House of Commons
(12 years, 5 months ago)
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Prayers
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Benefits Uprating
(12 years, 5 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
Mr Speaker, with permission I should like to make a statement about the uprating of social security pensions and benefits for 2012-13. I shall place in the Vote Office full details of the new rates that are due to come into force from the week of 9 April 2012 for each pension and benefit, and arrange for the figures to be published in the Official Report.
As part of his autumn statement last week, my right hon. Friend the Chancellor of the Exchequer announced the rates of tax credits for 2012-13, and today I am announcing the uprating of those social security pensions and benefits for which my Department is responsible. As my right hon. Friend Chancellor pointed out in his statement, uprating in 2012-13 would protect
“those who have worked hard all their lives…poorer pensioners…those who are not able to work because of their disabilities…those who, through no fault of their own have lost their jobs and are trying to find work.”—[Official Report, 29 November 2011; Vol. 536, c. 802.]
Starting with those who have worked hard all their lives, I should like to turn to one of the early actions of the coalition Government: the restoration of the earnings link for the basic state pension. This Government not only made good on the pre-election promises to restore the link with earnings, we went one step further by protecting the future value of the basic state pension with a triple guarantee—that the basic state pension will rise each year by the highest of growth in earnings, prices or 2.5%. The triple guarantee means that even in times of slow earnings growth, we will not see a repeat of small rises such as, for example, 75p in 2000.
The new rate for the basic state pension will be £107.45 for a single person, an increase of £5.30 a week. I can announce, therefore, that from April 2012, the basic state pension is forecast to be 17.1% of average earnings, a higher share of average earnings than in any year of the Labour Government since 1997.
I turn now to additional state pensions, commonly referred to as SERPS—the state earnings-related pensions scheme. In April 2010, one of the last acts of the previous Government was to freeze SERPS pensions. This was in the apparent belief that pensioners had not experienced any inflation in the preceding year. That was solely because the retail prices index was negative in the year to September 2009, with the rising cost of goods and services swamped by falling mortgage rates. However, in April 2011 we increased SERPS pensions by 3.1% and I am pleased to confirm that this year SERPS pensions will also rise by 5.2%. That means that the total state pension increase for someone with a full basic pension and average additional pension will be around £6.70 a week or £348 a year.
The standard minimum guarantee in pension credit must be increased each year at least in line with earnings. However, this would have implied an increase of just 2.8%; in other words, the poorest pensioners would have got the smallest increase. We judged that unacceptable, so instead, from April next year, the single person rate of the guarantee credit will rise by £5.35, taking their weekly income to £142.70. For couples, the increase will be £8.20, taking their new total to £217.90 a week.
To help manage expenditure, we shall be funding that above-earnings increase to the standard minimum guarantee by increasing the savings credit threshold, which means that those with higher levels of income will see less of an increase. In his autumn statement, the Chancellor told the House that we will uprate the standard minimum guarantee by £5.35 and that we would meet the cost of the over-indexation by increasing the threshold for the savings credit. That plan was correctly reflected in line 30 of table 2.1 on page 46 of the autumn statement, and it is indeed our plan. Unfortunately, the precise thresholds, which were calculated by our Department and appear at paragraphs 1.143 and 2.24, were incorrect. I apologise to the House for this error, which I am now in a position to correct. The correct thresholds for savings credit from April 2012 will be £111.80 for single pensioners and £178.35 for couples.
As many hon. Members will know, an important component of our plans for uprating pensions and benefits last year was the move to the consumer prices index— CPI. We believe that the CPI is a superior measure of inflation for benefits and pensions uprating. That is because the basket of goods on which it is based is a better match for the spending patterns of pensioners and others on a low income, and because it takes better account of the way in which lower income households respond to price changes. It is also the headline measure of inflation in the UK, the target measure of inflation used by the Bank of England, and internationally recognised. I am pleased to say that last week the High Court upheld the Government’s position that the CPI can be used for pensions and benefits uprating.
The coalition will ensure that the value of other social security benefits is maintained through a rise of 5.2%, even in these tough economic times. This means for disabled people, above and below pension age, through disability living allowance and attendance allowance, an increase of 5.2%; for people of working age who are not fit for work, through employment and support allowance, an increase of 5.2%; and for people who have lost their jobs, through no fault of their own, through jobseeker’s allowance, an increase of 5.2%.
On local housing allowance, at the emergency Budget in June 2010, the Government announced that from 2013, local housing allowance rates will be calculated annually by using the lower of the rent at the 30th percentile of local rents or the previous year’s rate uprated by reference to CPI. This will end the monthly uprating of LHA rates and bring the system into line with the uprating of other pensions and benefits.
As part of the preparation for this change, we need to fix LHA rates, to establish a baseline from which they will be uprated in future. As the new cycle for uprating LHA will be annual, we have decided that the baseline should be one year ahead of the first uprating event. Therefore, LHA rates will be fixed from April 2012. This approach means that there will be no reductions in ongoing awards as a result of this change.
So at a time when the nation’s finances are under severe pressure, this Government will be spending an extra £6.6 billion in 2012-13 to ensure that people are protected against cost of living increases: no less than £4.5 billion extra on state pensions; over £1 billion extra on disabled people and their carers; and over £1 billion extra on people who are unable to work through sickness or unemployment.
We protected the triple lock, securing the largest ever cash rise in the basic state pension. We have uprated the pension credit as well, so that the poorest pensioners benefit in full from the triple lock. We have uprated working age benefits by 5.2%, protecting the real incomes of the poorest. Through this statement, I have outlined our firm commitment to ensure that even in these difficult times, no one is left behind. I commend this statement to the House.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
I thank the Minister for advance sight of his statement, and welcome some of his announcements about the uprating of pensions. I am delighted that on the issue of increasing the state pension age further, the Government have learned from some of their mistakes on the previous round and will at least give adequate notice to those affected. That is a positive move. I welcome the U-turn on the mobility component of disability living allowance. The change should never have been proposed. We, along with disability campaigners, have argued hard for a U-turn and we are pleased that the Government have taken that action.
Last year, in the wake of the autumn statement, the Minister told my predecessor that his Government had embarked on decisive action to take Britain out of the danger zone. What a difference a year makes. The Government’s economic policy has failed and is failing, and working families are paying the price. It is when a Government’s back is against the wall that their true character is revealed, because that is when the difficult choices have to be made. The failure is writ large in the Government’s revised borrowing forecasts.
We know that the Chancellor told the House that he is going to borrow £150 billion more than he planned—£150 billion more. The Government are fond of the credit card analogy, and £150 billion is an astonishing extra debt to add to the nation’s credit card bill. It is the price of failure, and this failure is nowhere more apparent than in the extra £29 billion, largely the price of rising unemployment, which the Government project they will spend on benefits. What the Minister failed to say in his statement today is that to pay for the Government’s own failure, they propose to take twice as much money from children and families as they do from bankers.
Let us look at the impact on families and women. We are left with a benefits policy that hits the poorer hardest. The Institute for Fiscal Studies, which used to employ the Minister, has said that measures in the autumn statement would
“take away from lower-income families with children.”
Even the Secretary of State had to admit to the House last week that the bottom 30% do quite badly. The Government’s benefits policy will hit women harder than men. The House of Commons Library estimates that of the £2.37 billion raised from tax credits and public sector pay changes introduced in the autumn statement, 73%—£1.73 billion—will come from women and 27% will come from men. Taking together all the changes to direct tax, benefits, pay and pensions announced by the Chancellor since the general election, of the £18.9 billion the Government are raising each year, £13.2 billion comes from women. Women are being hit twice as hard as men.
In addition, the Government’s benefits policy will increase child poverty. In its distributional analysis of the autumn statement, the Treasury has admitted that as a result of Government decisions the number of children living in households with incomes below 60% of the median will increase by 100,000 in 2012-13, which means more children living in poverty. The IFS now estimates that the number of children living in poverty will rise by 600,000 over the next period. Surely the Government and the Minister cannot be proud of that.
Let me ask the Minister some straightforward questions. Minister, you signed up to the Child Poverty Act 2010. Do you believe that under the terms and definitions of that Act child poverty is set to rise under your Government? You will have studied the IFS—
Mr Speaker
Order. I gently say to the shadow Minister that he knows that debate should be conducted through the Chair and that use of the word “you” is not encouraged in the Chamber. We would be grateful if he addressed the Minister through the Chair. We are grateful that he has some questions, but he must wrap them up pretty sharpish.
Gregg McClymont
Thank you, Mr Speaker.
The Minister will have studied the IFS presentation. Will he confirm that its conclusion is that the people who will pay most will be those in the bottom 30%? Does he agree with the Secretary of State that work incentives will be diminished by the Government’s actions in the autumn statement and that the changes to tax credits and public sector pay announced in the autumn statement will hit women disproportionately?
Steve Webb
I am grateful for the bits of the hon. Gentleman’s speech that actually responded to my statement, because he appeared to agree with us entirely. I am grateful for his support for our increase in the basic state pension, our announcement on the state pension age and our changes on the mobility component of DLA. I also agree that we see the true colour of a Government when their back is against the wall. Notwithstanding the huge pressure on the public finances, for reasons he might understand, we took the view that protecting the most vulnerable was a priority. That is the true colour of this Government.
The hon. Gentleman asked about the distributional impact of the measures we have taken. I refer him to Chart 1.C of the distribution analysis published by the Treasury last week to accompany the autumn statement, which takes account of not only the measure set out in that statement, but the cumulative impact of all that we are doing. I am sure that he will not want to be selective and will look at the whole picture. Page 4 of the analysis includes a chart ranking people by what they spend, which shows that the proportion lost rises with income. In other words, the smallest amounts lost are for the lowest households and the largest cash amounts lost are for the highest households [Interruption.] Yes, cash is what matters to people.
The hon. Gentleman asked about work incentives, and I am pleased to say that with his support the universal credit that my right hon. Friend the Secretary of State wants to introduce will be the biggest boost to work incentives for many generations. Starting in 2013, we will be rewarding work instead of penalising it, and the best thing that we can do for low-income households is to enable them to work and to support them in that.
The hon. Gentleman did not mention the many things that we are doing for low-paid working households, such as the personal income tax allowance increases, the council tax freeze, the cuts in fuel duty and, above all, the low-interest-rate environment, which for households with mortgages is crucial to their living standards. I am grateful to him for the measures that he did welcome, but there was a lot more that he should have welcomed.
Mrs Anne Main (St Albans) (Con)
I am sure that the £6.6 billion that the Minister has announced today will be welcome to many families in the UK, but I am extremely concerned that the European Commission is seeking to open that benefit pot to European benefit tourists who seek to avail themselves of it. That £6.6 billion will be in no way enough if we are to encompass benefits for European benefit tourists.
Steve Webb
I can assure my hon. Friend that my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), the employment Minister, has quite categorically stated that Britain does not believe in benefit tourism, and that we will do all we can to prevent it.
Mr Frank Field (Birkenhead) (Lab)
Is it not true that the Minister’s partial statement today will in the next couple of years result in decreasing the incentive to work? If the Treasury believed in localism and had given the £6.6 billion to the Department to spend on uprating as it wished to, would not the Minister have made a statement today that increased work incentives rather than decreased them?
Steve Webb
The right hon. Gentleman, for whom I have a great deal of respect, will be aware that the reward for working comes from a combination of factors, one of which is the tax burden on the low-paid, and that this Government have twice increased the personal tax allowance by about £1,500. That is worth more than £300 a year for a standard rate taxpayer and, for two members of a couple in low-paid work, is a £600 gain with more to come. That is a real reward for working which all too often they have not had in the past.
Jenny Willott (Cardiff Central) (LD)
I welcome the fact that the state pension and the state earnings-related pension scheme will rise by 5.2%, and that pension credit will do so above earnings, but different levels of uprating and a complex system can make it difficult for pensioners to understand exactly what they should expect. Will the Minister do all that he can to simplify the system and bring in a flat-rate pension as soon as possible, so that pensioners are able to see clearly and easily what pension they should expect?
Steve Webb
My hon. Friend is characteristically persuasive. It is absolutely clear that a system in which we pay a wholly inadequate basic pension—we pay a pension that, even after the uprating to £107 a week, is not enough to live on, so we will top it up—cannot be a sustainable basis for the future. We therefore continue to develop our proposals for state pension reform, precisely so that we get more money to people automatically, with less reliance on complicated means tests that mean too many people do not get what they should.
Gloria De Piero (Ashfield) (Lab)
Children’s well-being does not just depend on benefits; it is often about child maintenance, too. So what is fair about charging single parents to use the Child Support Agency?
Steve Webb
The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller) brought forward proposals only this week to make child maintenance more effective, because, as the hon. Lady rightly says, getting child maintenance paid is crucial. We believe that far too little is paid and the cost of collecting it is disproportionate to what we receive, so we need an efficient child maintenance system, and that is what we propose to bring forward.
Nigel Mills (Amber Valley) (Con)
Does the Minister agree that rather than trapping more low-paid families in the complicated web of means-tested benefits, which has done so much damage already, taking them out of tax altogether is by far the better approach?
Steve Webb
My hon. Friend is quite right that we have already taken, I think, just over 1 million families or individuals out of tax. We have a long-term goal of a £10,000 tax-free allowance, which would take out millions more, but what is often not understood is that couples in which both members go out to work to make ends meet get twice as much benefit. Each benefits from the personal tax allowance increase, so it helps precisely those most hard-pressed families in which both parents work all hours to keep their family going.
Dame Anne Begg (Aberdeen South) (Lab)
People can get the uprating only if they get the benefit in the first place, and, despite what the Minister said about protecting those who have worked hard all their lives, there is a measure in the Welfare Reform Bill which time-limits contributory employment support allowance to one year, so a large number of people who work all their lives but drop out of work because of ill health will get nothing after that.
Steve Webb
As the hon. Lady, the Chair of the Work and Pensions Committee, knows, that is a measure in the Welfare Reform Bill being considered in another place, but we have put in place two safeguards—that the most sick and the most poor are protected. In other words, those in the support group will continue on an un-time-limited basis to get ESA, and those with no other household income will continue, through income-related ESA, to be helped. So, at a time when we have to find savings, protecting the most vulnerable and the poorest seems to us to be a priority.
Mr Philip Hollobone (Kettering) (Con)
Pensioners in the Kettering constituency will warmly welcome the £5.30 a week increase in the basic state pension to £107.45. Can the Minister also confirm that for periods of extreme cold he is announcing a permanent increase in the cold weather payment from £8.50 to £25?
Steve Webb
My hon. Friend is absolutely right; it was remiss of me not to trumpet that fact. Last year, we announced that we were reversing Labour’s planned cut in the cold weather payment, which was due to fall to £8.50 and will now be £25 in each year of this Parliament. Last year, we spent over £400 million to help the most vulnerable when it is freezing cold, and that is a priority for this coalition Government.
John McDonnell (Hayes and Harlington) (Lab)
Many of my constituents may well have welcomed the increase, but they cannot because they are no longer receiving their benefit, particularly as a result of the extremely bizarre assessments of their disability by Atos—
Mr Speaker
Order. I apologise for having to interrupt the hon. Gentleman. I do not know what has come over the hon. Member for South West Bedfordshire (Andrew Selous). He is normally the very model of restraint, good manners and kindness to all things human and animal, and I am sure that he will recover his poise, but I want to hear the hon. Gentleman’s question; if he wants to start it again, he can.
John McDonnell
Many of my constituents would have welcomed the increase but they cannot because they are no longer receiving their benefit, particularly as a result of the Atos assessments of disability living allowance. In addition to that, having lost, or not gained, their benefit, they are waiting long periods for their appeals. Will the Minister look at the length of time that people are waiting for their appeals and the number of appeals that have been postponed as a result of lack of staff?
Steve Webb
The hon. Gentleman is bringing together several different issues. It is entirely the case that at the time of the election the previous Government had given Atos a contract for the work capability assessment for ESA—not DLA—and we have gone through with the Harrington process, independent reviews and recommendations for change, all implemented by the Government. Good progress is being made on making the system fit for purpose, but getting the decision right first time is better than speeding up the appeals process, and we are doing that more and more because we are reforming the system.
Philip Davies (Shipley) (Con)
Further to the point made by the right hon. Member for Birkenhead (Mr Field), how on earth can the Minister justify increasing benefits by over 5% when people who are in work are facing a pay freeze or, at best, very modest increases in their salary? Is not that another kick in the teeth to hard-working taxpayers, and does it not go against the Government’s priority to try to make work pay?
Steve Webb
My right hon. Friend the Secretary of State is absolutely committed to making work pay through a combination of benefit reform, with the universal credit, with which we are pressing ahead, taking people out of tax, as well as the council tax freeze and the petrol duty cut. There is a whole range of factors about whether work pays. I believe that we have done a great deal for people in low-paid work, and there is much more to come.
Helen Goodman (Bishop Auckland) (Lab)
The Minister made much of his belief that CPI protects the standard of living of pensioners, but on Friday an old-age pensioner came to see me and pointed out that the Department for Communities and Local Government target for rents in the social sector is linked to RPI. Does not that display the fact that the problem Ministers have is that they assume that everyone is like them and is an owner-occupier?
Steve Webb
I know that the hon. Lady was a Minister in our Department, and she will understand that the way the housing benefit system works is that people in the social rented sector, provided that they are not over-occupying, get their full rent, whether it is increased by CPI or RPI. The fact remains that including mortgage interest in a measure of inflation for pensioners when, as she rightly says, most pensioners do not have an outstanding mortgage, is the wrong thing to do.
Mr Marcus Jones (Nuneaton) (Con)
How much better off will the average pensioner in Nuneaton be following the introduction of the triple lock guarantee and the restoration of the link between earnings and pensions?
Steve Webb
For someone retiring this year on a full basic state pension, the triple lock, we estimate, will benefit them to the tune of about £13,000 over the course of their retirement. That is a very significant change whose effects we are not yet seeing in full because earnings growth is depressed, but as it returns to more normal times, pensioners in Nuneaton and elsewhere will see real increases year after year.
Simon Danczuk (Rochdale) (Lab)
As we approach Christmas, does the Minister not think it extremely sad that his latest cuts to tax credits will put a further 100,000 children into poverty?
Steve Webb
I am glad that the hon. Gentleman has raised that point, because it is a selective quotation from the autumn statement. As well as making the changes to tax credits, we are over-indexing benefits relative to average incomes. As poverty is measured in relation to average income and we are putting up benefits according to CPI, which is about twice the rise in average income, child poverty will be reduced compared with the figure that he gave. There is more to this than meets the eye.
Harriett Baldwin (West Worcestershire) (Con)
The Minister will be aware that many more women than men are on pension credit and that about 60% of pensioners are women. Does this increase not therefore disproportionately help women?
Steve Webb
My hon. Friend is quite right. Not only does the pensions boost help women, but the pension credit boost helps women. Reflecting on the Opposition’s question about the combined effect of our measures, it is worth saying that the one measure excluded from that question was the VAT rise. They excluded that because men, on average, have higher incomes and higher spending. In particular, they have higher spending on VATables, so the impact of the VAT rise hits men more than women. For some reason, the Opposition did not count that measure.
Hywel Williams (Arfon) (PC)
May I welcome the Government’s decision on the mobility component? That is vindication of the wide campaign on this issue, which included my early-day motion and the 88-odd Members who signed it. On a slightly more incredulous note, would the Minister claim that the move to CPI and the large savings to Government expenditure are entirely coincidental?
Steve Webb
I am grateful to the hon. Gentleman for welcoming our decisions on the DLA mobility component. Clearly, the decision on CPI was taken in a fiscal context. However, it came after RPI was negative and CPI was positive, so the immediate context was a year in which state earnings-related pension schemes and public sector pensions had all been frozen. I certainly could not believe that there had not been any inflation, and I am yet to meet a pensioner who could.
Nia Griffith (Llanelli) (Lab)
As we all understand, with rocketing fuel and food prices these rises are not as generous as they look. Has the Department assessed the impact of the £100 cut in the winter fuel allowance, combined with the fact that those on low incomes spend a lot of money on food and fuel? People will actually be worse off, particularly those with an income that puts them just above the bracket for claiming the cold weather payment.
Steve Webb
It was entirely right that we went ahead with Labour’s planned cut to the winter fuel payment. We reversed the cold weather payment cut to prioritise the most vulnerable when it is most cold. I make no apology for that. It was important to put the full 5.2% through for people with no wage because of the pressures on household fuel bills and other costs. That is why it was vital that we stood by the most vulnerable even though money was tight.
Mr Andrew Love (Edmonton) (Lab/Co-op)
Will the Minister take this opportunity to admit that the policies of the coalition have led to a diminution of work incentives? If we are to believe press reports, that appears to be the opinion of the Secretary of State. Was there any consultation with the Chancellor about his autumn statement? Does this not show that the Government are in disarray over this issue?
Steve Webb
People are still better off in work. When we have the Secretary of State’s universal credit, that will be even more the case. The hon. Gentleman is focusing on a narrow aspect of the measures that we have taken. Personal income tax allowance increases, the cuts in fuel duty compared with Labour’s escalator plan and the cuts in council tax in real terms will all help people in work and make it pay to work. We have plans to take that further.
Mr David Winnick (Walsall North) (Lab)
The hon. Member for Shipley (Philip Davies), who is yet to reach the 19th century, attacked the unemployed. I point out to the Minister that a store in my constituency had 20 vacancies when it opened and 250 people applied. Is that not an illustration of people out of work and desperate to find employment? They should not be attacked by hon. Members in the way that I have mentioned.
Steve Webb
I have no doubt that the vast majority of people who are unemployed are actively looking for jobs. Indeed, that is a condition of payment of jobseeker’s allowance. We would not pay people if they were not actively seeking work. The very fact that there are many unemployed people in the hon. Gentleman’s constituency—I grew up near Walsall, so I know the area well—is why we have to get the nation’s public finances on an even keel. We have seen what happens to countries that do not do so.
Jonathan Ashworth (Leicester South) (Lab)
Further to his answers to my hon. Friend the Member for Edmonton (Mr Love) and my right hon. Friend the Member for Birkenhead (Mr Field), who is no longer in his place, does the Minister accept that the changes to working tax credits act as a disincentive to work? Does that explain why, according to newspaper reports, the Secretary of State is so angry about that change and baffled that the Liberal Democrats pushed for it?
Steve Webb
There is a danger of missing the central points here, which are that people are better off in work, and we want to go further; that the tax credits are part of a package of measures, and I have listed repeatedly the many things that make work pay; and that our increases in personal tax allowances, for example, will make work pay far more than in the past. The coalition is united on that.
Sheila Gilmore (Edinburgh East) (Lab)
The Minister is trumpeting the highest ever increase for pensioners, which I am sure they welcome, but is not the truth that it is so high only because inflation is so high? This is not some generous gift from the Government; it merely allows pensioners to keep up with prices. Further to that, many pensioner groups would point out that the real types of inflation faced by pensioners are actually higher than CPI.
Steve Webb
I do not recall the previous Government ever using something other than inflation or using a different rate for pensioners because of factors such as those the hon. Lady mentions. Sometimes the pensioner rate will be higher and sometimes it will be lower, but on average it will be broadly the same. There was a lot of speculation—she may even have read some of it—that we would not provide a 5.2% increase, that we would break the triple lock, that we would average out the figures or do all sorts of things, but we stuck by our promise and provided a 5.2% increase. The real value of the pension as a share of average earnings—that is what pensions are for: to replace the earnings that people used to have—is higher than in any year under Labour, and I am proud to put my name to that.
Registration of Commercial Lobbying Interests
(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
John Cryer (Leyton and Wanstead) (Lab)
I beg to move,
That leave be given to bring in a Bill to establish a public register of organisations that carry out lobbying of Parliament for commercial gain; to make provision for disclosure of expenditure by such organisations; and for connected purposes.
The Bill is in a very peculiar position among private Members’ Bills, in that it is as relevant today as it was 20-odd years ago. It was first presented to the House in 1982 by my father, who was then the MP for Keighley, and again in 1988 when he was the MP for Bradford South.
I am not seeking to bring in the Bill on the basis that I am looking for a place in the “Guinness Book of Records” for having presented the Bill with the longest gestation period in British history. The reason is that Britain now has a £2 billion lobbying industry, much of it centred here in Westminster. I believe that there is a strong mood among the public to make lobbying more transparent and accountable, and that will only be reinforced by the story on the front page of The Independent this morning that appears to show that Bell Pottinger and perhaps other lobbying firms have profound influence at the centre and seat of government. I will come to that later.
The Bill would require that all companies, partnerships or sole traders that sought to lobby Parliament in order to influence legislation or its application as their sole, major or subsidiary commercial purpose must be registered. It would not impede the ordinary lobbyist—the ordinary constituent or member of the public, who has a right to lobby his or her Member of Parliament. Nor would it affect the ability of a company, co-operative, trade unionist or residents association to lobby Parliament. My fear is that local groups such as residents and tenants groups do not have the financial muscle of big corporations that can bring professional lobbyists to bear on Parliament and be more successful and carry more weight as a result.
During the 1980s, when big consortia and companies were lobbying for contracts to build the channel tunnel, one Jonathan Aitken, who was then a Conservative MP, said—ironically, in light of later events:
“'What worries me most is that usually lobbying is genuine in the sense that it stems from little interest groups and concerned citizens. Here we are seeing the Panzer division of big business, their heavy artillery and tanks trampling over all the small people’s interests which I want to see better defended.”
I agree with that. It is odd that he should have said it, but I agree. Those Panzer divisions and that heavy artillery are now being brought to bear on possibly a greater scale than ever before.
Strangely enough, the Prime Minister agreed with me a few months ago about wanting to introduce a Bill that would establish a register of lobbyists, but he seems to have changed his mind. He promised a consultation paper on establishing such a Bill by the end of November, but that consultation paper has not yet appeared. There are now many large and powerful lobbying firms busy in Westminster, many of them specifically lobbying for health contracts, often for big, commercial health outfits based in north America. Here are a few examples: Citigate Dewe Rogerson lobbies on behalf of Benenden and Nuffield; Grayling lobbies on behalf of Cambian, GE Healthcare and Nuffield; Lexington Communications lobbies on behalf of Bupa, GlaxoSmithKline Beecham, Novartis and Pfizer; and MHP Communications lobbies on behalf of Ellipse, IMS Health, Lundbeck, Roche, Grünenthal, Hoffman-La Roche and Janssen-Cilag.
Incidentally, one special adviser at the Department of Health happens to have worked for MHP Communications before he went to the Department. That relationship might be above board, but we do not know because it is not transparent—we do not know what goes on in the heart of government.
Some will argue that the Bill is unnecessary because the Association of Professional Political Consultants has a code of conduct, but that argument simply holds no water. For instance, the code bars payment in cash or in kind to any parliamentarian, but Grayling public affairs is owned by Huntsworth, the chief executive of which is Lord Chadlington, who is obviously a parliamentarian, and Bell Pottinger public affairs is owned by Chime Communications, of which Lord Bell, who is also a parliamentarian, is the chairman. Perhaps they do it on a voluntary basis, but I doubt it; I suspect that they are paid by those lobbying outfits.
That brings us rather neatly to the story in The Independent today that Bell Pottinger staff have been secretly filmed making the most alarming claims to have influence at the very heart of government, even inside No. 10 Downing street. They claim to have got the Prime Minister to speak to the Chinese Premier on behalf of their business clients at something like 12 hours’ notice; they boast of having access to the Foreign Secretary, the Prime Minister’s chief of staff, Ed Llewellyn, and to the Prime Minister’s closest adviser, Steve Hilton; and they claim to be able to get MPs—presumably from the Government Benches, although that is not made clear—to attack investigative journalists for the smallest of errors in order to rubbish stories when journalists investigate, for example, the Uzbek Government or large health conglomerates.
Reporters from The Independent posed as agents of the Uzbek Government, who have one of the worst human rights records on the face of the planet. Bell Pottinger aimed for a contract worth £1 million. Bell Pottinger, which since its foundation 30 years ago has been close to the heart of the Conservative party, did not hesitate to discuss signing a contract that would include lobbying on behalf of the Uzbek Government, who, apart from anything else, we are told, boiled two opponents alive in water, but there we are.
Tim Collins, the managing director of Bell Pottinger Public Affairs, is a former MP. He is not regarded over-fondly on the Opposition Benches—if I can put it that way—but he says in the film:
“I’ve been working with…Steve Hilton, David Cameron, George Osborne, for 20 years-plus…There is not a problem in getting the messages through”.
He was talking about lobbying on behalf of the Uzbek Government when he said that there is
“not a problem in getting the messages through”.
Strangely, when a No. 10 spokesman was contacted last night by The Independent and asked about the story, he said:
“It is simply not true that Bell Pottinger or indeed any other lobbying firm has any influence on government policy”,
which is a fairly strange claim. If it is true, all former MPs who are now lobbyists, all former lobbyists who are now MPs and all full-time lobbyists have wasted their time all these years. They have had absolutely no effect on Government policy, so why did they not go and do something else? The idea that large corporations, multinational companies and big banks that hire big lobbying firms to exercise influence at the heart of government have absolutely no consequence and no influence whatever is pretty difficult to stomach.
The reality is that this Government are very close to vested interests in the City, big corporate interests and big businesses. They have not the faintest idea what is going on in 99% of the rest of the country, where people are suffering under the cuts that are being introduced with a heartlessness not seen since the 1930s. They have absolutely no idea of the effect of the cuts in public services, but they know big business and the City, partly because the City provides more than 50% of Conservative party finances. For the first time in British history, City individuals and businesses finance the—[Interruption.] The Chancellor is saying something from a sedentary position. Perhaps he is contradicting what I am saying, so I shall say it again very clearly: City institutions and individuals finance more than 50% of Conservative party funds. It is just those sorts of big financial interests that hire lobbying firms and that then go to No. 10, and perhaps No. 11, to exercise influence there to steer Government policy in particular directions.
If the Prime Minister were serious about introducing legislation that creates a register of lobbyists, he would take on my Bill; it has certainly been around for long enough. He would push it through its parliamentary stages and put it on the statute book. It is perfectly simple. If he is not prepared to do that, I will assume that he and perhaps the Chancellor, who was mumbling a while ago about something or other, have something to hide. Perhaps they and their advisers are a bit too close to powerful commercial interests.
Philip Davies (Shipley) (Con)
I have a great deal of regard for the hon. Member for Leyton and Wanstead (John Cryer) who proposed this Bill. He will know that the people in the Bradford district still have a great deal of regard for his father, who originally brought in this Bill, and for his mother, too. However, I am afraid that the Bill is typical of the Labour party’s nanny state bureaucracy and its belief that the Government should have a role in everything.
Although the hon. Gentleman started by saying that he just wanted to introduce a register of lobbyists, it became increasingly clear that he was against lobbying altogether and wanted to see an end to it, but only for businesses and commercial enterprises. None the less, lobbying plays an important part in any democratic process. It gives a voice to a whole range of groups and interests within our democracy by allowing them to make their case. One of the things that I despair of in politics is that increasingly politicians want to be on the popular side of the argument and that we are in danger of having a generation of politicians who will argue for what 75% of the public want rather than the other 25%. Actually, the 25% also deserve to have their case heard, and lobbyists can play a useful role in allowing organisations that might not be immediately popular and might not even have a particularly popular message to get across to have their voice heard as well. Surely, in a democracy all voices should be able to be heard whether or not they are popular.
This Bill could lead to many organisations and Members of Parliament becoming lobby shy. Discouraging lobbying altogether, as the hon. Gentlemen wishes, would lead to poorer law-making. I make no apology for the fact that I meet people who have a particular view that they want to express. It does not mean I will end up agreeing with them, and I am sure it does not mean that the hon. Gentleman agrees with everybody who advocates their case to him. None the less, it is perfectly reasonable that they should be able to have their say and that we should be able to listen to their arguments. We can either accept their arguments if they are good ones or we can dismiss them if they are not so good. I am surprised that the hon. Gentleman has so little faith in people in this House that he thinks that just because someone makes a case to them, they will automatically agree with it, pick it up and run with it. It does not mean anything of the sort; it just means that other voices can be heard.
What was sadly lacking in the hon. Gentleman’s speech was anything to do with trade unions. He had a lot to say about the lobbying of Members of Parliament by businesses, but he was reluctant to mention the importance of the lobbying of Members of Parliament by trade unions. His Bill talks about establishing
“a public register of organisations to carry out lobbying of Parliament for commercial gain”.
It seems that he has deliberately designed his words to exclude trade unions from his provisions. He wants a system in which trade unions can lobby anybody as much as they like and spend as much money as they like on doing so, but anyone else in the commercial world will not have any opportunity to do so. That is his real agenda—to push forward the trade union argument.
An opinion poll conducted by ComRes asked MPs about the number of approaches they typically received each week from various organisations, and the results were startling: 59% of MPs said that they received 20 or more approaches from interest groups, but in sheer lobbying volume the approaches from interest groups that included trade unions and non-governmental organisations outnumbered those from the corporate world. The hon. Gentleman wants to entrench that position. In effect, he wants the trade unions to have all the influence that they desire and nobody to be able to argue against any of the things for which they lobby. That would be a triumph not for democracy but for his own agenda. A perfectly effective self-regulatory system is already in place.
I do not want to detain the House any further and I certainly do not intend to call a Division, but I thought it important that the one-sidedness of the hon. Gentleman’s argument be made abundantly clear. The Bill is not necessary or desirable. We should be prepared to listen to people who want to lobby from all parts of society, whether they be businesses, trade unions, charities or other organisations, and we should not support a Bill that tries to prevent certain people from getting their message across just because he happens not to agree with it.
Question put and agreed to.
Ordered,
That John Cryer, Natascha Engel, Mr Dennis Skinner, Lisa Nandy, Kelvin Hopkins, Grahame M. Morris, Bob Russell, Caroline Lucas, Mr Tom Watson and Valerie Vaz present the Bill.
John Cryer accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 20 January 2012, and to be printed (Bill 258).
The Economy
(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
Before I call the Chancellor, I remind the House that in view of the high level of interest in the debate I have imposed a six-minute limit on each Back-Bench contribution.
The Chancellor of the Exchequer (Mr George Osborne)
I beg to move,
That this House has considered the matter of the economy.
I am pleased that the House has been given this early opportunity to debate last week’s autumn statement and to discuss the economic challenges that our country and continent face. Being conscious that many people have asked to speak, I shall try to tailor my remarks appropriately.
Seven days ago I set out the Office for Budget Responsibility’s latest independent forecasts and the measures that we would take to reinforce our country’s fiscal credibility and keep our interest rates low, increase the supply of money and credit to ensure that those rates were passed on to businesses and home buyers, and lay the foundations for a more resilient, more competitive and more balanced economy.
That was one week ago, and in the seven days since events have provided further confirmation of why these measures are necessary: countries such as Ireland and Italy have announced further budget measures from VAT rises to pension age increases, reminding us of the value of getting ahead of the markets not following them, and the credit ratings of 15 eurozone countries have been put on negative watch, while here in Britain interest rates have stayed low despite the deterioration of the fiscal forecast, which has meant that last week we continued to borrow at below 2.5%. [Interruption.] I thought that the shadow Chancellor was about to intervene, but we shall have to wait.
Last week I answered questions from Members who wished to ask me about the detailed policy measures in the autumn statement, and I am happy to answer such questions again today, but I thought this might also be a good opportunity to address three broader issues: first, the crisis in the eurozone; secondly, how we believe that the UK banking system should respond to the ongoing crisis and the advice that we received on Thursday from the Bank of England’s Financial Policy Committee; and thirdly, given the eurozone debt crisis and the banking issues that we face, why the credibility of our fiscal policy must be constantly reinforced. Let me take each in turn.
On the eurozone, our overriding responsibility is to protect and advance the interests of the United Kingdom. Those interests are best served by the countries of the euro finding a path out of the crisis, while also ensuring that our economic interests in the single market are protected. There is no doubt that the crisis is having a chilling effect on the British economy and destroying jobs here. In the words of the Governor of the Bank of England last Thursday, it is, in his judgment, the primary cause of the downward revision of the British growth forecasts, as it was one of the primary causes of the OBR’s downward revision of its growth forecast. Of course, the OBR warned us that it had assumed an orderly resolution of the crisis over the next two years. This impact sadly comes as no surprise, when 40% of our exports are to the euro area and £1 in every £7 that Britain exports goes to Ireland, Portugal, Greece, Spain or Italy. Although we must plan for all contingencies—and we are—we should not lose sight of the truth that Britain has a fundamental national interest in the eurozone sorting out its problems, even though we are not in the euro and will not be while this Government are in office.
Action is required by the eurozone on three counts. First, as Germany has argued, and as I made clear in July, there needs to be much tighter fiscal discipline within member states and much tighter fiscal co-ordination within the euro. This is the remorseless logic of monetary union. Secondly, those reforms to economic governance should provide the confidence in the future discipline that the European Central Bank requires to take whatever action is necessary to protect financial confidence. We have been calling consistently for a big firewall, properly capitalised banks and lasting structural reform, and we now need that delivered. Thirdly, all this will succeed only if there is an improvement in the competitiveness of the whole of Europe, and also, crucially, in the competitiveness of the peripheral eurozone countries vis-à-vis countries such as Germany. That will involve difficult change, but it is encouraging to see some European Governments, such as Ireland and Italy, now starting to take the necessary steps on issues such as pensions and labour market reform.
Britain has a huge interest in all that happening and has put forward specific proposals to ensure that our entire continent is not priced out of the world economy. As an open, trading nation, we benefit from the single market. We would like it strengthened and deepened, but we will also insist that our interests in the single market are protected from any future developments, including our interest in financial services. That is the approach that Britain will take to the European Council later this week. We need better regulated financial services to protect our economy when things go wrong, which is one reason why we commissioned John Vickers’s report. We want a single market in Europe so that our banks, our insurance companies and our pension companies can sell their products abroad, but 70% of Europe’s financial services are based in London. We will ensure as we approach this European Council that the interests of the European Union 27 are protected and that Britain’s national interests are protected too. That is our obligation to the British people.
Let me turn from the eurozone crisis to what all this means for our banks. British banks are well capitalised and liquid. Not one of them was identified as a cause for concern in the recent exercise by the European Banking Authority. I remind people that retail deposits in British banks or the subsidiaries of foreign banks here in Britain are protected by our country’s Financial Services Compensation Scheme, which ensures that £85,000 per person per bank is protected. Individuals with deposits in a UK branch of a European bank are protected by their national schemes.
The eurozone crisis is tightening credit conditions across the world and across Europe. The Bank of England announced today the introduction of a new contingency liquidity facility—the extended collateral term repo—which it will make available if needed. In addition, to protect small businesses from the higher costs of credit, we are pursuing the credit easing policy that I set out last week. I have set a ceiling of £40 billion on those operations, and have committed to £20 billion of guarantees through the national loan guarantee scheme, and £1 billion through the business finance partnership. Although the means are different, the ends we seek are the same.
Angela Smith (Penistone and Stocksbridge) (Lab)
Is not the Chancellor’s credit easing scheme an admission that his earlier deal—the Merlin deal—has completely and utterly failed?
Mr Osborne
The Merlin deal was for this year, and it was a commitment to increase gross lending to small businesses, which is what the banks have done. Of course, the previous Government, having tried net lending targets, then had gross lending targets with just two banks. The Merlin deal extended that to all the main high street banks. It was a one-year-only deal; the credit easing package that I have set out is, I think, what is required—not least in view of the tightening credit conditions across the continent of Europe and, indeed, across the world at the moment. The Government are using the credibility they have in the financial markets to borrow at low interest rates and passing those rates on to small businesses. As I said at Treasury questions, we are seeking state aid clearance and hope to have the national loan guarantee scheme operational by early next year.
At a time like this, we also have to be alert to risks across the financial system. One of the weaknesses of the tripartite regime is that no one felt they had a particular responsibility for monitoring the overall health of the financial system or felt they had the tools to do anything about it. We have created a Financial Policy Committee to do just that. We have established it on an interim basis to get it operating as soon as possible, instead of waiting for next year’s primary legislation. The FPC reported last week. Let me put it on the record that it is absolutely the job of the Governor of the Bank of England to be frank with the country about the challenges we face.
As the Financial Policy Committee warned very starkly:
“Sovereign and banking risks emanating from the euro area remain the most significant and immediate threat to UK financial stability.”
The committee encouraged banks to improve the resilience of their balance sheets in a way that does not exacerbate market fragility or reduce lending to the real economy. Given what it calls
“the current exceptionally threatening environment, the Committee recommends that, if bank earnings were insufficient to build capital levels further, banks should limit distributions and give serious consideration to raising external capital in the coming months.”
That is the point put to me by the Chairman of the Treasury Select Committee just an hour ago at Treasury questions. Limiting distribution includes restricting bonuses. Excessive pay in the financial sector is a concern at any time because of the perverse incentives it creates.
When it comes to linking pay to performance and being transparent, we are implementing the most comprehensive regime of any financial centre anywhere in the world. Today the Treasury launches a consultation that will extend transparency arrangements at large banks by requiring the eight highest-paid non-board executives to disclose their pay and bonus arrangements. This will cover an estimated 15 banks, including the largest UK banks and the UK banking operations of large foreign banks.
Mr Osborne
I will certainly give way; I hope the hon. Gentleman will welcome this change.
Gordon Banks
Will the Chancellor tell us how transparency will actually reduce the income of those to whom he refers?
Mr Osborne
Transparency should make it clear to the owners of these banks—the shareholders—what the pay and bonus levels and the remuneration levels are; it will then be for them to take action. I am aware of our responsibilities as a shareholder in some banks. As I mentioned at Treasury questions, an encouraging statement was made this morning by the Association of British Insurers, which represents the shareholders who own many of these banks, saying clearly that it does not accept current levels of pay in the financial sector and that it expects reform. As I said, we had a very clear warning from the Financial Policy Committee to the financial system that it should be limiting its distributions at a time like this.
Mr Osborne
I give way first to the shadow Chancellor and then to the member of the Treasury Committee.
Ed Balls
Labour Members welcome the Chancellor’s conversion to transparency in financial affairs. He will know that, following the Walker review, a piece of legislation is on the statute book that requires the publication of the salaries of all employees paid more than £1 million. Given that the legislation is on the statute book but that this Government have chosen not to enact it, will he now enact it and therefore bring about full transparency for anyone in the City earning more than £1 million?
Mr Osborne
I think that, in the interests of transparency, the right hon. Gentleman should have told the House that he was the City Minister who, for several years, had the opportunity to introduce these changes. What about the opportunity that he had to do precisely the things that we are doing today? When it comes to transparency in pay, we have consulted David Walker and others, and we think that this is exactly the right approach. We will introduce the changes unilaterally in the United Kingdom, although it is a significant financial centre, and I think that they will set an example that the rest of the world will follow.
Mr Osborne
I will give way if one single Opposition Member concedes that Labour was in government for 13 years and presided over a banking system that collapsed.
Mr Osborne
And the right hon. Member for Delyn (Mr Hanson) was a Minister in that Government.
Mr Osborne
Anyone listening to Opposition Members would believe that under the mythical Labour Government that apparently existed, all that information was disclosed. But was it disclosed? There was no disclosure whatsoever. I suggest to the shadow Chancellor—the former City Minister—and others that they back the unilateral measures that we are taking, which will make the financial centre here in London the most transparent in the world.
