House of Commons
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Oral Answers to Questions
Stephen Mosley (City of Chester) (Con)
1. What recent discussions he has had with the Secretary of State for Business, Innovation and Skills on the effect of the Green investment bank on levels of investment in renewable energy infrastructure.
The Secretary of State for Energy and Climate Change (Chris Huhne)
I regularly discuss the Green investment bank with ministerial colleagues, including the Secretary of State for Business, Innovation and Skills, and am confident that it can play a major role in capitalising private sector investment in renewable energy.
Stephen Mosley
I thank my right hon. Friend for his answer and welcome the Chancellor’s announcement in his autumn statement earlier this week of £200 million in incentives to support the green deal. Will the Green investment bank be able to back up that important investment and provide low-cost loans to support the green deal?
Chris Huhne
Supporting energy efficiency projects is indeed part of the Green investment bank’s remit, and clearly that includes the green deal. We can certainly envisage a key role in the launch of the private finance, because after all the green deal is private finance, but at the very beginning it will be important that the markets gradually get used to the idea of that new type of instrument, and the Green investment bank could have an important role in facilitating that.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
I am glad to hear that the Secretary of State is discussing the issue with colleagues. When will a decision on the location of the Green investment bank be made, and when will it be up and running for business?
Chris Huhne
The first investment should be made in the spring of next year. The location will be a matter first for the advisory board, whose advice I also anticipate will be available next year. The hon. Gentleman will bear it in mind that the Department for Business, Innovation and Skills is leading on this.
Roger Williams (Brecon and Radnorshire) (LD)
The coalition agreement emphasised anaerobic digestion as a technology to take forward, yet many people who are keen on it find obstacles in their way, including funding. Will the Green investment bank be able to provide funds for those people so that they can take their projects forward?
Chris Huhne
I thank my hon. Friend for his question. He is right that anaerobic digestion is one of the technologies that we want to encourage. Indeed, it falls broadly within the renewables remit of the Green investment bank, but my understanding of the problems with anaerobic digestion is that they relate principally to planning and objections, rather than funding. Funding is not the key issue with AD.
Caroline Flint (Don Valley) (Lab)
As we heard on Tuesday, because of the Government’s cuts, which are going too far and too fast, the economy is flatlining, unemployment is rising and the Government will miss their borrowing targets. In his autumn statement the Chancellor lauded the Green investment bank as proof of his green credentials, but on 9 September the Government confirmed in a written answer that the Green investment bank would have full borrowing powers only from April 2015, subject to public sector net debt falling as a percentage of GDP. Will the Secretary of State confirm that the Government’s policy is that we will not have a proper Green investment bank with borrowing powers until 2016 at the earliest?
Chris Huhne
I thank the right hon. Lady for her question. When the Green investment bank will be able to borrow has been set out clearly from the beginning. She wants to make the point that the borrowing powers of the Green investment bank are delayed, but the reality is that we are the only leading industrial country never to have had an infrastructure bank, despite the common experience of the 1930s and despite 13 years of Labour government. I very much hope that we will meet the net debt-to-GDP target as soon as possible, and when we do the GIB will be able to borrow.
Simon Wright (Norwich South) (LD)
2. What recent discussions he has had with major energy companies on their pricing policies.
The Secretary of State for Energy and Climate Change (Chris Huhne)
I am sorry, Mr Speaker, but I do not have the answer to the question.
Mr Speaker
It is on what discussions the Secretary of State has had with major energy companies on their pricing policies.
Chris Huhne
Thank you, Mr Speaker. I was under the impression that the question had been withdrawn, but I am happy to answer my hon. Friend.
We have had a number of discussions with energy companies, most recently the energy summit, in which we discussed consumer pricing.
Simon Wright
I thank the Secretary of State for his response. I am concerned about the extent of savings that are offered to the internet savvy and subsidised by offline customers. Given the digital divide, with many of the poorest households and older customers not having internet access, what action is he taking to ensure that everyone pays a reasonable price for their energy?
Chris Huhne
One of the key issues is that people who do not have online access should be able to get sources of advice that enable them to take advantage of cheaper tariffs. That may be people who are elderly or not necessarily able to get online, and one of the things that we are attempting to do is to encourage charities in the sector and organisations such as Citizens Advice to provide help when it is not forthcoming from family members. They are also a very important way of helping the elderly to move on to cheaper tariffs, however, and I know that a lot of family members do take the time to ensure that elderly members of the family get cheap tariffs.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
Energy pricing affects our industrial competitiveness, so although I welcome the Government’s steps in the autumn statement on energy-intensive industries, I note the real concern in the ceramics sector that such steps will do nothing to assist it. Will we see further announcements in the coming weeks for industries such as ceramics, particularly on capital allowances?
Chris Huhne
One key thing with the energy-intensive industries is that it is crucial to help those that will be most affected because of electricity intensity and their competitive position in terms of trade. We will set out the full details of that in the consultation.
Mr John Baron (Basildon and Billericay) (Con)
The Minister will be aware that one recommendation of the billing stakeholder group was that energy suppliers should send a tailored communication to customers, detailing in pounds, shillings and pence how much they could save by transferring to that company’s cheapest standard direct debit tariff in time for this winter. Two suppliers, Scottish Power and npower, have complied; four have not. Will the Minister now look at bringing those four into line?
Chris Huhne
First, I pay tribute to my hon. Friend for his work on the issue, because it is crucial that people are provided with clear and specific advice on what they can do. He is absolutely right to draw attention to the two large energy companies that have already complied, and yes, indeed, we are bringing pressure to bear to ensure that all the others follow.
Bill Esterson (Sefton Central) (Lab)
Will not energy companies benefit from pricing at the expense of companies such as Energy Outlet, in Formby in my constituency, which has lost business due to the cuts in support for solar energy, and that consumers will also lose out due to the change that the Secretary of State has made at short notice?
Chris Huhne
I simply do not agree with the hon. Gentleman, who argues that consumers will lose out from the measure. If we had not acted quickly to deal with cost overruns in the sector, not only would we not have been able to provide a sustainable future for those who are employed and have businesses in it, but we would have added so substantially to consumer bills that the impact on many other businesses right across the country, through reduced consumer spending, would have been substantial.
Ian Murray (Edinburgh South) (Lab)
4. What steps he is taking to assist households with their energy costs.
David Wright (Telford) (Lab)
10. What steps he is taking to assist households with their energy costs.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
We expect the warm home discount scheme to help about 2 million low-income and vulnerable households per year. This winter, energy suppliers will be required to provide automatic rebates of £120 on energy bills to more than 600,000 pensioners on the pension credit guarantee. In future, the green deal and the energy company obligation will provide energy efficiency measures at no up-front cost.
Ian Murray
The Minister will be aware that the Secretary of State, at the Liberal Democrat conference just a few weeks ago, said:
“None of us should have to save on warmth in a cold winter. Some of the most vulnerable and elderly will shiver—and worse—if we do not help.”
Why then does he believe that the Government should cut winter fuel payments to 12.7 million pensioners?
Charles Hendry
The hon. Gentleman will be completely aware that that policy was announced by the previous Government, who did not put the money into their budget for it to go forward. We have therefore continued the policy that was put in place, but we have introduced the most rigorous scheme of energy efficiency in our homes—rolling it out in a way not even dreamed of by the previous Administration—to bring lasting help and care to support such people.
David Wright
Twenty-eight per cent. of households in the west midlands live in fuel poverty, and one of the key issues for them is the quality of the housing stock in which they live. Obviously, the poorer the housing stock, the more difficult it is to heat. What specific support are the Government giving to help those in private rented housing, which is often not invested in by landlords and often very fuel inefficient?
Charles Hendry
The hon. Gentleman makes a very important point. That is why the green deal has focused very strongly on those in the private rented sector and why we are considering introducing a legal obligation on private landlords to ensure that their homes are brought up to a reasonable standard. This sector has often been overlooked and has been harder hit than many others, and we are determined to make sure that it is now addressed properly.
Mr Tobias Ellwood (Bournemouth East) (Con)
I very much welcome the warm home discount scheme, for which a number of elderly people in Bournemouth would probably be eligible. How are the Government making people aware of this important scheme?
Charles Hendry
My hon. Friend rightly draws attention to the warm home discount, which is up by two thirds as a result of the decisions we have made, whereby £120 million will be spent supporting 600,000 poorer pensioners. The energy companies are writing directly to many of their customers—and we, as a Government, are writing to millions of others—to make sure that they are aware of the extra energy efficiency support that they can have.
Andrew George (St Ives) (LD)
How does my hon. Friend believe that the practice of falling block tariffs and direct debit discounts for the comfortably off helps to address fuel poverty?
Charles Hendry
My hon. Friend raises the important issue of whether people should pay more for the additional units they use or whether the level should drop. Our concern about moving to a rising rate is that children, pensioners or people with disabilities who are at home more and need more warmth could be adversely hit by such a change. Not only the larger properties and the richer families would be affected; it could easily also affect those whom we are most keen to support and help.
Caroline Lucas (Brighton, Pavilion) (Green)
Does the green deal Minister remember telling the Energy Bill Committee that he fully expected the energy company obligation to provide a far greater level of support to tackle fuel poverty than either the carbon emissions reduction target or Warm Front? In what way is ECO’s pitifully small £325 million a year for fuel-poor homes a far greater level of resource than the 2010-11 Warm Front spending of £370 million or CERT spending of about £600 million on priority groups?
Charles Hendry
I am sure that the hon. Lady is aware that this is funding that people can have in addition to the green deal support. It is designed to make sure that there is a comprehensive approach. We have sought to ensure that we have an holistic approach and that we do more on energy efficiency and on assisting poorer households. We are trying to make sure that we do this in the most effective way possible.
Joan Walley (Stoke-on-Trent North) (Lab)
5. What representations he has received on feed-in tariffs from people in Stoke-on-Trent.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The Department has received a significant number of telephone inquiries, responses to consultation exercises and other pieces of correspondence relating to the consultation on feed-in tariffs. These are very likely to have included representations from the people of Stoke-on-Trent. However, at this early stage I am afraid that I cannot give the hon. Lady a detailed breakdown.
Joan Walley
The Minister did in fact receive a letter from the chief executive and leader of Stoke-on-Trent council telling him that what is at stake with the Government’s review of the feed-in tariff is 100 jobs and 4,000 council homes that will lose their opportunity to reduce heating bills. What is going on in Stoke-on-Trent is echoed all around the country. Given that everybody agrees that the feed-in tariff needs to be reviewed, but in a phased way, does the Minister agree that, at the very least, the existing tariff levels should be honoured for aggregated solar photovoltaic schemes where there are existing contracts?
Gregory Barker
There is nothing retrospective about the proposals that we are consulting on. The hon. Lady must accept that demand for the scheme is overwhelming compared with the budget that is available, and way beyond that which was anticipated by her own Government. We have to make very difficult decisions in balancing one factor against the other, but at the centre of our decision-making process will be a concern to ensure that this is a viable scheme that keeps the industry alive for the long term and does not support a short-term bubble.
Mr Speaker
Order. Although I accept that the same sun shines on all three places, Huddersfield and Lewisham, Deptford are rather a long way away from Stoke-on-Trent, to which this question is confined.
Annette Brooke (Mid Dorset and North Poole) (LD)
6. What recent assessment he has made of the effects of Government policy on household energy bills.
The Secretary of State for Energy and Climate Change (Chris Huhne)
I am delighted to say, Mr Speaker, that I do have the answer to this question.
On 23 November, DECC published its updated assessment of the impact of energy and climate change policies on energy prices and bills. The latest estimates show that the average household dual fuel bill is currently 2% higher than it would have been if energy and climate change policies were not introduced. By 2020, these policies will mean that the average household dual fuel bill will be 7% lower than it would have been in the same year in the absence of our policies.
Annette Brooke
I thank the Secretary of State for that answer. Would he be prepared to work with the Department for Communities and Local Government to see how the benefits of the discount schemes for people on low incomes could be extended to park homes, where the site owner is likely to buy in bulk and then resell, perhaps at quite a high price? To help the very vulnerable people in park homes, could there be a specific campaign to tell park home owners that they are eligible for the green deal?
Chris Huhne
I am grateful to my hon. Friend for that question. As a long-standing campaigner for people who live in park homes, she knows that they are far too often overlooked in schemes that benefit people who live in substantial and ordinary properties. It is crucial that we have the dialogue that she asks for to ensure that we help those people as far as we can. There are obviously practical issues that we need to address. We will try to get to the bottom of this.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Minister may not know that Huddersfield has a twinning arrangement with Stoke-on-Trent and that we work very closely together. People in Huddersfield, like the people in Dorset and Stoke-on-Trent, are sick to death of the cost of energy. They want a more visible, muscular effort from this Government to take on the energy companies, many of which are foreign-owned, and make them do their job.
Chris Huhne
I am sure that Mr Speaker is aware of Yorkshire’s unilateral declaration of independence, which allows twinning arrangements to be entered into between towns in Yorkshire and towns elsewhere in the country.
The hon. Gentleman made a serious point about energy costs. I assure him that we are doing more than was done under the Government whom he supported for 13 years to make this market as competitive as possible. We have just had the Ofgem retail review and its proposals to simplify the tariffs dramatically to make things much easier for consumers. We have introduced a clear limit on the period in which the energy companies have to switch people over. We are doing everything we can to make this a competitive market, at both the retail end and the wholesale end. That is the best guarantee for every consumer in this country, be they in Huddersfield or Stoke-on-Trent, that they will get the best possible deal.
Mark Durkan (Foyle) (SDLP)
Will the Secretary of State work with colleagues to establish a cost of warmth index, which could usefully inform the work of his Department, the Department for Work and Pensions, the Treasury and Parliament?
Chris Huhne
That is an interesting thought and I would certainly be interested to see more from the hon. Gentleman about this issue. I can see practical difficulties, given that warmth comes from so many different sources. For example, people who are off-gas grid and are reliant on heating oil may have substantially different problems from those who are on-gas grid and are able to avail themselves of a number of things. I would certainly be prepared to look at the idea if the hon. Gentleman put something on paper and sent it over.
Mr Jim Cunningham (Coventry South) (Lab)
7. What representations he has received on the length of time allocated to his consultation on feed-in tariffs for solar PV; and if he will make a statement.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The Department has received a number of representations in response to our proposals to reduce feed-in tariffs for solar PV, including the length of time allocated to our consultation. The consultation closes on Friday 23 December. Detailed information on the representations will be provided in the Government’s response to the consultation in January.
Mr Cunningham
Is the Minister aware that many people who have given up their jobs or borrowed money from banks to invest in this area stand to lose out? What does he intend to do about that?
Gregory Barker
We intend to put the industry back on a sustainable path to growth, far more in line with the projections that were made by the former Secretary of State for Energy and Climate Change who is now the Leader of the Opposition. We need a scheme that supports the industry but does not impose burdens unnecessarily on hard-pressed consumers.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
Will my hon. Friend explain why the cut-off date of 12 December for new projects to be accepted at the current feed-in tariff is different from the consultation end date of 23 December? Why the two-week gap?
Gregory Barker
The reference date of 12 December is what we are consulting on, but the changes that we are proposing would not actually kick in until the beginning of April. We had to choose a date that we thought fair to allow people who had contracts in the pipeline to complete those contracts, but without allowing sufficient time for people to enter the market who were not already engaged in the process, and we chose April.
Caroline Flint (Don Valley) (Lab)
We all know that the Government’s consultation, which will last half the normal length of time and close after the cuts have already come into effect, is a sham. Because of the Government’s rushed changes to the feed-in tariff, which go too far, too fast, thousands of jobs are at risk. Last night, 4,500 staff at Carillion were warned that their jobs could go, but this morning the Secretary of State told the “Today” programme that he did not recognise that estimate, and that the cuts and job losses that he will cause were just a “sensible course correction”. Does the Minister believe that causing unemployment on that scale is a price worth paying?
Gregory Barker
It is so interesting how the right hon. Lady comes to the House with such inconsistent messages. One moment she wants to protect the consumer, the next she wants to push high costs on to consumer bills without a thought for the fuel-poor. The fact is that we are doing our best to contain a bubble caused by the ineffective scheme that her Government set up. We will put the industry back on a sustainable footing and do the right thing by the consumers whom she has conveniently forgotten.
Caroline Flint
Sorry excuses for a disastrous policy. I think it is 60p on an annual bill—in fact, in answer to a parliamentary question last week we were told that it was only 21p on the annual bill from 2010 to 2011. The fact is that the Minister’s cuts will hit families trying to protect themselves from soaring energy bills, put thousands of jobs and businesses in jeopardy and give the lie to the Government’s promise to be the greenest Government ever.
Last week, we read reports in the press about a meeting in the Minister’s Department between officials and the solar industry, in which officials said that the cuts to feed-in tariffs were part of a deliberate policy to kill off the solar industry. Will he come clean today and say that that is not his policy? If not, even at the eleventh hour and despite the damage that has been done, will he change course to enable solar to be put on a real sustainable footing for the future?
Gregory Barker
I think this ridiculous scaremongering is quite disgraceful. The right hon. Lady wants to talk up the problem and talk down the industry, and this pathetic attempt to smear my officials is frankly repugnant. It is her scheme that we are trying to fix—it was put in place by the last Labour Government. We will fix it and put the industry on a sustainable footing, but we should not take any lessons on budgetary control from the party that left us with a catastrophic deficit and drove this country to the brink of ruin. Shame on you!
Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)
8. What assessment he has made of the potential benefits of the renewable heat incentive for rural and remote households.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The renewable heat premium payment, the initial heat support scheme launched on 1 August, is targeted at off-gas-grid homes, particularly those in rural and remote areas. It is too early to make an accurate assessment of the benefits, but we intend to evaluate them fully next year to feed into developing future support for renewable heat.
Dr Poulter
The Minister will be aware that 8% of UK households rely on oil for their central heating, many of which are in rural and remote communities, and that many people who use oil central heating are the frail elderly and people on fixed incomes. When he consults on the feed-in tariffs, will he look into the advantages of biofuels as a means of both driving down carbon emissions and supporting lower energy bills in rural communities?
Gregory Barker
My hon. Friend makes some excellent points. Sustainably sourced biofuels for electricity, including bioliquids, are already supported under the renewables obligation, but they are not currently supported by the feed-in tariffs. We will launch phase 2 of the feed-in tariff comprehensive review, which will consider their potential expansion to new technologies such as bioliquids. I certainly take his points on board.
Dr Alan Whitehead (Southampton, Test) (Lab)
Does the Minister consider that the renewable heat incentive makes sufficient provision for the encouragement of domestic and small-scale combined heat and power boilers, which are particularly appropriate to off-grid households but may not be fully covered by the provisions of the RHI because they are not necessarily supplied by fully biogas-based sources? Is he willing to investigate that and consider whether the RHI could support such devices to a better extent?
Gregory Barker
I am very willing to do so indeed. The RHI has not been launched in full for domestic appliances—we are currently trialling it with the RHPP—but I am keen to support micro-CHP in the way that the hon. Gentleman suggests. He is an expert on this area and I would be happy to work with him to see what further support we need to drive forward this exciting technology.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
9. What steps he is taking to secure agreement on climate finance in advance of the Durban climate change conference.
The Secretary of State for Energy and Climate Change (Chris Huhne)
There are three main elements. On fast-start finance to developing countries, I am proud to say that the Government are on track to deliver our £1.5 billion pledge. We want other donors to do the same. On long-term sources of climate finance, we are at the forefront of pushing for new sources of public and private finance and we want others to join us there too. Lastly, we will push for the green climate fund to be operationalised in Durban as part of a balanced outcome to the negotiations.
Catherine McKinnell
I thank the Secretary of State for that answer, but recent press reports suggest that countries might not be able to reach an agreement at Durban even on the green climate fund, which had been the only realistic expected outcome prior to the summit. What steps are the UK Government taking to ensure that countries reach an agreement on the structure, operation and finance of the fund?
Chris Huhne
My officials are working diligently on that. We want as many outcomes at Durban to operationalise the agreements at Cancun as we can get. I do not agree with the hon. Lady that that is the only potential outcome. One of the most important things we can hope to get out of Durban if the talks go well is a commitment from all parties to ensure that we have an overarching legal framework. We can negotiate that and we could also respect the science by ensuring that we peak global emissions by 2020.
Ann McKechin (Glasgow North) (Lab)
I am sure the Secretary of State will agree that financing for climate change measures is absolutely vital and that we have a very short period of time if we are not to feel the adverse affects of climate change. Does he agree with many groups, including the World Bank, the International Monetary Fund and the shipping industry, that a global tax on shipping is one way in which we could achieve a fair and sustainable way of financing climate change measures?
Chris Huhne
I certainly believe that a levy—a bunker fuels duty or whatever—is one potential way of raising the finance necessary. That was a recommendation in the report of the advisory group on finance, which was set up by the UN Secretary-General and in which I was honoured to participate. That is one of the most likely ways forward in breaking the back of that particular problem.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
11. What progress he has made in establishing the green deal.
Gordon Banks (Ochil and South Perthshire) (Lab)
15. What progress he has made in introducing the green deal; and if he will make a statement.
The Secretary of State for Energy and Climate Change (Chris Huhne)
The green deal is a coalition agreement and a priority for this Government. We established the legal underpinning for green deal through the Energy Act 2011 and recently launched our consultation on secondary legislation, which will guide the detailed operation of the scheme. I am encouraged by the support we have had in developing this policy and the interest shown by a broad range of organisations in playing a role.
Shabana Mahmood
The green deal consultation sets out the Government’s plan to give three times as much subsidy to able-to-pay households than to fuel-poor households that take up the green deal. Why are Ministers giving three times more help to home owners who can afford to pay for improvements than to people living in fuel poverty?
Chris Huhne
The hon. Lady should be aware that the eco-subsidy is replacing two elements that we inherited from the previous Government: the Warm Front scheme, which was aimed at helping those in fuel poverty, and the carbon emissions reduction target and community energy saving programme schemes, which were aimed generally at householders. The proportions are broadly similar, so I do not accept that this is a departure in policy in terms of prioritisation. She will be aware that the warm home discount is aimed at those in fuel poverty—it will give two thirds more support to those in fuel poverty and will be targeted on the 600,000 most needy pensioners. That is a statutory scheme, which compares with the voluntary one under the previous Labour Government.
Gordon Banks
In answer to earlier questions, Ministers said that the green deal is with us and working here and now, but it is not. The Government are scrapping Warm Front and delays with the green deal mean that they will be the first Government since the 1970s who have not had a fuel efficiency programme. At the same time, they are downgrading the number of jobs that will be created by the green deal by 35,000. The question is simple: why?
Chris Huhne
The eco-consultation and that jobs estimate obviously came out before the Chancellor’s announcement in the autumn statement of £200 million of incentives for the uptake of the green deal. Those introductory incentives have been warmly welcomed across the industry and will ensure that we have substantial uptake of the green deal. On the point about funding, the whole model of providing energy efficiency changes with the green deal. That was supported across the House, including by the last Labour Government. It will, I believe, unlock substantially more money that was ever available from publicly funded, Exchequer-funded sources.
Mr Speaker
Order. I hope that the Secretary of State will not overuse his renewables.
Guy Opperman (Hexham) (Con)
The Green Alliance has conducted three constituency pilot workshops in my constituency of Hexham, in Bristol North West and in Redcar today. Will the Minister meet the Green Alliance and me before Christmas to discuss the outcomes for the green deal that we studied for some considerable time only last month?
Chris Huhne
It is a very interesting idea and one that certainly merits further consideration. I am delighted to say that the Minister of State, Department of Energy and Climate Change, my hon. Friend the hon. Member for Bexhill and Battle (Gregory Barker), will be very happy to meet my hon. Friend to take that matter further.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
We have heard a lot about interest rates this week. Affordable interest rates for green deal finance will be crucial if consumers are to take up the green deal at the scale and level the Government anticipate. A report by E3G says that relying on commercial loans could mean interest rates as high as 8%, 9% or even 10%. Polling has found that only 7% of the British public and homeowners would be interested in taking up the green deal if interest rates were as high as that. Given that, what specifically are the Government doing to get green deal interest rates down?
Chris Huhne
We are working closely with a group of interested parties to provide a finance aggregator for the green deal, which is exciting and will bring forward finance that is substantially cheaper than that estimated by E3G. We will announce the details of the scheme when we have them.
Luciana Berger
I thank the Secretary of State for that answer. The aggregator to which he refers is the Green Deal Finance Company, which is working very hard to try to lower interest rates. It estimates that it will need hundreds of millions of pounds from the Green investment bank properly to fund the initial capitalisation of green deal loans and to act as the catalyst that the green deal market needs. Without such funding, interest rates will be higher than 10% and the green deal will, therefore, surely fail. A moment ago, the Secretary of State said that he envisaged that the Green investment bank would provide some support for the green deal and that it could play a very important role. Will he tell us definitively today whether the Green Deal Finance Company will receive that scale of funding from the Green investment bank?
Chris Huhne
Obviously, it is up to the Green investment bank board to make its decisions, but it is clear that it is interested in helping energy efficiency and ensuring that green deal finance gets off to a good start. Let me make it clear how this particular market is structured. Green deal receivables—please excuse me, Mr Speaker, for reverting to financial market jargon—are very similar to utility receivables. As soon as the market is established and we secure a couple of deals, the Green investment bank’s support will become important. The market will then be happy to finance this on terms similar to utility receivables. If it does that, we will be looking at substantially lower interest rates than the ones the hon. Lady has been citing.
Chris Williamson (Derby North) (Lab)
12. What discussions he has had with the Chancellor of the Exchequer on the implications of the autumn statement for investment in energy infrastructure and onshore wind farms.
The Secretary of State for Energy and Climate Change (Chris Huhne)
I have been fully engaged with the development of the infrastructure theme of the growth review, embodied in the accompanying national infrastructure plan 2011 and announced in the Chancellor’s autumn statement. I welcome the inclusion of measures relating to energy infrastructure, including onshore wind. These will help to deliver our ambition for a secure, low carbon and affordable energy system.
Chris Williamson
This was supposed to be the greenest Government ever. The Secretary of State has already undermined solar energy and torpedoed carbon capture and storage. His attempts on the “Today” programme to distance himself from the Chancellor’s autumn statement cannot conceal the fact that his green credentials lie in tatters. Can he explain to the House why he has been so singularly unsuccessful in securing the investment that we so desperately need for a low carbon economy?
Chris Huhne
I think we must have been living in different worlds. The Government’s achievements on the green agenda since the election include electricity market reform, the green deal in the Energy Act 2011 and the pioneering renewable heat incentive. Furthermore, we have brought forward the subsidy review for renewables, which was widely welcomed by the sector, and secured £1 billion for the carbon capture and storage programme. Indeed, yesterday I visited a CCS pilot partially funded by Government money. I think that the hon. Gentleman is overlooking many achievements on the green agenda that do indeed mean that we are on course to be the greenest Government ever.
Mr Mike Weir (Angus) (SNP)
In interviews at the time of the autumn statement, the Chief Secretary to the Treasury announced casually that the money for the CCS project was being reallocated and would not be required until well into the next Parliament. Given that the Secretary of State has already pulled the rug from under Longannet, is this not clear evidence that he has abandoned any hope of developing CCS as a potential export industry?
Chris Huhne
Absolutely not. By the way, the hon. Gentleman did not quote the Chief Secretary precisely. The Chief Secretary pointed out that money was absolutely available for a CCS project. Indeed, all the negotiators involved in the Longannet project recognised that although the money was not enough to make Longannet work, it would be enough to make a CCS project work elsewhere. The reality is that there will be some slippage. The profiling of that £1 billion in the comprehensive spending review was heavily weighted towards the last year of the CSR, and if there is slippage it is bound to be in the next CSR. However, we will make profiling decisions on expenditure for CCS when the projects come forward following the competition next year, and I can assure the hon. Gentleman that the money is available to fund them.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
The Secretary of State has just reiterated his claim last month that the £1 billion for CCS is safe. If so, will projects, including at Peterhead and elsewhere, aiming to be up and running before the end of this Parliament still have access to that £1 billion? If so, how does that square with the comments from his Cabinet colleague, the Chief Secretary to the Treasury?
Chris Huhne
The 2016 date is the end date for the competition run by the EU Commission. We hope to be able to support those projects in the UK that the Commission decides it is sensible to support, but there will be other projects too. The £1 billion is not necessarily available to fund the up-front capital costs entirely. If we can get private money into a scheme—such as the one I saw yesterday at Ferrybridge, where we invested £6 million despite the total cost being about £250 million—that is the right way to go. The Government are about using public money as effectively as possible to bring in private sector money as well.
Glyn Davies (Montgomeryshire) (Con)
13. What recent assessment he has made of the prospects for shale gas in the UK.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
Exploration for shale gas in the UK has only recently started, and it will be some years before the prospects for production in our geological, regulatory and economic conditions, and the economic prospects for the industry, can be fully assessed. However, a British Geological Survey study last year estimated that UK shales might yield some 150 billion cubic metres of gas—equivalent to roughly two years’ demand. Work is in hand to update these geological estimates in the light of more recent information, including Cuadrilla’s estimate of gas in place under its licences in Lancashire.
Glyn Davies
Media reports in the US state that shale gas discoveries have reinvigorated US oil and gas production. There have been substantial discoveries of shale gas in the UK, as the Minister mentioned, so does he agree that the UK could learn lessons from the US experience with a view to developing shale gas in the UK?
Charles Hendry
My hon. Friend is right to point to the lessons from the United States. Shale gas has transformed the energy outlook there and potentially turned the US from a gas importer to a gas exporter. There might be lessons to learn, but there are very different rules here on land ownership that will make things much more complicated. We are a much more densely populated area, and other countries such as Poland and elsewhere are clearly attracting interest in this connection, but we will explore the matter. There are no barriers to doing so but nevertheless we recognise the limitations.
Mr Iain Wright (Hartlepool) (Lab)
14. What recent discussions he has had on investment in jobs and skills in the green economy.
The Secretary of State for Energy and Climate Change (Chris Huhne)
I have had many recent discussions with the Chancellor and others on jobs and skills in the green economy. Green growth has been considered across all strands of the growth review, and I welcome recent announcements in this area, including on the green deal, which could support at least 65,000 insulation and construction jobs by 2015.
Mr Wright
I previously asked the Minister of State, the hon. Member for Bexhill and Battle (Gregory Barker). the same question, but he made such a mess of it that I am pleased that the Secretary of State is having a go. Why in the past year has Britain slipped from third in the world to 13th for investment in green technology?
Chris Huhne
Clearly the hon. Gentleman understands that investment in these terms is often a lagging indicator, and the last Government were sadly remiss in coming forward with adequate incentives—for renewables investment, for example. I am delighted to say that we have brought forward the renewables review and provided the certainty that the industry required, and I am sure that our position will improve in future rankings.
Joan Ruddock (Lewisham, Deptford) (Lab)
But how does the Secretary of State square the changes to feed-in tariffs with promoting a green economy? In just one small scheme by the Peabody housing association in my constituency, the four jobs at the association are at risk, the eight apprenticeships are at risk and the 100 jobs at Breyer, which is installing the scheme, are also at risk. The Secretary of State is killing the solar industry and he must know it.
Chris Huhne
That is absolutely not the case. The right hon. Lady knows very well the importance of sustainability, because—if I may pay tribute to her—she has a long track record in this House of standing up for sustainability. However, sustainability does not apply merely to environmental matters; it applies also to budgets and the growth of industry, and we are putting the solar industry on a sustainable basis for growth.
Craig Whittaker (Calder Valley) (Con)
17. What recent discussions he has had with energy suppliers on the provision of credit for energy supply to new businesses; and what assessment he has made of the effect on growth of the level of deposit currently required.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
The level of security deposits is a matter of negotiation between individual businesses and energy suppliers. If the terms of an energy supply contract are felt to be unreasonable, businesses should seek to obtain a supply from an alternative provider or seek independent advice from Consumer Direct.
Craig Whittaker
I thank the Minister for that reply, but requests from energy companies for large deposits up front is an increasing issue for new businesses in Calder Valley, as well as those being taken over by new owners. Will he reassure Calder Valley business people that the heavy-armed tactics that energy companies are using will be looked at and pressure brought to bear?
Charles Hendry
My hon. Friend raises an important issue, and I am grateful to him for raising it with me previously in a meeting. I understand the concerns facing businesses in Calder Valley and elsewhere. There are issues that Ofgem should be looking into, and I am happy to write and draw its attention to them. Indeed, Ofgem has recently said that it is doing more to try to ensure that businesses get a fair deal in this regard.
Barry Gardiner (Brent North) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Energy and Climate Change (Chris Huhne)
Since my Department’s last question time, I have published the annual energy statement and the green deal consultation, announced a comprehensive review of feed-in tariffs, launched the renewable heat incentive and confirmed £200 million additional funding for the green deal. Today I am publishing the carbon plan and the Government’s response to both Dr Mike Weightman’s final report and the consultation on the long-term management of the UK’s plutonium stock. Next week the Minister of State, my hon. Friend the Member for Bexhill and Battle (Gregory Barker), and I will attend the 17th conference of the parties to the UN framework convention on climate change in Durban.
Barry Gardiner
The Department says, “It’s the Treasury,” the Treasury says, “It’s the Office for National Statistics,” and the ONS says, “It’s not us.” So will the Secretary of State please publish the definitive advice on why the climate change levy fund for feed-in tariffs for solar has to be counted on the Government balance sheet? Is he aware that the European courts have recently ruled that a similar scheme in Germany need not do so?
Chris Huhne
One of the key issues is not whether something is on the Government’s balance sheet, but the effect on consumer bills. The hon. Gentleman cannot, sadly, wave away the question of whether this measure will add at least £26 to consumer bills in 2020, and possibly as much as £80. I will happily take this issue away and look into exactly which Department is meant to come forward, but I return to the point that what he needs to take into account is not whether something is on the balance sheet but what consumer costs are. [Interruption.] The right hon. Member for Don Valley (Caroline Flint) is muttering at me from a sedentary position, but she claimed recently that she cared about consumer costs, and I do not seem to see that now.
Mr Edward Timpson (Crewe and Nantwich) (Con)
T2. Will the Minister join me in congratulating Bentley Motors in my constituency on becoming the first plant in the UK car industry to achieve the new global energy management standard, snappily entitled the ISO 50001? What are the Government doing to ensure that businesses such as Bentley can continue to meet their renewable energy targets by investing in alternative energy sources?
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
I was delighted to have a chance to visit Bentley recently with my hon. Friend to see the work it is doing. I pay tribute to Bentley and to Volkswagen, the parent company, for the investment that they have put in place. There are systems in the CRC—carbon reduction commitment—energy efficiency scheme that help to encourage companies to improve their energy efficiency. Companies can qualify for climate change agreements through which they receive discount on the climate change levy in return for meeting energy efficiency targets. Many measures are already in place, but I congratulate the company my hon. Friend mentions on what it has already achieved.
John Mann (Bassetlaw) (Lab)
T3. China is doing it and Germany is doing it—reducing their reliance on Russian gas and Arab oil—so when will this useless coalition start standing up for the long-term British national economic interest?
Chris Huhne
I am grateful to the hon. Gentleman for eloquently making a point that I have made on many occasions. He will be pleased to see that the carbon plan contains a substantial discussion on exactly that issue. We are at a key turning point. Do we move forward to a position in 2050 where we will be reliant on imported energy for £9 out of £10 of our energy needs, or do we move forward to a position where we can be much more secure, much more energy independent and, indeed, make substantial improvements to our efforts on climate change?
Jane Ellison (Battersea) (Con)
T4. I recently took part in a conference, organised by Wandsworth Friends of the Earth and a number of local churches, which was focused on climate change and energy saving. One of the speakers, an architect, illustrated the enormous savings she had been able to make in a Victorian-era house through careful use of insulation and other methods. Does the Secretary of State share the encouragement this gave me that the green deal has much to offer constituents living in older houses?
Chris Huhne
It certainly does. My hon. Friend makes a very sensible point. It is precisely that sort of home, built before the first world war, for which we are going for the first time to be able to offer a substantial holistic refit, precisely because of the support given to solid wall insulation.
Jonathan Ashworth (Leicester South) (Lab)
T5. The Secretary of State will be aware that in the last few days the National Grid Company has said it would welcome greater independent auditing of its contracting arrangements with STOR—short-term operating reserve—aggregators. Given that the National Grid admits that it buys 500 phantom MW a year, which it presumably passes on to consumers, will the Secretary of State now insist on independent auditing of this relationship with STOR aggregators so that consumers get a fairer deal?
Charles Hendry
The hon. Gentleman raises an important issue. We have had discussions with the National Grid Company about this matter and we are glad that it recognises the scale of the problem. We will work with the National Grid to try to make sure that it is addressed.
Chris White (Warwick and Leamington) (Con)
T6. In my constituency, there are plenty of small businesses, co-operatives and charities that wish to play their part in building a greener economy. Many are concerned about some of the changes to feed-in tariffs but are hopeful that other measures such as the green deal will enable them to grow. Will the Minister give an assurance that the Government will make it as easy as possible for small businesses to get involved in the delivery of the green deal?
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
I can give my hon. Friend an absolute assurance. In fact, he may like to join me on 12 December when I host a round table specifically for small and medium-sized enterprises to work out how they can become key delivery partners in the green deal, which will provide a huge opportunity for local partnerships in exactly the way my hon. Friend suggests.
Paul Flynn (Newport West) (Lab)
Can the Secretary of State deny the outrageous claims that his own personal consumption of energy is about to be similar to that of a small town? Can he confirm for the House that he believes in leading the energy green crusade by example rather than just by exhortation?
