service provided, as the phrase had it, from the cradle to the grave—to the grave, not to the old people’s home. Social care was mistakenly seen as part of that contract with the state, and it still is. Social care, housing, feeding and dressing were things that, as citizens, we have paid for all our lives, but when it comes to being frail, as well as old, we need help in them, so they bridge a social convention—that we pay for housing, food and health—and the medical convention of the National Health Service. We are back to: “I paid taxes all my life”.
Dilnot’s most high-profile recommendation is that there should be a cap on an individual’s contribution to social care of somewhere between £25,000 and £50,000. This is high-profile because it strikes at this very unease felt by a generation of older people who, I have to say, have assets. We are asking taxpayers to fund the safeguarding of those assets. It is a long explanation to make that plausible to people who do not have such assets and wonder why people better off than themselves are asking people in the lower tax range to fund them. We are a property-owning democracy. Citizens are motivated throughout their lives to own their home and, what is more, it is a widely held impulse and part of our culture to have something to pass on to our children. Whether we approve of that or not is not germane to this argument. It is a widely held cultural belief.
Dilnot seems to me to walk a tightrope in asking that care is funded by a shared responsibility between the individual and the state. That is a new and understandable contract. It is as fair as can be devised and honours the aspirations of as many citizens as possible. Adjacent to this proposal are recommendations urging people to plan early in their lives and to be informed of the financial packages that are on offer to meet the sums they could be called on to pay, but the central proposition is a good one. I urge the Government and the Minister to move on this.
Lord Sutherland of Houndwood
My Lords, I thank the noble Baroness, Lady Pitkeathley, for introducing this debate in such a comprehensive, clear and incisive manner. I thank her, too, for the reference to the usual suspects. I am happy and proud to join her as one of them. Looking around the Chamber, most of us have form in this area. Remember “Butch Cassidy and the Sundance Kid”? In the film, as they are pursued by the Pinkerton men, Butch and Sundance look back and Butch, seeing the cloud on the horizon, says, “Who are these guys?”. We are these guys. We will not give up. We will continue the pursuit because this is such a critical matter. I thank Paul Newman and company for that. I shall group my remarks under a heading borrowed from Al Gore's influential book An Inconvenient Truth. I may use other catchphrases, some of which are stolen from MBA speak, such as “the elephant in the room”, but I want our minds to focus on “inconvenient truth”.
Today we address the Dilnot report, a good report, as one would expect from that stable. I have no hesitation in giving it my very warm support. Contrary to basic belief, we did not profligately recommend the free expenditure of money; we recommended a form of co-payment. I accept that the co-payment line has to be different today, and that is why I find it easy to support what Dilnot proposed. We address the report, but we do not address a government response. That is interesting and important. We have been here before—a situation where apparently the Government take longer to read the report than the excellent team took to write it. From past experience, this is not a good sign.
Occasional possible sightings of Dilnot have been reported, but they are usually accompanied by a pursing of Treasury lips and mutters about the state of the euro and that spendthrift bunch who were in government before. But of the report, there has not been a clear, authenticated sighting. Perhaps we should put David Attenborough on to it. It is perhaps in some frozen grotto in the north awaiting revival.
However, my simple thesis is this: the Dilnot report represents an inconvenient truth—none the less true for being inconvenient. The problems to which it points and the reasons for which it was commissioned—yes, it was commissioned, to the credit of the current coalition Government—have not gone away. It is not that the report has not gone away, but that the issues have not gone away, which is why some of us are here again. They will not go away. They will become more and more pressing the longer we ignore them.
What are the reasons for the delay in the Government’s response? They are the usual ones: “We need more time and information” or “We are consulting”. One thing successive Governments are not short of is advice. There is no need for further consultation. Think of the range of reports I could drop before the House today—I thought about bringing them in, but I would get back strain lifting them: the Joseph Rowntree Foundation report; the Wanless report from the King’s Fund; a report from the LSE by Raphael Wittenberg and colleagues; the 2006 report from the Audit Commission, the Healthcare Commission and CSCI; Her Majesty's Government’s 2006 report Opportunity Age; and their 2009 Green Paper Shaping the Future of Care Together. There was also an IPPR report; I could go on. The Law Commission has already been mentioned. There is plenty of advice. It is decisions that are needed. We need a policy.
All of those reports presented inconvenient truths to successive Governments. We have 13 years of history of this. For example, a government report in 2005 pointed out that by 2051 over 25 per cent of the population will be over 65. Wanless pointed out that the cost of care of older people will rise from £3.7 billion to £8 billion with the net cost to government rising to £1.7 billion. Wittenberg has equivalently devastating statistics. We all know them. I look around the House. Noble Lords know these statistics, and I do not need to repeat them. There is a constant litany on demographic change in this and in other countries. My favourite statistic is that in the course of this debate, if we all keep to time, noble Lords’ statistical life expectancy will rise by 30 minutes. That is not a cashable cheque, but statistically that is the rate of demographic change. These are facts. They are true, but they are inconvenient.
There is a litany of further inconvenient truths: our systems for coping with demographic change are getting worse rather than better. We should note the report that was published yesterday, of which mention has been made, about the failings of care at home; the continuing drip, drip of stories about the failings of residential care and care of the elderly in hospital; and the way in which money allocated to local authorities for these purposes, because it not being ring-fenced, is not visible at point of delivery.
I had a letter last week from someone who runs care homes, which, as far as I can see, are run very well. She reports that the price local authorities are willing to pay is £200 per week under the real price. The homes deal with it, not by cutting staff, which is the inevitable route taken by many, but by raising the money elsewhere. I say, good for them, but not everyone has that capacity. The drip, drip, drip, the points to note and the failures of the system are inevitably reported to us. They are the inconvenient truths.
A further inconvenient truth is an unplanned, unco-ordinated and inadequate system, which is approaching the point of breakdown. Ministers should beware because they will be to blame. MPs should beware because older people vote and will hit them in the ballot box, which is the only place that they have left. Governments may contrive to ignore this but they cannot. These inconvenient truths will not go away.
There are convenient ways in which the Government operate which set these aside. I shall list them. Do not upset the Treasury applecart—it has a system for limiting expenditure and no exceptions are allowed. Do not tamper with the historic power of departments—their budgets should be subject to only marginal change. Especially, do not tamper with the fortifications which separate the budgets for healthcare and social care. We do not recognise the elephant in the room. I put it to the Government that it is time now to recognise it and to deal with these inconvenient truths.
Lord Lipsey
My Lords, I declare an interest as president of the Society of Later Life Advisers, which trains independent financial advisers specialising in elderly care. I want to concentrate on the role of the private sector. I strongly endorse, as every speaker has, the key features of Dilnot, which build on the minority report of the 1998-99 royal commission of which the noble Lord, Lord Sutherland, was such a distinguished chairman. Sadly, however, four months after Dilnot, his core proposal, a cap on care costs, is in danger of going down the pan; first, because of the cost and, secondly, because the Government are chary of opening up this wicked issue. The job of the House today is essentially to save Dilnot.
On private insurance, there are only about 30,000 insurance policies for long-term care extant at the moment. There are so few largely because of a lack of demand. People do not know about care costs and too many assume that the state will pay, which is why the work of SOLLA is so important; why local authorities need to do more to help self-funders understand their options; and why a state information campaign—call it a national care service, if you like—is essential. However, that does not apply just to the demand for policies, but to the supply.
The main reason why insurance companies have been so chary of getting into this area is the fear that people will live longer and longer—we have just heard from the noble Lord, Lord Sutherland, about how fast the expectation of life is increasing—and that the costs of that care will bankrupt the companies. Without a state-funded cap which limits the liabilities of insurance companies, mass private insurance is a dead duck. With a cap, one can envisage a huge expansion in policies, many of them funded from the proceeds of equity release on people’s valuable houses. Enhanced annuities are another promising avenue; for example, a pension that increases if an individual becomes disabled later in life and needs care. In Asia, policies have been developed whereby a sum of money is set aside which can be used for a person’s care if they need it but can be left to their children if they do not, and so on. However, without a cap at some level or other, none of those schemes is likely to develop on any scale.
What should the cap be? I have just one criticism of Andrew Dilnot’s admirable report. As a cap on the costs that an individual must bear, £35,000 is too low for three reasons. First, it would cost the state too much—£3.4 billion by 2025-26. At a time of austerity, that will not happen. Secondly, it gives too much benefit to the better off. Let us remember that the poor will not get a penny of this money because their care is free now. Therefore, it goes entirely to middle to upper income people or, rather, their heirs. I do not say that they should not get any of it but if it is too high a cap, too much will go to the better off. Thirdly, because the cap is too low, most people will not bother to insure privately. They will say, “I can run to £35,000 out of the proceeds of my £300,000 or £400,000 house. I won’t bother”.
What should the level of the cap be? I am afraid that I do not know but that is not due to a lack of assiduity on my part. On 11 July, I asked in a Question for Written Answer what the cost of a £100,000 cap would be. The Minister replied with what I think these days we should call a “Baroness Trumpington”. In private communication the Minister has been his usual helpful self, but we still have no figure of a £60,000, £75,000 or £100,000 cap. I take with a pinch of salt his department’s contention that this is a hard calculation to do—with a ruler I could get quite near it myself. We will have to see what a freedom of information request can do to get an answer out of the Government.
But the more fundamental argument that the Minister uses against a higher cap is that the financial services industry does not want it. He cites the Government’s consultation on Dilnot, which favours a £50,000 to £60,000 cap. My own consultations with the financial services industry—I am in quite close touch—suggest a more mixed picture. Some companies want a low cap, say £35,000, and some want a high cap, say £75,000. However, the crucial point is that nearly all financial services companies agree that we need some cap. The Government’s consultation, cited by the Minister, states that support for the cap is overwhelming. The point is that the choice is not now between a £35,000 cap and a higher cap because the Government will not fund a £35,000 cap in present circumstances. The choice is between a higher cap and no cap at all. If there is no cap, there will be no role for private insurance. It is as simple as that. A cap is what we must get.
What do we want from this process? We want a settlement that will endure and enable private insurance to play its part alongside state provision and state funding in a deal on the matter. When do we want it? We want it, if not now, at least by the time of the White Paper next April, before another generation is condemned to inadequate care and crippling financial anxiety.
Baroness Tyler of Enfield
My Lords, I rise as a very recent recruit to the usual suspects and as someone still very much serving her apprenticeship but very proud to be a member of this group. First, I congratulate the noble Baroness, Lady Pitkeathley, on securing this hugely important debate. I do not think that I am exaggerating when I say that, despite all the challenges the country faces, the funding and the future of social care is the greatest social challenge facing the country, which we know we will all face in a very personal way as we move through our lives. I very much agree with the noble Baroness that it is a matter that has been put into the too-difficult-to-deal-with in-tray for far too long.
I should like to explain why this issue must be at the top of the political agenda. It is impossible to escape the fact that chronic underfunding of care has led to a crisis in our social care system and is putting huge pressure on existing care services, the NHS and, in particular, on families providing care. As we think of the challenges we face, a couple of statistics have really brought that home to me. The first is the fact that the number of over 85 year-olds is set to double over the next 20 years. The second is that 11 million people who are alive today will live to the age of 100. The third is that the number of carers is expected to rise from 6.4 million in 2011 to 9 million in 2037.
The extent to which social care funding has failed to keep pace with demographic change—in marked contrast to NHS funding—has already been well covered, so I do not intend to repeat those comments. Instead, I want to say a word or two about who is really feeling the burden of this underfunding. First of all, there is the cost to families. The result of demographic changes outpacing spending is that growing pressure is placed on family members who provide care. I was interested to see that statistics produced by the NHS Information Centre show that the proportion of carers providing over 50 hours of care a week has doubled in the last 10 years. That has all sorts of implications for people’s health, finances, their availability for work and, indeed, for the economy.
I turn next to the issue of the cost to businesses, which we hear less about. The peak age range for caring is 45 to 65, which often represents employees’ peak of training, skill and experience. Employers are at risk of losing these employees at short notice if the social care system cannot enable families to juggle work and care, and the average cost to businesses of recruitment, training and lost productivity is around £11,000 per staff member lost. As we know, there are many enlightened employers who are working hard to try to promote flexibility and workplace support for employees who are juggling work and care responsibilities, but flexibility in the workplace cannot compensate for poor quality, unreliable or inaccessible social care, and over 40 per cent of carers who have given up work say that they did so due to the lack of sufficiently reliable or flexible services.