The advice of the Financial Policy Committee is clear. Banks should consider limiting bonuses this year and using profits to strengthen their balance sheets in the face of the eurozone debt storm. Let me make this plain: stronger banks, not larger bonuses, should be the priority this winter, and money that is earned should be used to build balance sheets and not to enhance payouts. That is the advice from the Bank of England, and that is the advice that the Government now expect to be followed.
Helen Goodman (Bishop Auckland) (Lab)
Will the Chancellor tell us what he, as a major shareholder in some of the largest banks in the country, will do about the bank bonuses on which he can have a direct impact?
Mr Osborne
We restricted cash payouts in the Royal Bank of Scotland in the last bonus round to less than £2,000. That is what we did when we had the opportunity. The hon. Lady was a Minister in the last Government. Perhaps in 30 years’ time we will discover that she was sending letters to the Treasury asking “What are we doing about transparency in pay in the City? Why do we not introduce a permanent bank levy?”, and saying “I am really worried about the regulation of Britain’s financial services.” We will just have to wait for 30 years to find out whether, when she held Executive office, she once raised the concerns that she now raises in opposition.
Both the slow repair of our banking system and the crisis in the eurozone were identified by the Office for Budget Responsibility as causes of weaker economic activity. They are also a reminder of why it is so essential for Britain to maintain its fiscal credibility as we deal with a budget deficit that is higher than almost any other in the world. A month ago I was told by the OBR, as part of the formal preparation for the autumn forecast, that weaker economic activity would give Britain a less than 50% chance of meeting the fiscal mandate and the debt target that I had set out unless we took further action.
I believe that at that moment the OBR proved not just its independence, but its worth. It forced the Government to confront the issues at hand, and to use the weeks available to us before the statement to come up with a credible response. We know that under the previous forecast regime, those weeks would have been used to fiddle the forecasts, to tweak assumptions about the output gap, and to pencil in over-optimistic numbers on tax receipts: in other words, to do all the things that my predecessor, in his memoirs, says were done during his dealings with No. 10 Downing street. It would have been a case of choosing economic figures to fit the Government’s policies, rather than choosing Government policies to respond to the economic figures.
I believe that the existence of the Office for Budget Responsibility, which was consistently opposed by the shadow Chancellor in every position that he held in the last Government, has given the whole of Parliament confidence in the integrity of the forecast.
Stephen Timms (East Ham) (Lab)
Did the Chancellor use those weeks to rethink his plan, because the OBR was telling him that the assumptions on which his plan was based were mistaken? We were told that employment would rise every year, but that has not happened, and it is not going to happen. We were told that the budget would be balanced in this Parliament, and that is not going to happen either. Surely the whole plan should have been rethought?
Mr Osborne
The OBR was also very clear in its analysis of why there had been weaker growth. Over the past seven days the shadow Chancellor and others have paraded around the TV studios citing the OBR’s numbers while refusing to accept the OBR’s analysis of what lies behind those numbers. The OBR is very clear; it gives three reasons for the deterioration in the economic forecasts. First, it attributes the primary reason for the weakness since its last forecast to the external inflation shock of the high oil price. Secondly, it attributes the current weakness in the economic position to the lack of confidence caused by the eurozone crisis. Thirdly, it says its assessment both of the boom before 2007 and the subsequent bust and of the impact of the repair of the financial system is greater than it had previously estimated. That is its independent analysis. The Opposition cannot agree that we should now have an independent body and accept the figures it produces, only then to reject the analysis on which those figures were arrived at.
Sheila Gilmore (Edinburgh East) (Lab)
The OBR does not say that the cause of reduced growth is that the recession was found to be deeper. It does say that the recession was found to be deeper but, crucially, it also says the recovery during 2009 was stronger than previously forecast and that the further decline in growth happened only in the latter part of 2010.
Mr Osborne
The OBR is very clear that the cause of its downgrade of the trend growth rate is the—[Interruption.] Is it any wonder that the economic credibility of the Labour party is falling week after week? The shadow Chancellor has backed it into the incredible position where only Communist parties in western Europe agree with it. The reason he has done that has nothing to do with the future political prospects of the Labour party. Rather, it has everything to do with his own personal record. He cannot be the Labour politician who admits that his party made mistakes in the run-up to the 2007 crisis, because he was the Labour Government’s chief economic adviser. That is the position the Opposition find themselves in, and Labour Members know it. They are all going around telling anyone who will listen that that is their problem. Until they face up to the reality of the economic situation confronting this country—a reality they helped to create—they will not be listened to by anyone in this country.
The choice we faced when we saw the OBR’s first-round forecast was not whether to fiddle the figures; instead, it was whether we should take action to respond to the changed economic circumstances. We could have done nothing, but given international events I thought that was not a risk worth taking. It may have seemed to be the easier option, but not when we considered the possible consequences for the credibility of our country in the credit markets and the risk of a rise in interest rates of the kind that so many of our neighbours have experienced. The other option was to take further action to ensure Britain was on course to meet the fiscal commitments we have made, and that was what we chose to do, with a package of measures designed to tighten policy in the medium term while using short-term savings in current spending to fund one-off capital investment in our country’s infrastructure.
As I explained last week, we have put the total managed expenditure totals for 2015-16 and 2016-17 on a declining path. We have made changes to the tax credit entitlements. We set pay increases in the public sector for the two years after the freeze at an average of 1%. We have recalibrated overseas aid spending so we hit 0.7% of national income in 2013. We have also increased the state pension age to 67, starting from 2026.
That money saved in the short term has been used to fund the youth contract, new nursery provision to two-year-olds, new free schools and school places, and a major programme of road and rail building, and to help with the costs of living by extending the small business rate relief, keeping rail fare increases low, and freezing petrol duty next month, but the permanent savings—
Mr Osborne
I have given way to both hon. Members, and I know that many people want to speak in this debate.
The permanent savings we have made reaffirm Britain’s commitment to dealing with its debts. Who backs this commitment? The international organisations do. The OECD says that
“the ambitious fiscal consolidation has bolstered credibility and helped maintain low bond yields”.
The head of the IMF, whom the shadow Chancellor was talking about, said when she came to the UK that
“strong fiscal consolidation is essential to restore debt sustainability”,
and that the Government’s “policy stance remains appropriate”.
During Treasury questions, the shadow Chancellor was, I think, quoting The New York Times. What he did not quote was the Financial Times, where he actually worked. It said that
“the Government’s plans for fiscal consolidation have allowed Britain to regain the confidence of investors at a time when all too many countries have forfeited it”.
That is the kind of editorial he would have written when he was a leader writer there. The Economist says that the credibility the Government have achieved is “priceless”. The CBI has supported what we have done. The Institute of Directors said that we did the right thing. The Federation of Small Businesses, which the shadow Chancellor often quotes, and the British Chambers of Commerce have both welcomed the measures we announced for business.
Lisa Nandy (Wigan) (Lab)
We have heard a lot about what the Chancellor thinks about the Labour party. How many of the 100,000 additional children now growing up in poverty under his watch also support his plans, and what is he planning to do about that?
Mr Osborne
On the same measure that the hon. Lady uses, child poverty rose by 200,000 in the last Parliament. [Interruption.] She says, “We took those children out.” Child poverty in the last Parliament rose by 200,000 on the exact same measure that she is using. What we are doing is investing in nursery education provision for the poorest children, which never existed before, in a pupil premium, in free schools and in new school places—that is exactly what we are doing to tackle the causes of poverty as well as the symptoms.
Nadhim Zahawi (Stratford-on-Avon) (Con)
On the question of whom the nation blames, why does the Chancellor think that a recent ICM poll showed that people thought that the debt inherited from the Labour Government was the biggest single cause of the current slow-down?
Mr Osborne
The reason they think that is because it is true. This, again, is the absolutely hopeless position that Labour under the shadow Chancellor have put themselves in, but frankly, that is for them to work out. If I may declare an interest, we very much want him to stay in his post for the next three and a half years: he is the best recruiting sergeant we have.
The Governor of the Bank of England—appointed by the right hon. Gentleman, no doubt, when he was the chief economic adviser—said this last week:
“This is exactly the right macro-economic response to the position in which we find ourselves”.
And who is left opposing this credible action, this macro-economic response? The Labour party, which is now advancing this new theory that Britain’s low interest rates in this debt crisis are a sign of policy failure, not policy success. That was the argument we heard last week. The shadow Chancellor talked in his response to my statement of
“the illiterate fantasy that low long-term interest rates in Britain are a sign of enhanced credibility”—[Official Report, 29 November 2011; Vol. 536, c. 812.]
I pointed out that, on that basis, Italy’s rates of 7% were a policy triumph and Greece’s 30% rates were an economic miracle.
In the intervening week, I looked for evidence to support the argument that the shadow Chancellor has been advancing. I have not found it, but I did come across the very interesting “Ken Dixon lecture” to the department of economics at the university of York. It was given in 2004 by the chief economic adviser to the Treasury—Mr Edward Balls. He told a no doubt gripped audience of students about the importance of lower debt, of running surpluses in good times, of keeping deficits under control. He then cited the market interest rates that Britain was paying on its debt, versus neighbouring countries’, as the fruits of economic success. He boasted that the UK was borrowing money more cheaply than Germany and he hailed low interest rates as
“the simplest measure of monetary and fiscal policy credibility”.
Does he still believe that?
Mr Osborne
In the situation we face at the moment, where countries around the world, particularly those in the western world, face a challenge from the markets about their credibility, the countries with credibility have been able to keep their interest rates down and those without credibility have seen their interest rates rise. The right hon. Gentleman said that low “long-term interest rates” are
“the simplest measure of monetary and fiscal policy credibility”.
I want to know whether he still believes that to be the case—yes or no?
Ed Balls
This is the second time that the Chancellor has not understood the question today and has therefore not been able to answer it. Of course it is the case that in a normal operating economy that is how things are, but in a liquidity trap it is different, and that is where we are. That is why when American debt was downgraded in August, America’s long-term interest rates fell; they did not rise. Let me quote to him what the chief economist at Capital Economics said this August:
“Signs that the UK’s economic recovery has ground to a standstill have led markets to revise down their interest rate expectations”.
The National Institute of Economic and Social Research has said:
“The reason people are marking down gilt yields is because”—
they think that the UK—
“economy is weak”.
In a liquidity trap, long-term interest rates are a sign of the growth potential of the economy. It really worries me that the Chancellor does not understand the economics of this.
Mr Osborne
The right hon. Gentleman quoted the chief economist or head of the NIESR, but did not happen to declare to the House the interest that this person used to work for the shadow Chancellor. I do not agree with his analysis.
Mr Osborne
I will explain the economics very simply: if people do not think you can pay your debts in the world, they charge you a lot more interest on those debts.
I have actually bothered to read the right hon. Gentleman’s article in The Times today, in which he says that Labour would take
“tough decisions on tax and public spending.”
Will he get up and give us, either now in an intervention or in his speech, just half a dozen examples of the tough decisions he is prepared to take?
This is the shadow Chancellor who has opposed the increase in the VAT that the previous Government were planning, who opposed the increase in North sea oil taxation and who opposed the increase in capital gains tax—Labour Members do not know that, but he did actually oppose that. He opposes capping housing benefit, which was actually in the Labour manifesto; the reform of employment and support allowance; the changes to tax credits; and reforming legal aid. The Labour party has campaigned against every single change to the Ministry of Defence budget. There is not one single budget in the entirety of Whitehall that the Labour party has proposed cutting.
That is from the shadow Chancellor who says that he would take “tough decisions” on tax and spending. His position is, “We would not take them now. We would take them in the medium term.” That is his argument, if I understand it correctly. In the past seven days, he has opposed our measures to restrain public sector pay after the pay freeze comes to an end; opposed the path for public spending that we have set out for 2015-16 and 2016-17, which is in the medium term; opposed the raising of the state pension age, which is what is being done in Australia, Germany and America—the country he keeps citing. No wonder his economic policy has absolutely no credibility whatsoever. And, of course, he opposes the Government’s active enterprise policy—lower and simpler corporate tax rates; the new enterprise zones; the housing market changes that will revive the right to buy; planning reforms; and the changes to employment law.
Let me discuss just one measure that was announced seven days ago: the seed enterprise investment scheme. A group of entrepreneurs, including those who used to support the Labour party, wrote to the paper and said that the scheme will
“help the next generation of British innovations to become the next generation of great British businesses.”
This country faces some of the most serious challenges in its modern history. We are picking up the pieces of the biggest boom which became the biggest bust, and now we face a sovereign debt crisis in the eurozone. Unlike the shadow Chancellor, we are not the quack doctor promising a miracle cure. The action we have taken will help to take Britain through this storm and lay the foundations of a far more sustainable and balanced prosperity in the future, and I commend the autumn statement to the House.
Ed Balls (Morley and Outwood) (Lab/Co-op)
A year ago this week, the Chancellor of the Exchequer told the American news channel CNBC:
“We’ve already begun the reductions in public expenditure, and it has not had the impact on demand, not had the impact on economic growth that the critics said it would. So there are plenty of people who said what we were doing was wrong, but at the moment they’re being confounded by the figures.”
Twelve months later, on growth, on jobs and on borrowing, it is the Chancellor who is completely confounded by the figures. Let me remind him of what he boasted a year ago on 29 November in a Conservative party press release:
“Now the independent OBR have confirmed that the British recovery is on track, our public finances are on the mend, our debt is under control, employment is growing and our economy is rebalancing.”
Twelve months to the day, what did the independent Office for Budget Responsibility report? A recovery on track? No. Growth is flatlining—downgraded this year, next year, the year after, the year after and the year after that. Is employment growing? No. Employment is falling, and unemployment is now expected to be 500,000 higher than the previous forecast. Are public finances on the mend? No. Borrowing is disastrously off track: £158 billion more than the Chancellor told the House exactly a year ago.
The boasts of the Prime Minister and the Chancellor that they would eliminate the current structural budget deficit within five years are in complete tatters—in complete disarray. In his March Budget, the Chancellor claimed:
“We have put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 965.]
It must have been the wrong kind of fuel.
It is not as though the Chancellor was not warned. In his Bloomberg speech in August 2010, he claimed:
“There are some political opponents who claim that in setting out our decisive plans to deal with the deficit we have taken a gamble with Britain’s economy. In fact, the reverse is true.”
The Chancellor has taken an enormous gamble with the economy, with jobs and with people’s lives. The reality is that his gamble has completely backfired. Let me quote from an editorial in The New York Times at the weekend:
“A year and a half ago, Prime Minister David Cameron of Britain came to office promising to slash deficits and energise economic growth through radical fiscal austerity. It failed dismally.”
Before the election, we said that, like every country, after the global financial crisis we had to get the deficit down and we needed a tough plan. We needed spending cuts and tax rises. The question was not if we did it but how we did it. That is why the Opposition warned the Chancellor that he was reckless, that he was ripping out the foundations of the house, leaving our economy not safe but deeply exposed, and that is exactly what has happened over the last year.
Even judging by the one objective the Chancellor set himself for getting the deficit down, he is failing. In that CNBC interview a year ago, the Chancellor said:
“We have taken a series of steps, increased some taxes, consumption taxes, had some cuts in public expenditure, which have put us on a path to eliminate the deficit in a period of four years.”
Not only is the Chancellor now emphatically not going to eliminate the deficit in four years, but according to the OBR, he is set to borrow £37 billion more than under the plan he inherited from Labour at the last general election—a plan he called “deeply irresponsible.”
The Business Secretary told The Guardian in May that it was realistic for the coalition to eradicate the structural deficit by the end of this Parliament:
“Our credibility hinges on it.”
He was right, which is why the Government’s credibility is now badly undermined. The Chancellor should have listened to the warning from the Business Secretary before the election. This is what the Business Secretary said when he was a Liberal Democrat MP outside the coalition—the old kind of Liberal Democrat:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit.”
The Business Secretary was right before the election. It was only after the election, when he took his Cabinet seat, that he changed his mind.
Unemployment is up. Borrowing is up. Going further and faster has proved to be utterly counter-productive and self-defeating. All this pain for no gain. Eighteen months in, plan A has failed, and it has failed decisively.
Nadhim Zahawi
In The Times today the shadow Chancellor wrote:
“Credibility is based on trust and trust is based on honesty, so we must be clear with the British people that under Labour there will have to be cuts.”
In the spirit of honesty, will he tell the House what he would cut?
Ed Balls
Of course I will. When I was the Education Secretary we said that there would be over £1 billion of cuts in the schools budget at that time. We said, for example, that we would cut the police budget by 12%, but not by 20% with the loss of 16,000 police officers throughout the country. We would have raised national insurance. We raised the top rate of tax, but we would not have raised VAT to 20%, precisely because it would have choked off the recovery, as it has done this year.
I can tell the hon. Gentleman and his colleagues, the friends of the Chancellor, that I was reading a profile of the Chancellor a week ago, a few days before the autumn statement, in which one ally said:
“‘The autumn statement will correct the idea that we are off course’”.
Whatever were they on? One only needs to read the rest of the article to understand what is really going on. It goes on to say that the Chancellor
“has started taking discreet steps towards the Tory leadership. . . Members of the 2010 intake of MPs . . . are invited to discreet drinks at No. 11. The favourites”—
I do not know whether the hon. Member for Stratford-on-Avon (Nadhim Zahawi) is one of the favourites; perhaps he could tell us in another intervention—
“The favourites are invited to bibulous soirees at Dorneywood.”
If you ask me, it sounds as if they have been drinking rather too much.
Let me give the House another quote from one of those allies, because it was so revealing:
“Nobody in the Osborne circle is vulgar enough to talk openly enough about his leadership ambitions. . . ‘George has no agenda. I have never heard any talk of a timetable,’”
said an ally,
‘“But the unspoken assumption is that the party would be a lot safer in George’s hands than with bonking Boris.’”
Mrs Main
May I say to the shadow Chancellor, with all due respect, that the public deserve better than this? Tittle-tattle may be a joke to him, but the public want to know what his policies are, because they have faith in our policies. Is it still the policy of the shadow Chancellor and his party to make sure that we join the euro, given the huge financial consequences, which he is no longer discussing?
Ed Balls
Obviously the hon. Lady was not invited to the drinks parties. Perhaps she should apologise to the 5,400 families in her constituency who will lose from the cuts in child tax credits. If she wants to talk about deserving better, let me give another example from one of the Osborne allies:
“They were a bit sniffy about George. The Bullingdon is basically for Etonians. But they let him in even though he went to St Paul’s, though they did insist on him reverting to his original name of Gideon.”
The hon. Lady tells us that the country needs better than that. As for the euro, I will happily give way again if she can give the Labour Government credit for keeping the country out of the single currency in 2003.
Mrs Main
I am absolutely amazed that joining the euro is still in the right hon. Gentleman’s party manifesto, and that he can still plead that he kept us out of it. I am absolutely amazed that he has the brass neck to say that he is the saviour of this country from the euro—and I am sure that he will now stand up and tell us all that he no longer sees joining the euro at any point as worth while.
Ed Balls
I think that the bibulous parties might be starting in the morning, Mr Deputy Speaker. The euro is not succeeding as a single currency, which is why we were right not to join in 2003. There is no possibility of a British Government joining the euro at any time in my lifetime.
Charlie Elphicke (Dover) (Con)
Given that the shadow Chancellor seems to be making up policy on the hoof in this debate, is it any surprise that one shadow Cabinet colleague has said that his policy is hurting but not working, and that he has no credibility?
Charlie Elphicke
The shadow Chancellor talks about my constituency, but let me talk about his. How does he account for the rise in the claimant count in his constituency of 1,056, or 141%, in the last Parliament? Was that an economic success?
Ed Balls
If the hon. Gentleman is quoting the figures for this year, they might be the result of the Chancellor’s policies. Let me return to concerns about Dover and Deal. While campaigning for a new hospital in Dover, the hon. Gentleman said:
“I am very, very concerned that Dover has not had and does not get its fair share of health care. I have taken this up with ministers and hammered home just how angry people are”.
Perhaps he should also hammer home with his Front Bench the failure of cuts in tax credits.
In last week’s statement, in today’s debate and in every interview the Chancellor has given, we hear him give excuse after excuse and blame anyone except himself. Earlier in the year he blamed the snow, the earthquake, the royal wedding and higher oil prices. America was badly affected by the snow, and every country was affected by the Japanese earthquake and higher commodity and oil prices, so why did Britain have slower growth than any other country in the G7 except Japan? Why do we have higher inflation than any other country except Estonia? It was the Chancellor’s decision to raise VAT in January that pushed up fuel and petrol prices, hit confidence and reduced real living standards for families. He then blamed the euro crisis, but the fact is that our economic recovery was choked off a year ago, well before the recent crisis.
The Office for Budget Responsibility has downgraded its growth forecast for Britain in 2011, but it has upgraded its growth forecast for the euro area. Only Greece, Portugal, Denmark, Cyprus and Slovenia have grown more slowly than Britain over the past year. As the OBR figures show, the fact is that it is the lack of domestic demand that has slowed down our economy. It is only net trade, the contribution of exports, that has kept us out of recession over the past year. If the eurozone countries fail to sort out their problems, that will of course have an impact, which is why it is important that they are sorted out. Far from the eurozone dragging us down this year, it is actually the euro that has been buoying us up.
Mr Tobias Ellwood (Bournemouth East) (Con)
The right hon. Gentleman speaks of asking for, or demanding, an apology, but an apology is required from Labour Members. To give credit where it is due, however, I remember that when he was Secretary of State for Education he looked for savings in that area. But he did not do so right across the board. Page 15 of the OBR report shows that in 2008 borrowing went up to £68 billion, that in 2009 £152 billion was required, and that in 2010 another £145 billion was required: spending, spending, spending. It was not until this Government came in that such spending was halted.
Ed Balls
In a second. I will answer the previous intervention before I turn to the next one.
The financial crisis hit every major country in the world, and bank regulation was not tough enough here in Britain or in countries throughout the world—[Hon. Members: “Ah!”] There is no doubt about that. The Chancellor of the Exchequer, who was then the shadow Chancellor, spent his whole time urging us to deregulate, complaining about “burdensome, complex” regulations—but there we are.
By spring 2010 the economy was growing, inflation was low and unemployment was coming down. More people were in work and paying taxes then, so borrowing came in £20 billion lower than had been forecast in the pre-Budget report of 2009. How things have changed in 18 months! Then borrowing came in lower than was planned; now it is coming in at £158 billion more than was planned. The country is tired of the Chancellor’s excuses, and it is time he admitted that his failing plan is hurting but not working. His reckless gamble has not made things better; it has made things worse.
Richard Fuller
As the shadow Chancellor’s soon-to-be replacement, the hon. Member for Leeds West (Rachel Reeves), rustles through her papers to find a data point to throw back at me, may I ask him whether he has had the opportunity to look at McKinsey’s debt and deleveraging report, which identifies that on his watch and under his Government we became the most indebted major economy in the world? Does he not bear some responsibility for the enormous pain that families are going through in order to remedy some of his excesses?
Ed Balls
In the hon. Gentleman’s constituency 10,800 families are actually losing out as a result of the change in tax credits. We look forward to seeing that in his press release.
The fact is that we went into the global financial crisis with a lower level of national debt than France, Germany, America and Japan—
Ed Balls
If the hon. Gentleman calms down and lets me answer his point he will be able to intervene again. I shall be happy to take another intervention.
The fact is that when we went into the financial crisis our level of national debt was lower than that in America, France, Germany and Japan—and lower than that which we inherited from the Conservatives in 1997. I will give the House one good reason why: in 1999, when we raised £20 billion from the auction of the 3G mobile spectrum and they urged us to spend the money, we used the entire amount to repay the national debt.
Richard Fuller
The shadow Chancellor makes potentially a fair point about Government debt, but the Government are responsible not just for Government debt but for the total indebtedness of the nation, and he fails to understand that under the previous Government the total indebtedness of this country grew to become the largest of any major economy in the world. That is his legacy, and that is why 10,000 people in my constituency will be hearing why his policies led to the pain that they feel today.
Ed Balls
Over 1 million more homeowners than in 1997, and over 1 million more new businesses—with overdrafts and borrowing facilities—compared with 1997! The hon. Gentleman should be careful about giving the impression that borrowing in an economy is a bad thing for consumers, households and businesses. Many businesses want to borrow at the moment; it is just that the banks will not lend.
What did we get last week from the Chancellor? We got a cobbled-together package of growth measures which he knows, and the OBR forecast confirms, does not address the fundamental problem that his rapid and deflationary plan has choked off the recovery and pushed up borrowing. It is a so-called plan for growth that, according to the Treasury’s own figures, hits women harder than men, pushes up child poverty and delivers lower growth and higher unemployment.
Matthew Hancock (West Suffolk) (Con)
Youth unemployment in my constituency is falling because of a work experience programme that has now been rolled out across the country. I say that to preclude the shadow Chancellor’s rebuttal. He has just argued in response to my hon. Friend the Member for Bedford (Richard Fuller) that private sector debt is a good thing. Will he have the balls to say that explicitly?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am not quite sure we are going to allow “balls”. I am sure you can think of a better word, Mr Hancock.
Matthew Hancock
I withdraw it. Will the shadow Chancellor have the weight to state explicitly what he has just argued, which is that private sector debt is a good thing?
Ed Balls
The numbers for the hon. Gentleman’s constituency show that 8,600 families in his constituency are losing out from the cut in tax credits. [Interruption.] He is normally quite excitable, but he is really getting rattled this afternoon.
What are the facts? “We are all in this together,” yet women are being hit twice as hard as men; there has been a 100,000 rise in child poverty, according to the Treasury’s own figures; there is a four times bigger hit for families and children than for the banks, which have seen their taxes cut this year compared with last year; not 400,000 but 710,000 public sector jobs are set to go; there is £158 billion more in borrowing than was planned a year ago—£6,500 more in borrowing for every household in this country—and there is the cost of rising unemployment. That is the cost of the failure of the Chancellor’s plan. As for the Deputy Prime Minister’s contribution, we have a cobbled-together replacement for the future jobs fund that is judged by the OBR to have no impact at all on employment and zero impact on jobs. I have to say to the Chancellor and to the Chief Secretary that protecting our economy, businesses, jobs and family finances is more important than trying to protect a failing plan and their failing reputations.
Christopher Pincher (Tamworth) (Con)
For the benefit of the shadow Chief Secretary, my constituency is Tamworth. [Laughter.] I see that she has found it.
It takes some brass neck for the man who was so responsible for wrapping this country’s economy around a lamp post to stand there now and try to teach this Government how to drive. If he wants to be credible, and if he wants to be trusted about the cuts that he says need to take place, can he explain why he has abandoned the Darling plan and wants to spend £326 billion extra over the next five years?
Ed Balls
Abandon the Darling plan? It is the Chancellor who is borrowing £37 billion more than under the Darling plan. That is because of what is happening to jobs, growth and the living standards of families in our country, with 9,500 families in Tamworth hit by the cut in child tax credit announced last week. I will not read the next figure out; I will spare the hon. Gentleman’s blushes.
As we heard in Treasury questions earlier, the IMF was right: growth is necessary for fiscal credibility. The IMF urged the Chancellor to change course if growth undershot current expectations. The Chancellor did not even know the figures at Treasury questions this afternoon, but in October the IMF advised him to change course and to delay the planned consolidation if growth undershot. At that time the IMF was forecasting 1.1% growth this year; it has come in at 0.9%. For next year it was forecasting 1.6% growth; it is now forecast to be 0.7%. If that is not growth clearly undershooting expectations, I do not know what is.
In May the OECD called for the Government to slow the pace of consolidation if the economy undershot. The Chancellor likes to quote the OECD in support of his policies, so let me tell him what its chief economist said only last week. He told the Chancellor to
“contemplate easing up on spending cuts”
if events turned out to be
“a lot bleaker than even the bleak outlook that we have.”
That is not exactly a ringing endorsement of the Chancellor’s plans.
Mr George Osborne
The right hon. Gentleman has just quoted the OECD’s chief economist. The same person said on 28 November that “plan A is working”. The OECD also said:
“The ambitious fiscal consolidation has bolstered credibility and helped maintain low bond yields, leaving room for automatic stabilisers to work fully”.
The person the shadow Chancellor is quoting in the House of Commons in defence of his policy has said that “plan A is working”. Will he now correct the record?
Ed Balls
Only this Chancellor, out of his depth and out of touch, could come to this House and claim that the forecasts he set out last week showed that plan A was working. How can it be working when we have record levels of unemployment? How can it be working when growth has flatlined? How can it be working when he is borrowing £158 billion more than he planned a year ago?
I have seen the transcript of the Sky interview that the Chancellor is quoting, and I understand the diplomacy of the OECD. However, the chief economist said that the Chancellor should
“contemplate easing up on spending cuts”
if events turned out to be
“a lot bleaker than even the bleak outlook that we have.”
How much bleaker do they have to get? How much bleaker for families? How much bleaker for jobs and young people? How much bleaker for borrowing?
We were told a year ago that the Chancellor would not change course because his plan was working. Now, even though it is clearly not working, the Government still will not change course. The Prime Minister says that we cannot borrow our way out of a crisis, but that is exactly what the Chancellor has been forced to do. He is borrowing billions more to pay for the high unemployment, stagnant growth and rising benefits bill that his plan has delivered. The Chancellor made the wrong choice a year ago. He is now making a second catastrophic choice in sticking to a failing plan, when what Britain needs is a plan that will work.
Any British Government would be borrowing at the moment. There is no doubt about that.
Mr David Anderson (Blaydon) (Lab)
The shadow Chancellor makes the point that the Government are trying to borrow their way out of a crisis. I suggest that we are actually borrowing our way into a bigger crisis. [Laughter.]
Ed Balls
Government Members may laugh at an 80% rise in youth unemployment, but that is not a laughing matter for the young people concerned, or for our economy. [Interruption.] I am going to make this point because it is very important. It goes to the heart of the argument.
Ed Balls
In a second. Any Government would be borrowing at the moment. The question is whether it is better to borrow billions more to keep people out of work on benefits, or to act to get people back into work and paying tax, which would get the deficit down. If we let a year of stagnating growth and rising youth unemployment become a lost decade of stagnant growth and high youth unemployment, we will pay a long-term price. It makes much more sense to act now, as the International Monetary Fund has recommended, with temporary tax cuts and investment in jobs and growth. That is the best way to reduce the bills of failure for the long term. It is the only way to get our deficit down sustainably in the long term.
Ed Balls
I will give way in a second. There is a choice. We can either take action now and then have long-term fiscal discipline on the deficit, spending and our fiscal rules to make our economy stronger and to get borrowing down, or we can have what we have now and what is forecast for next year and the year after: stagnating growth, rising borrowing, including £158 billion more borrowing to pay for rising unemployment, and long-term youth unemployment, which will weaken our economy and make it harder to get the deficit down.
Nadhim Zahawi
The shadow Chancellor is obviously passionate about the subject of youth unemployment, so will he admit to the House that in the last Parliament, youth unemployment in his own constituency went up by 151%?
Ed Balls
Before the crisis, youth unemployment was lower than what we inherited in 1997. It then went up during the recession, but was falling a year and a half ago. It is now rising again. Unemployment was falling in our economy, but now there has been an 80% rise in long-term youth unemployment.
Matthew Hancock
I am very grateful. The right hon. Gentleman keeps making his argument about borrowing, but is it not completely undone by the fact that according to the OBR forecasts, borrowing has fallen and is set to fall over the next five years, and then debt will fall once it is under control? Can he answer the question that neither the shadow Chief Secretary nor other shadow Treasury Ministers can answer? How can spending more money possibly lead to lower borrowing?
Ed Balls
The economics of this are clear and easy to understand, which is why both the IMF and the OECD have made exactly the point that I am making. The fact is that the Government are borrowing £158 billion more than they planned, and the deficit is coming down much more slowly than was planned, because unemployment is going to be so much higher.
The issue is the pace at which we try to get the deficit down. If we try to get it down too fast, as the Chancellor did a year ago, it blows up in our faces. Growth and taxes slow down, unemployment goes up, and we end up borrowing £158 billion more. The right thing to do is to have a staged and balanced approach, get the economy moving, get people into jobs and get the deficit down. That is the only plan that will work.
Let me make an offer to the Chancellor. It is not too late to change course, and the deepening euro crisis makes it more important for him to see sense. If he does, we will back him—a new start, a second attempt. We read in The Daily Telegraph today about the Chancellor’s recent efforts to land a plane at Manchester airport—on a flight simulator, I should add, to reassure Members. There was too rapid a descent and a crash landing on the runway, narrowly missing ploughing into the terminal building. Too far, too fast—no surprises there. However, the Chancellor had a second go. With a little help from the experts and a steadier hand on the controls, things worked better the second time round. Perhaps there is a lesson for him in that story.
Perhaps the Chancellor should take my prescription after all. He claimed last week that a balanced plan to get our economy moving and to get the deficit down was like
“the promises of a quack doctor selling a miracle cure.”—[Official Report, 29 November 2011; Vol. 536, c. 810.]
Was not the Nobel prize-winning economist Paul Krugman closer to the truth when he described Britain’s experiment in austerity as being
“like a medieval doctor bleeding his patient, observing that the patient is getting sicker, not better, and deciding that this calls for even more bleeding”?
The patient is crying out for a second opinion, and all we hear from the Chancellor is a call for more cuts and more leeches.
Ed Balls
I will not, because I have gone on too long and there are other important speeches to be made today.
I was thinking about what other doctors the Chancellor resembled, and I concluded that he resembled Voltaire’s giant. I will take an intervention from anybody on the Government Front Bench who knows who Voltaire’s giant doctor was—Voltaire’s great doctor, Dr Pangloss. It does not matter what the evidence says, it simply strengthens Dr Pangloss’s opinion that his philosophy must be right. Britain’s rock-bottom gilts? A sign of success, not a damning verdict from the markets on the prospects for growth. Rising unemployment? Not a bad thing, just creating more space for the private sector-led recovery when it finally arrives. The worse things get in the rest of the world the better for Britain, because we are the only safe haven of prosperity.
In the Chancellor’s Panglossian world, everything is working out just fine, but in the real world, with the world economy darkening, and with the UK now forecast to endure stagnant growth and rising unemployment this year, next year and the year after, this Panglossian Chancellor is making a catastrophic error of judgment, refusing to learn the lessons of history, refusing even to understand the lessons of economics, and refusing to shift to a more balanced plan. He got it wrong 18 months ago; he is getting it so badly wrong today. He is out of his depth and out of touch. Is it not time he changed course before it is too late?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I just remind Members that there is a six-minute limit on speeches.
Mr Andrew Tyrie (Chichester) (Con)
I will not try so much of the party political stuff that we have just heard, but I will make a short point about the central fiscal judgment, a point about the forecasts and, if I have time, a point about the supply side.
First—we did not hear much of this in the previous speeches—I want to emphasise the backdrop against which the autumn statement was made. It was undoubtedly the most difficult backdrop since 1981, with a huge inherited budget deficit, a dysfunctional banking sector and an economy in which far too much is taken and spent by the public sector, as a result of which the private sector is having trouble leading the recovery. All parties were agreed on that before the election and all had plans to reduce public spending as a proportion of GDP. On top of that, we have a severe eurozone crisis, which is our most important market.
I will not be popular on either side of the House for saying this: despite the clash of cymbals we have just heard, fiscal policy would not be so different whoever was in power. There would be a little less deficit cutting and probably a bit more tax and spend under Labour, but the market discipline in the world at the moment is severe and biting, and the markets would demand roughly the same strategy, which it would get from any rational Government. That is an important basic point to have in mind.
My second point concerns the forecast. The Treasury Committee had the OBR before it earlier today. It has radically adjusted its estimate of the output gap—that was discussed a bit in earlier exchanges, although it was difficult to spot—and its estimate of productivity growth compared with its spring forecast. That radical adjustment in eight months has in turn obliged the Chancellor to adjust policy for the later years of the forecast period, as he pointed out, in order to meet the fiscal mandate.
A good number of my Committee colleagues—from both sides of the House—were a little sceptical of the OBR’s decision. Frankly, when we look at the OBR documentation, we do not find a great deal of evidence to support it. There is some evidence, and the Committee might well return to the issue when it reports on the autumn statement.
This morning’s Treasury Committee sitting brought home to me and to other colleagues a couple of important points, the first of which is that the OBR forecast is an independent one—nobody can claim that it has been cooked up by politicians—which in itself can add confidence to markets. Secondly, the difficulties that the OBR has had in supporting specific points on which the Committee challenged it this morning flags up the perils of all economic forecasting. The one thing we can say with some degree of certainty is that this forecast, like all others, will almost certainly turn out to be wrong.
I do not have very much time. I shall end with a few words about supply side reform. The financial crisis exposed the structural weaknesses in the public finances and the structural deficit now appears to be much bigger than was originally thought. But the financial crisis also exposed structural weaknesses in the real economy. As businesses struggle to recover, the full scale of the web of complicated taxation, excessive regulation and much else is being exposed to view, and that is getting in the way of businesses doing better.
The coalition Government assembled a fully worked up agenda for action to deal with the deficit, but until this autumn statement, we did not have a fully worked up strategy for improving long-run economic performance —the supply side of the economy. I was critical of the Government’s earlier proposals that were published a year ago. They reflected the fact that they were dealing with an inheritance from the previous Government and also with policies that had been thought up and planned at a time of economic abundance before the crash. The obvious truth is that supply side reform is extremely difficult to accomplish. Raising the long-run growth rate is a very big and long-term job. The Thatcher Administration did not even start to implement their major reforms in that area until their second term.
This autumn statement has taken a huge step forward in the right direction. It sets out a more consistent and coherent agenda to support enterprise. It recognises the crippling burden that is being imposed on energy-intensive industries by climate change regulation and by the need to improve transport and to do something about the planning system. There is a good deal else. The phrase “supply side” has also been rehabilitated.
However, we must bear in mind the fact that so far this is largely just an agenda; it now needs to be implemented. It also needs to be complemented by reforms to bring greater simplicity and certainty to the tax system, which is in a huge mess, thanks largely to the previous Government and that is what I hope the Budget, in only 17 weeks’ time, will be all about.
Stephen Timms (East Ham) (Lab)
The number of young people out of work has topped 1 million for the first time. If nothing else, that must be a wake-up call for urgent action on the economy. Last June, the Prime Minister told the House that cutting the deficit faster would revive private sector confidence. That was the rationale for the strategy that was set out to us. There would be pain but it would be worth it. Private sector investment and jobs would surge. The increase in confidence would mean that growth in the number of private sector jobs would more than match public sector job cuts. We were told that employment would rise every year. In fact, in the past year, employment has fallen by more than 100,000. One thing we can say for sure, with no fear of contradiction, is that that key assumption about confidence underpinning the Government’s entire strategy was mistaken.
The Institute of Chartered Accountants’ latest business confidence monitor is headlined “UK business confidence has collapsed”. That is its assessment of confidence. The latest of its regular surveys states:
“Confidence has declined across all sectors and all regions.”
There will be different views across the Chamber about the reasons that the Prime Minister’s hope has proved ill-founded. The Chancellor took the view and his party seems to take the view that all the problems before the election were the fault of the UK Government and that all the problems since the election have been the fault of someone else. Whatever view we take of the reasons that the Prime Minister’s expectation was ill-founded, the fact that it was ill-founded is, after the autumn statement, not in dispute.
The Prime Minister told us that unemployment would not be too much of a problem because private sector job creation would exceed public sector job cuts. In fact, public sector job cuts are exceeding new private sector jobs on a ratio of about 2:1. The Office for Budget Responsibility has told us that more than 700,000 public sector jobs will be lost. The cuts are going too far and too fast. Young people and women are bearing the brunt. Moreover, the plan is not delivering, as far as we can see, the central goal of swiftly eliminating the deficit. That is now clear. Borrowing will be higher than it was under the previous Government’s plans.
When a plan goes so badly wrong and when the expectations underpinning it are shown to have been so mistaken, surely it is time to revisit the plan. Surely, when things have turned out so different from what the Government told us would happen, the case for a fundamental rethink is extremely strong.
Jessica Morden (Newport East) (Lab)
Last week, Tata steel in my constituency mothballed a hot strip mill because of low demand for steel, which means that in the past month 185 job losses have been announced at Llanwern. Is that not further evidence that the Government’s economic plan is not working. We have heard nothing today that will do anything to save those much-needed steel jobs?
Stephen Timms
Unfortunately, nothing at all. This lack of confidence is one of the problems in the economy.
Another problem is that the Chancellor cannot change course because he has boxed himself in and cannot budge for fear of admitting that his judgment was wrong. That problem was well expressed by Martin Wolf, the chief economics commentator for the Financial Times—the Chancellor quoted the Financial Times in his support—who warned after the autumn statement last week of the danger of a lost decade. He wrote that the Chancellor
“is wrong to ignore his errors. He is trapped by his own rigid fiscal framework. He might indeed shatter confidence if he were more flexible. But that is partly his own fault.”
It seems that we will all be trapped because the Chancellor cannot acknowledge that he got the fundamental judgment wrong at the start.
We need to build growth in the economy and to create jobs for young people. That is the rationale for the five-point plan for jobs and growth advanced by the Labour party. We should repeat the tax on bankers’ bonuses to bring in another £2 billion and we should use that to fund 100,000 jobs for young people, getting them off the dole and building on the future jobs fund introduced before the election. I welcome the announcement of the young people’s contract—a watered-down version of the future jobs fund—and I look forward to seeing the details but it simply underlines what a misjudgment it was to shut down the future jobs fund in the first place.
We should introduce another temporary cut in VAT to rebuild momentum in the economy—that is what the temporary cut did last time—and we should introduce further investment in infrastructure, including in schools and other areas. We should also cut the increase in university fees. At a time when youth unemployment is at such a catastrophic level, the last thing that we should be doing is forcing young people out of education—we should be encouraging them to stay in. Yet, I am hearing reports from colleges that significant numbers of young people have concluded that, with fees at the level announced by the coalition, they have no chance of ever making it to university and that therefore they should not even bother staying on to study, including for A-levels.
We should also listen to the Federation of Small Businesses and give small firms hiring new staff a break from national insurance to encourage them to do so. The Government should heed that call. We need a strategy for growth but as yet we have no sign of one. I am pleased that the Government have retained the previous Government’s proposals for a patent box to improve the research-and-development environment. That was the right decision and it allowed the Prime Minister yesterday to make his welcome announcement about support for life sciences.
In closing, I want to draw attention to one seemingly minor measure announced by the previous Government. Its significance is much greater than the initial view suggested. I am referring to the tax break from computer games announced in the last Budget by my right hon. Friend the Member for Edinburgh South West (Mr Darling). We have some of the most creative computer design businesses and talent in the world and we should make better use of it.
Julian Smith (Skipton and Ripon) (Con)
I want to speak about small business—in particular micro-businesses, which are usually defined as those with fewer than 10 employees—and to thank the Government for their support for such businesses.
Since coming to power, the coalition has taken some significant steps on regulation. It has introduced the one-in, one-out policy—which Labour claimed to have introduced, but never implemented—and the red tape challenge, allowing the public and businesses to say which regulations they want scrapped. The Government have taken a number of specific steps for small and micro-businesses, and have begun to draw a clear distinction between the large multinational, the mid-size company, with a human resources department and a legal department, and the small owner-manager. The Government have created exemptions from all new UK regulations until 2013, delayed legislation on the right to request training for small businesses, extended the unfair dismissal period and introduced fees for employment tribunals. All are powerful measures, giving more confidence to small business to take on staff. The autumn statement also included an announcement on protected conversations, which, for the first time in decades, will allow a small business manager to have a chat with one of his employees without the fear of litigation. Further measures, on compromise agreements and other matters, are on their way.