Chris Huhne
I certainly can. I shall have to ask whether it is Huddersfield or Stoke-on-Trent whose energy I am meant to be consuming. I must admit I am not sighted on that issue, but if the hon. Gentleman would like to write to me, I will be happy to give him a full reply. I can assure him that I am not a small town and that my personal energy consumption is nothing like one!
John Pugh (Southport) (LD)
May I return the Minister to the subject of shale gas? Given the figures that have been announced for gas in place in the Bowland field, is it not important for the Government to form an early view on what can be economically and safely extracted?
Charles Hendry
A great deal of work needs to be done to assess the role that shale gas can play. We are aware of the gas-in-place estimate, but it is very different from an estimate of the amount of gas that may be recoverable. Much more research is needed, but we are satisfied that if the extraction goes ahead, it can take place under the existing legislative requirements relating to safety and environmental protection.
John Robertson (Glasgow North West) (Lab)
T8. An early-day motion tabled today, signed by me and the hon. Members for St Ives (Andrew George), for South Suffolk (Mr Yeo) and for Brighton, Pavilion (Caroline Lucas), calls on Ofgem to raise the level of debt for which pre-payment meter customers can switch suppliers from £200 to £350. According to the House of Commons Library, that would help more than 200,000 people immediately. Can we rely on the Secretary of State’s support?
Chris Huhne
We are working on a number of issues to try to ensure that those with pre-payment meters are given the best possible deal—that they can switch easily, and can opt for credit rather than pre-payment meters when that will help them. And yes, the hon. Gentleman can be assured that we will continue to pursue that agenda as vigorously as possible.
John Glen (Salisbury) (Con)
When considering the green deal and energy efficiency measures generally, does the Minister take into account the potential damage caused to property by condensation, which outweighs some of the advantages of some of those measures? Will he meet me and one of my constituents to discuss that growing problem, which compromises so much of what the Government are trying to achieve?
Gregory Barker
I should be happy to do so. It is true that older properties without damp courses, many of which were built before the first world war, are more difficult to treat, and much more research and development is needed to ensure that we do not unintentionally cause more problems than we solve.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
T9. I am glad to hear that the Secretary of State and the Minister are going to the climate change conference in Durban next week, but has the Secretary of State not left it too late? Is there not a danger that the conference will not produce the outcome that we want? What is the Secretary of State doing to ensure that we secure an international agreement, especially in the light of reports that have appeared over the past few days of a lack of progress in the negotiations?
Chris Huhne
The hon. Gentleman has a long-standing interest and expertise in this matter, and I am delighted to answer his question.
I could not have gone to Durban any earlier than Sunday, because that is the beginning of the ministerial segment, but the hon. Gentleman can be assured that I have been involved in talks with a number of other ministerial participants ahead of the conference, including Chinese, Colombian and South African Ministers. I believe that we have a real chance of making progress. Some of the gloomiest reporting tends to appear just before the talks begin in earnest, and I have not given up yet.
Mr Speaker
I am pleased to learn about the ministerial segment, of which I had not previously heard.
Mr Peter Bone (Wellingborough) (Con)
I know that our splendid Liberal Democrat Secretary of State believes passionately in localism. Can he explain why, having been rejected, the proposed Nun Wood wind farm development, which covers three parliamentary constituencies and is opposed by the three Members of Parliament and the three local authorities concerned, has suddenly been granted approval on appeal? That cannot be localism at work.
Charles Hendry
My hon. Friend has made an important point. In future, as a result of one of the changes that we are making to the planning system, it will not be possible to overrule such decisions on appeal simply because the developments involved meet a regional renewable energy target. That target has been removed, and we are giving much more authority and many more decision-making powers to local bodies. Applications involving more than 50 MW will be submitted to the Infrastructure Planning Commission and then to Ministers for approval, but we are determined to strike the right balance between local and national interests.
Ian Mearns (Gateshead) (Lab)
Will the Secretary of State agree to meet me and my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) to discuss the announcement of redundancies by Carillion Energy Services, which employs people in both our constituencies, and the fact that he is putting thousands of real people’s jobs at risk by slashing feed-in tariffs? The Minister accused my right hon. Friend the Member for Don Valley (Caroline Flint) of scaremongering earlier, but redundancy notices have been served to 4,500 employees.
Gregory Barker
The hon. Gentleman makes a legitimate point. Obviously, we are concerned about any job losses anywhere in the economy, and I will, of course, be very happy to meet him and his hon. Friend.
Julian Smith (Skipton and Ripon) (Con)
As Leeds, Yorkshire is the second largest financial centre in the UK and a leader in green energy investment, does the ministerial team agree that it is the ideal location for the Green investment bank?
Chris Huhne
The ministerial team is acutely aware that it must represent all parts of the United Kingdom and that many places have a substantial and impressive claim to be the home of the Green investment bank. We await with interest the advice of the advisory board.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I was very pleased to hear Ministers recognise the problems of people on prepayment arrangements for electricity. Will the Secretary of State say what specific action he will take to ensure that those who cannot switch to credit arrangements do not end up on higher tariffs than those who can afford to pay by direct debit?
Chris Huhne
We will continue to investigate this matter with the energy companies. Some people on prepayment meters used to pay higher tariffs than even the standard rate, but that is no longer the case and they now pay less. That is a substantial step forward, but it is not the end of the story. We will continue to work on this, as I am aware—as is the right hon. Member for Don Valley (Caroline Flint)—that it is a key area of vulnerability.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
The planned roll-out of smart meters across the UK will entail millions of homes being fitted with new devices. Will steps be taken to ensure that such devices are interoperable so that they do not act as a disincentive to consumers switching suppliers in order to get a better deal?
Charles Hendry
My hon. Friend makes a very important point. That is fundamental to our approach. Smart meters are designed to give consumers more control over the energy they use in their homes, and allowing people to switch and take advantage of different tariffs will be a fundamental part of their success.
Mr Speaker
I would have called Mr Sammy Wilson if he were standing, but I won’t because he isn’t. Instead, I call Mr Nigel Dodds.
Mr Nigel Dodds (Belfast North) (DUP)
I am very grateful for the advantage given to me by my colleague. What action has been taken to deal with Northern Ireland’s especially high dependence on home heating oil, given that a number of the current initiatives to tackle fuel poverty do not apply to Northern Ireland?
Charles Hendry
The right hon. Gentleman raises an issue that is of even greater importance in Northern Ireland than anywhere else in the country. I recently met Bord Gáis to talk about some of its plans for extending the gas grid in Northern Ireland. I welcome those investments, and in addition the Office of Fair Trading has taken measures to ensure that the market operates fairly and properly in the interests of consumers. The OFT has committed to continuing to investigate any examples of market abuse.
Mr Tobias Ellwood (Bournemouth East) (Con)
Does the Secretary of State share my pleasure in the fact that the Daylight Savings Bill will finally reach its Committee stage next week, and does he agree that it makes sense for us to align our lives more with daylight hours? That will support tourism, help business and reduce carbon emissions.
Chris Huhne
I am certainly interested to see the Bill’s progress, and I look forward to the full consultations with all interested parties, including the devolved Administrations, which might allow us to come to a satisfactory conclusion.
Mr David Hanson (Delyn) (Lab)
Will the Government, along with Ofgem, urgently look again at standing charges? In my constituency, Scottish Power has recently raised the daily standing charge from 15p to 31p, thus at a stroke adding £50 to my constituents’ bills.
Charles Hendry
I urge the right hon. Gentleman to consider the announcements Ofgem has made today, dramatically simplifying the range of tariffs. Ofgem states that there must be a standard tariff that every company must apply in a similar way, and also that the variable tariffs must meet certain conditions. This is all part of trying to ensure that charging is much more straightforward and clearer for consumers, so they can see whether they are getting a good deal and switch if necessary.
Mr Speaker
The only hon. Member standing who has not had a go is Chi Onwurah.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Thank you, Mr Speaker. As my hon. Friend the Member for Gateshead (Ian Mearns) said, many of our constituents face unemployment as a direct consequence of the inept and unfair way this Government have introduced the changes to the feed-in tariffs. What are the Government doing to give them security in their jobs and to give some certainty to the industry?
Chris Huhne
None of us wants to see anybody facing uncertainty about their employment prospects. The reality is that we must ensure a sustainable future for the solar industry that is based on a budget that will last rather than one that runs out so quickly that the industry comes to a grinding halt. The key thing for us is to ensure that we are on-track to deliver our goals for the low-carbon economy, including all the employment opportunities, and we will do that.
Business of the House
(13 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Angela Smith (Penistone and Stocksbridge) (Lab)
Will the Leader of the House give us the future business?
The Leader of the House of Commons (Sir George Young)
The business for the week commencing 5 December is as follows:
Monday 5 December—Motion relating to ministerial statements, followed by motion relating to UK extradition arrangements.
The subjects for these debates were nominated by the Backbench Business Committee.
Tuesday 6 December—General debate on the economy.
Wednesday 7 December—Motion relating to the appointment of the chairman of the National Audit Office, followed by motion relating to the membership of the Speaker’s Committee on the Independent Parliamentary Standards Authority, followed by motion to approve a European document relating to European sales law. In addition, the Chairman of Ways and Means has named the London Local Authorities Bill as opposed private business for consideration.
Thursday 8 December—Opposition day [un-allotted day] [half-day]. There will be a debate on a Scottish National party-Plaid Cymru motion, subject to be announced, followed by a money resolution relating to the Local Government Ombudsman (Amendment) Bill.
The provisional business for the week commencing 12 December will include:
Monday 12 December—General debate on immigration.
Tuesday 13 December—Motion to approve the appointment of the chairman of the Statistics Board, followed by motion to approve a statutory instrument relating to financial restrictions (Iran), followed by Opposition day [un-allotted day] [half-day]. There will be a debate on a Democratic Unionist party motion, subject to be announced.
Wednesday 14 December—Opposition day [un-allotted day]. There will be a debate on an Opposition motion, subject to be announced.
Thursday 15 December—Business to be nominated by the Backbench Business Committee.
I should also like to inform the House that the business in Westminster Hall for 8 December will be a debate on the EU Council.
Angela Smith
May I start by placing on the record an apology from my hon. Friend the shadow Leader of the House, who is attending an engagement in her constituency today and is therefore unable to be with us? In fact, she is welcoming the Queen officially to open a new development. I suggested that she might also want to use the opportunity to ask Her Majesty to look in her diary to check when her Gracious Speech is likely to take place, so we can finally clear the matter up—unless, of course, the Leader of the House would like to tell us first this morning?
Will the Leader of the House tell us when the Government will bring to the House business of any substance? For some time now, we have seen a distinct absence of Government-sponsored business and the schedule just announced, which takes us to almost the very end of the session, is no different. Perhaps the Government are responding to the dark days of winter and the even darker days of the economic crisis they have helped to create by going into hibernation. After just 18 months in government, they have run out of ideas while their economic policy has run into the sand. At a time when millions of families are desperately worried about what the future holds, the Government are showing how desperately out of touch they are by offering no new legislation and not a single debate of any substance.
Mr Speaker, on Monday you heard a point of order from the shadow Leader of the House that raised concerns about the Government’s deliberate and selective leaking of the autumn statement to the media and you responded by expressing your grave concern about those matters. Since then, of course, we have enjoyed the rather dubious pleasure of listening to the Chancellor deliver his statement on the Floor of the House and, indeed, it was an illuminating experience, if only in the sense that it revealed the very few details of the statement that had not already been leaked to the media. How important those small details are, however. We learned, for instance, that the Government are unable to meet the deficit reduction target that they set themselves only 18 months ago and that growth forecasts have been slashed to 0.9% this year, down from the 1.7% forecast in March, and 0.7% next year, down from 2.5%, the fourth downgrade since this Government came to power. We also learned that the Government’s squeeze on living standards will be not only severe but prolonged. It will be extended to six years or longer—a situation not seen in the UK since the last war.
Despite all the spin in advance of Tuesday, the very measures that the Chancellor chose to highlight in his leaks have unravelled under close scrutiny. Borrowing is set to spiral by £158 billion, despite promises to balance the deficit by 2015. Unemployment is expected to continue to rise for the next two years and £1.3 billion a year will be snatched from children and families after cuts to the child tax credit and the freezing of the working tax credit. Meanwhile, the bankers will contribute just £300 million. After 18 months, the verdict is in—plan A has failed colossally. So may we have a debate on the Chancellor’s autumn statement? It is time for the Government to adopt Labour’s five-point plan and put jobs and growth first.
When listening to the Chancellor’s statement, the House could have been forgiven for thinking that we were back in the 1980s—back to the future. Now we have the “back to the future jobs fund”. With more than 1 million young people unemployed, the Government’s U-turn on tackling youth unemployment is welcome, but the devil is always in the detail. May we have a debate on the measures that have been announced for tackling youth unemployment and how far they will go toward repairing the damage inflicted by the Government’s decision to abolish the future jobs fund in the first place? Such a debate would provide the Government with a good opportunity to apologise for their hastiness in cancelling a successful initiative.
The Government should also apologise for their reckless approach to economic management and, more crucially, they should stop blaming everyone and everything else when things do not go according to plan A. Last week, we heard that they were not to blame for their planned reduction in the feed-in tariff for solar-generated power and the damage that threatens to inflict on the solar industry. We were also told that the reduction was not a betrayal of their promise to be the greenest Government ever. This week, we have also heard that it is not their fault that there is no guarantee that the £1 billion for carbon capture projects will be forthcoming in the near future. However, we then learned in The Independent that the autumn statement would announce a review of legislation relating to the protection of precious wildlife habitats in the planning process because they are deemed to be a potential barrier to economic growth. May we have a debate about the role of green policy in promoting economic growth, given that the Conservative party said, “Vote blue, get green”, whereas the reality is that we are not getting very much at all? It will take more than a few huskies and a vanity photographer to restore the Prime Minister’s green credentials.
Not only do the Government refuse to respect the usual courtesies of the House but they refuse to respect the promises they made to the electorate or to take responsibility for their actions when things go wrong. They are out of touch and they are hiding from the electorate and from Members of the House.
Sir George Young
May I welcome the hon. Lady to her debut at business questions? Of course we understand the absence of the shadow Leader of the House, who is in her constituency.
On the date of Prorogation and the Queen’s Speech, I repeat what I have said in previous questions—we will announce those in due course. We have a legislative programme going through both Houses, and when that programme has made good progress we will be able to announce the dates of Prorogation and the Queen’s Speech.
The hon. Lady somewhat devalued the debates between now and Christmas that I have just announced, including an Opposition day, which she thinks is of no consequence at all. There is an important debate on the economy on Tuesday and some important debates will be chosen by the Backbench Business Committee. I am sure that she did not mean to insult the subjects chosen by that Committee by implying that they are not of any importance to the House.
On the ministerial code, I look forward to the debate on Monday; the Backbench Business Committee has brought forward a motion on the subject. I repeat that we are committed to what is in the ministerial code: important announcements should be made to Parliament in the first instance.
When we set the target that the hon. Lady mentioned, we gave ourselves an extra year’s headroom, and we have now used that up, so we are still on track to meet the original target. The strategy on which we have embarked, which she criticised, has been endorsed by the International Monetary Fund, the OECD, the Bank of England and all credible commentators. It is the Labour party alone that wants to embark on a reckless series of policies that would put at risk the low interest rates that the country now enjoys.
I hope that the hon. Lady welcomes the announcement made a few days ago on the youth contract. The future jobs fund was an expensive use of resources, and many of the jobs were short-term posts in the public sector; those in them ended up back on the dole. Our Work programme is a much more targeted and efficient alternative.
On the issues that the hon. Lady raised about climate change, we have just had Department of Energy and Climate Change questions, in which there was an opportunity to press the Secretary of State on our commitment to our environmental targets, which I am sure that he reasserted.
I think that I have answered all the questions that the hon. Lady put to me. Her last point was to ask whether we would stop blaming other people for the problems that confront us. The Office for Budget Responsibility could not have been clearer about the reasons for the difficulties that confront the country. The first is issues in the eurozone, the second is the increase in commodity prices, and the third is the deep recession that we inherited from the Labour party.
Mr Peter Bone (Wellingborough) (Con)
On Wednesday, more than a third of questions were Opposition Whips’ questions with exactly the same wording. That blocks Members who really want to ask questions from getting their question on the Order Paper. I know that that is not something that the Government do. Will the Leader of the House issue a statement next week condemning the practice?
Sir George Young
I think that I am right in saying that my hon. Friend raised that issue with you, Mr Speaker, at the end of the question session. As my hon. Friend implies, it is way beyond my remit to comment on the issue, but I would say that there is no evidence at all of him ever having asked a question given to him by our Whips.
Natascha Engel (North East Derbyshire) (Lab)
To help the Leader of the House fill the time before the end of the Session, the Backbench Business Committee will conduct a review of its work. To do that, we are sending out a feedback form asking Back Benchers about their experiences and ideas for the future of the Committee, so that we can put forward proposals for its future in the new Session. What can he do to help the Committee promote the survey and encourage Back Benchers to fill it in and return it before Christmas?
Sir George Young
I applaud the work that the hon. Lady and the Backbench Business Committee do, and I welcome her public service announcement about the survey. I would indeed encourage colleagues to complete and return the survey; that will, in due course, inform the review of the Backbench Business Committee that the House has committed to undertake at the end of the Committee’s first year.
Mark Pritchard (The Wrekin) (Con)
May we have an urgent debate on Burma? I am sure that we all welcome the recent release of political prisoners, but there are still more than 1,000 being held without charge or trial. If the Burmese regime is serious about being taken into the international family and community, it needs to let those people go.
Sir George Young
I am grateful to my hon. Friend for that. Like him, I welcome the signs of relaxation of some of the extreme measures undertaken by that regime. I cannot promise a debate, but I understand that the Backbench Business Committee has indicated that, on the last day before the Christmas recess, we will have a series of Adjournment debates. He might like to apply for one of those.
Mr Ben Bradshaw (Exeter) (Lab)
That was one of the most extraordinary Government business statements that I have ever heard—extraordinary for its complete absence of Government business. Is the Leader of the House not the slightest little bit embarrassed to be scrabbling around, trying to find things for us to do, when the Government face the gravest crisis since the 1930s? If I may make one suggestion, how about a debate on the Government’s plan for regional pay rates in the public sector, which will be absolutely devastating in south-west England, where we have very low pay in the private sector and, already, the biggest gap in house-price affordability?
Sir George Young
On the first point, we are anxious to avoid the fiasco that took place in the last Parliament; towards the end of a Session, Bills would be rushed through the House with inadequate consideration. As a result of the way in which we have planned this Session, the House has had ample time to discuss legislation. The right hon. Gentleman will know that we have two Houses of Parliament. Bills have to go through both Houses, and they have to complete the process before the House can be prorogued.
The legislative programme means that Bills, having gone through the House of Commons, are now in another place, where they are being considered. I am surprised that the right hon. Gentleman is asking for yet more legislation when, quite often, I receive complaints from Opposition spokespeople that we legislate too much and do not give the House adequate time. As for regional pay rates, he will have heard what my right hon. Friend the Chancellor said in the autumn statement: he has asked a commission to look at this and report back.
Bob Russell (Colchester) (LD)
May we have a road safety debate, so that Transport Ministers can explain to the House and to the country why they are pursuing policies that will result in more crashes, injuries and deaths, which would be the inevitable consequence of raising the speed limit to 80 mph, using the hard shoulder for moving traffic, and reducing the frequency of vehicle checks? Last night, St John Ambulance held its inaugural national awards. May I suggest that such a debate would provide an opportunity to discuss its campaign to introduce first aid training in schools, which would help to save lives, not increase deaths?
Sir George Young
I understand where my hon. Friend is coming from. The Government are consulting on raising the maximum speed limit and reducing the speed limit elsewhere. A final decision has not been taken on that proposition, and I shall ensure that his views are fed into the consultative process.
Sammy Wilson (East Antrim) (DUP)
I appreciate the efforts that you made, Mr Speaker, to allow me to ask a question earlier. I hope that the leader of my party, my right hon. Friend the Member for Belfast North (Mr Dodds), duly noted the way in which I stood aside for him, and rewards me accordingly.
In a breathtaking display of bigotry this week, the Sinn Fein Lord Mayor of Belfast refused to give a Duke of Edinburgh award to a young Army cadet. That typifies the intransigence that we see from Sinn Fein: Sinn Fein Members ignore the electorate by refusing to take their seats in the House, yet they get hundreds of thousands of pounds supposedly to carry out parliamentary businesses. Will the Leader of the House arrange for a debate and a vote so that the issue of the abuse of public funds can be dealt with?
Sir George Young
I agree with what the hon. Gentleman has just said. He will know that that issue was raised yesterday in Northern Ireland questions, and he may have heard what my right hon. Friend the Secretary of State said. I understand the disappointment of the young person who did not receive the medal in the way in which they hoped, and I understand the very strong feelings that have been aroused. I remind him of what my right hon. Friend said when that point was made yesterday:
“The right hon. Gentleman makes an interesting point. The armed forces are a wonderful example of people from right across the community working together.”
He went on to draw on the example of the Royal Irish Regiment and the work that it has done in securing
“representatives from right across Northern Ireland and the Republic”.—[Official Report, 30 November 2011; Vol. 536, c. 925-926.]
I very much hope that we can move forward in a more consensual way than that particular gesture indicated.
Nicky Morgan (Loughborough) (Con)
I know from personal experience and from my postbag in my Loughborough constituency that the lack of access to affordable child care is critical in preventing women from going back to work. May we have a general debate on child care policies?
Sir George Young
I would welcome such a debate, and on Tuesday it may be in order to discuss that. We have announced that we will invest an additional £300 million in child care support under universal credit, on top of the £2 billion in the current system. At the moment, that provision is available only if someone works more than 16 hours, but we are going to remove the minimum hours rule. I very much hope that my hon. Friend welcomes that announcement.
Keith Vaz (Leicester East) (Lab)
May we have a debate next week about the harmful effects of violent video games? Last week, the university of Indiana published research that showed that regularly playing those games resulted in physical changes in the brain. At a time when parents are thinking of purchasing video games for Christmas, does the right hon. Gentleman not think that it is important to hold a debate on this matter? This is not about censorship—it is about protecting our children.
Sir George Young
I am grateful to the right hon. Gentleman, and I know that this is an issue that he has pursued with vigour for some time. I cannot promise a debate next week. Home Office questions, I think, will be held on 12 December, but in the meantime I will draw his concern to the attention of the Home Secretary.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
Following the welcome announcement of additional funds for the Highways Agency and the Department for Transport for road infrastructure projects, may we have a debate on the key projects that Members wish to raise? Personally, I do not always find the Highways Agency as responsive as it should be, and it would be good to put on the record some of the projects that we are passionate about in our constituencies.
Sir George Young
I am grateful to my hon. Friend, who reminds the House of the supply side measures that we have taken, bringing forward some important infrastructure projects to generate employment. He will know that a large number of schemes were announced by the Chancellor on Tuesday, including some infrastructure projects to support growth in the west midlands. I am sorry if that did not go quite as far as my hon. Friend would wish, but on Tuesday, in the debate on the economy, I am sure that he will have an opportunity to make his plea, which I hope will be heard by Ministers.
Ann Clwyd (Cynon Valley) (Lab)
The Leader of the House may not have seen the Amnesty report on Saudi Arabia, which was published this morning. Amnesty says that
“hundreds of people have been arrested for demonstrating, while the government has drafted an anti-terror law that would effectively criminalize dissent as a ‘terrorist crime’ and further strip away rights from those accused of such offences.”
The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) will lead a delegation from Parliament to Saudi Arabia at the weekend. Does the Leader of the House agree—I have already spoken to the hon. Gentleman—that anyone who represents the House in Saudi Arabia should raise those issues, and it is important that they are raised face-to-face with our opposite numbers?
Sir George Young
I feel as if I am a postbox in the dialogue between the right hon. Lady and my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski). She will know that we had a debate on Monday—indeed, I think she took part—in which some of those issues were raised, although not the recent report by Amnesty International. I am sure that my hon. Friend heard her plea, has taken it on board, and will report back when he returns and let her know how he got on.
Andrew Jones (Harrogate and Knaresborough) (Con)
May we have a debate about rail in the north? We have a huge requirement for rail investment in the north, especially Yorkshire, and we have had some encouraging news recently. It would be timely to hold a debate after the announcement of the TransPennine Express electrification in the autumn statement on Tuesday.
Sir George Young
I would welcome such a debate, and it may be relevant on Tuesday. I see from the Chancellor’s announcement on Tuesday that there will be two new park-and-ride sites in York; and Leeds rail growth will be assisted by two new railway stations in Kirkstall Forge and Apperley Bridge, and a number of other schemes in the Yorkshire region. I very much hope that my hon. Friend accepts that this is a priority, and that we are making progress with infrastructure in the area that he represents.
David Wright (Telford) (Lab)
May we have a debate specifically on the national infrastructure plan 2011? As a fellow Shropshire MP, I support the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) in calling for a debate about roads and road investment. Just after the last election, we saw the removal of the M54-M6 toll road link from capital infrastructure projects. I should like to debate that in the House, and I am sure that other Shropshire MPs would, too.
Sir George Young
This reminds me of when I was Secretary of State for Transport many years ago, and heard all these pleas for extra investment, which I take seriously. I remind the hon. Gentleman that when his party came to power it imposed a moratorium on many of the schemes with which I was planning to go ahead. None the less, he makes a serious point about that particular road, and I shall draw his concern to the attention of my right hon. Friend the Secretary of State for Transport.
Tony Baldry (Banbury) (Con)
May we have a debate next week on today’s written ministerial statement on the retention of the mobility component in residential care? It would give the House an opportunity both to thank the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller), for listening to hon. Members on both sides of the House and to organisations such as Leonard Cheshire Disability, and to welcome the fact that, today, the Government have announced that the mobility component of disability living allowance will not be removed from people living in residential care homes, as an amendment will be tabled to the Welfare Reform Bill on Report in the Lords. That is welcome news, and the House ought to note that it is an extremely good example of Ministers taking the care, time and trouble to listen and respond accordingly.
Sir George Young
I am grateful to my hon. Friend. In business questions about 12 months ago, that subject was frequently raised by Members on both sides of the House, who expressed concern about our proposals under the personal independence payment to remove the mobility component of DLA for people in residential accommodation. As he knows, we asked Lord Low to review our proposals. He reported a few weeks ago, and today, the Under-Secretary of State for Work and Pensions has announced that we will not go ahead with our original proposals, as my hon. Friend said. We will table an appropriate amendment to the Welfare Reform Bill in another place to retain that entitlement, which enables people to have the mobility that they very much welcome if they live in residential or nursing homes.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
You fortuitously called me, Mr Speaker, just in time to revive an old English custom: a pinch and a punch for the first day of the month. Of course, I would never pinch or punch the Leader of the House, but I might be tempted to do so with the Government unless during the slight time announced today we have a serious debate on the fact that university applications are already 15% down, which is a serious challenge to our university system. The punch is that we should do something more ambitious on youth unemployment than what came out of the autumn statement.
Sir George Young
I do not think that the position on university applications for next year is quite as grim as the hon. Gentleman outlines. There was a fall of 0.9% for places that had to be applied for by 15 October. The 15% drop to which he refers is in applications for which there is still time to apply. We have not reached the final date, so it is too soon to say that there will be a fall of 15%. The earlier figure to which I referred is much more encouraging. If one looks at the demography, one will see that fewer people in that age group are coming forward for higher education.
Claire Perry (Devizes) (Con)
May we have a debate on women and the prison system? Mahatma Gandhi said that a society can be judged by how it treats its first, its last and its lost. It is my strong belief that women in the prison system and the 17,000 children a year who are separated from their mothers as a result of incarceration are among the lost. May we have a debate in Government time to review that important problem?
Sir George Young
I welcome my hon. Friend’s interest in that important subject. I very much hope that our new approach to the penal system of payment by results will also benefit women in prison, that new contractors with an interest in finding long-term, secure employment and accommodation for those leaving prison will come forward, and that we will be able to improve our record so far and help those women rebuild their lives after leaving prison.
Mr Dave Watts (St Helens North) (Lab)
May we have a debate on why the Government have decided to increase the funding for transport in London while slashing it across the rest of the country? Are they trying to buy some votes for Boris?
Sir George Young
Certainly not. Our policy on rail fares applies throughout the country. We have changed the formula from RPI plus 3 to RPI plus 1, which will benefit travellers in whichever part of the country they travel. As far as the capital programme is concerned, if the hon. Gentleman looks at the announcements my right hon. Friend the Chancellor made on Tuesday, he will see that every region in the country will benefit from infrastructure projects being brought forward.
Gavin Williamson (South Staffordshire) (Con)
Just the other week I visited the Cheslyn Hay Boys Brigade, an organisation that has been running for 40 years as a result of the dedication and commitment of its volunteers. May we have a debate on how we can encourage more Boys Brigades to play an active role in supporting young people’s involvement in civic society?
Sir George Young
I welcome the work of the Boys Brigade in my hon. Friend’s constituency and agree that it has a role to play in achieving the objective he has just outlined. I cannot promise a debate in the near future, although he may be able with some ingenuity to squeeze the subject in on Tuesday, and there will be the normal pre-Christmas Adjournment debate on the Tuesday we rise, during which he may have an opportunity to develop his case with yet greater eloquence.
Paul Flynn (Newport West) (Lab)
May we discuss whether giving to the few, rather than the many, and describing the principal sacrifice by more than 1 million people yesterday as “a damp squib” is likely to create a big society or a divided society?
Sir George Young
Yesterday’s strike had less of an impact than some people had feared. Fewer job centres closed than in June and the number of schools that closed was lower than had been feared. While I am on my feet, I would like to pay tribute to those who work for the House for ensuring that it could operate yesterday and that in the Chamber we could have important statements and a debate on living standards.
If the hon. Gentleman looks at page 4 of the distribution analysis, he will see that the distribution is progressive and that those in the top 10% are paying 10 times more than those in the bottom 10%.
Karen Bradley (Staffordshire Moorlands) (Con)
I know from my own experience and that of my constituents just how important health visitors are to new mums in the vital first few weeks of a baby’s life, so will the Leader of the House find time for a debate on health visitors and other support given to new mums to help families through that difficult and daunting time?
Sir George Young
I am grateful to my hon. Friend. She will know that one of the commitments we made was to increase the number of health visitors, which we are doing by redeploying resources. With regard to social mobility and giving people a good start in life, health visitors and what we are doing with free nursery care and the pupil premium are all part of a process of enabling people from disadvantaged families to break through and achieve their full potential.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Further to the question asked by my hon. Friend the Member for Huddersfield (Mr Sheerman), may we have a debate on university applications? Today, applications are down 15% on average, compared with this time last year, but in Middlesbrough they are down 40%. Does the Leader of the House agree with the chair of South Tees Conservative Future when he said that he “can see the benefits of lower applications”?
Sir George Young
I am in favour of more applications but, as I said to the hon. Member for Huddersfield, it is too soon to draw the conclusion that I think the hon. Gentleman is drawing—[Interruption.] It makes sense to wait until applications close before drawing conclusions on whether they are up or down on last year. As I said, where applications have closed the reduction is 0.9%, so I think that he is being unduly alarmist.
James Morris (Halesowen and Rowley Regis) (Con)
May we have a debate on how the Government are working with local authorities to protect some of our most vulnerable children, especially in areas such as Sandwell, where the Labour-run council was recently judged by Ofsted to be failing in its provision to some of the most vulnerable children in the community?
Sir George Young
I very much hope that the local authority will respond to the Ofsted report and seek to improve its standards. I will draw my hon. Friend’s concern to the attention of my right hon. Friend the Secretary of State for Education.
Mr Denis MacShane (Rotherham) (Lab)
May we have a debate on anti-Semitism, because yesterday an hon. Member of this House said in front of a House Committee that Mr Matthew Gould, our distinguished ambassador to Israel, should not serve as such because he is Jewish? In such a debate we could make it absolutely clear that we do not have a religious bar in our diplomatic service and that we do not say that Jews cannot serve in Israel or that Catholics cannot serve in Catholic countries or the Holy See, so that we may eradicate anti-Semitism once and for all from public discourse in our country?
Sir George Young
I agree with the right hon. Gentleman and applaud the work that he did in the last Parliament on the subject. The Foreign and Commonwealth Office is an equal opportunity employer. It is inconceivable that it would apply any sort of prejudice of the type to which he refers in deciding who should be our ambassador in any part of the world.
Gavin Barwell (Croydon Central) (Con)
Earlier this week one of my constituents was arrested after a video of her ranting at fellow passengers on a Croydon tram and using the most foul racist language spread on social media. It shows that the evil of racism is still with us, but it also shows, on a positive note, the power of social media, as it allowed her to be caught and showed that the vast majority of Croydon residents do not share her views. May we have a debate on how the evil of racism in our society can finally be eradicated?
Sir George Young
I agree with my hon. Friend. I should not comment on the particular incident, as I understand that charges have been made. It would be quite wrong if people could not travel on public transport because they were worried about being subjected to the sort of abuse to which he refers. I believe that the penalties we have to deal with hate crimes are serious and hope that they will be used if the offences justify them.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The Government have stated their desire to rebalance the economy and make up for the thousands of public sector jobs that are being lost in regions such as mine, yet today we received the dreadful news that 4,500 jobs at Carillion—a big employer based in Newcastle and Gateshead—have been put at risk as a direct result of the Government’s changes to the feed-in tariffs for photovoltaic panels. May we have an urgent debate on how their policies are impacting on private sector jobs in regions such as the north-east?
Sir George Young
I hope that the hon. Lady is able to intervene in the debate on Tuesday. I think I am right in saying that, right at the end of questions to the Secretary of State for Energy and Climate Change, the specific case of Carillion was raised and my right hon. Friend dealt with it. On the overall issue of unemployment, the OBR forecast shows that employment will be higher and unemployment lower if we compare the end of this Parliament with the start.
Glyn Davies (Montgomeryshire) (Con)
In Tuesday’s autumn statement, we heard good news on regional infrastructure development, and I was encouraged in particular to see the Chancellor refer to engagement
“with the Welsh Government on improvements to the M4.”
Will my right hon. Friend the Leader of the House ensure that there are opportunities for hon. Members to discuss investment in cross-border issues and projects that impact on Montgomeryshire and other cross-border constituencies?
Sir George Young
Those are important issues, and my hon. Friend reminds the House that there is indeed a commitment to
“engage with the Welsh Government on improvements to the M4 in south east Wales.”
The Welsh Government will also benefit from the Barnett formula, receiving enhanced funding in line with that which has been allocated to England, and there is also an urban broadband fund, which will create 10 super-connected cities, including Cardiff. There was a lot in Tuesday’s announcement to help my hon. Friend’s constituency and others in Wales.
Jonathan Ashworth (Leicester South) (Lab)
Given that the Leader of the House seems, if I may say so, to be struggling somewhat to arrange items of business, may I suggest that he schedules a debate on the important work of faith organisations in what I presume he would describe as the big society? Will he also join me in congratulating Leicester’s council of faiths, now in its 25th year, on its successful inter-faith week?
Sir George Young
I applaud what Leicester is doing on that particular subject, but let me explain to the hon. Gentleman what happens. The Government schedule time for Government legislation, and most of the rest of the time is allocated to the Backbench Business Committee, so if he wants a debate on faith organisations, which I would heartily support, he needs either to present himself on a Tuesday at 1 o’clock to that Committee and put in such a bid, or to apply to you, Mr Speaker, for an Adjournment debate. That particular subject would be warmly welcomed on both sides of the House.
Harriett Baldwin (West Worcestershire) (Con)
On Tuesday in the autumn statement, the Chancellor made the argument that investing in early years education and schools will do more to lift people out of poverty than just increasing benefits. Figures that I have obtained from the Library show that of all single-parent families on child tax credits with five or more children, 23,000 such households are out of work and 4,000 are in work, so may we have a debate about whether the best way to help those households aspire to greater prosperity is through helping parents into work with increased free child care, rather than increasing the size of their benefit cheque?
Sir George Young
My hon. Friend is absolutely right: the way to help such people is to help them into work and to remove the barriers that prevent them from going into work, one of which is child care. She will know that we have expanded free nursery education, first, for all three to four-year-olds and, then, to 20% of two-year-old children from disadvantaged families—a figure that was increased on Tuesday to 40%. I very much hope that that will help achieve the social mobility to which my hon. Friend refers.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
May we have a statement from the Government on the protections given to whistleblowers? This is a particularly emotive subject in my constituency, as a result of the legacy of the Harold Shipman murders and the crucial role that whistleblowing played in bringing him to justice. A ruling in the Court of Appeal last month, however, to the effect that employers cannot be held responsible for incriminatory acts by the fellow employees of another of my constituents, has some people worried that the protections that we give to whistleblowers are not vigorous enough. Will the Leader of the House raise that issue with his colleagues in the Ministry of Justice and, perhaps, arrange a meeting between me and one of those Ministers to discuss it further?
Sir George Young
The hon. Gentleman makes a serious point, and there should not be the deterrent, which he implies, preventing people from coming forward and reporting malpractice, injustice or, even, criminal activities. Of course I will raise with the Lord Chancellor the concern that the hon. Gentleman has expressed following that decision of the courts, and I will see whether the Government need to take any remedial action.
Brandon Lewis (Great Yarmouth) (Con)
In Norfolk and East Anglia, a huge number of engineering, energy and high-tech businesses are ready to expand and grow, but for many years they have complained about the previous Government’s neglect of our infrastructure and, particularly, our road infrastructure. I therefore welcome this week’s announcement on the A14, building on the A11 and the Government’s broadband investment in East Anglia. May we have a debate on infrastructure and the economic opportunities resulting from it, particularly so that we can highlight in Norfolk the further opportunities that will emerge if we eventually dual the A47?