Lastly, I mention the cost to the NHS. As we all know, an insufficient supply of social care in the community also results in additional pressures and unavoidable costs for NHS services, particularly through things like emergency admissions and bedblocking—a term that I absolutely hate, but recent statistics show that these issues are currently getting worse.
Like many other noble Lords, I am attracted to the recommendations made by the Dilnot commission. I notice that they have also attracted the support of many influential bodies in the sector and beyond. I believe that, if implemented properly, the recommendations have the potential to help people to prepare and plan for a better older age and take away the terrible fear that so many have. I will not run through the individual recommendations in detail because others have done so, but what is important is protecting families from catastrophic care costs by capping lifetime care bills, and we have already heard very interesting arguments about the level at which the cap might be set. I also welcome the commission’s clear recognition of the need for additional resources for social care to overcome the historical shortfall, as well as the proposed national system of eligibility and portable assessments in order to create a more standardised system across London and across England. That will help families if they move to different parts of the country. Another recommendation has been made which perhaps is not very sexy—we have not heard about it so far today, but I think it is potentially very important—is for a new awareness, advice, information and advocacy strategy to help families plan for care and to access private, state and voluntary sector support.
So where is the money going to come from in the very difficult current climate? I shall highlight a couple of possible areas. First, those of us who are involved in the consideration of the Health and Social Care Bill have heard a lot recently about the importance of the integration of health and social care, and I thought we had a good debate on the subject earlier in the week. The Bill is entitled “Health and Social Care”, which is very good, but I have to say that we do not talk that much about the social care aspect, and it still often feels like the country cousin. It was said earlier this week that it will require a really big shift of existing resources from the NHS to the social care system to make a reality of integration, and that is going to require huge political will at both the national and the local level.
There is also the issue of investment in more preventive work, which covers all sorts of things these days. We have reablement packages, telecare and the like that can make a big difference to older and disabled people and their families in terms of enabling them to remain in their homes. That is very welcome, but where is the money for these preventive services going to be found? Is it really going to be made available from ring-fenced public health budgets? We also need to do more to stimulate the care market and to think carefully about what these proposals will mean for current providers. It was interesting to note that a poll carried out in February 2011 of the social providers of community care showed that 25 per cent of them expected to face closure before the end of this year because of cuts in local authority fees. Finally, we need to do more to improve the quality of care available, in particular by supporting the development of a skilled, flexible and valued workforce. The point about members of the workforce feeling valued is so important.
I shall finish by saying that I believe we must be brave both as politicians and as a political class, and here I offer my apologies to the Cross-Benchers. We need a real political consensus on this. The report sets out the basis for a lasting and long-term settlement, and as a class we will not be forgiven if we duck the challenge because it is too difficult.
Lord Rix
My Lords, like others I welcome this very important debate and I commend the noble Baroness, Lady Pitkeathley, for affording her fellow Peers the opportunity to discuss this issue at such a timely moment. I also declare a personal interest as president of the Royal Mencap Society, an organisation that is greatly concerned about the current social care situation facing many people with a learning disability across the whole of the United Kingdom. In the context of the recommendations made by both the Law Commission and the Dilnot Commission about the reform of social care, there is clearly a demonstrable need and appetite for a change to the system to be achieved as soon as possible. While Government austerity measures have significantly reduced settlements to local authorities, it is important not to overlook the pre-existing underfunding that the social care system has experienced.
The Government spend around £16 billion per year on the provision of social care support, in comparison with £110 billion on health and £180 billion on welfare. Despite the vast number of individuals who rely on social care support to ensure their independence and dignity, these figures suggest that it has become something of an afterthought which merely succeeds in papering over the numerous cracks in the provision received by some of the most vulnerable members of society. I dare to suggest that extra funding awarded to social care, evenly distributed around the country, would reduce the NHS budget by a similar amount.
Matters are only likely to worsen. The number of people using social care is increasing and, within this demographic, the number of people with a learning disability is expected to increase by almost a third over the next 20 years. This is a group which is often highly reliant on social care support. Indeed, adults with a learning disability constitute 24 per cent of the social care budget, and so it is essential that their needs are met. However, this is increasingly not the case as the upward curve of social care need jousts with the downward spiral of funding per head in the system. Organisations such as Mencap and the Learning Disability Coalition warn that the consequence of this is that effective and appropriate social care provision is often increasingly out of the reach of a growing number of people with a learning disability.
According to recent research conducted by Mencap about local authorities’ eligibility criteria, 83 per cent of councils are only supporting people with critical or substantial needs, an increase of 10 per cent on the previous year. This reflects a wider culture of “tightening” eligibility criteria so that only those with the “greatest needs” are able to receive support, whereas those with milder or more moderate needs, who nevertheless still require social care support, stand to miss out. It indicates that, sadly, the funding situation for social care is worsening. Indeed, only two weeks ago, the courts ruled that plans by the Isle of Wight Council to provide assistance to those with critical needs and only for some people with substantial needs, was unlawful for failing to give due regard under disability legislation, alongside other reasoning. While it is encouraging to see that such action is being curtailed, there is the wider point that some councils feel obliged to make such contentious decisions as a result of the limited social care resources that they have at their disposal.
The real costs of underfunding become all the more quantifiable when individuals are affected. Susie is a 47 year-old adult with a severe learning disability, which means that, for all of her life, she has been the recipient of social care services and was able to attend a day centre five days a week. She was then offered the option of having a personal budget, which she accepted and, on reassessment, the council gave Susie a financial budget which amounted to only one and a half days’ worth of services.
What that case represents is the corner cutting that is happening throughout the country. But this is not a problem without a solution. What it does not require is yet more papering over the cracks. Instead, action is needed to bring about fundamental reform of the whole system in a way that does not shrink from making difficult decisions. It also requires a fundamental overhaul of the various processes, the various duties and the various means of support associated with social care provision.
This would help overcome the current postcode lottery of care that exists throughout the UK and which dictates that people with equal needs can receive wholly different outcomes purely as a result of where they live. Essentially, this brings together the recommendations of both the Law Commission and the Dilnot commission reports. The latter points out that the current system of funding of care and support,
“is not fit for purpose, and has desperately needed reform for many years”,
while the former urges that a wide of social care overhaul is required as:
“There is no single modern statute to which local authorities, service users, carers and others can look to understand whether services can or should be provided”.
While I fully appreciate the limitations of the current natural climate, the Government would do well to consider the wisdom of RH Tawney in the context of the future of social care when he wrote in The Acquisitive Society:
“As long as men are men, a poor society cannot be too poor to find a right order of life, nor a rich society too rich to have need to seek it”.
Lord Desai
My Lords, first, I must say that Andrew Dilnot has written a good report, but I am going to be more critical of the proposal than most noble Lords have been so far. That is not because I do not recognise that there is a great and growing need, and that a civilised society should of course take care of people in need. But we have to face the fact that we are at a juncture where we have severe problems in our public finances. It is not just the coalition Government who have done this thing. We have undersaved for practically a generation. We—not just the UK but the developed economies as a whole—now face a serious crisis in that, unless we tackle undersaving, we will not be able to survive further into the 21st century. Our dependency ratio will rise. Noble Lords have already pointed out how many more people will be aged over 65 and how many people will live to 100. That is all very good, but the working population in proportion to the people to be taken care off will be small, and if we continue to have this ludicrous policy on immigration, it will not get any better internally.
My noble friend Lady Bakewell said, as often people say, “I have paid taxes all my life, why can't I be taken care of?”. The bad news is that your taxes are not adequate to take care of you when you need help. I am sorry about that. That is the reality. We find the same crisis in pensions. The pension that you have accumulated over a working life is no longer adequate to pay for the long after-work life that you will have. Once upon a time, when Beveridge put in his proposals, the working man lived three years beyond retirement. It was easy and the pension funds were flush with money. Now, you probably work for say 35 years and live for another 25 to 30 years. It is difficult to devise a system of pensions unless you have saved a lot of money to begin with, which will make it feasible for you to have a comfortable life later on. Somebody has to be the hard man and I will choose to be the hard man here.
At the very least, the cap should be indexed. I will come on to what my noble friend Lord Lipsey said, but we should make it quite clear that the cap of £35,000 cannot be kept constant. It will have to be indexed either to prices or earnings; whichever the Government find more money-saving.
Secondly, my noble friend Lord Lipsey said some very good things about this. There is a market failure in the social care insurance business. Of course, as many noble Lords have already said, it is because people confuse social care with health and they think that health is taken care of. Therefore they think, “Why am I not looked after for this?”.
We have to incentivise the buying of social care insurance at a very young age by people. The way to incentivise it, although I have not worked it out, would be that the amount of cap you get later would be related to how much preparation you have made earlier. If you have actually taken care of some of your needs, then we will help you along. That is not to say that we will not help other people, but ultimately this proposal, as many noble Lords have said, is benefiting the better off. To the better off we will say, “Prepare early on. You may be only 25 now, but if you recognise that you will face problems when you are 70, there will be schemes and there could be some government help for you”.
One of the other problems that we will have is that while we have not saved very much, we have been beguiled into thinking that buying a house is buying an appreciating asset. If you buy a car, you do not think that the car will appreciate as an asset. Why do we all think that a house should appreciate because of inflation? Asset price inflation will not go on. A house will not be the kind of wealth that will support you. It ought not to. We ought not to be living with the continuous asset price inflation that we have seen. Equity release will not be a way out in the future.
Given all these problems, I hope that the Government will accept some version of Andrew Dilnot’s report because we cannot again kick the problem into the long grass and come back to it in several years. That is not possible. We have to start with Dilnot and examine whether £35,000 is the right amount and whether we should index it, or whether £100,000 is the right amount and should we reduce it, especially given that the rich not only have more assets than the poor but they live longer. Both ways, there is this kind of regressive redistribution.
Therefore, we have to be very careful and examine the long-run economics, and the projections in Dilnot are not enough. The long-run economics in the general macroeconomic context are what we can afford and who will pay what in a carefully humane way. But let us not get carried away and let us not land ourselves with yet another bankruptcy-making proposal.
Lord Pearson of Rannoch
My Lords, as previously in debates of this nature, I declare my interest as the father of a 31 year-old daughter with Down’s syndrome, who is fortunate enough to live in a Camphill community. What I have to say therefore particularly concerns those many people with learning disabilities.
For them, personalisation should offer greater opportunities to tailor services to their individual needs; some real choice, in other words. But you cannot have choice that actually means anything—real freedom of choice—unless you have the freedom to move if you want to. Unlike the rest of us, who can decide to move without losing our entitlement to, say, NHS services, people with learning disabilities who wish to move into another authority, even if it is a couple of miles away in the next town, do not have the same freedom. Somewhat understandably, authorities are only too happy to place residents elsewhere because they gain financially by the transfer. But the responsibility for fresh reassessment, care planning and, of course, funding is then transferred to the receiving authority, with no commitment to replicate it. Not surprisingly, individual receiving authorities do not always accept people who move into their area. These people must have their needs reassessed by this receiving authority, which can be a lengthy process. Most importantly, they have no guarantee whatever of receiving the same level of support.
The rules of ordinary residence mean that costly and wearing disputes between authorities leave vulnerable people in limbo while they thrash out who shall take responsibility. This causes great anxiety and suffering to them and to their families, and leaves providers who would be willing to accept them unable to do so because they do not have the funding available. For instance, Camphill life-sharing communities exist in only a few authorities, so if someone chooses such a way of life, it usually means that they have to relocate, which then brings all the problems I have just mentioned. The rules on the process of resolving funding disputes were recently clarified, but unfortunately this still does not get away from the disputes themselves. In a recent briefing from the Voluntary Organisations Disability Group, its chairman, Bill Mumford, the chief executive of McIntyre, said that one of the chief obstacles to the potential success of personalisation is the postcode lottery, which is,
“confusing and complicated for purchasers of services”.
The Dilnot report, which we are discussing, goes some way towards addressing this problem. It supports the Law Commission’s recommendation that assessments should be portable. Like other noble Lords, I urge the Government to implement this as soon as possible. It would be a step in the right direction. However, I fear that it does not go far enough. What is also needed is portable funding; funding, in other words, which follows the individual. I can but urge the Government to look into ways of ensuring that funding, as well as assessments, becomes portable across local authority boundaries. Perhaps we need a centralised system of funding.