I am delighted that business organisations have shown their support. I urge the Government to move swiftly with those proposals, because it is worth reflecting on who they are trying to help with those measures. Often we get a kick from the left whenever an attempt is made to reduce workers’ rights, but when we talk about very small businesses or micro-businesses, we are talking about just an owner-manager—a farmer in the dales in my constituency, for instance—setting up a business and trying to take on one or two people to help run it. We are talking about people such as Chris and Rebecca Blunstone from Pateley Bridge, who set up Helping Hands earlier this year while at the same time doing two jobs each. They also have two kids, so they were working flat out. It is people such as the Blunstones whom the Government are trying to support, because small firms and start-ups created two thirds of new jobs nationally between 1998 and 2010. They are the backbone of employment across the country, in all our constituencies, and we desperately need them to succeed and take on more people.
I understand that parts of the Government want to go further with reforms for micro-businesses, particularly in employment law. I believe that those forces are right. We need to make a strong case for rolling back the dead hand of the state on the smallest businesses in our country and make the argument that, despite the risk of having exceptions in the labour market, there are huge benefits for the economy. We cannot look at each measure through the prism of an individual impact assessment; rather, it is the cumulative impact of all the reforms that we need to move forward with. That will mean making some radical decisions on policies that our party is promoting in the areas of flexible working and the right to request training, because for very small businesses such rights legislation is a real burden and a hassle. Ultimately, the owner-manager will make the right decision—to train their staff or give them time off—and certainly does not need an edict from London.
Bob Stewart
In my constituency the complaint from small businesses is that they want to make a profit, not spend their time doing accounts or filling in regulation forms. We have to minimise that and, if possible, try to take it right out of the whole business—if it is small enough—because one in 10 still seems to be concerned with regulations.
Julian Smith
My hon. Friend makes a valid point. This is a controversial area, because although the Government are making great strides in shared parental leave, for example—reforms that I support—we need to look at how Whitehall is managing the relationship with micro-businesses on issues such as maternity and parental leave.
There are some exciting initiatives that did not make it into the autumn statement, but which I urge the Government to support and small businesses to show their interest in. They include, for instance, no-fault dismissal. Deciding when to finish an employment relationship as an owner-manager running a small business is really difficult. The idea of a compensated no-fault dismissal—the equivalent of a no-fault divorce in the business world—is worth looking at.
I urge the Government to have the courage of their convictions on policies like that. I would encourage micro-businesses everywhere to follow the Government on their call for evidence, as we need to make the case that expectations about workers’ rights in small firms must be different. We need the small business owner to be confident in taking on more staff. The doers and grafters need to know that this Government are getting fully off their backs.
Mr Alistair Darling (Edinburgh South West) (Lab)
I hope that the hon. Member for Skipton and Ripon (Julian Smith) will forgive me for not following him, given the short time I have available.
The real problem we face in this country, in Europe and, to a large extent, in America too, is the lack of growth. The Chancellor opened his remarks by saying that the previous Government had been too optimistic about some of their forecasts. He gave—how shall I put it?—a somewhat incomplete précis of my book. In that connection, I refer the House to my entry in the Register of Members’ Financial Interests. Surely the Chancellor would accept that forecasting is extremely difficult at a time like this. Perhaps when he goes back to No. 11 at night, he will reflect on the fact that he was wildly optimistic about both growth and borrowing. I do not imagine for one minute that he expected to be standing up a week ago to announce that he was borrowing £158 billion more than he thought he would be borrowing in the summer of last year. The reason for that, substantially, is that we have less growth, with fewer people paying tax, more people dependent on benefits and, as the Office for Budget Responsibility set out, incomes being squeezed.
All that was perfectly foreseeable. Many people—Labour Members and many others—said that this would happen. The problem was not just the rate at which public expenditure was being cut, but the fact that the mood music that the Government deliberately set out to orchestrate last year was that everything was full of gloom and doom, so it is not surprising that businesses did not invest and that individuals decided to hold back on their expenditure. That is precisely what is happening in this country and in Europe, to which I shall return shortly. All this was foreseeable.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Following on from my right hon. Friend’s point about cuts, is he particularly worried about the construction industry, not least because so many small businesses are dependent on it?
Mr Darling
I am, and I shall come on to that in a minute, but I want to make a further point. If the OBR comes out with another downward revision of its figures at the time of the Budget next March, does it mean that we are going to embark on yet another round of reducing expenditure? It this not the same sort of argument that we had in the 1930s? The prevailing orthodoxy did not work then, and it will not work now. My guess is that this argument is going to dominate politics and economics over the next few months—not just here, as I said, but in Europe.
My right hon. Friend mentioned the construction industry. I welcome some of the measures the Chancellor announced on infrastructure, but with this big caveat. First, if he looks at some of them, particularly the road announcements, he will see that they have been announced by successive Governments over many years. He will no doubt have been told by the Treasury that the problem with these big plans is the huge lag between the time they are announced and the time we see them. I remember opening the M6 expressway and a reporter said, “This must be a great triumph for the Labour Government.” I said, “Indeed, it was. Harold Wilson would have been absolutely delighted to see it built.” That illustrates the point.
Although this is not a transport debate, I am glad that the Government are looking at the issue of aviation, but they cannot escape from the consequences of the decision not to proceed with the expansion at Heathrow. I know this is no longer my party’s policy, but I believe that issue needs to be looked at again for the future prosperity of the country. The High Speed 2 line is no substitute for it.
The Chancellor has, of course, had to change course. He was very much against quantitative easing. When I introduced it, he said it was the last act of a desperate Government, but it now turns out that it is a jolly good thing and we can expect to get even more of it. I suspect we will need more as the economy slows down. As I said, he has also had to introduce the infrastructure projects to try to help—although not enough, in my view. I think he will have to do more, particularly about jobs for young people facing unemployment, which is going to be a real economic problem as well as a real social problem. Many of us here remember the lost generation in the 1980s. Many of those individuals never got over the experience of having no job when they left school, college or university. The Government are going to have to come back to this, no matter what the Chancellor says, because the outlook is such that the Government are going to have to at some stage accept that at a time like this only the Government can take the action necessary to stimulate the economy and restore confidence. That brings me to Europe.
Mr Pat McFadden (Wolverhampton South East) (Lab)
My right hon. Friend talks about the effect of the Office for Budget Responsibility and the forward outlook. How does he view its projections for returning to the trend rate of growth in two or three years’ time, given the drastic revision that has taken place between the forecast in March and the forecast last week?
Mr Darling
As it happens, there is a passage in my book about the trend rate of growth. I believe that economists find it terribly difficult to work out what the right trend rate of growth is. On the point raised in the Select Committee this morning, I am surprised that the OBR has said that the productive capacity of the economy has been so reduced, partly because of lack of productivity. Part of the OBR’s problem is that it fails to recognise that businesses have retained labour through this recession in the hope that they will need it when recovery comes. One worry is that if businesses think there will not be a recovery, the people they have held on to will then lose their jobs. No doubt the Select Committee will look into that.
Let me touch on what is happening in Europe. I appreciate that it is a risky business because what is happening today might not be what is happening tomorrow or the day after that. The Chancellor touched on it and I hoped he would say rather more about what is being proposed—if, indeed, he knows.
As far as I can see, the agreement reached between President Sarkozy and Chancellor Merkel on Monday seems to be a re-creation of the stability and growth pact—and we know which were the first two countries that actually broke it. I have a feeling that they are trying to reach a sufficient political agreement to give Mario Draghi of the European Central Bank sufficient cover to do what we all know the ECB has to do in terms of intervening in the market. It does not go any further than that. Mario Draghi made a good speech last week, in which he said, “Look, we’re ready to intervene, but you lot have got to show willing.” Interestingly, that is exactly the same position that Jean-Claude Trichet took in the ECB at the last ECOFIN meeting I attended in May 2010, to which the Chancellor is fond of referring, when it was necessary for Ministers in the European Union and the eurozone to decide on sufficient action to allow the ECB to intervene.
I am glad that the ECB is going to intervene, but the agreement reached on Monday does not go far enough because it does not address the fundamental questions and fundamental problems of having a single currency without something approaching fiscal or economic union. That was not addressed and neither was the Greek problem, which will not go away because that fix will not work. The rescue fund is still a virtual one and, of course, there is the whole question of the recapitalisation of European banks, which remains for next summer.
Mr Darling
I would love to, but if think that if I do it counts against me, so I shall carry on speaking for a minute and 22 seconds, if I may.
I know we will be represented in the Council at the end of this week. This is a debate that we cannot afford to stay out of. No one is advocating that we should join the euro, and it is simply not going to happen in anything like the foreseeable future, but what happens to the eurozone, who is in it, the implications of a breakdown whether it be orderly or disorderly—all that matters very much. I hope that the British Government will make it clear to our European partners that we really are partners and in that spirit try to bring about a resolution. As far as I can see, the present arrangements struck between the French and the Germans seem to be yet another fix. They will buy time, but they will not sort out the fundamental problems. Until those fundamental problems are sorted out, we will still have that dark cloud of uncertainty in Europe, which would be bad for Europe, bad for this country and therefore bad for growth and for jobs. For that reason, we have a real interest in helping to bring about a resolution to that problem if we possibly can.
Stephen Williams (Bristol West) (LD)
It is a great pleasure to follow the former Chancellor. We can contrast his thoughtful and authoritative approach with what we heard earlier from the shadow Chancellor, who has just left the Chamber. We are asked to believe that he cries during the “Antiques Roadshow”, but anyone watching our debate would have cried with despair at the pantomime act we were treated to earlier. Before one of the shadow Chancellor’s assistants gets up to tell me how many people in Bristol West receive child tax credits, let me tell the Labour Front-Bench team that people in Bristol West are far too smart to fall for the illusion that an increase of 5.2% in tax credits somehow amounts to a cut.
The state of the public finances has been mentioned several times. Before the coalition Government came to office, the deficit as a proportion of gross domestic product was 11.2%. In our first year of government, it was cut to 9.3%. According to the independent forecast from the Office for Budget Responsibility, the deficit will be 4.5% at the end of this Parliament. We will have effectively halved it over the lifetime of the present Government. The Darling plan, if I may refer to it thus, has been mentioned several times during the debate. I seem to recall that its aim was to do just that—to halve the deficit over the lifetime of this Parliament—so let us not hear too much for the foreseeable future from Opposition Members about cutting too fast and too deep.
The coalition is bringing the deficit under control, which enables us to benefit from international confidence that we can borrow cheaply and service the accumulated debt that already exists in an affordable way. In 2010 our credit rating was similar to those of Italy and Spain, and the fact that it is now so much stronger is due to the decisive action taken by the coalition Government. That improved rating is important not just to the Government’s Debt Management Office—although the billions of pounds that no longer need to be spent on servicing debt interest are now available to fund our priorities, whether they be pensions, education or the health service—but to all our constituents and the businesses that employ them. Historic low interest rates are a monetary stimulus, underpinning domestic confidence and increasing spending and investment.
One of the coalition Government’s key objectives is to make work pay in order to expand employment, and one of the key objectives that the Liberal Democrats have brought to the coalition Government is a progressive increase in the income tax threshold to £10,000 by the end of the current Parliament. That will make work pay for the low-paid in particular, and especially for women with part-time jobs, and it is fundamental to our commitment to fairness during the lifetime of this Government.
Last week, during a debate similar to this, I referred to the recommendations of the High Pay Commission. I was pleased when the Deputy Prime Minister said at the weekend that he hoped that the coalition Government would be able to implement many of those recommendations. We should also tackle tax avoidance in order to make it clear that, as well as rewarding the work done by those with low incomes, the Government are tackling high pay at the top of the income streams in the companies for which they may work.
Economic growth needs to be stimulated. I note that several Members with constituencies in the south-west are present. I am sure that none of us misses the South West regional development agency, but I have no doubt that all of us, especially those representing constituencies in greater Bristol—including the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), who is in the Chamber—will welcome the establishment of a local enterprise partnership covering the greater Bristol area, as well as an enterprise zone in my constituency to create new jobs in new media businesses.
Bristol will benefit from the regional growth fund, from Going Places funds, from the housing market stimulus, and from a new technology innovation centre. A couple of weeks ago, my right hon. Friend the Secretary of State for Business, Innovation and Skills opened the National Composites Centre, near the constituency of my hon. Friend the Minister of State, and we are also to have a university technology college. Those are examples of real actions being taken by the coalition Government to stimulate growth, particularly in new areas of the economy.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
How will regional pay in the public sector help areas of Britain that are lagging behind, such as the south-west and Wales? Surely it will only entrench regional wealth inequalities.
Stephen Williams
That is an interesting point. The Chancellor said in the autumn statement that a study would be carried out so that we could assess the evidence and decide what to do in the future. I do not think that we should form any firm conclusions at this point, but I would point out that regional pay differentials are the norm in the private sector.
Europe has been mentioned a few times today. It is worth our reminding ourselves that the European Union is the world’s largest single market, that it is worth up to £12 trillion—the aggregate value of the EU member states—that it has 500 million consumers, and that 50% of British trade exists with our fellow EU members. At this point it is all the more important for the United Kingdom to play a full and constructive role as a member of the EU, and I know that the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey)—who is present—plays an active role in financial services, energy, digital media and green technology. We want the single market to work in the interests of our country. Now is the time for our country to engage positively in Europe rather than hoping for some loosening of our relationship with the EU, let alone the catastrophic developments that would result from withdrawal.
The coalition Government have ambitious plans. We have restored confidence in our public finances and brought them under control, we have achieved international credibility, and we will stimulate economic growth and make work pay. These are difficult times indeed, but sustainable growth and recovery are on the way.
Mr Roger Godsiff (Birmingham, Hall Green) (Lab)
Ordinary people in my constituency who face massive pressures on their household budgets and look forward to a bleak Christmas are not too concerned about the blame game that is taking place between the parties, but there is a smouldering resentment of the financial sector, including the banks and financial institutions that have plunged the economy into recession, destroyed jobs and ripped people’s lives apart. That resentment is heightened by the fact that those self-same banks and financial institutions are once again acting as they did before they brought the crisis upon us. There are bonuses galore, and veiled threats that if regulations are introduced they will go elsewhere.
It is three years since the financial crisis struck, but it needs to be said again and again that that crisis was not caused by nurses and teachers. It was not caused by public sector workers, or by people working in the private sector. It was not caused by small business men, students or retired people, or indeed by the majority of people working in the financial sector. It was caused by the greed and irresponsibility of a small, self-serving group of people who made the decisions and played the casino, and now everyone else is paying the price.
Between 1992—when the United Kingdom was thankfully forced out of the exchange rate mechanism—and 2007, the British economy grew every year. It grew under the right hon. and learned Member for Rushcliffe (Mr Clarke) when he was Chancellor of the Exchequer, and it grew under subsequent Labour Chancellors. Public sector borrowing was consistently between 2% and 3% of GDP, which was perfectly sustainable. However, in 2008 it shot up to 11% because the financial crisis caused by those I referred to earlier had resulted in a full-blown recession and a collapse in tax revenues, and, furthermore, in the need for the Government to bail out the banking sector. I am sure that my right hon. Friend the Member for Edinburgh South West (Mr Darling), who spoke earlier, referred in his book to an interesting deputation that he received—when Treasury officials informed him that the only way of resolving the crisis was for him to nationalise the banks—and I understand why Mervyn King told the Treasury Committee that he was surprised that there was not more public anger.
However, we must look forward. Britain and the rest of the western world are witnessing the death throes of an ideology that has dominated for 30 years. The Anglo-Saxon neo-liberal market model has failed, and we must consider adopting different models if we are to have a financial services sector that is fit for purpose. We need to be more innovative: we need to try out new ideas rather than adhering to traditional recipes which we have already tried, which have been found wanting, and which have now been totally discredited.
Why, for example, should we not use RBS as a national investment bank—or call it what you will? After all, we own 87% of it. Why should it not be modelled on America’s Small Business Administration, which has supplied 20 million small business men with financial help since its establishment after the second world war, or indeed on Germany’s state development bank, which lent €30 billion to businesses in 2010 alone? Instead of printing money through co-called quantitative easing and giving it to the banks—which do not lend it, but hoard it to rebuild their capital base—why should we not give consumers money vouchers that are time- limited and must be spent on household goods or on, for instance, car scrappage schemes? We should try out some new ideas. The fastest way to stimulate the economy is from the bottom upwards, and no job creation scheme could have a more immediate effect than bringing our high streets alive. All Members know of high streets in their constituencies with boarded-up shops, and where the only new shops are Poundland stores and charity shops.
This is not revolutionary thinking. It has been tried before in America, Japan and China. People are looking for new ideas for the future, and they are prepared to accept radical and innovative policies. They do not want to be lectured by the Government or the Governor of the Bank of England, who can hardly be thought to have had foresight in seeing the recession coming given that he was arguing for increased interest rates right up until the end of 2008 in order to head off inflation, which he said was the biggest threat to the recovery.
We have paid homage to the Bank and financial institutions for too long. We must construct a better financial system that is fit for purpose, and we need to do that sooner rather than later.
Mr Deputy Speaker (Mr Lindsay Hoyle)
A few Members have risen, but I must remind colleagues that if any of them wish to catch my eye, it might help if they stand up. I call Mr Edward Leigh.
Mr Edward Leigh (Gainsborough) (Con)
The hon. Member for Birmingham, Hall Green (Mr Godsiff) suggests that RBS should be made into a national investment bank and that it would then be our saviour. I wonder whether he watched a programme on BBC2 yesterday, which relayed the entire history of how it cost the nation £20 billion. I am not sure it is an entirely good model, therefore.
First, I want to say a few words about what is happening in Europe this week. An express train is coming in our direction in the shape of the putative agreement between the Chancellor of Germany and the President of France. The shadow Chancellor said we should learn the lessons of history. Well, I have been reading about the congress of Vienna, and it is extraordinary how history repeats itself. Our whole national policy in those days—and for 300 years—was to prevent an agglomeration of power on the continent. Indeed, Napoleon created the continental system precisely to exclude us from the continent. That is why we fought so many wars over the centuries.
We are now faced with a worrying situation. If the eurozone creates fiscal and monetary union, we will, of course, voluntarily exclude ourselves from that. However, although we may exclude ourselves from the euro, because of qualified majority voting the eurozone countries will have not just influence but enormous power over our financial institutions. We should be extremely worried about that. Over the next few days the Prime Minister must ensure that we have real protection from what will be going on.
There has been much comment about the EU financial transaction tax. We may be able to refuse to implement it, or be given an opt-out. I certainly hope that that is the case, because the City of London is the global derivatives trading centre. Astonishingly, it accounts for 45% of all global trades in interest-rate derivatives, and this tax could cost us £26 billion. Vague reassurances are not enough.
The ex-head of the Financial Services Authority has recently said that between 80% and 90% of our prudential rule book originates from Europe. In 2010-11, the FSA has listed 29 financial regulations that come from Europe. All this is coming in our direction because the eurozone countries can muster 230 votes, and we will have no way of stopping it. We should be prepared to say no or to demand a treaty reassurance, and if necessary put any proposal to the British people in a referendum.
Turning away from Europe, I want now to talk about our woeful economic situation. It is in the interests of both parties to claim that the deficit reduction programme is tough and is hurting. It is in the interests of the Government because it shows that they are being prudent and implementing austerity measures, and it is in the interests of the Labour party because it is arguing that we are deepening the recession. In fact, however, we are not doing nearly enough to address the problems we face. Some 38% of all our output goes to Government. That is a higher proportion than in the USA, Canada or Australia. Contrary to what we have heard, many EU countries have a lower tax burden than ours.
Mr Andrew Turner (Isle of Wight) (Con)
My hon. Friend has alluded to the situation in Greece. Does he agree that much is borrowed but not accounted for?
Mr Leigh
That is absolutely right. We do not know what is going on in a lot of areas. Many EU countries, including Greece and Spain, tax their economies less than might be thought.
I apologise to Opposition Members for having to say this, but much of the blame lies with the previous Government. They increased Government spending by more than 55% in real terms and, contrary to all the political argument here today, we are cutting that by just 3%. The Government must decide whether they want to be liked or to deliver long-term prosperity and growth. As we have also heard today, we are still borrowing £141 billion every year. The cost of servicing that debt is £43 billion every year, more than we spend on defence. This is a staggering burden. I want to hear more of an intellectual case for smaller government. Big government leads to big waste. Sir Philip Green calculated in his study that £700 million could be saved on the Government telephone bill alone.
People are hit with a double whammy by all this Government spending. Like a black hole, it sucks in enterprise, and it inflates prices and taxes people of all their spare income so they have less to spend on their families and themselves. As a result, the economy deflates.
Governments say in such circumstances that more must be done and propose a fiscal stimulus, usually through public works, but those works are often driven by politics not the marketplace. A better way to deliver stimulus is to cut taxes.
Glyn Davies (Montgomeryshire) (Con)
I have a lot of sympathy with the case my hon. Friend is making, but can he point to any international examples of countries or organisations that recommend going further and more quickly in terms of austerity measures?
Mr Leigh
I can point to successful economies in the world that have the taken the view that the way to get out of the problem of a flatlining economy is to release more money back into the economy through the stimulus of lower taxation. I have referred to one tax that raises little money but acts as a tremendous disincentive to enterprise: the 50% tax rate. I would abolish that, as it achieves very little apart from bearing down on enterprise.
We still have the longest tax code in the world; indeed, it is longer than the tax code in India. The Centre for Policy Studies estimates that the marginal tax rate on poor people is as much as 96%, while the marginal tax rate on higher earners is 57%. There is a greater imperative than ever before for Government to be the facilitator, not the central planner. They can, by all means, deliver some public works, but they must not be fantasy or vanity projects such as high-speed railway lines. Instead, they must be works such as the third runway at Heathrow, which the market is prepared to build for us because the market wants it. By all means, let us have public works, but they must make sense in terms of the marketplace, and let us also have tax cuts. I support the Liberal proposal to take the lower paid out of tax, because that also delivers incentives and cuts the marginal tax rate on the lower paid. I want us to have a much flatter overall tax system, too.
Despite all that we have tried to do, Great Britain ranks as the 72nd country in the world for Government wastefulness, which is lower than Tajikistan and Ethiopia. The House may not accept all my arguments, but I hope Members will accept that an intellectual case must at least be made for a smaller and leaner Government who tax people less and deliver more vitality and entrepreneurship back into the economy. That is the only way we will fight our way out of this recession.
Gordon Banks (Ochil and South Perthshire) (Lab)
I draw the House’s attention to my declared interests.
The Government’s economic plan is not working—if it were, we would not have heard much of what we were subject to in last week’s autumn statement. The Chancellor has choked off recovery and in turn raised unemployment. I acknowledge that the eurozone crisis is having an impact on the economy now, but growth in our economy was choked off well over a year ago.
I want to spend a little time looking at economic growth and the role the construction industry can play. Labour has set out measures designed to create jobs and growth, and many of these would help the construction industry: 25,000 affordable homes, 100,000 jobs for young people and cutting VAT to 5% for home improvements. Having started my own business in 1986, I believe that without a vibrant small business sector, economic recovery is impossible, and without a vibrant construction industry, such recovery is equally impossible. The construction industry is of the private sector, but it needs both a vibrant private and public sector to survive. It is also a cash-consuming industry and as such needs the support of the UK finance industry. It is an industry that can create jobs fairly quickly and can train people in skills that will last them a lifetime. However, in recent years more than 300,000 construction sector jobs have been lost, 63,000 of those in the first three months of this year. Private sector job creation is not keeping up with job losses from the public sector. If it were to do that, the Government would need the construction industry to be significantly more active than it is.
The major banks will not lend enough to the industry. They have seen the sector weakened by Government decisions, and by their actions the banks add further to that decline. The benefits of a strong construction industry are, however, great and should mean one thing: more jobs for Britain, and more jobs for Britain means more tax revenue.
An obvious indicator of a country’s economic well-being is its construction industry. Every business needs this sector in order to expand—whether it is through bigger offices, bigger factories, better high-tech communications, or better road and rail infrastructure. However, let me make this point about infrastructure to both Front-Bench teams: major projects are very important, but I would argue for lower-cost, more local investments throughout the country, as well, as they would have an impact throughout the UK in both their development and post-development stages. Only “shovel-ready” proposals will have an immediate impact on our flatlining economy.
Mr William Bain (Glasgow North East) (Lab)
My hon. Friend will have noted that in Scotland recently, construction output has fallen by 2.3%. What contribution does he think the cut by John Swinney, the Scottish Government’s Finance Minister—a reduction in capital spending that is two and a half times faster than this Chancellor’s—has made to that slump?
Gordon Banks
The Scottish Minister’s decision is responsible for the cuts that could also impact on investment and delivery in the construction industry. The flipside is that if we are prepared to invest in the construction industry, it will deliver; if we cut public spending, it will destroy the industry and with it the economy.
For businesses to grow, they need access to affordable funding. Historically, most small business funding has been generated from our banks, but the Institute for Family Business and the Federation of Small Businesses tell us that, due to the actions of the banks and small businesses’ distrust of them, many such businesses are seeking funding from family members or not seeking it at all. To do the latter damages the business and the economy; to do the former may place limitations on the business, with the same impacts.
However, what is clear is that small and medium-sized enterprises are not at ease with the banking sector. The much-hailed Project Merlin has been a resounding failure. The British Bankers Association has declared that lending targets have been met; however, the FSB and the Federation of Master Builders have other ideas. I have been told of banks meeting their Merlin targets by re-signing existing, unexpired deals. But the truth is, we will never know how much of Merlin is re-signed and regurgitated arrangements. Indeed, this is smoke and mirrors that the Merlin of folklore would be proud of, but I suppose we should not be surprised: the clue is in the name.
I know of financing arrangements that have long been in place being removed with immediate effect, leaving a business in turmoil. Then, the bank returns to the business a few days later with the offer of a term loan that is new business for the bank to write—no doubt adding to the Merlin figures—at increased rates and with arrangement fees, all paid for by the business and with less capital provision for the lender, but leaving the business without any long-term funding in place.
Small businesses in the construction sector have been victimised on two fronts: for being small, and for being in the construction sector, which is deemed toxic by many lenders.
When considering finance, however, we should not forget first-time buyers and the crisis in mortgage lending. In 2007, there were 357,000 first-time buyers in the UK, and as a result the British high street was boosted by some £2.1 billion when these people kitted out their homes. However, today, young people, who are the majority of would-be first-time buyers, are unable to purchase their own home. Now, the average age of a first-time buyer without parental support is 38. With 25 or 30-year mortgages, these first-time buyers could still be paying off their mortgages as they approach their 70s. Surely, pensioners paying mortgages is not something we want to see in Britain in years to come.
In my business, where investment in vehicles can cost up to £130,000 each, and where forklifts and loading shovels cost tens of thousands of pounds, the real driver for investment is the footfall of customers and the profit margin. Both have taken a tumble in recent years, and nothing that I have seen this Government do or promise to do will result in more customers or a rise in profit margins.
Angela Smith
My hon. Friend is making a very strong case against the Government’s economic policy. Does he agree with Will Hutton’s comments in The Observer on Sunday? He said that the Chancellor
“is operating within a framework that permits no vision for how the British economy can be re-energised and reimagined.”
Gordon Banks
I agree with that, and I would add to that the comments of my hon. Friend the Member for Glasgow North East (Mr Bain) in his intervention a moment ago: there is a lack of vision in both Scotland and No. 11.
Falling business opportunities equals reducing margins and cuts to investment and employee numbers, which add further to the decline in the economy. Businesses in my constituency and in the construction sector want to know whether this Government see themselves as a driver for growth, or not.
It is all about priorities. As far as the SMEs in the construction sector are concerned, the comments on the report card, sadly, are not “could do better” but more like “shows no interest in the subject”.
Anne Marie Morris (Newton Abbot) (Con)
The Office for Budget Responsibility has shown clearly that productivity is slowing, and our recovery therefore depends on getting productivity moving forward faster. I suggest that one of the key barriers is over-regulation, which I think is borne out by many of the surveys that the Federation of Small Businesses and the Forum of Private Business have carried out.
The sector of the economy that is perhaps most affected by over-regulation consists of the very smallest of our businesses: the micro-businesses. A micro-business, for the most part, suffers from the same level of regulation but has less resource, by virtue of its size, to deal with it.
So why should we worry about micro-businesses? Because research has indicated that 90% of new jobs after a recession come out of that sector, and because it is in our rural communities that many of those micro-businesses exist. They are critical to the economic viability of our rural communities. We should also be concerned about the existence of micro-businesses in deprived urban communities, where, again, they play a key role in terms of cohesion.
What is a micro-business? The EU defines it as an organisation with fewer than 10 employees, but in fact, 90% of our businesses have fewer than five employees. Therefore, they have very little managerial support and expertise.
The Government have done their level best to help small and medium-sized businesses, and specific provision has been made to help the micro-business. So why do micro-businesses feel unloved and, in the words of one, invisible? Perhaps I may make some suggestions to the Treasury on how we can rectify that and support the sector better. We have given a three-year moratorium on new regulation for our micro-businesses, but the challenge is that they are still subject to existing regulation, a lot of which comes from Europe, and if they have only two or three people in the business, that is a very heavy burden. We need a “keep it simple” system for micros.
On employment, the Government have helpfully provided a national insurance break for start-up businesses. We have also examined the tribunal system and considered a simplified system for smaller businesses, but we must remember that businesses with no employees comprise 70% of all our businesses—or about 3 million businesses altogether—and if we gave those very small businesses national insurance relief, we would go a long way towards solving our unemployment problem.
On finance, I am delighted that we have the new seed enterprise investment scheme, as it will make a big difference. The point I would make to the Treasury is that we need to examine who is going to use that type of support. It will be the fast-growth entrepreneur who is looking for external investment, but what about social enterprises and what about the plumber who is setting up, having just been made redundant? Some of the money that they will be seeking could be offered by their families, but they are excluded from the scheme.
David Rutley (Macclesfield) (Con)
My hon. Friend is a passionate advocate for micro-businesses and I commend her for her extraordinary efforts. Does she agree that it is vital that our micro-businesses are better at articulating the problems they are facing, so that the Government can more effectively strip back the regulation that she and I both want removed?
Anne Marie Morris
I agree with my hon. Friend absolutely, and that brings me nicely to the challenge that we face in getting some of the main schemes to assist with finance. Project Merlin, the enterprise finance guarantee scheme and the regional growth fund have all been aimed at the smaller business. The problem is that in practice, because there is no carve-out and no requirement that any percentage of those schemes goes to our very smallest businesses, these businesses by and large get left out. That is because they are perceived to be invisible, too difficult or too small, or it is perceived that they cannot write a business case or are not after a big enough loan. I hope that when we examine the new credit easing arrangements, we might consider a carve-out specifically for micros.
Even some of our institutions that are supposed to be looking at our small businesses exclude them. I have spoken to officials in UK Trade & Investment, and it appears that a small business of fewer than five employees is, unfortunately, beyond its notice. I have talked to those in the National Apprenticeship Service, which now has a small business unit, and they say that a micro-business with fewer than five employees is, again, outside its remit.
May I suggest to the Treasury that the solution, is, first, that we should properly recognise this group for what they are? Let us define them properly as organisations with four or fewer employees, as is happening around the world, and let us devise a scheme specifically for this group. That is perfectly possible, as the French have come up with such a scheme for their smallest micro-businesses. It provides limited liability, a very simple form of establishing a business, simple accounting procedures and a very simple tax system, and it also provides for very simple sets of regulation, particularly in respect of employment. So something simple for our smallest micro-businesses is just what we need.
In the last minute available to me, I suggest also that, because much of the regulatory burden comes from Europe, there is a case to be made for considering an exclusion for micro-businesses from European regulation. I commend that to the Treasury and the Chancellor, if and when we come to treaty negotiations, as something that might be usefully traded.
Phil Wilson (Sedgefield) (Lab)
I would like to discuss the part of the autumn statement dealing with local public sector pay and the relationship with local labour markets—in other words, regional pay. As a Member of Parliament for the north-east of England, I know that unemployment in the north-east is 11.6%—the highest in the country—the average wage is just over £19,000 a year, and the average house price is £144,000. A 25% deposit on a mortgage will cost £36,000, and to obtain a mortgage for the remaining 75% someone would need an income of £31,000 a year. A house in the rural north-east costs 8.1 times income, whereas in the urban areas of the north-east it averages 7.3 times income. Average incomes in the north-east are 12% below the national average and are the lowest in England. Given those facts, introducing a regional wage structure in the public sector is the wrong thing to do, because it is short-sighted and it belies the facts on regional pay disparities. If the Chancellor were really serious about pay, he would join me, and many of my colleagues in the north-east of England, in calling for a living wage, not a regional wage.
I do not believe that national pay bargaining in the public sector suppresses pay in the private sector. Although regional pay does exist in the way allowances are paid, for example, for people who work in London and the south-east, the main differential is not between regions, but between London and the south-east and the rest of the country. Pay disparity between the regions is about £2,000, according to Incomes Data Services, and there is very little difference in the cost of living between regions. The largest disparity is between the north-east and London, where the cost of living varies by 10%. The Office for National Statistics states that the cost of living in the remaining regions varies by between 1.5% and 2.8%, depending on the goods compared. However, the wages of commuters in the London commuter belt are higher than those of the people living and working in the commuter towns.
The ONS and IDS believe that the only distinct labour market in the UK is in London and the commuter belt area around the city. Is that not another reason for investing in transport infrastructure projects, which will shrink distances between London and the rest of the UK, rather than encouraging a rush to the bottom in pay rates between the public and private sectors, and between regions?
Mrs Jenny Chapman (Darlington) (Lab)
My hon. Friend is making a superb point. I do not know whether he has served on the governing body of a school or on a board of a health trust, but I can tell him that recruiting good, able, ambitious and talented people in the public sector can be a real challenge in the north-east. As someone who lives there, I do not understand why that is, but it seems to be the case. We need to be able to attract those quality people, and enable them to move around the country and pursue their careers as they need to.
Phil Wilson
That is absolutely right. If a regional pay structure went ahead, in whatever variety it may take, it would just exacerbate that situation. The regions would become silos, and people would not be able to move around the country.
It is also a myth that there are major variations in the cost of living around the country. The reason why the variation is less explicit outside London is because major retailers have national pricing policies, and internet shopping is having a similar effect in ensuring that the cost of living is more convergent around the UK than it would otherwise seem to be. In addition, major private sector companies—BT, British Gas, Waterstone’s, First Great Western and Santander, to name but a few—have national pay structures, although they have, for example, allowances for workers in London. When the previous Government examined this issue they came out against regional pay bargaining for the following reasons, which were quoted in a Treasury guidance note in 2003. It said:
“At the extreme, local pay in theory could mean devolved pay…to local bodies. In practice, extremely devolved arrangements are not desirable. There are risks of workers being treated differently for no good reason. There could be dangers of leapfrogging and parts of the public sector competing against each other for the best staff.”
That illustrates the point that has just been made by my hon. Friend the Member for Darlington (Mrs Chapman).
The wage disparities do not arise from an overactive public sector displacing private sector jobs; that cannot be so, given that 700,000 public sector jobs are to be lost in the coming years. I want to see a vibrant private sector, with skilled jobs that are well paid and full time, but to achieve that we need growth.
Angela Smith
Does my hon. Friend believe for a minute that the Government have thought through the complexities of moving to local pay scales, given that it will inevitably involve consultants in establishing exactly where on the new pay scales the public sector employees will belong?
Phil Wilson
My hon. Friend raises an important point. I do not think the Government have thought all these things through; I know they will be looking at them in more detail, but the process seems ideologically led.
One North East was a dynamo for private sector job creation in the north-east. To abolish it was the wrong decision. We need the expertise of the public sector to generate private sector jobs in the area. That is how Hitachi Rail was attracted to Newton Aycliffe in my constituency, creating hundreds of direct private sector jobs and thousands in the supply chain. Hitachi did not come to the north-east because of the public sector, but it did have the help of the public sector. I want more Hitachis coming to the north-east, bringing highly skilled jobs that will deliver good wages. That is how we shall redress wage disparities in the north-east; not by suppressing the wages of a section of the community but by raising the wages of all employees, through investment, training and skills. With that will come good wages, and I call on the Government to promote a living wage, not a regional wage, for the north-east and the rest of the UK.
There is no evidence that regional pay will rebalance the economy. Driving down wages will only exacerbate economic disparities, not resolve them. Driving down relative wage costs and taking money out of the economy is as bad for the private sector in areas such as the north-east as it is for the public sector. That is why I make a special plea, not for the public sector but for all employees in the north-east of England, whatever they do and wherever they work.
Public sector employees face a two-year pay freeze and then two years with only a 1% increase. It has been estimated that between 2010 and 2015 public sector workers will see their incomes decrease by 14%. Average pay in the north-east is just over £19,000. How low do the Government want it to be? The policy is wrong, and I believe it is ideologically led. The answer is a living wage, not a regional wage.
Glyn Davies (Montgomeryshire) (Con)
I shall take a Welsh perspective, and to some extent a constituency perspective. Debt hangover, deficit reduction and the problems facing the eurozone have an impact in Wales, just as they do in the rest of Britain, but some issues are specific to Wales and I want to touch on them.
Much of the management of the Welsh economy is devolved, but not completely; for example, policies on tax rates and international investment are still determined at Westminster. That inevitably means that a close working relationship between the Governments in Cardiff Bay and at Westminster is crucial. Without one, there is the potential for damage. Enterprise zones are an important aspect of the Government’s policy for dealing with the economic problems of England. I do not want to blame anyone, but in Wales they are still incredibly ill defined and the process is slow, so we need a much closer relationship between Ministers in the Assembly Government and Ministers at Westminster.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The hon. Gentleman said that most economic control was devolved to Wales. Would he be as comfortable with a relationship between London and Europe as there is currently between Cardiff and London—with most powers held in Europe and London, despite the economy of Wales being devolved?
Glyn Davies
I thank the hon. Gentleman, although I am not absolutely certain that I picked up his point. Governments and institutions have to work as closely together as possible for the benefit of the people they all serve.
First, inward investment has historically been strong in Wales. Yesterday the Secretary of State for Business, Innovation and Skills told the Welsh Affairs Committee that Wales was doing relatively badly. I think Wales is doing very badly indeed; last year only 3% of inward investment in the UK went to Wales. In the two previous years the proportion was 6%, which is about what one would expect given the population of each country. In the days when Lord Walker was Secretary of State for Wales, it was 20% for two or three years in a row. There was a major focus on Welsh links to the most successful parts of Europe, such as Baden-Württemberg, Stuttgart, Barcelona and Lombardy. There was a strong relationship with Japan, which in those days was aggressively developing its economy throughout the world. A lot of investment was going to Wales, and we need that sort of advantage. When I became a Member of this House I had been a Member of the Welsh Assembly for eight years, and I want the relationship between the two institutions to work as well as possible. On inward investment the working relationship has not been as close as it should be, and we need to change that.
Secondly, I want to touch on cross-border issues, in particular their impact on my constituency of Montgomeryshire. Again, it is a question of making devolution work for the people. There is a real problem in terms of capital investment in Wales. A consequence of the autumn statement is that over the next three years another £216 million will go to Wales for capital projects, but projects on the border will not be considered, because the arrangements following devolution mean that they cannot be. For my constituency and for the whole of mid-Wales, industrial development depends on access to the west midlands market and the motorway network. One of the biggest impediments is the stretch of the border between Welshpool and Shrewsbury. A road project there has high priority for the Welsh Government and would almost certainly have gone ahead, but the total cost is around £30 million, with a significant proportion—about £5 million—over the border in England. Although it has huge priority in Wales it is given almost no priority at all on the English side. That project has been sitting around for ages and is not going ahead, yet it should really be a priority. I could give three or four similar examples.
Owen Smith (Pontypridd) (Lab)
I entirely agree with the point that the hon. Gentleman is making, but would it not have been easier if the Government had chosen not to cut £900 million overall from the Welsh capital budget? Admittedly they gave back £200 million last week, but there is an overall reduction of £700 million in this Parliament.
Glyn Davies
I thank the hon. Gentleman, but he completely ignores my point and is going back to the partisan knockabout that produces absolutely nothing. There is an important point of principle relating to cross-border investment, and all Members of the House and of the National Assembly, not just the Government, should try to focus on the issue so that we have a resolution that benefits the people who actually depend on it.
Thirdly, I want to touch on the impact of proposals for wind farms in mid-Wales. Many of my constituents, and indeed people in neighbouring constituencies, fear that there is an intention, or a desire, to sacrifice mid-Wales on the altar of onshore wind, irrespective of the consequences for the economy. About two decades ago, when I was involved in developing the economy of mid-Wales, strategy was based on the growth of manufacturing industry—what today we might call rebalancing the economy—after the loss of jobs from agriculture and mining over a long period. Over the last 30 or 40 years the percentage of people employed in manufacturing rose from about 7% to about 24%; it was a terrific performance, but between the late-1980s and the mid-1990s there was less concentration on regional development and the figures probably slipped back.
Today the most important developing industry in Wales is probably tourism. People who work in the industry contact me regularly to tell me that onshore wind is the biggest threat to the potential of their business. We cannot ignore that. Planners in mid-Wales are aware of the threat. They are deeply concerned that wind farm applications are being submitted without the necessary information about ecological or environmental impacts. There is almost no transport planning for the 20 or so proposed wind farms, yet planners are under pressure to approve the applications. If they do, they will be sacrificing the economy of mid-Wales. Many of us in the House have concerns about the costs and their impact on the fuel bills of the most vulnerable in society, and we are worried about the impact on British jobs, which will be exported as a result of those costs. From the perspective of my constituency, the economy of mid-Wales will be destroyed at the same time.
Helen Goodman (Bishop Auckland) (Lab)
I am pleased to follow the hon. Member for Montgomeryshire (Glyn Davies). I do not agree with what he said about wind farms, but he made a thoughtful and interesting speech, and I hope that when he listens to what I say about the north-east, he may feel that things in Wales are not quite so bad.
At the weekend I received an e-mail from a constituent which said:
“I wanted to apply for a crisis loan for my heating oil but when I rang up I was told this was not possible … and I would have to apply for a budgeting loan which has a three-week wait … My problem is I am unable to pay by direct debit … I have been unable to save the money from my employment and support allowance as I have been trying to pay my other important bills . . . My dilemma is that my oil will not last much longer and as I suffer from diabetes and had a heart procedure in September my health will suffer as a result of no heating.
What can I do to sort this out?”
The e-mail is interesting not because of what it says about the benefits system, but because of what it reveals about the level of poverty being faced at present in some households, as well as the consequences of the failure to tackle the energy giants adequately.
There are two major themes that I want to pull out of what the Chancellor of the Exchequer announced in his autumn statement—the unfairness and the unintelligence of the proposals that he put to the House. In many cases they are unintelligent because they are unfair. Let us look first at who is bearing the burden of the measures that he announced. We can see from the analysis published by the Institute for Fiscal Studies that it is the poorest who are paying the most. The IFS analysis makes it clear that the measures that the Chancellor of the Exchequer announced will make the bottom 30% worse off and the top 60% better off.