Sir George Young
My hon. Friend makes an important bid for yet further investment in infrastructure in his constituency, and I note that he welcomed Tuesday’s announcement, which will improve the A14, A11 and parts of the M1—junctions 10 to 13. I will pass on to the Secretary of State for Transport the fact that my hon. Friend’s appetite has now been whetted, and that he wants to see yet further investment in his constituency.
Mark Lancaster (Milton Keynes North) (Con)
May we have a debate on localism? The Nun Wood wind farm application spans three local authorities, each of which looked at it independently and, in line with their local plans, turned it down, only for a distant planning inspector to decide that he knew better than the local plans, thereby allowing the application. Does the Leader of the House understand why my constituents, my hon. Friend the Member for Wellingborough (Mr Bone) and the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), feel so strongly about this issue, which is a real smack in the face for localism?
Sir George Young
I understand my hon. Friend’s disappointment at the decision of the planning inspector, and I know from my time as a planning Minister that there are now fewer opportunities to appeal. I very much hope that, when the Localism Bill hits the statute book and we introduce a new planning regime, there will be a system that is more responsive to local needs than the system we operate at the moment.
Mr Philip Hollobone (Kettering) (Con)
Given my right hon. Friend’s personal commitment to this Chamber being at the centre of the political life of the nation, will he support the motion, put forward by the Backbench Business Committee on Monday, that ministerial statements on major policy announcements be made first to this Chamber of the House of Commons?
Sir George Young
I reaffirm my commitment to that part of my hon. Friend’s motion. If he has looked at the Government’s response to the Procedure Committee’s report, he will see that I have severe reservations about the second part of his motion, which includes a rather punitive regime for breaching that aspect of the ministerial code. I will in due course on Monday, if I catch your eye, Mr Speaker, explain why the Government have doubts about the wisdom of the second half of the motion.
George Hollingbery (Meon Valley) (Con)
The Leader of the House will know about the extensive work being undertaken at the Department for Communities and Local Government on community budgets, including 16 pilot programmes, on families with complex needs in particular and on cross-departmental spending to solve those problems. Given the wide range of measures being taken by the Government, particularly with reference to today’s announcement by the disabilities Minister, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller), may we please have a debate about the scope of that work and its potential consequences?
Sir George Young
I welcome such a debate on that initiative and on other schemes such as the early intervention grant, which has done a lot of useful work, trying in particular to bring together funding streams that were previously disparate, and providing a more comprehensive policy to help such clients. I cannot promise such a debate, but in the pre-Christmas Adjournment debate my hon. Friend could initiate a discussion on that important subject.
Bob Blackman (Harrow East) (Con)
Thirteen days ago four Harrow police officers were stabbed while trying to apprehend a suspect in neighbouring Kingsbury. I am pleased that their courage has been commended by the Home Secretary and by the Mayor of London, and that my right hon. Friend the Prime Minister is writing to the four police officers, who I am pleased to say are recovering after having suffered those injuries. They are also about to receive “Get well” cards from local children, who are pleased about the work of the police in helping them to celebrate their religion and in going to school, but may we have an urgent debate or a statement on the measures that we can take to help the police and, in particular, given the protective clothing that is issued to them, to combat knife crime?
Sir George Young
Many of us will have seen that particular incident on our television screens. The specific issue of protective clothing is a matter for the police service, and I will draw my hon. Friend’s concern to the attention of the appropriate authorities, but more broadly he has reminded the whole House of the professionalism and bravery of our policemen and women. They get up in the morning and do not know what risks they will confront during the day, but they discharge their responsibilities with a commitment for which we are all very grateful.
Jeremy Lefroy (Stafford) (Con)
May we have a debate on ways to tackle the shortage of doctors who are specialised in accident and emergency care—a major factor in the temporarily reduced hours of the A and E department at my local hospital in Stafford? I place on the record my thanks to the Minister of State, Department of Health, my right hon. Friend the Member for Chelmsford (Mr Burns), for all his great help in the matter, but it is a long-term problem that needs to be discussed and tackled.
Sir George Young
My hon. Friend draws the attention of the House to a serious issue, but the problem in that case is the shortage not of resources, which are there, but of applicants to take up the posts. Discussions are indeed continuing between the Department of Health, the strategic health authority and the local trusts to see whether those barriers can be overcome, but I am grateful to my hon. Friend for his thanks to my right hon. Friend. I will pass on my hon. Friend’s concern and see whether we can accelerate the process.
Guy Opperman (Hexham) (Con)
Thank you, Mr Speaker; I shall try to be worth the wait.
In Northumberland, hundreds of women have outstanding equal pay claims that some Opposition Members and I are trying to persuade the local authority to resolve. Please may we have a debate in the House on the issue of equal pay for women, past and future, and what the Government are trying to do about it?
Sir George Young
The Government are keen to address the injustice of unequal pay between men and women. In 2009, there was a gap of some 16.4% between men’s and women’s pay. We are working with employers to encourage voluntary non-legislative action to improve transparency on pay and on equality more generally.
Point of Order
Paul Flynn (Newport West) (Lab)
On a point of order, Mr Speaker. May I take this first opportunity to express my regret that in my excitement at being called early in topical questions, I inadvertently referred to the Secretary of State instead of the Minister of State, thereby denying the Minister of State the opportunity to explain how his green crusade is not only one of exhortation but of example? I express my regret to both of them.
Mr Speaker
I am extremely grateful to the hon. Gentleman for that very courteous clarification.
Backbench Business
Mr Speaker
We have two debates on, respectively, BBC cuts and debt management services. It may be for the convenience of the House if I explain that the Backbench Business Committee anticipated and recommended that there should be a broadly equal division of time between the two. Starting as we are at just after 12.20 pm, I would expect the first debate to conclude at approximately 3.15 pm.
BBC (Proposed Cuts)
Austin Mitchell (Great Grimsby) (Lab)
I beg to move,
That this House calls upon the BBC to reconsider the scale and timing of its proposed cuts so as better to safeguard BBC local radio, regional television news and programmes, the morale and enthusiasm of its staff, and the quality of BBC programmes generally, all of which have made the BBC the most respected public service broadcaster in the world.
I am very grateful to the Backbench Business Committee for providing this wonderful opportunity for Members to say what they think of the cuts proposed by the BBC in Delivering Quality First. It is important to get those views on the record and for us all to say what we think the BBC should do given its current financial stringencies. I am an admirer of the BBC. It is the best news and media organisation in the world, and an institution of which we in Britain can be proud. It is better to say that outside the BBC and admiring it than it is inside and working for it, as I once did, when one has to tackle the layers of bureaucracy above.
This admirable institution is now threatened by cuts. The licence fee settlement is the worst in the BBC’s history, with the licence fee frozen at £145 for six years. On top of that, the BBC is required, from 2014, to finance the World Service and BBC Monitoring, both of which used to be a Foreign Office responsibility and should, in my view, continue to be so. The BBC World Service does a better job for Britain in the world than the Foreign Office and all its pinstriped mandarins put together, and it should be financed by the Foreign Office. In addition, the BBC loses £150 million a year to finance superfast broadband, for which, again, the Government should be responsible, and £25 million a year to finance the Secretary of State’s dream of local TV stations. All this amounts to savings of 16% in the annual budget, to which the BBC has added another 4%—in other words, £670 million a year in cuts. That is on top of the efficiency savings of 3%, or £487 million, a year that were required in 2007 for the period 2008-13, and are, in fact, being exceeded. The BBC is suffering a double dose of anorexia, and that threatens quality, jobs, innovation and creativity, and hence a groundhog diet of endless repeats on television.
This is a squeeze too far. I have to admit that the BBC has certain faults, which I shall list. It has not helped itself with its erratic financial decisions. For instance, there was the hokey cokey about Broadcasting house. First, it was going to move, then it moved out to White City, and now it is going to move back and sell the old television centre at White City.
Mark Pritchard (The Wrekin) (Con)
I congratulate the hon. Gentleman, who is chairman of the all-party group on the media, on his consistency on this issue. I do not accept that the BBC has an anorexia problem. It is an obese organisation and, like the rest of the public sector, it needs to go on a diet. I accept that the BBC does a huge amount of good and is probably the best news organisation in the world. Does he accept that the decision on where the cuts fall should not discriminate against regional and local radio? The BBC is in danger of being very London-centric, retaining managers in London while laying off hard-working journalists in the regions.
Austin Mitchell
I accept that absolutely. The BBC should concentrate on efficiency savings, which are still possible in what is, as the hon. Gentleman says, a large organisation. That, and not the cuts in regional services and local radio stations that are forecast in Delivering Quality First, should be the basis of any cuts.
Austin Mitchell
I would rather not accept a lot of interventions because many Members want to speak, and I think it is better that they make their points in the debate rather than interrupt my diatribe.
The BBC bureaucracy has always been more adept and skilful at interfering with and managing programmes than at managing the finances of the BBC. As a result, it is unable to cost its services and say where the efficiency savings should come. That is a problem for the BBC, but it is being cured with the help of the National Audit Office, which says in its report on the BBC’s efficiency programme—we discussed it in the Public Accounts Committee—that the BBC is making splendid progress. I want that progress to continue. I want the BBC to be able to say, “If we cut to this extent, the overall consequences will be X and the consequences for delivery and quality of services will be Y.”
We need that clarity so that the BBC can take a firm position on what cuts it can accept instead of its current approach, which is the culture that characterises Delivering Quality First of can-do submission to whatever the Government propose. The Secretary of State shakes his head. Last October, though, the BBC apparently quaked before the terrifying spectre of the Secretary of State; we have read about what must have been a terrifying weekend of pressure that he brought to bear. It should be immortalised in some kind of drama—“Three Days in October”—showing the terrifying effect that he had on the BBC, which caved in totally. The Secretary of State put the frighteners on, Sir Michael Lyons resigned, and the BBC set about a “Yes sir, no sir, three bags full, sir” programme of cuts. Indeed, the director-general, Mark Thompson, told staff in Belfast—this is very unlike him—
“If you’re really that unhappy, if you think that you can’t do your best work here then leave—no-one is forcing you to stay.”
That situation, described as consultation of the BBC staff, was forced on the BBC by the Secretary of State with his bullying tactics last October. It is a skill that amazes me. Now he sits there smiling, all friendly, but that is not how the BBC saw him last October.
I am not saying, in all this, that the BBC is its own worst enemy, because the Murdochs are still around. Indeed, the Murdochs are selling programmes; for instance, Elisabeth Murdoch sold “MasterChef” to the BBC. However, I am saying, loud and clear, that these cuts are going to be deeply damaging to the quality of the BBC service. One cannot force a 20% spending reduction over five years, with a loss of 2,000 jobs, 1,000 of which are in the vital news services, without it being a blow to creativity and to all the creative industries that supply and support the BBC, and without doing deep damage. That is what will happen over the coming years if the BBC, as it is being forced to do, follows the prescriptions laid out by James Murdoch in the MacTaggart lecture in Edinburgh a few years ago. The cuts programme has an amazing resemblance to what he said he wanted.
Let us look at the consequences. This debate provides an opportunity for all Members to give their views on the consequences and to say what they think should be done. I would like to first consider local radio. There is a strong feeling among Members that the cuts to local radio go too far and will be too damaging. That point emerged in the Westminster Hall debate.
Daniel Kawczynski
On the issue of local radio stations, Radio Shropshire is not even allowed to procure its own window cleaners. That is done centrally from London. The BBC in London sends window cleaners from Lancashire to clean the windows in Shropshire. That is highly unacceptable and must be changed. There must be better procurement and value for money at the BBC.
Austin Mitchell
I hope that the cleaners from Lancashire do not arrive with little ukuleles in their hands. That would be an example of excessive expenditure at the BBC. However, such examples do not make the case for the cuts, because the cuts will be much more deep-seated. I accept that there are anomalies and problems.
The cuts will press heavily on local radio, which we all respect. It provides our roots in society and in politics. I am particularly proud of Radio Humberside. It does not do enough on politics, but that is probably because it would lose its audience if it did more on politics. It would gain me, but it would lose its audience. It is a particularly good station. It will lose 8.5 members of staff as a result of these decisions.
In BBC local radio overall, the output will be cut by 22%, the budgets will be cut by 19%—far in excess of all the other cuts—and 280 jobs will be lost, which is an average of seven per station. That will be a crippling blow. Such harsh cuts press particularly hard on small organisations that have high fixed costs.
Hugh Bayley (York Central) (Lab)
I am grateful to my hon. Friend, who is making a magnificent speech. The talk about window cleaners trivialises the problem. BBC Radio York, which got the title of best original journalism of the year this year, will lose eight journalists as a result of the cuts. Surely the licence fee should pay for the sort of broadcast services that commercial stations will not provide. Local radio is at the core of that.
Austin Mitchell
I agree with my hon. Friend. I am sure that that station’s ratings will go up as his appearances multiply. It is true that local radio provides a better service for older people and that it is more listened to by older people. That is why I am dealing with this issue—I am one of the oldest Members around. It is true that the cuts will be deeply damaging to the roots of the BBC and to us in particular.
The same is true of the quality of the local press. The number of reporters in the local press is declining steadily and rapidly across the country. It is also tragic that regional television, which we rely on for the coverage of regional politics, faces cuts of 16% and 100 jobs lost. Regional news on television has already suffered from the cuts at ITV. Competition will be further damaged by these cuts.
BBC Online, which the Murdochs have complained about vociferously because it competes with their paid services, will be cut by 25%. That is real vandalism, because it is a quality service. I rely on it heavily for news and information.
The Asian Network, which is the only non-sectarian, non-political service for news, music and discussion for all Asian communities, will lose 47 people, have a budget cut of 46% and face the closure of its Leicester newsroom. That will be a bitter blow to ethnic communities and to the ethnic mix among BBC staff.
Those are the major objections that I have to the cuts. I have no doubt that other Members will put forward other objections. The BBC must consider the objections that come from us and from the rest of society. There may be other cuts to come. That is not clear because negotiations are still going on over pension conditions.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Before my hon. Friend leaves the issue of regional television, does he think that it is consistent with the BBC charter for the BBC to locate most of its production at Salford, Bristol and Cardiff, and to leave areas such as Birmingham, the west midlands and his part of the world out of the loop?
Austin Mitchell
No, I do not. It is true that services are being unacceptably concentrated in those places. We want better services and better staffing in Yorkshire and the Humber, which—dare I say it—are a nation in themselves and deserve to be treated as a nation. The cuts are a serious setback to recruitment and to the transfer of jobs out of London, which cannot be satisfied just by the creation of the monster of a centre in Manchester.
The newsrooms of the BBC and the BBC World Service are going to be merged. There are overlaps there, which will lead to further redundancies. We are told that Radio 4 has been protected from cuts, but its producers have been required to reapply for their jobs.
Bill Esterson (Sefton Central) (Lab)
I am pleased that my hon. Friend has raised the issue of Radio 4, which, as he said, is being protected. On Merseyside, more than twice the number of people who listen to Radio 4 listen to BBC Radio Merseyside, yet Radio Merseyside faces a cut of 20% and will lose a third of its staff. Overwhelmingly, the people who listen to it are elderly, disabled or poor. Those people do not have the option of finding other means of entertainment. Does he agree that it would make sense to protect local radio rather than Radio 4?
Austin Mitchell
I agree absolutely. Radio 4 tends to be radio south-east, or indeed radio Westminster at times, given its concentration on politics. Listeners in the regions deserve the same degree of protection.
I was arguing that Radio 4, which is supposed to be protected, is not being protected because its producers are all being asked to reapply for their jobs. Audio & Music, which produces programmes such as “Desert Island Discs”, for which my invitation to appear is still to arrive—I hope that it arrives before rigor mortis sets in totally—has been cut by 18%, with a loss of 140 jobs.
To conclude, my message to the BBC is simple and threefold. To the BBC Trust, I say please go easier and slower with the cuts, particularly those to local services. To the BBC management, I say reconsider the proposals in Delivering Quality First carefully, because management in the regions are in revolt. We have had discussions with the regional management in Yorkshire and Humberside. Although they are preparing the cuts, they clearly want MPs to come forward against those cuts. They are inciting us against their own management.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I hope that I will not pre-empt my hon. Friend’s third message to the BBC. The concern has been raised with me that the BBC does not seem to be listening to the evidence of the number of listeners and viewers at a local level. It also proposes to create super-regions for television programming, in particular for “Inside Out”, where it believes that audiences will tolerate it. However, there is no evidence of that.
Austin Mitchell
I agree absolutely. The people listen to the BBC, but is the BBC listening to the people in this instance? I ask BBC management, who have proposed a diet of sacrifices and cuts for everybody else in the BBC, what they can bring to the party. Salaries have become inflated in the BBC—there are 1,065 people earning more than £70,000 a year. Good heavens, that is as much as MPs get—what a scandal! We are grossly overpaid, of course, everybody says so. There are 45 people at the BBC with salaries of more than £190,000 a year, and the director-general’s package is also pretty inflated, it seems to me.
If BBC management agreed to cut the director-general’s package to £142,000 and lower the other top salaries in ratio with that, they could save and bring to the feast £27 million. That would be helpful when they are imposing cuts on other people. We are all in it together, and they are in it as much as the BBC staff. They should recognise that fact by making sacrifices. That is my third message to the BBC.
My final message is to the Government. I say to them that what happens is their responsibility, and substantially that of the Secretary of State. If and when—I say “when” because I think it is a case of “when”—it becomes clear that the cuts are destroying quality and ending intelligent debate and discussion of politics, the Government should stand ready to provide a supplementary licence fee. All the poll evidence indicates that people are prepared to pay more for their licence fee. One recent poll showed that they were prepared to pay 7p more a day. That would obviate the need for the cuts altogether. The Government should bear that in mind. They should certainly reconsider imposing the burden of the BBC World Service on the BBC itself. It should properly be financed by the Foreign Office.
I say to my fellow MPs who will speak after me, let us please avoid the old carping and criticism of the BBC. We all grumble at the BBC—it is there to be grumbled at, like the weather. However, it is also there to be admired. It is the best producer of quality programmes and quality news in the world, and an institution that we should be proud of, not treating in this horrendous fashion of cuts, sacrifice and dumbing down.
Madam Deputy Speaker (Dawn Primarolo)
Order. May I explain to Members that, as Mr Speaker mentioned, we plan to end the debate at 3.15 pm and start the wind-ups at 2.45 pm? There are 12 Members who have indicated that they wish to speak, and I can be a little more generous on the time limit if Members are disciplined. If those speaking at the beginning take more than 10 minutes including interventions, it will mean that those who come later get less time. With that in mind, and knowing the self-discipline that Members will want to apply, I will set the time limit on Back-Bench speeches at 10 minutes.
Martin Vickers (Cleethorpes) (Con)
It is a pleasure to follow the hon. Member for Great Grimsby (Austin Mitchell). Clearly Radio Humberside is going to get a few plugs this afternoon.
It is tempting on such an occasion to attack and compliment the BBC in equal measure. I am very happy to say that I would pay my licence fee for Radio 4, and if I happened to get the Radio 5 Live football commentaries, “Newsnight” and “Match of the Day” thrown in I would be a satisfied customer. In reality, however, we are here this afternoon to convey to the BBC, through the Secretary of State, the concerns of our constituents.
It is clear that our constituents greatly value local radio. In the case of mine, that means Radio Humberside. Unless someone is local to the area, it is difficult for them to appreciate the antipathy to the word “Humberside”. Indeed, one of my illustrious predecessors, Michael Brown, pledged to expunge it from the English language. Alas, it lives on, although it is now sometimes referred to as “the Humber”. However, Radio Humberside has gone a considerable way towards overcoming the in-built suspicion of anything containing the word “Humberside”. Nowadays, we are at least referred to as “northern Lincolnshire”.
Nic Dakin (Scunthorpe) (Lab)
Does the hon. Gentleman agree that despite the issue of the word “Humberside”, there is a lot of affection for Radio Humberside among people in Scunthorpe, Grimsby and on the south bank of the Humber, particularly for its support for and reporting on local people’s activities, whether they be football, arts or other things?
Martin Vickers
I certainly agree with the hon. Gentleman, and the word “affection” appears somewhere in my notes in relation to Radio Humberside. I suspect, though, that most of my constituents on the south bank of the Humber are more interested in what goes on in Louth and Lincoln than in Cottingham and Kirk Ella. I therefore remain convinced that some savings could be made through joint working with Radio Lincolnshire. Residents in places such as Keelby and Caistor, which are really suburbs of Grimsby and Cleethorpes, feel much more part of what we might call the Humberside community than of the more rural Lincolnshire community. I acknowledge that the success of Radio Humberside is partly because people grow fond of—even affectionate towards—some of the presenters, such as Peter Levy with his lunchtime phone-in.
Daniel Kawczynski
Does my hon. Friend agree that local presenters are very much admired and revered by the local community and hold local politicians to account in debates? May I put in a plug for Eric Smith, my favourite presenter on Radio Shropshire, who is also appearing in “Aladdin” at Shrewsbury’s Theatre Severn, playing the emperor of China? I very much hope that people will go and see him over the Christmas holidays.
Martin Vickers
I hope that plug serves my hon. Friend well in his future dealings with his local radio station, just as I hope that Peter Levy will view my next appearance on his programme favourably after my mention of him.
With the decline of many local newspapers, although thankfully not the Grimsby Telegraph, local news on BBC stations will become more important, although it is easy for them to overdo the contribution that they make to local politics. I can speak only for the Humberside and Lincolnshire area, but many years ago there was a Radio Humberside reporter at local council meetings as a matter of course. Indeed, when I was first elected to Great Grimsby borough council in 1980, there was a reporter who not only attended meetings of the full council but had the unpleasant task of even being at every committee meeting. I often used to sympathise with him as he sat through far more meetings than even the councillors were forced to.
Hugh Bayley
The hon. Gentleman is absolutely right to stress the local links that local radio has with the community and the identification of listeners with their local radio station. During the catastrophic floods in York 11 years ago, I was tasked by the police silver command one Friday night, when we ran out of sandbags, with trying to find some people to come in overnight and sew additional ones. I put out public appeals on BBC Radio York, Radio Humberside and Radio Lincolnshire. Two hours later, a factory manager in Lincolnshire said that he had been called up by workers who had gone to the factory having heard the programme, so that they could open it up and sew. Within 24 hours there were 1 million sandbags. Is there not a risk that such local community service by radio—
Madam Deputy Speaker (Dawn Primarolo)
Order. We have now had an advert and an intervention that is really a speech. Interventions are supposed to be brief and relevant to the point that the speaker who has the floor is making. I would be grateful if we could stick to that.
Martin Vickers
Thank you, Madam Deputy Speaker. I entirely agree with the point the hon. Gentleman makes on floods and the like. We have had our share of floods in the Cleethorpes area—most recently four years ago. Local radio comes into its own on such occasions.
To go back to the coverage of local politics, it is completely unrealistic to expect local council meetings to be covered individually by reporters. Indeed, in some areas, there are far too many local councils to be covered by local stations, which is another argument in favour of single-tier local government—that is an argument for another day.
I support the Government’s approach to the licence fee. Any organisation as large as the BBC can and should make savings. The licence fee is a significant burden—
Martin Vickers
I think I am running out of time, so if the hon. Gentleman will forgive me, I will carry on.
The licence fee is a significant burden to those on low and fixed incomes. I acknowledge that although various schemes help some categories of my constituents, the licence fee falls disproportionately on the elderly and the housebound, who quite naturally rely to a much greater extent on their radios for company and entertainment.
The licence fee must be contained. I do not subscribe to the more radical proposals for the BBC that are supported by some of my hon. Friends—I would regard myself as a critical friend of the BBC. As the hon. Member for Great Grimsby pointed out, in many ways, the BBC sets a benchmark for quality and is an institution of which we should be justly proud, but it must recognise that it is funded by what is in effect a compulsory tax, and the anger the general public feel about some of the salaries and fees paid to executives and presenters. Why do more than 100 members of staff earn more than the Prime Minister? I remain unconvinced of the merits of that situation, although I am sure they are capable individuals.
The director-general carries a heavy responsibility, but he and his colleagues must recognise that my constituents, many of whom do not earn as much in their working lives as his annual salary, contribute to that. My constituents remain amazed that £15,000 per episode of “Question Time” represents a reduction in the presenter’s salary—£15,000 is not far short of the average wage for my constituents. I am a passionate supporter of the free market and recognise that the BBC operates in a competitive environment, but it must, like all publicly funded organisations, recognise the circumstances in which the country finds itself.
The motion asks for local radio and regional TV programmes to be safeguarded, but not completely insulated from savings, which to a limited extent can always be found. I put “local” ahead of “regional”. I find the suggestion of a “Radio England” completely unacceptable. Regional radio used to exist. I recall that when I bought my first Marconiphone transistor radio, I could tune into Midlands, North, London and the like as well as exotic stations such as Hilversum, Athlone and Luxembourg. However, regional radio never really had any buy-in from its audience—people did not tune into 434 medium wave for the northern news; they tuned in because that was the best reception in the area.
I enjoy some programmes on BBC 4 television, but I remain unconvinced that its new programming could not or should not be aired on BBC 2—indeed, it would have been before the latter station was dumbed down. That is not a throwaway remark. I clambered into my loft last weekend and dug out some editions of the Radio Times from the 1960s and ’70s—do not ask me why I had them. When I flicked through those pages, I appreciated how much rubbish is broadcast these days in comparison with years gone by. I am told that BBC 4 is cheap television. I can understand that—it does not cost a great deal to re-broadcast a 1976 episode of “Top of the Pops”. I would prefer one from 1966, but that yet again shows my age.
Radio Humberside and local radio generally is greatly supported by our constituents up and down the country. It is that above all else that the BBC should concentrate on safeguarding as it looks for savings in other areas. I hope all hon. Members support the motion.
Valerie Vaz (Walsall South) (Lab)
I begin by thanking my hon. Friend the Member for Great Grimsby (Austin Mitchell) for introducing this timely debate. It is always a pleasure to follow the hon. Member for Cleethorpes (Martin Vickers).
The motion says it all. I call on the BBC to reconsider some of its short-term responses to the problem of relieving pressure on its budget, and I hope to set out why. So many times in the Chamber recently I have had to express my concern about our national institutions, which are the envy of the world. The BBC is a well loved service, and one that is respected for factual output, drama and music. It is now leading the debate on science and bringing its beauty and wonder to the masses.
I shall focus on the national position, what is happening locally in the west midlands and what will happen in future. As my hon. Friend the Member for Great Grimsby said, for just £12 a month, the nation can enjoy new drama, science and current affairs programmes. In my view, the BBC is hamstrung, because although the licence fee settlement is guaranteed until 2017, the licence fee is frozen. As he said, the BBC will also have new funding responsibilities for, among other things, the World Service and S4C, and must make savings of 20%.
The whole point of a public broadcaster is that it need not have an eye to the shareholder, so it can commission new and innovative programmes. The BBC is accountable to viewers, who will always tell it what they like and do not like, but people must have space and time to hone their craft. Creativity cannot be measured as a unit of expenditure.
Steve McCabe
Is it fair that viewers in the west midlands should have to pay the same licence fee as viewers in Cardiff, Bristol or Salford when the former get such a limited return for their investment compared with the latter?
Valerie Vaz
I thank my hon. Friend for that intervention, but I shall come to what is happening to BBC West Midlands.
A drama can have a greater impact and provide greater understanding of a topic; one has only to watch “Later…with Jools Holland” to see this country’s tremendous musical creativity; and in both television and radio, exploring the boundaries of our world and helping us to make sense of it is one of the cornerstones of what the BBC does.
What concerns me most as a west midlands MP is the proposed decimation of BBC West Midlands, which has a unique 90-year history of both factual and drama programme making. It is home to some of the most excellent programmes, such as “Countryfile”, “Coast” and “Gardeners’ World”. A long time ago, I made a programme that came from Pebble Mill—“Network East”—and I remember the expertise of the staff. They edited a piece on the Chelsea flower show at 7.50 pm for transmission at 8.00 pm. One can find such professionalism and dedication to the job across the whole of the BBC. As many hon. Members from the west midlands will know, when we go on the “Politics Show”, a remarkable woman—is there not always a remarkable woman?—does our make-up, acts as floor manager and provides the hospitality at the end of the programme. I am not sure what else she can include in her job. Perhaps the BBC will expect her to be a camera operator as well. That is the nature of her commitment and the commitment of the other people who work there.
The £15 million that is spent on the region is worth £28 million to the local economy, not to mention that Birmingham is the country’s second city and the geographical heart of England. That as well as skilled jobs such as journalists, researchers, engineers and producers could be lost. The pitch is that 150 skilled jobs in the area could be lost.
Tracey Crouch (Chatham and Aylesford) (Con)
If the west midlands is the heart of England, Kent is the garden of England. Is the hon. Lady aware that Radio Kent, which provides many of my constituents with an excellent service, has longer listening hours throughout the week than any other BBC radio station? That is why it is vital to retain top-quality programmes and stations for our constituents.
Valerie Vaz
The hon. Lady serves her constituents well by making such an important point and I hope that the BBC is listening to her. It is not only the skilled jobs that will go; the local news dimension and the cutting edge digital production will be lost. Once lost, such skills will never be regained.
The west midlands is one of the most diverse areas. When BBC operations moved from Pebble Mill to the Mailbox, Mark Thompson said that great cities such as Birmingham were central to his vision of the BBC. None the less, it is the future on which I wish to focus. In the midlands, there is a different a pool of talent from that in London. Broadcasting there offers opportunities for a first step in the media. Outreach work is carried out across the midlands and includes projects such as BBC News School Report, the International School and the university of Birmingham sports partnership in which, hopefully, it will be recognised that women can play sport and that there is a gender balance to be achieved.
Yvonne Fovargue (Makerfield) (Lab)
Does my hon. Friend share my concern that these cuts are having an effect on regional sports? For example, there are fears that the cuts, particularly those in London, will take away 95% of the coverage of rugby league, which is hugely popular in my constituency.
Valerie Vaz
My hon. Friend makes an important point, and I absolutely agree with her. I should also like to flag up my concern that after the move to Bristol, S4C may be made to broadcast from there to save costs rather than from Wales.
Alun Cairns (Vale of Glamorgan) (Con)
I am startled by the claim that S4C could be broadcast from Bristol. Is the hon. Lady telling me that that is official Labour party policy?
Valerie Vaz
Oh dear. I thought that the hon. Gentleman was listening. I was voicing not official party policy, but my concerns. I tend to look at the future and worry about things. The hon. Gentleman should be aware that such a move is a possibility. It is not one with which I agree. People have actually starved to secure the channel S4C, and it should remain in Wales, which is the most wonderful country. Let me press on now.
Each generation has seen the BBC achieving new successes. Programmes such as “Doctor Who” have been reworked and old legends such as “Merlin” have been broadcast. Savings can be found by curbing the excessive salaries of the so-called stars.
Valerie Vaz
Yes, Jeremy Clarkson. As I mentioned earlier, all this output costs £12 a month. If we match some of the savings with a slight increase in the licence fee—7p a day would mean a £2 increase a month—which my hon. Friend the Member for Great Grimsby mentioned, we could stop all these cuts. We cannot have a situation in which we buy in other people’s words and pictures rather than have news reporting on the ground. I have written about this matter to Mark Thompson and the chairman, Chris Patten. The reply, which I received today, does not reassure me that any of these cuts are necessary. I urge the BBC to think again. Operating a camera, directing and editing are different skills. Mistakes are made when there is no time for research and facts are not checked. The BBC is not a throwaway institution, but an institution that nurtures new talent while celebrating the wisdom of the long-standing people who work there. The world is getting more complex; the BBC needs to expand and not contract. The message from this House must be that it has to think again.
Mr Don Foster (Bath) (LD)
I congratulate the Backbench Business Committee on selecting such an important subject for debate and the hon. Member for Great Grimsby (Austin Mitchell) on introducing the debate with his usual panache. Bearing in mind his current attire, I was slightly taken aback by his attack on pinstriped mandarins. Other than that, I agree with a great deal of what he said.
The motion says that the BBC is
“the most respected public service broadcaster in the world.”
From the contributions that we have heard already, it is clear that it is the best public service broadcaster in the world. It is the best because of the high quality of its output on television, radio and online. Its news is both impartial and highly trusted, which is reflected in the fact that it produces only 27% of television news, yet secures 72% of all news viewing.
Bill Esterson
The right hon. Gentleman makes a good point about television. The same is true of radio, and local radio in particular. BBC Radio Merseyside and other regional radio programmes achieve high listening figures among the over-65s. The loss of such a service will be a blow to those people. Is it not true that the core of the BBC’s business is its regional news service and it should rethink its decision?
Madam Deputy Speaker (Dawn Primarolo)
Order. I have already said that interventions need to be brief. Brief means short and not a speech.
Mr Foster
Let me just say to the hon. Gentleman that I will discuss local radio a little later in my speech. The BBC provides a significant training function for many parts of broadcasting—not just for the BBC. One of the things that has not been mentioned is the vital role that local radio provides as the training ground for many of the people who go on to be national news presenters or who get involved in national news production. The intangibles of the BBC are many and varied. It is, for example, one of the best technological innovators. We have seen that with the fantastic success of the iPlayer, which, I think, will be replicated when we have the launch of YouView some time next year.
The BBC also makes a huge contribution to the creative industries in this country. We are well aware not only of its technological and training achievements but of the way in which it provides support for fantastic orchestras and for the Proms. It will make a huge contribution to the 2012 Cultural Olympiad. The BBC, in the many ways in which it operates, is critical to this country. We have already seen a number of cuts to its service. Under the previous Government, huge cuts were required. Indeed, it has already had to find savings of about £1 billion since 1998. That has included reductions in senior management and in salaries and that could go still further.
I was delighted that the hon. Member for Great Grimsby referred to the crucial role that the National Audit Office is now playing in scrutinising the accounts of the BBC. I was very pleased indeed when that role was introduced by the coalition Government.
Before I come on to the cuts, I want to address one other matter that worries me—and this is a criticism of the Government. At a time when the BBC has to deal with these significant problems, some of its attention will be diverted by the Leveson inquiry. It was wrong for the remit of that inquiry to be widened to include broadcasting when there are so many other important issues that need to be addressed.
It is absolutely right that the BBC cannot be immune from the cuts that are facing the public sector at the current time. Lord Patten, the new chairman of the BBC Trust, was right to say that it should be possible to run an outstanding broadcaster on £3.5 billion a year. While the hon. Member for Great Grimsby was castigating the Secretary of State earlier on in his contribution, he should have been aware that the size of the cuts imposed on the BBC could have been considerably higher had the Chancellor required the BBC to fund the free licence fee for the over-75s. Some credit must go to the Secretary of State for his role in ensuring that the cuts were not as great as they could have been. Nevertheless, there are serious cuts facing the organisation and additional responsibilities that it must take on. It is not surprising, therefore, that the director-general has said that the BBC simply cannot take on further responsibilities if there are further cuts coming down the track.
Mr Nigel Dodds (Belfast North) (DUP)
The work that the BBC has done over 30 or 40 years of violence in Northern Ireland is a credit to public broadcasting, but would the BBC not do itself more good if it were more transparent and, for instance, revealed exactly how much each presenter and employee gets? The public have a right to know.
Mr Foster
I hope that the right hon. Gentleman is aware that the BBC has already made great strides in making public that information, but with some individuals there will be issues of commercial confidentiality and contractual relations. It is difficult but the BBC has made progress, and I hope that if we enable the National Audit Office to consider these issues, more information will be forthcoming.
As I said, these are deeply challenging issues, and they include the increased responsibilities of the BBC. Unlike the hon. Member for Great Grimsby, I am pleased that the World Service will come within the wider remit of the operation of the BBC. That will be to the benefit of the excellent World Service, which reaches 165 million people around the globe every week. I recently visited the Arabic and Persian services, which are doing fantastic work and whose contribution during the Arab spring has been immeasurable. We should be praising their work. However, bringing the World Service and the BBC together will bring real benefits. I am pleased that Members on both sides of the House raised concerns about the level of cuts to the World Service—we should all be concerned about that—but I am pleased that additional funding has been found, and I hope that we can find more to ensure that it can continue its excellent work.
I am pleased that, with the management arrangements for taking on some of the responsibility for S4C having been sorted out, the channel now has a secure future, which means that it can continue to provide an excellent service through its Welsh-language service not only to the people of Wales but to the growing diaspora of Welsh people throughout the rest of the country.
I am perfectly sanguine about the need for the BBC to make a contribution towards the roll-out of high-speed broadband. After all, it is part of the BBC’s remit that it delivers services and helps to develop different platforms. It is right, therefore, that it is involved in high-speed broadband roll-out, although I would say to my right hon. Friend the Secretary of State—I have said this to him several times—that one contribution that the BBC could make but is not allowed to make as much as it would like is on demand management to help people to understand the benefits of high-speed broadband and to provide training activities.
I am lucky enough to be the chairman of the all-party group on the BBC, and recently we held a meeting at which Lord Patten and the director-general, Mark Thompson, came before the group to answer questions about its Delivering Quality First plan. It will not surprise Members that more than 50% of questions asked were about local radio and expressed concern about the cuts. I want to make it clear that I join all Members who urge the BBC to think again about the cuts. They are seriously damaging. As a proportion of radio stations’ budgets, the cuts might seem small but, as the hon. Member for Great Grimsby said, given that a high percentage of their budgets will go on fixed costs, the impact on many local radio stations’ cash budgets—used on programmes and to pay presenters—will be significant and do great damage.