This would prevent the use of money intended for the learning disabled, which is no longer ring-fenced, being spent on other local needs. It would get around much of the unfairness, particularly the postcode lottery which is endemic in the current system. It would ensure real freedom, which is—or should be—at the heart of personalisation.
Finally, in these times of stringent cuts—and here I trust that the noble Lord, Lord Desai, will agree with me, in view of his earlier remarks—every penny would be spent at the frontline, actually supporting people in the way that they choose and that best suits them, rather than on costly and wasteful disputes between authorities as to who will pick up the bill.
I look forward to the Minister’s reply.
Baroness Wilkins
My Lords, I thank my noble friend Lady Pitkeathley for initiating this timely debate. The noble Baroness, Lady Campbell of Surbiton, had hoped to take part but, sadly, she has developed a chest infection and I know that all noble Lords will want to join me in wishing her a speedy recovery. She asked me to speak to the points that she wished to make, which I share, and to thank Marija Davidson of RADAR for her help.
The noble Baroness, Lady Campbell, particularly wanted to speak on future policy for people below pension age who need personal care, people who are either born disabled or who become so in their younger years. Her main points focus on the issue of human rights and the place of the precious, long-fought-for concept of independent living in future policy on social care.
The proposals of the Commission on Funding of Care and Support rely heavily on building the ability of people to plan and prepare to contribute financially. This is, of course, sensible for those who have had years of employment which allowed them to save for their inevitable decline. But many disabled people do not have that opportunity. Only 50 per cent of disabled people of working age are in work, compared to 80 per cent of non-disabled people, while 23 per cent of disabled people have no qualifications compared to 9 per cent of non-disabled people. The average gross hourly pay for disabled employees is £11.08, compared to £12.30 for non-disabled employees.
All this does not bode well for our ability as disabled people to save and pay for our social care support, whether early or later in life. For those born disabled, the odds against them are stacked even higher, as they will never be able to accrue enough capital to purchase the big things in life, like a property, or to start a business. Disabled people do not start from a level playing field, and it was pleasing to see that the Dilnot report recognises this inequity in its recommendation 3:
“People born with a care and support need or who develop one in early life cannot be expected to have planned in the same way as older people. Those who enter adulthood already having a care and support need should immediately be eligible for free state support to meet their care needs, rather than being subjected to a means test”.
But what will that “free state support” consist of? How will our precious concept of independent living fare in this new world?
An inquiry is currently being undertaken by the Joint Committee on Human Rights, of which the noble Baroness, Lady Campbell, is a member, into Article 19 of the UN Convention on the Rights of People with Disabilities, which concerns independent living. Three things have become clear during the evidence sessions. First, there has been a decline in opportunities for independent living due to decreasing financial resources. Secondly, there is a continued reluctance of local authorities to embrace choice and control for disabled people so that they can exercise independent living. Thirdly, there is buck-passing. It seems that as soon as money gets tight, the urge to snatch back power and control is overwhelming. The increase in charging for social care over the past decade has been matched by a decrease in disabled people's freedom to live independently.
A Social Care Institute for Excellence report published in February highlighted that social care budget holders are losing control over their budgets, as councils require accountability for every single expenditure. Just over a year ago, disabled people receiving social care support through direct payments had the flexibility to spend their payment in the way they deemed best to meet the agreed objectives in their support plan. It is now being asked whether this is a luxury that local councils can afford. However, what they are calling luxury is Article 19 of the UN convention. The positive effects and benefits of independent living, which basically mean choice and control over how one’s personal support money is spent, are legion. Not only does it mean that disabled people can work, volunteer, support families and be active but by providing social care in this way, service users will create new markets through their individual choices. However, local authorities still do not see it that way. In their desperate efforts to control spending, councils are mistakenly snatching back our control, which will undermine the very markets that we need for 21st-century social care. Are we past the heyday of direct payments, which were hailed as a life-starter by disabled people, just when they have barely started to roll out across the country?
Disabled people report a full-steam reversal on supported independent living in the community, always on the grounds of cost. Many disabled people who have had high levels of need are now being asked or, in some cases, cajoled on to continuing care, where there is no right to control your personal budget.
We have to face the fact that there is a cost to disabled people enjoying their human rights, as there is to most human rights—the right to a fair trial, for instance, the right to education and so on. Surely that is a price worth paying collectively, as the whole of society will benefit, not just disabled people. The evidence to the JCHR Article 19 inquiry has demonstrated this starkly; and we have ever-present evidence in this House in the noble Baroness, Lady Campbell, who writes:
“Without another human being by my side, 24/7 to help me function equally, I cannot exercise any of my fundamental human rights”.
Disabled people have serious concerns whether independent living is being eclipsed in the current debate on social care reform. Will the Minister give an indication of the Government’s thinking? For example, are the Government considering allowing personal health budgets to be controlled far more by disabled people? Of course, there is also the issue of portability, just spoken to so eloquently by the noble Lord, Lord Pearson of Rannoch—the right to disabled people’s freedom of movement. The Minister in the other place has expressed a keen desire to make portability a reality. However, it seems that this Government are talking about portability of assessments. Most people can already take their assessment with them; the issue is whether they will be satisfied in the new area. It is portability of outcome that disabled people are seeking. That is what the noble Baroness, Lady Campbell, is seeking in her Private Member’s Bill and we hope it will receive government support.
Independent living is a great good for disabled people and society at large. We are seeking reassurance from the Minister that the right to independent living will take its rightful place in underpinning the future of social care and in its funding.
Lord Low of Dalston
My Lords, I too congratulate the noble Baroness, Lady Pitkeathley, on securing this extraordinary and interesting debate and on the comprehensive and compelling review that she gave us, which has stimulated so much creative and critical thinking from those who have followed her. I can remember three debates on social care and related issues during my first year in your Lordships’ House—so much so that I observed that social care and the importance of social work had become something of a leitmotif running through the proceedings of the House. This does not seem to have been the case so much of late. Unless I have missed something, the last debate of this kind took place on 9 December last year. It is high time we had another one.
The debate is also very timely. The Government received the Dilnot report last July and are now consulting on it. There also seems to be some disposition for cross-party talks on both sides in advance of the promised White Paper in the spring. If we could get to the point where it was possible to move forward, on a basis of consensus, with reform of the law on social care, the upgrading of social care itself and reform of social care funding, that would truly be a consummation devoutly to be wished.
The debate also does not come a moment too soon, in the sense that hardly a day goes by now without our ears being assailed by further horror stories of the neglect, abuse, dehumanising treatment and downright inhumanity to which the most vulnerable on the receiving end of social care—those in greatest need in our society—are habitually subjected. In the summer we had Winterbourne View; and only yesterday, as has been mentioned, the EHRC was reporting evidence of what it called a “systematic failure” across the country, which amounted to a breach of elderly people’s human rights. Examples that they considered amounted to cruelty included people being robbed, left hungry and unwashed, and food being placed in front of deafblind people without telling them it was there, or putting it in an inaccessible place—something, I have to tell you, that blind people routinely complain about in hospital. On the strength of this, the CQC announced the previous day that it would step up its programme of inspections of homecare services, saying that people who use homecare services often find themselves in vulnerable circumstances and the operation of homecare is not as transparent as care in hospitals and other sectors because interactions happen behind closed doors in people’s homes. The Care and Support Alliance, a consortium of more than 50 organisations representing older and disabled people to which the noble Baroness, Lady Pitkeathley, referred, has recently stated that the social care system is in crisis, unable to meet the needs of growing numbers of older disabled people and those with long-term conditions.
Since the day when I entered this House, and I am sure for some time before, we have been talking about a crisis in social care; now it has become a scandal that many predicted if action was not taken. In some ways, that is a good thing—not that we want anyone to be subjected to inhuman and degrading treatment, but it seems to be the thing that gets Ministers’ attention. Up to now, there have not been any Victoria Climbiés or Baby Ps among the elderly and disabled. My fear is that, when the funding for the deprived and disadvantaged, the most marginalised and dispossessed in our society, is cut or they are subjected to inhuman and degrading treatment, they simply disappear beneath the radar.
Coming towards the end of the debate, I speak after such big-hitting luminaries as the noble Lords, Lord Sutherland, Lord Warner and Lord Lipsey, who all, as the noble Lord, Lord Sutherland, acknowledged, have form on this subject—not all the same form but, nevertheless, considerable form. In their presence, I cannot expect my contribution to be anything more than modest, so I shall content myself with trying to drive home a few key points that seem to me pretty well ungainsayable but cannot be said too often.
We have already mentioned the crisis. As everyone has said, the Government must really bite the bullet on Dilnot now. As has become clear, there is room for a range of opinions on the precise form that the bullet should take, but bite the bullet the Government must no doubt do. Labour did some good things with social care when it was in office, but the past decade, as the noble Lord, Lord Sutherland, reminded us, has been littered with too many reports and policy statements that have remained unenacted. It was to the coalition’s credit, therefore, that it moved quickly to set up the Dilnot commission and it will be even more to its credit if it can build cross-party consensus around it and get on with implementing it. I do not disguise the fact that it is a formidable challenge; expenditure on social care has increased, though not as much as on health and education, but it has not increased enough to keep pace with rising demand stimulated by people living longer, and it needs to increase still further. That is a hard saying at a time of financial stringency, but with the number of 85 year-olds set to double in the next 20 years the level of demand will only go on rising relentlessly. I am afraid that that is just the problem that the Government have to deal with; if they do not, they will attract the opprobrium that rightly attends allowing a scandal to balloon out of control without making any serious attempt to deal with it.
Time is running out. Reforming the funding of social care is not the same as undertaking the upgrading of social care that is needed, so Dilnot is not enough. There will be more to do. I realise that it cannot all be done at once but, in addition to Dilnot, it will be imperative for the Government to commit to embracing a wider agenda. Workforce development is critical, but the proportion of care delivered by the private and voluntary sector has gone up from 56 per cent to 84 per cent in the past 10 years. Much of this will be concerned to keep costs to the bare minimum in order to turn a profit. The noble Baroness, Lady Bakewell, devastatingly laid bare, in the Second Reading of the Health and Social Care Bill, how this issues in a jumbo scandal of its own, with the Southern Cross debacle. This poses real challenges in recruiting a sufficiently high calibre of staff.
Finally, Dilnot’s fourth recommendation says:
“Universal disability benefits for people of all ages should continue as now”.
With the Welfare Reform Bill, that kind of joined-up thinking would appear to have gone by the board already.
There is need for some serious rethinking here. It is not yet quite too late.
Baroness Wall of New Barnet
My Lords, I, too, congratulate my noble friend Lady Pitkeathley on achieving this opportunity for us to debate a subject that is growing more and more important. There is no doubt that Dilnot is a good thing but I suggest that it is not the complete solution to all the problems faced in the delivery of social care. The problem is a major issue for us all and, I suggest, the responsibility of us all, certainly those of us involved in commissioning and delivering services to people who need this care and are entitled to it.
Although I have suggested that the issues are major, I also think that they can be described simply. There are ever increasing demands on social care budgets as the population ages. A little like the noble Lord, Lord Low, I feel that I am repeating everything that everybody has said, but it is more and more difficult for each speaker not to do so in putting over the context and importance of this debate. Councils face a much tougher funding settlement than the NHS, councils’ eligibility criteria and funding levels vary and the public are confused about charges.
All of the above can lead to an imbalance and dysfunction between the health and social care systems, which need—or ought—to operate seamlessly if patients are to receive joined-up care and travel efficiently and safely from the health to the social care system. Dilnot tackles this in various ways, including by proposing standard eligibility criteria and the transferability of assessments between different local authorities. A number of noble Lords have referred to this, and the evidence is very clear that that can cause a great deal of distress for people.
Dilnot also talks about capping an individual's liability for charges. Again, other noble Lords, including my noble friend Lord Lipsey, have spoken in much more detail on the cost of that. My understanding is that this would require between £1.3 billion and £2.2 billion of central government funding, so that those individuals do not lose their home if, for example, they need continuing care. The report suggests that,
“the Government should review the scope for improving the integration of adult social care”,
and do so with other services involved,
“in the wider care and support system”.