Mr McFadden
My hon. Friend is right in what she says about the Institute for Fiscal Studies estimates. She will also know that the IFS says that by household types, it is families with children who are worst hit. What does she think the Government and the Chancellor have got against families with children?
Helen Goodman
I cannot imagine what the Chancellor has against families with children, but it is obviously a matter of extreme concern not just that the number of children who live in poverty will go up, but that to tackle the problem, the Government are going to redefine poverty. They will find that that is a massive mistake. If they go to an absolute measure, they will not look good against the Labour Government, who reduced the number of children in absolute poverty by 2 million.
Those on £14,500 will lose eight times the share of their income that those on £32,000 will lose. The poorest 10% will lose four times the share of their income that the richest 10% lose. In other words, it is a cynical way of focusing money on so-called marginal voters. The proposals are unfair. They are unintelligent to the point of stupidity, because the propensity to consume is highest among the poorest. Maintaining the incomes of people on low incomes will have the fastest and greatest impact on demand, so even with the same level of borrowing as they propose and the same fiscal stance, the Government could have a bigger bang for their buck. They could have a greater impact on demand and on the growth of the economy, simply by redistributing.
The second dimension on which the autumn statement is both unfair and unintelligent is the regional distribution. The Government are switching £4 billion from current to capital, of which only £4 million—that is, 0.1%—is earmarked for the north-east. That is 25 times less than the £100 million that was lost from my constituency alone when the Building Schools for the Future programme was cut. For example, improvements to the A1, the A19, the A66 and the Tyne tunnel are not going ahead.
The North East chamber of commerce has described this as “hugely disappointing”. The extension of 100% capital allowances till 2017, the new enterprise zone in the port of Blyth and the increase in the regional growth fund are all minuscule in comparison with the impact of the abolition of the regional development agency.
Furthermore, the infrastructure plan is old-fashioned. Only £100 million of the new money is in the communications strategy and that is all concentrated in the cities, whereas the lack of access is in rural areas. Today the Federation of Small Businesses and the National Farmers Union came together to point out that hundreds of thousands of people will be left behind, so where it is most useful and most needed, it will be least available.
In announcing his weakening of the habitats directive, the Chancellor seemed to be scornful of green considerations. After the excuses of snow and royal weddings, it seems to be the butterflies that are the problem, or perhaps it was the seaweed that he was complaining about.
My hon. Friend the Member for Sedgefield (Phil Wilson) pointed out the detrimental impact of regional pay on our regional economy. Lower pay in the north-east is a symptom of our problems. Reducing the pay further will take yet more money out of the demand in the regional economy. To set this in context, my hon. Friend the Member for Easington (Grahame M. Morris) made an excellent speech in Westminster Hall, pointing out that the cuts in incapacity benefit are already taking £170 million out of the regional economy. What may look like a sneeze in the south can cause pneumonia in the north-east.
Damian Collins (Folkestone and Hythe) (Con)
Throughout the debate this afternoon we have been asked to consider that the debt situation that we are in is not as bad as it seems and that we can spend money that we do not have to try and get out of it. That argument lacks any credibility with the money markets.
Damian Collins
The hon. Member for Bishop Auckland (Helen Goodman) is speaking from a sedentary position. I shall come to her remarks, which are pertinent to my constituency, particularly her comments on the habitats regulations and how they impact on the local economy.
Opposition Members have put to one side the seriousness of the debt situation. The other issue that has not been spoken about at all—certainly not by the right hon. Member for Edinburgh South West (Mr Darling) or by the shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls)—is the underlying competitiveness of the economy. When we look at the debt situation and the world economic crisis, which are grave and severe, we should also consider that our economy may not be as fit and competitive and as able to grow the sort of jobs that we will need in the future as we thought it was.
Statistics showing how this country has fallen behind in the competitiveness league tables published by the World Economic Forum are often brushed aside. From being seventh in 1997 when the Conservative party left office, we fell to 13th last year and are 10th now. That means that in 1997 we had the most competitive economy in the European Union. We find ourselves today behind Sweden, Finland, Germany, the Netherlands and Denmark on competitiveness.
On the broader question of infrastructure, which is so important to the competitiveness of our economy, we find that Britain lies in 28th position, according to the latest figures, not rubbing shoulders with France, which is third, or Germany, which is 10th, but instead between Saudi Arabia and the Czech Republic.
Sheila Gilmore
I am fascinated by the comparisons that have been given. Virtually all of the first group of countries that the hon. Gentleman mentioned have a very large public sector and a very comprehensive welfare system. It would appear that they have a competitive economy as well. Perhaps we should be looking more to the Scandinavian model.
Damian Collins
The hon. Lady will be pleased to know that we are also behind Singapore, the United States and Japan, so there are more countries ahead of us than there used to be, and more than there should be. When we consider trying to create jobs in the economy, Opposition Members seem wilfully to ignore the fact that our competitiveness in an increasingly competitive world matters. To them, competitiveness is not worth talking about and is irrelevant to creating jobs. If we are serious about doing what President Clinton has called getting back in the future business—his criticism of the US economy can be applied to the UK economy over the past 10 to 15 years—we must recognise that we have not invested as we should have done to make our economy as competitive as it should be.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
The common denominator in all the European countries to which my hon. Friend the Member for Edinburgh East (Sheila Gilmore) alluded is their manufacturing base, and Germany, Japan and China are of course also manufacturing surplus economies. Britain used to have such an economy, until 1979.
Damian Collins
I am not sure what the hon. Gentleman’s critique is of the party that was in power for 13 years and delivered these statistics. The point I made at the beginning of my speech is that after 18 years of Conservative Government Britain’s competitiveness in Europe was much higher than it is now. I do not know what sort of indictment he finds after 13 years of Labour Government, but it sounds pretty damning to me. The hon. Member for Bishop Auckland talked about the habitats regulations, which I will move on to because it is an important point. She was slightly dismissive, but I do not think that she meant to be.
Damian Collins
She was very dismissive of the significance of the review the Chancellor announced last week on whether the habitats regulations are being used to hamper growth and business development and whether they are being unfairly and unreasonably applied. A particularly pertinent case in my constituency is whether Dungeness nuclear power station in Kent should be allowed on the list of new nuclear power sites, and I have written to the Chancellor to ask him to give it special consideration in the review. There is a huge amount of local support and there are two nuclear power stations there already.
Land was set aside for the creation of a third power station in the 1960s, most of which was disturbed during the building of the first two. The land is within a special protected area next to a Ramsar site that gives special protection not to butterflies, but to vegetation that grows on the shingle banks and to birds. The bird sanctuary was created largely after the building of the existing power stations. The area of development for the new nuclear power station is less than 1% of the protected area, so it would be difficult to claim that building it would damage the integrity of the whole site or destroy the habitats totally. They remain within a large, protected and conserved area and will be protected.
Nevertheless, based on Natural England’s interpretation of the habitats regulations, it was recommended to the Government that a third power station should not be built on the site, and that is the only reason why it cannot be built. It would create thousands of jobs during the construction phase and 500 permanent jobs for its operation. It would be an incredibly important investment, and that is an example of how the interpretation of some of these regulations is impeding growth and investment in our economy. The power station would be built not on a greenfield site in a protected area, but next door to two existing power stations and on land that was set aside for the purpose. I obviously feel strongly about this example because the new power station would help my constituency directly, but it would also be a new energy source in an area of high demand in the south-east of England, close to south-east London.
Another local example is Lydd airport. Extending or building new regional airports is a controversial issue. In my constituency the local council decided some time ago to approve a planning application to expand the airport. There had been a previous public inquiry on that in the 1990s, which had lapsed, so the process has to be gone through again. A private developer who is willing to invest money with the support of the local council, which approved the planning decision, is being put through a costly and lengthy process, wasting hundreds of thousands of pounds, with the prospect of possible judicial review at the end. That is also because of the way the habitats regulations have been interpreted, and during the course of the most recent planning inspector’s inquiry many of the objections were set aside. It is frustrating that these rules and regulations are hampering investment and growth.
Angela Smith
I thought that the hon. Gentleman’s party was going to form the greenest Government ever.
Damian Collins
The hon. Lady seems to think that there is something incompatible between sensible investment in growth that respects environmental regulations and having no jobs or investment at all. I think that that is possible in this area. The contention in my constituency and those of many hon. Members is that the rules are being applied in a way that restricts growth and investment, largely from private investors and operators, where it is really needed, and that is unacceptable.
The regional growth fund is a big help for constituencies, such as mine, where extra support is needed to attract investors to create new jobs. That is certainly something we welcome in east Kent. Another point about infrastructure investment, which I touched on at the beginning of my remarks, is the importance of the Government’s commitment to invest in broadband and improve the extent of mobile phone networks and coverage. I was pleased to hear in the Chancellor’s statement that, thanks to the extra £150 million that has been made available for new masts in rural areas, the coverage target for mobile operators is now 99%, rather than the 95% target in the last Parliament. That is good news for people in rural communities who are excluded from current coverage and something we should welcome. It is an important investment in our infrastructure for the future.
Sammy Wilson (East Antrim) (DUP)
First, I welcome a number of things set out in the autumn statement, such as the increased money for infrastructure that will come to Northern Ireland. It will not make up for the 40% cut in capital spending announced in the Budget, but it will fill some of the gaps. Secondly, I wish the Chancellor well in his battle with the Secretary of State for Energy and Climate Change, and perhaps the Prime Minister, as he takes on the green lobby and seeks to strike a balance in the economy and redress the damage that many green policies are doing to industry.
I will focus on some of the points that have been made on the need for growth. All the problems that have been identified as impeding growth in the UK economy overall are magnified in Northern Ireland. First, there is the heavy dependence on the public sector, which means that public sector spending cuts have a greater impact. Secondly, there is the difficulty businesses have in obtaining finance from banks in an economy that is heavily dependent upon failed Irish banks and where penetration by UK mainland banks is not great. Of course, the problems in the eurozone have been magnified because we live next door to, and are heavily dependent upon, an economy that has been greatly affected by what has happened in the eurozone and the austerity measures that the Irish Government have had to take. Indeed, many more such measures were announced yesterday in the Irish budget.
One of the things the Chancellor has focused on, and rightly so, is the importance of keeping interest rates low, and I do not think that any Member disagrees with that. It has an impact on businesses and mortgages and on those who have taken out loans, so it is correct that we should be following policies that keep interest rates low. However, I do not accept that they have been kept low in the UK only because of his plan A and his austerity measures. Looking at the reasons, one sees that of course economic management and confidence in it is important, but so too is the fact that the Bank of England has been buying up £220 billion-worth of Government bonds as a result of quantitative easing. That has injected confidence that other European countries that have been mentioned today would perhaps not have had because the European Central Bank has not done the same.
Secondly, we also have the flexibility to adjust our exchange rate and so have a way of stimulating some growth, whereas many European countries that are tied to the euro do not have that. Thirdly, even though the Government have admitted that their plan for getting rid of the deficit will not be fulfilled in the set period and that they will have to borrow more than expected, the financial markets have not deserted the UK. In fact, they have remained solid. I believe that one of the reasons for that is that we are not regarded in the way that some of the other European countries are, for the very reasons I have given. If anything, the Government ought to capitalise on that. If the markets are prepared to lend to pay for unemployment, would they not be even more willing to lend to pay for investment in infrastructure that could give growth which, in turn, could provide the ability to pay back the debt we already have? Rather than walking away from borrowing, and from borrowing—perhaps only modestly—to do the things that Members have mentioned today, the Government should capitalise on the reputation that their management and our flexibility outside the eurozone gives the Chancellor when it comes to borrowing money.
There are already signs that the Government know their plan is wrong: they are engaged in quantitative easing, which is a way of stimulating the economy by monetary means; and in the autumn statement they indicated that they were prepared to spend more money on infrastructure. They ought then to look at what they can do and at what borrowing they can undertake not to pay to leave people sitting at home, but to pay to get them into work, growing the economy and generating tax revenues.
The hon. Member for Gainsborough (Mr Leigh) said that he did not want to see the public sector increase, but such borrowing would not have to be for the public sector. Indeed, the hon. Member for Ochil and South Perthshire (Gordon Banks) mentioned VAT cuts for the building industry. That would not increase the size of the public sector; it would stimulate the private sector and grow the economy.
Mr Anderson
In reality, can the two sectors not work together? My hon. Friend the Member for Bishop Auckland (Helen Goodman) mentioned a classic example, Building Schools for the Future, for which we had money earmarked in our constituencies. In my constituency, there was £80 million, and it would have gone not to the public sector but to Gateshead council, which would have passed it straight on to private sector builders to build the schools that we need. Is that not the way we should be working our way out of this crisis?
Sammy Wilson
That is exactly the point that I am trying to make. Borrowing does not necessarily have to mean a bigger, bloated public sector; it can be directed in many other ways that would meet the demands of even some Government Members. In Northern Ireland, tourism is a huge industry, and selective cuts in VAT could stimulate spending there and help the Finance Minister to realise the potential to increase tourist numbers by 3.5 million over the next two years, thereby generating private sector growth and helping us to rebalance the economy.
Things can be done and there is potential. The Government have more flexibility than they accept, and if we are to deal with the social strain, the economic hardship and the impact on businesses we need to see examples of that flexibility in order to get back on to a path to growth and back into a position where we can repay our debts.
Nigel Mills (Amber Valley) (Con)
It is a pleasure to follow the hon. Member for East Antrim (Sammy Wilson). Having recently joined the Northern Ireland Committee, I am becoming more familiar with the issues that he raises and, in particular, with Northern Ireland’s attempts to show that one can compete on tax rates to grow one’s economy. It has the right idea in wanting to match Ireland’s lower corporation tax rate in order to grow the Northern Ireland economy, but I sense that it will not want to match Ireland’s new higher VAT rate in an attempt to grow the economy over there. That is aiming for the best of both worlds.
I welcome the chance to contribute to this important debate on what is the central issue for my constituents. I am sure that every Member who has spoken to constituents and businesses cannot have failed to notice how difficult economic conditions have become, and that is why I welcome in particular the fact that the Chancellor, in his autumn statement last week, did not try to hide the full extent of the difficulty, but set out exactly how difficult things are now and will be for the next few years.
The response was robust, and it should see us maintain the market’s confidence, which is the key to our recovery. I am not aware of any serious commentator who suggests that we should change our plan, and borrow more and spend more than we plan to, when we are running a deficit of more than £120 billion this year already. The shadow Chancellor chose earlier to quote Voltaire, and I have found a second quotation for him:
“Common sense is not so common.”
Some of his speech showed eminently that that is true.
I shall touch on the measures in the autumn statement that are relevant to my constituents and work through those issues that are raised most frequently. People—especially first-time buyers—complain that they cannot get mortgages or, if they can, that the deposit requirements are too high or the cost is too high, so last week we announced measures to make it easier for first-time buyers to get mortgages and thus get the building industry started again. I can think of some building sites where a couple of houses were started on the edge but the rest of the estate was mothballed for a few years, and getting those finished has to be a good thing.
Small businesses have for a long time complained that they cannot get funds out of the banks, and, although all our measures may have helped a little, they certainly have not solved the problem, so the loan guarantee scheme will I hope be a real step forward. Many businesses are struggling to decide whether investment is a great idea in the current climate, but as things start to improve the scheme will be in place and enable them to secure the finance that they need. In the meantime, every small business will welcome the extension of the business rate holiday for a few more months, but it keeps being extended, and at some stage it might be nice to extend it to a distant horizon so that we know where we are.
The worst impact of any economic downturn is on unemployment, and especially on youth unemployment, and the £1 billion of funding that we announced to tackle that will be hugely welcome. As I visit businesses throughout my constituency, I see that some are taking real steps, at their own cost, to employ local young people. I pay tribute especially to David Nieper in Alfreton, a fashion business that has started its own fashion academy, taking students from nearby universities and showing them the entire industry—from designing clothes all the way through to marketing them, selling them and producing brochures—in order to give them that whole-industry experience so that they really are job-ready.
Helen Goodman
I am pleased that the hon. Gentleman congratulates David Nieper, because my sister works in that factory.
Nigel Mills
Well, I am sure that she recognises how great an employer it is—and it is very kind of the hon. Lady to give me an extra minute!
Many other businesses in my constituency have expressed their concern about the impact of rising energy bills, especially given the Government’s climate change policies, which increase those costs. In my constituency, I have another great business, Denby Pottery. I do not know whether the hon. Lady has family working there, too, but it has expressed a real concern that even the welcome help that we announced for energy-intensive industries last week will not assist the ceramics sector, so I urge the Government to keep working on those measures to protect such valuable and historic industries.
Another particularly welcome announcement for me was the announcement of expenditure on infrastructure and road building. New road construction in Amber Valley has been a little neglected, so I urge the Government to look favourably on the bid that I and Amber Valley borough council have championed for the new Ripley-Codnor bypass, which would link the A38 and M1. We are not asking for the full funding, because the council is busy arranging it through developers that can pay for up to half the bypass, but if the whole road were completed it would present a real chance for regeneration and a real chance to attract new business to the area, which is exactly what the Government’s infrastructure funding is trying to do.
I am happy with what the Government have announced. In a difficult situation, they have announced some short-term measures to tackle the worst impacts of economic downturn. Now, we need to look at the long-term strategy and at the measures we need in place to make our economy as competitive as it can be in five or 10 years’ time.
In the final minute of my speech, I shall turn to the reform that we need in our tax system. As my hon. Friend the Member for Chichester (Mr Tyrie), the Chairman of the Treasury Committee suggested, many tax regimes that affect our businesses are unduly complex and out of date, discouraging investment while encouraging strange and perverse behaviour, which is why we have to introduce a huge number of more complex anti-avoidance rules, such as those announced today.
Wholesale simplification would ensure that we had a system which encourages what we do want and make it easier to stop the avoidance behaviour that we rightly wish to tackle—and I think the Government are coming round to that. Last week, they announced that 100% capital allowances will be made available to enterprise zones, and, to all those businesses in my constituency which would like to invest in new machinery and need to do so to remain competitive, we should send the message that we want to provide tax incentives for people to invest in capital equipment at this time. If we need 100% capital allowances for enterprise zones, can we not find a way of being more generous with capital investment throughout the whole country, not just in those zones?
Mr David Anderson (Blaydon) (Lab)
Last week was the week when the bubble burst and the Conservatives had to accept what everybody else knew: that the Chancellor had got it wrong on growth, this year and next; on unemployment, up by half a million next year; on borrowing, going up to £158 billion; on children in poverty, again set to rise; and on hitting women the hardest. The House of Commons Library says that the effect of cuts to tax credits and attacking public sector pay will impact on 73% of the women involved. There is complete humiliation for the Chancellor and even more damage to our economy, but who carries the can for the failure of the system? The old, the young, the jobless, the disabled and the women of this country.
As always, when capitalism fails, it is the most vulnerable who suffer. We should look back to the 1930s. Only a few weeks ago, young people marched to London in a sad echo of the crusades of those who left Jarrow 75 years ago. Those brave souls in 1936 did not march to London for the exercise—they did it because they were starving, jobless, and desperate. Just like today, they were turned away empty-handed and made to carry the can for a mess they did not create.
We all know that history repeated itself in the 1980s, when the country was led in a series of recessions by a neo-liberal Government who saw the deindustrialisation of this nation as a price worth paying. They destroyed not only the coal mining and shipbuilding industries of this country but the manufacturing industry that those industries helped to create and that was making leading, cutting-edge technology for the coal-mining industry. Why did we do that? Because the market demanded that we did it. It said that British coal was too expensive and that we needed cheaper coal to deliver cheap power. The Government’s response was, “That’s okay. It’s a price worth paying.” They were not paying it and their constituents were not paying it; the people in my part of the world were paying it. The outcome was that hundreds and thousands of lives were decimated, local communities withered and died, and support industries died off.
The truth remains that it is the less well-off, the poor, the frail, the poorly educated who lose the most, while those in charge—the ones to blame—get off scot-free. What else can we say when we face a situation where a quarter of our children will be living in poverty, record numbers of people are out of work, and those lucky enough to retain a job face pay freezes, an unprecedented drop in living standards, and a real lack of security, while at the same time Barclays makes a £11.6 billion profit and pays only £113 million in corporation tax, and its poor chief executive is paid only a measly quarter of a million pound salary but, luckily for him, it is topped up with a bonus of £6.5 million?
Mr Bain
My hon. Friend is making a passionate argument, as ever. The Chancellor said earlier that the only people who were calling for an alternative were, in effect, communists. Does my hon. Friend share my sense of disgust at the Chancellor’s slurring the democratically elected Government of Denmark, who are engaged in a stimulus programme and have seen their bond yields fall?
Mr Anderson
I am very clear that the Chancellor is trying to pretend that nobody else in the world wants what we want. The whole world is crying out for a change to a system that has let it down.
The people of this country—the nurses, the doctors, the care workers—are carrying the can for the failure of global capitalism. We now know that 98 of the top 100 FTSE-listed companies are avoiding £20 billion-plus of tax by putting their money into offshore tax havens.
Lorely Burt (Solihull) (LD)
I am very sympathetic to what the hon. Gentleman is saying about high pay and tax evasion; we are trying to do all we can about that. As regards stimulating the economy, what would he say about the situation in America, where that stimulus has been tried and it is now £15 trillion in debt?
Mr Anderson
I will come to what the hon. Lady’s party has had to say and pick up her point then.
It is little wonder that we are in a mess. We are told that even in the City of London—the heart of capitalism—job vacancies have fallen by 16% in a single month. In the past month alone, retail sales have dropped by 1.7% despite huge pre-Christmas discounts. The Engineering Employers Federation says that it expects a drop in its production from 2.2% to 0.9% next year. But do not worry—the Deputy Prime Minister, the leader of the hon. Lady’s party, tells us that he is going to crack down on top corporate pay. Does that mean that he will do what he and his friends in the Conservative party are doing to public sector workers—to nurses, doctors, firefighters and policemen—by putting a two-year pay freeze and a 1% cap on to private sector pay and the fat cats? Of course not. The Deputy Prime Minister tells us:
“I don’t mean the government starts going around setting pay rates in the private sector...I believe that people should be well paid if they succeed.”
Can he tell me where the nurses, the doctors, the firefighters, the police, the home care workers, the child care workers, and millions of others are failing?
Jim McGovern (Dundee West) (Lab)
As everyone is aware, the Prime Minister referred to last week’s day of action as a “damp squib”. I think that it was anything but a damp squib. Does my hon. Friend agree that if the coalition Government stay on the course they are on at the moment, there will be many more squibs and none of them will be damp?
Mr Anderson
I certainly hope that there is no need for any more squibs, damp or otherwise. It was absolutely wrong that people felt forced to go on strike last week, but they felt that they had no option because the Government were clearly not listening; I hope that they are now.
All in this together? What a laugh! Has Bob Diamond really become 5,000% more successful than his predecessor was 30 years ago? Of course not, but his salary is 5,000% more than his predecessor’s was in the early 1980s. The people who are running our public services are asking, “Where is the fairness?” At a time when other people are wandering around with massive pay packets, they are losing their jobs by the bucketful. Last week, in a throwaway line, the Chancellor dropped in the horribly disrespectful term, “headcount”, when he said that the headcount of job losses in the public sector would rise from 400,000 to 710,000. The headcount! These are men and women, flesh and blood—people with kids, with mortgages, with debt, and with holidays, cars and Christmas to pay for, and they face a future with no hope because this Government put the interests of the market before the interests of the people. It is economic madness driven by an ideology that does not care about the impact on real people.
Of course, the Conservatives will argue that this is all necessary. Perhaps we could accept that if it was actually working, but we see now that it is not. This year, in the north-east alone, 32,000 public sector jobs have gone, 1,080 of them at Gateshead council, with another £38 million cuts to come next year. We will have more people on the dole, poorer service delivery and more hardship all round. It is the classic Tory remedy, and we have seen it all before. Mervyn King may well be right—this might be the worst crisis in our history—but, sadly, the Tories are using exactly the same old methods to get out of it.
As my hon. Friend the Member for Birmingham, Hall Green (Mr Godsiff) said, we need a real dialogue that puts the needs of ordinary people first, and not the demands of the market. We need to move away from the appalling situation that we are in yet again, where bankers and people in the money markets are acting like the arsonist who burns your house down and then comes back next week and offers to rebuild it for you and charges you twice the price for doing it. This is a challenge to all parties in this country, including mine. We need to go beyond the narrowness of the past 30 years and look to develop an economic system that ignores the markets and does right for the people of this country.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
It is great to follow such passion from the north-east, but I would say to the hon. Member for Blaydon (Mr Anderson) that the problem is that my electorate remember 13 years when they were promised that there would be an end to boom and bust, and they are still waiting for an answer from his party as to what went wrong.
I want to make a few observations about what is happening in my constituency and generally in the north-west, and perhaps to have the temerity to suggest something to the Treasury, but we will see how I get on with that. The key focus for my area is on growth and how we get through this crisis. My electorate accept that the deficit reduction programme is delivering low interest rates for businesses, mortgage holders and many others, and that is seen as a good thing. They also see what is happening in other countries across the world and recognise that this Government are delivering by keeping us out of the mess that there has been in Ireland and in Greece.
Many hon. Members constantly see the kinds of businesses that I see in the north-west that have the potential for growth and have the orders, but cannot manage to bridge the gap and buy the extra machine or the extra shed that they need to get things moving. That is why I, like my hon. Friend the Member for Amber Valley (Nigel Mills), am behind the Chancellor’s support for infrastructure, the national loan guarantee scheme of £20 billion and the business finance partnership. I was pleased that earlier in Treasury questions, the Chancellor said that he hopes to get that up and running in January. That will be vital for small businesses.
Sammy Wilson
The hon. Gentleman has given a list of reasons why businesses are not investing. Does he also accept that one reason is that businesses lack confidence because they see an economic policy being pursued that will not release the kind of growth that is needed to sell the goods once they have made the investment?
Eric Ollerenshaw
I am grateful for the intervention. I was going to go on to say that some of these things are actually working.
One of the biggest employers in Lancaster, Northern Tissue Group, is halfway down the line of achieving extra support from the regional growth fund. That will lead to extra jobs. Oaktec, a small company that is developing innovative energy recovery from vehicles, has just got a grant from the Technology Strategy Board to take that innovation further. Those are small beginnings, but the innovation is there.
I want to suggest how we can develop that through the local enterprise partnerships and the new enterprise zones that hon. Members have talked about. One problem that my part of the north-west has had with all Governments is that every time they look at the north-west, they look at Greater Manchester or Merseyside. Although I welcome Lord Heseltine’s intervention, or should I say re-intervention, in the north-south divide and his talk of city hubs, which we are all behind, my part of the north-west also has businesses that have potential, as you will understand, Mr Deputy Speaker. With a bit of extra investment, which I hope is coming following the Chancellor’s announcements in the autumn statement, those businesses could provide a good return. I have cited two small examples—Northern Tissue and Oaktec—but there are many other possibilities in the area.
My area also has two universities, Lancaster university and the university of Cumbria, and Lancaster university does a great deal in terms of innovation. My suggestion draws on two developments that we already have. The first is technology innovation centres, which are planned for Warwick, Strathclyde, Bristol, Rotherham and Sedgefield. In 13 years, the Labour Government delivered none of them. At least we are now getting five. Germany has 59 of them. Their mission is to bridge
“the gap between research findings and outputs, and their development into commercial propositions”.
The second development is enterprise zones, the mission of which is
“to support genuinely additional growth and create new businesses and new jobs”.
The original concept envisaged only one zone per local enterprise partnership. Perhaps that idea was developed by some Treasury mandarin who had to calculate the hypothetical loss in taxes due to the hypothetical creation of the new businesses and jobs. As they will be new, I am yet to understand how they can calculate that. Obviously, I am just a simpleton when it comes to the Treasury.
In a nutshell, my suggestion is that we should allow all universities to bid to designate mini-enterprise zones on their campuses. Perhaps not all universities would take that up, but it might fulfil the other Government objective of ensuring that there are more direct outcomes for the economy from universities. It seems to me that there is nothing in the practical definition of an enterprise zone that most universities cannot fulfil.
I suggest that there would be savings to the taxpayer, because universities would not need all the investment that is required for the planned enterprise zones. By their nature, the zones would be incubators for new start-ups that would eventually have to move off campus on reaching a certain size. A mini-enterprise zone on a university campus would therefore create a quicker turnover than the planned enterprise zones. The hypothetical loss in taxes calculated by the Treasury mandarin would therefore be far less, because once a business on a campus got to a certain size, it would feel restricted and would have to move off quicker than those in the planned enterprise zones.
Matthew Hancock
I am interested by my hon. Friend’s proposal. Does he recognise that it is similar in structure to what happened at Stanford in the United States from the 1960s onwards, where the cheap start-up costs for IT firms led to the creation of Google and many other world-beating companies?
Eric Ollerenshaw
I thank my hon. Friend for that intervention. My suggestion is a hybrid scheme for which universities could bid. As part of a technology strategy, the universities could make some money out of the start-up companies through joint ventures with them, which could then be reinvested. I believe that it would cost the taxpayer less in the long run if we just let such zones happen.
To use Lancaster as an example, I can think of two or three innovative businesses on campus that are struggling to find extra funds, but that had to start paying taxes straight away. Just a little bit extra would allow them to move. By the nature of a university campus, the businesses will not be there for ever. By definition, they will have to move on and there will be a swifter turnover.
To put it simply, let 100 university zones bloom. The hon. Member for Blaydon is not in his place, but he would have liked that phrase. There is potential for growth and for new jobs. This could apply to most universities. It would be a simple thing to do, provided that we could get it through the Treasury mandarin.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
I have listened to this debate with interest. My experience is that the problems that my constituents bring forward for me to deal with are a reliable barometer of what is happening in our economy. At present my constituents are getting it tough—very tough. They are not alone. Earlier this month, The Guardian reported that half a million people will be forced off incapacity benefit. Additionally, child poverty, youth unemployment and fuel poverty have increased and are set to rise further. At the same time, fuel and food prices are rising to unprecedented levels.
Angela Smith
I wonder whether my right hon. Friend feels insulted that, given the seriousness of the debate, no Minister could be present on the Front Bench.
Mr Clarke
The Chancellor likes to hear himself, but I do not see him often when others are speaking.
We are entitled to be extremely worried given that over the past three months unemployment has reached its highest level in 17 years. There are now more women unemployed than at any time since 1988. All of this is a consequence of this Government’s austerity measures—and what improvement has there been as a result of the hardship?
Mr Bain
My right hon. Friend has been a champion of equality since being elected to this House in 1982. I wonder whether he has had an opportunity to consider the report issued by the Institute for Fiscal Studies this morning, which says that one of the biggest drivers of the lift in household incomes has been female employment. How does he believe the cuts announced by the Chancellor in the Budget and the autumn statement will contribute to living standards?
Mr Clarke
My hon. Friend, as usual, makes an interesting and relevant point. I hope to return to it later if time allows.
The Office for Budget Responsibility has forecast that growth will now be lower this year, and for every year until 2014. Unemployment will rise next year and be higher than previously forecast in every year until 2015. Consequently, Government borrowing, which we have heard so much about, is set to be £158 billion higher than was planned a year ago.
The coalition Government’s economic policy is simply not working. When Labour left office, the economy was growing. In the past 12 months, only Greece, Portugal and Cyprus have grown more slowly than Britain. That is not just because of the eurozone crisis. The British recovery was choked off more than a year ago. In the 12 months since the Government’s spending review the UK economy has grown, but by a mere 0.5%, while the EU has grown by an average of 1.4%. Their policy has starved us of growth.
Britain needs sensible public sector projects that will stimulate our economy, so that it is less dependent on a downward spiral of destructive cuts. Instead, the OBR forecasts more than 700,000 public sector job losses as a result of Government measures, and for anyone who remains, a ceiling of 1% is being put on pay rises for the two years following the spending review period.
Youth unemployment has exceeded the 1 million mark, and long-term unemployment among 18 to 24-year-olds is up by a shocking 83% since the start of 2011. What do the Government do in the face of that crisis? They scrap the future jobs fund and introduce three-year work placement subsidies, which will mean just over 53,000 funded jobs—a far smaller number than the 105,000 starts provided by the future jobs fund between October 2009 and March 2011. Those new placements are not even guaranteed. No wonder our young people feel cheated by society. That message certainly comes over to me in my constituency.
If we are not careful there will again be a lost generation of young people—just as there was in the ’80s, Mrs Thatcher’s time—which will lead to broken homes, broken relationships, dashed hopes and broken dreams. I would not for one second condone the riots that took place in England earlier this year, particularly as I am asking the House to reflect on what youth unemployment actually means. Indeed, I am pleased that they did not extend to Scotland. However, it would be naive in the extreme to think that we can continue with the figures and statistics that are a reality in Scotland and not expect young people to articulate their views.
We were first warned about these matters as long ago as during the war, when Sir William Beveridge wrote:
“If full employment is not won and kept, no liberties are secure, for to many they will not seem worth while.”
So what about the poor and people with disabilities? Since 2010 jobseeker’s allowance claimants have risen in the most deprived areas of my constituency—I underline the word “deprived”—from 26.3% to 28.1%, against a UK average of 3.9%. We are asking what the Government’s response will be, because that is a real problem. Additionally, Mencap has found that one in two families with a disabled child live in poverty. The Chancellor is playing with the lives of those people. As they teeter on the breadline, tax credits are being cut, Sure Start centres are closing at an alarming rate and the number of people able to claim disability benefit is being cut.
Jim McGovern
My right hon. Friend may be aware that last Friday, a Spanish wind turbine company called Gamesa abandoned its plans to locate in Dundee, my home city. It is a devastating blow for Dundee and means that a prospective 1,800 jobs will not be created. Does he agree that the UK Government and the Chancellor should work more closely with the devolved Administrations to ensure inward investment throughout the UK?
Mr Clarke
My hon. Friend makes an excellent point, with which I agree.
When it was promised that the coalition Government would protect the most vulnerable from the impact of spending cuts, what part of that commitment did the Chancellor not understand? Instead, the situation of those individuals will only worsen as the Government announce yet more and more cuts to make up for a lack of growth. It does not have to be that way. It should not and need not. The Government could change course and adopt Labour’s plans for jobs, to seek to grow the United Kingdom and take us out of debt. Our people deserve no less.
John Stevenson (Carlisle) (Con)
It is a pleasure to have the opportunity to participate in the debate. I appreciate that it is primarily concerned with the state of the economy at present, and I accept the reality that the economy is likely to dominate our debate and politics for the next few years as we concentrate on improving it and trying to achieve some growth. However, as this is a general debate I thought I would take a slightly different approach. In the short time that I have, I wish to consider what sort of economy I would like to see in the next five or 10 years, and what sort of economy we should aspire to.
Members of all parties want a rich and growing economy that provides quality public services and well-paid jobs. That is clearly our ultimate goal. We therefore need to consider matters such as: the balance between the public and private sector; what level of taxes we should have and what those taxes should be; how much regulation there should be and what we should be regulating; what industries the Government should support and encourage; what the relationship should be between central and local government on economic policy; and what policies on education, training and the like will best support a growing economy. Those are all very big issues in their own right, but I shall concentrate on three general themes.
My first theme is the public sector. The critical starting point for me is that government, whether it be national or local, can and should be a vehicle for good. However, the danger of government being a hindrance is all too obvious. It can become too big, acquire too much debt and an oversize deficit that crowds out wealth-creating sectors, and introduce too much regulation, strangling any innovation. Probably worst of all, officialdom and bureaucracy can become all-powerful and interfering. That has happened to some extent over the past few years, and it is this Government’s job to try to reverse it.
It is vital that over the next few years, we start to rebalance things. I accept that the state has an important role to play, but it should be smaller and more efficient. Government should not try to do everything, it should try to do some things extremely well, particularly the things that the private sector cannot do. The state sector needs to raise its productivity levels, and we must always remember that it is not always about the amount of money that is spent, it is also about how we spend it. We need to create a competitive environment within the public sector wherever possible, and most importantly of all we need to encourage clear leadership and quality management, to maximise freedoms in the public sector so that leaders and managers can perform their jobs to the best of their ability and as efficiently as possible. Those overriding concepts can lead to a much more productive and effective public sector providing better services for the people of this country.
We also have the wealth-creating sector, which must also be a vehicle for good, creating jobs and wealth for our country. Our goal should be to create an environment in which the private sector can flourish, with a sensible tax regime and an appropriate regulatory regime. We need consistent Government policy so that business can plan for the future, and we need to ensure that the Government’s finances are stable. That should be their aim.
We need a balanced economy, but at the same time we must recognise that we have certain strengths as a country, for instance our financial sector, and should play to those strengths where appropriate. The key is to ensure that we have a competitive environment and a skilled and educated work force. Wherever possible, we need to ensure that barriers to entry are kept to a minimum. The prime example is the banking sector, in which organisations are too few and too big. Indeed, we could go on and criticise the accountancy world, in which we have four very large firms. Are they also too big and too few? There is work to be done over the next few years in helping our economy rebalance, creating the right environment for business to grow and ensuring that we have a skilled and educated work force and a competitive market for businesses to compete in.
The final key area on which I wish to reflect is how Britain made its fortune in the past, which was through trade. We are a trading nation and a very open economy, but we appear not to have performed as well as we should. We have a deficit of £100 billion in the trade in goods, so there is clearly a problem. Some 50% of our trade is with Europe, and our main trading partner is Ireland. What about the BRIC countries—Brazil, Russia, India and China? Ten years ago they represented 8% of the world’s GDP. It is now 20%, yet we have only £2 billion-worth of trade with Brazil.
Charlie Elphicke
Does my hon. Friend agree that a key Government priority should be to boost trade with BRIC countries so that we can diversify our economic base internationally?
John Stevenson
I completely agree. Growth is not in Europe but elsewhere in the world, and we should try to increase our trade with the BRIC countries. We need to look at those new markets and rediscover our trading instincts.
I accept that our concern is primarily the state of the economy here and now and in the next 12 months. However, we need to remember to raise our eyes above the horizon and think about what kind of economy we aspire to in five or 10 years’ time, and how we will create it.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I shall use the time available to make a couple of points about the economic challenge facing the country, and in particular about the era of the politics of less. All of us must look to achieve our political and economic aims in an era of lower growth than we have been used to in recent years.
The central feature of the autumn statement last week was the further downgrading of economic forecasts for the short term. The Office for Budget Responsibility downgraded its growth forecast for this year from 2.6% to 0.9% and for next year from 2.8% to 0.7%, and said that by 2015 the economy will be 3.5% or £65 billion smaller than previously forecast. The Financial Times has estimated that the gap between the economic growth trajectory had the recession not happened and where we will be in a few years’ time is 14% of GDP. We are therefore entering an era in which our economy is smaller—and by some projections significantly so—than it would otherwise be. Recovery will be weaker than expected, unemployment will be higher and the economy will be smaller for some years to come.
Mr Denis MacShane (Rotherham) (Lab)
Is my right hon. Friend aware that between 1997 and 2010 the British economy grew by 75%—in other words, that it almost doubled? It has now come to a shuddering stop and is going into reverse. Can he think of any previous historical period in the past 200 years, and not only in the 1970s, when a Conservative Government presided over such an astonishing, shrinking, no-growth economy?
Mr McFadden
I agree with my right hon. Friend that the economic times that we are in should make us reassess what we think of as normal.
The human implications have been laid out by the Institute for Fiscal Studies in its analysis of the impact on households. As was mentioned earlier in the debate, the IFS has shown that the distributional impact of the measures is geared so that the greatest losses come in the lowest-income deciles, and that there are particularly harsh effects on families with children. The shadow Chancellor in his opening speech referred to the impact of the tax credit measures on individual constituencies. The most striking figure for me is that the IFS forecasts that between 2009-10 and 2012-13 there will be a 7.4% fall in real median net household income, which is about the same as the largest fall since records began.
Angela Smith
In the context of what my right hon. Friend says, can it be fair that while £1.2 billion in tax credits for low-income families is taken away, only £300 million extra will be required from the bankers?
Mr McFadden
Anyone who looks at the IFS distributional charts would certainly not judge the impact of the Government’s measures as fair.
The background, therefore, is less disposable income, weaker growth, more unemployment and more borrowing. Against that, it is little wonder that there is such low confidence among families and businesses alike.
The question, therefore, is what to do to promote the economic growth that we so urgently need to create jobs. The Chancellor set out a number of measures in the autumn statement—more lending to small businesses, more spending on infrastructure and so on—to try to boost growth. Some of those individual measures are perfectly sensible and should be welcomed. Of course small businesses want more lending, and more capital spending will create jobs, but the real question is whether those measures will contribute to economic growth.
The OBR has already given its verdict. Paragraph 1.14 of its report states:
“We have not made any material adjustments to our economy forecast on the basis of these policy announcements”,
meaning the ones in the autumn statement. Its verdict is that however worthy the individual measures are, they will not make a material difference to the overall picture. Therefore, if growth will not come from consumer spending because the consumer is being squeezed in the way that the IFS has set out, and if it cannot come from Government expenditure because that is contracting, it must come from trade and investment.
The Government should ask what more they can do to encourage business to invest. My contention is that that is not a matter of putting one or two measures suggested by business lobby groups into such statements. Rather, it is a matter of making a sea change in our thinking of how we get growth in these economic times.
I shall focus on one particular issue on which I have spoken before in the House. Although industry welcomes the change announced on R and D tax credits, there is real concern about why the Chancellor is pressing ahead with his plan for a £3 billion-a-year hit on manufacturing industry through his cuts to capital allowances. It is not enough to argue for enhanced capital allowances in enterprise zones when manufacturing in the economy as a whole is putting up with that £3 billion tax hit. How does it help us to generate a low-carbon economy if the Government make investment in the equipment and machinery that will get us there more expensive through their tax policy? Even the excuse that that is a necessary deficit-reduction measure is not available, because the money is not being used to reduce the deficit; it is being recycled in a give-away to businesses in those sectors of the economy that do not invest, including the very banks that will not lend to manufacturing businesses in the first place.
If we really want to rebalance the economy, our manufacturing tax stance should recognise the shortened lifespan of machinery, help businesses to invest, and ensure that British companies have an incentive to invest and that they are not hindered in their efforts to keep ahead of the game. That is made more urgent by the sharp downgrading last week of the forecast for growth over the next couple of years. That shows that the Government need to be more, not less, ambitious in their plans to promote trade and investment.
We have twice heard Government plans that have been billed as plans for growth, yet at each economic statement, growth has fallen, and it is projected to fall further. If we should have learned one thing in the past three or four years, it is that assumptions of snapping back to so-called normal trend rates of growth have been consistently over-optimistic. These are not normal economic times. The downturn has been longer lasting than we feared and hopeful projections of future growth have a habit of retreating into the middle distance.
My contention, therefore, is that the era of the politics of less poses challenges for us all—Government and Opposition. How do we secure economic efficiency and social justice in an era of lower growth and squeezed household incomes? If the Government’s spending is to continue on a downward path for some years, and if households face the kind of squeeze in their incomes set out by the IFS, the circumstances demand an industry policy on a scale and ambition way beyond what we saw in the autumn statement last week. They demand a resolve from the Government, industry and all levels of education to make the rebalancing that we talk about happen, and to put weight behind those areas where Britain can succeed. The situation demands more than a regional growth fund at half the level of spending of the regional development agencies; more than a tiny fraction of the €5 billion-a-year relief for energy-intensive industries that is available in Germany; and tax policies that support the rebalancing effort rather than pull in the opposite direction.