I have already mentioned the training issue. I simply do not understand why something as important to so many of our constituents as local radio is under attack like this. It is worth remembering that about 20% of people listen only to local radio. It is a lifeline for such people, particularly older people and the disabled. I hope that the BBC will reconsider that matter, just as I hope that it will look again at regional television. After all, regional television provides journalists with particular insights into, and an understanding of, what is happening in a locality that cannot be reflected by people stuck in Salford, Cardiff, Bristol or wherever.
I hope very much that the BBC will consider one other issue that has not been raised so far today but which has been raised by members of the all-party group: the BBC’s coverage of European issues. It is worrying, for instance, that the BBC has not yet implemented the 2005 Wilson report, which recommended additional training to journalists about the operation of the European Union. Bearing in mind how important the EU is to this country, it is worrying that the only major programme covering European issues, “The Record Europe”, might be axed.
There is one area where the Government could quickly do something to assist the BBC. I find this matter bizarre. In the vast majority of the world, if someone were running a satellite or cable programme, they would be begging to have on their platform the programmes that the BBC produces. They would be paying it to make that contribution. The Government need urgently to address what are called in the jargon “retransmission fees”. If Virgin does not charge, other than for the costs of the operation, to have BBC programmes as part of its popular package, I must question whether it is now appropriate for Sky to receive so much money from the BBC. I urge the Government to look at that.
I end where I began. Notwithstanding the forthcoming cuts, I am confident that the BBC, despite all the changes taking place, will continue to be not only, as the motion states, the most respected public service broadcaster in the world but the best public service broadcaster in the world.
Paul Blomfield (Sheffield Central) (Lab)
In joining colleagues to make the case for local radio, I want to focus on three points. First, the cuts being made to local radio are unfair and disproportionate. Secondly, they will have not only an immediate impact on service but a long-term effect that could threaten the very future of local radio. Thirdly, echoing a comment by the hon. Member for The Wrekin (Mark Pritchard), these decisions are being made by a London-based management who appear not to understand the nature of their service or listeners outside the capital.
I want to illustrate these points with reference to Radio Sheffield, which is a successful station that broadcasts from the heart of my constituency and throughout south Yorkshire and which is listened to by 244,000 people every week. That equates to a remarkable 19% penetration of its potential market. On average, those people listen to Radio Sheffield for eight hours every week. I have to declare an interest as a regular listener of Radio Sheffield too. I shall declare another interest: I also listen regularly to Radio 4. I recognise, however, that Radio 4 has a significantly smaller audience across the country than the 7.5 million people who listen to local radio.
Tracey Crouch
Does the hon. Gentleman agree that one reason people are so loyal to their local radio stations is the variety they provide: there is the heavy speech content in the morning, followed by a variety of music, plugs for local events and so on in the lunch-time and afternoon shows, followed by the interesting speech content mix in the drive-time shows. That variety means loyal listeners.
Paul Blomfield
I agree with the hon. Lady about the variety and local roots of those different strands of the local radio offer.
It is important not only to consider the aggregate total of people who listen to local radio but to take note that one third—2.5 million people—of those people do not listen to any other BBC station and that, as the right hon. Member for Bath (Mr Foster) pointed out, almost one fifth listen to no other radio station at all. Yet while the Radio 4 budget is being protected, local radio across Yorkshire is facing cuts of about 18%. What does that mean for Radio Sheffield? The current 16 hours a day of local content will be almost halved, to nine hours. From broadcasting local content every weekday from 5 am to 10 pm, we will have two local slots, one in the morning and one in the early evening. The afternoon will be filled with regional programming—joint shows with Radio York and Radio Leeds—and from 7 pm, evening local radio will effectively become, as was pointed our earlier, “Radio England”, which is complete nonsense when it comes to local radio. The loss of medium wave will bring an end to language programmes for ethnic minority communities, which are highly valued and attract a significant local listenership. We are also facing shared sports commentary, an issue to which I want to return in a moment.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Let me say how much I support the case that my hon. Friend is making for local content from Radio Sheffield, a case that I would also make for Radio Newcastle. Does he think that the cuts to local radio are consistent with the BBC’s duty to reflect and strengthen cultural identities at the local and regional levels?
Paul Blomfield
My hon. Friend makes an important point, because I think the cuts conflict with that duty. The BBC has done a lot of great work over recent years in seeking to meet that aspiration and won a popular following from our minority communities in Sheffield. That is now at risk as a result of these cuts.
My concern is not only about the immediate impact, but that the transformation of the local radio offer—a significant change—will lead to a spiral of decline. Reduced budgets will lead to falling listener numbers, which would challenge local radio’s legitimacy further and leave the London-based management in no doubt in future. Smaller audiences for local radio would lead to further cuts, reducing listeners again. That spiral of decline will ultimately bring into question the future of local radio. That must be a worry for us all, because BBC local radio is unique. No one else, in either the BBC or the commercial sector, has a similar offer. As other Members have said, research suggests that many people—particularly older people—tune in to local radio for a sense of connection with their communities. A MORI study for Ofcom indicates that older people are more likely to listen to the radio at least five days a week, with 87% of those over 55 doing so. That is certainly true of Radio Sheffield, whose audience’s average age is 54. Those people listen to it because it is local: it is of the community and reflects that community identity.
Julian Smith (Skipton and Ripon) (Con)
Does the hon. Gentleman think that one of the challenges is that, looking at these issues from London, the Yorkshire dales, which I represent, and Sheffield, which he represents, may seem close, when in fact the communities there are quite different and distinct? We need to point that out to people living in White City.
Paul Blomfield
I absolutely agree with the hon. Gentleman’s point about regional identity; in fact, I was coming to that. My point about the spiral of decline is that, if evening programmes became national—“Radio England”—they would, by any definition, cease to be local, and the reason for listening to them would disappear. If afternoon programming becomes regional, the same will happen. In Sheffield, we are rightly proud of being part of Yorkshire, which is an important part of our identity. However, although Yorkshire is our region, it is not our community. Yet that point—precisely the point that the hon. Gentleman makes—is not understood by the BBC management in London.
Let me illustrate that by reference to the plans for shared sports coverage. Sport is very popular with the Radio Sheffield audience, and I have no doubt that the same is true around the country. Nobody else provides that service, and on a Saturday afternoon the station is the most popular station on the dial in south Yorkshire. One in four radio listeners are tuned in to Radio Sheffield. However, under the BBC plans, when Sheffield United play at Elland Road—as we will next year when we are promoted: I have to declare another interest at this point—the commentary will be provided by Radio Leeds. I recently pointed out to the director-general of the BBC—at the meeting to which the right hon. Member for Bath referred—that Sheffield United fans would rather switch off than listen to a Leeds-based commentary. He recognised that that was a problem and said that the BBC needed to provide more neutral football commentary—completely missing the point. As a Sheffield United fan, I listen to Radio Sheffield’s away commentary precisely because it is not neutral—because it is partisan and because Keith Edwards knows the club inside out and cares about it, just as I do.
Martin Vickers
As a blades supporter, I can understand what the hon. Gentleman is saying. Does he agree, however, that it is even more important for teams in the lower leagues—such as Grimsby Town, which is temporarily residing in the Blue Square premier league—and other local sports clubs to be covered by local radio? Without it, our 7-nil victory on Tuesday evening would not have been widely reported.
Paul Blomfield
That is an incredibly important point. I worry that, when the away coverage comes from London, as under the BBC’s proposal, a whole range of clubs will fail to get any commentary.
This issue goes beyond football. Local radio works because it is partisan, because it is rooted in communities and because it identifies with people, speaking to them and for them. Take that localness away and we will take the listeners away. As I mentioned earlier, BBC local radio in England has an estimated 7.5 million listeners, an increase of around 500,000 on last year and 700,000 more than the previous year. Cutting local radio in this way, when listener numbers are going up, makes absolutely no sense. If the current consultation launched by the BBC is to have any validity, I trust that it will listen to the huge number of voices raised in support of local radio and think again.
Glyn Davies (Montgomeryshire) (Con)
Thank you for inviting me to speak, Madam Deputy Speaker, in this debate on a subject that is hugely important for the people of Wales—possibly temporarily, before the whole thing is moved to Bristol.
I love the BBC. I love it as one might love a cantankerous auntie or some other relation. I enjoy complaining about the BBC, in much the same way as the hon. Member for Great Grimsby (Austin Mitchell), who introduced this debate, might enjoy complaining about the weather. I enjoy complaining about the left-wing bias and the ridiculous obsession with wind farms. In fact, about three weeks ago I even wrote a letter of complaint to the BBC—the first I have written in my life, I think. I wrote to “EastEnders”, because there was a line in it where someone said that somebody had died as a result of a bee sting. I was approached by all the apiarists in my constituency, who were outraged at the damage that that would do to beekeeping throughout Britain. I wrote to the BBC asking it to make it clear that dying from a bee sting is an incredibly rare event. When the BBC does such things on “EastEnders”, there should be a high-profile rebuttal of the idea that such events happen regularly. I am therefore taking advantage of this debate to make that rebuttal, because I do not think that the BBC issued one.
The BBC is hugely important in Wales; indeed, it is probably more important to Wales than to any other part of the country. I know that we all think that, but Wales is a proud nation, and the BBC not only delivers the same thing to Wales as to the rest of Britain, but actually underpins the culture of Wales. The BBC in Wales has its own orchestra. The BBC is absolutely part of Welsh culture. It does a terrific amount of work for our unique language—Welsh, the language of heaven. It is not just S4C that has been involved in that, but the BBC, which has played such an important part in developing the language. Indeed, it is one of the success stories when it comes to the world’s minority languages, and we have to recognise the role the BBC has played in that.
The BBC, through its coverage of the National Assembly for Wales, is also playing a huge part in the development of the political identity of Wales. I am unashamedly Welsh through and through, and I have been incredibly proud of the work the BBC has done to make Wales an identifiable nation since devolution became a reality in 1999. I am also proud of the work it is continuing to do, and I do not want to see it stop.
The truth is, however, that the BBC had to reduce its costs. The reduction in the licence fee—what we call BBC cuts—is an entirely reasonable expectation. The Government obviously have an influence on the licence fee in its discussion with the BBC, and vulnerable people must be protected. The BBC licence fee is a regressive tax, which impacts more on the poorer in society than on the wealthy. At a time when the whole nation faces difficult economic and financial circumstances—we cannot be sure how long they will last—it would be completely wrong for the BBC not to make a contribution through the licence fee. I am fully supportive of the reduction in the level of the licence fee.
I want to make three points; the first is about S4C. One of the BBC cuts is for S4C funding to the tune of a little less than £80 million a year. This is the first chance I have had to speak on this since serving on the Committee considering the Public Bodies Bill, which was effectively taken over by the issue for a significant part of its work. It helped all of us to understand the impact of the BBC in Wales. I received 1,100 e-mails about the proposed changes in the Public Bodies Bill, which people feared would give the BBC excessive influence over S4C. I sought assurances from the Minister and was very encouraged by those I received. What we found in the end is that the result has been a terrific score. I thus wanted in this Chamber to say a huge thank you to those who delivered the agreement between the BBC and S4C, which has produced what is as close to an operationally independent S4C in Wales as could be hoped for. We feared that that would not happen, but the matter has been laid to rest. I also want to mention the BBC National Trustee for Wales, Elan Closs Stephens, who played a terrific part in bringing about that agreement, which needs to be publicly recognised.
My second point is about English language broadcasting in Wales—an issue also raised by the former controller of BBC Wales in a recent high-profile speech. Many Wales MPs have been so focused on the future operational independence of S4C that we have perhaps not argued as strongly as we should have for Wales to have its fair share of English language production. It hurt me a little when I read in the report of the former controller of BBC Wales that Welsh politicians did not fight remotely as hard for English language broadcasting in their country as the Scots did. I thought that that was a challenge to us. One reason I wanted to speak in today’s debate was to try to make it certain that Welsh politicians started fighting for their share of English language broadcasting in Wales. It is not just a matter of S4C; it is about English language broadcasting as well.
The hon. Member for Walsall South (Valerie Vaz) suggested looking at the issue like an accountant to see whether BBC broadcasting in Wales could be transferred to Bristol. I can see that making a lot of sense from an accountant’s point of view, but my hon. Friend the Member for Vale of Glamorgan (Alun Cairns) and other hon. Friends leapt to our feet like startled rabbits when we heard that. That is how we felt. I could not believe that anybody could possibly make such a suggestion—even in jest. It struck me that at that stage not a single Member from Wales from any party other than the Conservatives must have heard it. I would have thought that Opposition Members, including the hon. Member for Blaenau Gwent (Nick Smith) who was not in his place at that stage, would have leapt to their feet, too.
Valerie Vaz
The hon. Gentleman is being slightly unfair or failing to understand the point I was making. It was a simple one. I meant that if it was a question of costs, then there was such a possibility. It is not on anybody’s agenda, but I thought that, just by saying it, perhaps the situation could be saved.
Glyn Davies
I thank the hon. Lady. When she made that suggestion, it was the first time that I had ever heard it. Perhaps this is the quickest ever way to save a situation—three quarters of an hour after what the hon. Lady said. That seems promising, but the suggestion itself is so unreasonable and outrageous that one cannot even contemplate it. My own view is that if changes have to be made, perhaps we could move Bristol to Cardiff.
Nick Smith (Blaenau Gwent) (Lab)
I thank the hon. Gentleman for giving way, and I am sorry I had slipped out of the Chamber when that remark was made. I do not think anything serious was meant by it. I believe that the BBC Cardiff operation is fantastic. As we all know, it is the home of “Doctor Who”. I cannot believe that the significant investment made by BBC Wales in Cardiff in recent years will be overtaken by a move across the nearby channel.
Alun Cairns
Does my hon. Friend think that the hon. Member for Walsall South (Valerie Vaz) meant Bristol, Tennessee or Bristol in Avon?
Glyn Davies
I think I will pass on that one.
My third point is about political coverage in Wales. The new controller of BBC Wales has produced a plan for the future. On the face of it, the plan is a worry for politicians, particularly those based here in Westminster. It looks as if political coverage in Wales, particularly of politics in Westminster, will be reduced. If that happened, it would be a huge concern for me. I am reassured that it will not. We will have to wait and see the extent to which transferring the production of programmes from BBC Wales to the private sector happens. I gather that one programme in particular will be commissioned by the private sector. Let us wait and see how it works out and whether it delivers the same level of political coverage that we have been used to.
My feeling—this is a criticism I have made of the BBC in the past and I have heard Opposition Members express the same concern—is that coverage of Westminster politics is not as strong as it should be. It is more convenient for the BBC, given that it is located in Cardiff, to contact Members of the National Assembly and to relate to them. It is more difficult for it relate to Members of Parliament. It places a responsibility on us to make sure that we are noticed and that the BBC reports what we do. It is a serious concern, and I believe that over the next couple of years, we will have to look at whether the changes to the BBC in Cardiff actually deliver what the controller tells us they are going to deliver. I hope that our fears will not prove to be worth being overly concerned about.
There is no doubt that the BBC faces a huge challenge. The reductions in the licence fee and in the investment that the BBC can make are going to mean an awful lot of changes, but £3.5 billion is a huge amount of money. My view is that the BBC will return to the swaggering, confident self it used to be but has perhaps not been for the last couple of years, so that I can start to feel comfortable complaining about the BBC again. I look forward to regaining some of the pleasure I have often taken from that.
Mr Iain Wright (Hartlepool) (Lab)
I thank the long list of Members who have put pressure on a tight time scale to enable us to debate this important issue. In my brief speech I shall highlight, as others have already, the important and valuable local identity and distinctiveness—a phrase to which I shall return time and again—of the BBC’s output. I shall focus on local radio, but I shall also say something about the importance of local investigative journalism on television.
As part of its Delivering Quality First project, BBC local radio is expected to find savings of some 12%, but for some reason BBC Tees, my local radio station, is expected to find savings of 20%. There is no transparency and no rationale for the disproportionate cuts that my local station is expected to absorb, which will pose a severe risk to its link with its listeners and the local identity and distinctiveness that are rightly cherished.
Delivering Quality First states that the BBC Trust wants to
“protect the five editorial priorities that the Director-General has identified: news; children’s programming; UK drama and comedy; knowledge programming; and the coverage of events of national importance.”
I certainly agree that the corporation should concentrate its licence fee expenditure on the output that most people expect from it, but I also believe that local radio is the section of its output that seems most personal to, and most owned by, the licence fee payer. Many people have diligently paid their licence fees year in year out, and do not use other parts of the BBC’s service such as iPlayer or BBC 3. Local listeners feel very close to local presenters, and I think that BBC radio is the best broadcasting example of localism in action. That is certainly true of BBC Tees, as is reflected in its record listening figures and the fact that its audience satisfaction rates are at an all-time high.
I am not sure that the BBC’s actions comply with the trust’s wish to ensure that it
“continues to improve the extent to which its services resonate with all the UK’s nations, regions and communities.”
If anything, its proposals for BBC Tees drive a coach and horses through the special and distinctive service offered by local radio. I see that my hon. Friend the Member for Wansbeck (Ian Lavery) is present. I must point out, with the greatest respect to my hon. Friend, that communities in Teesside often have little in common with communities in Tyneside and Wearside. I predict that if the cuts go ahead and programming is shared between my area and, for instance, his, the listener engagement and interaction that constitute an important part of any local radio station’s activity will cease.
The corporation has stated that staple programmes such as the breakfast show and the early evening drive-time show will be protected. That seems to suggest that teams, indeed armies, of people are allocated to specific local radio programmes, which is certainly not the case at BBC Tees. I am struck by the amount of multitasking that is involved in producing, presenting, and investigative journalism. It is not unusual for Ali Brownlee, for example, to present a football show on, say, a Tuesday evening, reporting on what is invariably a defeat for Middlesbrough, and then to serve as anchor for the breakfast show a few hours later.
Tom Blenkinsop
I second my hon. Friend’s support for Ali Brownlee. I also pay tribute to Mark Drury, another member of the BBC Tees sport team. However, given the record-setting losing form of Hartlepool this season, I should have thought that my hon. Friend would be much more appreciative of the station’s coverage of Middlesbrough and, indeed, Guisborough Town football clubs.
May I now strike a serious note, and ask my hon. Friend whether it is not rather dangerous that northern BBC stations such as BBC Tees are being subjected to cuts of more than 20% while their southern counterparts are being subjected to cuts in single figures?
Mr Wright
I admire and respect my hon. Friend’s championing of Guisborough Town, of which I understand he is the president, but I should prefer to draw a veil over Hartlepool United’s appalling home record of seven defeats in a row. I think it best not to talk about that.
I agree with my hon. Friend’s point about access to local sport provision. My only criticism of BBC Tees is that it gives far too much coverage to a local non-league team called Darlington.
I am not sure that such practices as the sharing of afternoon or evening shows will ensure that those 20% savings are achieved. The excellent John Foster show, which is broadcast between 2pm and 4pm, benefits from the resources of a presenter and a producer who doubles up as a broadcast assistant. There is hardly a huge amount of fat or inefficiency in BBC local radio, at least in my area. I fear that the loss of jobs and expertise will inevitably result in a deterioration in programme quality, not through the fault of BBC staff, but simply because they will have too much to do. Audiences will decline because they will no longer experience that sense of local identity and distinctiveness.
Julian Smith
The hon. Gentleman refers to the limited fat in local BBC stations. Len Tingle, who followed me around for a day last year, persuaded his wife to accompany him on a day out in the Dales and an evening at a B and B. She ended up carrying all his bags and acting as cameraman in the evening. I think that that shows how hard local journalists are working day in, day out.
Mr Wright
I entirely agree.
Another aspect of the local identity and distinctiveness to which I have referred is the fierce passion for and loyalty to an area. My hon. Friend the hon. Member for Sheffield Central (Paul Blomfield), in a far more eloquent speech than I could ever make, presented the case for ensuring that local radio stations are partisan in that sense. It is significant that BBC Tees’s strapline is “proud of where we live”. The station’s championing of new renewable and offshore wind technology in the area is second to none, and its advocacy of the area during the loss of the steel plant in Redcar and its unconfined joy when the plant was sold as a going concern to SSI showed that it would always fight Teesside’s case. While he is still in the Chamber, let me pay tribute to my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) for ensuring that the plant and its workers remained on Teesside.
Much of that passion for and pride in the station derives from its staff. The presenters, journalists and production staff at BBC Tees are all professionals, and fiercely loyal to the region. Most of the presenters were born and raised in the area, which has given them a knowledge of and affinity with the area that is unsurpassed in any other broadcasting medium. Both Ali Brownlee and John Foster, the former breakfast show host who now presents the afternoon show, were born in Middlesbrough. Neil Green, who currently presents the drive-time show, was born in Hartlepool, was a teacher in the area, and still lives in my constituency. It is important to bear in mind that those people use the same services as their listeners.
Such loyalty and passion, however, are not the same as slavish devotion. The quality of the journalism on the station is extremely high and challenging. I can certainly say, as an elected representative, that we are not given an easy ride when being questioned by presenters. I certainly was not given an easy ride this week when I was questioned about the autumn statement, along with the hon. Member for Redcar (Ian Swales). The station’s passion for ensuring that local politics is viewed in the context of what we do here in Westminster is very valuable.
In the run-up to last year’s general election, all the candidates for the seat that I now represent went to the BBC Tees studio, where we were questioned and challenged by Neil Green, who also fielded calls from listeners and prospective voters for well over an hour. It is difficult to think of another widely used, indeed universal, medium that would allow such direct democratic challenge, such professionalism, and such reach to and interaction with our constituents. Because many people in my area do not have access to the internet, e-mail or social media, BBC local radio is the sole means by which citizens can question people in positions of authority or people who are standing for election.
Julie Hilling (Bolton West) (Lab)
Does my hon. Friend agree that local radio stations such as the Greater Manchester station not only give our constituents a chance to challenge us throughout the year, but give us a chance to garner support for important local and regional campaigns, such as the campaigns for the Manchester hub and my own campaign here for the teaching of emergency life support skills?
Mr Wright
I entirely agree. As I said earlier, BBC local radio can serve as a champion for particular issues.
In the time left to me, I want to outline my concerns about the cuts to local investigative journalism. The “Inside Out” programme provides in-depth and important local journalism. It is comparable in quality and scope to Granada’s “World in Action” in the 1970s and 1980s, and no other current broadcaster or programme, with the possible exception of Channel 4’s “Dispatches”, is able to match it. In my region, its exposé on Southern Cross care homes and investigation into the supply chain used by the businesses of Mike Ashley, the owner of Newcastle United, were important and showed investigative journalism at its best. The 40% cut to that programme will allow those with powerful vested interests to sleep more soundly in their beds, which should be avoided.
There is, of course, cross-fertilisation between the two elements of the BBC. Local radio investigations and points put forward by listeners can feed into television journalism, and vice versa. The quality of local provision will fall as a result of these cuts, and licence fee payers in my area will receive a poorer service.
Julian Smith
Does the hon. Gentleman agree that the recent policing scandals in Cleveland and my area of Yorkshire would not have been analysed properly had it not been for BBC local radio and television news?
Mr Wright
I entirely agree. The BBC revealed the costs of those police investigations and challenged those in authority on such financial issues.
The world is getting much smaller in the sense that it is becoming ever more interconnected. People have access to news events across the world, such as the Arab spring, in a matter of seconds through BBC World Service and News 24, as well as through broadcasters such as Sky and CNN. Paradoxically, and somewhat perversely, the BBC cuts proposals will result in less local provision, but that is equally important. That should be avoided. One of the BBC’s great strengths is its local output, and that should be protected as much as possible.
Alun Cairns (Vale of Glamorgan) (Con)
It is simplistic to complain only about the cuts the BBC is facing. We need to take into account the broader economic perspective. Instead of adopting the top-down approach of considering where savings can be made, our starting point should be to ask the following question: what do we want the BBC to do and to achieve? Let me say at the outset that I am a strong supporter of the BBC. The quality of its output is first class, and it covers subjects that no commercial operator would consider addressing. It responds positively to education and social needs and demands. As a public service broadcaster, it ticks all the boxes and more. However, in doing the “and more” part, does it stifle competition and squeeze out competitors, thereby reducing plurality of provision? A guaranteed licence fee income of £3.5 billion and a total income of £5 billion puts the BBC in a strongly favourable position compared with providers who have to deal with fluctuating advertising income and economic unpredictability.
Critics of BBC budget cuts need to recognise that it may well be able to operate more efficiently in some of the many areas of its output, and, indeed, that it might not need to operate in all those areas, as other providers may be better placed to cover them. To the credit of the BBC—and the Secretary of State for Wales—freezing the licence fee has resulted in its being forced to look at what it does, and the Delivering Quality First agenda is the outcome, although I would suggest that it should be the start of its reaching the desired outcome.
I want the BBC to start by focusing on what other providers might do and what capacity they may have for providing entertainment and information, as the BBC must ask itself how it can ensure that it strikes an appropriate balance in services and subject areas while representing all parts of the nations and regions of the United Kingdom. How can it contribute to innovation, rather than squeeze out competition? Should it operate in every area where there are commercial alternatives, such as in the market that Radio 1 covers? Plurality and news output to target audiences must be considered of course, but do we need to continue with the same traditional approach?
It may be unfashionable to mention James Murdoch at present, and I would condemn him if he were to be found guilty of any of the allegations that have been made.
Alun Cairns
If the right hon. and learned Member for Camberwell and Peckham (Ms Harman) wants to intervene on that point, I will happily respond.
James Murdoch has highlighted that when some years ago Radio 2 was losing its target audience of 24 to 45-year-olds, it paid millions of pounds to recruit Jonathan Ross to try to regain those listeners even though commercial operators already addressed that audience. If that is not an example of the BBC squeezing out competition, I do not know what is.
Does it make sense for the BBC to cover sporting events that ITV, Channels 4 or 5 or Sky would like to broadcast? I agree that we need to look at what should be free to air and whether pay per view is appropriate in all areas, but let us consider the example of Formula 1. The BBC has paid £300 million to screen Formula 1 over a five-year period. That amounts to £3 million per race, yet Sky will also broadcast every race. The partnership between Sky and the BBC is a significant and positive step forward, as it is certainly better than the previous situation of their competing outright, but two issues remain unresolved. First, could not ITV, Channels 4 or 5 or another broadcaster screen that popular sport? Secondly, the simple fact of the BBC bidding with public money will drive up the price and squeeze opportunities for others.
I recognise that the quality of the BBC can give it an edge over other broadcasters, but I remind Members that the BBC covered test match cricket for a long time, but the greatest innovations in the coverage of the sport occurred when the broadcasting rights were won by Channel 4 and then Sky, who took coverage to a much more sophisticated level. Innovations such as Hawk-Eye were introduced and a more informal approach to cricket attracted more viewers and new audiences.
I pay tribute to the BBC’s website coverage, which has set the standard for such output. It covers national and regional news in a structured way, and addresses subject matters across the spectrum from hard news to social gossip. It is an excellent example of the innovation the BBC can achieve. Yet if it continues to dominate this part of the market, that could prevent other providers—newspapers, broadcasters or even new entrants—from having the opportunity to innovate. The BBC set excellent standards, but it needs to consider whether there should be a subsequent, partial withdrawal when the market has matured.
I strongly support the BBC’s activities in areas where the market cannot provide. News in general is extremely important, and without the BBC’s news activities in many parts of the UK there simply would not be any coverage of significant news or social or cultural events. Wales and Scotland are of particular relevance in this regard, especially with the advent of devolution.
Other Members have talked about local television, so I shall now briefly address a parochial issue. The UK press does not always cover Wales as adequately as it should. This is where the BBC comes into its own of course, but in Wales its implementation of the Delivering Quality First agenda involves a squeeze on its political coverage. It argues that news is not being cut under the current proposals, yet there is a reduction in political output. Politics is news, so there is obviously a cut to news.
Although the BBC has, to its credit, responded well to devolution, that should not be achieved at the cost of coverage of non-devolved matters. Over recent years, there has been a trend to reduce political coverage on mainstream news outlets. Welsh questions have been covered on a mainstream outlet in Wales since 1987, but under current proposals that will no longer be the case.
Glyn Davies
Does my hon. Friend agree that Members of all parties must not stand back on this issue? Instead, we must raise our voices to complain, as a former controller of the BBC has urged, so that we in Wales get the coverage we deserve?
Alun Cairns
I am grateful to my hon. Friend for that intervention, and in his speech he highlighted that very point, and I underline it and pay tribute to it. Let us all have confidence about complaining to the BBC when we are unhappy so that it can respond. If we do not air issues and concerns, how will the BBC know about them?
I recognise that we, as politicians, are not the most popular people in the world. I would suggest, however, that some of the issues we debate are at least sometimes relevant to mainstream outlets in the nations and regions of the UK. There is no proposal to change coverage on the English regional output—granted, there will be local changes to BBC radio in England, but in Wales that situation does not exist.
While I am discussing Wales-related issues, I want to join my hon. Friend the Member for Montgomeryshire (Glyn Davies) in recognising the deal on S4C and I pay tribute to the BBC and the Secretary of State for delivering what he promised at the outset: a channel that was well funded, secure in its funding for the future and operationally and editorially independent. There were many sceptics in the debate, but even they have now been won over. I support the tribute that was paid to Elan Closs Stephens and to the chairman of S4C, Huw Jones, at the end of the negotiations, despite some of the difficult tensions among the membership of the authority.
Let me return to the broader issues. I know that the BBC has made significant progress on salary levels, but there remains scope for some further progress, particularly in relation to talent. I know that Graham Norton’s deal reduced from £16.9 million over three years to £4 million over two.
Karl Turner (Kingston upon Hull East) (Lab)
I am grateful to the hon. Gentleman for giving way, especially as I just came into the Chamber a few minutes ago. He talks about salaries at the BBC. Would he take this opportunity to make a comment about Jeremy Clarkson and say something about responsibilities coming with salaries?
Alun Cairns
I would certainly underline that point, but we should bear the context in mind. I did not see the broadcast and although I have read some reports about it, I would like to watch it before I comment specifically. I have no doubt that the Secretary of State will refer to it when he sums up.
I was talking about salary levels and progress has been made, but Graham Norton still earns £4 million over two years. I am sure that if that amount was squeezed further, he probably would not walk. Reference has already been made to the fact that David Dimbleby earns £15,000 per episode. Anne Robinson’s salary was cut from £4 million over two years to £2 million over two years. Demand for such roles clearly outstrips supply and the BBC has a fantastic ability in developing talent. It generates the supply as well as satisfying the demand. There is no excuse for paying such salaries to those people.
Julian Smith
Does my hon. Friend agree that work needs to be done to ensure that management salaries at the BBC in London and the south are much more equitable with management salaries and executive salaries in the north?
Alun Cairns
I am grateful for that point. The ultimate test is transparency and that is an area where the BBC has taken some small steps. For comparison, the agenda of the Government as regards local authorities, where every invoice in excess of £500 is published, leads me to expect the BBC to go that way, too. That greater transparency would allow people to judge and would better inform the BBC about its judgments and, no doubt, misjudgments, on occasion.
In the minute I have left, let me refer to Professor Anthony King’s report about how the BBC must better reflect the nations and regions of the United Kingdom on the network. It has taken some positive steps. For example, “Doctor Who” has been highlighted in this debate and it is now filmed and produced in Cardiff. There is a significant shift to Salford, too, but that does not get away from the fact that television from the nations and regions of the UK about the nations and regions of the UK should be broadcast on the network. Let me highlight, for example, “Boys from the Blackstuff”, a pioneering programme about Merseyside that educated significant numbers of people about some of the culture there. “Auf Wiedersehen, Pet” was a programme that made the north-east attractive to many people, and it brought it out through the characters. We need to see more of that sort of innovation and I am grateful to have had the opportunity to highlight it.
Angela Smith (Penistone and Stocksbridge) (Lab)
I congratulate the Backbench Business Committee on giving us this debate today and the Members who called for it, particularly the hon. Member for Cleethorpes (Martin Vickers) and my hon. Friends the Members for Great Grimsby (Austin Mitchell) and for Hayes and Harlington (John McDonnell). I called for such a debate in my Westminster Hall debate on this issue, because I feel very strongly that we must ensure that the BBC and the Government understand the depth and strength of feeling on the issue. More than 50 MPs tried to speak in the Westminster Hall debate—obviously, not all of them could get into a 90-minute slot, so this is a welcome opportunity to extend the number of voices heard in Parliament on this topic. Those voices need to be heard.
The BBC Trust is planning to achieve savings of about £670 million a year by 2016-17, with a net loss of about 2,000 jobs across the piece. The £670 million-worth of savings identified will be lumped together with £30 million of savings generated by exceeding the targets for the BBC’s current efficiency programme, which will result in total savings by 2017 of 20%. By anybody’s standards, that is a fairly significant cut in funding for our public broadcaster. The question is: why is that being done? Why are we seeing that level of cuts?
We know that the cost of the licence fee has been frozen until 2017, yet it has gone up by just £10 since 2007 and now costs just over £12 a month for all the TV, radio, websites and live events covered by the BBC. That compares with about £60 a month for some subscription services and, as the National Union of Journalists has pointed out, if all the current licence fee-paying households contributed just 7p extra a day, the cuts could be stopped. It is important to underline the facts that lie behind the measures that we are discussing. It is critical to point that out.
Of course, everybody has been talking today about what is good about the BBC. Many people have drawn attention to “Doctor Who” and I think it is worth drawing attention to some of the very expensive programmes made by the BBC, which are among the most loved of its output. “Frozen Planet”, for instance, is an amazing series. Everybody is now aware of the images of the criminal penguins that are doing the rounds on the BBC. “Springwatch” and “Autumnwatch” are very expensive programmes to make, but their educational value, never mind their entertainment value and their value in raising awareness of the environment, means that I would hate to see them disappear from the BBC’s output. They must be expensive to make—they are live and they involve a lot of filming over a long time.
As I said, everybody has mentioned “Doctor Who”, but I would also mention “Torchwood”, which, in my view, is one of the best programmes on the BBC. The maker of “Doctor Who” and “Torchwood” is Russell T Davies, who is one of the best programme makers of my generation. The right hon. Member for Bath (Mr Foster) mentioned this earlier—I wonder whether Russell T Davies would be the programme maker he is today without the investment in developing good programme makers that we have had from the BBC in the past. I would not like to see people like Russell T Davies walk away from the BBC. They are amazing and creative people and that quality makes the BBC better than any other public service broadcaster in the world.
Julian Smith
Out of interest, where does the hon. Lady stand on “Mad Men”? What is her view of American imports and, in particular, of that great show?
Angela Smith
I must confess that I do not watch “Mad Men”. I want to focus on the output of the BBC today.
In the end, the cuts to local radio proposed by the BBC are the most worrying. As the NUJ has pointed out, under the plans 22% of local radio output will go at a time when listening figures are going up. Current affairs and investigative programming will be badly affected across the board, but 40% of the reductions are outside London, which will have a disproportionate impact on local radio broadcasting. On top of that, as my hon. Friend the Member for Sheffield Central (Paul Blomfield) pointed out, output will go regional at local level, which is a contradiction, at 1 pm. Drive-time broadcasting will be local but then output will go national after 6 pm. On Sundays, local broadcasting will finish at 1 pm. The total reduction in local broadcasting is about 50%. We have had a pilot on afternoon regional programmes in south Yorkshire and it did not work. Many of the people in south Yorkshire who would tune in to Paulette Edwards tuned out as soon as they realised it had gone regional. As I said in the Westminster Hall debate, we are not parochial but we listen to local radio for a reason—because we want to hear about local news, local politics and local concerns. If we wanted to go regional or national, we would tune in to another station.
Local radio serves a very important purpose and delivers to a specific socio-demographic audience, as was pointed out earlier. The point has been made about the age profile of Radio Sheffield, but it should also be placed on the record that two thirds of the station’s audience are classed as C2DE—in other words it has a working-class audience. Many of those people listen to no other station than BBC Radio Sheffield. It is true that Radio 2 and Radio Hallam get a bigger audience in south Yorkshire, but the reach and audience of Radio Sheffield is significantly higher than the 12% Radio 4 weekly audience of 157,000 and the audience of Radio 5 Live, which reaches 126,000 listeners across the week—just 9.9%.
It is crucial that the BBC Trust gets this decision right. My hon. Friend the Member for Sheffield Central pointed out how passionately people believe in their local radio station, and I want to underline that point. What we enjoy about Radio Sheffield is the diversity of its output and the way it connects with its audience. This is a critical point. My hon. Friend made some funny comments about the sports coverage on Radio Sheffield and I point out that fans of Barnsley FC, Doncaster FC and Rotherham FC also rely on Radio Sheffield for distinctive and very partisan coverage. We must maintain that. I will counterbalance the point he made about Sheffield United by pointing out that Sheffield Wednesday fans, of whom I am one, are also keen Radio Sheffield listeners. On his point about Sheffield United playing Leeds United next year when they are promoted, I must say that they will have to get past Sheffield Wednesday first—they are fifth in the table and we are second—so we will see how that goes.
I want to emphasise the loyalty that there is for BBC local radio. Last Saturday, I was out canvassing in Penistone picking up lots more Labour votes—the swing to us there is quite significant—and I found what one lady said particularly interesting. She said, “I know who you are: I hear you on Radio Sheffield.” One thing that Radio Sheffield does is debate local politics in a very fair and balanced way, giving it significant coverage. She went on to say, “I absolutely love Radio Sheffield and Toby Foster—there’s nobody else I would listen to in the morning.” A lot of people would say the same about Rony Robinson, Paulette Edwards, Howard Pressman and all the other broadcasters on Radio Sheffield. That is the point—the proposals put forward by the trust will have a disproportionate impact on local radio. It must listen, take note and change its plans. I also think that the Government should think again about freezing the licence fee.