Can the noble Earl please share with us his views on this and how he thinks that the Government, working together with all parties, can achieve this? The report continues:
“In particular, we believe it is important that there is improved integration of health and social care in order to deliver better outcomes for individuals and value for money from the state”.
I shall raise some points in this context. First, this is important because it will stop councils putting in place higher eligibility criteria than their neighbours and ensure a consistent standard of approach across the country. Transfer of assessments is an efficiency gain and will reduce the number of repeat assessments, as patients move to different authorities. My understanding from talking to people is that it would also remove much of the anxiety that people have in repeatedly having to go through those.
Secondly—this is also important, I suggest—it benefits individuals and families rather than the social care system. Although Dilnot says more funding is required for social care, simply replacing co-payments by individuals with government funding does not by itself, in my view, bring additional resources.
My third point, which is important for trusts such as mine in Barnet and Chase Farm, is that we need to work as an integrated health and social care system. That is something I have believed for the past five years as chair of that trust. I have urged it to happen and we still do not get there. If we do not do this, we will end up with people lying in expensive hospital beds who do not want or need to be there and who, through no fault of their own, prevent others being able to receive the treatment that they require, perhaps in that bed.
Integrated health and social care delivery does not necessarily mean single organisations providing health and social care. It can be achieved through joint commissioning, joint planning and, dare I suggest, pooled budgets. I would guess that suggestion is too radical for some people, but I believe it is true. That has been the aim of many Governments, and people have made many suggestions. The previous Government had this aim and worked hard to achieve much of it—other noble Lords have referred to many of our achievements in this area—but, because the health system, and I particularly include PCTs in that, have never worked closely enough with local authorities, we allowed the gap to remain into which many vulnerable and needy people fall. They are still falling into it now, and that is worsening.
I suggest that there are some gaps in Andrew Dilnot’s recommendations, particularly regarding where the extra funding is going to come from—which is a big question—and whether even what he recommends goes far enough. The story is not complete, and some of the issues still remain. However, as others have said, this is the most sensible set of proposals that we have seen for some time. They must be supported and worked on by all involved to ensure as seamless an approach to health and social care delivery as we possibly can for very often the most vulnerable of people whom we are dealing with. We must do this with urgency.
Lord Adebowale
My Lords, I support the debate initiated by the noble Baroness, Lady Pitkeathley. I congratulate her on ensuring that, at this critical time, social care is given the attention that it deserves. I should also declare an interest as CEO of the health and social care enterprise, Turning Point. I apologise in advance as I certainly do not match the expertise or the eloquence of the luminaries who are taking part in this important debate.
Like many others, I support the work of the Dilnot commission for creating a once-in-a-lifetime opportunity to resolve the anxiety created by the current position of those in need of social care. The noble Baroness, Lady Bakewell, has already mentioned that the deal between the individual and the state to provide care in older age is one of the pillars of this debate. Her position is a reasonable one to take, in expecting those with assets to contribute to the cost of care, although with a cap. The noble Baroness set out the argument with admirable clarity and I need not keep the House further by saying any more than that I support her arguments and those of the noble Lord, Lord Lipsey. Indeed, I am going to get a T-shirt made of his credible call to arms: “What do we want? A cap. When do we want it? Some time after the full response of the Government to the Dilnot report has been published”.
The noble Lord, Lord Desai, made the point that if you want cradle-to-grave care, you have to pay cradle-to-grave taxes—a point that would indeed make of the Minister a brave man if he were to agree to it during the course of this debate, which of course I invite him to do. No, Dilnot may not solve all the problems of the future, but it is a good place to start.
However, it is not just the fact that the general population are living longer that means we have to resolve this issue; it is also that those who have complex needs across substance misuse, mental health and learning disabilities live longer. Turning Point is working with many elderly people who have addictions, mental health challenges and learning disabilities. While I acknowledge Mr Dilnot’s recommendation that the cap should be zero for someone who enters adulthood with already established care and support needs, we need to do more.
My concern in the matter of adult social care is that we should more clearly acknowledge the needs of those people who do not fit the stereotype of the elderly in care—or, as someone in one of Turning Point’s services put it, “My worry is that everyone talks about care for the elderly as though everyone will be Mrs or Mr Marple. What about my mum who has been drinking, anxious and chaotic for the last 15 years?”.
It is essential that we ensure that the integration of health and social care is built into the design of social care policy. As the noble Baroness, Lady Barker, pointed out, this debate is not a break from the Health and Social Care Bill; it is mission-critical to its success. If people fall through the care gap, they either keep on falling or they land on the often very painful and expensive health spike. The critical need for new technologies and approaches, as mentioned by the noble Baroness, Lady Tyler, is essential. Where the money comes from needs to be considered in the context of the fact that cuts now will not always save money in the not too distant future.
I support the remarks of the noble Lord, Lord Rix—I said I would—with regard to people with learning disabilities. The fact is that desperate measures are being taken to resolve short-term challenges. Susie’s story is being repeated up and down the country. To use the noble Lord’s phrase, Susie has started to fall into the crack. We need national eligibility criteria as a first step in at least acknowledging that this crack exists.
This needs to be addressed alongside the point made by the noble Lord, Lord Pearson of Rannoch: surely in a modern society the idea of a postcode lottery of care is simply unacceptable. We need funding to follow the funded, along with their care passport. This policy supports the remarks of the noble Baroness, Lady Wilkins. If we do not have a right to care, regardless of location, we cannot have independent living. Why should those with care needs, however complex, not have the right to move and to be economically active, as many wish to be?
I, too, hear the disappointment of those who expected to be given the resources to create a bespoke pattern of care for themselves and who are being denied that opportunity. These people might create a solution to their complex needs, as opposed to being shoehorned into a convenient budget heading. Surely, the horror stories recounted by the noble Lord, Lord Low, might be addressed by empowering care customers to demand better care.
Policy on care for the elderly cannot be separated from other areas of government policy. We are aware that the Government’s White Paper on social care is being designed as we debate this matter. The paper must be cross-departmental in scope and cannot work in isolation from other policies, such as the Welfare Reform Bill, already mentioned by the noble Lord, Lord Low. The impact on this client group needs to be at the centre of our concerns.
I often state somewhere in nearly all my speeches that the future is decided by the undiscussable. All parties—the Labour Party and the Conservatives in coalition with the Lib Dems—have contributed to making social care discussable. The baton of leadership in this area has now passed to the coalition Government. As has been pointed out by the noble Baroness, Lady Tyler, and others, failure to grasp the nettle now in both funding and need will allow fear of need in old age and disability to dictate the future for us all.
Lord Warner
My Lords, I, too, congratulate my noble friend Lady Pitkeathley on securing this debate and on her excellent speech, after which I felt that I should like to make her an honorary member of the Dilnot commission. I also pay tribute to the coalition for setting it up. I declare my interest as a member of that commission, which was so ably chaired by Andrew Dilnot.
I do not have time this afternoon to go through all the issues that were raised in the commission’s report; I want to concentrate on a few key issues. First, I emphasise that we formulated our recommendations only after an exhaustive consultation with a very wide range of interests, encompassing commissioners and funders of care, providers across the different sectors, the financial services sector, carers and many others with experience and expertise in this area. These groups were united in the view that the system of funding long-term care needed urgent reform on a sustainable basis that had cross-party political support. This issue will require the leaders of the three parties to oversee a political concordat on a solution. It must not just be left to the health teams to sort out, particularly since, if I may say so, some of the current health-post occupants have form on this issue.
The other thing that was clear from our work was that, however much some people still hanker after a wholly tax-funded solution to the issue of funding, there is now widespread recognition that we must move forward on the basis of a partnership between the state and the private citizen in funding adult social care but—and it is a big “but”—with the state covering the cost for the poorest groups and those incurring high, unpredictable costs at the end of their lives. Only through a partnership of this kind will a sustainable system of mixed funding sources be built and new financial services products developed. The commission has created a wide measure of public agreement on this vexed issue, as the reception of our report on publication has demonstrated. I hope that the elected political class will not casually waste the consensus that has been created.
If I may put it as bluntly as this, the funding system for social care is bust. Despite the additional £2 billion announced by the Government in the previous spending review, for which they deserve huge credit, the King’s Fund estimates that there will be a funding gap of at least £1.2 billion by 2014. Despite their best efforts, local authorities are having to continue to tighten eligibility criteria and face more legal challenges for doing so.
We are seeing a growing number of reports of poor care of elderly people at home, in care homes and in hospitals. Too many of the staff undertaking this care are poorly trained, poorly paid and poorly supervised. A shrinking social care funding pot will inevitably produce more scandals and load pressure on expensive and inappropriate NHS in-patient care. That is the stark reality that we face as a country.
We have to start the process of increasing the size of the adult social care funding pot as a matter of urgency. This cannot all be done by implementing the Dilnot proposals but they are critical to showing commitment to building a more sustainable funding solution. If I may say so to the Government—I make this as a helpful contribution—there is nothing to stop them taking powers in the Health and Social Care Bill to implement Dilnot by regulations subject to affirmative resolution procedure. In the spirit of helpfulness for which I am famed, I have put down an amendment on these lines to test their appetite for a bit of decisive government. They could still complete their consultation on the details to be covered in regulations and the timing and cost of implementation. I suggest that this would give a clear signal to the sector and the public that change and improvement are going to happen.
I recognise that in this difficult financial climate the Government face difficult financial choices. I am sure the Minister will say that even just another 0.25 per cent of GDP—that is the cost of the Dilnot proposals at £1.7 billion—is difficult to find. However, it would be unlikely that all these costs would be incurred in one go, or immediately. I make another constructive suggestion. The Government could implement the proposals in stages of their own choosing. They could halve the cost by raising the cap to something like £65,000 rather than £35,000. I, for one, would be sympathetic to moving in that direction just to establish the principle of the cap, as my noble friend Lord Lipsey said.
While I am in radical mode, I bring one of the Health Secretary’s favourite subjects to the House’s attention—the so-called death tax. The reality is that many people in my generation have seen a remarkable increase in the value of our housing assets. Some would see these as windfall profits. There is no reason why some of those assets should not be collected after death to pay for care. Indeed, as we said in our report, some local authorities already do this but do not charge interest on the effective loan of the care costs. Why do the Government not accept our proposal to have a national scheme to allow more people to meet care costs from their estate if the property value is sufficient and up to a capped limit, and let local authorities charge interest at an agreed national rate? If we have a state student loan scheme, why cannot we have a state long-term care loan scheme? On that constructive note, I end by saying that if we do nothing about this, as the King’s Fund has shown, the cost of the current inadequate scheme for public funding of adult social care will rise from £6.7 billion in 2011 to £12.1 billion in 2026. That is a pretty expensive way of doing nothing.
Baroness Thornton
My Lords, I thank my noble friend Lady Pitkeathley for initiating this debate and pay tribute to Andrew Dilnot and his colleagues, including my noble friend Lord Warner, for the report which they produced in July this year. I am sorry that no Conservative Members on the Benches opposite are present to take part in this debate because the band of “usual suspects” to which reference has been made includes members of the Conservative Party. Their voices have been missed in this debate.
I am grateful to all noble Lords who have taken part in the debate for their insights. We felt that it was important that those on these Benches should initiate this debate as we seem to be at a standstill, or making slow progress, on many social care fronts, and in some areas are possibly moving backwards. That is a matter of grave concern. I echo the final words of my noble friend Lord Warner that we cannot afford not to do anything.
We can all agree that the need to secure a sustainable funding settlement for social care has never been more urgent, with local government and NHS finances under significant pressure and demand for services increasing as the population ages. We all agree that the NHS will never work properly without a sustainable approach to social care funding. The Dilnot report therefore offers a credible and costed way forward. We believe that the Government must move quickly to undertake detailed work on the report’s recommendations and honour their pledge to publish a White Paper, followed by legislation in 2012.
The adoption of the capped cost framework recommended by Dilnot offers a fairer and more transparent way of sharing the costs of care between the individual and the state. This will make it easier to tackle the deeper problem of underfunding that has led to the tighter rationing of services and escalating levels of unmet need, which have also been mentioned by several noble Lords, including my noble friends Lord Lipsey and Lord Warner, and the noble Lord, Lord Sutherland.