Matthew Hancock (West Suffolk) (Con)
I shall continue directly from what was said by the right hon. Member for Wolverhampton South East (Mr McFadden). Our country faces very difficult economic times, as does the continent of Europe. In recovering from a debt crisis throughout the west, we face difficult challenges. I listened with great interest to the right hon. Gentleman’s speech. It closely followed the line of argument that was put forward by the right hon. Member for South Shields (David Miliband) in a speech last week. The right hon. Member for Wolverhampton South East recognised the scale of the problem and the need to deal with the deficit. Some of his suggestions were sensible; others I would not follow so closely. None the less, he was engaged in the economic argument. People across the country want to see politicians engaging directly in the economic argument about how we deal with the problem that exists now. I am not talking about the forecast that was set out before the credit crunch in 2007 and before the last election. Incomes are 14% smaller than anticipated, which is a serious problem. Most of the blame rests with the previous Administration, so it is absurd to make party point-scoring interventions on this particular issue. This is an important argument with which to engage, which is why I am so disappointed by the arguments that were put forward by the shadow Chancellor and the Labour party; they completely failed to engage in the seriousness of the economic debate.
I should like to tackle three issues that show just how much the Opposition arguments miss the point. I will not dwell on the fact that the Opposition seem to believe that borrowing is in and of itself a good thing and I will not set out any further than has been set out already the chaos of their euro policy—a policy that was changed from the Dispatch Box in response to an intervention. However, I will set out the complete failure of the Opposition on three specific points.
Karl Turner (Kingston upon Hull East) (Lab)
Before the hon. Gentleman moves on to his next point, will he accept that economic growth was choked off well before the eurozone crisis? Government Members were being warned about the situation by many people. They were even warned by me, and I have very little knowledge of the economy.
Matthew Hancock
I certainly accept that growth and the protection of the economy will be difficult because we are escaping from a debt crisis in which we had the biggest boom and the biggest bust. Certainly there are some very important domestic causes of our problems. The massive boom was funded by borrowing—both by the Government and in the banking sector. I also accept that inflation, and especially commodity price inflation, has had a negative impact on the economy as set out by the OBR. Moreover, the Greek crisis broke in the weekend after Labour had lost the election, but before the coalition was formed. The then Chancellor set out that Britain should participate in bail-outs, a position from which this Government have extricated themselves. The euro crisis certainly has had an impact and it broke in May 2010.
My first specific point is that I have not yet had an answer to a question that I have been posing on TV, on the radio and in this House, which is how can spending more money lead to lower borrowing?
Matthew Hancock
Let me set out my point and then I will take the intervention. The conditions under which that can be true are highly specific so as to be utterly extraordinary. The Lafferites on the right argue that in the case of very high marginal personal taxation rates, they can pay for themselves if they are cut, but there is little evidence of that. Margaret Thatcher said that the problem with the Laffer curve is that one does not know where one is on it.
The idea that spending can lead to a Lafferite consequence—that borrowing is lower because of more spending—has absolutely no force in economic evidence or logic.
Sheila Gilmore
It has more force in economic theory. That was precisely the point that was made during the 1930s and subsequently by Keynes. It was said that the time one should be borrowing is during a recession. We should borrow to build houses, create construction jobs and to keep people in work and not, as this Government are doing, to keep people out of work.
Matthew Hancock
I will come on to that point a little later. That is the argument that is put. The question that has to be answered is how can the extra tax that the Government get from employing people exceed the cost of employment when it is the Government who are paying the tax? It does not make sense.
Matthew Hancock
No, I will make the point in another way. If a person borrows money to employ somebody and then claims that they will get back more than the cost of employing that person through tax and lower unemployment benefits, the Government would have to pay more to themselves in tax than they spend in tax. That cannot be true in logic let alone in economics.
Angie Bray (Ealing Central and Acton) (Con)
Is the point not being missed by the hon. Member for Edinburgh East (Sheila Gilmore)? On this Keynesian argument, a person would have had to be saving during the good times, and that is what was missing from the programme of expenditure of the Labour party.
Matthew Hancock
Keynes himself argued that we need to save in the good times or, as JFK on the left put it, we need to fix the roof when the sun is shining. That argument has no foundation in economic theory or experience. I have a second argument that I want to challenge. It was put this morning by the shadow Chancellor in The Times. He said:
“The argument is whether it is better to be borrowing billions more… or whether action now to get our economy moving will get more people into work paying tax and help to get the deficit down in a fairer way.”
I could not agree with him more. It is better to be taking action now to get our economy moving rather than borrowing billions more, which is the policy of the Labour party. Their position, therefore, is illogical. Their argument is that borrowing is going up. However, the shadow Chancellor was forced to admit after an intervention that borrowing is falling; it is lower this year than last year and it was lower last year than the year before under Labour. It is falling in the OBR’s forecast every year. Labour members may smile, but when their argument is inconsistent with the truth, they know that they are on weak territory.
My final argument concerns the idea that low interest rates are a bad idea. The shadow Chancellor holds both that borrowing is good and that higher interest rates would be better because he has said that low interest rates “are a failure”. I put it to all Members in this House to ask their mortgage-holding constituents and their small businesses whether that is the case. The only conclusion I can come to is that the reason they hold this position is purely political so that they can oppose the cuts.
Angela Smith (Penistone and Stocksbridge) (Lab)
Follow that, as they say.
There is no doubt that the economic news of the past few weeks has been appalling. In last Tuesday’s autumn statement, the Chancellor finally admitted what the shadow Chancellor and many economists had been telling him for months—that the massive gamble that he took in June 2010 has failed.
Last week, the Chancellor announced not plan B but plan A-plus. Over this Parliament, the Government will now have to borrow £158 billion more than they said just 18 months ago. That is despite the pain of cuts worth £40 billion imposed on the economy and tax rises imposed on ordinary families up and down the country.
Angela Smith
It absolutely does explain the scale of it. Let us make real-life sense out of some of these figures. They mean that 700,000 public servants had to be cast aside, 300,000 more than the Chancellor said would lose their jobs just a few months ago. Some £1.2 billion has been taken off tax credits while bankers suffer a mere £300 million increase in the take from their pay packets by the Treasury.
Any pretence of fairness and of our all being in this together went out the window last Tuesday. Ordinary families are taking a massive hit: already more people are unemployed than at any time since 1994—the current figure is 2.6 million—and to make matters worse the number of people out of work for more than a year is 868,000, with the long-term rate for 16 to 24-year-olds standing at a staggering 30%.
Mr McFadden
My hon. Friend refers to the cuts in tax credits in the autumn statement. Since they entered office, the Government have made great play of increasing the incentive to work. How does she think that the incentive to work will be affected by cutting tax credits for low-income families?
Angela Smith
It can only have a regressive impact because it will mean that families are less able to provide for their children and to develop the aspirations that are so important in later life.
One in three young people have been unemployed for more than one year and youth unemployment stands at a staggering 1 million, with the figure for those not in education, employment or training standing at a terrifying 1.2 million. The Government are creating another lost generation similar to the one that they created in the 1980s. Clearly, the Chancellor’s policies are hurting the British people, but they are certainly not working. The young in particular are paying a high price for his failures.
There is worse to come as the OBR now states that, at best, the British economy is set to stagnate next year and the year after, with growth broadly remaining flat. Even worse, if the well-respected OECD is correct, the economy will dip again into recession early next year. The British economy has been stagnating for the past 15 years, and the growth and jobs crisis has its roots firmly planted at No. 10 and No. 11 Downing street. Real incomes are being squeezed like never before, with high inflation and rocketing fuel bills not helped by the Government’s decision to increase VAT in January.
Last week’s statement gave hard-pressed families two more years of austerity, with real median incomes set to fall by 7.8% according to the Institute for Fiscal Studies. That means that real median household incomes will be no higher in 2015-16 than they were in 2002-03 and that we will have suffered the longest period of austerity since the second world war.
The Government inherited an economy that was fragile but nevertheless in growth, yet they gambled that recovery on the basis of tired ideas that have been tried before and found wanting. The right-wing prescription failed in the ’30s and is failing again now, with the consequence that the economy could dive into a double-dip recession. The level of unemployment in Yorkshire is almost twice what it is in the south-east and is growing at twice the rate. It is entirely possible that Yorkshire is already in recession.
The autumn statement did not announce any new resources to be injected into the economy—all it announced was a moving around of the money. It will be families with children who will pay for the back to the future jobs fund—the youth contract—through the £1 billion cut to the child element of family tax credits. If this country is not to face a lost decade, or even worse, we need a strategy for growth, and we need it now. The stakes are high and we urgently need to get people back to work before another generation has to pay the same price as mine for an ideologically driven Government who refuse to learn the lessons of history.
In particular, we need as a starting point Labour’s five-point plan, which would reverse the damaging rise in VAT temporarily and give a one-year national insurance tax break for every small firm that takes on extra workers. And crucially, it would bring forward long-term investment projects for schools, roads and transport to get people back to work. What we do not need is what has been recently proposed: a shopping list of projects here and there paid for by redistributed money. Instead, we need a rigorous, strategically driven investment regime designed to drive long-term economic growth.
In the medium and long term, we need a better economic way forward. On that point, I echo the points made by my hon. Friends. The Thatcher-Reagan consensus is crumbling before our eyes. Will Hutton put it even more starkly in a recent article when he said that
“we are about to experience economic, social and political tectonic plates on the move”.
We desperately need to develop an alternative economic paradigm, which means changing the way our capitalist structures work. We need to go back to making things and to give manufacturing a much bigger role in our economy. We need a capitalism that looks to the long term, not just to short-term profits, and we need a society where reward and risk are shared and where it is understood that the state has a role to play in pioneering and driving strategic investment. And we need to invest in innovation
The Government’s strategy of cutting and hoping that growth will magically reappear is not working now and did not work in the past. The Government are bankrupt of ideas for our future and lack the imagination and the bravery needed to take our country forward to its next phase. These extraordinary days require extraordinary solutions, but the fear is that it could soon be too late for many millions of British families who are paying the price for this out-of-touch, ideologically driven Government who seem determined to follow their chosen course no matter what damage it does to the British economy and to families in this country.
Richard Fuller (Bedford) (Con)
I listened with great interest to the comments of the hon. Member for Penistone and Stocksbridge (Angela Smith), who spoke eloquently about the short-term pain that many families in her constituency and, I am sure, in mine are going through in these difficult economic circumstances. She also rightly pointed to the need for the Government to think about the long term. I hope that she will listen to my observations in the same spirit.
Under the previous Government, the United Kingdom became the most indebted major economy on earth. That was not the fault of the bankers alone, of Government borrowing alone or of companies alone; it was the fault of us all, although led by a Government who were at best asleep at the wheel and at worst systematically undermining our long-term finances for short-term political gain. These problems are so endemic that they cannot possibly be put right in one year, in one term or by one policy.
The absolute core policy that a massively indebted nation must pursue is the maintenance of low interest rates for as long as possible. The McKinsey Global Institute study on debt and deleveraging shows that the UK led the pack of the world’s largest economies in terms of its debt-to-GDP ratio and became increasingly more indebted from the mid-’90s and, in particular, from 2003. From 2000 to 2010, domestic, public and private debt as a percentage of our GDP rose by 182 percentage points to nearly 500% of GDP, making the UK the most indebted of all major economies—even more so than Japan at the end of the period.
Mr MacShane
In the 1930s, interest rates were close to zero, as they were in Japan in the 1990s. Arguably, that increases indebtedness because if people can borrow massively without having to pay serious interest rates, they might run up debts. I am just gently saying that the idea that one factor can explain the problem and that we should focus on that is wrong. We need a holistic approach.
Richard Fuller
The right hon. Gentleman makes a helpful point. It is precisely my point, although unfortunately the shadow Chancellor missed it when he seemed to think that the responsibility of the Government towards debt management was to do with Government debt alone. It is not. The responsibility of the Government is to look at the whole economy. The debt of a nation, whether taken on by the Government, households or companies, has to be repaid by the nation. That is what got so out of control over the past 10 years.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I assume that in his figures for debt, the hon. Gentleman is talking about secured debt as well as unsecured debt. Did he read the article in the Financial Times about three weeks ago demonstrating that the level of unsecured debt under the Labour Government actually lagged behind economic growth, which means that our boom was not led by unsustainable borrowing?
Richard Fuller
I thank the hon. Gentleman for his intervention. He makes one correct point but draws a false conclusion. It may well be true that unsecured debt did not rise as rapidly as secured household debt under the last, Labour Government, but it is absolutely not true that the last, Labour Government did not preside over one of the most massive increases in debt of any nation on earth.
In response to the right hon. Member for Rotherham (Mr MacShane), let me make four points. The first is about the potentially crushing impact of household mortgage debt. Let us compare a household deciding whether to purchase a house with a mortgage in 1997 with one making that decision in 2007, looking at the loan-to-value ratio and average house prices in those two periods, and ask how much money the average household will lose over the next 25 years because house prices were allowed to rise so much. The answer is that the average household will have £250,000 less to spend—it will be a quarter of a million pounds worse off—in the next 25 years precisely because the last, Labour Government thought that they were creating wealth by making average house prices escalate way out of the range of the average family.
As a Government we need to look at building more houses and regulating mortgage lending to maintain sustainable norms. We need to look—as we are—at simplifying planning controls and removing obstacles standing in the way of house building. At some stage we also need to analyse the impact of the reintroduction of mortgage interest tax relief, should interest rates rise precipitously.
Matthew Hancock
Should we not also consider regulating the overall debt in the economy, as was done until 1997, but then stopped?
Richard Fuller
My hon. Friend makes a good point; indeed, that is also an idea that we should consider.
The other thing that we are leaving the next generation that we need to consider is our pensions liabilities and how to resolve them. The happily titled “Project Armageddon” report from Tullet Prebon shows that the public sector pensions liability is £1.18 trillion, which is almost the same as the published, or “treaty”, Government debt of £1.11 trillion. I do not particularly want to dwell on public sector pensions, but this raises in my mind the way in which we have structured our pensions liabilities—that is, the pay-as-you-go nature of the basic pension scheme—such that we expect the next generation to pay for them rather than paying ourselves. Given that this generation will pass on such significant debts to the next generation in other ways, I have been considering various ways to change how we fund our pensions in this period.
In 2006 the Australian Government established the future fund, with 18 billion Australian dollars of seed capital. The goal was to invest in long-term infrastructure projects with a commercial return in order fully to fund the pension liability of public servants—that is, to move from a pay-as-you-go approach to an essentially self-funding system for public sector pensions. In the autumn statement my right hon. Friend the Chancellor talked about £21 billion of credit easing, which he will put through the banks via the national loan guarantee scheme. Let me suggest to the Minister that instead of putting that £21 billion of credit easing through the banks, perhaps we should create a UK version of the Australian future fund, essentially moving a portion of our pensions liability into what might be termed a hypothecated fund for that purpose. That is one thing that the Government could do that would significantly benefit the future generations that will have to pay off the debts racked up over the past 15 years.
Let me make two observations about job creation. There is nothing worse than people not having work to do when they are seeking it—hon. Members on both sides of the House think that is true. I am very pleased that the Chancellor has said that he will ask the independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets. That would be a far more effective way of addressing wage-price rigidities than calls to scrap the minimum wage or other such measures. It is an issue—I listened to a speech by an Opposition Member about this earlier—that in certain parts in the north of our country, the public sector premium over private sector pay is 20%, whereas in other parts it is much lower, at 4%. In those areas the private sector should not be priced out of the market getting people to work for it because public sector pay is set significantly higher.
In closing, let me also gently suggest to the Minister that, with national insurance contributions at 13.8%, we have a significant tax on jobs. As we look to implement our policy to take the lowest paid out of tax, may I ask him perhaps to consider the national insurance tax on jobs too?
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I will resist the temptation to answer the points made by the previous speaker, the hon. Member for Bedford (Richard Fuller).
The autumn statement last week was the most astonishing litany of failure. The shadow Chancellor described the Chancellor’s view as Panglossian; I myself thought it was more like something from “Alice in Wonderland”. I just cannot see how the situation that the Chancellor inherited 18 months ago—a growing economy, and inflation, unemployment and our debt dropping—was so bad that it had to be destroyed and a set of policies put in place that have done the reverse. Now the Chancellor stands there and says, “This is what is needed. This is what the rest of the world admires and praises us for.” Quite frankly, that bears no resemblance to reality whatever. I cast my mind back to 1997, when the former Prime Minister, then the Chancellor, resisted the temptation when he came into power to overturn everything that the previous Government had done. He kept within the previous Government’s public spending limits for two years, laying the fiscal foundation for 10 years of prosperity. Perhaps the current Chancellor should eat humble pie and look at his example.
When the Chancellor announced his policies, I tried to pick from them the rationale for why they might work. As far as I could see, they were predicated on two assumptions. The first was that we would export our way out of trouble, the second that we would invest domestically to grow the private sector so that it could take the unemployment arising from the public sector. He did not really take into account the fact that in many regions the private sector is dependent on the public sector; indeed, the main thrust behind the surge in our manufacturing exports was because of the weaker pound and the sustained high demand in Europe. At the same time, he failed to co-ordinate the rest of the departmental policies to sustain that. He removed the regional development agencies. He also failed to deal with the banks and enable them to borrow to companies so that they could export, which meant that those companies immediately ran into capacity problems.
Then, of course, the squeeze hit, and confidence—not helped by the apocalyptic economic rhetoric that the Chancellor used to justify his policies—fell, reducing demand from companies to invest more. Now we face the problem of a difficult credit situation from the banking sector alongside low confidence, which means that people do not have the incentive to apply for loans. When I look at the measures in the autumn Budget, I fail to see how that would be addressed.
The Chancellor has introduced a whole set of supply-side measures that are in themselves a recognition of the mistakes he made when he first took office. I refer to things like the bank loan guarantees, which are just an extension of Labour’s enterprise finance guarantee scheme. Then there are the infrastructure commitments, the regional growth fund, which is a poor alternative to the regional development agencies, and the youth jobs measures. These are basically repackaged measures, which the Chancellor claimed when Labour delivered them were one reason why we had this record deficit.
The problem is that the Chancellor is funding these measures out of cuts in current expenditure. We have long-term infrastructure projects, which do not have a short pay-off period; we have credit easing, which is borrowing by another name, and neither bankers nor businesses know how it will work—it will not work unless people feel they can sell the products that come from the extra investment; and we have RGF funding, which is glacial in its progress in tackling unemployment. I have asked the Minister several times how many jobs have been created nearly a year after its first implementation, but he cannot even give me a figure.
What we have at this moment is a set of long-term supply-side projects, which are not in themselves bad—I would support them—but they are funded out of short-term current expenditure at a time when we have the worst possible squeeze on personal expenditure. The real danger is that our capacity to grow in the future will be impaired by the present squeeze because many companies will either shed skilled workers in the meantime or will go under. When we get into a position to grow out, we will not have the capacity to do so. The Office for Budget Responsibility has drawn attention to that very point.
Charlie Elphicke (Dover) (Con)
I am pleased to be the first to welcome you to the Chair, Madam Deputy Speaker. I want to make a few remarks about economic impacts on the households and families that find it the hardest to make ends meet. Some call them the strivers; some call them hard-pressed families; I have even heard them talked about as alarm-clock Britons. Many families with children find it very hard to make ends meet, so it is worth underlining the strong action that the Government have taken to help people in that position.
First and most important of all is keeping interest rates low. I noted with interest the intervention of the shadow Chancellor on the Chancellor to point out, “Well, there is a liquidity trap; interest rates are too low; it is a bad sign; we need higher interest rates.” I think that that will ring very poorly with Britain as a whole. For people who are striving and finding it hard to make ends meet, having to pay higher mortgage interest is not in their interest. The shadow Chancellor and the Labour party are wrong if they are entertaining a policy that is about raising interest rates. That was my understanding of the drift of the shadow Chancellor’s speech. I regret it; I do not think it is the right thing to do. Let us bear in mind that a 1% hike in interest rates would mean £10 billion more in interest payments—about £1,000 extra on the average mortgage. People are finding it hard to make ends meet because of rising global commodity prices and the current difficult situation. Higher mortgage interest rates would be a massively retrograde step. One of this Government’s most important achievements has been to keep interest rates low by providing stability, clarity and a positive deficit reduction plan to get our finances in order. That is helping millions of families up and down the country and millions of businesses with lower interest rates are far better off than they would be otherwise.
The other really important thing is the help the Government are providing with child care. For a long time it has been difficult, particularly in deprived communities like parts of Dover and Deal in my constituency, for joint working parents to juggle child care. The announcement to help those deprived areas with extra help for child care places was one of the most important in the autumn statement.
Sheila Gilmore
At the same time the Government reduced the amount of child care tax credit last year, so far from helping working families, that did exactly the opposite. These provisions for nursery care, though important, are not really a substitute for the kind of costs people face if they want to work.
Charlie Elphicke
I thought that child care tax credits had been protected. Indeed, I believe they are going up £135 next year, so I am not sure that the hon. Lady has that right.
Sheila Gilmore
Like others who have spoken today, the hon. Gentleman is confusing several different issues. The purpose of child care tax credits is to pay the cost of child care. The Government reduced the proportion of the cost that was paid from 80% to 70%. Child tax credits are a completely different entity, and yes, they are being increased. Earlier, the hon. Member for Bristol West (Stephen Williams) suggested that tax credits had not been frozen, but they have been, and that is another hit suffered by working families. It would help if Government Members understood more about the benefit and tax credit system.
Charlie Elphicke
As the hon. Lady well knows, she and I debated the issue at length during the Committee stage of the Welfare Reform Bill. I know that Opposition Members sneer at this, but I think it important that child tax credits are rising by £135 next year. That is a move in the right direction. It is good that the lowest paid in the public sector are being protected from the pay freeze because they are disproportionately women, just as it is good that 1 million people are being taken out of the income tax system because they are disproportionately women. We need more action of that kind. The hon. Lady’s party had 13 years in which to take such action, but, as we know, child poverty sky-rocketed during the last Parliament. At least this Government are trying to take positive action in difficult times.
Hard-working families need to see stable finances, a stable Government and a stable fiscal position, because that is the only way in which we will bring back real growth. If we had continued to pursue the policies of the past, what would have happened to our country? We would have ended up as a basket case, like Greece, Italy, Portugal and Ireland. However, we had a credible plan, and we took firm action to control the deficit and sort out our national finances. We have made tough decisions that hit the least well-off, but also the most well-off. We are all in it together. Everyone is sharing the pain, more or less equally, and I think that that is the right direction of travel for the Government.
Members on the rowdy Opposition Back Bench may not agree with what I am saying, but the figures make it clear to me that we are working to create fairness. For instance, unlike the Opposition, we want to create fairness for motorists. By the end of next year, those who experienced such difficulty as a result of Labour’s fuel duty escalator will save £144 on the cost of filling up the average car by the end of next year. That is an important example of progress. The apprenticeship scheme has also been a real help to our young people after youth unemployment rocketed, particularly under the last Labour Government. [Interruption.]
Madam Deputy Speaker (Dawn Primarolo)
Order. Members do not have to agree with what is being said, but they do have to listen to it, and not continually interrupt.
Charlie Elphicke
Thank you, Madam Deputy Speaker.
In the last Parliament, youth unemployment in the shadow Chancellor’s constituency rose by approaching 150%, whereas in the current Parliament the rise has been much lower. We are having to try to turn around the supertanker to return to our young people the futures that were so disappointingly taken from them by the last Government. We need to look after the younger generation, and allow them hope for a better future.
Let me end by saying a little about what the Government are doing for east Kent. The South East England Development Agency spent £20 million on a business park project and created tarmac, but no buildings and no business park. Money was too often wasted. Now we have a local enterprise partnership that has already created an enterprise zone, which is important to a community that experienced difficulties after Pfizer decided to run down its research in the United Kingdom. That is real progress.
Our area has benefited from massive activism. The fast train service to Deal and Sandwich will help to improve the economic situation, as will the £40 million regional growth fund. I also welcome the £180 million catalyst fund that the Prime Minister announced the other day. Such things are very important. We have seen more economic activism in east Kent in the last year than we have seen in the last decade.
If we can establish the people’s port in Dover, it will give the community a sense of ownership, place and control of their destiny which will have an important impact on their confidence in us. East Kent is so often at the end of the line, a poor relation of the rest of Kent. I hope we can establish the people’s port project, and make it work so that it is a great showcase. If we make it a success, we will be able to hand back confidence and the idea of building a future, and thereby regenerate Dover, making it every bit as good as it can be so that it is once again a jewel in the crown of the nation.
Looking across the piece at what we are doing both nationally and locally in Dover and Deal, we can see that the Government have the right policies at the right time. They are making the difficult decisions that will pay off for us over the next decade or so.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
The plan of the Prime Minister and the Chancellor had been fiscal austerity coupled with an evacuation from the public sector, and it was initially assumed that that plan would by itself provide private sector growth. The plan has clearly failed because of its flawed logic and odd priorities. Under that flawed logic, more spending was planned for Post Office mutualisation than the original English regional growth fund.
Forecast growth has consistently been downgraded, while borrowing has been consistently revised upwards, from £46 billion extra to more than £158 billion extra and rising. While deficit reduction is highlighted by the Prime Minister, private sector growth was assumed, reliant upon foreign consumption at a time of international downturn in all consumption. That international downturn is nowhere more evident than in the eurozone, which the Government are at pains to attack politically at a time when the eurozone needs political union more than ever in order to provide fiscal credibility. Counter-intuitively, however, the Government undermine the required confidence, and in so doing only succeed in bad-mouthing the very export markets we so desperately need to retain in the interim until new market partners are developed.
Not until last week’s autumn statement did we hear an acceptance by the Chancellor that private sector investment requires confidence and a reduction in risk via the injection of public investment. That is either achieved directly by underwriting projects or, as we have seen, by off-balance-sheet lending on an unprecedented scale. That lending is, of course, premised upon Britain’s own position in respect of a now highly likely eurozone bank failure if no political union is established to reinforce fiscal union. The consequences of that will be extraordinarily grave for our financial institutions, given the potential for contagion. What is even more troubling is that the Office for Budget Responsibility believes the effect of the autumn statement’s attempt to rectify this situation is negligible.
The Chancellor will also be aware that the Bank of England has purchased 42% of gilt issuance, owning 30% of total gilt stock. Britain’s interest rates have been made lower as a result. That has been achieved by the independent Bank of England’s purchasing policy, not because of the Chancellor’s fiscal measures. It is interesting to note that this self-given “safe haven status” by the Chancellor has not led to increased international market ownership of British gilts. Indeed, international market ownership of gilts has not changed from 2008 levels.
Quantitative easing is also a reason for that. When the independent Bank of England buys gilts from banks and pension funds, some of the money is re-channelled into the sterling corporate bond market. That is great for the City, sterling and London property investment, but as yet there has been no trickle-down for regional small and medium-sized enterprises or regional high streets despite the much-hailed Project Merlin.
What have been the consequences of the Government’s counter-intuitive policy for manufacturing and industry? I should state that the Government’s aim to address our deteriorating balance of trade in order to create the surpluses we need is admirable. However, our balance of trade has deteriorated in the last 18 months under the Prime Minister’s and Chancellor’s watch. Last month’s Markit and Chartered Institute of Purchasing and Supply index slumped to 47.6, the lowest level since June 2009. Any figure below 50 is usually an early indicator of contraction.
In the EEF’s last quarterly survey of more than 450 manufacturers the growth forecast for 2012 has been cut to 0.9% from 2.5%, a figure it predicted only a few months ago. There is obviously a contraction, and a contraction that prefigures the eurozone crisis. This contraction undermines the Government’s valid ambition to pursue export-led manufacturing growth. There is no manufacturing growth, and also an interim skills mismatch as any private sector manufacturing roles are being supplied with surplus labour from mass public sector redundancies and retail redundancies. In the 1980s there was the cultural phenomenon of mass long-term male unemployment due to a politicised attack upon unionised, largely male, manufacturing sites, and we now face the proposition of mass female unemployment as the public sector and retail sector shed employees, again in the public sector’s case due to a largely anti-trade union, dogmatic narrative mirroring the diatribes from the Conservatives in the 1980s.
Nic Dakin (Scunthorpe) (Lab)
My hon. Friend is giving a powerful analysis of the situation the country faces. Does he agree that we desperately need demand in the economy from somewhere, whereas what he is describing is a situation of contraction, rather than demand to fuel economic growth?
Tom Blenkinsop
My hon. Friend will know the consequences of the policies so far. We have seen massive job haemorrhages at Scunthorpe steelworks, and there was the recent announcement about Llanwern, where nearly 200 steelworkers face unemployment as a result of the mothballing of that site. Another site in Scunthorpe, next door to the steelworks, has decided to move to a short-time working agreement. Those are the consequences of these economic policies.
Culturally and economically, these policies are counter-intuitive to the needs of the economy. We need not just to rebalance the economy per se, but to rebalance structural unemployment, which requires as large an investment as that proposed for the infrastructure. For example, in the steel industry, becoming a waterman—probably the most important job on a blast furnace, involving as it does ensuring that water does not mix with molten steel—requires a minimum of two years’ training. That is a considerable cost for the industry.
Unemployment is predicted to pass 9% next year, according to the “optimistic” estimate of the Office for Budget Responsibility—and at what cost to the Exchequer? Such estimates actually predate the autumn statement, which increased public sector unemployment by 200,000—from 500,000 to more than 710,000. My major concern, as the son of a British expatriate family that sought a future in Qatar during the early 1980s, when the previous Tory Government ratcheted up unemployment on Teesside, is another diaspora of British skilled manufacturing labour moving to other, far-flung nations. The promise of warmer climes and job certainty will be hard to resist for many, especially as a recent Experian study for BBC’s “Newsnight” showed that Redcar and Cleveland, and Middlesbrough are among the top three areas hardest hit by the Chancellor’s autumn statement.
It is not just the public sector cuts. The proximity of the north-east, which has no regional development agency, to Scotland is having severe consequences for our regional economy, as Scotland, which has its own RDA, is absorbing that manufacturing.
Women are losing their jobs at twice the rate that men are, and the Chancellor’s decision to freeze the working tax credit will hit women hard, especially working single mothers. That move, coupled with his decision to claw back money that would have been spent on the child tax credit, will have a significant impact on the well-being of the 36% of single mothers who claim working tax credit, and their families. What will happen to their incentive to work?
Tom Blenkinsop
I thank my hon. Friend for that lovely intervention; it is an early Christmas present, in many ways.
What will be the consequences in benefit payouts to the Exchequer? The OBR tells us that by 2017, we can expect to have lost 710,000 public sector jobs. With 40% of women working in the public sector, making up 65% of the public sector work force, it is not unreasonable to assume that they will bear the brunt of these cuts, which could have potentially disastrous effects on the unemployment rate for women, with private sector growth not providing enough employment to compensate for these job losses.
Currently, 2,133 out of 6,622 Care to Learn claimants are aged 19 or over, including seven claimants each in the boroughs of Middlesbrough, and Redcar and Cleveland. As if young women in further education were not already facing massive financial challenges due to the education maintenance allowance being scrapped, I hear that the Government have recently consulted on the future of Care to Learn funding. These are the social consequences of counter-intuitive economic policies, which only beget further social consequences, further fiscal strain and spiralling social breakdown, without addressing any of the necessary economic rebalancing requirements.
David Rutley (Macclesfield) (Con)
It is an honour to follow the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), a member of the “rowdy” Bench, perhaps better known as Snow White and what were four grumpy Members.
In the current economic climate rebalancing the economy is a critical task, and I am pleased that the Government are taking urgent action in this direction. We need to create the conditions in which sectors vital to the nation’s growth have the best possible chance of success. Yesterday’s launch of the UK’s strategy for life sciences was an important step in improving the competitiveness of life sciences and pharmaceuticals, which are vital to the UK and to the local economy in Macclesfield, where AstraZeneca employs some 2,000 people. Across the country, those sectors employ about 160,000 people and have a combined turnover of roughly £50 billion.
The launch set out important positive policies for the life sciences sector: it will create new research partnerships with companies such as AstraZeneca to cut the time between the development of new treatments and their application; it will introduce a £180 million catalyst fund for the most promising medical treatments; it will reduce the time for the first recruitment of patients for clinical trials to 70 days from a staggering 600 days; it will ensure that medicines approved by the National Institute for Health and Clinical Excellence are automatically approved for use in hospitals; and it will establish an early access scheme that will allow thousands of seriously ill patients to get access to cutting-edge drugs up to a year earlier than they can now. Those steps will not only help to reaffirm the competitiveness of the UK’s life sciences industry, but will encourage major pharmaceutical businesses to stay based in the UK and materially help to rebalance the economy. But the approach goes further, because it will enable patients who have simply been waiting for far too long for new medicines to get them earlier. The Government are absolutely right to tackle that unacceptable situation.
Our approach is not just about rebalancing the economy, because we need to rebalance our skills set too. There has never been a more important time to prepare a generation of young men and women for a future in business and enterprise.
Charlie Elphicke
Does my hon. Friend agree that apprenticeships have been a real step forward and have made a massive difference to our young people?
David Rutley
I completely agree with my hon. Friend, and I will come on to talk about the impact in Macclesfield, and no doubt in Dover too. Apprenticeships have been a phenomenal step forward.
A crucial priority for us now is getting to grips with reshaping the life chances of millions of young people and helping to improve the long-term economic prospects of the United Kingdom. There is clearly a lot to do. A recent survey of 3,000 parents with children aged 11 and under found that the top career aspirations for their children were: first, being a sports star; secondly, being a pop star; and thirdly, being an actor or actress. Going into business did not even feature in the top 10. More worryingly, those aspirations are increasingly reflected in the subject choices in school, with business-related subjects lagging far behind in the popularity stakes.
Pat Glass (North West Durham) (Lab)
Does the hon. Gentleman believe that the Government’s policy of putting a hierarchy of subjects into their English baccalaureate, so that classical Judaism comes above subjects such as business studies and IT, will help that situation?
David Rutley
It is good to hear that, and the hon. Lady makes an important point. Of course vocational skills are important and, as my hon. Friend the Member for Dover (Charlie Elphicke) was saying, the Government have taken important steps on vocational training. But it is also important to raise academic standards across the board in education, which is why it is vital that the English baccalaureate is being put in place.
To return to the theme that I was discussing, it is vital that employers get confidence in the education being given to our young people; in a recent survey, 70% said that not enough business awareness was demonstrated by school leavers. In June an Ofsted report on business education went further, saying that students taking part in business-related education often had
“only vague ideas about the economy, interest rates and their impact”.
That is clearly concerning and it will be an important spur to addressing business-related subjects in the much-needed national curriculum review in the months and years ahead.
The focus on business education needs to be improved in universities as well. Management, economics and accounting were much less popular than media studies and sociology in 2010, and the growth in media studies—15% over the past five years—continues to outstrip the growth in both management science and economics, the figures for which were 5% and 12% respectively. At a time when companies are crying out for commercial talent, it is troubling that the upcoming generation is not demonstrating an interest in business education, which is clearly growing in other countries.
So how can we begin to address those long-standing trends? Much can be done back at school. That same Ofsted report highlighted the fact that more than a third of schools failed to provide sufficient opportunities for students to engage directly with businesses.
Mrs Chapman
How can the hon. Gentleman possibly square that point with the dramatic nose-dive this year in applications for education from kids in the north-east post-16? What does he put that down to?
David Rutley
I am not familiar with circumstances in the north-east; I am making the point that too few students want a career in business because until now they have not had the right education, and we need to get them back on to a better path. [Interruption.] Apprenticeships are clearly one of the ways forward.
One of the key things we have to do is expose young people to more local business leaders. We have to get those people into the classroom to make the case for business, and we have to make sure that they provide positive role models. Work experience programmes go further, acting as an important way of helping children to apply and develop skills learned in school. In Cheshire, Bentley has created a successful work experience scheme with local schools; more than 850 pupils have gone through the programme over the last five years. We need more such schemes. KPMG, Tesco, Morrisons and others are starting to sponsor students at university. More needs to be done to engage businesses at university level.
As my hon. Friend the Member for Dover pointed out, it is vital to look at alternative ways for young people to get business skills. Apprenticeships are one of those ways, and we are seeing real success not just in shop floor disciplines but across a wider range of business skills, such as accounting apprenticeships. Macclesfield college is working with Elior, a French catering group, achieving real success not just for the business but for the young people involved. The Government are doing well in putting forward the case for apprenticeships, and I commend them.
Although it is vital to rebalance the economy and our skills base, the most important thing we need to do in the long term is to rebalance and raise the ambitions of future generations. I encourage the Government in those efforts.
Mr Michael Meacher (Oldham West and Royton) (Lab)
There is a paradox at the centre of the autumn statement that makes it self-defeating. The statement was widely touted as a growth Budget, but it is the opposite. The infrastructure plans relate to the medium-term future, on a three to 10-year time scale, but even if they materialise they are not the stimulus that is urgently needed now. Pension funds will certainly not invest in infrastructure unless the Government fully underwrite the risk, in which case it will be registered in the national accounts as a potential increase in expenditure and thus a rise in indebtedness. The paradox is that even to achieve that “smoke and mirrors” impression of growth the Chancellor is such a deficit fetishist that he has been obliged to tell the markets that there is no increase in spending at all, and everything has been funded by cutting spending elsewhere.
Significantly, the Chancellor has chosen to make those cuts by hitting the poorest hardest. Of the £1.2 billion child tax credit and working tax credit savings over the next year, 32%—nearly a third—will come from the poorest fifth but only 6% from the richest fifth, yet the poorest are precisely the segment of our population that is by far the most likely to spend and thus to stimulate growth. Reducing that source of growth in favour of will-o’-the-wisp infrastructure plans in the medium-term future is a pretty silly policy. It is certainly perverse and anti-growth.
The biggest problem facing Britain is not indebtedness, but the lack of aggregate demand. Everyone recognises that except our myopic Chancellor. In the 1930s, John Maynard Keynes said that if we look after unemployment, the budget will look after itself. Exactly the same thing applies today. Christine Lagarde, the head of the International Monetary Fund, warns that if all countries deleverage at the same time, it will be economic suicide. It is absurd to imagine that the markets would not accept some modest loosening of the monetary targets if it was likely to produce a serious prospect of growth; indeed, they would welcome that.
Of course we have constantly heard the Chancellor’s refrain against this argument, his canard that any increase in public expenditure will push up interest rates, threaten the precious triple A rating and cost Britain more, but he does not have to increase public borrowing to kick-start growth. There are two sources of funding that he could draw on at no risk from the markets whatsoever. One is to require the super-rich to make a fair contribution to the Exchequer at a time of crisis for the country. At present they are contributing next to nothing.
In the past year, according to the IFS, the income of the bottom 10th of the population rose by 0.1%. The income of the directors of the top FTSE 100 companies rose by 49%. That is just about 500 times as much. It is time those latter people and the financial and corporate elite of which they are such a part made a fair contribution.
Jim Shannon (Strangford) (DUP)
The right hon. Gentleman has clearly identified those at the top of the earnings scale, but at the bottom of the earnings scale are the long-term unemployed. Does he accept the concern of many in the House that the long-term unemployed are not looked after, and that there seems to be little regard for them?
Mr Meacher
Indeed. I very much support that point, and I shall come on to it later, if the hon. Gentleman allows me to make my argument.
I draw the attention of the House to the point that I was making. The latest version of The Sunday Times rich list, published in May, shows that in the 1990s the 1,000 richest people in this country—0.003% of the population, a tiny number of people—had assets of £99 billion, which by 2010 had more than tripled to £335 billion. That is truly staggering. It means that those 1,000 persons alone could pay off the entire budget deficit with just half of the gains that they have made over that period. So not to make the ultra-rich pay down a significant part of the deficit, which they themselves have largely created, is perverse, unjust and wilfully prejudiced.
There is a second source of funding that the Chancellor could and should, with no net increase in expenditure, use in order to resuscitate growth. Here I come to the point to which the hon. Member for Strangford (Jim Shannon) drew attention. It costs £8 billion to £10 billion every year to keep a million people on the dole. Instead of letting them rot on the dole, the Chancellor could create, with the same amount of money and no net increase in borrowing at all, up to 500,000 jobs to begin the house building, the energy and transport infrastructure improvement, and the development of the new green digital economy—all the things that the country so desperately needs.
The Chancellor would then have a triple whammy. He would reduce joblessness by a fifth, he would get income tax and national insurance contributions and he would get VAT, all by having people working rather than drawing benefits. He could well get Britain moving again. That is what the Labour party stands for, and it is about time the Chancellor, who has wreaked such devastation, caught on to a plan that will reduce the deficit fairly and sustainably and finally produce some growth in this country.
Madam Deputy Speaker (Dawn Primarolo)
Order. There are still seven speakers who wish to contribute to the debate, so I am reducing the time limit to five minutes each. I ask each Member to pay attention to the clock, and to colleagues in the Chamber, so that they stand some chance of getting into the debate today. That is five minutes, starting with Mr Steve Baker.
Steve Baker (Wycombe) (Con)
As I rise to speak I am reminded of a quotation from an economist who was a fierce critic of Keynes, a chap called Henry Hazlitt, who said:
“Today is already the tomorrow which the bad economist yesterday urged us to ignore.”
We have heard today some moving accounts of individual and collective suffering in different regions of the country and among different sections of the public. We should be asking ourselves why, oh why, have we been delivered into this misery, which looks as if it will extend over years. Much of the conversation we have heard has been along the lines of aggregates, coarse economic aggregates, and has tended to stray away from individual choices and consequences. We have talked about markets in the abstract, and it is a pity that we seem to have forgotten that markets are a social phenomenon, and that they are about people co-operating. When we talk about markets, we tend to imagine overpaid people, high-frequency trading and those who add nothing to society.
I am reminded of something a constituent said to me recently after hearing a Minister’s speech. He asked, “Why is it that everything always seems to get harder for the working man, whoever is in power?” Indeed, in my constituency unemployment is up by 6.3% among the over-50s, up by 9.5% among those aged 25 to 49 and, scandalously, up by 23% among the young. We have heard that child poverty increased by 200,000 under the previous Government and that it is likely to increase by up to 100,000 under this Government. In the 21st century, that should not be our economic position.
Why are we in this debt crisis? I have just checked the M4 money supply figures—I am sorry to return to aggregates, but needs must. When Labour came to power the money supply was about £700 billion and it is now about £2.1 trillion, so it has tripled over the past 14 years. Unfortunately, most economists talk about money flowing into the economy as if it were water poured into a tank that found its own level immediately, but what if it is like treacle or honey? What if it builds up in piles when poured into the economy and takes a while to spread out? What if that money was loaned into existence in response to individual choices led by the excessively low interest rates pushed by the central bank? What if it was loaned into existence in particular sectors, such as the housing sector, where prices have more than doubled over the same period, and what if it was the financial sector that received the benefit of that new money first? Would that not explain why financiers and bankers are so much wealthier than everyone else, and why economic activity and wealth has been reorientated towards the south-east?
Unfortunately, the idea that money takes some time to move around the economy is lost on most economists, which I very much regret. Why did most economists not see the crisis coming? I put it to the House that it is because their theories of credit are mistaken. They make fundamental errors. Unfortunately I do not have time to go into that, but the fundamental point is that credit is a choice to consume more now and less later. It is about the exchange of present goods for future goods, and co-ordinating the economy through time, and I am afraid that the current intellectual mainstream in economics has dropped us into this desperate mess.