The hon. Member for Vale of Glamorgan (Alun Cairns) said that the BBC has an unfair advantage over some of its competitors. However, Radio Centre, which is the industry body for commercial radio, has said:
“While we understand that the BBC needs to make savings to meet the terms of its licence fee settlement, we do not”—
the word “not” is underlined—
“accept that this should inevitably lead to its most distinctive output being diluted.”
Even commercial radio understands the role that local radio has to play in delivering cultural, political and social services to the people of this country. I urge the House to support the motion.
Pete Wishart (Perth and North Perthshire) (SNP)
It is a great pleasure to follow the hon. Member for Penistone and Stocksbridge (Angela Smith). I am very much enjoying all this football banter between northern Members of Parliament and finding out about all these broadcasters whom I had not heard of, such as Ali Brownlew and Toby Foster. I am going to have to tune into some local radio services in the north-east. Obviously, they provide a first-class service; we would not expect anything else from local radio in the north-east.
Hon. Members might be surprised to hear that I am not going to speak about local services. I am going to speak about national services, but not those provided by the wonderful Radio 4, Radio 2 and Radio 1. I am going to talk about the impact of the cut on national services in Scotland. We will experience a disproportionate cut compared with that across the United Kingdom. Scotland is not a region—it is a nation, and a nation needs a specific type of broadcasting capability available to it. We have our own national Parliament, which as everybody knows has many significant legislative powers. We have our own civic institutions, we have our own legal system and we provide education and health services entirely differently from the rest of the UK. As everyone knows, we have our own national culture and we require that to be reported in a remarkably different way from any other region in the United Kingdom. That is why it is absolutely critical that we get the correct resources to ensure that our nation is served adequately.
Alun Cairns
Does the hon. Gentleman feel that Wales, which is also a nation in its own right, has the same needs as Scotland?
Pete Wishart
Yes, is the short answer. I am very grateful to the hon. Gentleman for turning up today. There are two Welsh Conservative Members of Parliament present and we are hearing from Members from right across the United Kingdom, but is it not unfortunate that other than the hon. Member for Midlothian (Mr Hamilton), who is here on Whip’s duty, there is not one of the 40 Labour Members from Scotland here to debate such an important and significant issue as the BBC in Scotland? It is a real tragedy that they would rather turn up and vote on English issues than discuss issues of real importance for the people of Scotland.
We need a BBC that is properly resourced to cover adequately what is happening in England, but what is happening is that one nation’s BBC services are being protected at the expense of another’s. Lots of people in Scotland like Radio 4, and when I am in London I put the Today programme on, but what we learn from the Today programme is usually about the NHS in England and education in England and Wales. I like hearing about the NHS in England and finding out what is going on within the education services in England and Wales, but that means absolutely nothing to me or my constituents. We are continually served up a diet of UK news that is totally inconsequential to Scotland.
The hon. Member for Vale of Glamorgan (Alun Cairns) made this point and it was also pointed out by Anthony King, who produced a very good and detailed report on how the BBC broadcasts in the nations and regions. It still has things absolutely wrong.
Alun Cairns
Does the hon. Gentleman agree that although the BBC has taken a positive step, partly to respond to Anthony King, by moving to other parts of the UK for broadcasting, nothing replaces the broadcasting of Scottish, Welsh and Northern Irish issues on the network as well?
Pete Wishart
Absolutely. That was a key feature of the King report. He said that a lot was being lost in relation to Scotland and Wales when it came to national news reporting. Sometimes, we got the funny little story at the end about going up to Loch Ness or Snowdon or somewhere and giving an amusing little anecdote to end the news, but in terms of significant reporting of news concerning Scotland, Wales and even the English regions, there was absolutely nothing.
The King report made another important point, which the hon. Member for Vale of Glamorgan will recall. Some English journalists had to be sent on devolution training so that they would start to understand the difference between devolved powers and reserved powers and work out how to communicate that to the rest of the nation. They still get it absolutely wrong sometimes. We get it so often that we are becoming a little tired of it in Scotland and, presumably, in Wales and possibly in some of the English regions.
A particular type of approach is required when broadcasting for a nation; we have very different requirements, in terms of how the everyday experiences of the Scottish people are reflected and reported, and how the news agenda is shaped. That is why the cuts will have a disproportionate impact on the people of Scotland. Let me detail what we will experience in Scotland. One in 10 jobs at BBC Scotland is to be lost, and there is to be a reduction of about 16% in the total budget. BBC Scotland’s news operation and support staff will be hit hardest by the cuts. Between 100 and 120 jobs will be lost at the Pacific Quay headquarters in Glasgow by 2016-17. It is feared that production operations, and online and Gaelic services, and perhaps sport, will be cut and hurt. BBC Scotland’s news operation is to lose 30 jobs; 20 jobs will be lost at Radio Scotland. Craft and production will shelve 35 jobs, and operations and support will lose another 30. The whole future of the BBC symphony orchestra is still under review. That is on top of efficiency savings that will cost some 20 jobs.
The future of BBC Scotland’s “Newsnight Scotland” programme—affectionately known as “Newsnicht” down here—is under threat. It is an important feature of the news output and agenda in Scotland. It gives us the only opportunity that we get in the evening to go over, debate, and comment on what has emerged during the day in the Scottish Parliament, elsewhere in Scotland, or down here. I enjoy turning up at 11 o’clock in the evening to contribute to “Newsnicht”.
The problem with “Newsnight Scotland” is that although there has been an assurance from the BBC that it will be maintained, BBC 2 will be making a transition to high-definition television, and there is not the capability or opportunity for opt-outs for the nations or the regions. If the BBC is listening to this, I hope that it will tell us what it will do to ensure that we continue to get “Newsnight Scotland”, because it is a critical feature to so many people who are interested in the daily political and cultural diet in Scotland.
The Broadcasting Entertainment Cinematograph and Theatre Union in Scotland says that the scale of the cuts means that it will be almost impossible to ensure that the job losses will happen through voluntary redundancies; compulsory redundancies are likely. It is so concerned about the scale of the cuts in Scotland that industrial action has been talked about, and might be a feature, unless we get the problem resolved.
People are taking the issue into their own hands in other ways, too. There is a fantastic campaign about “introducing…”, which is a little programme on Radio 1 on a Monday evening, from 10 pm to 12 midnight. There is “introducing…in Northern Ireland”, “introducing…in Wales”, and “introducing…in Scotland”. That is under threat by the BBC. They are great programmes; they give many new artists and bands a radio platform for the first time in their career. They are responsible for the early development of artists such as Paolo Nutini and Calvin Harris. Bands such as Biffy Clyro and Frightened Rabbit sent their first demos to “introducing…”, and they are now to go.
Such is the response to those little programmes on Radio 1 that a petition on the subject has already secured the signature of some 6,000 people—more, per head of population, than the petition to try to save Radio 6. That is how much concern there is about it in Scotland. That is the type of impact that there will be on local services. I am grateful to the Under-Secretary of State for Culture, Olympics, Media and Sport, the hon. Member for Wantage (Mr Vaizey), who will meet campaigners who are trying to save the programmes. I have not had a response from Mr Thompson; perhaps we could have a discussion about his coming to meet the campaigners, so that he can explain to them why that iconic little programme is to be shelved. The proposal is ridiculous, because it will not save any money; there will still be an “introducing…”; it will just broadcast across the United Kingdom. The individual identities of the programmes, and the opportunity for bands from Northern Ireland, Wales and Scotland, will be lost. You know, Madam Deputy Speaker, how passionately I feel about the music industry and opportunity for young artists. I really hope that the BBC thinks again.
I have only a few minutes left and a number of issues to raise. The reason I am so annoyed by, and angry about, the BBC cuts in Scotland is that we do not even get our population share’s-worth back from the BBC. We in Scotland are actually subsidising the BBC; we give more through the licence fee than we get back in services. I am appalled that Scotland has to subsidise the BBC for the rest of the UK, just as we have to subsidise the rest of the UK when it comes to resourcing, and the balance of payments to the Treasury. That is a feature that we have had to put up with. If we have to subsidise the BBC’s television and radio services, let us do what we can to protect the services that we have.
We will need a properly resourced BBC, because there will be a few big issues coming Scotland’s way in the next few years. We will ask the people of Scotland to make one of the most substantial and important choices that the nation has ever had; they will have the opportunity to say yes to becoming a normal, self-governing nation, like those throughout the rest of the world.
Pete Wishart
It will be in the second half of the parliamentary term, as was set out in our manifesto; that will be delivered. The BBC will have to be properly resourced to ensure that we can continue to inform the people of Scotland about this important choice. That is why we need BBC services to be properly resourced.
Back in 2005, production output from Scotland was below 4%; that was appalling, particularly given that, as I have said, we subsidise the BBC. Progress will be made on that, as the Secretary of State knows. All credit to the BBC: it has improved the situation. We are getting close to our population share target of 9% for production, and there is a commitment to meet that target by 2016. I do not know how cutting the BBC in Scotland so dramatically will help to achieve that. Again, I would like the BBC to explain how we are to hit those production targets by 2016 if we are to cut so deep and so hard in the BBC in Scotland. I hope that the BBC recognises that what I am talking about is not a local or regional, but a national service in Scotland. Our nation is losing out.
Mr Hamilton
I thank Peter “nae pals” for his contribution. Surely he should unite with everyone else on the Opposition Benches, because the same cuts are affecting all of us. Surely it would be more helpful for him to unite with the other Opposition parties, rather than arguing his single line, as he usually does.
Pete Wishart
I am grateful to the hon. Gentleman. I am four-square behind colleagues who want to ensure that regions and local areas of the United Kingdom retain services; they are losing their services at the expense of UK services such as Radio 4. Let us keep the local and national services. I say to the BBC: have another look at the impact of the cuts. Do well by the nations, the regions, and local radio.
John McDonnell (Hayes and Harlington) (Lab)
I want to speak about the decision-making process that has been taking place over the past couple of years, which has, to be frank, been a nightmare. I am grateful to the Backbench Business Committee for giving us the opportunity to hold this debate. My hon. Friend the Member for Great Grimsby (Austin Mitchell) set out the overall implications of Delivering Quality First. He chairs the National Union of Journalists parliamentary group, of which I am the secretary. We have lived with the process for the last two years. We have met the staff who have lost their jobs already, and the staff whose careers are now at risk.
What comes out of every one of these debates is a consensual view across the House about the importance of the BBC. It is always described as a jewel in the crown of British culture, and as setting world standards in public service broadcasting. Many Members have emphasised its critical role as a foundation stone of local and national democracy. However, as a result of Delivering Quality First, as Members have set out, there will be significant cuts over time, which not only undermines the BBC’s potential to maintain those standards but shows that there is an agenda about the long-term future of the BBC itself.
It is important to discuss how we got here. There is a lesson for future Governments about how decisions are made on the issue. Never again should we have to go through this process. This is not just a budgetary exercise. The assault on the BBC is driven by an agenda that has been set elsewhere. I remember the James Murdoch lecture in 2009 at the Edinburgh television festival, in which he set out an agenda which, regrettably, the Government are following almost to the letter. He set out the objective of the Murdoch empire to deregulate the media overall and undermine the BBC by cutting its supply of funds.
Alun Cairns
Does the hon. Gentleman not accept that the freezing of the licence fee has made the BBC look at its activities and, at the very least, has reduced the salaries of some of the highest-paid people in broadcasting?
John McDonnell
There are always benefits from a process like this. My concern is about the long-term future and some of the short-term implications that the hon. Gentleman himself pointed out. We should not wander into this debate naively, because there is a separate agenda, which was set by James Murdoch at that time. The tone of sheer arrogance in that speech somewhat contrasts with the tone of his performance in the hearings by the Select Committee on Culture, Media and Sport. In that speech, he proclaimed his advocacy of Darwinism, and he said that he believed in natural selection in all things, particularly within the media market. It was like Gordon Gekko in “Wall Street” saying, “Greed…is good.” James Murdoch proclaimed that the law of the jungle worked. It was almost Orwellian. I shall quote him exactly:
“There is an inescapable conclusion that we must reach if we are to have a better society. The only reliable, durable and perpetual guarantor of independence of the media is profit.”
That is exactly the agenda that was set. It is that philosophy in other sections of the media that has led us all the way down to the Leveson inquiry and the descent of parts of the media into the gutter. This is not a conspiracy theory. I do not need to mention the 11 occasions on which the Prime Minister has met Murdoch’s News International. I do not need to mention the six occasions on which the Secretary of State for Culture, Olympics, Media and Sport has done so, or the three occasions on which the Deputy Prime Minister has done so. I do not think that it is part of those meetings; I do not think that it is part of a conspiracy. I simply think that the Government share that agenda.
Jesse Norman (Hereford and South Herefordshire) (Con)
Until the hon. Gentleman began to personalise this and mention individuals, I was prepared to share some of his concerns about the Murdoch speech and some of the claims that were made. Two things should be perfectly clear. First, many Government Members feel very warmly towards the BBC, and want to enfranchise and support the tradition of public service broadcasting, which it does better than anyone else in the world. That comes not just from Back-Bench Members but, I am thrilled to say, from the Secretary of State and the Prime Minister.
The second thing is—
Madam Deputy Speaker (Dawn Primarolo)
Order. This is an intervention, not a speech. [Interruption.] Yes, but interventions must be brief, and we are coming to the end—[Interruption.] Will the hon. Gentleman take his seat? This debate is due to end at approximately 3.15 pm, and there is a time limit for speeches of 10 minutes for Members who have been in the Chamber all afternoon. Throughout, I have implored all Members to make their interventions brief. I am not negotiating with the hon. Gentleman: I am telling him that he should make his intervention brief, and not make several points.
Jesse Norman
Thank you very much indeed, Madam Deputy Speaker, I appreciate that.
Does the hon. Gentleman not agree that his position would be much stronger if he focused on the benefits—the lowering of salaries, much greater flexibility and competition in the market—as well as the negatives as he sees them?
John McDonnell
The hon. Gentleman is a new Member, and I understand the point that he has made. Other Members have made that point. I do not want to criticise him, but if he had been here throughout the debate, he would have heard them make those specific points. I want to make my specific points, not seek to replicate or repeat other points that have been made, if that is okay with the hon. Gentleman.
I simply make this point. My concern is that this is not just a cost-cutting exercise. It is part of a political agenda that, in the long term, is aimed at undermining the BBC. It has been set outside Government—not in Government—but the Government concur with it. Secondly, I was here with the right hon. Member for Bath (Mr Foster) and my hon. Friend the Member for Great Grimsby, and was involved in discussions on the licence fee settlement. I never ever want to go through that exercise again, because it put at risk the future of a whole range of people, and that was not taken into account.
I remember the Secretary of State advising the director-general of the BBC in August 2010 that there would be a long consultation on the BBC licence fee, which would be determined the following spring. However, I also remember—my hon. Friend the Member for Great Grimsby has alluded to this—that weekend in October, and the 48 hours in which the Government brought the BBC in and threatened it. The right hon. Member for Bath is right: the BBC was threatened either with the licence for the over-75s being taken over—in other words, a £530 million cut immediately—or it had to take on proposals on the World Service, BBC Monitor and the Secretary of State’s grandiose plans for the future of television development. It was placed in an invidious position and there were threats of resignation, which created pandemonium in the settlement process. We had thought that the process would be a rational debate that this House could shape or influence in some way, but in fact it was the grubbiest deal we have seen in any public sector settlement of recent years. The people least taken account of were the workers who supply the service itself, which I think was disgraceful. If we learn nothing else across the parties, we should learn to behave in such instances in future.
What are the implications? One implication is that the management must now implement another 1,000 job cuts on top of the 7,000 that have been made since 2004. They are implementing those cuts with exceptionally limited consultation or engagement with the unions. Agreements are being torn up before workers’ eyes with minimal consultation.
My hon. Friend the Member for Great Grimsby referred to the meeting of BBC NUJ reps in Belfast on 14 October, which involved all staff, who were anxious about the process. I can quote the director-general—the problem with speaking in front of trained journalists is that they normally know shorthand—who said:
“If you’re really that unhappy, if you think that you can’t do your best work here then leave—no-one is forcing you to stay.”
That is real management empathy—unfortunately, Hansard does not do irony—with people, many of whom are about to lose their jobs. Such behaviour by management would be unacceptable in any structure, whether public or private. It resulted, for the first time in the BBC’s history, in a vote of no confidence by the staff in the director-general and his competence to manage the organisation.
I urge the BBC to pull back and start engaging in proper discussions and consultations. Otherwise, as the hon. Member for Perth and North Perthshire (Pete Wishart) said in relation to Scotland, some unions might move towards industrial action unless there are proper negotiations and their views are taken account of properly. I agree that that raises the issue of salaries in the BBC, and not just for the stars, but for management overall. I think that it is obscene that the director-general earns four times more than the Prime Minister. As has been said, we should consider the high level of salaries throughout and, in particular, the inequality between the high and low salaries. In a public organisation that is simply unacceptable.
A number of Members have raised concerns about local radio services, and we could list them and put the lists in the House Library for Members to see, but the cuts to stations right across the piece are effectively undermining local radio as we know it. It has recently been praised very affectionately in two debates, yet BBC management does not seem to take account of the views of Members expressed here. I do not believe that S4C is safe in the long term or that the deal will hold. I think that the Government will come back for more cuts. It is not about freezing the licence fee, as I think they will come back for further cuts in future years.
I am also anxious about the World Service. The right hon. Member for Bath has worked with us on that and there has been excellent cross-party work to try to protect as much of the World Service as we can, but there have already been cuts and I think that it is still in jeopardy overall. Political coverage is being undermined not only in the regions, but nationally, as we have seen 2,000 jobs going in some of the BBC’s core political reportage.
Overall, I am deeply anxious about the settlement. The only way now is to have a proper discussion—the discussion we should have had last year. Instead of it being bounced through in 48 hours, there should have been a proper discussion and consultation, and I believe that the only way forward now is to reopen the licence fee debate.
Let me say just one final thing on two parochial matters. Several hon. Friends have mentioned the Asian Network, a service that has grown over the years into one of the country’s most popular and well received stations and brought about social cohesion as the BBC is meant to, but a 50% cut in the Asian Network will, as every Member knows, undermine that service, and it will be picked off. That is salami-slicing, and it undermines the viability of particular services.
On my local BBC radio station, Radio London, sport is one of its most popular elements, but we are now told that cricket, rugby league and rugby union will no longer be covered, and that football coverage will be curtailed. As a result of such cuts, a station eventually loses its listenership, and that in turn threatens the viability of the station itself.
That is what we are fighting for. We are fighting not just against marginal cuts, but for the future of the BBC, the future of local radio, the future of specialist services such as the Asian Network and the future of services for the nations, regions and principalities that are under threat in the longer term. The only way in which they can be saved is by breaking the Murdoch agenda, by getting back to a discussion about the BBC as a public service, the jewel in the crown, and by reopening the debate about the licence fee—so that we can have a viable BBC for the long term.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
It is a pleasure to follow my hon. Friend the Member for Hayes and Harlington (John McDonnell), who, along with many Members, has made a fantastic speech. I, too, congratulate my hon. Friend the Member for Great Grimsby (Austin Mitchell) and the Backbench Business Committee on securing this important and timely debate. Many Members in the Chamber today took part in the Westminster Hall debate that was so over-subscribed and well attended, and, likewise, the topic has come up time and again at many Culture, Media and Sport question sessions over the past year, so our opportunity for a debate today in the Chamber is a timely one.
We have heard from many Members about the different casualties of the Delivering Quality First review, none more tragic than the 2,000 people throughout the BBC who will lose their jobs as a result of it. I, too, will focus on the impact of the review on local radio—and in particular, on BBC Radio Merseyside.
It is clear from every contribution so far that all Members and the public rightly cherish the BBC, which is a source of national pride because of its quality, role in our public life and commitment to educate, inform and entertain, but it is clear also that the BBC faces a huge challenge. The licence fee freeze until 2017 is the worst in its history, and, given that it has to shoulder the costs of the World Service, it is obvious that many difficult decisions need to be made.
Unfortunately, the BBC has exacerbated those difficulties by producing a set of reductions that are, in some part, fundamentally unfair: unfair because local radio faces a disproportionate cut while larger budgets are protected; unfair because local radio provides a true community service to an audience who rely on it; and unfair because the cuts will mean an end to local news-gathering and locally produced content.
The 39 BBC local radio stations throughout the UK are a unique and popular part of our media landscape, and severely reducing their output would be a huge loss. Throughout the UK, 7 million people listen to their local BBC radio service, of whom 2 million listen to no other BBC radio station. As well as being popular, BBC local radio is also value for money for the listener, costing on average 3.2p per listener hour, compared with BBC 1 on television, which costs 6.7p per viewing hour, and BBC Radio 3, which costs 6.3p per listener hour.
All in the House have seen the value of their local BBC radio station when it has come to emergencies—we heard examples of flooding—or to the disturbances this summer. BBC Radio Merseyside played a very important role in informing the public of where they should and should not travel and of where the disturbances were, and in dispelling some of the myths that popped up on social media sites.
If BBC local radio goes, we will lose a vital service that reflects, celebrates and affirms countless local identities.
Luciana Berger
If the hon. Lady will forgive me, I will not, because I am conscious of the fact that one more hon. Member would like to speak before the winding-up speeches begin.
The feeling from those I talk to who work at the BBC is that local radio is being set up to lose its audience, so that it can be scrapped completely at the next licence fee settlement. I sincerely hope that that is not the case, because as a Liverpool MP I see the real value of local radio every day. That is why I have been campaigning against the cuts and why over 1,500 people signed a petition that I had on my website, which I presented to Parliament a couple of weeks ago. For many people, BBC Radio Merseyside is the voice of the city, and it is home to some of its most famous institutions, including the Roger Phillips show and the Billy Butler show. It is also hugely successful. It is the most listened to station outside London, with over 300,000 listeners who, on average, tune in for a staggering 16.2 hours a week. Yet the station will be one of the worst hit by the changes and will see its staffing funding reduced by 20%. Radio Merseyside is already run on a shoestring compared with the larger BBC services. Worse, as the majority of expenditure at the station is on fixed costs such as buildings, any budget reduction of this size cannot be made without a disproportionate loss of locally produced shows and cuts in jobs.
Given that, it is rather strange that no cuts will be made to Radio 4, which has an annual budget of £99 million—it is more than twice the size of the largest commercial station in the UK. With 66% of the licence fee spent on television, it is hard to understand why funding for BBC 1 has been cut by only 3%. I do not believe that it is impossible to find savings from these significantly larger budgets. For example, “You and Yours” is a show on Radio 4 that is aired for one hour a day, five days a week. It is a very informative programme, and I enjoy listening to it when I get the chance. However, there are more people working on that one radio show for five hours a week than there are in the entire staff complement at BBC Radio Merseyside. Is the BBC really saying that it cannot find any savings from that programme, or from its other larger radio stations or television stations? To me, it does not add up.
Alongside the reduction in funding, another planned change is the sharing of local radio programmes between groups or clusters of stations, so that at certain times of the day, instead of having individual local programmes, stations will share programmes with neighbouring city stations up to 50 miles away. Other Members have spoken about the impact that that will have in their localities. In reality, it means that there will be no local programming for large parts of the week. Localness is the DNA of local radio—the clue is in the title. Once one dilutes this service, one fundamentally changes the relationship between the provider and the listener—the licence fee payer. Local radio may be seen by senior managers as a quick and easy way to cut costs, but the listeners, who are primarily aged over 55 and in the lower socio-economic groups, and for whom local radio is not only a friend but a lifeline, do not agree. Local radio programme-sharing was tried in parts of the north in the early 1990s, and it failed to connect with audiences and to attract listeners, particularly in areas with a strong local identity such as Merseyside and Tyneside. It is true that many stations in the midlands and the south of England have been sharing programmes for some years, but they are seldom the stations with huge listening numbers.
BBC senior managers will talk about “value for money” from the licence fee. I agree that that is crucial, but the planned cuts are not equal in impact. The impact on local radio will almost certainly cut much deeper, with the likely loss of broadcast journalist jobs, including reporters and producers, reducing news coverage and programmes. Local radio therefore gets a double whammy—fewer local programmes and huge job losses, resulting in a much reduced news and information service. This comes at a time when other local news providers such as newspapers have been frantically reducing staff as they struggle to cope with the effects of the recession and influx of web-based news services. It seems that the BBC is keen to reduce service in the one area of the market where there is a discernible gap.
The BBC has said that the consultation on the Delivering Quality First proposals will be a genuine one. I have written to the BBC about this, as have many of my constituents and many Members here today. I hope that senior managers will listen to what the public are saying. To be fair, the BBC has a strong tradition of doing that, and I expect it to continue. Some press reports suggest that the BBC might be listening to the calls from various Members and that in the coming days we might see something of a U-turn on the cuts to local radio. That would surely be welcomed by all of us, as the current proposals are unfair and the BBC should rightly think again. I sincerely hope that Members on both sides of the House will support the Backbench Business Committee motion.
Nick Smith (Blaenau Gwent) (Lab)
I congratulate my hon. Friend the Member for Great Grimsby (Austin Mitchell) on initiating this debate.
At a recent session of the Public Accounts Committee, of which I am a member, we heard how the BBC delivered the efficiency savings requested under the last licence settlement but maintained its high standards. That must be acknowledged. In 2004, 64% of the public said that the BBC
“maintains high standards of quality”.
Today, the figure is 78%. At the moment, 80% of people are happy that the BBC exists, compared with just 72% in 2004. The key factor in achieving those savings was new technology. We have to be concerned about how future savings will be made, given that the savings in some sectors may already have been maximised and further staffing cuts of 10% are planned. Quality and a broad range of programming across the UK must be maintained.
I give special mention to the BBC World Service, which has done an excellent job over the past year in covering the phenomenal events in the middle east and north Africa. I look forward to the further development of world television.
The public rightly value programmes such as “Frozen Planet”, which other colleagues have mentioned, that are visually stunning as well as informative. People also value the BBC as an effective consumer champion in the UK and in Wales. BBC Cymru Wales is covering a story about car parking management in my constituency, following a high number of customer complaints. The car park operator has complained to me that the BBC’s filming of the car park “created a general disturbance”, and he has lambasted its “grossly unethical mafia-style actions”. That surprised me because I think that the BBC is doing an excellent job in reporting that important local story. The BBC is not afraid to ruffle feathers or to pursue consumer rights. That is another reason why it has massive public respect.
Finally, I thank the Backbench Business Committee for agreeing to this debate. It is important that we recognise the huge value of what is the world’s best broadcaster.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
It is a pleasure to follow my hon. Friend the Member for Blaenau Gwent (Nick Smith).
My hon. Friends the Members for Liverpool, Wavertree (Luciana Berger), for Penistone and Stocksbridge (Angela Smith), for Sheffield Central (Paul Blomfield), and for Hartlepool (Mr Wright) put forward a compelling case for the BBC to think again about local radio. Surely the BBC will think again given the passion and the forensic arguments of hon. Members from all parts of the House.
I thank my hon. Friend the Member for Great Grimsby (Austin Mitchell) for moving the motion and the members of the Backbench Business Committee for choosing BBC cuts, particularly in local radio, as the subject of today’s debate. It has been an excellent debate.
The importance of the BBC to Britain today is hard to overstate. The BBC has unparalleled breadth, depth, reach and appeal. It is, along with the NHS, one of the things about Britain that is most trusted and valued. It is a source of national pride for its quality and international impact. Whether through sport, drama or just Saturday night family viewing, the BBC is an integral part of life in this country. We all think that we bring up our children, but actually we do it in partnership with the BBC and CBeebies. The BBC is valued worldwide. We could have had a whole debate on just the BBC’s children’s programmes, the World Service, BBC news, the BBC’s sports coverage, or the importance of the Proms and the great BBC orchestras to music in this country.
I want to take this opportunity to address some points to the Secretary of State about his responsibility for the BBC. His responsibility is to ensure that the BBC remains strong and independent. If he wants a strong BBC, he will sometimes have to stand up for it, as we did, against the commercial sector. Of course it is important that we have a dynamic commercial broadcasting sector, but it was good that when we were in government the BBC got more channels on radio and TV, developed major online services and expanded into digital. Not surprisingly, that attracted opposition from the commercial sector, and we withstood the pressure. I hope that the Secretary of State will stand up for the BBC’s strength, independence and future development, and resist unwarranted pressure from the commercial sector. When and if he does that, he will have our full backing.
When it comes to fighting the BBC’s corner, is it not bizarre, as the right hon. Member for Bath (Mr Foster) made clear, that the BBC has to pay Sky to carry its channels rather than the other way round? Why is it that when someone watches “Frozen Planet”, a BBC production, on Sky, the BBC has to pay Sky? In the next five years, the BBC will pay £50 million in satellite access fees, more than all the costs that the BBC is planning to take away from local radio and BBC Four combined. Surely that cannot be right.
Alun Cairns
If that is such a priority, why was the issue not addressed when the right hon. and learned Lady’s party was in government?
Ms Harman
Perhaps it should have been, but we are talking about the situation now and in future, especially in light of what has happened in the licence fee settlement, with which I shall deal in a few moments.
As well as standing up for the BBC against commercial pressure, the Secretary of State will need to stand up for it against some on his own side. Lord Justice Leveson’s inquiry and Ofcom are now examining media plurality in the wake of the Murdoch scandal. The dominance of the Murdoch empire, which was so much the root of the wrongdoing that is now being exposed, would have been even more dangerous without the BBC.
I do not think we will see James Murdoch repeat his attacks on the BBC any time soon, but some who support the anti-BBC stance that Murdoch set out in his 2009 Edinburgh lecture will see the Leveson proceedings and the Ofcom review as an opportunity to re-launch their attacks, as my hon. Friend the Member for Hayes and Harlington (John McDonnell) said. Those voices have kept away from the debate today, but we know that the view still lurks among some in the Secretary of State’s party and on his Back Benches. If he wants a strong BBC, he will need to stand up to some on his own side strongly and publicly. When he does that, again, he will have our strong support.
The Secretary of State needs to stand up for the independence of the BBC. At the heart of its independence is the licence fee, and that is why so much concern has been expressed in the House again today about how the deal on the licence fee was done last October. My hon. Friend the Member for Great Grimsby talked about it as “Three Days in October—When Jeremy Terrorised Mark”. Actually, there was a prequel to that film: “Three Days in October—When George Terrorised Jeremy”. The Secretary of State, appearing to have failed to fight his Department’s corner with the Treasury and to have accepted cuts that were too deep, then imposed major new financial responsibilities on the BBC in a rushed deal behind closed doors, to be paid for from licence fee funds. One was the cost of the World Service.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
Will the right hon. and learned Lady explain why, if George terrorised Jeremy, the settlement for the BBC required it to make 16% efficiency savings compared with 19% cuts across the whole of the rest of Government?
Ms Harman
The Secretary of State could be saying that, in the context of deficit reduction, which the Opposition believe is happening too far and too fast, the settlement could have been even worse for his Department. I do not like to play Tory Cabinet Ministers off one against the other, but the Secretary of State for International Development secured an increase for his Department. The point is that what is happening in the BBC derives from the deal that was done in October.
Of course, like all organisations, the BBC should be efficient, but the agreement on the licence fee should be a settlement between the British public and the BBC; it should not be, or be seen to be, an opportunity for Government intervention in the BBC. That is why there should always be an open process, based on evidence and involving consultation, particularly with the public, who pay the licence fee and receive the service. But that is not what happened. The licence fee stands till 2017, which is after the next election, but I am asking the Secretary of State to acknowledge today that the way in which that was done was wrong, and that to protect the BBC’s independence it should not happen like that again in future.
Mr Hunt
If the right hon. and learned Lady is so against the licence fee settlement, will she confirm that it is the Labour party’s policy to reopen it, and that she is against the six-year freeze in the licence fee, which has been so welcomed by hard-working families up and down the country?
Ms Harman
The Secretary of State did not listen to what I said. I said that to protect the independence of the licence fee and of the BBC, the licence fee deliberation should be done with great care, with consultation with the public at its heart, and that it should be based on evidence and be open and transparent. Actually, it is a threat to the independence of the BBC to have the Secretary of State locked in a room with the director-general and to have an imposed settlement. I have highlighted the question of independence. I like to think well of people, so I ask the Secretary of State to say that he will support a strong, independent BBC. He needs to show understanding of the concern about how the licence fee was imposed and I hope he will do so.
With the frozen licence fee, new financial responsibilities and the increase in inflation—the forecast is that it will be up from 1.6% to 4.5%—the BBC is having to cut back by at least 16%. The BBC faces invidious choices and hard decisions, which cannot but affect services, jobs and all the sectors for which the BBC is the creative heart.
The cuts to local radio and regional TV have prompted particular concern. I echo hon. Members on both sides of the House who have said that BBC local radio gives a sense of place in what are sometimes fragmented communities—it is about local identity, because it reports local sports and events as well as local news. Local and regional TV offers a ladder of opportunity into the national media and the outcry against the cuts in local radio is heartfelt and genuine.
I should like to add my view of the quality of local radio and to mention Ed Doolan of BBC West Midlands—he is not from my region and I am not trying to get on his programme; he is retired—who spoke out for the whole of the west midlands and was as high a quality of broadcaster as can be found anywhere in the world.
Jesse Norman
I share the right hon. and learned Lady’s view about the quality of radio broadcasting in the west midlands—BBC Hereford and Worcester is a classic example. Does she agree that the Government’s plans to introduce more local television to invigorate local markets are extremely welcome?
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
My right hon. and learned Friend mentioned Ed Doolan, a big figure in the west midlands. When Mark Thompson opened The Mailbox in 2004, he said:
“The BBC’s centre of gravity is shifting. The regions of the UK and great cities such as Birmingham are central to our vision of a new BBC”.
So much for the vision of 2004; clearly it is no longer with us in 2011.
Ms Harman
Let us hope that Mr Thompson is reminded of that spirit and that he listens to the words of my hon. Friend and hon. Members on both sides of the House.
The BBC Trust should respond to the motion and review its proposals. I know that the BBC’s room for manoeuvre is tight, but like other hon. Members, I urge it to think again. It should also think again and put right, at no extra cost, the men-only shortlist for BBC sports personality of the year. Is the BBC really saying that there are no sportswomen, or that sportswomen do not have any personality? Is it any surprise that it has come about given that the panel of people who draw up the shortlist includes representatives from the magazines Nuts and Zoo but not, unsurprisingly, from Grazia and Marie Claire? This is clearly a matter that the BBC needs to think about again.
Tracey Crouch
I am grateful to the right hon. and learned Lady for her generosity in giving way. I support everything that she says about the BBC sports personality of the year. As a sportswoman and someone who coaches girls on a regular basis, I think that it is important that the BBC looks at its overall coverage of women sports. Rather than imposing positive discrimination so that women get on to the sports list, we should raise the profile of women’s sports so that they can be shortlisted on the basis of merit.
Angela Smith (Penistone and Stocksbridge) (Lab)
For as long as we keep talented top athletes such as Sheffield’s Jess Ennis off the shortlist, we are sending out the wrong message to women who want to compete and engage in sport.
Ms Harman
Absolutely. The BBC can and should sort this out. The process for the awards is not written on tablets of stone. There is time to sort this out. The BBC should listen to what is being said by hon. Members and by people all around the country and sort the matter out.
Finally, may I raise an issue that was mentioned by my hon. Friend the Member for Kingston upon Hull East (Karl Turner)? Will the Secretary of State join me in condemning the really outrageous remarks of BBC presenter Jeremy Clarkson yesterday on live TV? He said that striking public sector employees should be “executed” in front of their families. The BBC has apologised for those remarks, but I hope that the Secretary of State agrees that Mr Clarkson should do the same.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
I congratulate the hon. Member for Great Grimsby (Austin Mitchell) on securing this debate, which follows a well-informed and informative debate in Westminster Hall. I recognise that hon. Members have been speaking for their constituents and for many people the length and breadth of the country when they talk about their commitment to BBC local radio. Just under 10 million people listen to the BBC’s national and local services, in total consuming around 90 million hours of listening every week. That is a third of the 30 million adults who listen to local radio every week, including, as the hon. Member for Sefton Central (Bill Esterson) said—I do not think that he is in his place at the moment—a number of people who are disabled, older and from disadvantaged sections of society. We have heard of numerous examples across the country of where BBC local radio has filled a gap that would not have been filled by anything else. In line with what other hon. Members have said, I need to mention the excellent work done by BBC Surrey, which I visited recently, including the excellent Nick Wallis breakfast show.
Before discussing the specific proposals the BBC has made, I want to place this debate in the context of two broader issues that have direct relevance to the issues at stake. The first is the Government’s broader policy on local media and the second is the BBC licence fee settlement, which I negotiated last October.
Let me start with the broader policy towards local media. I am a localist. I have always believed that too much power is concentrated at the centre of our country and we should trust local communities with much greater power to control their own destiny. Strong local media are a vital part of that vision. However, local media in this country are not in a healthy state. Our newspaper industry is battling to reinvent itself in the face of massive technological change. Furthermore, our independent local radio stations have struggled to be profitable and started to consolidate under national brands, which can make them appear less, not more, local.
Almost uniquely among developed countries, we have virtually no local television. I want to put that right. People have characterised our local media policy as simply about local television, but that is a misrepresentation. I want to use the arrival of local television next year, when we will issue 20 cities with the first local television licences, to transform our entire local media landscape to help operators to develop new business models and, most importantly, to learn to respond innovatively to the local communities that they serve in a transformed technological environment.