The much mentioned budget deficit is no reason for delay. The questions of affordability go beyond the current economic situation, and the additional public spending needed to fund the proposals, as we have noted, is less than 0.25 per cent of GDP. The social care system is widely regarded as inadequate, unfair and unsustainable. Under the current means-testing arrangements, anyone with assets of more than £23,250 must pay the full cost of their care. This leaves one in 10 people over 65 facing costs of more than £100,000. Eligibility criteria for council-funded services have been tightened whereby in most areas only those with very high needs now qualify for help.
The squeeze on local authority budgets over the next four years will widen the gap between needs and resources, despite the additional £2 billion announced in the spending review and the best intentions of all local authorities to protect social care. As my noble friend Lord Warner mentioned, the King’s Fund estimates that a funding gap of at least £1.2 billion could open up by 2014 unless all councils can achieve unlikely and unprecedented efficiency savings.
In addition, only this week, the report of the EHRC, led by the noble Baroness, Lady Greengross, shone a light on the too often invisible experiences of older people receiving care at home. It reveals a service stretched to the limit and older people denied the dignity and respect they deserve. It is shameful and unacceptable for elderly people to be left for hours without food and drink and not properly cleaned.
We know that the Dilnot report called for the improved integration of health and social care. Evidence suggests that this can improve outcomes for individuals and deliver cost savings. We know all this, and we have been talking about it not only for the past 40 years but in the past few days during the proceedings on the Health and Social Care Bill. However, despite notable successes, the progress has been limited, with less than 5 per cent of NHS and social care budgets being subject to joint arrangements and wide variations across different parts of the country in the quality and achievement of joint working. Indeed, part of our scrutiny and testing of the Health and Social Care Bill is whether it will make that situation better or worse.
Nor should we forget that Dilnot did not claim to have the whole answer to the challenges that we face. He claimed that his report was part of the process and addresses very importantly, among other things than those I have mentioned, the injustices of portability of care assessments. The Government’s response to the Law Commission report is most important and was mentioned by my noble friend Lady Wilkins and the noble Lord, Lord Pearson of Rannoch. The Minister should be able to respond that progress is being made on this and other matters.
The proposals for carers are also important in the Dilnot report, as is the establishment of a national source of advice. The commission recommends that better advice should be complemented with a national awareness campaign on the cost of care and a new funding system. I look for that to be part of the Government’s response to this report. Indeed, the assessment and provision of services will be available using the same system as for older people, but the funding cap will work differently for younger adults and the report sets out how this might be achieved.
We must not forget that the need for timely, effective social care not only involves the long-term disabled, those in old age and people with long-term conditions. I thank Macmillan for its briefing and for reminding us that integration across health and social care is also vital in helping to meet the practical, emotional and financial needs of people living with cancer and those reaching the end of their lives. Macmillan welcomes the findings of the Dilnot commission, as it believes that the report also represents the foundation for a fairer funding system for social care.
I have mentioned all the things on which we agree, and I have done so quite deliberately. We all agree that we urgently need a long-term solution for the funding of social care, and that is why Labour offered cross-party talks on this issue from the outset. I urge the Government to get round the table so that we can tackle the care crisis and find a fair and sustainable solution for the future.
I hope that what I have to say now may help the scepticism of the noble Baroness, Lady Barker. Indeed, when I explain how we would like to proceed, I hope that she will nudge her own Government into conceding on this and making faster progress than they have done so far.
As the Minister will recall, when the Dilnot report was launched in early July, my right honourable friend the leader of the Labour Party welcomed it and offered cross-party talks on the future of social care, using the report of the Commission on Funding of Care and Support as a stepping stone to secure a better, fairer system of care for older people and the disabled. I understand that there was an exchange of letters in September and October, and most recently a letter to the Secretary of State dated 8 November.
There are some outstanding questions that the Government need to address in their commitment to this process, and I should be grateful if the Minister would indicate to the House whether progress on them has been made. There are four points. First, securing agreement on funding and implementing the Dilnot proposals clearly goes beyond the remit of the Department of Health and the Secretary of State for Health—it should involve all the departments affected. Given the public spending implications of both the Dilnot proposals and the rising costs and needs, the engagement of the Treasury in this process is crucial. Does the Minister agree with that, and is there agreement that that is how we need to proceed?
Secondly, the Government should nominate an independent person to chair the talks. Again, does the Minister agree with that, and when might it happen? Thirdly, we would like to see established an independent secretariat with the specialist expertise to provide equal access to the negotiations as required. Fourthly, there should be a party leaders’ meeting to agree a clear timetable to demonstrate that we are all equally and seriously committed to talks at the highest level.
Those commitments do not stand in the way of the process: rather, they will facilitate it. I put them on the record now, as they have been put to the Secretary of State for Health, and say that I think it would help the House and the process if the Minister would take the opportunity to respond on this matter. Finally, I thank all noble Lords for taking part in the debate.
Baroness Barker
I thank the noble Baroness very much—I did not know about the correspondence. However, can she explain why an independent chair is necessary for the process? I understand the other three points but I do not understand that one. What is the reason?
Baroness Thornton
We think that having an independent chair is a sensible way to move forward. We have not suggested that we should appoint the chair; we have asked the Government to suggest the name of the person who might chair those talks. I do not think that any of those things is a barrier to progress in this matter.
Finally, we on these Benches think that this is one of the most important issues facing our society today. It is one that we cannot neglect or leave in the long grass, and it is one that we are determined to resolve.
Earl Howe
My Lords, I thank the noble Baroness, Lady Pitkeathley, for calling this debate on a topic that I know is not only close to her heart, but close to the hearts of all those who have spoken, as well as mine. This is also a very well timed debate. It will helpfully feed in to the Government’s consideration of these extremely important matters.
Before I talk about reform, I would like to respond to some of the points that have been made here and in another place about the current funding situation for social care. In these challenging economic times, there is pressure on all areas of government spending. We, as a Government, have had to set our priorities and make some difficult decisions. One of those decisions has been to protect social care funding. In the last spending review settlement, we provided an extra £7.2 billion over the four years to 2015 to protect social care, partly through councils and partly through the NHS.
That additional funding will help to alleviate pressures on the adult social care system in the context of a challenging overall funding settlement for local government. We believe that this settlement will protect services, and our view on this is supported by independent research. The King’s Fund has said in its report, Social Care Funding and the NHS, that central government have put enough money in to protect adult social care services. But times are tough and I am not going to pretend otherwise. Although nationally, I can present a relatively positive picture, there are areas where cuts have been made to front-line adult social care services that are really beginning to bite and that must concern all of us.
I turn now to the reform of social care and what needs to happen in the future to improve the way in which we, as a society, support people with care needs and their families. The noble Baroness, Lady Pitkeathley, set out the position extremely well. In this country, our population is ageing as people live longer. This is to be celebrated and not seen as a burden. My noble friend Lady Tyler reminded us of some of the statistics. Last year, we had 13,000 centenarians. I saw that one of them, Fauja Singh from London, recently completed the Toronto marathon, so I hope that that will be an example to many. Most people who are 65 now will live well into their 80s and the number of over-85s is set to double between now and 2026. These are all things that we, as a country, should be proud of, but I can only echo the noble Lord, Lord Low, and the noble Baroness, Lady Wall, in saying that it is also a fact that, as we live longer, we will have a greater need for social care to ensure that we can continue to lead independent and fulfilling lives.
Demand will rise. This is one of the uncomfortable truths mentioned by the noble Lord, Lord Sutherland. We have an outdated social care system that in some respects has more in common with the principles of 19th-century poor law than it does with the needs of people today and as demand for social care increases, the cracks in this system grow ever wider.
The noble Baroness, Lady Pitkeathley, invited me to signal how strongly the Government feel about this. Our belief is that we urgently need reform, both to the way in which social care is funded and to the legal framework that supports it. The noble Baroness, Lady Bakewell, was absolutely right: many people currently think that when they need social care it will be provided free, just like the NHS. Unfortunately, for most people, this is not true, a fact that people often discover only when they, or their relatives, need care. Many people without direct experience of social care are not aware of the unfairness of the current system and the urgent need to modernise it. We need people to realise that they face a huge financial risk and that this can be met only by reforming the system and by individuals taking greater responsibility for planning and preparing to meet some of these costs.
Social care costs are unpredictable and can be very high. Although a quarter of all those currently aged 65 will not need any significant social care, one in 10 will have costs in excess of £100,000. This can be catastrophic for people and their families. Andrew Dilnot’s report proposes one way in which the problem can be addressed. It is an excellent piece of work and a significant contribution to the debate on social care funding.
I listened with great care to all noble Lords. I will mention the different themes singled out for analysis and comment by the noble Lords, Lord Rix, Lord Adebowale and Lord Low. We now need all those involved with social care, and all sides of the political spectrum, both in your Lordships' House and in another place, to engage in an open and honest debate about the priorities and trade-offs in the area of long-term social care. The engagement on social care that the Government launched in September will provide a forum for the debate and will inform the White Paper and progress report that we intend to publish next April. This will set out our response to Andrew Dilnot's recommendations on funding.
I say to the noble Baroness, Lady Thornton, and to all noble Lords, that this is not an issue that we will shy away from. More than one noble Lord suggested that the Government were, in common parlance, dragging their feet. That is absolutely not the case; social care reform remains a priority for us and we recognise that the current system is unsustainable. However, the matter is complex and we will have to answer a number of related questions. The Dilnot commission's recommendations have significant costs attached to them. As we said in our response to its report, we will need to consider that aspect carefully against other funding priorities and calls on constrained resources. We also set out six tests that we will need to consider in coming to a judgment on the recommendations. Before we set out our plans for major reform of social care, we want to talk to stakeholders about the priorities for reform. That is why we launched the Caring for our Future exercise on 15 September.
The noble Lord, Lord Sutherland, was sceptical about the need for further consultation. He is of course absolutely right that much work has already been done in this area. The Dilnot report builds very capably on that foundation. However, I put it to him that it is also right that we engage with stakeholders on the priorities for reform in the current economic climate. Our commitment to legislate at the earliest opportunity is undiminished.
The noble Baroness, Lady Pitkeathley, asked whether the Government in their White Paper will respond to the Law Commission. The answer is yes. We have committed to legislate for adult social care at the earliest opportunity and we will need to take the Law Commission report as our foundation for that work.
The noble Lord, Lord Desai, took us to the subject of the cap and asked whether we felt that it should be index linked. The Dilnot commission recommended that it should be. The range suggested for the cap was between £25,000 and £50,000. It recommended that ideally the figure should be around £35,000. We are looking very constructively at the suggestion of index linking.
The noble Lord, Lord Lipsey, suggested that I had “done a Baroness Trumpington” in my reply to his question about the cap. I am sorry that he thought that: it is not my style, as I hope he knows. The commission’s report set out detailed costings in its evidence and analysis. These included costs for different levels of cap. The level of the cap is an important variable. We are considering the implications of the different levels. As part of the Caring for our Future engagement, the department discussed the cap with the financial services sector. In particular, we discussed the principle of a considerably higher cap than Dilnot recommended. A key conclusion of the discussions, which we published on the engagement website, was that a high cap such as £100,000 would seem unobtainable to people and would not stimulate the development of financial services.
That brings us to the question posed by my noble friend Lady Barker of whether we are looking at the possibility of improving the equity release market. The engagement is exploring the role for financial services in helping people with care costs. That will include any improvements in equity release that we can see for the future. I do not agree with the implication of the noble Lord, Lord Desai, that equity release is not a potentially useful mechanism for us to explore.
The noble Lord, Lord Warner, put forward his constructive view that the Government might consider setting up a loan scheme so that people can use housing wealth to pay for care. We are aware of the commission’s recommendation for a universal deferred payment scheme, and we have been considering it along with other recommendations as part of the engagement.
My noble friend Lady Barker indicated that assessment of needs has to be independent of the financial assessment. I agree that that is an important issue. The Law Commission’s recommendations make clear provision for that. Following on from that, the noble Baroness, Lady Pitkeathley, talked about the need for information and advice when people use care and said that that has to improve, which was again a theme picked up by Dilnot. We completely agree that information and advice are extremely important. Our publication A Vision for Adult Social Care, which came out a year ago, made it clear that people should have good information. The Law Commission has made recommendations in this area, as I am sure the noble Baroness knows. We are again looking very seriously at this. It is a major issue coming out of the engagement.