Opposition Members criticise the Thatcher and Reagan years. I think that there was much to applaud in those years, but unfortunately their intellectual underpinning was monetarism, which, like Keynesianism, is infected with those dreadful mistakes. People in the Occupy movement, and our constituents, are right to question the justice of our economic processes. The hon. Member for Penistone and Stocksbridge (Angela Smith) said earlier that the system cannot endure, and I am inclined to agree. I agree that the current debt-based and—I am afraid to say—statist system cannot endure. However, if this system is not to endure, which way should it fall? Humanity tried the statist direction in the past and it led to misery and murder. I stand for free markets and free co-operation, but I say this to the House: if this is capitalism, I am not a capitalist.
Chris Evans (Islwyn) (Lab/Co-op)
We have heard the name of John Maynard Keynes again in this debate. My favourite Keynes quotation is the one in which he says that there comes a time when every Government have to indulge in “ruthless truth-telling”, and it is time that this House stopped acting like Nero when Rome was burning.
We stand on the edge of the abyss, and we have a eurozone crisis that is not being solved. Nothing seems to be happening. Greece is on the point of defaulting, it could exit the euro and it could be quickly followed by Spain, Portugal and, even, Italy. Yes, we might say, “We’re not in the euro: we’re little Britain; they can’t touch us,” but the key thing is that their bonds are held by British banks, and British banks will have to bail them out once again.
We have to ask ourselves, “Are we going to stand back and allow ourselves to sleepwalk into another financial crisis, or are we going to heed the warnings and do something about it?” Last week, when we had the autumn statement, the headlines were that the OBR had downgraded its forecasts, but what worried me more than anything, and what was not said anywhere or by anybody in the House, was that the OBR could not quantify what a crisis in the eurozone would do to the British economy. The best economists in the Bank of England could not even quantify or say what disaster might befall us if there were a euro crisis, and to me that is very concerning.
There comes a time with every Government when they have to put ideology aside. When Labour nationalised the banks, it did not do so because of ideology; nationalisation was 30 years ago and belonged to the past. It did so because nationalisation was a necessity and a practicality, so now, as we face the crisis in the eurozone, we have to put ideology aside, see what the practicalities are and put them into practice. It calls for the type of bravery that is rarely seen in this House, but, if we had to nationalise the Bank of England and bail out the high street banks again, we would be saying to our constituents, “If you have the dream and the hope of setting up a business, it ain’t gonna happen, because the banks are going to be even more cautious about lending to you,” and, “If you have a mortgage, you’re not going to be able to move it on to a lower interest rate, because the banks are not going to take that risk again.”
The problem is that, with every crisis, every politician will stand up and say, “Oh, it’s never gonna happen again. It won’t happen on my watch.” Even the Chancellor has said, “It won’t happen again. No, not while I’m Chancellor—no it can’t,” but the truth is that it can, because we have not learned the lessons of the previous financial crisis.
In my speech, I wanted to analyse the legislation that affects banking, so I looked, researched and went to the Library, but I could not find any. There was none at all, so we are facing another crisis with the same banking practices and with a Government unwilling to do anything.
One thing on which I agree with Keynes is that, “During a recession you do not raise taxes.” But what have the Government gone and done? They have put VAT up. It is all very well saying, “We’re going to create jobs,” but, if someone needs to drive to work and they are paying £1.33 for petrol and £1.41 for diesel, they might find it difficult to do so. If they are shopping and find that the price of their shopping basket has increased by 5% in the past year, they might not be able to afford food. Those are the decisions that people face.
I wish I had more time, but I will say this: the Government have an opportunity to do something. We need to look at skills and education, and to have a grown-up, adult conversation, asking, “Why are our young people leaving school not equipped to go into work?” I talk to people in my constituency with apprenticeship schemes, and they say that the kids are not prepared, so let us have an adult conversation and ask, “Why are they not prepared? What is wrong with the education system?”
The final point that we need to look at is tax reform. It is all very well the Government giving people a 1p cut in corporation tax, but when I speak to the small business man I find the thing that concerns him more is red tape. He asks me, “When I have a micro-business, why do I have to employ an accountant? Why can’t I have a simplistic tax form to fill in?” I wish I had more time to develop those arguments, Madam Deputy Speaker, but I will sit down now.
Harriett Baldwin (West Worcestershire) (Con)
How can I follow the wonderful, lilting oratory from the hon. Member for Islwyn (Chris Evans)?
It is very difficult to turn round a supertanker. The supertanker that my right hon. Friend the Chancellor inherited was weighed down by the lead weight of having to pay out £120 million a day in interest and artificially inflated by a Government who were spending more than they were taking in, so that, in effect, £1 out of every £4 spent was borrowed. There was a very challenging situation when the Chancellor took the steering wheel of the supertanker, and we need a significant process of change to alter its direction towards one where we have a much healthier public sector financial position and where the private sector is able to continue its process of growth. [Interruption.]
Madam Deputy Speaker (Dawn Primarolo)
Order. I am sorry to interrupt the hon. Lady. If Members want to have private conversations, they should leave the Chamber. If they are in the Chamber, they are taking part in the debate and they will listen to the person who is speaking.
Harriett Baldwin
Thank you, Madam Deputy Speaker.
I want to feed back to those on the Treasury Bench some of my constituents’ reactions to the decisions that the Chancellor announced last week in his autumn statement as regards the process of steering the supertanker. Those decisions were taken very much with a view to his understanding their impact on household budgets. Businesses and drivers in my constituency have welcomed the fact that the increase in fuel duty promised for January is not going to happen. Following the victory in Libya and acknowledged slower economic growth, they were expecting the price of oil to fall and the price of petrol and diesel at the pump to decline, but it has not. The increase in January would be extremely unwelcome for them.
My constituency has a very high percentage of people over pension age, who, needless to say, welcome the fact that they are to receive the largest cash increase in the state pension in history. They also welcome the Chancellor’s decision to allow councils to freeze the council tax for a further year, because for those who are on fixed incomes or receiving modest pay increases, not having to suffer that increase in their council tax is another significant help to their household budgets.
For the many small businesses in my constituency, the fact that the small business rate relief is to be extended until April 2013 is very welcome. The new initiative whereby larger businesses can defer some of the rate increase by 60% for two years will also greatly help businesses with their cashflows.
On the credit easing measures, I would like to draw the Chamber’s attention to an innovative idea in my constituency called ThinCats.com—presumably the opposite of FatCats.com. People can put their savings to work with ThinCats.com and it will lend the money out for them. It is one of the credit circles that are becoming increasingly popular. Credit easing is another way in which we will be able to get the benefit of lower interest rates into our business sector to allow businesses to receive help with their cashflow.
Finally, let me mention my concerns about the whirlpool that is offshore of the supertanker in the eurozone. The three possible outcomes that could occur are an underwriting of eurobonds, a break-up of the entire currency union, or the current uncertainty as we jolt from summit to summit with great promises and then huge disappointment. Of those, the current situation causes the worst damage to business confidence in my constituency. I therefore urge Ministers, as they go into these negotiations, to try to steer them towards one of those two alternative outcomes, which would provide some of the monetary stimulus that the eurozone needs and thereby a resolution of the current situation, which is the worst of all possible worlds.
Mr William Bain (Glasgow North East) (Lab)
Thank you, Madam Deputy Speaker, for calling me to speak in this extremely important debate.
The huge error made by the Chancellor on assuming office last year was to mistake a global crisis of demand, growth and jobs for one purely of debt and deficit. He launched a grand experiment of so-called expansionary fiscal contraction, which he must now admit has been the most disastrous episode in British fiscal policy since the 1930s.
The Chancellor took an economy recovering at an annualised rate of 2.1% at the end of the previous Government’s period in office and turned it into an economy with flatlining growth. This autumn, our rate of growth stands as the fifth lowest in the EU according to the European Commission and is lower than the eurozone average. The National Institute of Economic and Social Research has said that this is the slowest recovery from recession in Britain in a century. In the great recession of the 1930s, it took just 48 months to rebuild the lost output in the economy. Under this Chancellor, it will be 69 months and counting. Even taking into account the measures announced by the Government last week, the OBR has downgraded growth for the fourth time since its initial forecasts last June. Growth is now 0.8% lower this year and a whopping 1.8% lower next year than in the previous March forecasts.
The burden is not being shouldered by the Chancellor, nor by the rich and powerful in society. It is being paid by women working part time to help support their families. It is being paid by children facing lower living standards than the generation before them. Above all, it is being paid by the poor, with the number of people in food poverty in this country approaching 4 million, and by the unemployed, with the number of young jobless now more than a million.
The respected Fraser of Allander Institute has said in its latest commentary that there is still some scope for fiscal easing without damaging our fiscal credibility in the long term. As Tony Dolphin of the Institute for Public Policy Research wrote last week in relation to the Government’s fiscal consolidation plan and its impact on bond yields:
“If it had started with a plan that reduced the deficit more slowly—say over six years rather than four—yields would probably be little different from current levels now.”
What is particularly worrying is that the same austerity medicine is being applied in many other EU countries with similar results.
The Chancellor’s growth strategy is now predicated on maintaining loose monetary policy indefinitely, with ever higher levels of quantitative easing, a policy he once derided as
“the last resort of desperate governments”
whose other economic policies had failed. As the experience in the 1990s shows, low interest rates in themselves are insufficient to generate new demand. Japan has net debt of more than 200% of GDP, but even lower bond yields than the UK. As the Japanese economist Richard Koo recently said of austerity economics in an interview with Money magazine in the United States:
“The Japanese made a horrendous mistake in 1997.”
He explained that
“The cutback caused a second recession… The Japanese Government didn’t do enough spending in the early 1990s and added another 10 years to the problem.”
It is precisely that thinking that underpins what the Chancellor is doing today.
The Government are ignoring four basic realities about our economy. The first is that living standards for families with working-age parents are being squeezed to levels last seen in the 1920s, amid slumping consumer confidence, slumping demand and weak retail sales. The second is that supply-side reforms are needed to stimulate growth in manufacturing and construction. In particular, a national investment bank could produce the borrowing capital needed to kick-start new investment in the green economy. The third is that mass unemployment creates massive social costs and unrest, and devastates lives, which ends up placing a higher burden on future taxpayers. That is the price of economic failure. Finally, we need to build an economy in which those on low and middle incomes share more of the proceeds of growth than they have over the past three decades.
The country is crying out for a fair alternative to this failed Tory plan that is sucking demand from our economy, and hope and life from our communities. Our country deserves better leadership and a more optimistic vision of the future than that which has been offered by the downgraded Chancellor of this deflationary Government.
Mr Tobias Ellwood (Bournemouth East) (Con)
It is a pleasure to participate in this important debate. I hope that the usual channels will recognise the demand for and interest in it and perhaps provide more time in future.
I begin with a challenge to the Labour party about the observations made in the report by the Office for Budget Responsibility. I very much welcome the existence of that body and its report. If the Opposition accept the figures in the report, they must also pay heed to its analysis. I believe they have accepted the numbers, but not the reality behind them. The OBR does not predict a recession here in Britain, according to page 15 of the report, but there is a caveat that has been stressed by Members of all parties about what is going to happen in the eurozone. It is hoped that the right decisions will be made to bring confidence back to that area.
The report provides three reasons why the OBR has had to provide an updated position. The first is rising commodity and food prices, the second is that the scale of the boom and bust under the last Government had a greater impact on the economy than previously thought, and the third is that the euro crisis has increased instability and uncertainty, which has affected household and business spending.
There is also uncertainty about the liquidity of Europe’s banks, which a number of Members have mentioned. There is an irony there, because in 2008-09 it was Governments who were bailing out the banks, but today the banks are called upon to buy bonds and bail out Governments. However, many banks across Europe are unable to do that. They are desperately trying to repair their exposure to the debt, and bond issuance across Europe is actually dropping. In the past six months, just €17 billion was traded, compared with €120 billion in the same period in the previous year. Big decisions need to be taken about the role of the European Central Bank, eurobonds and so on if we are to create the stability that is required.
I am grateful that our Government are in a different position from others, because they acted to keep the deficit down, cut the size of the public sector and help the private sector to grow through active enterprise policies and a reduction in corporation tax. They also took difficult decisions about universities and tuition fees, to ensure that we remain competitive in the long term.
I turn briefly, in the very short time that I have, to the economic growth figures as measured by GDP. The shadow Chancellor is keen on suggesting that the economy is flatlining. He uses funny gestures to say so—I wish he would stop them, because he looks a little bit like a cross between a lazy cricket umpire and Mr Tickle. I do not believe he understands the difference between the economy flatlining and growth. It is like the difference between velocity and acceleration—if someone jumps out of a plane, they fall at 9.98 metres per second squared. That number does not change, but as anyone who has done it knows, they do accelerate. It is the same with economic growth. The economy is growing year on year, as long as the figure is above zero. Labour need to recognise that. If they accept the figures in the OBR report, they must also accept that the outlook is that we can expect to see growth of up to 3% by 2015. If the Opposition say the economy is flatlining, are they saying that China’s economy is flatlining with a growth level of 10%? Of course it is not; it is growing year on year.
My final point is about the national debt and the responsibility that the last Government ignored. That is the public sector net borrowing requirement—the difference between what we raise in tax receipts and what we spend on all the Government Departments. In Labour’s last year in office, the Government put £513 billion into the pot but took £670 billion out, leading to a deficit of £157 billion. That was just one year. In 2002, the books balanced and there was not a problem, but the year after they borrowed £19 billion, and then it went up to £30 billion. Year after year, they accumulated a massive debt, which led us to the position that we are in at the moment.
It was not until this Government came to power that we said, “Stop. We cannot keep adding to this debt crisis.” By the time the election took place, we were perilously close to losing our triple A rating, and we inherited the highest structural deficit of any major economy in the world. I am very pleased that we have got a grip on the economy now. Many quotations have been given in the debate, and I will give one final one, from Margaret Thatcher, who said that sooner or later, every Labour Government run out of UK taxpayers’ money to spend. That is clearly what happened under the last Government.
Sheila Gilmore (Edinburgh East) (Lab)
This debate is not about denying the deficit, and nor is it about never reducing public spending: it is about if and how we reduce the deficit and how we use public investment to grow the economy.
I intervened on the Chancellor earlier in this debate and asked the Chief Secretary to the Treasury a question at Question Time because they ignored an important part of the OBR report, which they have quoted extensively—indeed, the Chief Secretary is still ignoring this point. He argued that we do not have growth because the OBR discovered that the recession was deeper than previously thought. However, the OBR also said that the recovery had been quicker and stronger in 2009 than previously thought and that the decline in growth came in the latter part of 2010.
That is when the famous oil tanker that people have talked about threw out its anchors and started moving backwards. The 2009 recovery did not happen by accident or because the sun was shining; it happened because the previous Government took steps to stimulate the economy. Such steps can be taken. It is not true, as has been argued, that if we simply use Government money, we will never pay off the debt.
The National Housing Federation, which represents housing associations, has made a small but helpful suggestion. It says that if the Government put £1 billion towards shared-ownership housing, the housing association sector could put £8 billion towards it. That would grow 400,000 jobs and build the 66,000 shared-ownership houses that are hugely needed by many low-income families, and at the same time reduce spending on jobseeker’s allowance and housing benefit. Many who would live in shared-ownership houses would previously have lived in high-rent private sector housing, which causes the housing benefit bill, which the Government say they are worried about, to escalate.
That is just one small example. When we create jobs in that way, we create not just that one job. It is not a question of saying, “We spent all that money creating those jobs. Okay, those people will pay more tax and will not be on benefit, but that is not growing the economy.” Those people exist within local communities. If people have jobs and incomes, they will buy goods from other businesses.
It is no accident that many of the businesses in difficulty during the recession and after are related to the housing world. I know of one firm in Edinburgh that not only sold furniture but built it. The furniture-building side of the business has closed because the market has declined. People are not buying houses and they are not moving into new ones or redecorating, and they are not buying furniture.
Mr Speaker
Order. It is the height of discourtesy for an hon. Gentleman, who has just made a speech in the debate and who is fortunate to have done so, then to sit there, wittering away at other Members, completely ignoring another hon. Member on her feet. That hon. Gentleman should be thoroughly ashamed of his behaviour.
Sheila Gilmore
The ongoing effect of creating construction jobs would ripple far beyond the jobs themselves. That is what we mean by investing to grow the economy. We will not always borrow money for such things, but if we borrow on a short-term basis, we would still be borrowing for a purpose. Borrowing is not always bad. Many Government Members and others bemoan the fact that small businesses cannot borrow to expand. The Government can quite legitimately borrow to grow the economy. That is what we should be doing, but we have not been doing it for the past 18 months.
Sammy Wilson
There is an additional ingredient that is needed in the hon. Lady’s proposal. Not only do the Government need to borrow, but banks need to be willing to lend to people the mortgage side of the purchase of the house so that the shared ownership can be effective.
Sheila Gilmore
Indeed. Despite the fact that the Chancellor has assured us that he has entered into arrangements with the banks so that they would provide loans, we still have this mystery of why that has not been happening. If we do not do these things, we will see ourselves going further and further into decline. What the previous Government did to help us climb out of recession is worth repeating. That is why we are urging this Government to invest, to grow and to spend the money that is needed to get people back to work. We are talking about real people and real jobs that can be created. We should not be placing families in such hardship. Those who think that because we have high-end restaurants expanding in central London the economy is doing okay should move themselves out of central London and see the real world.
Nic Dakin (Scunthorpe) (Lab)
I thank you, Mr Speaker, for calling me to contribute towards the end of this debate. I have had the privilege of hearing much of the debate. What has struck me is the unanimity on all sides of this Chamber that the Government’s policies are hurting people in the world outside. The question is whether the policies are working. My constituents and constituents across the country want to know whether the policies are right and whether they are working. At the moment, the early indications are that they are certainly not working according to the plans that were set out by the Government 18 months ago. We have youth unemployment above 1 million and women’s unemployment at the highest ever level. The borrowing figures are £158 billion higher than expected to pay for unemployment and benefits, and not to pay for investment or jobs. At this mid-term point of the Government, that does not appear to be a positive step forward.
Businesses across the country are struggling. In my own constituency of Scunthorpe, an agreement was reached between the trade unions and the management at Caparo Merchant Bar to close early for the Christmas period so that the company can better reshape itself for the challenges of 2012. The demand for global steel is very low, which is causing a great challenge for steel companies in my constituency.
One of the arguments that concerns me is that the public and private sectors are somehow different. The public sector carries an element of risk while the private sector provides innovation and drive and those two sectors need each other. A local businessman said to me, “What we need, Nic, is demand in the economy. We need things done that drive demand.” I welcome the infrastructure projects that were outlined in the Chancellor’s autumn statement. Frankly, those projects should have been in place 18 months ago. It is not a matter of too little, too late but that there should be more. Consumer confidence is at an all-time low and dropping, and that is of great concern.
I want to focus on individuals because they are at the heart of this. A police officer in my constituency wrote to me, drawing my attention to the threats to his pay, his conditions of service and his pension. In a heartfelt way, he asked, “How much more pain do we have to suffer and how much more money does my family have to lose before enough is enough?” We should be listening to the words of the people out there. We owe them a stimulus and a direction forward and we should deliver them today.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Last year the Chancellor boasted, with barely contained glee, that it would be necessary to make cuts deeper and faster than any Chancellor in history in order to clear the deficit in four years. In the process, we were told that the private sector would be freed, that the economy would soar forth just in time for general election tax cuts and that we would all be in it together.
One week ago, the Chancellor came to this place to admit that growth had flatlined, that he would be borrowing £158 billion more than forecast, that further cuts had to be made and that the deficit would still be there at the next election. And it certainly does not feel like we are all in this together, as many of my right hon. and hon. Friends have said this evening—not when there are 1 million unemployed young people, not when two thirds of the cuts are being borne by women and not when manufacturing, the regions, education and innovation are all suffering.
This has been a lively and, at times, passionate debate, and there have been many excellent contributions. I am only sorry that I do not have the time to mention all my hon. Friends who have spoken so eloquently. I shall only mention my hon. Friends the Members for Blaydon (Mr Anderson), for Bishop Auckland (Helen Goodman), for Birmingham, Hall Green (Mr Godsiff), for Middlesbrough South and East Cleveland (Tom Blenkinsop), my right hon. Friend the Member for Oldham West and Royton (Mr Meacher), my hon. Friends the Members for Islwyn (Chris Evans) and for Glasgow North East (Mr Bain) and my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke), who explained with passion and determination how the pain being experienced in their constituencies was but inadequately matched by the dry, outdated ideological dogma of too many on the Government Benches. [Interruption.] Yes, and we see it again this evening.
One week ago, the Chancellor came among us neither cowed nor humbled, and although his policies were discredited, he delivered a lecture and a series of ad hoc announcements but no proper plan for growth. Rather, he seems to think that if he talks about it, it will happen. But what we needed from him last week was a proper plan B. We need a short-term plan to kick-start the economy and create jobs such as—now let me think—Labour’s five-point plan for jobs and growth: a tax on bank bonuses to fund up to 100,000 jobs for young people; genuine long-term investment in infrastructure such as roads and schools; a temporary VAT cut giving families with children a boost of about £450 a year—[Interruption.] Government Members may laugh but that is a lot of money in my constituency. The plan also includes a year-long cut in VAT to 5% on home improvements and repairs to help small business; and tax breaks for small businesses to take on extra workers. It is a very good plan.
As well as a short-term kick-start, however, we need a long-term strategy, a vision for the future of the economy. On “Newsnight” on the evening of the autumn statement, Lord Heseltine claimed that it was the beginning of an industrial policy. I fear that he might have to explain to the Chancellor what an industrial policy is. Indeed, he should probably explain what an industry is—and, while he is at it, perhaps he should explain that to the Business Secretary too. Both are ideologically opposed to using active government to ensure that industry has the environment it needs to flourish. Both fail to recognise that we need a long-term vision for an economy that is competitive, resilient and fair, and that we need strategies to promote those sectors in which we have a competitive advantage and where businesses pursue long-term, inclusive and socially responsive strategies for the good of themselves and the rest of us.
Let us look at how the key drivers of our economy are doing under this Government. Lee Hopley, the chief executive of a manufacturing employers group, says that
“short-term confidence has all but fallen away”.
That is why this week the manufacturing sector cut its growth forecast to 0.9%, down from 2.2% just three months ago. And still the Government talk about a manufacturing-led export-driven recovery! Today the Deputy Prime Minister was busy announcing an extra round of the regional growth fund. We support its aims; in fact, they are similar to those of the regional development agencies, except that its fund is only half what theirs was, and it is controlled from Whitehall, not the regions, where it belongs. As of today, just a quarter of the successful bidders in round one have received their money. There can be no better example of the Government’s inept and out-of-touch approach to regional growth.
Let us look at higher education. Universities—the centres of knowledge and ideas—should be the drivers of both growth and social mobility. In 2009, the sector contributed £7.9 billion to the economy. In 2008, the higher education sector created almost 700,000 jobs. It is our seventh largest export industry, but almost exactly a year ago this Government pushed through the most damaging and disruptive changes to the higher education system, tripling tuition fees and then changing the rules after universities had set their fees. At the same time, the Government introduced changes to student visas that, in effect, tell the world: “Britain is closed”. All this is hugely damaging to universities and students.
So what about innovation, the “engine of growth”, as the Business Secretary likes to call it? The Chancellor likes to say that he is protecting science, but research from the Library shows that the science budget is being cut by 15%. If this Government truly believed in putting science at the heart of the innovation economy, they would protect our position as one of the world’s leading science nations. Indeed, a recent report from the Department for Business, Innovation and Skills says that our position is at risk because of this Government’s lack of investment. It is true that yesterday the Government produced a life sciences strategy, but why has it taken them 18 months to produce a plan for one sector? Eighteen months and we still do not have a plan for innovation. That is because this is a “stand on the sidelines” Government, letting companies, industries and whole sectors fail in the absence of action.
Today the shadow Chancellor of the Exchequer said:
“The argument is whether it is better to be borrowing billions more to keep people out of work on benefits or whether action now to get our economy moving will get more people into work paying tax and help to get the deficit down in a fairer way.”
In March, the Chancellor ended his Budget statement —he may remember this—by saying:
“We want the words: ‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’ and ‘Invented in Britain’ to drive our nation forward”.—[Official Report, 23 March 2011; Vol. 525, c. 966.]
Wanting is not enough, however. The Government need to act. There are millions up and down the country who want to drive our nation forwards by making and building things. Instead, they find themselves chasing far too few jobs with far too many others. There are hundreds and thousands of young people—young men and women—who want to learn the skills to make and build things, but instead are consigned to a life without education or employment. For how long will this Government continue to pursue a bankrupt ideological vision in the face of every economic indicator and so many broken lives? The Chancellor of the Exchequer is capable only of driving our nation forward into year after year of rising unemployment, flat growth and higher borrowing. We ask—we demand—that he change course.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
I do not think anyone doubts the serious economic challenges facing the UK, Europe and the wider world. The serious tone of today’s debate reflects that. So it is important in such a crucial debate that we can agree on the economic and financial figures and forecasts, not least because in the past, Parliament, commentators and the markets have questioned Governments’ forecasts. In the past, Governments jealously guarded control of the forecasts and used that control to tweak, fiddle and fix the figures. As we can read in the previous Chancellor’s memoirs, the pressure to fiddle the figures is never greater than in the tough times. By giving responsibility for forecasts to the Office for Budget Responsibility, this Government have changed all that. The OBR figures are independent; the OBR figures tell it straight; so these figures command respect. I challenge Labour Members to say so now if they do not accept the OBR’s figures.
Mr Geoffrey Robinson (Coventry North West) (Lab)
It is not a question of not accepting the integrity of the Office for Budget Responsibility. The question is the reliability of the figures stemming from the credibility of the organisation. Why does it get everything so wrong all the time? Is it not up to the job? Does it have a lack of expertise, or is it just that it is being asked to fix figures that have no meaning in the real world?
Mr Davey
Given that that comes from a former Treasury Minister in a Government who often got their figures wrong, I do not think that the OBR needs to listen to that. It is absolutely clear that the Labour party is taking the OBR’s figures seriously. It is significant that we can at last have a debate without the numbers being the issue—without the spin and the game playing that so debased the House’s deliberations in the past. The Labour party’s acceptance—grudging or otherwise—of our or the OBR’s forecasts presents Labour Members with a problem. Why do they not accept the underlying explanation of the OBR’s forecasts?
This House has heard that the OBR’s forecasts changed not because the Government’s policy has gone wrong, but because of three reasons outside this Government’s control: imported inflation, with higher oil and commodity prices; the huge uncertainty caused by problems in the eurozone; and, finally, the boom and bust that Labour once arrogantly told us they had abolished, which was worse under Labour than anyone had previously thought. The Labour party has to face up to this reality, yet the shadow Chancellor did not. This Government have, and have made the difficult choices in doing so.
Our strategy of loose monetary policy and fiscal consolidation, backed with some of the most ambitious supply-side reforms in generations, was not just right when we first announced it after the election; it is right now. Indeed, recent events have given even stronger confirmation that it is right. That is why, despite the changed forecast, our interest rates remain so low while countries all around us have seen their credit rating slashed, downgraded or put on negative watch. The markets have shown their confidence in the UK with the interest on our debt falling to historic lows.
In what was probably the most remarkable part of today’s debate, the shadow Chancellor was astonishingly dismissive of the low interest rates and our achievements. Never mind that Italy and Spain have seen their rates shoot above 6% while ours have fallen towards 2%; never mind the benefit to mortgage holders, businesses and taxpayers of that achievement. The shadow Chancellor seems to believe that the UK is in a liquidity trap—despite the fact that we have a credible central bank, despite the fact that quantitative easing has been judged effective and despite the major credit easing announced in the autumn statement. In the early 1930s, ahead of Keynesian rearmament, a monetary expansion with low rates combined with fiscal consolidation produced a significant recovery. Is that not the lesson from history that the shadow Chancellor simply has not learned?
Of course, we could have opted for another growth policy—some call it plan B—involving unfunded tax cuts, more borrowing and more spending. The details of that are never clear, but the consequences are higher interest rates. [Interruption.] Labour positions itself as the party of high interest rates, although a 1% rise in market interest rates adds £10 billion to mortgage bills—meaning that the average family with a mortgage will pay £1,000 more—and increases business rates by £7 billion and taxpayers’ costs by £21 billion. That would be the price of Labour government. [Interruption.]
I have looked around Europe for Governments or mainstream political parties that have opted for a policy such as plan B, but they are in short supply. Other Governments are now having to address their budget deficits—[Interruption.]
Mr Speaker
Order. Far too many private conversations are taking place in the Chamber. Let us hear the Minister.
Mr Davey
Other Governments, faced with rising interest rates on their debts, are now having to address their budget deficits. Often they are having to cut deeper than us. It is true that our deficit reduction, at 3.7% of GDP over the next four years, is the third highest in the G7. After all, in 2007 our structural deficit was the highest in the G7. Yet Italy is now making much deeper cuts, and France too is planning deeper cuts. Our deficit reduction is of course significantly less than that of Greece, Ireland, Portugal or Spain, so we will not be opting for plan B as suggested by the Labour party.
We heard many excellent speeches from Members in all parts of the House. I particularly commend those of my hon. Friend the Member for Chichester (Mr Tyrie) and of the hon. the Members for Skipton and Ripon (Julian Smith) and for Newton Abbot (Anne Marie Morris), all of whom referred to the importance of the supply-side reforms. The hon. Member for Skipton and Ripon mentioned the important employment law reforms which, I believe, will make a big difference to our efforts to return people to work, and the hon. Member for Newton Abbot spoke of the importance of ensuring that regulation was cut for micro-businesses. I can tell the hon. Lady that we are achieving that now, even at European level.
We also heard good speeches on the importance of infrastructure investment from the hon. Members for Folkestone and Hythe (Damian Collins), for Ochil and South Perthshire (Gordon Banks) and for Scunthorpe (Nic Dakin), and from the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling). The significance of the infrastructure plans that we announced in the autumn statement is that they are well advanced, and some are even shovel-ready, so the problems that the shadow Chancellor worried about do not pertain.
This was an important debate. For once, it was not about the figures in the economic forecasts and the Budget questions. Thanks to the innovation of the Office for Budget Responsibility, it focused largely on analysis—although at times the analysis presented by the shadow Chancellor was more theoretical than academic—and it sharpened the differences between the coalition and the Opposition. While the Government are focused on keeping interest rates low, Labour’s priority is to spend and borrow more. While this Government—
Mr Alan Campbell (Tynemouth) (Lab)
claimed to move the Closure (Standing Order No. 36).
Mr Speaker
The Question is, That the Question be now put. [Interruption.] I think the Ayes have it. [Interruption.] Order. Hon. Members must calm themselves; it will be injurious to their health otherwise. The Question is, That the Question be now put. [Interruption.] It is simply a case of putting the Question. I will try once more. The Question is, That the Question be now put. I think the Ayes have it.
Question accordingly put, That this House has considered the matter of the economy.
The Comptroller of Her Majesty's Household (Mr Alistair Carmichael)
On a point of order, Mr Speaker. I seek your guidance. Is there any means by which tomorrow’s record can record that the sort of meaningless gesture that we have just seen is as good as it gets?
Mr Speaker
That, I think, was a case of either a point of frustration or, as the right hon. Gentleman has a smiling countenance, him getting his point on the record.
Ed Balls (Morley and Outwood) (Lab/Co-op)
On a point of order, Mr Speaker. Given that the motion before the House today was on whether there has been a sufficient debate on the economy, given the failure of plan A, given the £158 billion of extra borrowing, given rising unemployment, and given the view of the House that more time is needed for this debate, could you advise on whether the will of the House could be expressed and there could be more time to debate the very important issues facing this House and the country?
Mr Speaker
I am grateful to the right hon. Gentleman. The allocation of time for parliamentary debates is not a matter for the Chair, but the right hon. Gentleman has recorded his view, as has the Deputy Chief Whip.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Further to that point of order, Mr Speaker. I seek your advice. Is it fair to say that anyone who has spoken in the debate and then voted against the motion is actually misleading the House by saying that it has not considered the motion?
Mr Speaker
The very simple answer to the hon. Lady is that the House has not been misled in any way. Nothing disorderly—[Interruption.] Order. I have just made the point, which brooks no contradiction, that the House has not been misled in any way. Nothing disorderly has taken place. The vote is what the vote is; it is not for me to interpret. Other hon. and right hon. Members and people outside the House are free to do so as they wish.
Andrew Miller (Ellesmere Port and Neston) (Lab)
On a point of order, Mr Speaker.
Andrew Miller
Mr Speaker, by a majority of 134, the House has determined that this House has not considered the matter of the economy. Have you heard from the Government Front Bench whether the Government intend to allocate more time to ensure that the House does consider the economy properly?
Business without Debate
(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Speaker
With the leave of the House, motions 4 and 5 will be taken together.
business of the house
Ordered,
That at the sitting on Tuesday 13 December paragraph (2) of Standing Order No. 31 (Questions on amendments) shall apply to the Motion in the name of Mr Nigel Dodds as if the day were an Opposition Day; proceedings on the Motion may continue, though opposed, for three hours and shall then lapse if not previously disposed of; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Greg Hands.)
Ordered,
That at the sitting on Wednesday 14 December paragraph (2) of Standing Order No. 31 (Questions on amendments) shall apply to the Motion in the name of Edward Miliband as if the day were an Opposition Day; proceedings on the Motion may continue, though opposed, for three hours and shall then lapse if not previously disposed of; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Greg Hands.)
delegated legislation (committees)
Ordered,
That the draft Daventry (Electoral Changes) Order 2012, be referred to a Delegated Legislation Committee.—(Greg Hands.)
Short-life Homes (Lambeth)
(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Speaker
Order. I appeal to hon. and right hon. Members who, for whatever reason, quite unaccountably, are leaving the Chamber to do so quickly and quietly so that the hon. Member for Vauxhall is afforded the same courtesy for her Adjournment debate as they would want for theirs.
Kate Hoey
Thank you very much for those words, Mr Speaker, although I do not think the House will stay full for much longer.
It is with a great deal of sadness that I hold this Adjournment debate, but it is important that the House understands what is happening just over the river in Lambeth in terms of short-life housing disposals. If there were any kind of legislation on wording, using the description “short-life” would almost be in breach of it, because the homes are not short life in the sense that people have lived in them for only a few months. Many of the people I shall refer to will have been in their homes for 30 years or more—most of them for between 15 and 25 years.
There is a history in Lambeth. Short-life housing co-ops were formed in about 1980 to make use of Lambeth council properties that were in too bad a condition to let normally, but that Lambeth could not afford to repair to a lettable standard. Housing co-operatives were given licences to use those properties, usually by a secondary agency, typically a housing association. Initially, short-life meant short-life, six months being the normal period, but owing to Lambeth’s general mismanagement and policies that seemed to change every 10 years, many people have been in their homes for more than 30 years. One resident, Steve Drake, who lives in Nealden street in a co-op, has been there now for 31 years.
Through the mid and late 1980s and into the 1990s many housing co-ops became established as the properties that they managed became more long term. As I said, the phrase “short-life” became a misnomer. There were various schemes involving many properties attracting some limited funding via schemes such as Mini-HAG, which was mini housing association grants administered by the then Housing Corporation. That finished in about 2000. Housing co-ops needed an income to pay for the maintenance of the properties that they managed and the day-to-day running of the co-op, so co-op members paid rent, the amount agreed by members of each individual co-op.
Throughout that 30-year history of housing co-ops, Lambeth has changed its policy at various times, thought about recalling the short-life properties and threatened evictions at various times, but as recently as 1997, which does not seem such a long time ago, Mr Drake got a letter from the then chair of housing, Labour’s housing spokesperson in Lambeth, saying:
“I write to you further to your letter of 29 June 1997, to update you on the situation regarding shortlife housing.
I am pleased to say that at the last Housing Committee meeting at the beginning of September, we succeeded in persuading the other parties to back our proposals for proper negotiations with the shortlife housing co-ops. I am sure that … the Lambeth Federation of Housing Co-ops has been in touch with you … and I hope that as a result of this work, it will be possible to come to an agreement which allows the current residents to stay in their homes.”
That was from Tom Franklin, who was then the councillor in charge.
Shortly after that, the council seemed to change its policy. It did not seem to make much difference whether it was a Labour council, a coalition council or a hung council. The policy got into one of those files that seem to sit around local authorities, and for many years the residents had no idea what was happening, but they carried on with their co-ops, some of which were very successful. The Short Stock housing co-op—I have named the person who has been leading that, Steve Drake—has been going extremely well, and is part of the Lambeth Self Help scheme that involved buying Short Stock’s properties with tenants in situ. The plan was that the very large property would be worked on and could be sold, but that everybody would be allowed to stay in their houses and renovate them. The people in Nealden street and in Morat street have stayed on. During that time Lambeth had 100% nomination rights to any vacancies that came up.
Last year Lambeth Self Help was approached by Lambeth council. It submitted a plan, which the council wanted revised, given the change in central Government policy on social housing rents. The plan was resubmitted and rejected, then re-submitted and rejected again. Finally, Lambeth changed its policy in the summer and now wants to sell off all the remaining properties housing families of different sizes—there are roughly 150 of them—and the council wants to do a deal. It originally wanted to do a deal with Hyde Housing. Hyde Housing had come to an arrangement whereby some of those residents would be able to stay in their homes when they were bought.
That fell through because Lambeth did not think it was getting enough money. It has been in negotiation with Notting Hill Housing, which is making clear its opinion that it is doing Lambeth a favour. It will buy the properties and immediately put 80% of them on the open market, leaving 20% as affordable houses in Lambeth. I can understand that, as there is a shortage of capital, although Lambeth has not said that that money will go into housing. It has said that some of the money—we do not know how much—will go towards reducing the shortage of school places in the constituency of my hon. Friend the Member for Streatham (Mr Umunna). If there is money going out of housing to the council, it should come back into Lambeth to be used for housing, as there is a huge waiting list.
In the meantime, the council has said that it wants vacant possession, and every property must be empty by the time the deal goes through with Notting Hill Housing. Notting Hill Housing told me that it might have been prepared to consider taking on some of the residents who were adequately housed and in social need, but Lambeth council said that it wanted to give them with vacant possession, and Notting Hill Housing then said that it would take the properties only with vacant possession.
Lambeth’s legal firm, Devonshires, which must be making a fortune out of this, is now going to the courts in Lambeth or Wandsworth week after week to try to get the long-term residents evicted. On almost every occasion the courts have said, “Hang on, we haven’t got all the facts and we want to know more.” A number of cases have been postponed over and over again, costing Lambeth huge amounts of money each time. Many of the properties are in a really good state. There is absolutely no reason why they could not be kept by the council or, if they go to Notting Hill Housing, left with the current residents, who have maintained them to a high standard for over 20 years.
I simply do not understand how a housing association can get away with spending a lot of money buying up properties from a local authority that has tenants who need housing and then planning to sell off 80% of them. They are not trading organisations. I thought that the point of a housing association was to provide housing. I find Notting Hill Housing’s attitude very strange. If it is doing this as a favour to Lambeth, I do not think that it is much of a favour to the people living in the properties. The most recent communication I received from Notting Hill Housing on 30 November indicated that it was
“clear that the properties will be sold to us with vacant possession. That means that the Council will evict all the current residents. We will then refurbish 20 per cent, and will sell up to 80 per cent of them. This is the assumption so that we can give the Council the kind of receipt they require. I know this is distressing for many of the residents who have lived here for many years but I understand the council will rehouse everyone”.
Of course they will get an offer from the council.
I want to give some examples of the people who live in the properties and how they have been involved for many years in the local community, in campaigning organisations and in all the things that are so important to an inner-city area. The Cope family live at 26b Stockwell Park road. Indeed, some hon. Members live around that area, which is probably one of the most expensive in my constituency. Another long-term resident lives next to them, at 24b. The family have been in a short-life residence there since 1987, originally part of the Ekarro housing co-operative, which became a different housing co-op, and finally they ended up with South London Family Housing Association, which was later taken over by Amicus, which was when the licence was withdrawn from the housing association. The family have done all the repairs in the house and managed to prevent the ground-floor flat next door, which was owned by Lambeth council and had been empty for years, being squatted by what I call real squatters—I am not opposed to the squatting of long-term empty houses in some cases. The family have done all the work on that house but are now being told that they must move out, which will probably mean the loss of the last two or three remaining houses in affordable social housing in the middle of one of the most expensive areas.
The Cope family is very much part of the community, and all the residents of the Stockwell Park residents association have signed a letter stating that they want the family to remain. It just does not make common sense, because they will be moved into another Lambeth property that someone on a waiting list might have their eye on, and at the same time the family might be moved out of their community to somewhere many miles away from where their children go to school—and for what purpose? In the end the property will either go back to another tenant, if it happens to be in the 20% that Notting Hill keeps, or it will be sold on the open market.
Just up the road, literally four houses up, 20 Stockwell Park road was one of those short-life properties. The resident was evicted—taken away, asked to get out—a few years ago; the property was squatted; Lambeth got rid of the squatters and re-did the place with new bathrooms and kitchens in two of the flats; three weeks later it was squatted again; and the squatters in one flat have not been removed. So, the council has spent a lot of money on its own property, allowed it to be squatted by people with no housing need and, at the same time, is trying to get rid of people who do have housing need.
The Clapham North Housing Co-operative is a very active co-op, with a substantial number of properties—19 homes—on which people still pay rent, and Lambeth could have negotiated with it. The negotiations started, stopped and then Lambeth changed its mind, so now, despite saying at the bottom of every letter that it is a co-op council, it is getting rid of co-ops. I speak as someone with many co-ops in the north of my borough and in Bishop’s ward, such as the Coin Street housing co-operatives, and I have seen the value of co-ops and how they link people with their community.
We have some terrible individual cases. Heidi Usher, of 12 Thorpe Park road, has been there for many years. She has been adequately housed, with four children in her home, which she has kept beautifully, having done all the work herself, but she is now being taken to court. Fortunately, yesterday when she went to court, the magistrate said, “This is ridiculous, this needs more than an hour. I need at least a day,” and has deferred the case until 28 February. So, every case is being put back, and that gives the Minister an opportunity to intervene and do something that would give those people hope, because it does not make common sense.
I want to ask the Minister some questions that he might or might not be able to answer. Many of these issues have occurred because of the local authority’s inadequacy and incompetence over many years, for which we can blame many people, but at the end of the day the people who are suffering are the residents, whose fault it is not. The cost of all those legal cases could have adequately brought some of the homes up to the decent homes standard.
On the decent homes standard, when I visit those residents I feel that they are living in a decent home, as they do. It may not tick the box, because the kitchen may not be exactly like the modern kitchen that represents supposedly the decent homes standard, but, if they are happy there and adequately housed, why is the decent homes standard used as a reason to move them out?
Does the Minister share my view on what his Department could do to ensure that families are able to stay in their homes of many years? Surely the Government must have some say in the matter, because Lambeth will get Government housing money, as will Notting Hill Housing association. I should like an assurance that he understands Notting Hill Housing to be conducting the process properly, because I have concerns. about how it is doing so.
Some time ago, Lambeth offered many residents the right to buy, albeit at absolutely open-market prices, but some struggled to do so because it was their home. Will they be considered under the Government’s new policies on the right to buy at less than market value? That could be a solution.