The objective is to increase plurality—a word that we have heard a lot of this year—at a local level in a way that is consistent with the approach laid out by my hon. Friend the Member for Vale of Glamorgan (Alun Cairns). The relaxation of local media ownership rules is the first step, and next year’s licences will be the second step. The arrival of superfast broadband to 90% of the country by 2015—another of my departmental responsibilities—will mean that by then nearly everyone will be able to access local television over the internet. In short, as the BBC responds to the concerns raised today, which I hope that it will, the Government are doing their best to address the longer-term structural deficiencies in the local media sector.
Hon. Members have mentioned last year’s licence fee settlement. I strongly believe that the settlement is fair to the BBC and a good deal for licence fee payers. It is the first time that the licence fee has been frozen for six years, and at a time when nearly all other household bills are going through the roof, this will help struggling families and remind people that the BBC is doing its bit, too, to offer the public better value for money.
Overall, the agreement requires the BBC to make efficiency savings of 16%, which, as I said, is less than the 19% across the rest of government. I put it to the House that 16% efficiency savings over six years is not unreasonable: they are considerably lower than in many other parts of the public sector and far below those that many private sector companies have to make over much shorter time scales. The director-general of the BBC himself said:
“Anyone who believes that the BBC could have achieved a licence fee settlement at any stage and under any government, which would have called for lower efficiency targets than other public bodies were facing, is deluding themselves.”
Both he and the new chairman of the BBC Trust recognise the fairness of the settlement in challenging times.
I say to the right hon. and learned Member for Camberwell and Peckham (Ms Harman) that the Labour party also has responsibilities, and it cannot complain about the cuts without also saying whether it would reopen the licence fee settlement and end the six-year freeze. To engage in a debate about cuts and not say what it would do is irresponsible politics and undermines the excellent speeches made by Labour Back Benchers today.
The House will understand that, as mentioned, having negotiated an overall efficiency saving, it is not for the Government to specify how the BBC Trust spends the money. Operational and editorial independence is at the heart of the high esteem in which the BBC is held by the public and vital to the role that it plays in our democracy. Because of its fundamental importance, that independence is enshrined in its charter and agreement.
The hon. Member for Great Grimsby talked about the BBC’s culture of “can-do submission” and its saying to me, “Yes, sir, no, sir, three bags full, sir.” If only that were the case. He will know that I am probably the only Member to have been called a four-letter word that rhymes with his surname by a presenter on the “Today” programme. Oscar Wilde said:
“The only thing worse than being talked about is not being talked about”.
The presenter certainly cured that problem for me.
If it is wrong for the Government to compromise BBC independence, however, it is equally wrong for the BBC not to listen to, and take heed of, the views expressed by hon. Members today. I hope that the BBC will listen to the passion with which Members have spoken. I hope that it will note the articulacy with which, for example, my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) talked about local decision making at Radio Shropshire. My hon. Friend the Member for Cleethorpes (Martin Vickers) talked about Radio Humberside. My hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) talked about Radio Kent, which has the longest listening hours in the country. The hon. Member for Makerfield (Yvonne Fovargue)—I do not think she is here—talked about the importance of rugby league and local sports coverage. The hon. Member for Sheffield Central (Paul Blomfield) talked about Radio Sheffield and its reach to ethnic minorities, as well as its sports coverage. My hon. Friends the Members for Montgomeryshire (Glyn Davies) and for Vale of Glamorgan (Alun Cairns) talked about the important role that the BBC plays for the Welsh language. The hon. Member for Hartlepool (Mr Wright) talked about the importance of local identity, as well as the match reporting of Ali Brownlew.
The hon. Member for Penistone and Stocksbridge (Angela Smith) talked about the BBC’s brilliant natural history coverage—I think it was the first time that “criminal penguins” had been mentioned in this House. She also made an important point about the importance of the local as well as the regional, which is very much at the heart of the local TV agenda. The hon. Member for Blaenau Gwent (Nick Smith) talked about the fact that the BBC is not afraid to rattle feathers. In terms of local TV coverage, one of the things we need to do—[Interruption.] I think the phrase I was looking for was probably “rattle cages”. We want to increase, not decrease, the scrutiny of local democracy and local politics, which lies at the heart of many of the concerns that hon. Members have raised today. The hon. Member for Liverpool, Wavertree (Luciana Berger) talked about the pitfalls of local radio sharing. I hope that the BBC will think about those lessons. I had not heard that “Newsnight Scotland” was called “Newsnicht Scotland”, but what the hon. Member for Perth and North Perthshire (Pete Wishart) said about the dangers in the transition of BBC 2 to HD is something that the BBC would do well to listen to, because I know how important that programme is.
I hope that hon. Members will be reassured by some of the comments that BBC management have made in response to this whole debate and the points raised. The director general said to the Public Accounts Committee that local radio was an “incredibly precious service” and that the BBC did not want to preside over its decline. Lord Patten, the new chairman of the BBC Trust, described local radio as the glue that holds local communities together and a
“more trusted way of getting information than anything else”.
I know that Lord Patten has been visiting BBC local radio stations recently to learn more about them and their role. I am sure that he will see that radio is a medium that often generates a passionate response, especially from listeners. He will see that local radio is a unique source of local information, debate and culture. He will see that it serves a crucial function in building relationships with and supporting local communities. As such, local radio is rightly valued and treasured by Members of this House, speaking up for their constituents.
Austin Mitchell
With the leave of the House, I would like briefly to reply to what has been an interesting debate. We have heard praise from all parts of the House for the BBC and its role as a beacon of excellence in news, television and all the other services it provides. Some of the praise from Government Members was praise with faint damns and some of them suggested various cuts that could be made that were different from those proposed in the BBC’s agenda. In particular, we could consider cuts to Clarkson’s salary, which brings to mind an interesting proposal for a programme: “Cutting Clarkson: Women Viewers Say How”, which I can recommend for BBC 2.
It is interesting that nobody defended or justified the full scale of the cuts or the full scale of the impositions on the licence fee. The Minister presented himself in a more amiable light today than in those three days in October, when he must have presented himself as The Beast From 10,000 MHz, such was the terror that he produced in the BBC. However, he made what I thought were three mistakes in his presentation. I agree with him about the desire to stimulate and develop local television, but that should not be done at the cost of cutting BBC local radio, as the current proposals do. I agree that he has defended the BBC against 19% cuts, which was the average among Departments. However, if he works it out, adding the 16% cuts that he has imposed on BBC to the 3% efficiency savings that were already in train under the 2008 agreement—and which will continue until 2013—makes 19%. That is in addition to the further 4% cuts that the BBC is imposing to generate money for programmes. This is a fairly elementary mistake.
It is wrong to say that the Government proposed the cuts and that the BBC cannot interfere in how those cuts are carried out. It has to stand itself in reserve. If the cuts become damaging to the BBC and its reputation for quality, it will need a supplementary licence fee increase to save it from disaster. That is the reserve power that was asked for.
For the rest, what has emerged from the debate is stunningly clear and loud. We are saying to the BBC that local radio should not be cut in the proposed fashion, that regional television should not be cut in the proposed fashion and, most loudly and clearly of all, that the BBC should go away and think again about the scale and timing of these cuts.
Question put and agreed to.
Resolved,
That this House calls upon the BBC to reconsider the scale and timing of its proposed cuts so as better to safeguard BBC local radio, regional television news and programmes, the morale and enthusiasm of its staff, and the quality of BBC programmes generally, all of which have made the BBC the most respected public service broadcaster in the world.
Debt Advice and Debt Management
Alex Cunningham (Stockton North) (Lab)
I beg to move,
That this House has considered the matter of debt advice and debt management services.
It is a special privilege for me to open this debate this afternoon—a debate called for by Members from across the House. Although we may have many differences, when it comes to debt advice and debt management services, we share a real concern for ordinary people, including some of the most vulnerable in our society who, often through no fault of their own, find themselves in crisis. Many see that crisis deepen because they do not know where to turn when they fall victim to unscrupulous practices that I am sure we would all unite in condemning.
I am extremely grateful to my hon. Friend the Member for North East Derbyshire (Natascha Engel), Chair of the Backbench Business Committee and to the Committee members for providing us with the time to discuss the issues on the Floor of the House today.
The Select Committee on Business, Innovation and Skills is currently undertaking an inquiry into this very matter, so I believe this debate will add value to the work being done, particularly regarding the scandalous actions of a large number of debt management companies.
Debt seems to have permeated every part of our society in the 21st century. Households are in debt; students are in debt; the Government are in debt; even premiership football clubs are in debt. Debt seems simply like a fact of life for many. Something tells me, however, that neither the Chancellor of the Exchequer nor Malcolm Glazer are subject to aggressive cold calling, excessive fees and misleading advertising by debt management companies from which many of the most vulnerable people in debt suffer. A report commissioned by the Consumer Credit Counselling Service found that 6.2 million people are financially vulnerable—in other words, they have no money left in the bank at the end of the month—and many more are on the brink. More startling is the fact that younger Britons are getting into more debt earlier in life. More than a million households in the 18 to 39 age group are already struggling to cope, with a further 893,000 at risk.
Gordon Banks (Ochil and South Perthshire) (Lab)
Is my hon. Friend as concerned as I am about the cuts to the Money Advice Service just now and how detrimental they will be to the money advice that can be given to young people?
Alex Cunningham
I certainly am, and I am going to deal with the issue later. I understand that a considerable number of this body’s staff are to be cut, which is bound to have a tremendous knock-on effect for services across the piece, not just those for young people.
Insolvency is also on the increase. Earlier this year, it emerged that 135,000 people were declared insolvent in England and Wales in the previous 12 months—the highest figure since 1960.
It should also be emphasised that it is the legacy of debt that is the real concern. There was a huge rise in consumer debt from the 1980s until 2007, and although consumer spending has reduced in the last few years, the debt remains, accumulating vast amounts of interest as time goes by. Contrary to what some may think, such debt is not predominantly due to reckless overspending. According to figures from the University of Nottingham, 50% of debt problems can be attributed simply to changes in individual circumstances, particularly unemployment or a drop in wages—something that is not too uncommon in the present grim economic climate.
I know that it would be easy to start outlining why even more people will need help in the coming years as a result of the Government’s policies, but I believe that the purpose of the debate is to concentrate on how we can best help the victims. If we are to help people, we need to retain and enhance the right services and ensure that there is appropriate regulation. Tackling debt head-on can have far-reaching benefits. One pound spent on debt advice saves £2.98 in future spending. A report from the Centre for Social Justice, published in October and entitled “Completing the revolution: Transforming mental health and tackling poverty”, estimated that debt advice could save about £30 million for the national health service, £50 million in legal costs and £220 million in productivity gains, as well as providing other benefits such as debt repayments to creditors.
I am proud of the good work that the Labour Government did in helping those in debt. Since 2005 the financial inclusion fund has done tremendous work, focusing on the most vulnerable members of society and providing free advice for anyone who needs it. I was relieved when, despite the current Government’s initial decision not to maintain the fund, it was announced in February this year that £27 million would be made available so that free face-to-face debt advice could continue to be funded during the coming year. Now I am concerned about future provision, and especially about the possibility that local government—which is also under a considerable financial constraint—will be required to do more in this regard and Government cash will dry up.
The Money Advice Service, set up by the Government to co-ordinate debt advice, is evidently a new body still trying to find its feet, but we desperately need a clarification of its role. For example, if it aims to co-ordinate debt advice, does that include fee-charging services? I hope that the Minister will publish the whole business plan for the service, particularly as I understand that—as was suggested earlier by my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks)—staff numbers are to be cut dramatically.
We must also maintain the excellent practice that exists in our constituencies. In my own constituency the Cabin, part of the Stockton district advice and information service, provides targeted advice for young people. It depends on grants to survive, and I was pleased to learn that the lottery was helping to fund it, but that type of funding is extremely limited, and it will run out.
One young person who was dealt with by the Cabin had approached a fee-charging money management company. According to its assessment, he would be able to pay £100 per month, of which £29.50 was a monthly administration fee. He tried his best to keep up the monthly payments, but knew that he could not really afford them in the first place. He visited the Cabin, which arranged a debt relief order for him, basing his monthly contribution on his current circumstances. He was then able to put his life back on track.
The Cabin’s manager, Janine Browne, is worried about young people finding their way to the very kind of organisation that we want them to avoid. She told me:
“We find the majority of debt collection agencies are very aggressive and if young people cannot access appropriate advice and support they will try other avenues which may not be effective or necessarily appropriate to their circumstances. Without support they bow to pressure.”
What is happening with debt management companies? In 2010-11, the Citizens Advice service in England and Wales dealt with 3,155 complaints about debt management services, 5% more than in the previous year. The key complaints were about poor advice, poor service, excessive charging, cold calling, and up-front fees for services that did not materialise. Most debt firms that have been audited have also failed to comply with guidance from the Office of Fair Trading in several respects, the main problem being misleading advertising that represents their services as being free when they are not. Through up-front fees, the companies take their clients’ cash for themselves first and their creditors second, leaving people disheartened by the lack of progress in dealing with their debts. What can we do?
I have a number of questions for the Minister. Free debt advice is currently widely available and easily accessed. How will he protect and promote those services? The current system of self-regulation is failing. How will he enhance it? Will he ban cold-calling canvassing for new business and the upfront fees? Will he introduce tougher licensing and a requirement for firms to make clear their fees on any advertising and on initially meeting clients?
Gordon Banks
My hon. Friend is giving the Minister a Christmas list—and the Minister will recall that this time last year we were addressing the Postal Services Bill, which caused much amusement. Does my hon. Friend agree that the Minister should pay particular attention to the powers of the Office of Fair Trading? Where it has evidence of wrongdoing, it must be able to act quickly to suspend the licences of companies, rather than cases being dragged out for up to four years in the courts before the OFT can finally take action.
Alex Cunningham
My hon. Friend steals my final point. He will find out in a few moments that I entirely agree with what he says. What I do know, however, is that some Christmas list requests will not be fulfilled this year because of the levels of debt people are facing.
What work does the Minister have planned with search engines such as Google on finding ways to help people in need find the free services that are available to them, rather than the unscrupulous merchants? Will he provide the OFT with the power to investigate ruthless companies and shut them down early, rather than that sometimes taking more than two years, during which time the companies still operate, make a profit and charge vulnerable customers? I look forward to the Minister telling us what is to be done.
Karl Turner (Kingston upon Hull East) (Lab)
On a point of order, Mr Deputy Speaker. In the previous debate, I raised the issue of the disgusting and disgraceful comments made by Jeremy Clarkson last night. My right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) directly asked the Secretary of State to address the issue in his closing remarks, but he failed to do so. Is that in order?
Mr Deputy Speaker (Mr Lindsay Hoyle)
That is not a point of order. It is for the Secretary of State to decide whether he will comment. The hon. Gentleman’s remarks have gone on the record, however.
Tracey Crouch (Chatham and Aylesford) (Con)
It is a pleasure to follow the hon. Member for Stockton North (Alex Cunningham). I attended the Backbench Business Committee with him in order to try to secure this debate, and I am grateful to the Committee for enabling us to speak on this important issue.
Debt is not a new phenomenon, but over recent years personal debt levels have risen sharply and have become unmanageable for many. Total UK personal debt stands at £1.5 trillion, UK adults owe an average of £30,000, and the Office for Budget Responsibility predicts that total household debt is set to rise from £55,000 to just over £80,000 by the end of this Parliament. My constituency of Chatham and Aylesford has pockets of severe deprivation and high levels of personal debt, and the number of new personal insolvencies there stood at 275 in 2009 alone. Those figures give a mere snapshot of the levels of debt we face in the UK, but they serve to highlight the importance of getting the debt advice right for those in need.
People can find it difficult to admit that their debts have become unmanageable. Many would rather continue as if there were not a problem with the state of their finances, struggling to make their monthly payments and racking up more debt. Typical symptoms include selectively ignoring bills, taking on more credit cards, and turning to store cards to relieve the pressure temporarily. Of course, that just prolongs the delay before the acceptance of a debt problem and worsens the situation in the meantime. Long gone are the days when bank managers took people aside, as they did with me, and cut up their credit cards, but I think many of us would welcome a return to the days when banks paid a bit more attention to personal accounts.
Although many of the individuals seeking debt advice represent a particularly vulnerable section of society on a low income, unmanageable debt is no longer confined to the least well-off. Data from Experian suggest that the biggest increase in personal insolvencies in 2010 was among middle-class families, who typically have a number of monthly outgoings to meet. Equally worrying is the number of young professionals and middle-income earners who have entered insolvency. To return to the point I made earlier about problems in dealing with debt, it is fair to say that it is such groups in society who struggle the most to admit that there is a problem in the first place.
Aside from not wanting to admit to what they see as a failure on their part, those people might be oblivious to the advice and services open to them and instead go on burying their heads in the sand. One fifth of the people struggling with debt are not sure where to turn for advice, let alone aware of the benefits and drawbacks of debt management plans, the meaning of an individual voluntary arrangement or the criteria for debt relief orders. When they decide to do something about their debts, information and impartial advice are key. Finding someone the right solution and getting them on to a feasible plan is vital to remedying the problem, not least as the repayment of debts owed is in the interest of not only the debtor, but the creditors they owe.
Unfortunately, customers can find themselves signed up to inappropriate repayment plans. Statistics from R3, the insolvency trade body, have revealed that 35% of individuals on a debt management plan were not made aware of alternative ways of consolidating their debts and 12% said that they felt pressurised into the arrangement by the company responsible for administering it. Up to 30% of those now declared bankrupt were previously signed up to a debt management plan. That demonstrates the clear lack of information provided and in some cases the coercion from some sectors of the debt management sector, which serves to prolong the misery for the individual and add to their debt burden.
Gordon Banks
I just want briefly to outline an issue in my constituency. One of my constituents was making payments through a payment plan and then found the same debt management company acting for the office of the Accountant in Bankruptcy when they went into bankruptcy. My constituent had no understanding of the basis on which that company was dealing with them at all.
Tracey Crouch
The hon. Gentleman makes a fair point. We all see people in our constituencies who have been tied in and there has always been a vested interest in such programmes.
Lorely Burt (Solihull) (LD)
I am sure that all Members will have tales to tell about some of the rogue companies that cynically take people on, take their money as an up-front fee and also charge them commission, knowing all along that that person will have to take on either an IVA or bankruptcy.
Tracey Crouch
As it happens, I was about to tell the House about an instance of which I have recently learned. An individual entered an agreement to pay back their debt through a debt management plan. The plan spanned a total of 14 years and required repayment totalling far more than the original debt. In fact, this particular individual would have found it far cheaper to declare bankruptcy. The information and advice simply were not made available to the customer, who was instead trapped in a monthly payment schedule repaying vast fees.
In the past, and certainly in that instance, debt management companies have been responsible for exploiting the vulnerable and heavily burdened with debt and it is welcome that the Office of Fair Trading has begun to crack down on rogue operations. As a Conservative, more regulation is not something I typically welcome, but, in tackling rogue DMCs it is clearly necessary. Their fees are not always made abundantly clear and cost consumers up to £250 million a year. Adding such high costs to the burden for those who are already over-indebted does not strike me as particularly helpful.
Margot James (Stourbridge) (Con)
Is my hon. Friend aware that the Select Committee on Business, Innovation and Skills is currently undertaking an inquiry into this issue? So far, we have heard from several experts that the regulation of debt management companies of the paid-for variety is not working at all. Like her, I do not relish more regulation, but I fear that in this area we have no alternative.
Tracey Crouch
I am aware that the BIS Committee is looking into this and I hope that its recommendations when it has finished the inquiry will help the Government to form an appropriate regulatory structure, because it is clear that the current structure simply is not good enough.
Currently, a clear bias exists in favour of pushing consumers into plans that are likely to yield more in fees, rather than focusing on paying down their debts steadily over time. That is in stark contrast to the advice provided by Citizens Advice and the Consumer Credit Counselling Service, which is free, impartial and in some cases anonymous. So the debt management plans are not always in consumers’ best interests. In many cases, they fail because the level of debt built up is already too great and the monthly payments are also too great.
Sadly, it is only when those DMPs fall apart that customers turn to the free services provided by Citizens Advice and the CCCS to help them to pick up the pieces. As a result, the advisers at those services see and hear some horror stories littered with shoddy advice and spiralling debt, so they are particularly well placed to comment on the sector. My local Citizens Advice recently had people with a record £3 million-worth of unsecured personal debt walk through its doors in a single week. It suffers from dealing with the impact of a dangerous cocktail—several high-cost credit shops on the local high street and the emergence of rogue debt management companies. It has campaigned heavily for the regulation of both those sectors, which I support and would welcome.
Earlier this year, I tabled an early-day motion calling for further regulation of debt management companies and for the Government to introduce a robust statutory regime under powers available in part 5 of the Tribunals, Courts and Enforcement Act 2007. That would limit what such companies could charge consumers and would require them to submit self-funded independent audits to a relevant authority. If such companies are found to have breached protocol, the company’s consumer credit licence can be revoked or sanctions brought to bear. That system relies on having an effective regulator, and I am pleased that the recent crackdown on rogue debt management companies by the Office of Fair Trading, which has resulted in the worst offenders having their licence stripped from them, is beginning to fulfil that role.
What we need is a standardised service under which vulnerable consumers looking for advice know exactly what they are getting and can rest assured that it will be in their best interests. Transparency is key to sanitising the debt management sector. Regulation and strict sanctions are necessary to rein in the sector, but it is equally vital that more be done to signpost those looking for help to the right services in the first place. The Government have taken welcome steps to improve the access and quality of debt advice, for which I commend them. The commitment of an extra £27 million for face-to-face debt advice to be delivered by Citizens Advice and others means that access to impartial advice can be assured. That will go some way towards encouraging those in debt to seek help.
Some 90% of MPs in the previous Parliament were contacted by constituents in financial difficulty. As a new Member of Parliament representing a constituency with pockets of deprivation, I know that I will make up part of a similar statistic at the end of this Parliament, as will many other hon. Members. We are in a position to signpost constituents who are in difficulty to free and impartial services such as those provided by the Money Advice Service, Citizens Advice and the CCCS, and to steer them away from costly alternatives. That is something I will continue to do.
In my opinion, debt and debt management should be taken as seriously as the provision of high-cost credit. As legislators, we have an opportunity to do what is necessary to control an industry that can, if misused, misdirected or mishandled, ruin someone’s life. There are a variety of reasons why people find themselves in debt and they should not be judged as a consequence. Instead, we should judge those who seek to help them out of debt and we should judge ourselves as legislators if we fail to do anything about this soon.
Yvonne Fovargue (Makerfield) (Lab)
It is a pleasure to follow the hon. Member for Chatham and Aylesford (Tracey Crouch), who made a thoughtful contribution; I agree with most of what she said. I congratulate my hon. Friend the Member for Stockton North (Alex Cunningham) on securing the debate, which is timely, as Christmas is coming up, although that is not traditionally a time when the advice agencies see people who are in debt; they see them in January, once the debts have come through.
The number of people finding their debt unmanageable can only increase; that is beyond doubt. My hon. Friend mentioned the Financial Inclusion Centre’s recent report, “Debt and the Generations”, which says that a £50 per month drop in disposable income, due to any one of a number of factors—a small drop in hours, increased pension contributions, increased child care costs, or a rise in rent—would result in 3.2 million people who are just about coping and keeping their head above water no longer being able to pay all their creditors. As has been said, we are not talking about being profligate, and buying designer trainers and large flat-screen TVs; we are talking about paying the heating bills, paying for food, and buying school uniforms. Research from the Joseph Rowntree Foundation shows that only one person in six seeks advice from any source. If we accept that, it means that a further 500,000 people would seek debt advice if incomes dropped by only £50 a month.
We need to target the people who are not seeking advice, as the research proves that people who receive advice manage significantly better than those who do not. The Money Advice Trust has done an interesting report called “Facing the squeeze”, which indicates that many families are managing at the moment only because they have low interest rates, are taking on additional sources of credit—some of which, unfortunately, are payday loans—or are cutting back on essential expenditure to the point of deprivation. All of us will have visited constituents like the one I visited the other week, who said, “I’ll put the heating on while you’re here, but I’ll turn it off when you’ve gone, because I want to save the money.”
It is incontrovertible that debts do not come singly, and that early intervention when there are debts saves money. Government policy is slightly short-sighted in removing the majority of debt issues from the scope of legal aid, and in leaving things until the point of eviction.
Paul Blomfield (Sheffield Central) (Lab)
Does my hon. Friend share the concerns of Peter Hemmingfield, a debt team supervisor in my constituency who works, under the community legal advice contract, with the Legal Services Commission to provide specialist debt advice? He is very concerned that the service that he provides will practically disappear as a result of the intended legal aid cuts. He says in a letter to me:
“A substantial amount of our work is involved in helping many clients who have mental and physical health problems, who are aged”—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Unfortunately, interventions have to be short; I am sure that the hon. Gentleman is just coming to the end of his.
Paul Blomfield
You are absolutely right, Mr Deputy Speaker; I was just coming to the end. Peter Hemmingfield talks about people who are unable to manage their debts alone. Should we not be concerned about the impact on the most vulnerable?
Yvonne Fovargue
I agree with my hon. Friend. As for the idea that people can manage by themselves, that is not happening at the moment, and as a result of the cut to legal aid, 100,000 of the poorest people will lose access to advice. We need to look at where they will go, and how they will be helped in future.
Of course, there is a cost to free debt advice, and it is estimated at about £150 million a year. The credit industry contributes 3% of that amount. I would like the Minister to investigate further how a levy on the credit industry could be made to work without affecting the business model of companies such as the Consumer Credit Counselling Service, which relies on a “fair shares” principle to fund its work; I would not like such companies to go because we were looking at a levy on the credit industry. However, it is not sustainable that the industry should pay just 3% of the £150 million.
On the latest figures, Citizens Advice deals with 8,910 new debt problems each working day. The reason why it deals with that many cases, and why people go to it, is brand awareness. Some 97% of people recognise Citizens Advice, although they might not always know what it does; they sometimes say, “It tells people where to go, doesn’t it?”—well, it does not tell people where to go very often. However, people recognise Citizens Advice, and I am concerned about the Money Advice Service spending its hard-earned money on building a brand that people will recognise. I would question the need to build yet another brand. Why not use a trusted brand to deliver money advice services on the high street?
I am pleased that there is more research on why people get into debt, and I do not think that the reasons have changed significantly over the years. As I have said, they include low income, sudden changes in income, changes in family circumstances, illness, divorce and so on. However, the type of credit that people access has changed. One form of credit that has exploded over the past five years is payday loans. There is evidence of people relying on that type of credit when they max out their credit card and have been denied other avenues of mainstream credit. They use their credit cards regularly to pay their bills.
Only this week I attended a fascinating presentation facilitated by the Centre for Responsible Credit on the international experience, particularly in the US, which is an interesting place, because different states have different regulatory regimes, so the way in which they work can be compared. The former secretary of the securities and banking council who presented the report was adamant that the sector needs to be regulated. He said that as an American citizen he is no fan of regulation, but that regulation needs to be enforced, and the regulator has to have the power to suspend companies where necessary.
I urge the Minister to consider the report and its conclusions, including limiting the number of roll-overs and a cooling-off period so that people cannot immediately take out another loan when the first one ends, then take out another one to pay off the second one. Evidence from Florida shows that capping the total amount that people can take out in any one period—for example, $500 in a year—improves their ability to pay back that loan. We asked whether that sent people into the hands of illegal lenders, but we were told that the average amount that people take out in loans in Florida is $388, which is quite a bit below the $500 limit. People do not max out their loans, which may mean that they do not go anywhere else. In California, however, where maximum loans are much lower at $250, people take out $249, which is evidence that they will look elsewhere quite quickly. It is an interesting report.
We should also consider setting up a real-time database owned by the regulator, but funded by payday loan companies, that stores basic data, including the number of loans and amounts, so that easy referrals for debt advice can be made.
Damian Hinds (East Hampshire) (Con)
Does the hon. Lady agree that the United States consumer credit market is rather different from the one in the United Kingdom? She is right to identify the difference between states, but another key difference is that there is no home credit market to speak of. There is a danger that if we over-regulate on payday lending we may shift that borrowing into other business models.
Yvonne Fovargue
I agree, but the disadvantages of the payday loan industry are greater than those in the home credit market, which is easier to regulate, because we can target it. The home credit market has been here for a long time—we all know the Provvy—and when I worked at a CAB, we could see when lenders were going around an estate, and we could talk to those consumers about that. If people get loans on the internet, or from high-street shops or over the phone, that is much more difficult to control.
We should consider a real-time database, because there is a lot of interesting data that could be gleaned from it. The regulator could very quickly look at companies acting illegally as a result of the information on the database. I recommend, too, the Smith Institute publication that was launched today, which is entitled, “A Nation Living On The Never-Never”. It includes a chapter by Damon Gibbons on learning from other countries. I agree: we are not the US or France, but there are things that we can learn, particularly because regulation is different in different states, so quite a lot of comparisons can be made.
That leads me into the need for debt advice, which should be free, independent and quality marked; should be funded in a sustainable way; and should meet the needs of all consumers, including the most vulnerable. Anyone who is in debt can be vulnerable. One of the most difficult cases that I saw involved an accountant, who had reached the stage where they could not open an envelope or answer the telephone. They needed the initial face-to-face advice so that someone could talk them through the situation and explain that they were not alone. They could then be referred to a telephone service and deal with things themselves, but the initial face-to-face advice had to be there.
Gordon Banks
My hon. Friend makes a forceful point. When a person is desperate and sitting at their computer searching for a solution, at that point they will embrace with open arms any organisation that responds to say that it can solve their problems, and they will jump into something that they might well regret. That is why the face-to-face advice is so important.
Yvonne Fovargue
I absolutely agree. My hon. Friend the Member for Stockton North had a point when he said that we need to look at Google. When someone googles “citizens advice debt advice”, they get the debt management companies, not Citizens Advice, because those companies can afford to pay for the ranking.
Finding debt advice is not like finding a plumber. It is not possible to go into the pub and say, “I’m in debt. Do you know a good company that can help me?” That just does not happen, because people are ashamed to admit that they are in debt. They go on the internet in the middle of the night or look through telephone books because they want the most anonymous way of finding help. That is why they can fall prey to dodgy debt management companies that do not offer the full range of debt solutions. I would probably need another hour to explain the complexity of the debt solutions and the need for a coherent system. I urge the Government to bring forward plans to implement a statutory debt management plan.
Debt management companies sometimes charge up-front fees, as has been said, and sometimes take the money before referring customers to not-for-profit providers. For the average debt of £30,000, the fees are £6,000 on average, which means the client takes a further 18 months to pay it off and the creditor has to wait a further 18 months. It is not good for either party.
Often people are unaware of the free alternatives, which is why I introduced a ten-minute rule Bill to try to level the playing field for not-for-profit providers, which put all their resources into providing advice and none of it into advertising. Since I introduced the Bill, I have received many more examples from across the country of companies ripping off clients—persuading them to take out secured loans or paying the creditors only small amounts, and then going into liquidation, taking the rest of the money. People were giving them continuous authority to take the money from their bank account, which can go on long after the debt should have been paid. However, there is currently no power to suspend such companies, even though the Office of Fair Trading knows that there is considerable consumer detriment. It can take up to two years to revoke a credit licence, because there is no limit on the number of appeals, and the short-term loans industry and fee-charging debt management companies rely on that. For some of them, their business model is to make a profit in two years and then go.
The landscape has completely changed for consumers. Both in the UK and internationally, self-regulation has been proven not to work. I realise that there is a one-in, one-out policy for regulation, but in this instance I urge the Minister to look holistically at the sector. There are so many new challenges and problems that it needs to be treated as a whole new area, rather than as an area that has been around for a long time. It is so different from even five years ago. I believe that we need to provide the necessary adequate regulations and enforcement, however many it takes, to ensure that our vulnerable consumers are not ripped off by the sharks who are profiting from desperation and despair.
George Hollingbery (Meon Valley) (Con)
I congratulate the hon. Member for Stockton North (Alex Cunningham) on securing this important debate and the hon. Member for Makerfield (Yvonne Fovargue), whom I followed on the occasion of our maiden speeches, on her speech. It is a particular pleasure to follow her today as she was so erudite and well informed as a consequence of her employment history.
Debt management and debt advice are important concerns even in relatively wealthy constituencies, such as mine. The latest report from our consumer advice bureau shows that debt advice is the No. 1 request it receives on a daily, weekly and annual basis. I do not want to trouble the House for long, but I want to raise an issue that many hon. Members have raised in the Chamber before. Questions on this matter have been asked before by the hon. Members for Great Grimsby (Austin Mitchell), for Ashfield (Gloria De Piero) and for Blaydon (Mr Anderson) and the right hon. Member for Delyn (Mr Hanson). The hon. Member for Westminster North (Ms Buck) has even introduced a private Member’s Bill on the matter. No doubt Mr Deputy Speaker will rule me out of order if the subject is not close enough to the motion before us, but I believe that the subject of bailiffs is important and germane to this debate, because many of my constituents and, I suspect, others rack up debts that they then have to refinance due to the bailiff system.
This is a complex argument, and there are two distinct sides to it. The BBC’s “Inside Out South West” made a programme on debt collectors last month, concluding that efficient debt collection—the threat of ultimate sanction—was important, particularly for small businesses, at this difficult stage of the economic cycle. My conversations with those closer to the Minister than I am, in the Ministry of Justice, suggest that that Department shares that concern.
On the other hand, all Members will have heard stories from many constituents about debts racked up because bailiffs’ charges have ended up way in excess of the original fine or charge. BBC’s “Watchdog” has done a great deal on the matter, and if one trawls the internet, one finds many websites that include lots of information and reflect a huge concern about the issue.
One or two of my constituents have been to see me about debt, and one who e-mailed me about a case then came to see me about her non-payment of council tax. She had missed just two £30 payments, and she knew she had, so she contacted the council to attempt to make arrangements—admittedly some months after she had missed those payments. She knew that it was her fault, but, after having her bailiff changed and trying to leave on an answerphone any number of messages to which there was never any reply, her bailiff was changed, somebody new arrived on her doorstep and she was presented with a bill for £642.
To many people that might not seem like a huge amount of money, but for my constituent it was completely insurmountable: she absolutely could not possibly pay that sort of money. We intervened, made arrangements for the local council and things were sorted out, but if we had not been there I hate to think where she would be. The answer is probably in the hands of the sort of debt management organisations that have been so well described today.
Another constituent failed to pay a parking ticket, and, after many months of dispute one way or another, with missed phone calls, missed letters and letters allegedly sent from bailiffs, she ended up with a bill for £500. A further constituent received a bill for £60 which escalated to £596. There is something plainly disproportionate about what happened in those cases. It is important that we have robust debt collection services, because we cannot allow people to rack up fines knowingly without any intention of paying them, but we have to look at the matter of proportionality, and I am worried about it.
My local citizens advice bureau has shown me two more cases that it has handled. It has one client who receives regular letters from a debt collection—bailiffs—company for her son who owes council tax, but he has not lived with her for five years, as she has made clear to the debt collection company any number of times. She has given the company her son’s address and phone number, but the letters keep on coming. She has also complained to the local authority, but it does not have the power to do anything.
The same bailiffs company persuaded another of my constituents to set up a direct debit to pay off arrears that she had run up some time ago, but the firm failed to collect the second payment, even though the direct debit was still set up. The company assured her that the direct debit was not set up, but bank records showed quite the opposite, and it has since charged her penalties for not paying an amount that it was supposed to collect and had a mandate to collect. That situation clearly cannot be allowed to continue.
This is a difficult issue, as I have already said. It is based on law, customs and practice from many years, if not many centuries, ago and there is clearly a need for reform. The previous Government did act on the matter, putting on the statute book the Tribunals, Courts and Enforcement Act 2007, to which my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) has referred. She mentioned section 5; my point is about section 3.
Section 3, as I am sure many Members will know, has not been enacted, but some progress has been made. There is an online certificated bailiff register, so debtors can check a bailiff’s status; all bailiffs now have to pass a Criminal Records Bureau check; and minimum training and skills are required for certification. But section 3 remains unenacted. It includes measures on when and how a bailiff or a High Court enforcement officer can enter a premises, what goods they can seize and sell, and what fees they can charge.
Yvonne Fovargue
I am glad that the hon. Gentleman mentions visits, because I have had two cases of bailiffs visiting a property, one in which they said, “You’ll be taken to prison and the child will be taken into care, and another in which they threatened to seize a pedigree puppy while a child was there. Some of their actions on visits are as bad as their letters.
George Hollingbery
A small trawl of the internet produces reports of any number of similar cases in which the circumstances are really quite horrifying. Vulnerable people standing on a doorstep, often surprised by the visit, can be bamboozled into doing all sorts of things. Indeed, in the parking ticket case that I mentioned, the lady was so upset by the situation, as was her neighbour, that the neighbour wrote out a cheque at that very moment to pay the £592 so that her friend’s car would not be taken away. These are unacceptable practices.
On taking office, the coalition said in its agreement:
“We will provide more protection against aggressive bailiffs and unreasonable charging orders, ensure that courts have the power to insist that repossession is always a last resort, and ban orders for sale on unsecured debts of less than £25,000.”
On 22 March this year, the hon. Member for Gedling (Vernon Coaker) asked a question of the Secretary of State for Justice about the timetable for consultation on the implementation of section 3 of the 2007 Act. He received this reply:
“The Government have given a commitment to provide more protection against aggressive bailiffs. We have identified options for public consultation on this commitment including the better regulation of bailiffs, the powers of bailiffs, their costs and how complaints should be dealt with. We are currently preparing the paper and intend to publish in spring 2011.”—[Official Report, 22 March 2011; Vol. 525, c. 971W.]
It is not spring 2011—it is early winter 2011—and that consultation is still not with us.