I say to the noble Baroness, Lady Wilkins, that we completely agree that disabled people need to have choice and control to live independently. The Government’s A Vision for Adult Social Care makes clear our commitment to more personalised support. We want to see greater rollout of personal budgets that give people choice, control and independence. I think it is unrealistic to believe that we can do that sooner than around 2013, but we are working hard on it.
The noble Lords, Lord Pearson of Rannoch and Lord Adebowale, and the noble Baroness, Lady Wilkins, spoke powerfully about the idea of portability. We recognise that enabling portability of assessment could mean that people moving to a new area and the professionals supporting them would not have to go through unnecessary multiple assessments of their needs. This can be particularly important for people who want to maintain employment and pursue career opportunities. The Government support this in principle. We are considering the practicalities in the light of the recommendations of the Law Commission and the commission on the funding of care and support. We have recently launched an engagement process with stakeholders to bring together the recommendations of these two commissions, as I have mentioned, and to consider what our priorities should be. The White Paper will set out our conclusions. I think it would be wrong at this stage for me to pre-empt that process, but I take on board the points that were made about portable care packages rather than simply assessments.
Lord Pearson of Rannoch
When the Government go through this process, for which I am sure all of us are very grateful, will they bear in mind the cost savings which would emerge from portability, as we are looking for cost savings in this area?
Earl Howe
I am sure that is a factor that should be taken fully into account. If I can tell the noble Lord more about that when I return to the department, I shall be very pleased to do so.
The noble Lord, Lord Warner, whom I thank for his work on the Dilnot commission, talked about portability and flagged his intention to debate this when we go back into Committee on the Health and Social Care Bill. As I have just indicated, we intend to signal our response to the Law Commission’s report and the Dilnot commission in this area when we publish our White Paper. I feel that the Bill that we are debating in Committee at the moment is not the right vehicle into which to shoehorn a recommendation like this. It needs the right legislative vehicle. Nevertheless, I am not shying away from the kind of debate that the noble Lord signalled he would introduce.
Integrated care has been mentioned by a number of noble Lords, including my noble friend Lady Tyler and the noble Baroness, Lady Wall. We recognise the importance of integrated working between the NHS, social care and public health, and the benefits that this can have for individuals and their families. It is important for good outcomes and for achieving value for money, as a number of noble Lords have indicated. We have debated this theme more than once during Committee stage of the Health and Social Care Bill. We want to ensure that local authorities and NHS bodies have the flexibility that they need to work together at a local level. The health Bill will ensure that key flexibilities, such as support for pooled budgets under Section 75 of the Health Act 2006, are translated into the reformed system.
My noble friend Lady Tyler referred to telecare, which is an exciting area. The previous Government instigated the largest randomised control trial of telehealth and telecare anywhere in the world—the whole system demonstrator project—which will provide the gold standard evidence for which everyone is looking. It has been one of the most complex studies ever undertaken by the department but the early results are very promising. Evaluation is ongoing but we are nearly ready to publish headlines that will help decision-makers here and across the world.
My noble friend also spoke about the need to ensure that we have a high quality social care workforce. Of course, she is right. The department is spending nearly £300 million on the training and development of the social care workforce this year. The ONS labour force survey shows that 67 per cent of people working as care assistants and home carers have a level 2 qualification or above. Data show a steadily improving picture with regard to the number of people who hold level 2 or above qualifications. In the current financial year, the department is providing approximately £28 million of funding to Skills4Care for the training and development of the adult social care workforce.
My noble friend Lady Tyler once again referred to the importance of supporting carers. We fully agree with her that the carers’ strategy refresh document prioritises future actions to ensure the best possible outcomes for carers and those they support. We have made available an additional £400 million to the NHS over four years to provide carers with breaks from their caring responsibilities to sustain them in their caring role.
A number of noble Lords have expressed the view that a broad political consensus is emerging on long-term care reform. I genuinely hope that that is so. I can say to the noble Baroness, Lady Thornton, who put the question about cross-party dialogue, that we remain committed to a process of dialogue with the Official Opposition, given the importance of this issue, which is why the Secretary of State wrote to the shadow Secretary of State for Health inviting him in his new role to continue in this dialogue.
As she mentioned, the Secretary of State has received a response from the shadow Health Secretary and the shadow Minister for Care Services stating their commitment and intention to continue with the process. We very much want to seek to build consensus around an issue as important as this. We will of course ensure that sufficient resources are provided to support talks. But, as the noble Baroness will recognise, Ministers must remain ultimately responsible for the decisions that we take. She also mentioned the letter that my right honourable friend wrote to Andy Burnham on 8 November. On the same day, a letter was received from Andy Burnham and Liz Kendall. It outlined their commitment to resuming talks, which we welcome. We are considering the questions and conditions in that letter. I hope that my right honourable friend will be in a position to reply formally very soon.
Of course, there are a number of other priorities for social care. We need to improve the quality of care that people experience to ensure that those with care needs have the best possible outcomes. Services need to be more personalised, more people need more choice about their care so that social care is designed around the needs and wants of the individual, not around the convenience of systems, and we need to push for better integration, as noble Lords have indicated. We need to support more prevention by early intervention so that we can avoid people deteriorating unnecessarily and allow them to remain independent as long as possible, and we need to create a more diverse and responsive care market so that people can buy the services that best meet their needs. All these are our priorities. I hope that the engagement we are now in will find the solutions to those. This is an issue for our times as our society gets older. How we look after people with care needs will become ever more important. We now have an opportunity to get this right, and we must not miss it.
Baroness Pitkeathley
My Lords, we have seen great enthusiasm for the Dilnot Commission in the course of this excellent debate while acknowledging that it is not the whole answer, and while acknowledging its shortcomings. Even my noble friend Lord Desai admitted that it is the best chance we have. However, if the objective of the debate was to save Dilnot, as my noble friend Lord Lipsey proposed, I am not sure we can be confident that we have succeeded, judging by the Minister’s response. Even so, I know that as ever the House will be grateful to the noble Earl for the way in which he has responded and, indeed, confronted some of those inconvenient truths about which the noble Lord, Lord Sutherland, reminded us.
My noble friend Lord Warner robustly reminded us that doing nothing is not an option. As ever, the wisdom and expertise shown around the Chamber has been extraordinary, and there has been universal agreement that we need a lasting settlement based on a partnership between the individual and the state. We have also seen that we must have honesty and, above all, we must have political consensus, which will require a degree of bravery. I know that the usual suspects who have taken part in the debate—these guys, as we all are—will continue to apply pressure, as well as offer advice and consultation to stiffen the resolve of the Government and the Opposition to be brave, to bite the bullet and make this a watershed moment in the history of social care by responding to the call to arms. I thank all noble Lords who have taken part in this inspiring debate.
Renewable Heat Incentive Scheme Regulations 2011
(12 years, 11 months ago)
Lords ChamberRead Full debate Read Hansard Text
Baroness Stowell of Beeston
That the draft Regulations laid before the House on 25 October be approved.
Relevant documents: 31st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 22 November.
Voluntary Sector Funding
(12 years, 11 months ago)
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The Lord Bishop of Ripon and Leeds
To ask Her Majesty’s Government what action they will take to support the work of publicly funded voluntary groups in deprived areas in the light of cuts in local authority budgets.
The Lord Bishop of Ripon and Leeds
My Lords, the voluntary sector in our society is effective, innovative and massively underfunded. The other day I was standing in a Leeds street discussing with community leaders why there were no riots or disturbances in the city in August this year. There was a good deal of sensible discussion about the key points of what had happened in the summer. But the point upon which people agreed was that the immediate presence on those restless evenings of the youth workers who mingled with young people gave expression to their authority and calmed nerves. Some were directly employed by the city, but more were members of a variety of organisations, many of them publicly funded and many of them faith-based, which run or have run youth work within the city. One of the community leaders said, “If this happens next summer, there won’t be the youth workers to provide confidence for the young people of Leeds”.
Those issues are key to a discussion of the work of voluntary groups in deprived areas. So much work is done by this collaboration between local authorities and voluntary organisations. I am sure that the Minister, when he replies to the question, will want to affirm that work. Yet, there is now such a massive threat to so much of it. I take as an example Thrive West Midlands, which is a faith-based infrastructure organisation in Birmingham founded by the Church Urban Fund, which has worked with the city to obtain continued funding for daycare centres for the elderly. That fits so well with the social care debate that we have just been having.
There has been some success, but, for example, the Weoley Castle Community Project has had to pull out of direct daycare making two staff members redundant because of a failure of funding. The impact on the elderly in situations such as that is immense. Individuals suffer and those individuals are often among our most deprived citizens. I know that we face cuts, but it should be for those of us who can afford it to bear the weight of those cuts; not those under most pressure already. There would be no great loss if the dustbins of our comparatively well-resourced suburb were emptied fortnightly rather than weekly. Many of us could afford higher council taxes, yet the pressure is always on the weaker members of our society.
To its credit, Manchester City Council has tried to ring-fence homeless support, but the Booth Centre for the homeless there has had a £40,000 cut from DCLG which means that it is unable to bear the burden of homeless people coming there because of the closure of other advice centres.
Leeds has a good record of collaboration with the voluntary sector through Third Sector Leeds and I pay tribute to the collaboration that we try to express in the city. Yet we have seen cuts, for example, to English as a second or other language provision, which helps people to integrate more fully into our exciting multiethnic society. This has made it all the more difficult for asylum seekers and refugees to be served and helped as we try to support them through charities such as Meeting Point in Armley. That means that the volunteer provision is often unused because we cannot find premises or expenses. There are volunteers who would like to be involved. It is becoming true that some of them cannot afford to be so.
The examples could go on, and I know that the Minister, as a good Yorkshire inhabitant, will want to respond to the particular pressures that we have in the north. Hope Housing in Bradford writes of the increase in clients becoming homeless because of higher rents in the city. The Association of Chief Executives of Voluntary Organisations points to the probable closure of Oxfordshire Children and Voluntary Youth Service, which has placed 3,100 young people in volunteering positions. We know that closures such as those mean a waste of talent, energy and commitment and yet we have not yet found a way to circumvent it. It is not impossible. Philanthropy and generosity have remained remarkably buoyant during the financial squeeze. There could be tax encouragement to make that philanthropy more effective, but philanthropy is not enough. There needs to be some specific ring-fencing of government money, public money, for areas such as mental health, where charities struggle as mental health issues grow, with increasing homelessness and fear. There need to be incentives for money to be directed to areas of most need, and to those organisations which use most volunteers. Earlier in the day, we thought of how there could be incentives for firms which have most apprentices as they seek to provide facilities for the Government. There could be a parallel in direct incentives for those who use volunteers. It is no use exhorting local authorities and then squeezing the amounts they have to work with in the voluntary sector.
There needs to be a greater fairness in the allocation of local authority funds. It is those under most pressure which face the most substantial cuts. So I looked at the authorities with the maximum cut of 8.8 per cent in 2011-12. I began to feel that there might be a personal vendetta in this, because they were most of the places in which I have lived and worked—places like Knowsley, St Helens, Doncaster and Manchester—whereas those with the small cuts are the places where I go on holiday: Dorset, Rutland or West Sussex. The most challenged include some London boroughs: Hackney and Tower Hamlets. For the most part, however, the cuts to local authority funding represent a significant transfer of money from the north to the south. That can only widen the north-south divide which plagues our economics, and which I am quite sure the Minister regrets.
There are a variety of ways forward. I have tried to suggest some of the possibilities. I look forward to hearing proposals from others who speak, and to hearing which of those directions the Government will follow in fulfilling their desire to encourage both volunteering and voluntary groups in their contribution to our society.
Lord Rennard
My Lords, it is six months since I was in the very beautiful cathedral of Ripon, speaking to the synod of the diocese of Ripon and Leeds in its debate on the big society and the role of the church. I welcome the debate this afternoon. In many ways, it will mirror that debate last June, which can still be found on the very good diocese website.
The discussion in the cathedral that morning actually reminded me of rather more political gatherings in many ways, as it revolved around what first seemed to be simply a technical amendment. The main motion said:
“This Synod welcomes the opportunities for the Church's contribution to the common good represented by the Big Society".