If Notting Hill Housing buys that group of properties, can the Government do anything to stop it immediately selling off 80% of them? It seems absolutely scandalous that it can spend public money buying properties and immediately sell them.
Can the Government insist on Lambeth council and Notting Hill Housing allowing those sitting tenants and residents who are adequately housed and meet the criteria to remain tenants of the association, rather than being moved somewhere else to move in somebody who has lived in Lambeth for only a couple of years? That would at least be a fair way of looking at the issue.
Does the Minister understand the anger and misery that is being caused by a policy of moving people out of their homes of over 20 years just so that at some time in the future they will be let to new tenants? Given that there are already very well-established co-ops in other parts of the borough, will he encourage Lambeth to incorporate those that are working adequately into some kind of system that would allow those people to stay? Most of all, does the Minister think that a local authority such as Lambeth could show a little more imagination? Of course we know that there is a shortage of money everywhere, but money from the Government has been stopped and we need to get some of that investment back.
Lambeth has improved its housing management. My previous housing Adjournment debate was also about Lambeth, and I have to say that things have improved since then. Lib Peck, who is the cabinet member for housing, has done a sterling job and has bought into the whole idea of this being the only way to protect the investment. However, the council’s policy is misguided and has been built on many years of mismanagement and neglect. As I said, there are many people to blame for this, but they are not the residents.
This is a complicated situation that is somewhat historical and almost unique to Lambeth, but sometimes in such cases, where there is clear injustice, we must find a way to stop it happening. I hope that the Minister will, at the very least, offer to meet me and a group of co-op residents from across the borough so that we can explain how unjust this is, because in such a short time I have not been able to go into much depth. Not a single ordinary person would read through all the dossiers and meet these people and not say at the end of it, “This does not make common sense in 2011.”
The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)
I congratulate the hon. Member for Vauxhall (Kate Hoey) on securing this debate and on the diligent work that she has done in support of her constituents and residents. She spoke very eloquently.
This is the first time that the situation that the hon. Lady described has come to my attention. I understand that Lambeth has a proposal that is designed to dispose of properties to help to fund renovation, perhaps of those properties but certainly of other stock in the borough, some of which is being let for short-term tenancies. She described the confusing development of the phrase “short-term” to mean something quite different and gave illustrations of the very long length of tenancies that some people have had in these properties. I want to make it clear that I am working from the description that she has given. I do not have first-hand information, and the Department has not been formally notified by Lambeth, or anybody else, of any transactions taking place.
The House will know that the Government fully understand the need for a radical and comprehensive approach to housing. That is why we published our housing strategy for England last week. That strategy covers a broad range of housing topics, including social housing, the reuse of empty housing, and a number of other factors of which I am sure that the hon. Lady is well aware. I want to stress that it is for the London borough of Lambeth to decide its own strategic approach to its housing, and not for Government to comment on it. Speaking in this debate as a member of the Government, I have to stick strictly to that rule. In the privacy of the Members’ coffee room, I might say something else. The reality is that the Government’s job is to provide the strategic approach to housing policy and it is for the London borough of Lambeth to decide its approach to its housing. Of course, the Government want all local authorities to adopt the effective management of assets, including in their disposal of stock and reinvestment.
To go back, perhaps I should say that the basic assumption is that local authorities will plan for holding or redeveloping all their council stock. Clearly, the right to buy entitles tenants to purchase properties. The hon. Lady asked whether the right to buy would apply to these particular tenants. The nub of that issue is that it depends on the nature of their tenancy agreement. If they have a standard council tenancy, which it seems they may not have from her words, they would be entitled to exercise their right to buy. Otherwise, they would not have a statutory right to buy.
As well as tenants buying stock, councils can engage in partial or whole stock transfers, but those require the consent of the Government. There can be no question of wholesale disposals without the need for some consent or approval. Similarly, housing associations registered with the Tenant Services Authority need consent to dispose of their properties. I want to reassure the hon. Lady that in this system, there is a strong degree of control over what happens to social housing stock.
Andrew Stunell
I certainly want to cover that point. There is a regime known as general consents, which means that if certain preconditions are met, specific consent over a particular transaction is not required. The key point is that money arising from such disposals must be reinvested in affordable housing or regeneration. That would be within the general consent. Use of the money elsewhere would not be suitable. The meaning of investment in affordable housing is perhaps self-evident, but regeneration has a technical meaning. It means projects or activities on land where the land is
“vacant, unused, underused, ineffectively used, contaminated or derelict”
and where
“the works or activities are carried out in order to secure that the land or the building will be brought into effective use”.
The hon. Lady has mentioned the possibility—obviously I have only her words to go on—that it was proposed to provide more school places with some of this money. It would be a matter for examination whether that was a regeneration activity. If it was not, the expenditure of the money from this projected sale would require specific consent from the Secretary of State. If it was regeneration, it would come within the general consent. I am happy to write to her to spell that out, because it is a complex area to get across in this debate.
The treatment of properties that are occupied by secure tenants is tightly controlled and it always requires specific consent, unless the disposal is to the occupant. In other words, if it is not a right-to-buy sale, a secure tenant’s property cannot be transferred without specific consent. The nature of the tenancies that these constituents enjoy again depends on the intricacies of the story that the hon. Lady has presented to the House.
The Government do not have any intention of changing those arrangements. Of course we are keen to see run-down properties passed on to landlords who are able to invest in them while retaining them for social tenants. I have had the opportunity to announce to the House a £100 million fund for bringing such empty homes back into social and affordable use for social tenants. Those disposals can be to other bodies or individuals, and they could be covered by the general consents in the situation that I have previously outlined.
No application has been received in respect of the schemes that the hon. Lady has mentioned, and I cannot comment on what decision the Secretary of State might take unless one is submitted and there is a proper investigation into the circumstances by the Secretary of State.
The Government have put significant support into social housing in Lambeth. We have committed £18 million this year and next to bring homes up to a decent standard there, with a further £82 million provisionally allocated for the next two years, making a total of £100 million to be invested in Lambeth to bring its backlog of non-decent homes up to a decent standard. A significant amount of money is available to Lambeth from the Government to improve its homes, and she may want to consider encouraging the council to direct some of those resources to the homes that she has mentioned today.
London has been allocated 27% of the new affordable homes to be provided through the affordable homes programme. Combined with the existing commitments, that means that the target of 50,000 new affordable homes by 2012 set by the Mayor is very likely to be reached. I am not in a position today to say how many of those homes will be built in Lambeth, because that is subject to contracts, not all of which have been sold.
Lambeth currently has 25,000 council homes, and according to the housing strategy statistical appendix it has a waiting list of 23,000. In other words, there is an acute demand for social housing there. It is also true that Lambeth has an above-average number of empty social homes, or voids. In April, 4.1% of its stock was vacant compared with a national average of 1.5%. According to the council tax database, Lambeth has 1,676 long-term empty homes, which are those empty for longer than six months.
The hon. Lady might like to consider the fact that given the £100 million that is being provided to Lambeth over the next four years for decent homes, given the investment that we are making in new and affordable homes and given Lambeth’s higher than average number of empty homes and long-term empty homes—
Petitions
Closure of Liverpool Coastguard Station
Swansea Coastguard Station
Westminster Hall
(12 years, 5 months ago)
Westminster HallRead Full debate Read Hansard Text
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Sport and Youth Crime
(12 years, 5 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
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Damian Collins (Folkestone and Hythe) (Con)
It is a pleasure to serve under your chairmanship, Mr Dobbin. Today’s debate on the effects of sport on youth crime falls, in some ways, in the shadow of last summer’s riots, and from his appearance yesterday on “Newsnight”, I know that the Minister for Policing and Criminal Justice is up to speed with the subject. This debate is set against a longer-term concern about the rising problem of disengaged youth, which has disturbed Governments of all persuasions for decades, and a belief by many in the sporting community that sport can and does play a positive role in re-engaging young people and refocusing their lives.
Nelson Mandela has said:
“Sport has the power to change the world. It has the power to inspire… It speaks to youth in a language they understand. It is more powerful than governments in breaking down social barriers”,
and I want to use this debate not just to say that sport is good for its own sake, although many people believe that numerous benefits come with it. Studies of the benefits of youth participation in sport suggest that sport in and of itself is not enough to refocus or turn around the lives of disadvantaged young people and that what is required is a structured programme of support alongside the sporting activities. It is not simply a case of putting on ad hoc sporting events or creating new sporting facilities, but about how programmes are managed.
This is not simply a way of saying that Government intervention is necessarily a bad thing, or that Government agencies and public bodies are unable to deliver programmes that successfully intervene in young people’s lives. Support, including financial support, from the Government and their agencies is incredibly important to the success of such projects, but a good deal of new evidence suggests that sporting organisations and brands that have credibility in the eyes and lives of young people are often more successful in achieving the breakthrough that we all seek.
There has been a debate among people with an interest in sporting interventions in the lives of young people. People instinctively feel that such interventions are the right thing to do, and they have anecdotal evidence that they make a positive difference, but if there is any criticism, it is that there is perhaps a lack of robust data about exactly how they reduce criminal behaviour. I want to highlight some case studies that show the positive impact of such interventions on reducing crime and on antisocial behaviour and in improving the general well-being and educational performance of young people. The studies, of necessity in some ways, focus on relatively small numbers of people in relatively small geographical areas, and I would like the Government to consider some broader research that would seek to demonstrate the value for money and the performance of sporting interventions with young people.
I want to thank a number of sporting and other young people’s organisations that run such programmes and have provided information about them for the debate today—in particular, the Premier League, with its Kickz programme; the Manchester United Foundation; Charlton Athletic Community Trust; the Rugby Football Union; Sky Sports; the Sport and Recreation Alliance; First Light, which works in the arts; and Catch22. Their formal programmes are largely delivered by volunteers from the communities that they serve, and so I also want to thank the many volunteers who make them a success and the hundreds and thousands of people who work every day to deliver youth sporting projects, not just for disadvantaged young people but for all young people across the country. Their work is incredibly valuable and important to us all.
I want to look at four important areas that are of relevance to the debate: sporting programme interventions that help to reduce crime and antisocial behaviour; interventions that engage young offenders, both in young offenders institutions and after release; programmes for improving school attendance and attainment; and initiatives that help to rebuild young people’s self-worth.
We must consider costs; none of these programmes is delivered for free, although many are delivered with the support of the private and charitable sectors. We must also consider the costs of doing nothing, of maintaining the status quo. Based on 2010 figures, the National Audit Office has calculated that more than 200,000 criminal offences a year are committed by people aged between 10 and 17 at an annual cost to the country of up to £11 billion. It costs up to £100,000 a year to keep someone in a young offenders institution, and the number of 15 to 17-year-olds in prison has doubled over the past 10 years. During the five days of riots in August, 26% of the rioters were under 17, and 74% were under 24. There is not a male bias in the programmes and activities—they are open to boys and girls—but it is worth noting that 90% of the rioters were male.
First, on reducing crime and antisocial behaviour, one of the longest running and most successful projects is Kickz. It has been run by the Premier League for five years, has involved contact with more than 50,000 young people across 113 projects in some of the UK’s most deprived areas and has been supported by 43 professional football clubs. Kickz targets 12 to 18-year-olds, and its projects are football-led but include other sports and programmes designed to encourage young people’s awareness of health issues. The schemes typically take place three nights a week throughout the year, which is important in that they are frequent and have a very fixed structure. Kickz and the Premier League believe that one in 10 of the young people who initially attend the programmes as participants go on to volunteer, delivering the programmes for other young people, and they say that 398 people have gained full-time employment in some of the professional football clubs that have run the projects.
A report published last year by the Laureus Sport for Good Foundation and New Philanthropy Capital, entitled “Teenage Kicks”, looked at a project run with Arsenal football club in Elthorne park in London and discovered that the investment in the project potentially created £7 of value for every £1 spent, with the savings coming from the reduced costs to the state of the reduction in criminal behaviour, with less police and court time needed to put people in detention. One participant said that he thought that 25% of the kids on the estate would be in jail without the programme, and he highlighted the nature of the problems that many young people face. He was someone who came home from school to find not a fridge full of food and people waiting for him, but nothing for him at all and an empty time in his day.
Interestingly, the Laureus Sport for Good Foundation also commissioned a report looking at the role of sport in gang culture. Young people involved in the research gave reasons why they might get involved in activities that would keep them out of trouble, and the top reason was that the activities would simply give them something to do. We should not underestimate the importance of that.
Returning to the study of the Elthorne park Kickz project delivered by Arsenal, it suggested that there had been a 66% reduction in youth crime within a one-mile radius of the project. Even taking into account other interventions—through community policing, for example —and after looking at national youth crime reduction trends for that period, the study’s authors thought it reasonable to suggest that at least 20% of that reduction was directly related to the project.
The Manchester United Foundation has delivered similar projects, with its star footballers working with youth workers and volunteers to deliver football-based recreational projects for young people in Manchester. Some of its research suggests a similar pattern of behaviour to that found in other research. It believes that in its Salford project there was a 28.4% reduction in antisocial behaviour during the session times when the foundation was working, and a 16.3% reduction in Trafford.
There are other smaller projects that in some ways work with people with more challenging needs, and I want to highlight—this has been highlighted in the Laureus report and by other people—the work of the Tottenham boxing academy. Members who know more about boxing than I do might take part in this debate, so I will not dwell too much on this. The project was designed for 14 to 16-year-olds. Physical impact sports—boxing and rugby—seem to be particularly effective when working with people from troubled backgrounds and certainly with those who have been involved criminal activity. There were 17 people on that project. Eight of them were known to have been offenders in the past, and based on normal intervention programmes, two thirds of those young people would normally be expected to reoffend within a year. However, in that instance, only two did. It is a small project, but it suggests that sporting projects help to re-engage people. They engage young people through a sport and then allow the youth workers delivering the project to engage with them about the other issues that they might have.
Mark Field (Cities of London and Westminster) (Con)
I congratulate my hon. Friend on securing this important debate. He has spoken a bit about curing those who have committed youth crime. Does he accept that prevention is also an issue with youngsters who might otherwise be attracted into criminality?
May I make a quick plug for the club that is probably nearest to where we are sitting now? About 300 yards away is St Andrew’s club at Old Pye street. The club has been around for 130 years, runs 12 football teams on a weekly basis and has an indoor gym. It works well with Westminster school, which has put a lot of money into ensuring that the gym is up to the highest standards, and it makes an impact in the vicinity. St Andrew’s club operates not too far away from what would otherwise be a quite troubled area of social housing.
Damian Collins
I thank my hon. Friend for his intervention. St Andrew’s club is indeed a great success. I know that it has his support as well as that of previous lord mayors of Westminster, who have made it their annual mayoral charity. Its work is greatly appreciated by people in central London.
The project Hitz is delivered by the Rugby Football Union, the premiership rugby clubs and the police across 10 London boroughs, and has 750 participants. Again, the sessions are led by youth workers and run frequently, twice a week for 50 weeks of the year. In the Haggerston park area of Hackney, where the project was delivered, the fall in antisocial behaviour calls was calculated at 39% during the project.
Such projects often encourage people not just to take part in the project itself, but to take their interest into a more structured environment and perhaps into full-time participation in the sport. The Hackney Bulls rugby club recruited six new players from people involved in Hitz, and overall, the programme has taken 41 young people into full-time participation in rugby.
In my area, Kent, the Charlton Athletic Community Trust has done excellent work with young people over a number of years. Certain projects that have sought to re-engage young people and refocus their lives have caused similar falls in antisocial behaviour, including a fall of 35% in Aylesham and 59% in Buckland. The trust also does good work on alternative curriculum provision to re-engage young people with their studies, and I will come to that in a moment.
Good work can be done in the community to help direct young people away from the path of criminality, as my hon. Friend highlighted. There is also some evidence on work being done to engage young people in the prison environment, often at low cost, as many prisons and young offender institutions have good sporting facilities, and it is a question of bringing in the right people to engage young offenders. Those programmes use sport to help bridge the gap between life inside an institution to life outside it afterwards.
A project called 2nd Chance has worked in the Ashfield young offenders institution. Drawing on professional sports clubs around Bristol, such as Bristol Rovers and Bristol rugby club, it has worked with 400 offenders a year and is a low-cost provision. It has been calculated that, if just one offender with whom the programme works is kept out of prison, that will pay for the delivery of the entire programme for a year. When we consider that the current reoffending rate for young offenders in Ashfield is 76%, it seems a risk worth taking.
As part of the study of its work, 2nd Chance has asked that it and groups like it have access to information about reoffending rates for people who have engaged in such programmes, to demonstrate whether they offer a value for money return. At the moment, it is difficult for those groups to access that information, as all sorts of data protection issues rightly surround information that can be traced to individual offenders. However, could general information be given to make that link and demonstrate the payback of such projects? The project within Ashfield was delivered for less than £80,000 in a year of operation and worked with more than 400 young people.
The Rugby Football Union has a programme called Try for Life that has worked with young offenders in numerous institutions, and a programme called Prison to Pitch that trains young people in prison to play rugby and then helps them gain placements with rugby clubs outside prison. As with the programmes run by the Premier League, individuals who do not go on to work within the sport go on to volunteer to help deliver programmes for other young people.
School attendance and attainment is particularly relevant to a case from my own constituency that I want to cite: the work of the Charlton Athletic Community Trust in New Romney. It is worth noting in the data from the riots that 30% of rioters were persistently absent from school. In New Romney, the Charlton Athletic Community Trust has taken over alternative curriculum provision, a mainstream piece of provision offered across the country. Charlton Athletic won the contract to deliver it. It uses its role as a football and sport club to re-engage young people, but it also delivers studies in maths and English, as well as a broader basic curriculum.
The project opened in New Romney in September. I attended, along with my hon. Friend the Minister for Sport and the Olympics. During the two or three months since it started, the rate of attendance of the young people involved has improved significantly. The project gave me statistics. The attendance rate of one of those young people went from 1% at their previous institution to 55% now. Another student’s attendance rate went from 26% at their previous institution to 100% now.
Such projects help to reduce antisocial behaviour, as some statistics demonstrate, and a broader, fuller study by the Government would be welcome. I have cited examples showing how they can intervene successfully in the lives of young people in prison and re-engage those who have had trouble at school with their studies. There is also much to be said about the projects’ ability to help rebuild young people’s sense of self-worth and make them feel happier in their working and school environments.
The charity Greenhouse does a lot of work across London. It was supported by the Duke and Duchess of Cambridge on their wedding guest list and by The Times’s Christmas appeal. In the research based on its 41 full-time sports and performing arts projects across London, some things that stand out strongly are improved school attendance, improved timeliness for the projects and increased happiness in school. An evaluation commissioned by Greenhouse from external valuers showed that 87% of the young people with whom the charity worked reported being happy at school as a result of the new programmes in which they were taking part, compared with just 52% before the start of the programme. Those might be softer measures of improvement, but they are important when we consider that we are dealing with people who are, on the whole, quite disengaged from their environment and from formal learning areas and practices.
The Manchester United Foundation calculated that its project had worked with 500 young people. Of those 500, seven got jobs with Manchester United, 14 were recruited as volunteers, 30 gained accreditation in music and IT production projects, eight completed football level 1 and 2 qualifications, 12 won boxing tutor awards and 30 became junior football organisers. That is not a bad rate of return for engagement with 500 young people, and the project was delivered at relatively low cost, for less than £50,000 a year.
In conclusion, I ask the Government to consider the issues raised by my remarks and the case studies that I have mentioned. The Government should shift their priorities generally—they have already signalled a shift—so that they do not just increase participation in sport for good but consider how targeted intervention by sporting projects can help change the lives of some of the most hard-to-reach young people. They should consider how to create a unified approach to delivery across Departments. The work touches on the role of the Home Office, the Ministry of Justice, the Department for Culture, Media and Sport, the Department for Education and the Department for Communities and Local Government, all of which have some interest in the delivery of such projects. A unified approach is needed, probably with a lead Minister to take responsibility for and an interest in how those projects are delivered.
There should be a review of some of the rules and regulations about the delivery of sporting projects on the ground. Many sporting clubs cite problems with Criminal Records Bureau checks and other forms of bureaucracy that make their work more difficult. We should certainly look at that. All the national sporting bodies should prioritise the development of coaching qualifications and the training of people to help deliver projects.
To return to what I said at the beginning of the debate, a good starting point would be to build on the work that is being done by many sporting and charitable organisations, take up the research that they have done, complete a fuller study and analysis of the benefits and the rate of return from this type of intervention, and then consider the potential basis of further Government support via Government agencies, local government and the police—through crime prevention strategies—to make this a fuller programme for the country. The need to re-engage with young people is strong and evident, and the riots over the summer demonstrated that clearly to us all. Through the fog of this despair, there is evidence of some incredible and successful interventions that are turning around the lives of young people. We should draw from that and build for the future.
Jim Dobbin (in the Chair)
Order. Before I call the next hon. Member to speak, it looks as though four or five other Members would like to contribute. I intend to call the shadow Minister at about 20 minutes to 11.
Tom Brake (Carshalton and Wallington) (LD)
Thank you, Mr Dobbin. I congratulate the hon. Member for Folkestone and Hythe (Damian Collins) on securing this debate. I hope that hon. Members will not feel too much of a sense of déjà vu after I have finished, because I will make many of the points that he has already made, although I will use examples that are local to me in order to illustrate them.
The debate’s title could have been recast and centred on the effect of sports leaders on youth crime, because I think that sports leaders are what really do it in terms of reducing crime. Clearly, the sport itself plays a part, but I think it is the sports leaders who have the impact, and that is because of the discipline that they can instil, their important mentoring role, and the values that they demonstrate in leading young people, whatever their sporting activity. The Government have to get on top of the mentoring role. I believe that there is an issue about which Government Department should take responsibility for mentors. There is a clear need for them in, I would suggest, large numbers, but there seem to be difficulties in securing them, so that is an area for the Government to focus on.
Sport is also central to reducing youth crime and engaging young people in positive diversionary activities. Sport is all about team play—working together with others—which might be something that they have not experienced before. Moreover, exercise undoubtedly helps address the anger management issues that some young people may have—it is a lot harder to be angry after three hours of intense sporting activity. Sport is also about sportsmanship and being able to demonstrate to other young people the value of fair play. Wrapped up in all that is the issue of diet. Addressing dietary failures is necessary not only to succeed at sport at almost any level, but particularly if alcohol is an issue.
There are many examples of very successful sports schemes—or schemes that use sport, which are slightly different—that are used to tackle criminal behaviour or reduce the risk of offending. The hon. Gentleman has referred to Kickz, which is a very good project, and I will refer to a couple of statistics that highlight its success. There has been a 60% reduction in antisocial behaviour in areas in which Kickz is active, and up to a 20% reduction in the crimes that are most often associated with young people. Clearly, the project has the metrics to demonstrate that it is successful, but, like the hon. Gentleman, I think there is an issue about being able to demonstrate what types of projects are in fact successful. Anecdotal evidence is, of course, very good, but if the Government, the voluntary sector and charities, or social entrepreneurs want to invest in something, we need more than anecdotal evidence to support what is and what is not successful.
I am fortunate to have Cricket for Change based in my constituency. It does a lot of work on street cricket and engaging young people, both boys and girls, in it. Such is the success of its programmes that it has exported them to other countries around the world, such as Jamaica, Sri Lanka and South Africa, so it has taken the idea to challenging deprived areas and has bound people together. It has just finished a three-year programme targeting the 10 communities in London with the highest levels of youth crime. I want to see what that project’s metrics say about the outcomes, because it may have been very successful.
Another local project is Community Inspirations, the importance of which is that it can provide wraparound for some young people who have fallen out of education. They may, for instance, be training locally at the Skills and Integrated Learning Centre—SILC—in plastering, tiling and other skills. There is often an issue about what they do during the school holidays. The typical activities of organisations such as Community Inspirations centre on sport. It often takes a group of young people who may never have stepped outside their postcode to another part of the country to meet other young people and play in competitions. It is having an important impact.
I had a chance meeting last night on my way to the Akash Tandoori, an establishment that I would recommend to anyone who finds themselves in Wallington. It is run by Yawar Khan, who is the president of the Federation of Bangladeshi Caterers and with whom I do a lot of work. Incidentally, I think that the Government and the Secretary of State for Communities and Local Government could perhaps give him credit for the idea of setting up a curry college in the UK, because he and his federation have been pushing for it for a number of years. He certainly sees the value in training young people here, as opposed to bringing them over from abroad. I will not pursue that line of inquiry, because its link with sport is tenuous.
Mr Khan was hosting a fundraiser for the Royal Marsden at which I happened to meet Mike Fleet, who runs Croydon Harriers. It takes its role in education very seriously, to the extent that when it takes young people on a coach to an athletics meet, the team managers go around and ask the young people, “Where’s your homework? Are you doing it? Do you need some help with your Spanish?” It is, therefore, very hands-on in its support for those young people, as well as in coaching them in their sporting activities and techniques.
I asked Mike why he thought sport was successful and whether it was because the young people win and it gives them a sense of worth. He replied that that was not necessarily the reason, because, of course, they do not all win. He said that it is actually about things such as feeling that they are part of a family. They see a group of young people and adults on a regular basis who can provide them with support. Croydon Harriers work with a range of young people, from perhaps some of the most challenging in Croydon to pupils from Whitgift—whose behaviour I do not think is particularly challenging—and provide them with support and a family environment. In fact, they will often bring in a young person’s actual family and provide an environment in which they can work together, with sport as the coalescing factor. Young people can also see their own progress—they start out achieving a certain distance or time and can then monitor their progress and realise that they are taking positive steps.
Members may not have expected this, but the final project that I would like to mention is the work of the Angling Trust on urban fishing and getting young people from areas that we would least expect involved in fishing. However, a blogger responded to my suggestion that this was a good thing by saying that they did not want oiks to ruin their fishing, so there may be some issues about ensuring that regular fishermen and women do not feel threatened, but the project has an important part to play.
I have given examples of some very good schemes. Finally, I would like to go over the same ground as the hon. Gentleman. There are statistics and hard facts about what is successful, and a lot of anecdotal evidence, but we need to channel that into a strong body of evidence on which the Government and other groups can base decisions about what types of sports schemes they should support. That is true for the whole area of criminal justice, for crime prevention and detection, and for sport. I understand that a sports think-tank has just been set up. Andy Reed, who used to be the Member of Parliament for Loughborough, Lord Addington and a Conservative peer whose name, unfortunately, I cannot remember are on that think-tank. That organisation may want to consider the matter in terms of pulling together the evidence. We need some joined-up government.
This is my last point. We know that the cost of sending people to prison is £40,000, and up to—who knows?—£200,000 for a very secure establishment. We want to see some hard facts about the success of these projects in diverting young people away from crime, so that we can offset the expenditure on those projects against the savings that will be derived by having fewer young people in our prisons. If the Government can achieve that, there will be a substantial improvement in our understanding of how we can tackle these problems.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
It is a pleasure to serve under your chairmanship, Mr Dobbin, in this important debate, and I congratulate my hon. Friend the Member for Folkestone and Hythe (Damian Collins) on securing it.
Anecdotally, we have all seen programmes that touch us in understanding how sport has actively intervened in people’s lives to put them on the straight and narrow or, indeed, to make them positive role models in their own communities and families. My hon. Friend has already set out in substantial detail the wide landscape within which many programmes operate. The Positive Futures programme in Suffolk is run as part of a national programme and has been a significant success. It is funded by the Home Office drugs strategy directorate and I hope that the Minister may have some evidence of its benefits. All of us can think of examples in our constituencies where such an approach has worked.
The Rugby Football Foundation, which has already been mentioned, is involved with the Prison to Pitch initiative. I have been impressed by Sally Pettipher from the Rugby Football Foundation, who has described that scheme to me. I have tried to help to organise some funding and she has been very diligent in trying to get the initiative going, which works with people who are in prison or a young offenders institute. The physical playing of rugby is a useful energy release exercise, but that is not the only beauty of the project. When people leave prison or a young offenders institute, they are invited to join their local rugby club. The intention is that, instead of perhaps going back to the so-called family or friends who lead them astray or back into crime, they can have a new family within the rugby club. Rugby is particularly well set up for that because it has more of a clubhouse feel and that community aspect is far more evident than perhaps with many football teams. Those teams do a great job across the country. Often—how can I put it?—they assemble on Hackney marshes on a Sunday and go for a drink afterwards, but the members of the teams do not necessarily see each other from one week to the next.
I want to encourage the Home Office and the Minister to try to do what they can to support that programme. The Under-Secretary of State for Justice, my hon. Friend the Member for Reigate (Mr Blunt), who is responsible for prisons, was very supportive of the scheme and, indeed, still is. However, I know that Ministry of Justice officials were initially concerned that allowing a contact sport into a youth offenders institute would introduce safeguarding issues around children. We seem to have got over that, but I encourage the Minister to do what he can to try to stress the positive aspect of sports as opposed to erecting barriers.
A separate programme—the Wooden Spoon programme—essentially involves a group of teams that go out and play and raise money for community projects. That has been very successful; indeed, it has crossed codes, with the league and the union coming together to provide mutual support. The programme’s projects not only tackle things such as disability and opportunities, but, with the Young Men’s Christian Association, focus on NEETs. That has been successful in trying to tackle antisocial behaviour in deprived areas.
My hon. Friend the Member for Folkestone and Hythe is a big Manchester United fan. I happen to be a Liverpool fan. After the party conference this year, I was in Manchester, but I made the trip down to Speke in Liverpool. I was made very welcome there by the Liverpool football club community department. I pay particular tribute to Bill Bygroves who is the community officer. He has a focused team of people, and has shown true leadership since the scheme was set up in 2000. From what I could tell from my time there, the scheme has gone from strength to strength and is broadening out into a variety of functions, including addressing issues such as men’s health.
I want to focus on some of the work that the LFC community department does with children and schools. It employs some people who, by their own admission, have strayed off the straight and narrow path but have turned their lives around and have been encouraged by the positive association in the community with a brand as strong as Liverpool football club. That brand association has taken these programmes into places where things that are not very cool, such as a local youth service, might not reach. Of course, it is not only happening in Liverpool. We have heard about Manchester United and I know Everton do it. In addition, the excellent Kickz scheme has been mentioned. The LFC community department has done something very good in systematically associating something positive with a general challenge to attitudes and, critically, with talking about positive relationships.
I have been shown a variety of material that has been shared with many children across Liverpool. The scheme works in such a way that, essentially, children from a class will spend time at a particular sports centre and interact with people who work for the club. Various worksheets are used as part of its education curriculum, which talk about things such as “positive relationships,” “tactics for families,” “respect for all,” “truth for youth,” “drop the drugs,” “ban the bully,” “rule out the racist,” “shoot goals not guns” and “say no to knife crime.” As hon. Members can see, very positive messages are associated with leading football players such as Steven Gerrard and because Stevie says so, kids will stand up and take notice, which is very positive.
On other local activities, I must admit that I do not have children, but I always get a bit fed up when I meet younger people who say that there is nothing to do and blame this, that and the other. If we look around us, we can see the great work that is done in every community across this land, whether by volunteers who help to run the scouts and the guides and enjoy that kind of sport; those who are involved with work in lucky places such as Manchester, Liverpool and other main conurbations where football and rugby teams proactively go out to help their local communities; or people who are involved with the local Army Cadet Force or similar organisations. I genuinely believe that there is a lot out there for young people to do, but sometimes we just need to encourage them in the right direction.
Of course, many of those things are not seen as being very cool. Although the Archbishop of Canterbury talks about civic society, he needs to go and engage with these people. Something we can all do is direct people towards such organisations. One of the lessons we can learn is to associate positive brand ambassadors with these initiatives, whether they are at a football club or a local church school hall youth club that meets on a Thursday night. We need to have such positive brand imagery and to encourage all our local celebrities and respected local people—that may even include Members of Parliament—to fly the flag for the volunteers who are trying to make a difference with youth and sport.
Jim Dobbin (in the Chair)
In case hon. Members are interested, for the record, I should say that I am a Glasgow Celtic fan.
Charlotte Leslie (Bristol North West) (Con)
It is a pleasure to serve under your chairmanship, Mr Dobbin. I congratulate and thank my hon. Friend the Member for Folkestone and Hythe (Damian Collins) for securing the debate, which could not be more timely or more important. I thank him and other hon. Members for illustrating so effectively the statistical basis we have to demonstrate why sport is so important in tackling youth crime.
There is also the value-for-money aspect. My hon. Friend talked in a learned manner about boxing and the Tottenham boxing academy. What is so fascinating is that, as an alternative pupil referral unit, it actually costs a lot less than a regular PRU and is significantly more successful. In difficult economic times, youth sport is not only a good mechanism to tackle one of the big issues of our time, which erupted in August, but an extremely valuable mechanism to deal with social problems that arise when we do not have much money to do so.
In my short time this morning, I do not want to concentrate on anecdotes, because there are many, or the statistics and value-for-money figures, because they have been given out very effectively. I want to outline briefly why sport is important. If we understand what sport is and why it is important, it becomes a no-brainer that it will perform the functions that we need to demonstrate statistically—because we are accountable politicians—before we spend money on it. It is very important to understand what sport is.
I am president of my local boxing club, The National Smelting Co Amateur Boxing club, and chair of the all-party group on boxing. As with many sports, boxing is so important for many young people who have fallen out of all the normal authority measures. They have fallen out of school because they do not see that it offers anything for them. They have fallen out of the council’s best attempts to engage them in its systems of social work because they feel that they are dislocated from authority. For many young people, the boxing club is the only rival identity to other less savoury identities that are offered to them. One young boxer said to me:
“My life was a cul-de-sac of going into a gang. If I wanted an identity, security, protection, feeling I am something, there was only one option for me and that was to join a gang. My local boxing club provided an avenue off that cul-de-sac where I could find a family and identity.”
Family and identity, particularly identity for young people, are massively important. We all remember our school playground days and how important it was to be a member of a group of friends for our own identity. Crucially, for many young people, sport is the first opportunity they have to have a traction on achievement. In the riots, we saw a whole generation of young people who felt that they had nothing to lose, so why not go off and do stupid things? They felt they had no traction on achievement in their lives. They did not actually know how to achieve. The word “aspiration” is bandied around a lot, and the concept, included in the document, “Five days in August”, of hope and dreams is also bandied about a lot. There is a big, big difference between having hopes and dreams, and having goals. A hope and a dream is something one might vaguely hope to get to. Lots of young people have hopes and dreams of being David Beckham, or a WAG. They do not have any idea of how to achieve those hopes and dreams.
Sport begins to give young people a ladder to climb, from where they are now to where they think they want to be. Not everyone can be David Beckham. He is a very talented footballer. The narrative that society gives to young people is that David Beckham became David Beckham by just appearing on TV one day in a football kit, but David Beckham became David Beckham by putting in hours and hours and hours of training and hard work. The immense value of sports clubs—particularly boxing clubs for kids who will not engage with other forms of society, because they feel they are too much part of authority—is that they provide the first opportunity to learn the very important lesson that my old swimming coach, Eric Henderson, taught me—no pain, no gain. To achieve something, one has to put in effort now, be it doing maths homework because one wants to be rich, have a fast car and a very attractive wife, or be it putting in a bit of effort going for a run and a sports training session that one does not really want to do—because it is early in the morning, it is raining and one feels tired—but one does because one wants to achieve something in sporting life later on. That, of course, applies to school, sport and life. It applies to getting a job. It applies to so many things. In fact, it is the citizenship lesson about work and achievement—about teamwork, learning how to win and learning how to lose—that is so often delivered in schools in a two-dimensional form on a piece of paper, but which we need to deliver to young people in a real form on our sports fields and in our sports clubs.
We have the most extraordinary opportunity on our horizon next year. It is a once in a generation event: the Olympic games. We have just come through a summer that has rocked our nation. There is a problem with youth disengagement that we all knew existed. My goodness me, communities up and down the country knew it existed, because it was on their doorsteps daily. It erupted with massive force in London in August. The whole country looked at our young people and asked, “How have we let this happen?”
Next year, we have the most iconic solution to that problem—we have the Olympic games. I beg Government—I will do everything I can to work with them—not to let the opportunity of an Olympic legacy go to waste. On the ground, people know that sport works. If we understand the basic psychology of kids and all human beings, it is very apparent why sport works. We urgently need statistics, and the statistics base around it, to justify expenditure we need to make. We need to put that at the heart of tackling the massive social problem that erupted this year. What better opportunity is there to do that than when our British Olympic champions stand up on those podiums with those medals that I have no doubt they will win, saying, “Not only is this a gold medal because I was fastest or jumped highest on the day, not only is this a gold medal to say I was the best, but this gold medal also means a lot to me because of all the work I put in to get there”? Not everyone can be an Olympic champion, but everyone has their own personal best that they can achieve. It would be a great message to have every British Olympian standing and inspiring our young people to achieve. We can only do that if they have the rungs on the bottom of the ladder in our communities at grass-roots sports level in our schools and in our amateur sports clubs.
Once again, I thank my hon. Friend the Member for Folkestone and Hythe for securing this debate, which could not be more timely. We do not have much time to act and I urge the Government to address this issue with all seriousness.
Justin Tomlinson (North Swindon) (Con)
It is an absolute pleasure to serve under your chairmanship, Mr Dobbin. I congratulate my hon. Friend the Member for Folkestone and Hythe (Damian Collins) on securing this important debate.
I am passionate about the positive role that sport can play in our local communities. I support that positive role through encouraging a healthy and active lifestyle that improves behaviour, teamwork and enjoyment. Sport can channel young people’s energy and boost self-esteem. Sport can be a forum for enjoyment, friendship and personal fulfilment. Sport can reach and change young people by improving their life chances, increasing educational attainment and building life skills. Sport can achieve some of the social outcomes that will help transform our society, and sport can be used a tool to benefit disadvantaged young children.
The reason why I am so passionate about sport relates partly to my own background and partly to the fact that I was the lead member for leisure on Swindon borough council before I became a Member of Parliament. I went to a school that was bottom of the league table in Worcestershire. We had many of the challenges that are often raised in debates connected to this subject. Two of my best friends when I was growing up ended up spending time at Her Majesty’s pleasure. Some would say that, now that I am in Parliament, perhaps I did not do better than those other two people, but among our group of friends, the main reason why the majority of us did not follow my two friends who did go to prison was, frankly, that we were too tired at the end of the day because of sport. We were influenced by role models on television. We predominantly played football, but, if it was Wimbledon fortnight, out came the tennis racquets. If the Tour de France was on, out came the bikes from the shed. If it was the Ashes cricket, out came the cricket bats. This is a serious point: we were genuinely too tired to cause too much trouble. By the time the sun went down, we were more than ready to go home and be watered and fed.
I want to focus my comments on the opportunities that I benefited from and that we as a society can provide for young children. When I was first elected, probably one of my more controversial moves was to support the move to defend the school sports partnership programme. I was a big champion of that scheme, because its whole principle was to provide sporting opportunities for those who are not particularly naturally competitive. If someone is gifted at sport, invariably that is because their parents have encouraged them from a young age, and they will therefore have been provided with plenty of opportunities. The vast majority of children, however, need a bit more encouragement. The one thing that the school sports partnership programme does very well is offer a wide programme of opportunities. There is a sport for everyone. When I refer to sport, it is not always necessarily the obvious sports that we might see in the Olympics or on the television, but such sports as street dance—basically, anything that can make young people active and constructive.
We also need to encourage more coaches—a number of hon. Members have already touched on that—but also day-to-day volunteers. When I talk to sports clubs, their biggest challenge is to find someone to be the club secretary or treasurer, and someone to fill in all the complicated forms and to organise the fixtures. There is a real deficit of people to fill those roles. In a society, people who are not particularly sports-minded can still play a constructive role. I welcome the work of the Football Foundation with its funding; rather than only the traditional provision of a brand-new, shiny set of football kits for a variety of sports clubs, it is looking at the legacy and encouraging more coaches and volunteers, so that more people get an opportunity to benefit.
Charlotte Leslie
Does my hon. Friend agree that, if we are going to talk about the big society, for example, there are few areas where it is more prevalent than in sport?
Justin Tomlinson
I am passionate about the merits of the big society, and sport can be absolutely at the heart of it. We can all play a role, even if it is not the traditional one of leading on the front line in the sporting team.
During the 10 years that I was a councillor, four of which were spent as the lead member for leisure, the one thing that I was most proud of was setting up the Sports Forum, which brought together about 60 different sporting organisations from throughout Swindon. They would meet once a quarter to share best practice, to identify additional funding, to help increase their presence in the local media and to share facilities. It was a huge success.
In a brief deviation, we had the extremely sad news that Roger Byrne, who was the lead officer for leisure, passed away last week. He was one of the main driving forces behind the Sports Forum, and during my 10 years on the council, he was easily the most respected officer that I and many others ever worked with.
From the Swindon Sports Forum, an example of how different organisations coming together can make a huge difference is Esprit Gymnastics, an excellent not-for-profit organisation promoting gymnastics. It used a facility that was full to capacity, with about 400 children a week benefiting, but it was so popular that the neighbouring units on the industrial park where it was based complained, saying that there was nowhere to park after school times, because all the parents were descending, and that either it should move away or they would move away.
Suddenly, a successful gymnastics organisation was faced with being homeless. Through the Sports Forum and Swindon borough council, an alternative facility was found—at the old Headlands school, which was being bulldozed to create a new academy, although a £4 million sports hall had only been built a couple of years earlier. We faced the embarrassing situation of bulldozing a relatively new £4 million sports hall, and to cut a long story short, a deal was done and Esprit Gymnastics moved into the sports hall site, while the school was bulldozed around it. Esprit paid a level of rent to the council and managed the facility.
I went to visit last Monday and not only does the site now have a much bigger gymnastics facility, but the Kirsty Farrow dance academy and the Leadership Martial Arts organisation are in place as well. From 450 children a week benefiting from a facility, we now have 2,000 children a week. This is all washing its face, and it is a fantastic facility. I met with parents who were dropping off one child for dance, one for gymnastics and another for martial arts. Some do different activities on different nights, and we even have a shop in the facility that provides all the specialist clothing. It is a really good example of organisations coming together, led by volunteers, to transform a number of young children’s opportunities.
Other opportunities go back to when I was younger and playing lots of sport: the absolute, desperate need for accessible, usable open spaces, which I talked about in my maiden speech. The turf on the football pitches does not have to be premier league quality. I played on an almost vertical hill that worked very well; because two of my friends, the twins Matthew and Paul Gilbert, were so much better than we were, they had the privilege of kicking uphill all day long, while the rest of us got to kick downhill—we still lost.
The other frustration that I saw when I was a borough councillor was to do with private finance initiatives and access. Schools in my old ward of the borough were PFI and, once the clocks hit 4, it cost an absolute fortune to get access to those facilities. I represented a high-density housing estate with limited open spaces, but with wonderful expanses of open space behind high fences priced out of the community’s reach. As a society, we need to look at that.
I welcome some recent Government measures—in particular, the introduction of a “troops to teachers” programme. When I visit schools, particularly primary schools, the heads are saying that their big challenge in providing sporting opportunities is not necessarily having a pool of teachers who have the confidence or the skills to deliver a wide variety of sport. If we can get some of those troops who become teachers into primary schools, they would be apt to offer such opportunities.
Insurance continues to be a big burden, particularly for young teachers who are extremely expensive to insure for school minibuses, which limits the opportunities to go and play sport in school competitions or at the regional or district level. I keep calling on the Government to broker a national agreement, with their collective power of hundreds and thousands of schools, to get a better deal for the younger staff.