I must make it clear that I recognise that this is not an easy problem to solve. There needs to be a robust mechanism in place to enable those who are owed to collect outstanding debts from those who simply refuse to pay; all reasonable people would agree on that. Ministers are faced with serious difficulty in creating a scheme that has real teeth, but only as a last resort, without charges becoming hugely disproportionate. It is a fine balancing act, and I do not envy them the task. But if companies and taxing authorities do not have such schemes available, they could well face serious economic difficulties. It is not an easy task, and I can genuinely understand why making progress is difficult. That said, we have had promises and there is an expectation that something will happen. All I ask is that the Ministry of Justice—of course, the Minister who is with us today cannot respond on its behalf—provide some certainty for those in the industry and those who are subjected to bailiffs’ visits to ensure that we understand where we are going on this issue.
Nic Dakin (Scunthorpe) (Lab)
It is a pleasure to follow the hon. Member for Meon Valley (George Hollingbery), who made a very intelligent speech about controls on the use of bailiffs that is helpful in the context of the overall picture that we are looking at.
I congratulate my hon. Friend the Member for Stockton North (Alex Cunningham) on securing this debate, and I thank the Backbench Business Committee for allowing us the time for it. The debate is timely in two ways. First, as the Chancellor said this week, we face an economic storm. Families and individuals are facing rising energy prices, higher food prices, and rocketing fuel bills. Their incomes are being squeezed, and there is a real risk that more people will move into debt. Secondly, we are now in December, with the extra pressure of Christmas hitting household budgets. We do not want a debt hangover in the new year, with its awful consequences.
When someone summons up the courage to ask for help with dealing with their debts, they need to get the best possible support from people who will help them to clear those debts, not make matters worse. The hon. Member for Chatham and Aylesford (Tracey Crouch) clearly illustrated the dilemmas and problems, and the kinds of practices that unfortunately happen. At present, people who try to take responsibility for their debts can find themselves at the mercy of unhelpful, aggressive and sometimes unscrupulous practices that make dealing with debt an even more unbearable experience. In 2010, the high-cost credit industry lent £5 billion in the UK. Payday loans alone increased from £1.2 billion in 2009 to £1.9 billion in 2010. The UK now has one of the highest levels of personal debt in the world. In April 2011, the figure stood at a staggering £1,460 billion.
At this time, the future of debt advice is uncertain, with changes to eligibility for legal aid and the transfer of responsibility for debt advice to the Money Advice Service. It is important that the Government and the Money Advice Service confirm the future of the financial inclusion fund debt advice services as soon as possible, not just for next year but for future years. The funding from that is part of the overall funding of Citizens Advice services. There will be real risks if the critical mass of funding to provide advice is destabilised by further cuts in income at local or national level.
The FIF debt advice services are in their sixth year. They were deliberately located in areas such as Scunthorpe to meet the needs of communities that have difficulty accessing debt advice. Every year, those advice services have directly helped more than 100,000 people nationally to resolve their problems. Regular audits and evaluations have found high levels of customer satisfaction, with services exceeding clients’ expectations and effectively reaching their intended target group.
The provision of independent debt advice in my constituency is particularly worrying. The situation is in danger of being exacerbated by the changes to legal aid eligibility and reach. There are real worries about the availability and accessibility of future support. I fear that that is typical of the situation in many parts of the country.
If the FIF debt advice services cease, there will probably be no alternative sources of help. By definition, those services are used by people with very low incomes and limited means. Their inability to repay substantial amounts towards any consumer credit debt means that private sector debt management services do not see them as a profitable client group to serve. Research shows that there is little overlap and duplication between the national telephone advice services and the local FIF services. Clients often use local services on referral from other local agencies such as jobcentres, landlords and local authorities. Many of the people they serve have problems or communication needs that require support to be given face to face for it to be effective.
The quality of advice from many fee-charging debt management companies is questionable. Their fee structures mean that they get much of their income up-front. They are therefore not encouraged to work with their clients to help them manage their affairs and become debt free. A huge amount of those companies’ budgets is spent on advertising to draw in income from the indebted. That contrasts with companies such as the Consumer Credit Counselling Service and Payplan that use a “fair share” model to gain income. The incentive under that model is to work with creditors and the individual to make them better able to manage their money.
According to Citizens Advice, the majority of people in difficulty find themselves there due to changes in their life circumstances, such as death, divorce and redundancy. My hon. Friend the Member for Stockton North, in opening this debate, drew attention to research from the University of Nottingham that underlines that finding.
With all its experience, Citizens Advice highlights three principles for taking debt advice and management services forward. First, access to free and independent debt and money advice services is vital for those in financial difficulty. Such services need to be funded in a sustainable way and should meet the needs of all consumers, including the most vulnerable. Secondly, people in financial difficulties need better options to deal with their debts so that they are not drawn into using poor-quality debt management firms or taking on high-cost credit as a coping strategy. Thirdly, the consumer credit regulator needs stronger powers and more resources to prevent consumer detriment and to act more quickly and decisively to deal with problems. I will return to the point about regulation later.
There are other things that need to be looked at carefully. We have heard about misleading advertising. Many businesses claim that their services are free when they simply are not. Fees should be clear, understandable and highly visible from the start. At the same time, free services must be made equally obvious and clear. My hon. Friend the Member for Makerfield (Yvonne Fovargue) has introduced a ten-minute rule Bill to make advertisers signpost free advice. That is worth careful consideration.
Another issue is up-front fees. Debt management companies often front-load their charges, with customers paying several hundred pounds before they receive any advice. We need to consider whether up-front fees should be banned. We should also consider whether cold calling should be restricted.
The Office of Fair Trading lacks the resources proactively to monitor compliance by debt management companies. It has issued formal warnings to 129 firms out of the 172 that it has surveyed recently for compliance. We need to strengthen the regulatory framework. Across the House, there is recognition that this is an area in which the regulatory framework needs to be used. I draw attention to the comments of the hon. Member for Chatham and Aylesford, which made that point clear.
We can consider better control on firms entering the market, better scrutiny of business models and making the regime less reliant on enforcement action against firms that behave badly and more focused on preventing bad practice in the first place, so that bad firms do not get into the market. Consumer credit regulation needs to be strengthened, so that it has a deterrent power. At present, many firms are simply not sufficiently worried about action by the Office of Fair Trading to avoid unfair practices.
The regulator should be able to compel firms to compensate consumers for unfair practices, and there should be swifter enforcement against unfit firms. As my hon. Friend the Member for Makerfield said, firms that the OFT considers unfit to hold a credit licence can continue to trade and cause consumers harm for many years as a Jarndyce v. Jarndyce-type labyrinthine process is gone through in the courts. That is not to anybody’s benefit.
Interestingly, a large number of lenders in the UK are now US companies that have come here to take advantage of the lower level of regulation. Earlier this week I met an organisation called Veritec, which said that the market was very attractive to US companies at the moment because of the lack of regulation. Five of the seven largest UK companies in the sector started in the US. It is therefore right and proper that we look at practice in the US and how it has come to regulate this fast-expanding area of business since the problems in 2000 and 2001, particularly in the state of Florida. Those problems led it to introduce a regulatory framework that appears to have some attractions.
My hon. Friend has already drawn attention to the features of the Florida model: a maximum loan of $500—we could consider the maximum being a percentage of gross monthly income instead, but $500 is Florida’s model—limits on multiple loans, the stopping of any roll-over payments, a 24-hour cooling-off period between loans and finally, a very important ingredient, the real-time information system run by a private company and paid for by the credit companies, but accountable to and owned by the regulator. The database is funded by a transaction fee.
Damian Hinds
I am pleased to see that although it is the first of the new month, the hon. Gentleman has not taken the opportunity to make his face clean-shaven.
Will the hon. Gentleman acknowledge that the Florida measures apply specifically to payday loans, which do not account for the majority of the credit market or the majority of the debt problems in this country?
Nic Dakin
The moustache is having an encore for today and will be removed tomorrow.
The hon. Gentleman is right that the Florida measures apply to payday loans, but I believe that it is worth considering how that model can assist overall. Interestingly, by 2009, 6.8 million loans had been authorised in Florida, and not a single loan was extended beyond the contract period. More than 90% paid back their loan within 30 days and more than 70% repaid on the contract end day. Consumer complaints of mis-selling dropped significantly, as did overall indebtedness, and not one borrower was indebted by more than $500 at any given time. The Florida model may well not be the answer, but I ask the Minister to what extent the Government are drawing on practice elsewhere in the world, including in Florida and in France, which has also been mentioned, to help inform how we can move forward. I believe there is cross-party consensus about the need to regulate, and as the hon. Gentleman indicated, it is horses for courses—the Florida model covers payday lending, but there are other issues to consider.
Yvonne Fovargue
The other advantage of the independent database owned by the regulator is that if anyone researches a credit reference agency database, it does not show who has been on the payday lending database. When people move from payday lending to more established forms of credit, as we hope they will, their credit reference is not affected by the fact that they have had a payday loan, or maybe 10 payday loans.
Nic Dakin
My hon. Friend makes a significant point. The devil is in the detail—I can see that the Minister is nodding. We should learn from practice elsewhere that can better assist us. It is clear that practices in some US states have created unforeseen difficulties, so there is something to learn from what works well and what does not.
I should like the Minister to address certain questions when he speaks. Will he confirm that the Government recognise the need for sustainable face-to-face debt advice provision for people who get into significant debt difficulty? Will he confirm that the Government will ensure that funding is available for that in future?
Will the Minister take steps to eliminate misleading advertising of debt advice and to abolish the practice of debt management companies charging huge up-front fees, which results in perverse commercial incentives? Will he recognise that a consensus has been expressed by Members on both sides of the House that debt advice and debt management needs to be regulated? Such regulation should not be compromised by the one-in, one-out rule, however reasonable that aspiration is. Regulation is necessary if we are to have better activity. If we do not regulate soon, we will have consequences that we would rather not have.
Finally, will the Minister confirm that he will learn from practice elsewhere in the world? I am sure he will because he is very much into learning from others.
Lorely Burt (Solihull) (LD)
I congratulate the hon. Member for Stockton North (Alex Cunningham) on securing this debate and on his excellent contribution, in which he referred to the Consumer Credit Counselling Service report. The problem is enormous: 6.2 million households are financially vulnerable, of which 3.2 million are already in financial difficulty.
There is consensus on both sides of the House that debt advice is a distress purchase. People do not shop around. If they hear of somebody who can help them, they will grasp at the opportunity. There is an “any port in a storm” mentality. I was particularly taken by what the hon. Member for Makerfield (Yvonne Fovargue) said on getting to people before they join the 3.2 million who are already struggling, because help can be afforded to them at that stage.
We have talked about who offers debt advice. Citizens advice bureaux do a wonderful job, and work with the CCCS and Payplan, which are the two free advice services. The important distinction between pay advice companies and free advice companies is that the former are funded by creditors through a fair-share system. When the debt is paid off, the company that has managed to secure the payment receives a commission or contribution. That is important. We have heard about CCCS, which is partnered with Citizens Advice, and the Money Advice Trust, a debt line that will co-ordinate the best debt advice, but the problem, to which several hon. Members have alluded, is that there is not enough information out there for those desperate people when they can really benefit from the help.
Let us look at the pay debt management companies. All the money comes from the customer—the person who is in debt. The balance of their interest comes from getting the fees. Under the fair-share system, the interest is only in ensuring that the payments are paid back because companies do not benefit unless the debt is recovered.
The structure of these fees is also of concern. Not all companies charge an up-front payment, but some will charge hundreds of pounds before they have even looked at a case. Regular commission comes from the person who is making the payments back, and that just makes the problems worse. As I mentioned earlier, what is recommended further down the line is very often something that should have been recommended in the first place. These companies all favour solutions that make them money, so they go for the debt management plan and for the individual voluntary arrangements. Very few offer debt relief orders, which are a key insolvency tool for people with few assets and low incomes.
Although many Members in this Chamber would argue that there is no place for these pay debt management companies, it is important that we consider their case and what they have to offer. The Debt Managers Standards Association, which is one of the two trade bodies, told me that its members, the good companies, offer face-to-face meetings and professional help. They will also negotiate with the debtors. It says that those companies provide that service because they are being paid.
On the other side of the coin, Consumer Focus, which was responding to the Office of Fair Trading report into the debt management sector this year, said:
“On the basis of the OFT review, fee-charging debt management is a market which, at the moment, is largely failing consumers.”
We have heard about the rogue debt management companies and about the number of complaints that are made against them. Interestingly, people do not necessarily go to the regulator about such companies. They tend to go to the citizens advice bureau because they see it as their friend on the high street; the place where they can go to get face-to-face advice.
There are examples of companies that hold on to payments and then go into liquidation. Whatever else we do, we must tackle those rogue companies. Several Members today have called for those companies to be suspended. As soon as we discover that they are misbehaving, they must be suspended there and then before they have the time to wreak havoc and do even further damage.
As the OFT licenses debt management companies, it has certain responsibilities. Last year, it launched a crackdown, issuing warnings to 129 companies, 35 of which threw in the towel straight away. They knew that the game was up and they were not going to be able to make the sort of money that they wanted to.
Although the OFT has teeth, it could do more to regulate such companies. It is strapped for money, so it is unable to give the kind of service that it wants to give. In October, DEMSA agreed in principle that the Institute of Chartered Accountants should undertake monitoring of new and existing DEMSA members. DEMSA has an OFT-approved code of practice, so it is doing its best to clear up the industry and to provide a fair service to customers. At the end of the day, if a company rips off a customer, then they cannot pay. It is in everyone’s interests to clean up the industry.
I want to consider the options available. We could close down debt management companies altogether, but that would be illiberal and take away a service that is of help to many people in the country. Furthermore, of course, those people would simply go elsewhere. Where would they go? They could go to organisations such as the Consumer Credit Counselling Service. On the other hand, however, they might go elsewhere, including to a loan shark. If they are to use debt management companies, therefore, it is important that they have the protection that we all wish for.
Alternatively, we could work with the debt management companies. As suggested by the Debt Resolution Forum, we could require other companies to subscribe to the DEMSA code of practice and to auditing by the Institute of Chartered Accountants. My favourite option, however, would be to strengthen the OFT so that it can use its existing powers to levy a fee on debt management companies to pay for them to be audited. To ensure that it was not prohibitive for small debt management companies, the fee could be related to the number of debts under management at any one time. Consequently, the big companies would pay a larger share, and that would strengthen the OFT and enable it to do what it wants to do—ensure that these companies are properly audited.
The only other alternative is formal regulation, which could be done under existing statutory legislation. I was interested in the comments of the hon. Member for Stourbridge (Margot James) about the report from the Business, Innovation and Skills Committee, and it would be helpful to take an intensive look at the matter and establish whether regulation could provide a workable solution. People’s lives are at stake here. We could not be considering a more important issue that is able to make a difference to the quality of life of indebted people.
Justin Tomlinson (North Swindon) (Con)
It is a pleasure to follow my hon. Friend the Member for Solihull (Lorely Burt), who has been a long-standing champion for this issue. I congratulate the hon. Member for Stockton North (Alex Cunningham) on securing this important debate on a subject in which I take a particular interest—I supported the ten-minute rule Bill introduced by the hon. Member for Makerfield (Yvonne Fovargue) and have spoken in several connected debates.
This issue is important because 91% of people in financial difficulty feel that with better information and advice they would have made different decisions. Members of Parliament know through their casework of the distress in which individuals find themselves, and in times of financial difficulties their needs are even more urgent. These people do not necessarily have the time to shop around and make informed decisions, and many people get into financial distress following a significant change in their circumstances, whether it is a job loss, bereavement, illness or family breakdown. At such moments, they are not necessarily in the strongest position to address the challenges that they face.
I wish to highlight a number of issues. First, I have been a long-standing champion for the improvement of financial education, and I shall take this opportunity to plug my ongoing campaign. We need to equip people of all ages in this country with the key skills that enable them to make these important decisions, and I shall continue to press for that at every opportunity. The total costs of the decisions that people make are not necessarily displayed in a format that they understand—in plain, good old-fashioned cash terms.
Andrew Bingham (High Peak) (Con)
With his usual modesty, my hon. Friend just briefly mentioned the campaign for financial education in schools, on which he has led the way in the House—I think that the all-party group on financial education for young people, which he set up, is the largest in the House. Does he agree that financial education is very important to tackling the problem in the long run, particularly given that there are now so many different ways in which people can purchase things and borrow money? This education is crucial for future generations.
Justin Tomlinson
I thank my hon. Friend for that intervention. He has been extremely supportive of our ongoing campaign. One of the driving forces behind our desire for compulsory financial education is the fact that we live in a challenging, complex world, where individual consumers are all too often bombarded by unhelpful marketing messages. Equipping consumers to enable them to pick their way through that minefield would make a big difference.
We are also seeing products becoming available that have complex terms and conditions—again preventing consumers from making informed decisions—and for which the consequences of defaulting are not clearly set out. The up-front and administration fees are not clearly shown, and too many consumers are making monthly payments to such companies without clearing the original debt for which they turned to them to get help. We have also seen misleading company names and advertisements. People in financial distress are under pressure from the companies to which they owe money. They feel obliged to make a quick decision, so when companies contact them to say, “We can sort this out. You just need to say yes in this phone call and we’ll get these people off your back,” it can be very attractive. We have seen excessive amounts of cold calling and dishonest texting. I agree with the request that the hon. Member for Stockton North (Alex Cunningham) made to ban such practices—I am certainly someone who is sick and tired of receiving unwanted calls and text messages. A number of hon. Members also referred to Google rankings, whereby people innocently type in “free debt advice” and are bombarded with the complete opposite. I would recommend that the Minister look at that.
I welcome the OFT’s revised guidelines, which set out the standards and expectations of debt management companies, making it clear that they must be transparent about the service on offer and the fees charged, to ensure that the advice provided is in the best interests of the consumer. It is clear that the Government—especially the Minister, who has shown a great interest in this subject—and the OFT are seeking to make a difference. However, I have a number of questions for the Minister, which I hope he will respond to when he wraps up. Some 129 businesses have already been warned, 69 of which have now exited the debt management market. Does he consider that a success?
Secondly, the process can take up to two years. What can be done to speed it up? As the hon. Member for Makerfield pointed out, not only can those businesses inflict huge damage to the most vulnerable consumers in two years, but for some of them, their whole business plan is geared towards being around for only two years and making as much money in that time as they can. I have spoken to the Consumer Credit Counselling Service, which told me that many such companies are also fleet of foot. As soon as we knock them off in one form, they reappear in another. My final question on the issue is this: how easy is it to identify some of the online operators? If they are on the high street, with nice big shiny signs above their shop doors, it is obviously easy to identify and tackle them. However, many such companies operate online, making it difficult to track them down. Is that stopping the clock ticking in terms of action being delivered?
All those who have spoken today have promoted making available free, independent debt advice—which I, too, support. I welcome the increased content available online, but we must remember that a significant number of the most vulnerable consumers—the people we will see coming into our surgeries—still rely on individually tailored, face-to-face or telephone sessions to help. I pay tribute to organisations such as Citizens Advice and the CCCS, which provide fantastic, individually tailored, free advice sessions. Those sessions are essential, because vulnerable consumers, with their individual circumstances, need somebody with the patience to go through things with them. All too often they are people who, through fear of what they are encountering, have not opened their post. They need someone to sit down with them, because online advice relies on people to know their own situation, which all too often is not the case.
People might also feel the need to make a quick decision because the people to whom they owe the money are chasing them. A debt management company might say, “Just say yes on the phone and I’ll sort all those problems out.” When confronted with a bag of unopened post, people need somebody to help by saying, “We’ll sit down with you and get to a position where you can make a quick response.” Also, advice sessions will always take account of people’s individual circumstances, because every person is different—every person has different priorities and different amounts of debt—and will help them take the best possible course of action for their circumstances.
I welcome the Government’s commitment to secure the £27 million-worth of additional funding for the next year, but we need a long-term commitment, which is what the Money Advice Service is exploring. I urge it to continue and find what it is looking for, as this is so important. In these difficult and constrained financial times, this is an absolute priority, which I shall continue to support.
I would go further than some other speakers who talked about the need to provide access for free and independent advice. Just as we insist on having a Government health warning on all packets of cigarettes, I would like to see information published about how to access the free independent advice so that people can take a few moments out and contact those who can assist them. Too often, we have seen some of these debt management companies create spurious charities, whose people then provide the “independent advice” when they are, in fact, just subsidiaries of the company that is going after the business in the first place. Some have said that they did not want to get rid of this market completely, but wanted to be confident that every single consumer has easy access to the free and independent advice that we all believe is so important.
Finally, I want to explain how we can make a difference as individual Members of Parliament. Organisations such as Citizens Advice are under a lot of pressure: only a limited amount of funding is available and only so much time can be given to consumers who are in financial distress—effectively in a last-chance saloon—and need a quick response. When approached by R3, Citizens Advice and Nationwide, we carried out a training day, involving me as MP and all the staff in my constituency office. We were trained on how best to deal with people in financial distress. We were able to phone up the local citizens advice bureau and arrange an emergency appointment the following day, where people could benefit from a one-hour session. It provided an opportunity to sit down with the individual in advance and say, “This is what you need to bring to your session tomorrow”. The maximum help possible was provided in that one-hour session. All too often, consumers turn up at the last chance saloon without having all the information they need, which makes it difficult to give them the practical advice they need. I have been assured by both Citizens Advice and the Consumer Credit Counselling Service that they will happily provide similar training for all MPs. That shows how we can take this up to make a positive difference.
Damian Hinds (East Hampshire) (Con)
I congratulate the hon. Member for Stockton North (Alex Cunningham) and my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) on securing this important debate, and I thank the Backbench Business Committee for granting the time.
With almost £1.5 trillion of personal debt in the country and £200 billion of unsecured consumer lending, debt can clearly be a problem at all levels of society. In common with others who have spoken, I am particularly concerned about the less well-off members of society accessing sub-prime and high-cost credit. It is worth reminding ourselves that although to many opinion formers, journalists and others, this is a relatively hidden market, it is not at all a small one. The leader in home credit provision claims to visit one in 20 UK households every week. The leader in the rent-to-own sector has almost 250 stores and hopes to double that number. Payday Loans—as we have heard, a relative newcomer on the scene—already has between 1 million and 2 million customers a year.
Most people who look at this issue end up concluding that we need a three-pronged strategy to deal with it. The first is about education and advice, both before the fact and when people get into trouble; the second is about smart regulation, including disclosure to make it obvious to people what they are taking on; the third is the provision of alternatives. All three are vital, either directly or indirectly, to the provision of debt management advice—directly because advice is one prong, and indirectly because they impact on the need to have that advice. I shall talk briefly about these three in reverse order.
Starting with alternatives, hon. Members will not be surprised to hear me mention the importance of credit unions. Credit is a fact of life. Although we all occasionally meet people who say, “Well, if you haven’t got much money, you shouldn’t borrow”, the fact of the matter is that it happens at every level of society to help people get through the ups and downs of life. Childbirth and Christmas can happen to anybody—[Interruption.] I accept that childbirth is unlikely to happen to me. We need affordable and responsible lenders to operate in the market. Credit unions provide affordable loans, promote financial inclusion, get more people to have bank accounts, which has a big knock-on effect, and encourage savings. With savings, people are much less likely to find themselves getting into debt problems later.
I congratulate both the current Government and their predecessor on their support for the credit union sector. They have taken different but equally positive approaches. The new legislative reform order will mean the liberalisation and potential growth of the sector; the coalition’s £73 million modernisation fund will help it to become self-sustaining over the medium term; there is a possibility of its working with the post office network—for instance, introducing “jam jar” budgeting accounts—and there are many other interesting and exciting opportunities.
Many Members have spoken about aspects of regulation. This is clearly not the occasion on which to go into detail about the regulation of the high-cost and sub-prime credit markets, because we do not have enough time, but I should like to touch on some key points. Other Members have mentioned the potential for caps on the cost of credit. At times during our debates about this subject in the Chamber it has seemed that there may be a simple answer to the problem, but there is not.
A blunt and general cap on the cost of credit would have few positive results and many negative ones. It would, for example, push a large number of people out of the legal credit market and into the arms of those whose idea of a late-payment penalty is a cigarette burn on the forearm. It remains true, however, that some form of usury limit exists both in the European tradition, in countries such as France, Germany and Italy, and in the Anglo-Saxon tradition, in countries such as Australia and Canada and—as we heard earlier—many American states. That does not mean that they are all correct and we are wrong, but it should at least make us ask, as the hon. Member for Makerfield (Yvonne Fovargue) did earlier, what we can learn from abroad. I know that the Minister and the Government as a whole are keen on that idea. A variable cap may well be possible, and I know that Bristol academics are considering that as we speak. I have my own particular hobby horse: I think that a limit to the annual interest rate and a separate one-off introductory or set-up fee, also limited, would be a successful formula.
Members have mentioned the way in which debt mounts up as a result of rollovers and the accumulation of behavioural problems, and that too needs to be considered. Perhaps most important of all is the need to ensure that debt is affordable by imposing a requirement to that effect on lenders. The hon. Member for Makerfield mentioned the Centre for Responsible Credit. She and I attended the launch of a report that laid bare the massive difference between the affordability of credit at the high-cost or sub-prime end of the market and its affordability at the mainstream end.
In some American states there is a requirement for operators to pool data with a central agency. That is specifically in the payday sector—the distinction is important—but in any case I do not think that there would be any appetite for such an operation in this country. It does not accord with our way of doing things, and even if it did, there would be huge IT problems, My God, imagine trying to hook up every sub-prime and high-cost credit provider in this country—not just in the payday sector—into a database. It would be a nightmare, and the fact that the credit reference system seems to work so poorly at present—some people have eight, nine or 10 loans by the time they seek help from the likes of the Consumer Credit Counselling Service—does not bode particularly well. There may be possibilities, however.
John Pugh (Southport) (LD)
The hon. Gentleman’s speech is teaching me a great deal, but is he implying that debts can be affordable without a usury cap, or that a usury cap is necessary for them to be affordable?
Damian Hinds
Obviously credit can be affordable without a usury cap. It depends on the price that is set. I am increasingly of the view that there probably is room for some form of cap, but that it should not be a blunt and general cap that would have all sorts of unintended consequences. As I said a moment ago, I do not believe that there would be any appetite in this country for an enormous central database storing credit transactions involving every conceivable type of provider and every single citizen of the United Kingdom so that loan applications could be compared with earlier ones.
Affordability is now a principle in the OFT guidelines. There is an argument that lenders should have a general duty of care to make reasonable efforts to ensure that the loans they provide are affordable to the consumer, and also that the loan does, indeed, get paid down over time.
Yvonne Fovargue
At present, however, even the most up-to-date credit reference agency updates only once a fortnight. My constituent who took out six payday loans in a day would not be stopped by that. Most of our payday lenders come over from America, where they are registered with one agency that regulates only payday loans as a short-term means of lending.
Damian Hinds
That is a perfectly legitimate and credible line of argument. The hon. Lady mentioned, however, that the payday lending market barely existed in this country five years ago. There are many other high-cost forms of credit, so this market has a remarkable ability to shapeshift, and targeting just one sector will result in the growth of other sectors. Not all the states in America have the payday loans regulations the hon. Lady mentioned, but those that do have experienced growth in other areas of lending, such as rent-to-own loans. Somebody always picks up the slack in the market, therefore. I am not arguing against all regulation, but I am arguing that what appear to be easy and general solutions are usually ineffective.
Education and advice are essential. Some people would say that the best advice on debt that we could give to individuals—or to Governments—is, “Don’t.” To be a little more nuanced, we could say that capital spending—people investing in themselves through investing in their education, their home or a car that will help them get to work—is a legitimate reason to incur debt, whereas current spend is usually to be avoided unless people can be confident they will be able to pay the money back. In other words, people must ensure that in the ups and downs of life there are not only downs, but an up will come, too. We might call that a golden role. Opposition Members will recognise that term, and they will also appreciate how important it is to stick to the golden rule and not change it part way through.
My hon. Friend the Member for North Swindon (Justin Tomlinson) has done amazing work not only in running the all-party group on financial education for young people but in raising the profile of this issue. I agree that young people must be equipped with the necessary skills for when they enter adulthood and the marketplace, and I believe the best way to do that is through maths, because if people understand percentages and so forth, they can assess all sorts of financial products. If schools and society are doing their job well, people will understand their self-responsibility too, which is also very important.
There will always be a need for a backstop solution for when things go wrong and I believe that debt counselling and advice should be mainly industry-funded. It must also be available through all channels—online, telephone and face to face. However, we must accept that face-to-face advice is massively more costly than the other channels. The hon. Member for Stockton North cited Citizens Advice cost-benefit analysis figures in respect of debt advice, but they are slightly exaggerated as they represent not the return to the Exchequer, but a much broader view of cost-benefit analysis taking account of the benefit to the economy. We must accept that face-to-face advice is costly, but, as my hon. Friend the Member for North Swindon rightly pointed out, it is essential to have that provision as it is important for some of the most vulnerable members of society. I am delighted that the Money Advice Service is focusing on how it can improve productivity—the case load throughput per person—in order to make face-to-face advice more affordable.
There is a role for debt management companies. There are hundreds of them and we must not over-generalise. On the other hand, a considerable number of them have got into trouble with the OFT, which suggests there might be a systemic problem in the sector. It is worth bearing in mind the circumstances of the customer that a fee-paying DMC will take on. They are, as has been said, typically not letter-openers. They often have unrealistic optimism about how the circumstances of their lives are about to change and turn around and, conversely, they have an enormous myopia about fixing today’s problem and today’s bills rather than looking at how to lay down long-term foundations. They are, almost by definition, quite easily swayed by good advertising—usually by either the first ad they see or the last. That all means that they are quite susceptible to the offer of an apparently easy solution whereby somebody else will take on the administrative burden and deal with the range of creditors on their behalf and they will focus on the smallness of the monthly payments rather than on how the alleged solution will bring them into long-term financial health.
That means, in turn, that the successful companies in the sphere tend to be those with the biggest marketing spend, the biggest promises, the longest repayment term on the loan and therefore the highest conversion rates. Although they will have a substantial drop-out rate, it does not matter so much if they have charged up-front fees that mean that they have ensured that their cash flow is safe. I hear from my excellent citizens advice service in East Hampshire that debt management companies all too often fail to consider the consumer’s overall position, the priority debts that they must pay first and their ability to pay back the loan schedule.
Yvonne Fovargue
The hon. Gentleman might be interested in a text that a colleague has just received—the Minister might be interested, too. It is cold calling from a debt management company and says that there is new legislation that means that debts can be written off. Is the Minister aware of introducing that new legislation? That is how people get drawn into the debt management companies.
Damian Hinds
Indeed. Remarkably, the hon. Lady might even discover that such texts seem to come from the Government on occasion. For the avoidance of doubt, let me state that they do not. Those are the sorts of tricks and ploys that are played, with a lot of subtle suggestions without saying anything. We probably know people who are not generally credulous who, from time to time, receive such a thing and take it as genuine.
I apologise for being almost boring in the extent to which I am going to agree with all previous speakers—[Hon. Members: “No!”] You are too kind. There is a remarkable degree of consensus among Members from all parties. Cold calling and canvassing for such businesses have no place in a responsible marketplace. The front-loading of fees sets apart the true interests of the customer and the provider. Although banning it might be excessive, we need to get rid of the front-loading and ensure that the operator has an incentive to see the individual through to financial security.
Finally, on search marketing and the extent to which people are actively searching for debt advice rather than being bombarded with marketing messages, I do not think we need to wait for a law or new regulation. There is only one substantial operator in that market. It is called Google and I am sure it has a corporate social responsibility department. I hope that it will read the transcript of the debate and take it on itself to ensure that although it will suffer some diminution in pay-per-click marketing fees, it can put free, respected and valued debt advice services at the very top of the list of the results when people search.
Nick Boles (Grantham and Stamford) (Con)
This has been a fascinating debate and I congratulate the hon. Member for Stockton North (Alex Cunningham) and my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) on managing to secure it now, in a week when we have learned from the Office for Budget Responsibility, the Institute for Fiscal Studies and others that real disposable incomes for most people in Britain will not rise much in the next few years.
We all know, through our own experiences and those of the people we represent, the extent to which unavoidable costs such as filling one’s car, paying a heating bill or doing the weekly shop are going up. As a result, I fear that many more people will find that the sums just do not add up at the end of every week or month and that they cannot pay every bill on time. It is particularly important therefore that we anticipate now, in the next few months, the rising demand for debt management advice and work out how to protect the people who need to call on that advice.
Many hon. Members are great experts on aspects of this problem. My hon. Friend the Member for East Hampshire (Damian Hinds) is a great expert on credit unions, my hon. Friend the Member for North Swindon (Justin Tomlinson) is a great expert on financial advice and the hon. Member for Makerfield (Yvonne Fovargue) seems to be a great expert on everything to do with financial understanding. My interest in this subject comes from my constituency. I am lucky enough to represent the 750 people who work for Payplan in Grantham, which is an extraordinary business. It is important to understand that it is a business—a very valuable business—that does very well at making money. It does so by providing free debt management advice to troubled debtors and taking a fair share of contributions from creditors.
Payplan has demonstrated, along with the Consumer Credit Counselling Service and a few others, that it is an entirely commercial proposition to offer people advice based on the contributions received from creditors. It absolutely is not necessary to charge consumers for that advice in order to build a valuable business and make decent and respectable profits. Payplan is a partner of the Money Advice Trust and works closely with Citizens Advice and the National Debtline. I have run small businesses and I have many friends and colleagues who work in businesses, and I have not come across a business that makes as much money as Payplan does by doing as much good, so I am immensely proud to represent it and its employees.
The key question I want to address is the one at the heart of the debt management advice industry: what is the right economic model for that industry and should we be willing to intervene as a Government to change or specify that model? I go along with a view put forward by other hon. Members, particularly by those on the Government side, although my Lincolnshire colleague the hon. Member for Scunthorpe (Nic Dakin) also seemed to be of the same view. I am innately—I do not require the hon. Gentleman to go along with this—an economic liberal, like the Minister. I start off being sceptical of state intervention and I require that people demonstrate to me that a market failure is both obvious and substantial. I was therefore very happy, when a number of us met the Minister to discuss these issues a few months ago, to take his suggestion and look at whether there was a non-regulatory way of trying to fix the problem of cowboy companies gouging vulnerable debtors with huge fees up front and failing to fix their fundamental, underlying problem.
I was happy to look at whether there were alternative ways of dealing with the problem, and I set up a meeting with the excellent people who work in what has become known as the nudge unit at No. 10 Downing street. They are some of the most terrifyingly clever people one could hope to come across, and they are advised by one of the two authors of the original book, “Nudge”, who advise the Government on this issue. At the end of an hour in Portcullis house during which I fuelled them copiously with coffee because I knew that I would be able to make no other contribution to their deliberations, they reluctantly concluded—I think they were genuinely reluctant—that there was no obvious way of nudging this category of consumers.
Hon. Members have talked about the consumers in question, and about their state of mind and character. My hon. Friend the Member for East Hampshire described them, and while he was doing so I realised that he could have been describing me. There was the tendency to respond to advertising, and the unwillingness to open letters. Certainly, we Members of Parliament all feel, when we get personal letters, that we have had enough letters in the week. He missed out one vital element that certainly describes me: the total brain-freeze that seizes a person whenever they have to consider their personal finances. Last year, on my election to the House, I forced myself, for the first time, to draw up a budget for the year, and it is not a process that I intend to repeat soon.
We can all understand that for a person on a much lower income than any of us in the Chamber, and for a person whose costs were much more unforgiving than ours, it would be much more difficult to make a purely rational decision. They would be much less likely to ask themselves, “How is it that these people are able to do all this for free? Where will they send that money in the first few months? How quickly will my debts go down, and will they go down as quickly as they would if I went to another provider?”. It is simply unrealistic to expect consumers of that kind, in that situation, to go through the right process of questioning.
Is there a way of making sure that those consumers are at least fully aware of, and given all the required information about, the alternatives on offer? People have talked about Google, and requiring companies that charge consumers to mention the free advice systems. The difficulty is that there is almost no nudge that will overwhelm the advertising that could be funded by the huge fees that companies get. Even Google—a company that I admire greatly, and that is generally very keen to be socially responsible—will find it hard, on its own, to overwhelm the marketing brilliance of commercial operations that have a certain ruthlessness in their approach. As a result, I—and, more importantly, the nudge unit at No. 10—reluctantly concluded that there was no nudge available that would do the job.
As an economic liberal, I then forced myself to go to the next stage, and ask: is this market failure substantial, and is it obvious? I think that the answer is yes on both counts. It is substantial because the disparity between the information available to the consumer and the information available to the person selling to them is great. There are all sorts of areas where all of us, across the House, accept that that is the case, and that regulation is therefore necessary.
We believe, by and large, that it is important for consumers to know up front that cars have certain safety mechanisms in them, because most of us are not sufficiently well versed in checking for ourselves whether a car’s brakes fulfil the standards. We have myriad building regulations because we do not believe that consumers building, buying or moving into houses have any possibility of second-guessing whether the plumbing system will work, or blow up beneath them. We do the same with boilers, and with health care: we expect and require anybody providing laser eye surgery, or any other kind of operation, to be subject to specific regulations, because consumers cannot possibly second-guess whether those products are being provided safely. I would argue that the same applies to the consumers, and the product, that we are talking about.
We reached that conclusion a number of years ago in relation to other financial services. We decided that it was essential to regulate the fees that could be charged by independent financial advisers offering people mortgage, pension or endowment policies and products, for very similar reasons—we did not think that consumers would have the ability or information to assess whether fees were fair. Financial products are innately complicated, and we long ago concluded that consumers needed to be protected from the sharp practices of some providers.