The amendment that was carried changed this wording to say:
“This Synod recognizes the opportunities for the Church's contribution to the common good represented by the Big Society".
The difference between those two positions reflects a dilemma faced by many people, communities and voluntary organisations. This is a dilemma about, on one hand, the principles of the big society, which some of us have always called community politics and some may call the good society, and, on the other hand, the practicalities of recognising the need at present to reduce government expenditure.
My invitation to speak at the cathedral arose from the fact that earlier this year I had been asked by the Association of Chief Executives of Voluntary Organisations to chair a commission looking at the role of the voluntary sector in the big society. By the time we reported in May, I had met more than 60 charities and voluntary organisations working in many different parts of this country.
I would say that all of them and indeed all the members of the commission—they came from different backgrounds in the voluntary sector, all the major parties and the church—agreed principles about the big society that are relevant to our debate this afternoon. They all recognised that power and responsibility are shifting in our society; that individuals and communities now have more aspiration, power and capacity to take decisions and solve problems themselves; and that we all need to take greater responsibility for ourselves, our communities and each other. However, just as these principles were commonly agreed, so were the dangers clearly seen that cuts in local council budgets risk undermining many of these principles.
Although the charities and voluntary organisations that I met were very realistic about the country’s economic problems, many of them feared genuinely that they would suffer disproportionately from cutbacks and that this would particularly affect their work in many of the most deprived areas of this country where their efforts are most needed. This resulted in a debate in our commission about how far local authorities could or should be directed to provide services directly themselves or via the voluntary sector. We concluded that it was not compatible with localism to direct local councillors in this way, but we all agreed on the need for much greater transparency in the way in which local councils decide to provide services directly or via alternatives involving the voluntary sector, and how they calculate the costs and benefits of these different approaches.
Frequently, we came across problems arising from government expenditure decisions being taken at different levels and based on far too narrow a consideration of the costs and benefits to that particular part of government in isolation—what they often call a “silo” mentality. We also saw the application very often of too much short-term consideration, which prevented proper evaluation being made that might otherwise have justified some of the expenditure that was being reduced.
Early on in my role as chair of the big society commission, I was challenged on the “Today” programme about whether promoting big society values and the role of the voluntary sector in general was simply a question of spending money and that doing that was not compatible with making the savings in public expenditure that everyone knows are presently required. As ever in my experience, it is always to rebut a charge with a clear and specific example. I was able to quote in the programme the case of what was then Age Concern in south Staffordshire, an example of where funding a voluntary organisation actually led to savings in public expenditure. It was working with seven hospitals to look after older people prior to admission and again as soon as they were ready to come out. By helping to prepare these older people for going into hospital, and helping to support them at the earliest possible time for returning home, their stays in hospital were of a much shorter duration, and of course they were much happier to be in their own homes for more of the time.
The funding to help 3,000 people a year in this way was £500,000 per year, but it saved the NHS around £3 million per year, as these people were in hospital for a much shorter period. It saved £6 for every £1 spent. However, shortly after the programme, I was asked not to use the example again because the £500,000 funding had just been cut—an example of short-termism and the silo mentality. That approach in how decisions over public expenditure are taken needs to change.
The Association of Chief Executives of Voluntary Organisations, known as ACEVO, has given me many similar examples, not all of them based on local authority cutbacks but where the same issues arise. When I was chairing the commission, I spoke to many charities and voluntary organisations that needed professional support and help with things such as the cost of maintaining premises. They explained to me that these organisations could exist only with some significant help from the public purse, especially in low-income areas, but by undertaking the work that they did they could often cause significant savings to be made in the long run to the public purse. The common problem, they explained, was that the haste in which the Department for Communities and Local Government had agreed cuts in local authority budgets meant that some local authorities were able to make their cuts in the required time only by making them disproportionately at the expense of the voluntary sector, and probably also at the cost of additional expenditure to the public purse in future. Of course, some but by no means all local authorities saw the voluntary sector as a softer target in any event.
The Government’s transitional fund helped that problem to some degree and was a welcome £100 million for a year, but it was for one year only and against cuts that the NCVO estimates at about £3 billion over four years. One of the projects that I visited, the Liverpool Lighthouse project, benefited from the transitional funding. It raised substantial funds itself but also explained that it was simply not realistic to expect it to continue all its activities so successfully in future without continued significant public support. I saw for myself how it was succeeding in helping to educate young people who would otherwise be skipping school, often beginning a life of crime, at great expense to their neighbourhood and to all of us if they follow routes leading to imprisonment. The project was helping to get people off drugs and out of criminal activity through volunteering so that they had at least the prospect of gainful employment. However, the long-term value of such projects is not properly factored into how public expenditure decisions are made at present.
In our commission report, Powerful People, Responsible Society, we called for much greater transparency in how local authorities fund the voluntary sector and how they decide on the best long-term providers of services. Many local authorities are very sympathetic to these points; they want to see a rapid and massive rollout of community budgeting to reduce the problems of allocating expenditure by one part of government without taking into account the effect on other parts. Voluntary organisations always want the Government to help them to co-operate better by sharing services without the unfair imposition of VAT bills if they cross-charge services to each other and try to get best value for money. Above all, there needs to be much greater respect between government at all levels and the voluntary sector.
The compact between the government and the voluntary sector was refreshed at the end of last year. It will help and it must be fully implemented next year, and local authorities should all adopt the recent best-value guidance setting out the reasonable expectations that the voluntary sector can expect in its dealings with them. I hope that the impact of cuts to the voluntary sector will be closely monitored, especially in deprived areas, and that this subject is one to which we will return in future.
The Lord Bishop of Derby
My Lords, this is a very vital topic. I echo a lot of what the noble Lord, Lord Rennard, said and offer the Minister a perspective from the grass roots. I have been talking to colleagues I work with in deprived areas in Derbyshire and, especially, in the city of Derby. We all recognise and accept the need for what we call cuts—a reduction in expenditure—but the plight of voluntary groups funded by local authorities is a very powerful litmus test of how these cuts might be made and what the priority should be around public funding of social welfare.
The Government have called us to have this vision of the big society, in which we all co-operate, so that the capacity that we lose through the cuts can be compensated for by an increase in voluntary endeavour and activity. That is a very great challenge, especially to those in churches and the voluntary sectors. But let me offer some perspectives from those trying to rise to that challenge.
First, many of my colleagues say that the voluntary sector is taking a disproportionate cut of the reductions in expenditure that local authorities are making. In Derby this year, community grants by the local authority are to be reduced by one-third, which is a massive cut in the voluntary sector investment. The voluntary sector generates enormous resources. I saw a statistic the other day that the Church of England contributes something like 23 million hours of voluntary work a month to the working of our society.
However, the reality is that, beneath that, much voluntary endeavour is small-scale, fragile and vulnerable. It therefore needs to have a bigger frame and a set of priorities to help the volunteers and those offering the funding make the right decisions, because my colleagues tell me that at the moment energy is going into survival rather than serving the people who the organisation was set up to serve. They say that we are having cuts in public sector spending and in the voluntary sector but that there is almost no evidence of private investment. The result is what one of them calls a feeding frenzy for funds. The experience is that the lottery is becoming the arbiter of social welfare and making big decisions about that. I do not think that it was set up for that. Who should be making decisions about priorities in social welfare?
I welcome, as do my colleagues, the response of the Government in a lot of commendable initiatives on red tape, a national citizen service, community organisers, best value for local authorities and the notion of the compact but, on the ground, it feels as if all those things are calling energies into process and inward-looking negotiation. They are taking energy away from engaging with the need of people on the street, just at the time when the capacity of the voluntary sector needs to increase.
This is having two results. First, people are becoming frustrated. This week in Derby, Action for Blind People demonstrated in the streets and collected petition signatures against the cut in its local authority funding. These were not disaffected youths in Leeds on a Saturday night in the summer. It was Action for Blind People—a main-line charitable enterprise, using local authority funding, whose people are frustrated and angry at the dilemma they are suddenly thrown into, when all their good work looks like receding because of the way that the cuts are being managed. They are saying that volunteers are not being encouraged but being alienated. That is the message which I pick up from people working in deprived areas. The volunteers who we want to encourage to populate the big society are, at the moment, not being encouraged but being alienated—not just by the size of the cuts but by the higgledy-piggledyness of it, really.
The other factor is, of course, that need is increasing rapidly. Some of your Lordships will have seen in the Times this week some articles about human trafficking. Our church is involved with a project called Restore in inner-city Derby, which works with prostitutes. In recent months, besides working with girls who are on the streets, there is an increasing challenge to work with the issue of trafficking, which is coming into our city in a very disturbing way. This requires greater resource and greater engagement—and the kind of policy view, as the Times draws our attention to, which we must look to Government and local government to have. We cannot just leave volunteers to increase their capacity against these odds.
What can we do? There is a primary responsibility on those of us in the voluntary sector to step up and make our contribution, as my right reverend friend the Bishop of Ripon and Leeds said. In our own diocese in Derby, we are sponsoring a movement called “growing community” in the city of Derby. We have taken an initiative to bring together faith communities, voluntary groups and the local authority to see how we can create a new kind of infrastructure to care for people in need in our cities, given the new circumstances. We are looking for a partnership and giving priority to jobs, micro-industries, self-support schemes, food banks, the homeless and the poorly housed. My point, when I ask what the Government can do if we are trying to get organised like that, is to strengthen our arm on priorities.
The Government say that they have a commitment, which I commend, to a fair and equal society. The question is: what does fair and equal mean? Does it mean more than our great concern today with human rights? I suggest, and I ask the Minister to comment on this, that it also means a concern, especially for people in deprived areas, with what we might call “social rights”—rights to access to jobs, housing and an environment that is secure and not threatening.
In the big picture, when we use the word “government”, both nationally and locally, we have to do some hard thinking about priorities and the rights that we desire people to have to flourish in their human lives. That would provide a framework of context within which the groups could make a contribution and get organised. Small and vulnerable though we are, if there were a framework to direct our energies and priorities and to encourage local authorities to have public strategies for social welfare, then we would know what we were trying to achieve and how we could all work together.
Best value, which is important and which the Government rightly invite us to inhabit, is not simply an audit of processes and their effectiveness; it is about the markers of making a difference in the lives of people in our most deprived communities. Surely the markers should not just be decided by agencies like the lottery—there ought to be a richer and more thought-out framework and sense of priorities and values that the Government encourage, and that local authorities negotiate with partners both voluntary and private in their areas. If there were clearer priorities and a sense of direction, we might get more private investment and local authorities might be able to be shown to be more accountable for what they were doing, rather than getting criticism for making cuts but not being seen to offer many positive alternatives.
Lord Wood of Anfield
My Lords, I thank the right reverend Prelate the Bishop of Ripon and Leeds for giving the House the chance to debate the crucial issue of the work of the voluntary sector in our most deprived communities and how that work is being affected by the economic crisis and the Government’s cuts to local authority budgets. Debates such as this shine a light on the plight of those whose voices do not often get heard, and remind us of our duty to show, as the Dean of Norwich said on the 20th anniversary of the landmark Faith in the City report, that our common concerns can be harnessed in the common good.
We all know the vital work that is done by voluntary and community organisations, especially in our most deprived communities. It is work that becomes more, not less, important in difficult economic times such as this, when large-scale cutbacks in funding combine with increased demand among the most vulnerable for the care and community services that these organisations offer. No doubt the Minister will refer in his reply to the need for the voluntary sector to take its fair share of pain in the spending cuts that the current Government are prioritising. I agree. The question is not whether, at a time of fiscal pressure, the voluntary sector should somehow be given wholesale protection from cuts. Rather, the question is whether the cuts meet three eminently reasonable criteria: are they proportionate, are they distributed fairly and are they being made intelligently with regard to the long-run viability of the organisations affected?
I shall start with the scale and proportionality of cuts. About one-third of the voluntary sector’s income of £35 billion a year comes from statutory sources. Survey work has shown that the maximum cut to a local authority in 2011, a figure referred to earlier, was just under 9 per cent of income. However, the average for members of ACEVO was 23 per cent of their funding. For smaller organisations it was higher, at 27 per cent of their income. Activities in the voluntary sector that have been especially badly hit are children and youth charities, services for the elderly and disabled, homelessness and housing charities. For some organisations, the cuts have been both disproportionate and catastrophic, a famous case being Oxfordshire Children and Voluntary Youth Services, hit by 90 per cent cuts in its funding and intending to close in March 2012. If we are all in it together, we should all be in it together in roughly the same way—a way that is proportionate to our means and to the importance of activities to our communities and country. The scale of the cuts to the voluntary sector and the absence of proportionality should give us all real cause for concern.
What about the distribution of cuts and, in particular, their effect on deprived communities? Again, it is becoming clear from survey evidence, imperfect as it may be, that the cuts are having more of an impact on organisations in deprived areas than on those in other areas. First, we know that local authority areas where deprivation is higher are experiencing larger cuts in funding, partly to do with the way that area-based grants work. Secondly, since voluntary sector organisations are more likely to be based in these areas—because activity rightly follows need and demand—such organisations are more likely to experience cuts in government funding. Their dependence on state support, compared to other sources of support, means that their activities will be hit more savagely than those of organisations in better-off areas. The result of this variation is that there is now little doubt that the most vulnerable are being hit the hardest. As Dame Clare Tickell, chief executive of Action for Children, said just last month:
“The scale and pace of change, alongside the cutbacks that we have seen over the past year, are unprecedented. We are now seeing the impact in communities across the country—and fear it could result in severe and long-lasting damage to the most vulnerable children and their families as they struggle to cope … We are at a tipping point”.
What about the third criterion, of sensible cuts? Are they being made intelligently and with regard to the long-term viability of the organisations affected? We know that the cuts have cut into the core activities of the voluntary sector. A third of those surveyed reported having to cut the services that they provide. More than 40 per cent have had to make staff redundant.
As the noble Lord, Lord Rennard, has reminded us, given that cuts of this magnitude are under way, the case for a strategic approach to managing their implementation and impact becomes more compelling for a number of reasons. Many charities have no reserves at all to fall back on, or hold very limited amounts of expenditure. If cuts are imposed without strategy and intelligence, they could lead not only to an interruption of services for a few years but to a more permanent scrapping of expertise and networks that cannot simply be replaced when the good times return. Moreover, in a period when demand for these services among the most deprived is rising, cutting the ability of the voluntary sector to meet these needs often simply displaces the need for provision back on to the state. The needs of the most vulnerable are not like a need for luxury goods which we can defer for a bit while we tighten our belts; they are needs that must be met. Cuts to the voluntary sector which shift the burden of meeting those needs on to another part of the statutory funding landscape neither serve the interests of those in need nor help the spending plans of the Treasury.
What do we know about the Government’s strategy for implementing these cuts, especially in our most deprived areas? The first answer is: not as much as we should. As far as I am aware, the Government do not have reliable data on the distributional effects, by local authority, of the cuts on the voluntary sector. Nor have they taken steps to help ensure that the best practice of councils in handling these cuts is spread to other councils. We know that the way in which local authority cuts to the voluntary sector are being handled varies wildly from case to case. Some local authorities are approaching this difficult task of distributing the pain of cuts in partnership with voluntary organisations, observing the compact between the voluntary sector and the Government, while others show little interest in that partnership.
Does the Minister agree that one important action that the Government could take would be to make sure that all local authorities are aware of and complying with the NCVO’s best practice guide, as well as observing the terms of the compact, such as giving at least three months’ notice when changing funding decisions? Can the Minister also tell us about any plans that the Government have for the renewal in 2012 of the transition fund that was set up for 2011—I believe it was £100 million —to help organisations in the voluntary sector that had been hit by the cuts? Lastly, what are the Government doing to ensure that the Government themselves, and not just the umbrella associations that represent the voluntary sector, monitor the impact of the cuts on that sector, especially in deprived areas?
The effect of spending cuts on civic activity in deprived areas is no doubt of concern to all of us, whatever our party affiliations might be. But there is another, special reason why this Government should care about the long-term effects on the capacities of the voluntary sector: their big idea, the big society, purportedly relies on the health and expansion of this sector, at a time when it is being hit considerably harder than other parts of the institutional landscape.
While the idea of strengthening civic society is of course shared by all, the claim occasionally made by some members of the Government to have come up with the idea has been met with some derision. Their failure so far to respond to the disproportionately severe and long-term effects of cuts to voluntary organisations on poorer areas speaks to two more specific blind spots in the Government's big society agenda.
The first is that they show no appreciation of the importance not simply of inequality in funding but of inequality more generally. The fundamental fact is that inequalities in wealth and income, and levels of deprivation, affect the quality of civic life and the capacity of voluntary organisations. We know that in less well-off areas, you are much less likely to see volunteering. You are twice as likely to be a volunteer if you have graduated from university than if you have no qualifications. One-third of the population provides 90 per cent of total volunteering hours.
The problem is that the laudable desire for a big society is not matched by an understanding of these inequalities or of the more limited capacity for society to be big in poorer areas. Professionals in the sector know it: 83 per cent of voluntary sector chief executives said that they thought the big society would not work well in deprived communities. Sixty per cent of the public agree.
So what is stopping the sincere advocates of the big society responding to this? I think that the answer lies in a second blind spot: the idea that a big society needs a shrunk state to work, when in fact a well functioning civic society needs a supportive state and a Government who understand what factors lead to barriers to participation on the one hand and who build capacity on the other.
A Government who are serious about this would support the big society not just through funding but through helping to skill up the sector, encouraging partnerships and promoting collaborative budgeting et cetera. It is a view that was supported by David Cameron, the Prime Minister, in a speech in 2009, when he said:
“I believe that, in general, a simplistic retrenchment of the state which assumes that better alternatives to state action will just spring to life … is wrong … This means a new role for the state: actively helping to create the big society”.
Eighteen months in, we are still waiting for some idea of what this more active, constructive role for government might be. As this debate has reminded us today, it is the most vulnerable and most needy in our poorest areas who need imagination and boldness on the part of the Government most of all.
Lord Wallace of Saltaire
My Lords, I thank the right reverend Prelate for introducing this debate. I also welcome the noble Lord, Lord Wood, on what I think is his first speech from the Front Bench. I give him a particularly personal welcome. I think that I first met him when I was asked to give a seminar with some colleagues in the Treasury. I was especially nervous because my daughter was going to be one of those who would be listening to us speak. I have to say that, from my knowledge of his role as a special adviser in the Treasury, he was always very warmly spoken of by the officials. For a special adviser, that is an unusual and considerable compliment.
We are discussing a very serious and broad matter today. I want, if I may, to go a little wider than the brief that I was given in terms of what we are all facing. I, too, remember the Faith in the City initiative. Certainly, in the Bradford diocese, I saw this as a Church of England initiative to try to persuade the congregations in the better-off parts of the diocese that they were part of the same community as those in the worst-off parts, and they needed some persuasion. It was an extremely worthwhile exercise, but it required to be done. I am very conscious, in respect of the Leeds diocese, that the richest street in West Yorkshire, according to the Yorkshire Post, is less than two miles from Gipton and Harehills, which is one of the poorest and most deprived estates. My wife and I spent an afternoon some two months ago with the West Yorkshire Police going around and looking at how neighbourhood policing works in Gipton and Harehills.
It is not that we live in a country in which the two sides are very far apart but they do not interact enough and we have unfortunately lost our sense of mutual obligation. The rich do not provide enough in terms of philanthropic giving and resist paying their share of tax. That is part of the problem which we need to address. The gap between the public’s reluctance to pay higher taxes and the public’s expectation of high-quality services is something with which the previous Government struggled. The media, above all the Daily Mail, feed the expectation that you should have lower taxes and better quality public services. We constantly read that the wicked National Health Service is depriving us of a new cancer drug costing only £25,000 a year per person. We are also told that that is not our fault, we do not need to contribute to that and somehow the state should provide it. Only one party has included a commitment to raise taxes in its manifesto in any recent general election campaign and that was the Liberal Democrats in 1997 and 2001. I remember my Labour friends saying in 1996, while I was writing the party manifesto, that this would be a disaster. It was not a complete disaster. I suggest that all parties should educate the public with regard to the fact that in an ageing and highly unequal society we cannot expect to have lower taxes because demands will rise, not fall.
Part of the problem we face is due to the fact that after 2001 the Labour Government accepted a substantial increase in public expenditure on welfare and social support but did not increase taxes proportionately to pay for it. That is why we went into deficit from 2002 onwards, leaving a structural deficit, the consequences of which this Government are now struggling with. Along with implementing very painful cuts the coalition Government are focusing on tax avoidance and tax evasion to ensure that the better off pay their fair and proper share of taxation. I hope that we have the active support of the Opposition in this.
In addition, the Labour Party believed that the state should take over more and more of the functions previously undertaken by the voluntary sector and that services should be provided only by trained and vetted professionals. Long-term problems arise when a voluntary sector is too dependent on the state. However, I am told that only 20 per cent of society organisations depend on state support but that some 50 per cent of public support for the voluntary sector comes from local authorities and 40 per cent comes from central government. I very much support what the right reverend Prelate said about co-operation between civil society organisations and local authorities, not dependence. We all face the long-term challenge of raising public and private funds to pay for social welfare. The public funds will come not from a shrunken state but, sadly, not from a much larger state because the public will not pay out taxes amounting to more than 50 per cent of their gross national income. Therefore, we need to seek a partnership between taxation and philanthropic giving in this respect.
We also believe that central government should not direct what local authorities and schools do too directly and too intrusively. Surveys have shown that some local authorities have cut into support for voluntary organisations much more than others. Liverpool and Sheffield in particular have cut into this support while others have managed to maintain it, and one or two have even increased it. There is substantial evidence that local authorities working in partnership with the voluntary sector have been successful in managing cuts and actively protecting the funding of certain groups. That is something which we, in our capacity as citizens, should all be concerned with. The churches, of course, play a major role in this area, including in providing funds for some of these bodies. Community foundations also have a role to play. I am about to visit the Leeds community foundation to learn more about how it operates.
Voluntary organisations that are also social enterprises can provide funds. I was rather distressed to find one body in Bradford with which I have had some contact cutting back on its income-generating activities because it felt that these were not core to its activities, whereas generating income from what you do while providing social objectives is a highly desirable development.
We certainly need to encourage philanthropy. I have a particular feeling of aggression against the bank for which my father worked for 40 years, which paid for my secondary schooling, and which had a very old Quaker philanthropic tradition. Those who run that bank today have entirely lost that tradition and in some ways seem to have lost any sense of moral shame about the large amount of money they earn and how little of it they give to charity—living offshore, avoiding taxes offshore and denying any sense of responsibility towards the society from which they emerged. We have to turn that around. All of us from all parties have to turn that around.
Central government is doing what it can to help these bodies through the transition. The transition fund, which was mentioned, was intended to be for one year and will not be renewed. There are a number of other activities. The Big Society Capital fund is getting under way. Its interim committee has just made the first grant and we are therefore not leaving everyone to sink or swim afterwards. A new fund of £20 million will also be available for bodies providing advice, and a number of things are in place to help us through the very difficult transition.
While we are conscious of the real difficulties that current cuts are bringing to voluntary organisations, as they are to a range of other essential services, the Government are working to provide what assistance they can through the transition. However, how we see the direction of travel is for support for local organisations to come, as far as possible, through local authorities. That is the appropriate way forward. Central government grants for local activity should not be what one would want in the long term. Again, I am aware of one or two useful organisations in Yorkshire that have been dependent on central funding. That is difficult for local organisations and involves them in the organisation of very complicated contracts. The long-term funding implications of that relationship are something that we will all have to work through as we go on, and as we come—we hope—out of the current crisis.
Meanwhile, the Government are funding the training of community organisers. We have started a national citizen service, we have a new Community First fund for communities in disadvantaged areas to help them take action to improve their lives, and we are working across a range of different voluntary activities by assisting them and their funding to enable people to take greater responsibility for their own communities and their own lives.
As a Liberal Democrat, I think of not precisely a big society but a responsible society. I think that part of what has gone wrong with this country over the past two generations has been that people—again supported by the media, rather too uncritically—have begun to talk about their rights and not about their responsibilities. The noble Lord, Lord Glasman, has written quite powerfully on this, so it is not entirely a single partisan point. We need to get back to a society in which we all recognise our responsibilities to each other, including our financial and philanthropic responsibilities. I hope that that is common ground among us. I know that it is part of the message that I learnt as a choirboy in the Church of England.