What should the Government do? In the debate, two approaches have been proposed. The reluctance to regulate in a crude way is so deeply instilled in Government Members that they have proposed audits and restrictions on the percentage of fees that can be charged up front, on cold calls and on the worst practices of debt management companies that charge consumer fees. Listening to the debate—and I have genuinely changed my view slightly during it—I have come to the conclusion that going down that route would require enormous expenditure on regulation and enforcement. If we had to enforce measures on cold calls and on auditing everyone, as well as measures on the exact proportion of the fee taken from the repayment in a number of months, that would require such huge expenditure in the Office of Fair Trading that I fear it would be unrealistic.
I have concluded—no doubt the Minister will change my views yet again—that there is a simpler approach. We should take that spectacularly successful commercial model—fair-shares funding by creditors—and make it compulsory for any debt management company to make its money in that way.
Alex Cunningham
I have a simple question for the hon. Gentleman. Does he really believe that cold calling should still be allowed?
Nick Boles
I do not. I think that cold calling is a terrible idea, but I have good news for the hon. Gentleman: cold calling will die out automatically if all debt management companies follow the fair-shares model. There is not sufficient revenue available from the creditors to fund any of those dodgy marketing practices. That is why CCCS and Payplan do not indulge in those practices. To some extent, we are not here to save one commercial company and not another one, but they do not do so because their fair-share payments from the creditors do not make that possible. It is only because the fee-charging companies charge such huge up-front fees to consumers that they can afford to spend all that money to get them in in the first place.
The good news is that those bad practices would die out. On the other hand, we would have to do something else: we could not just require debt management companies to operate on that model. We would have to require creditors to make it available to all debt management companies, because none of us is in the business of somehow skewing the market towards one or two providers. We would have to require the creditors to offer that to any company that passed the basic regulatory requirements.
I understand that that would be a big step for any Government. The good news is that the legislation is already in place. The Tribunals, Courts and Enforcement Act 2007 is already on the statute book. Part 5, which envisaged setting up regulations for debt management advice, has never been activated, because a commencement order has not been laid. My final suggestion to the Minister is that the Government should bite the bullet and lay that commencement order. They should introduce a simple regulation to enable strong, competitive and profitable commercial providers of debt management advice to flourish by offering advice funded by fair shares from creditors, thereby ensuring that the interests of some of the most vulnerable in our society at some of the most worrying times in their life are protected.
Ian Murray (Edinburgh South) (Lab)
This afternoon’s debate has shown the passion of Members across the Chamber about this important subject. I congratulate my hon. Friend the Member for Stockton North (Alex Cunningham) and the hon. Member for Chatham and Aylesford (Tracey Crouch) on securing the debate through the Backbench Business Committee and pay particular tribute to my hon. Friends the Members for Makerfield (Yvonne Fovargue) and for Darlington (Mrs Chapman), who is not in her place, for doing so much to highlight concerns about debt advice and debt management. They are all strong advocates for their constituents, dogged campaigners and great champions of free debt advisory services such as Citizens Advice. We must put on the record our thanks to them for bringing such important information before the House.
Every life blighted by the spectre of debt is one too many. The human and family cost of uncontrollable debt should not be underestimated. The debate is often couched in terms of numbers and regulations, as we have heard this afternoon, but we must not lose sight of the fact that debt can often cost relationships, employment and, tragically, lives.
We come to the House this afternoon at a time of great economic uncertainty, which makes the debate even more important. Inflation stands at 5% and the sustained squeeze on wages has left many struggling to pay everyday bills, heat their homes and buy essentials. With Christmas around the corner, families will be under even more pressure as a result of financial worries.
Many consumers have got into debt by borrowing via credit cards, finance deals, overdrafts and unsecured personal loans. In numerous cases, as we have heard this afternoon, that is not down to reckless spending or people living beyond their means; too often it is due to the harsh reality of rising living costs. A recent survey found that such costs alone may force 71% of UK consumers to use savings, credit cards or overdrafts in order to meet the cost of bills—the trap of using debt to service debt. For others, it is down to a shock in their personal lives, such as unemployment, divorce, bereavement or ill health, and there is evidence that around half the people with debt problems are in that predicament because of some such tragic life event. That shows that the spectre of debt could fall on any of us at any time, as the hon. Member for Grantham and Stamford (Nick Boles) explained earlier.
There are numerous types of debt, from bank loans and overdrafts to credit cards and finance agreements, but one of the largest increases in indebtedness is due to debt to Government Departments and agencies, which has not been mentioned today. That includes those who have accrued arrears in council tax, benefit overpayments, payments to the Child Support Agency or Her Majesty’s Revenue and Customs, and even TV licences. Most concerning of all is the number of people with high-cost credit debt who are seeking advice. Debt due to loans from payday and high street lenders has rocketed in the past 12 months. The Money Advice Trust alone has seen the number of calls it receives increase from 200 a week to 1,000. That is hardly surprising, given that it is impossible to watch daytime television without being swamped by TV adverts offering easy high-cost credit on the high street or internet.
What happens to people when they fall into financial difficulties? Debt advice plays a critical role in helping to manage financial difficulties, but often people feel that accessing advice is stigmatising. Indeed, many fall into difficulty because of a lack of financial education. We should give a strong commitment to include financial education as part of the national curriculum in order to resolve some of today’s problems tomorrow. An e-petition started by Martin Lewis of MoneySavingExpert has received over 100,000 signatures, so I hope that the Backbench Business Committee or the Government will find time for a debate. I commend the hon. Member for North Swindon (Justin Tomlinson) for doing so much on that not only in the House through the all-party group on financial education for young people, but in promoting financial education in schools.
With the OBR revising the level of personal debt in the UK dramatically upward, it is little wonder the number of people walking through the doors of citizens advice bureaux across the UK seeking debt advice remains high. Citizens Advice alone deals with almost 9,000 new debt problems every working day. It is that free and accessible expert debt advice that can play a key role in unlocking control of the debt. I would like to put on the record my thanks to Citizens Advice for the contribution it makes up and down the country in often difficult and challenging circumstances. It deserves the gratitude of the whole House.
Without access to free debt advice from organisations such as Citizens Advice, however, consumers will often seek other less affordable solutions from fee-charging debt management services in order to pay down debt—an issue that every Member who has spoken this afternoon has mentioned. Sadly, there are too many examples of abuse in the sector, and it affects some of the most vulnerable people in society.
When the Office of Fair Trading looked at such companies last year, it found more than 90% non-compliance with its own rules, noting that
“the findings from this review shine a spotlight on a market where poor practices appear to be widespread… it is clear that standards across this market are not as high as should be the case.”
There is, therefore, a strong case for Government intervention.
Following the Government’s consumer credit and personal insolvency review, the Minister committed to the development of a protocol setting out what was expected from a debt management plan, so in his response will he outline the progress that has been made on that?
I welcome the Minister’s commitment to keep the legislative angle open, but he needs to go further now and consider a proper legislative response. It is disappointing that the Government have dragged their feet slightly on the issue, but they could commit today to respond properly to the OFT’s report.
Calls for regulation in the sector have been echoed by fair-share debt operators, such as Payplan and CCCS, which provide free, immediate and ethical debt advice and repayment schemes to more than half a million people every year. They work closely with the organisations that are critical to resolving debt issues—the creditors. Much of their work comes from Citizens Advice referrals, and there is high demand for debt management plans, as every week more consumers reach the limit of their indebtedness and seek responsible solutions to their financial difficulties.
Based on information that I have received from Payplan, the number of people in that situation increased from about 300,000 at the start of 2010 to more than 560,000 by the end. Like Citizens Advice, it fears that in the absence of an effective regulatory framework many vulnerable customers unfortunately receive poor and unsuitable advice from the fee-charging debt management companies that they contact for help.
Such consumers are often charged up-front fees for services that should be free, with charges not being clearly explained before they enter into an agreement. My hon. Friend the Member for Stockton North gave some stark examples of that in his opening speech, and Consumer Focus has also expressed its strong concerns, stating:
“On the basis of the Office for Fair Trading (OFT) review, fee-charging debt management is a market which, at the moment, is largely failing consumers.”
Debt advice does not need to cost, however. The fair- share models of Payplan and CCCS are effective at dealing with indebtedness and at getting debt under control. The Minister should look at enacting section 5 of the Tribunals, Courts and Enforcement Act 2007 to give consumers the statutory protection that they need through consistent industry standards, whereby only reasonable fees are charged and abuses of the system are rooted out.
Consumers who are often vulnerable need such regulatory protection. In fact, should we work towards a situation in which consideration is given to phasing out up-front charges or, even, fees all together? The idea has been highlighted in many speeches this afternoon.
Consumers need protection from the way fee-charging debt management companies advertise. During my preparation for today’s debate, I had the television on in the background, and while it was on no fewer than three adverts for debt management companies popped up during the breaks, with reassuring claims to “wipe out debts” through “easy solutions” and “one easy monthly payment”. We could be forgiven for thinking that they would solve all our financial problems at one stroke. As Members from all parts of the House know, however, that is simply not the case.
The up-front fee and structure of debt payments, whereby the companies take their cut before paying creditors, is not clear at all in the advertising. There is also no clear indication that such services can be accessed free. As my hon. Friend the Member for Darlington has articulated through her ten-minute rule Bill, statutory regulation, over and above the basic licensing and supervisory regime presided over by the OFT, is desirable in television advertising.
Over-indebted vulnerable customers are acting under stressful conditions and without the time or inclination to shop around. There should be adequate protection from rogue providers of debt advice, so that huge numbers of already indebted customers are prevented from falling into even greater financial difficulties. Indeed, the OFT’s report states that
“advertising is the most significant area of non-compliance, in particular misrepresenting debt management services as being free when they are not”.
The Government need to do more in this respect to ensure that consumers are fully informed about the processes and services available.
My hon. Friend the Member for Stockton North was right to be proud of the previous Government’s financial inclusion fund, which focused millions of pounds of resources on providing free debt advice to those who were most vulnerable and most at risk. It is therefore disappointing that the current Government’s record on helping with consumer debt funding is unclear. In January, they announced that funding to the financial inclusion fund would be cut, with the loss of 500 specialist advisers who work primarily through Citizens Advice, and then gave it a short reprieve of just a year. Were it not for the vocal opposition from Citizens Advice and other consumer debt support groups, along with hon. Friends such as, in particular, my hon. Friend the Member for Makerfield, the Government would have pursued that devastating policy on debt advice. The £27 million that has been allocated to the financial inclusion fund has given the Government a little time to consider how they will continue to provide crucial debt advice to the public. We know that, from April next year, the Money Advice Service will be responsible for the co-ordination of debt advice provision across the UK and has submitted funding proposals to the Financial Services Authority, but it would be helpful if the Minister updated the House on when and if the funding will be confirmed.
It is vital that the funding of free debt advice is maintained, particularly given the pressure on local government budgets, which could be significantly compounded by the changes to legal aid. Ministry of Justice figures show that the legal aid budget for debt advice is due to fall by a massive 75% from 2013. Last year, Citizens Advice dealt with 64,000 debt cases funded by legal aid. A 75% cut in future funding would reduce that number to just around 15,500. Potentially, tens of thousands of people will be left without the support and advice that they need in their time of need.
It would be remiss of the House to debate debt advice and management services and not to refer to the growing problem of short-term loans and the short-term loan market, which has been mentioned by hon. Members on both sides of the House. Over 1.2 million people use the payday lending market, not out of choice but out of necessity. Families are using doorstep and payday lenders who charge exorbitant rates of interest on these loans, piling on an unmanageable debt burden. It is not appropriate for the Government not to act. Should they not step in and regulate these markets in the interests of the most vulnerable and disadvantaged? My hon. Friend the Member for Walthamstow (Stella Creasy) has been a thorn in the Government’s side in pursuing the high-cost consumer credit market. In doing that, a regulator could work with industry to ensure realistic reductions in exorbitant interest rates and charges. [Interruption.] I am delighted that my hon. Friend has obviously made a direct impression on the Minister.
There are lots of examples of solutions out there. That would not, as many fear, involve imposing an arbitrary interest rate cap that may exclude the very people who need access to short-term credit. Although tackling interest rates is crucial, it is but one strand of the many ways in which that sector can be regulated. There could be upper limits on the amount borrowed or on the number of times an individual can borrow to help to prevent multiple loans. There could be grace periods or time restrictions on paying off a loan and taking out another in order to prevent “rolling”. A balance of regulation has to be struck to protect vulnerable consumers in this competitive marketplace.
Let us not forget to mention illegal loan sharks. I am pleased that the Minister has managed to continue to find funding for the specialist enforcement teams for the illegal money-lending project introduced by the previous Government. Those teams do tremendous work and have raised awareness and understanding of illegal lending.
I pay tribute to many of the speeches that have been made, particularly by my hon. Friend the Member for Stockton North, who spoke passionately about the effect of debt on the most vulnerable in our society. The hon. Member for Chatham and Aylesford—I believe that she is also a very useful footballer—pleaded for the banks to be more responsible and noted that 30% of those who go to debt management companies go bankrupt; that is something that we do not want to happen. The hon. Member for Meon Valley (George Hollingbery), who is not in his place, raised the subject of bailiffs, which is incredibly important to bear in mind in the context of this debate. My hon. Friend the Member for Scunthorpe (Nic Dakin), who is still sporting his Movember moustache—I am not, as it was shaved off by Andrew Neil this morning on the BBC—expressed strong concerns in relation to the provision of free debt advice, of which he has been a strong champion in this Chamber.
The hon. Member for Solihull (Lorely Burt) said that more information needs to be available to people when they need help. I think that everyone in the Chamber agrees with that. The hon. Member for North Swindon also deserves credit for all that he has done on financial education. The hon. Member for East Hampshire (Damian Hinds) raised the importance of credit unions and other lending organisations. I am delighted that he mentioned credit unions, because they have been left out of this debate a bit.
The hon. Member for Grantham and Stamford explained the nudge theory in Downing street. I thought that Nudge was the Downing street cat. Nudge is obviously alive and well in the industry. He also said that Payplan is in his constituency and does a good job in regulating the market in which it operates and in dealing with the debts of many of his constituents and the constituents of other hon. Members.
This has been an important debate. I commend my hon. Friend the Member for Stockton North for bringing the subject to the House. Given the economic outlook, the Government’s political dogma of not admitting that their plan A is not working, and the spectre of higher unemployment, lower growth and shattered consumer confidence, it is unlikely that this issue will improve any time soon. Millions of families may struggle with severe debt. Access to free and independent debt and money advice services is vital for those in financial difficulty. Those services need to be funded in a sustainable way and they must meet the needs of all consumers, including, most importantly, the most vulnerable.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
This has been an excellent debate with contributions from all parts of the House. I will try to do credit to it in my response. I hope that I will be able to reflect on many of the excellent contributions.
The reason this has been such a good debate is that Members, from talking to their constituents, know that this is a huge problem. There is a rising tide of misery out there. It is incumbent on this House and this Government to respond to that in as many ways as we can. I will do my best to do that. For many years in opposition, my right hon. Friend the Secretary of State for Business, Innovation and Skills was critical of the previous Government because they did not take action to deal with the rising indebtedness of many families and individuals across the nation. He feels that we need to do as much as we can in government to deal with the misery that is the legacy of that increase in personal indebtedness.
In my initial remarks, I will go through each of the contributions and pick out points and respond to them. The hon. Member for Stockton North (Alex Cunningham) asked about the future funding of debt advice. The hon. Members for Chatham and Aylesford (Tracey Crouch) and for Edinburgh South (Ian Murray) also touched on that matter. I know that the funding of debt advisers under the financial inclusion fund is of great concern. The House will know that my Department has committed to continue the funding for this year.
Money Advice Service has also been clear that it intends to renew all existing grant agreements for the provision of face-to-face debt advice next year. It is in the process of securing funding from the Financial Services Authority for that, so that people in need have access to good advice. We look forward to that being confirmed by the FSA board over the next few days or weeks. It is considering the business plan put forward by Money Advice Service. Once it has made its decision, that business plan will be published. That answers another question from the hon. Member for Stockton North.
The hon. Member for Makerfield (Yvonne Fovargue) made an extremely informed contribution. I would like to pick up on her point about the importance of the Citizens Advice brand. That is critical to how we address these issues. People in distress, who may be suffering from mental health problems, family breakdown or any of the other things that compound the problems of debt, often do not know where to turn. As Members have said, they can react to the first piece of advertising that they see and end up in the wrong place. We need to ensure that everyone knows of the existence of the free debt advice that is available and knows that that is where they should go. I believe that, because the Citizens Advice brand is so well known and so trusted, it is the brand on which we need to build. I am grateful to her for making that point.
My hon. Friend the Member for East Hampshire (Damian Hinds) rightly talked about credit unions. He also touched on the research that the University of Bristol’s personal finance research centre is doing, having been commissioned by the Government to look into whether a cap on the total cost of credit is the right way forward. We will await that research before making any further moves in that area.
My hon. Friend the Member for Grantham and Stamford (Nick Boles) made interesting comments about the nudge unit. I do not know whether there are minutes from that meeting. He also talked about the different regulatory approaches that we could adopt. Not only will I think about what he said, but I am very happy to meet him to discuss it further.
My hon. Friend the Member for Solihull (Lorely Burt), in a very effective contribution, praised the OFT for how effective its crackdown has been. She asked for it to be given more resources and more teeth, and she gave some ideas about how we could obtain those resources.
The hon. Member for Meon Valley (George Hollingbery), who is no longer in his place, mentioned bailiffs. I will relay his remarks to my colleagues in the Ministry of Justice, because it was clear that the House felt strongly about the matter.
The hon. Member for Scunthorpe (Nic Dakin) talked about learning from other countries. The research that is being conducted on the proposal for a cap on the total cost of credit that can be charged by high-cost lenders will include a consideration of regulation in other countries, including those that have rate caps. He talked about the idea of a real-time database, and other colleagues also picked up that subject. I think it is fair for me to inform the House that the company behind that database, Veritec, has had meetings with officials in my Department, in No. 10 and in the OFT. We are considering the matter, but I am not making any commitment now—that would obviously be quite wrong. If a decision were taken to regulate the payday market more, the experience in other countries would have to be considered further.
We are opening discussions with stakeholders on how we can increase data sharing for the benefit of consumers. We will also explore the issue of credit scoring and whether high-cost credit providers should provide data to credit reference agencies. The hon. Member for Makerfield asked about that, so it is important that I make that point.
My hon. Friend the Member for North Swindon (Justin Tomlinson) again stressed the importance of education, and he is absolutely right. We are working with the Money Advice Service and the industry to see if consumers can be helped in considering whether a credit product is right for them before they purchase it. That will play a role.
The hon. Member for Edinburgh South pressed us on payday loans, as did a number of other colleagues. I can say that we have started intensive discussions with the payday loan industry to ensure that future codes of practice contain the consumer protections that we believe are needed to address the concerns that blight the market. I have personally written to the trade associations highlighting the importance of that work and my concerns about specific issues such as continuous authority. I will also meet them during the process. Payday loan companies dipping in and out of people’s bank accounts, taking money set aside for rent and food, is simply not on, and we need the codes of practice to reflect that.
I wish to turn in more detail to debt advice. Inevitably, some people will fall into financial difficulties, and when they do, I want them to be empowered to make the right decisions for themselves about their finances, and to have access to the appropriate debt advice when they need it. The Money Advice Service will take forward the co-ordination of debt advice delivery from April 2012, and my Department has provided the necessary funds to research and develop a new multi-channel debt advice service across the UK.
The interim findings of that research have highlighted a number of key principles, which the Money Advice Service will take forward in its delivery strategy. Those principles include some critical points. For example, people should know where, when and how to access the right debt advice for them. That relates to the point about branding that the hon. Member for Makerfield mentioned. The Money Advice Service’s research shows that there should be a standard set of approved tools that are well understood and used by advisers, which will help to ensure consistent, quality responses for consumers with similar issues.
The research also suggests that digital self-help should be much more widely available and awareness of it increased. People for whom digital services are appropriate should be encouraged to use them, but of course they will not be appropriate for some people, and they can be encouraged to access existing telephone services, which must remain a key option.
Above all, face-to-face advice has to be available for service users who have particularly complex debt or who have accessibility problems with other channels. Indeed, more face-to-face outreach services need to be developed, because as we have heard in the debate, many people are unable or unwilling even to come to a citizens advice bureau but nevertheless need support. Face-to-face services need to be improved and be more quickly available, although there are already some excellent services. That is what is coming out of the research. We hope that the new model, on which I have put an awful lot of emphasis, can be in place for 2013.
As well as debt advice, people who fall into financial difficulties need access to remedies that work effectively for both them and their creditors. Before concentrating on what the Government are doing in relation to debt management companies, I should like to outline some matters on which we are proposing important action. On 7 November, I published a consultation on proposals to reform the application process for bankruptcy. Bankruptcy is an appropriate route for some people to deal with their financial difficulties, but it is apparent from earlier consultations on proposals to reform how debtors petition for their own bankruptcy that people see clear benefits in removing the court from the process while providing the necessary safeguards.
I also want to ensure that the most appropriate route is provided when bankruptcy is applied for by a third party. That means involving the courts when there is a dispute between parties on whether bankruptcy is a proper outcome. However, when there is essentially no disagreement—in other words, in the vast majority of cases—I believe a more streamlined route into bankruptcy can be found. The new process will encourage debtors and creditors to resolve their issues when possible before applying for bankruptcy.
In addition, as promised in the Government’s July response to the review, on 17 November I published a consultation on bankruptcy and its effects on the ability of the individual to access a bank account. All hon. Members would agree that a bank account is one of the most basic requirements of financial inclusion. It allows people to carry out basic financial management tasks in a simple way and can also save them money, because there are often discounts for direct debits. The concern is that bankrupts are unnecessarily excluded as a consequence of their bankruptcy. The consultation seeks evidence on that situation and on how best to remedy it.
Sadly, I am very familiar with the problems in the debt management market, but I would like to thank hon. Members who have raised their concerns and added to this debate, particularly regarding the unscrupulous behaviour of some fee-charging companies. It is worth noting that since the Office of Fair Trading compliance review in September, a total of 70 businesses have exited the debt management market—70 businesses that were failing to comply with OFT standards have gone.
As the Commercial Secretary to the Treasury and I said in July, we believe that more can be done. I am pleased to report that my officials have opened discussions with stakeholders from all sides—fee-charging companies, free-to-debtor providers, and creditors and debt advisers—to explore how a debt management protocol might work. That should help to improve standards, guide debtors towards better-quality advisers and providers, and leave no room for the rogue elements within the industry.
Hon. Members asked a range of questions on the powers of the OFT in tackling debt advice and management. It is important to remember that we have a regulation—the OFT has the right to charge debt management companies for the credit licence, without which they cannot operate. The OFT manages that and will soon publish revised guidance for debt management companies, which we expect early in the new year. Debt management companies should comply with the guidance. If they do not, they are in danger of the OFT revoking their licence or fining them. We need to consider that and to build on it. Indeed, many of the responses to the consultation on whether we should change the regime for consumer credit regulation say that the OFT works well. However, people would like it to do more and to have more powers. Those responses were echoed on both sides of the House during the debate. I obviously cannot pre-empt what the Government will say in response to the consultation, so I am limited in what I can specify today, but I refer hon. Members to the consultation, because it is an important part of the way forward.
I shall try to rattle through a few other points that were made on the OFT in the short time that remains. Hon. Members quite rightly talked about how social media—Google, Twitter, Facebook and so on—are being abused by a number of those companies. The OFT consulted on that earlier this year and has revised its guidance, so it now states:
“Licensees who advertise or sell online or by email must comply with the Electronic Commerce…Directive”
It also states:
“Before using internet based and social media marketing, licensees should consider whether they can exercise adequate control over its content…The OFT considers that search engine sponsored links and online messaging forums which limit the number of characters are unlikely to be an appropriate means of providing…balanced and adequate information.”
That is typical technocratic language to say that the OFT will act in this area. My hon. Friend the Member for East Hampshire raised the point about the social responsibility of Google, and I hope that it listens and responds to his remarks.
On cold calling, the OFT’s revised guidance on credit brokerage and debt management sets out a number of specific practices relating to cold calling of consumers that it considers unfair or improper business practice.
On advertising, the OFT has taken a market-facing approach in the past few years to tackle bad practice in the market. For example, it took well publicised action against firms that sent misleading IVA mailings to customers or used lookalike websites to mislead customers into believing that they were charity-based sources of free debt advice.
I have rattled through a few of the issues. What I wanted to convey to hon. Members is that we are focused on those and that we are listening both to this House and to people responding to our consultation to see what we need to do to improve our current regulatory regime.
I am extremely grateful to the House and to the Backbench Business Committee for allowing this debate. I know that a number of Members—the hon. Members for Stockton North, for Scunthorpe, for Makerfield and my hon. Friend the Member for Chatham and Aylesford—helped to precipitate the debate. I hope that it has made a major contribution to our thinking and to the thinking of those who are part of this process.
Alex Cunningham
I, too, believe that we have had a good and measured debate this afternoon. I am also grateful to the Backbench Business Committee for granting us the time to do this and to the many Members—there were quite a few of us—who supported the idea of having this debate.
Hon. Members have made it very clear that they have deep-founded concerns that the people who find themselves in crisis should get the help and support that they need. It was good to see how much we agreed on, though there was a little on which we disagreed as well.
I am grateful to the Minister for his response to the issues that hon. Members have raised this afternoon; he has much to address. He is one Minister who listens and responds positively. He has trailed for us in his response some things on the future funding of advice services and he has also talked about possible changes in the OFT’s approach to some of its powers and interventions, which is very welcome. However, the proof of the pudding will be in the eating, and we look forward to it coming out of the oven.
I know that the Minister shares our tremendous concern for the victims of debt and debt management companies. I am pleased that he has taken on board all that has been said today. Perhaps one day he will welcome the end of the fee-charging companies that have caused so much damage.
Many hon. Members have outlined not just the anguish suffered by people who find themselves deep in debt, but the tremendous benefits to the individuals, to the families, to their health and to the economy of appropriate advice, action and protection. When the Minister leaves the Chamber today, I hope that he will talk to his officials, the charities and the other organisations about the solutions and that he will remember the strength of feeling across the House today. I hope that the debate will spur him on to ensure that we get early action to address all the issues that have been raised today. I look forward to seeing what will happen in the future because only the Government can deliver the action that we need.
Question put and agreed to.
Resolved,
That this House has considered the matter of debt advice and debt management services.
Business without Debate
Business of the House (8 December)
Phenylketonuria (Kuvan)
(13 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Kwasi Kwarteng (Spelthorne) (Con)
I am grateful for the opportunity to raise the issue of access to Kuvan for sufferers of phenylketonuria. I believe that the most important part of our job in the House is to represent our constituents as conscientiously as possible. It is also our job to bring forward issues of national interest that, even though they might come to us initially as matters of individual complaint, relate more widely to national concerns. In raising this issue of access to Kuvan, I hope to fulfil both these important functions.
I want to raise this issue tonight for one simple reason: a constituent of mine, Mandy Macedo Box, who lives in Shepperton, has a six-year-old son who suffers from PKU. Mrs Macedo-Box’s son, Charlie, happens to have a particularly severe form of the illness. PKU is a relatively rare and unknown liver disease. Its sufferers have to restrict all protein-containing food in their diet in order to survive and to avoid damage to both the brain and the nervous system. About one in every 10,000 people has PKU. Sufferers can never eat food that has a high protein content, such as meat, dairy, bread and cakes, while foods containing lower amounts of protein, such as vegetables, can be eaten, but only in small amounts. Only fruit can be eaten safely.
To maintain this low-protein diet, sufferers have to work out a complex diet of “exchanges”, which often includes prescription products, such as imitation rice or protein-free bread. As well as this very restrictive diet, sufferers often have to take a number of supplements to help their bodies function normally and to reduce their appetite. I am sure that Members can imagine how restrictive and detrimental to the quality of life this can be, especially for children and their families.
There is now a drug on the market that has been developed to help with the treatment of mild and moderate cases of PKU. This drug, Kuvan, enables sufferers to double the amount of protein that they can tolerate, which obviously means an increase in the amount of real food that can be ingested. I am sure that you can imagine, Mr Deputy Speaker, the huge improvement in the quality of life that such a drug would bring to many sufferers of PKU. Unfortunately, however, as is often the nature of these things, the drug is not guaranteed to work in Charlie’s case. It has therefore been proposed that Charlie take the drug for a trial period of one month so that doctors can determine whether it can help his condition.
The drug company that manufactures Kuvan has offered to make the drug available to Charlie’s local health authority, NHS Surrey, on this trial basis on the understanding that should the trial be successful, NHS Surrey would agree to fund the drug for patients with PKU in Surrey in the future. I understand that similar arrangements have been offered to other primary care trusts. However, the crux of the problem is that in Surrey the local area prescribing committee is simply unwilling to make this undertaking because—it claims—there is
“limited evidence of ongoing clinical effectiveness, and lack of cost-effectiveness”
of the drug.
To put it simply, we are now in the absurd position where the drug company will not commit to a trial period unless the PCT can guarantee future funding should the trial be successful, while, on the other hand, the PCT will not commit to a trial period because it cannot guarantee future funding because it is not sure that the drug will work. While this stand-off continues, the quality of life for a young boy in my constituency and many other sufferers of PKU continues to be seriously impaired simply because they have no access to a drug that might help to alleviate the symptoms of the disease.
To make matters even more frustrating for Charlie and others like him who are desperate for some non-dietary treatment, we know that Kuvan, although not available to many PKU sufferers in the UK, is routinely made available to patients in European countries such as France, Germany, Italy and Spain. It simply does not seem right that, despite the many miracles that we all know the NHS performs every day, British patients should be disadvantaged in that way, compared with their peers on the continent. It is in that context that I feel that a solution to the impasse must be found. Why can British sufferers of this disease not access the drug on the national health service? An answer might lie in the fact that the National Institute for Health and Clinical Excellence has not yet positively approved the drug. If that were to happen, some progress may well be made.
Finally, I find it quite striking that in an area where we are supposed to be supporting a great British business—pharmaceuticals—we should not be able to provide funding for the drug, thereby restricting the opportunities of many thousands of people in this country.
I am grateful to the House and to you, Mr Deputy Speaker, for the patience that you have shown in this debate—and, in fact, for your consideration in granting it. This may seem a small issue, but it has a massive bearing on the quality of life of those affected—both the sufferers and their families. It is quite right that it should be aired in the highest possible arena, which is what this House represents. I urge the Government to do all they can to find a solution to this grave dilemma.
The Minister of State, Department of Health (Paul Burstow)
I congratulate my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) on securing this debate and on setting out so clearly, on behalf of his constituents, the concerns that they have brought to him and the concerns that he, in turn, wanted to ensure the House properly addressed this evening. He is absolutely right: that is exactly what Adjournment debates are for. They are an opportunity for constituents’ concerns to be raised in this House, and I pay tribute to him for doing so.
My hon. Friend talked about the case of Charlie and the situation facing him and his family. He will understand that the necessity for patient confidentiality meant that until I heard his speech, I was not aware of that specific case from the briefing that I had to prepare for this debate. However, I hope that I can give him a response that will none the less address a number of the important points that he raised. As part of the preparation in advance of this debate, my private office supplied me with a copy of the postings on the Phedup website that talk about Charlie’s case. One can feel only strong sympathy for the concerns that my hon. Friend has raised on behalf of his constituents. As a 12-year-old boy, Charlie wants to be like every other young person growing up. He does not want to be different from his cousins. That point comes across clearly from the website.
I cannot deal with all the details, but I understand how important it is for children with phenylketonuria to be treated early and to receive the most effective treatment from the NHS. As my hon. Friend rightly said, the condition affects around one in 10,000 babies born in England. Those with phenylketonuria—or PKU, as it is more commonly known—are unable to break down the amino acid phenylalanine, which builds up in the blood and, critically, the brain. In most people with the deficiency, food is not broken down by the enzyme known as phenylalanine hydroxylase, or PAH—I will stick with the initials from now on, if I may. In people with PKU, the PAH enzyme function is impaired because of a genetic mutation. As a result, phenylalanine levels in the blood and other tissues rise, which can lead to brain damage and, in some cases, learning difficulties.
Without treatment early in life, the outlook for those with PKU is very poor. Most people will develop severe learning disabilities and will require constant care. With treatment, however, the outlook can be incredibly good. Since 1969, the NHS has screened newborn babies for PKU, so early detection is commonplace in this country. Following a low-protein diet and taking regular dietary supplements containing amino acids helps keep the phenylalanine levels low, avoiding the terrible damage that the condition can inflict on a person. Specially formulated low-protein foods and nutritional supplements are available on the NHS, and GPs are able to prescribe them to treat patients with PKU. As with any condition that requires constant management and attention from—
Paul Burstow
Thank you, Mr Deputy Speaker. I was not prepared for that procedural intervention.
As I was saying, any condition that requires constant management and attention from birth can be an incredibly stressful one, as my hon. Friend captured in his remarks. I appreciate how difficult it must be for children and their parents or carers to maintain the protein-free diet necessary for the majority of patients with PKU. From what I understand about the condition, children with PKU cannot eat many of the foods that we all take for granted. Some of the pleasures of life are not available to them, which makes simple day-to-day activities like going to school difficult. Again, I very much understand the desire to see a child living a life that is not different from that of their peers. That point was powerfully made, as I said, on the Phedup website when I looked at it today.
The Government recognise the importance of maintaining this diet. That is why a range of food and nutritional supplements are provided by prescription on the NHS. The committee responsible for approving these products definitely understands the importance of providing a range of products for patients and takes special care to make sure that these products are approved for NHS use.
This debate is primarily about the role of a new drug, Kuvan, and how it can change individuals’ lives if it is made available because of how it can deal with the problem of phenylalanine levels in children and adults with PKU. Kuvan is a synthetic form of a vitamin that helps PAH enzymes work better. However—here we come to what I fear is the important point—the drug is not believed to be universally effective. It works only in some cases for some types of PKU, depending on which precise PAH gene mutation is present. As I understand it, only about four in 10 patients are likely to benefit from it. As my hon. Friend said, the benefit is determined only after a month, and through a blood test. Kuvan is more likely to benefit those with the milder forms of PKU, and most people would still need to continue with their dietary treatment. The drug might enable them to eat a few grams of protein, but would not allow a complete reversion to a conventional lifestyle and diet.
Let me deal with the role of the primary care trust in all of this. PCTs are legally obliged to provide funding so that drugs positively appraised by NICE are available on the NHS. This includes drugs with European orphan designation. In the absence of NICE guidance—for instance, where NICE has not appraised a treatment or is in the process of doing so, or where NICE has not recommended a treatment for use on the NHS—the PCTs are responsible for making funding decisions based on the needs of their populations.
I understand that the Surrey NHS area prescribing committee has considered Kuvan and has taken a decision on the basis of the evidence not to make it available in Surrey. The panel, which included GPs and other clinicians, considered the available clinical evidence, together with supporting information from parents of children diagnosed with PKU. After full and careful consideration—my hon. Friend has quoted this—it concluded that there was insufficient evidence to support the use of Kuvan at this time.
Doctors can request treatments that are not usually funded on behalf of their patients through an individual funding request, if they feel that there are exceptional clinical circumstances. I understand that a further request has been made by the Great Ormond Street Hospital for Children NHS Foundation Trust. I believe it has led to further correspondence between the PCT and the trust. At the moment, the foundation trust has not supplied all the information necessary for the application to be properly considered. I hope that that information will be provided and that consideration will be given to those representations by the foundation trust. I shall also ensure that the report of today’s debate is made available to the primary care trust, so that its members can see for themselves the representations made by my hon. Friend.
Under the NHS constitution, patients have the right to expect local decisions about the funding of medicines and treatments to be made rationally, following proper consideration of the evidence. To help PCTs make those difficult decisions, the Department has issued a set of core principles. PCTs are required to have clear and transparent arrangements for local decision making on the funding of drugs, and for consideration of exceptional funding requests.
My hon. Friend asked how we could address these difficult issues in the future. We want to improve access, on the NHS, to innovative medicines that are effective, particularly those that can allow a fellow citizen to lead as normal a life as possible. We will do that by reforming the way in which companies are paid for NHS medicines, adopting to a new value-based pricing system when the current pharmaceutical price regulation scheme expires at the end of 2013. That will bring the price that the NHS pays more into line with the value that a new medicine delivers in terms of the benefits that doctors and patients gain from a drug. The aim of the new pricing system is to create a system that has the capability to include the broadest possible range of new medicines. When possible, we want to avoid creating different processes for different treatments.
I understand that some people with very rare conditions—including, I suspect, the one that we are discussing—who want to gain access to a particular treatment fear that their cases will not be considered fairly under the new system because they are among a tiny minority who would benefit in such circumstances. We will keep an open mind, and if, as we continue to develop our plans to implement value-based pricing, it becomes clear that some treatments for the very rarest conditions would be best dealt with through separate arrangements, we will consider those options.
I well understand the need for this matter to be raised in Parliament. I will ensure that the points that have been made today are taken up with the PCT as it gives further consideration to the case being advanced by the foundation trust and by the family. I assure my hon. Friend that the Government’s priority is to ensure that NHS patients, including those living with phenylketonuria, are able to gain access to the most appropriate treatments in order to manage their conditions.
My hon. Friend has raised an important point about the need to ensure that the quality of life is properly respected, and that, in the very rare cases of phenylketonuria, that respect is reflected in the provision of drugs that allow a child to enjoy a wider range of meals and, as a result, grow up as a normal child with a normal life. I hope that he feels heartened by the debate, and that, as a hard-working constituency Member of Parliament, he will be emboldened to pursue this matter further.
Question put and agreed to.