Let us look at legacy and the schools Olympics. As has been mentioned, the Olympics are a wonderful opportunity to inspire young people who, however, then need the opportunity to play the sports in which we are successful. Whichever sports we are successful in are the ones that the children wish to replicate, so it is really important that the schools Olympics that we are driving forward are taken on board and utilised, so that everyone has regular opportunities, especially once the razzmatazz of the Olympics has passed.
There have been many mentions of mighty premier league football clubs such as Liverpool and Manchester United, so I will throw in Swindon Supermarine of the seventh tier of the Football League, whom I worked with to secure funding for from Capita, to pay for a sports programme for the most challenging schools in both the Swindon constituencies. It was about not only providing an opportunity to play football but helping with nutritional advice—in some cases, the basic necessity of a meal—as well as providing kit. Again, that has been exceptionally popular.
Finally, sport needs to work more with the youth service. In the old days, the traditional youth service and the traditional sports club, which was for the most competitive and technically able children, would never mix. The two should be one and the same. In all local authorities, the head of sports should also be the head of youth. When I was head of leisure, I touched on the youth service briefly, and I visited a lot of those traditional youth centres, which might have only six or eight children on a Friday evening. Yet I would go to the ice-skating disco and 600 teenagers were whizzing around the rink, chasing whoever was their flavour of the month and keeping themselves active and constructive. It always used to frustrate me that sport could have been used to engage with children, whether street dance, ice skating or football. The youth service needs to get out of its fixed facility and park itself outside wherever sport is enticing children.
Recently, I spoke to Stratton parish council, which is considering spending somewhere in the region of £4,000 or £5,000 on graffiti walls, which I am utterly opposed to. I said that it would surely be far better to spend that money on hiring some coaches, whether for boxing or for football, who could come in on a Friday night—the council would not have to charge itself for opening up its own facilities in community centres and school grounds—and those coaches, on £30 or £40 an hour, could provide entertainment and a constructive outlook for young children.
My plea to the Minister is to keep driving home the need to create opportunities. The facilities do not necessarily have to be fantastic, wonderful or driven by the most efficient, sports-minded people, but give young people an opportunity—they are creative enough to take advantage of it. If we can keep them engaged actively, as I was, they will be too shattered to cause any trouble.
Stella Creasy (Walthamstow) (Lab/Co-op)
It is a pleasure to speak in the debate. I congratulate my fellow Red—in many senses, from what he said today—the hon. Member for Folkestone and Hythe (Damian Collins) on securing the debate, which is timely, as has been said. There is a large degree of consensus in the Chamber about the importance of sport to our young people. I wish to talk about that, about some of the challenges in achieving the outcomes that we all say that we can achieve through sport and about why that matters.
The first point to make on the record, perhaps with an exception for the hon. Member for North Swindon (Justin Tomlinson)—I take issue with his humbleness about the impact of sport on his own achievements—is that we all recognise, as the hon. Member for Folkestone and Hythe said, that sport is not enough on its own. It is not about containing or diverting young people, but about the relationship that good, positive sporting activities and those who undertake them can play in securing achievement for our young people. Therefore, it is important to see sport not simply as a form of diversion but as a pathway to that achievement, and that is how we get the impact that we are all talking about. Not only do the coaches in our own communities keep kids off the street, but they keep them on that path towards the straight and narrow, towards the things that they could do in life.
This is not just about young people’s formal exercise activities—I take on board the points made by the right hon. Member for Carshalton and Wallington (Tom Brake) and the hon. Member for North Swindon—but about the soft skills that they learn from being involved in sport and working with sports coaches and other young people. Those skills include team leadership, teamwork and participation, and what they offer not just on the pitch, but in the playground and the classroom. The importance of data and examples to prove what we have all known for many years—this applies especially to those of us who have worked in the youth voluntary sector—about those relationships and what sport gives to young people is vital to understand in whose interest investment in sport provision is and to secure those outcomes.
We have talked about different interventions, or alliterations, whether prison to pitch, cricket for change, or troops for teachers, and they all show that thinking smartly about how to bring those skills to young people—the right people to work with to engage them in those activities—reaps rewards that last not just while taking part in the sport, but for a generation. We also talked about the value for money of those programmes, which is a key point to which I shall return. If it is recognised that the benefits accrue not just in the short term, but in the long term, it is necessary also to recognise whose responsibility it is to support that work to secure the gain.
The challenge for us all is not to make the case for whether sport can play an important role in helping young people to achieve, thereby in tackling crime and under-achievement, but to say how to do that. The hon. Member for North Swindon mentioned school sports, and I pay tribute to the support that he gave to many of us who were deeply worried by the proposals to cut the school sports programme. I want to put on the record my personal thanks to my right hon. Friends the Members for Leigh (Andy Burnham) and for Dulwich and West Norwood (Tessa Jowell) for their work in improving dramatically the teaching of sport through schools and for having the far-sightedness to recognise its value.
School sports drove up participation in high-quality physical education for our young people from only 25% in 1997 to more than 90% in 2010. The school sport partnership, to which the hon. Member for North Swindon referred, was vital because it enabled the infrastructure that made participation possible to be put together, including the people who organised the games, provided the coaching and looked for the range of sports that young people want to take part in. When the Government foolhardily tried to dismantle that network, there was, rightly, an outcry. It is welcome that they have backed down to some degree, although many of us who still work with our local school sport co-ordinators are worried about the impact of those changes.
The issue is not just what can be done in schools. Critically, it involves the role of the voluntary sector. Some fantastic examples have been mentioned today. I have worked in the scouting movement, and I want to put on the record my support for voluntary organisations and the number of activities that they could provide. We are all clear that not just one sport is involved. Indeed, the scouting movement prides itself on being able to provide 200 different activities for young people each week and recognises that a range of provision is needed to engage with the range of young people.
I see the work of organisations such as Kickz in my community, and I want to put on the record my thanks to the Leyton Orient community sports programme for promoting that work. The hon. Member for Folkestone and Hythe referred to the “Teenage Kicks” research. We know the impact of its work in pulling back young people who are at risk of antisocial behaviour, and we know that that makes a difference and is valuable not just regarding their antisocial behaviour but for their future achievement. He also referred to a social return on investment. Such programmes with the right people bring rewards that we could not achieve through sport provision alone.
I pay tribute to some of the grass-roots organisations. Many hon. Members have talked about fantastic large organisations that work with young people. I also pay tribute to Manchester United for inspiring me in many different ways. I share sympathy with the hon. Member for Suffolk Coastal (Dr Coffey) for her support for Liverpool, and I appreciate the work of the Liverpool community sport programme. Many of us know of smaller organisations in our communities, including Salaam Peace and Asianos in my constituency, that encourage young men to take part in football and cricket. They engage with young people with mentors from similar backgrounds who recognise the role of sport in providing soft skills and spend their lives encouraging young people to take part.
All such organisations—I want to turn to risks—show the importance of joined-up provision. The funding for such organisations often comes from a range of sources, including public and voluntary sources, and philanthropically from the private sector. That is a concern that I want to put to the Minister. We all recognise, because of the relationship to achievement, the value for money of investing in sport and providing sporting activities not just early in children’s lives, but throughout the critical periods of transition to adulthood, but how can we ensure that that happens not just for the few, but for all young people?
One of my concerns, having worked in the voluntary and community sector in providing for young people, as well as in local government, is the impact of some of the cuts on our ability to deliver such services. One challenge for local authorities, which often fund such work initially and are often a vital support for voluntary organisations at grass-roots and national level, is that the speed of the cuts means that they are cutting the very relationships that we all believe are important for young people, because there was no time to find efficiencies, to renegotiate contracts or to share services. Inevitably, funding for the voluntary sector, especially non-statutory services such as youth services, has suffered most. No one is denying that money must be saved, but it will clearly be a false economy if the very services and relationships that we know make a difference to our young people are the first to be cut.
Damian Collins
On priorities, the previous Government decided not to support Kickz from the investment budget of the Department for Culture, Media and Sport because the programme was not designed purely to increase participation. Some people may say that it had a stronger function, but that function has been recognised by the Home Office in particular under the current Government. Total money is important, but so is deciding on priority areas of spending.
Stella Creasy
The hon. Gentleman is absolutely right to talk about priorities, but he is being a little disingenuous about Kickz, because it received public funding from other agencies. This is not just about particular projects; the case that he made powerfully, with which I agree, is that it is about the activities that we ask youth providers to undertake. Indeed, I would be critical of those who simply offer sport without asking what it can do in the long term for young people and those who say that it is enough just to get young people off the streets. That is why I challenge the hon. Member for North Swindon, who suggested that all that mattered was that he was tired at the end of the day. I suspect that participating in sport, working with other young people and organising sport made a difference to his confidence and probably also to his life chances.
We cannot get away from how to fund such activities. My worry today is that cuts mean that organisations and programmes such as Kickz and Leyton Orient’s community sports programme are under pressure as a result of some of the Government’s choices. If we all accept the case that good sports activity can provide that longer-term function in young people’s lives, we should be fighting for resources to go to those organisations and making the case for investment now and in the future, as a way to protect longer-term achievement.
The issue is not just the practical provision of services, but how that can help to reduce crime. The Minister may not be responsible for the allocation of budgets to the Department for Communities and Local Government, but he is responsible for community safety grants. We have seen a massive slashing of those grants and the very money that was helping the police and local authorities to work creatively with local community groups to provide outreach activities. For example, in Lambeth, one of the boroughs that was affected by the riots, the community safety grant has been reduced from £691,000 in 2010-11 to just £276,000 in 2012-13. Hounslow is facing a 32% cut in its youth offending budget next year. That matters because the funding allows people to think creatively about how to engage with young people and to do more than just tackle crime; it can prevent it by funding work with those young people, but that is under threat.
I want to flag up for the Minister the fact that the funding cuts for local government are a real risk to some of their key provision of facilities. The hon. Member for North Swindon spoke effectively about the importance of school buildings. The extended schools programme was doing exactly what he was asking for. It was encouraging schools to consider how to open up their facilities. I represent an area in north-east London, and I am conscious of the lack of space to undertake sporting activities. There is a relationship between playing sport at school and taking part in sporting events organised by voluntary organisations outside the school, but somewhere is needed to do that work. Will he make a case for revising that decision? I am sure that he will ask where the money will come from.
May I encourage the Minister to talk to his colleagues in the Department for Education about the national citizen service? There are questions about the scheme’s value for money, and the Education Committee has highlighted concerns about the costs versus outputs that we will get from the service as it is currently constructed. If the Minister recognises the social return on investment in sport in tackling youth crime and also in delivering achievement, I suggest that he work with his colleagues across the Government to make the case for a better use of the funding that is available for youth provision.
Charlotte Leslie
Does the hon. Lady recognise that much of the purpose of the citizen service scheme is to engage young people in the idea of volunteering and getting involved in their communities? On no planet will the Government be able to fund the entirety of amateur youth sport across the country. The national citizen service scheme plays a valuable role in introducing young people into their communities, so that they too can coach young people and play an active part in their community. It cannot be measured in the simplistic terms suggested by the hon. Lady.
Stella Creasy
The hon. Lady ought to listen to her colleague, the hon. Member for Folkestone and Hythe, who talked about priorities. In a time of financial austerity, the national citizen service is a very expensive scheme for a very small amount of time. If we are not able to fund everything—yet we are all in this together—we have to look at what money is being spent on young people. I advise the hon. Lady to look at the Government’s commitment to fund the national citizen service for all 16-year-olds and the amount of money that that implies. She has made a powerful case about value for money and the cost of some of the alternative schemes that support young people, but perhaps she should consider which is the greater priority at this point in time. I have a background in working with a national scheme that provides exactly that sort of citizen service through the uniformed organisations. No one is suggesting that such schemes do not have merit, but in a time of financial austerity, it is absolutely right to ask about the Government’s priorities, especially given the powerful case that Conservative Members have made about the impact of sports provision and the importance of working with voluntary organisations and providing services not just for eight weeks in the summer but throughout a young person’s life, so that they can have mentoring and support, not just to avoid antisocial behaviour, but to secure achievement.
Dr Thérèse Coffey
The hon. Lady suggests that the systems that we have had seem to have worked. It is fair to say that this new initiative is a seedcorn project, but I think that it has great potential. We should not keep throwing money at projects that may not have had the impact that the hon. Lady suggested.
Stella Creasy
I absolutely agree with the hon. Lady, and I therefore advise her to read the Education Committee’s report on the national citizen service in which questions were raised about the scheme’s value for money and efficacy. That is the key point. If we all agree that sport makes a difference to young people’s achievement, we have to look at how we can use the resources that we do have to make sure that we get results. I will end on that point. The Minister needs to champion the work that we all agree is important and he needs to champion the resourcing, otherwise many young people will not have access to the opportunities that we all agree make such a difference, and we all recognise that Britain would be poorer for it.
The Minister for Policing and Criminal Justice (Nick Herbert)
I welcome you to the Chair, Mr Dobbin. I congratulate my hon. Friend the Member for Folkestone and Hythe (Damian Collins) on securing this debate and on speaking with great expertise and clear conviction about the importance not just of sport, which is something that we can all agree on, but specifically the role that sport can play in reducing youth crime. It is a profitable subject to debate and some positive contributions have been made. I noted with a certain amount of concern his suggestion that there needs to be a lead Minister to co-ordinate across government. He plainly put in a credible bid for his own potential role in that respect, so some of us will have to watch ourselves very carefully.
We should acknowledge that most young people are not involved in crime. Often in our debates—for example, in yesterday’s debate about the causes of the riots—we ignore the fact that the vast majority of young people do not engage in crime. Sport has a value to them, which is separate to our discussion this morning. It is also important to state that, apart from recognising the value that sport may have for reducing crime, we are committed, as I am sure the previous Government were, to reducing youth crime. That will continue to be important for the communities affected by crime. We must prevent young people getting drawn into a life of crime and into a cycle of criminality from which it can be difficult to escape. Providing routes out and choices, which are so important at an early age, is what this debate has been about. Indeed, there was a lot of discussion about that in the context of the riots. What positive or alternative options can be given to young people who may otherwise be drawn into criminality? What alternative structures, as it were, can be offered?
Tom Brake
On the subject of routes out, does the Minister have the capacity to look at what sporting and diversionary activities the authorities in areas where the riots took place are planning? In Croydon, 500 people were arrested and 400 charged. I suspect that 200 or 300 will have gone to prison. They will be coming back to Croydon, because 80% of them were from Croydon. It is important that the Government monitor what will be in place to take those people on board when they return.
Nick Herbert
We will come to a discussion about who is responsible for providing such activity. My hon. Friend the Member for Bristol North West (Charlotte Leslie) described somebody who had gone into what he felt was a cul-de-sac as a result of gang activity, but boxing had been the avenue out. Routes out are important. My hon. Friend the Member for North Swindon (Justin Tomlinson) spoke about the route that he found out of what might have been an alternative career option such as his friends pursued, which was time spent detained at Her Majesty’s pleasure. He has found a different course, although many would suggest that there is not much difference between that role and that of his friends.
Nevertheless, there has been general agreement in the debate. There has been no dispute about the value of sport in having a positive impact on behaviour. It teaches control, self-discipline and the importance of teamwork. It unites people and provides opportunities for people, wherever they come from. Sporting activity is of huge value in preventing offending. Where offending has taken place, sport can play an enormous part as an intervention to break the cycle that I described. We must be careful to ensure that it is not the only intervention. There may be other causes of offending behaviour that need to be addressed in parallel. Whether there are learning difficulties or various addictions, sport can be one of the means to help an offender, but other interventions may be equally important.
There was also agreement about the importance of role models, particularly the powerful role models provided in sport. Such role models can of course provide a catalyst for change. My right hon. Friend the Member for Carshalton and Wallington (Tom Brake) talked about the particular value of sports leaders, but I am sure he did not mean to imply that those were simply national sports leaders. Of course, national figures in sport, as mentioned by other Members, have a significant impact on young people. The mentors described by my right hon. Friend work at local level and come from all sorts of places. They can show a leadership role, and assist and encourage young people to engage in sporting activity. That is equally important.
I spoke recently to a police community support officer who, in addition to his community work, devotes much of his private time to working with young people and providing coaching in local sporting activities. He felt that it was important to assist those young people to take part in a constructive activity that would prevent them from getting into trouble. Such volunteers and local heroes matter just as much as national role models; I agreed with my hon. Friend the Member for Suffolk Coastal (Dr Coffey) when she said that it was important to fly the flag for volunteers, and to celebrate them and recognise what they do.
Damian Collins
In the United States there is a programme called Badges for Baseball—all these programmes have snappy names—in which the police organise baseball and softball league games directly with young people. Does the Minister feel that there may be additional scope for police to be directly involved with such programmes in the UK?
Nick Herbert
I am sure that there is scope. Equally, if I were to ask any of the 43 police forces in England and Wales, I bet that they would supply good examples of activities in which local police officers are already engaged. I am sure, however, that they would accept my hon. Friend’s encouragement in the right spirit. They play an important role in the community.
I reject the characterisation of the police that was offered yesterday in research commissioned by The Guardian. It suggested that some hostility to the police is necessary, but in fact the development of neighbourhood policing and the community interaction carried out by the police is important and something that we must maintain and continue to develop.
Stella Creasy
The Minister and I agree that it is important for the police to interact with young people over things other than criminal behaviour, so that trust can be built and young people can see the police as being on their side. What assessment has the Minister made of the effect that cuts to police numbers and the safer neighbourhood teams will have on the ability of the police to participate in sports games, to be on the street and to have that relationship with young people?
Nick Herbert
One departure from an otherwise consensual debate was the utterly predictable statement made by the hon. Lady when she laid at the door of the Government cuts that, in her assessment, will mean that none of the positive activities under discussion can take place. She described the choices that the Government are making, but we make such decisions because the economy is in difficulty and we inherited debt from the previous Government. Some contrition and responsibility for that on the part of the hon. Lady might make her position more credible. Like any Government, we have to find savings. When it left office, the hon. Lady’s party was committed to £40 billion of unspecified spending reductions and knew that savings had to be made. So far, the reduction in front-line policing numbers has been just 2%; there is no need for the front line to be affected, provided that police forces make savings in the right way. Such partisan points do not assist the debate.
Several hon. Members mentioned the importance of the Olympics in offering something of lasting—rather than just temporary—value to this country and its young people, and we want to harness the power of the games to provide new opportunities for young people to take part in competitive sport. My hon. Friend the Member for North Swindon mentioned the school games, and such activities will be particularly important. Since the issue of funding has been raised, I will point out that over £128 million of lottery and Government funding is being invested to support school games, and that is underpinned by continued investment to increase the numbers of new clubs, coaches and volunteers working in sport with young people.
Charlotte Leslie
Will the Minister recognise the work of the Football Foundation? It carries out fantastic work not only by efficiently using funds to renovate community sports facilities but by putting structures in place so that those facilities are more self-sustaining and do not require so much Government funding. That is the kind of long-term legacy that it would be good to see more of throughout the country after the Olympics.
Nick Herbert
I am happy to recognise that; there is clearly a role for civil society, sport clubs and organisations, as well as for the Government and bodies that provide public funding. My hon. Friend the Member for Folkestone and Hythe mentioned Kickz and Hitz as examples of programmes that are driven by national sporting organisations and have a real impact on the ground. StreetChance is an initiative that promotes cricket, and StreetGames works with national governing bodies to support athletics, table tennis, handball, gymnastics, badminton and rowing. Through the initiatives of such national sporting bodies, it is possible to reach out and offer young people the opportunity to engage in a multitude of sports.
In the remaining time available, I wish to pick up on some specific points raised by my hon. Friend. He was clear that he was not calling for a general increase in sporting participation, and that targeted intervention—rather than just dealing with crime—was the objective. I agree with him. He specifically called for robust data on such interventions, and for research to identify whether they provide value for money. That general call is welcomed by the Government. The whole thrust of our criminal justice reform programme is to move to a situation in which we are much clearer about the outcomes that programmes deliver. When resources are tight, it is particularly important to ensure that money is being well spent, and that is why we are increasingly moving towards payment by results in the delivery of criminal justice interventions, so that we can be certain that we are getting the outcomes we need.
In spite of the challenge of public spending, Government- funded programmes are continuing, specifically in relation to youth crime.[Official Report, 20 December 2011, Vol. 537, c. 8MC.] The Positive Futures programme will continue until the end of 2013; thereafter, elected police and crime commissioners will have a budget that they can distribute for similar programmes, should they so choose. The Positive Futures programme delivers sports and arts-based activities that target and support vulnerable 10 to 19-year-olds in some of our most disadvantaged communities.
Although I accept my hon. Friend’s injunction about targeted interventions, it is important to ensure that school children have access to sporting facilities—my hon. Friend the Member for North Swindon also raised that point—and that physical education is valued in schools. Physical education will continue to be compulsory for all pupils following the review of the national curriculum, and we are taking action to ensure that young people in local communities are not deprived of access to playing fields and sporting facilities.
As part of Sport England’s £135 million “Places, People, Play” legacy programme, the Minister for Sport and the Olympics, and Sport England, recently launched a protecting playing fields initiative—a £10 million fund to protect and improve sports fields across the country. The programme will fund projects that create, develop and improve playing fields for sporting and community use, and offer long-term protection of those sites for sport. Sport England will run five £2 million funding rounds over the next three years, investing between £20,000 and £50,000 in schemes such as buying new playing field land, improving the condition of pitches through drainage, or bringing disused sports fields back into use. That is important; the issue is not only about role models, access and funding schemes; we must also ensure that facilities are available both inside and outside schools.
Again, I congratulate my hon. Friend the Member for Folkestone and Hythe on securing this debate. The Government accept the value of sport in reducing crime, and that responsibility is shared by them, local authorities, and by members of civil society and sporting organisations. I am sure that all hon. Members will have listened carefully to the contributions made by my hon. Friend and others during the debate today.
Mental Health (Veterans)
(12 years, 5 months ago)
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Hazel Blears (Salford and Eccles) (Lab)
I am very grateful to have secured the debate. It has attracted interest from hon. Members on both sides of the House, who have offered me their support. Many hon. Members, in all parties, have pursued the issues relating to veterans for a considerable time and have been very effective in securing improvements in the way in which the country looks after and supports veterans.
I am here today because of a very special young man, Mr Neil Blower, who is one of my constituents. He is here to observe the debate. Incidentally, that is because of much appreciated help from Virgin West Coast Trains. We are glad that he has been able to make it here today. Neil is 28. He served in the Royal Tank Regiment for six years. He served a tour of duty as a peacekeeper in Kosovo and he was involved in the invasion of Iraq. He was in his tank when it was attacked at a vehicle checkpoint in Basra and he had the terrible experience of watching his sergeant be attacked and killed. He saw for himself the real and terrible horrors of war.
In 2005, Neil was discharged from the Army, suffering from post-traumatic stress disorder as a result of the horrific experiences that he had undergone. When Neil turned up at my surgery, I did not know what to expect. I thought that there would be issues about the practical help for veterans with mental health problems—issues about housing, employment and all the things that we associate with people adjusting to civilian life. What I did not appreciate was that I would meet someone who is incredibly articulate, passionate, committed and determined. Neil Blower is a very special individual indeed. I wanted to help him as much as I could in any event, but our discussion was quite enlightening to me. He told me not only of the problems that he had encountered when he left the Army—finding a home, looking for a job and trying to pick up the pieces of a normal life—but that he had discovered a new talent, a passion for writing, which had helped him to come to terms with the horrors that he witnessed during his Army service. He gave me his book to read. It is called “Shell Shock: the diary of Tommy Atkins”. There is a warning on the front cover that it contains strong language, and it certainly does, but it also contains a deep insight and a profound humanity. I have read the book. It has the power to move people and to make them laugh. It certainly made me laugh, but it also moved me to tears.
As I said, the book is called “Shell Shock: the diary of Tommy Atkins.” We all know the words of Rudyard Kipling in the poem “Tommy”:
“For it’s Tommy this, an’ Tommy that, an’ ‘Chuck him out, the brute!’
But it’s ‘Saviour of ’is country’ when the guns begin to shoot”.
Neil’s book is the diary of an ordinary soldier who has served in Iraq and Afghanistan, who has watched his friends die, who feels guilty that he has survived and who is struggling to come to terms with civilian life. If that sounds familiar, it’s because it is. That is why this debate is so welcome.
Luckily, combat stress and post-traumatic stress are now widely recognised by our armed forces, but that was not always the case. During the first world war, 266 British soldiers were executed for desertion, 18 for cowardice, seven for leaving their posts, five for disobeying a lawful command and two for casting their weapons aside. Some of those men were no doubt victims of shell shock. Their families had to live not just with the loss of their brothers, husbands and sons, but with the shame, anger and humiliation of their deaths at the hands of the state. In 2006, a conditional posthumous pardon was granted in respect of those individuals. That was a big turning point in how the country approaches these matters. We have come a long way in recent years in recognising the problems experienced by those who have been in battle, and Governments of both parties have taken action to provide improved health services for both physical injuries and mental health problems, but there is still more for us to do.
I pay tribute to Combat Stress, which does a tremendous job in helping veterans and is the UK’s leading military charity specialising in the care of veterans’ mental health. It looks after people who have post-traumatic stress disorder, anxiety, depression, sometimes phobias and certainly nightmares and flashbacks—all the things associated with having been in the heat of battle and having a mental wound as a result.
Last year, Combat Stress received more than 1,400 new referrals—that is the scale of the problem. It has a current case load of more than 4,600 individuals, including 211 who have served in Afghanistan and 583 Iraq veterans. In March 2010, its patron, His Royal Highness the Prince of Wales, launched the Enemy Within appeal on behalf of Combat Stress. That is a three-year fundraising campaign to try to ensure that Combat Stress has the capacity to continue to treat the increasing numbers of people who are now, happily, coming forward with the problems that they have developed. I understand that on average it takes someone who has developed anxiety and depression after having experienced the horrors of battle an unbelievable 13 years to come forward. For some, it will be longer, and for others it will be a shorter period, but that length of time indicates the embarrassment and shame that people still feel and the stigma that there still is around mental health problems. Of course, that is not limited to military life; there is still a huge stigma about mental health problems across society as a whole. But I think that, when people have been in combat situations, it is even worse.
Sir Paul Beresford (Mole Valley) (Con)
I am delighted to hear the praise for Combat Stress, which is located in my constituency. The right hon. Lady mentioned the figures. Is she aware that the rise in applications is running annually at about 12%, whereas the percentage of Government funding is dropping quite dramatically? I hope that she will touch on that.
Hazel Blears
Yes. The hon. Gentleman makes a very important point. The capacity of the people at Combat Stress to cope with the increasing number of referrals is of concern to all of us in the House, because they are specialists—they know what they are doing and are very effective. The best way to use Government funds is to put them into the services that we know achieve positive results, and Combat Stress has an excellent record. I will come to the issue of funding shortly.
Combat Stress provides very practical help. It is establishing 14 community outreach teams across the country. It has three short-stay treatment centres and it wants to enhance the clinical care that it provides at those centres; it wants to provide better clinical care. That is one of the uses to which any additional funds should be put. These are very specialised areas of intervention, and giving people the highest-quality clinical support is very important indeed. Since 2005, Combat Stress has seen a 72% increase in demand for its specialist services catering for veterans’ mental health problems. The services are free of charge to veterans, so they have to be financed through fundraising and from public sources as well.
A number of veterans leave the armed forces with very severe psychological wounds. Post-traumatic stress disorder can go on for a long time—for years, in fact. These conditions are not susceptible to easy treatment. Therefore, there needs to be a sustained commitment to funding and support for organisations such as Combat Stress.
Combat Stress also offers a 24-hour helpline. That provides confidential help not just to people who have been in the military, but, crucially, to their families. We sometimes forget the huge impact on the families of veterans suffering from mental health problems. If people commonly have nightmares and panic attacks, lose their temper and occasionally become violent, the impact on families can be enormous. The 24-hour helpline is therefore a practical way for people to get emergency help when a situation gets out of control.
Combat Stress has an expanding outreach service. It has a team of mental health practitioners, community psychiatric nurses and regional welfare officers. It has three centres, in Shropshire, Surrey and Ayrshire. In September, it introduced a six-week veterans programme, which provides enhanced treatment for people with complicated presentations—it is intended really to dig deep and to delve into all the symptoms people exhibit.
Combat Stress also has a well-being and rehabilitation programme, which is available to all the veterans in the short-stay treatment centres. The programme uses a really structured occupational therapy model, which draws on best practice in civilian mental health. It includes employment mentoring and life skills workshops, and it deals with the practical issues of rehabilitation so that people can take up social activities in the community, which they may have lost touch with while they had post-traumatic stress disorder.
Combat Stress is absolutely the leading organisation in this field in terms of expertise. It now has a partnership agreement with the Ministry of Defence and the Department of Health, and £350,000 of investment was recently agreed, which is, of course, very welcome. Despite that, however, Combat Stress is still feeling the pressure, as the hon. Member for Mole Valley (Sir Paul Beresford) said, and that pressure is likely to increase. I therefore asked it what it was looking for from Ministers, and I want to put to the Minister the points it raised so that he can address them.
First, Combat Stress is looking for increased recognition of the number of people who are beginning to disclose that they have post-traumatic stress disorder, especially given that an increasing number of servicemen are being withdrawn from the combat zones we have had in Iraq and Afghanistan. As these people come home, the pressures will build, and more and more of them will need services.
Combat Stress estimates that 960 of the service personnel leaving the armed forces in 2012 are likely to suffer from post-traumatic stress disorder, while about 4,700—a huge number to cope with—are likely to suffer from a more common mental illness, such as depression or anxiety. That is the nature of the problem. Combat Stress’s services are running at capacity and demand is going up, so my first question to the Minister is whether the MOD and the Department of Health, which is responsible for treatment, recognise that this problem, which will increase, should be firmly on the agenda.
Combat Stress’s second request is for increased capacity. The organisation is now extremely well known, so anybody who is in the circumstances I have described turns to it for help. The last thing Combat Stress wants to do is to turn people away because it does not have the facilities to cope. Can the Minister therefore tell us whether any planning is being done to deal with this issue? What proposals are there to meet the increased demand over the next few years? Where will the investment go? There will be investment in NHS facilities, but the facilities I am talking about, which are close to people and their families, can make a huge contribution in addition to that made by the NHS. I would therefore like to hear what specific proposals the Minister has to provide more funding, more resource and more capacity, particularly for Combat Stress’s outreach work and its 14 outreach teams, which will be extremely helpful for people suffering from the problems I have mentioned.
The third issue I want to raise with the Minister is the stigma around these conditions. There is much more to be done on this. Some 81% of veterans with a mental illness feel ashamed or embarrassed, which sometimes prevents them from seeking the help they absolutely need if they are to get well. One in three veterans—this is a very sad figure—are too ashamed even to tell their families about their mental health problems. I can only imagine what it must be like to live in a family with someone who becomes withdrawn, who is no longer part of the family, who suffers from all the symptoms I have described and who is often in a desperate state and too embarrassed to tell the other members of the family how they feel.
The Government—indeed, all of us—have a job of work to do to raise the profile of these issues and to remove the stigma around them. These things happen in conditions of war, and we should not be embarrassed or ashamed about them. We should do our utmost to help people in such circumstances. I welcome the MOD campaign on this, which is called “Don’t bottle it up”. It is a good way of starting to get rid of the stigma, but more could be done.
Mr James Gray (North Wiltshire) (Con)
The right hon. Lady is talking a great deal of sense. Allied to the question of stigma is people’s failure to recognise symptoms in themselves. People often suffer some of these things many years after the incident that caused them. Does she agree that another role the NHS could usefully play would be to advertise some of the symptoms and causes of these unfortunate mental disorders so that people actually recognise what is happening to them?
Hazel Blears
The hon. Gentleman makes an extremely good and practical point. The NHS runs public health campaigns about a range of issues that affect people, such as smoking and obesity. If we could normalise mental health in that way to some extent, people would feel much more comfortable about coming forward and saying they have a problem. One symptom of post-traumatic stress disorder is that people often resort to drugs or alcohol and end up with alcohol problems, not recognising that there are severe mental health problems underneath them. The prisons have recognised that about 50% of ex-service people in prison could well be suffering from post-traumatic stress disorder, and that is estimated to cost the nation about £300 million a year. This is a good example of a public health issue, and taking the approach I have described could not only result in significant savings, but contribute to the well-being of all those who are suffering. The hon. Gentleman makes a good point.
Sir Paul Beresford
On the same sort of theme, when veterans leave the forces, it is frequently 12 to 14 years before they present, as Combat Stress says. In the meantime, as the right hon. Lady has said, families, communities and so on can face havoc. The United States and the United Kingdom have a decommissioning period in which they help people leaving the armed forces, but ours is very short. The United States actually targets individuals so that they can be picked up and referred before they get into the community. The funding that she talks about will come predominantly from the NHS, and the Minister cannot really speak for the Department of Health. However, he can speak about what the Ministry of Defence can do to catch people early, before they do any damage to themselves or others.
Hazel Blears
The hon. Gentleman touches on a good point, which relates not quite to prevention, but certainly to early intervention before problems get worse. I am coming to the funding that will be supplied by the Big Lottery Fund, which will specifically target this issue, and it, too, is a good step forward. One issue is how we co-ordinate all the funding going through the NHS, Combat Stress and the Big Lottery Fund to make sure that we provide a really good wraparound service.
I want to say a word about the Big Lottery Fund investment. Over the next few years, the Big Lottery Fund will put £35 million into this issue. It is setting up a trust called Forces in Mind, which will provide long-term support and advocacy across the United Kingdom—it is important that ex-forces personnel have someone to speak on their behalf. The trust is about people making a successful transition back into civilian life. It will work with the people who have served in Iraq and Afghanistan. It will look at mental health, family breakdown and alcohol-related problems, which are absolutely pressing.
The trust involves a partnership between the Mental Health Foundation, the Centre for Mental Health, the Confederation of British Service and Ex-Service Organisations and the Shaw Trust. It therefore includes a number of good organisations that have reach into these areas, which is positive.
The trust had its business plan approved by the Big Lottery Fund board last month, and it has three early projects, which I will say a quick word about. The first is the early service leavers trial, and the hon. Member for Mole Valley touched on the issues it deals with. It is called “Future Horizons” and it is an enhanced transition programme for those who leave the services early, but who currently get no support from the armed forces. One thousand such people recruited from across the UK will go to Catterick garrison. They will get 12 months —this is a long-term programme—of enhanced support with finding jobs and accommodation, as well as guidance with educational problems and mental health issues. Twenty-six different community organisations are involved, so, again, there is good local reach. That is the beginning of what the hon. Gentleman seeks—an enhanced transition. It is no good giving people help for six weeks when they are looking for a job, trying to find a home and trying to get back into life. A 12-month programme will therefore be very helpful.
Another project will involve SSAFA Forces Help, which was the Soldiers, Sailors, Airmen and Families Association. It will work with the Mentoring and Befriending Foundation, TimeBank, Shoulder to Shoulder, the British Association for Counselling and Psychotherapy and Help for Heroes—again, it is a big consortium. Working with Cruse Bereavement Care, it will support people who are bereaved. Cruse is renowned for working with bereaved families. It is expert in counselling and support and will be a crucial part of the partnership, which will work with the widows, widowers, partners, children and siblings of those who have been killed, covering the whole range.
The other project, which will come on stream quite early, is with mentoring organisations. It will involve early service leavers who are under 24, so very vulnerable young people will get a specific mentor to help them through the transition—a buddy to be side by side with them, if you like. Younger people are often more vulnerable and their problems can be very long term. If we can intervene early, perhaps the transition can be more effective. The money from the Big Lottery Fund is therefore very welcome, but in my view it does not absolve the Minister from looking at other Government resources that might help. I am sure that we will all be interested to hear from him.
Neil Blower, my constituent, has made me much more aware of the problems faced by people than I ever was before, and I am grateful to him for that. I asked Neil, as I asked Combat Stress, what one thing he would really want to happen. What is his wish to help veterans in such circumstances? Neil has been lucky enough to be admitted on to the degree course in creative writing at the university of Salford and he has had his first book published—something that many budding authors never achieve. He hopes to go on to have a career as a writer, and I am sure that he will be successful. He wishes that there were a Tommy Atkins scholarship fund, and I would like the Minister to consider that seriously. It would be akin to the GI Bill in America, whereby the American Government paid for servicemen and women, after the Korean war, to go to university when they left the forces. That helped them to go from combat to classroom. Supporting some of our forces to realise their talent and potential through access to higher education would be a tremendous step forward.
Neil is busy costing the project and I am sure that we will come back to the Minister at a later date with a detailed proposition. Giving people the chance to have an outlet into higher education, whether to enter teaching or another important area of life, would help them with job seeking and give them more skills and a better chance in the labour market. Neil felt that, for him, education was a great way to deal with his mental health issues. It helped him enormously. He felt that he was doing something worth while, it made him feel as if he belonged and made him feel part of society again. The power of education therefore can be of tremendous benefit.
I am not on a sales trip, but Neil’s book is available and I urge as many Members as possible to get it. I did not know what to expect from that little volume. It is short, but incredibly moving, and I want to finish with a quote from it. I do not want to give away the ending completely, but in the book, Tommy Atkins is at the end of his tether. He has come home and life is terrible. He breaks up with his girlfriend, his mum and dad break up and a series of terrible events happen to him. I am sure that such things happen to an awful lot of people in these circumstances. He gets to the point where he is absolutely desperate and it is so difficult for him to carry on that he thinks of taking his own life, but then something kicks in inside his head: “This was a coward’s way out. I was a British soldier and we don’t do that. We never surrender and we never give up. That is for other people. I realise that, despite all the pain and heartache and suffering that there is in the world, there is good as well—there is good in this world. The love of another, the bonds between family, friendship—these are the things that I fought for. These things are still worth fighting for and they are worth staying alive for. I will love my mum and dad whether they are together or not. I just want them both to be happy. I will meet another girl and fall in love again. I will always remember the friends I’ve lost—Kev, Johnno, the serg, Jamie. I will honour their memory by living, by leading a good life. I stood in the mirror and looked at my medals, then I did the bravest thing I have ever done. I picked up the phone, I rang Combat Stress and I told them about me. I told them what I was feeling and I felt a great weight lifted from my shoulders.”
That, for me, is the best summary that I can give of the experience of Tommy Atkins and all those thousands like him. From this book, we can all rededicate ourselves to ensuring that we press for better understanding and better support to improve the lives of those who have given so much for all of us. I am grateful for being granted the debate this morning.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I congratulate the right hon. Member for Salford and Eccles (Hazel Blears) on securing the debate. It is on an issue that I have spoken about on one or two occasions. I am delighted to say that in my maiden speech I gave warning and notice to my right hon. Friend the Minister that I was likely to carry on banging on about it. I am therefore grateful to have the opportunity to do so. A big problem with such debates is that the issues are covered by not only the Ministry of Defence but the Department of Health, and it would be helpful if we could, at some stage, get a Minister to come to talk about the health implications of what we want.
The right hon. Lady has given a very good briefing on Combat Stress, and I, like her, have been to talk to that organisation. It has been incredibly good at ensuring that I am kept informed and have an understanding of exactly where the problems are. Of course, we have heard a lot about the concentration and focus on veterans who have come out of Iraq or Afghanistan, but we must remember that people who were involved in conflicts in Northern Ireland will also need help. They also make up a significant number of the casualties who were created from that long and bloody conflict.
We talked at some length about how there will be an increasing number of people dealing with combat stress over the years. The Government have announced that we will withdraw from the Afghanistan conflict by 2014, but activities will continue there. During a trip that I made to Afghanistan a couple of weeks ago, I was told that although the troops will not go out on patrol, we will almost certainly need to support and help those in the Afghan army and police, who will need guidance. I am in no doubt at all that elements in the Afghan resistance will seek to ensure that our troops are subject to many attacks.
I grew up with these issues. My father went into the Royal Navy at 14, and was awarded the distinguished service cross for his activities in Narvik. He told me, when I was a child and a teenager, of how it was that he had been responsible for trying to take the head of one of the people he had served in a cabin with to throw it over the side when it was blown off in action. Fortunately, that did not have an impact on us as children. He was a very normal man and lived a full and active life until he was 89, but there was a real chance that such activity could have had a significant impact, not only on my mother, who, I have to say, had the most wonderful sense of humour, but on us, as children. We have all come out, I hope, reasonably sane and balanced.
The other day, I visited the Royal Marines in Exeter. One person told me a sad story of how when he had served abroad in action, he came back and wanted to talk to his wife about what he had faced. He wife looked at him and said, “Don’t start talking to me about any of that. I’ve had a damn awful day as well. I’ve had to deal with 300 e-mails, so that’s my priority”, so he did not talk to her about it. He tried to talk to his mates, who were not involved in the armed services, but they found it very difficult to understand, so he had to find his fellow servicemen—Royal Marine friends—who lived in Aylesbury, where he came from, and talk to them. It was only by having that opportunity to share his experiences that he saw what was going on.
I represent Plymouth, Sutton and Devonport, and it is a great pleasure to do so. We have just, literally, had 3 Commando Brigade come back from Afghanistan, and I think it also has some of the scars that come with that.
I am delighted that we have accepted the military covenant into law. I hope that the Secretary of State’s regular reports on that issue will be informed, and that we will be able to talk about mental health. I congratulate my hon. Friend the Member for South West Wiltshire (Dr Murrison) on writing the paper called, “Fighting Fit”. I think that that was the benchmark for ensuring that we were able to produce a strategy, and we are taking the issue more seriously.
I am also concerned about the reservists. We are enormously good at talking about regular service personnel, but we do not talk too much about reservists, although I know that my hon. Friend the Member for Canterbury (Mr Brazier) has been doing an extraordinarily large amount of work on this. I was talking to the British Legion the other day, and it told me how it did not seem possible to share information on reservists with charities that are delivering support and help. Could we look at that? Can we make sure that the information is much more readily available, so that people such as Combat Stress and the British Legion are aware of exactly where the issue is going to?
Mr Gray
There is a particular problem regarding the Territorial Army and reservists in general. Whereas a regimental family closes around someone among the regulars who is bereaved or has mental problems, and regulars tend to live in the same place as where they are serving, reservists often come from right across the land, and there is a much less strong regimental hierarchy to look after them. Reservists need particular help from the Ministry of Defence.
Oliver Colvile
I was just about to make that point. Those people work and live in isolation. The problems that they have with decompression are enormous. When they come back, they do not necessarily have the same amount of time as regulars do to unwind and be debriefed. We need to look at that issue. When I was talking to a senior Royal Marine the other day, he said that it would be helpful if the decompression time for reservists could be longer. I urge the Minister to consider that.
Another issue that we need to look at is how the national health service is dealing with the matter. As I said, the question is not just about how the MOD deals with the issue, although the Minister has been doing excellent work on veterans. I support the way in which we will change the structures of the NHS. I voted for the legislation, and I think it is the right way of going about it, but will our general practitioners and commissioning boards be able to manage the matter? If GPs commission such services, how far up the agenda is the mental health issue going to be? How will policies be implemented? Will we have lead GPs taking an interest? I will most certainly be asking my GP commissioning board down in Plymouth how it is proposing to manage the issue. We must think the matter through. We in this place can pass legislation easily, but we must ensure that it is implemented and that we monitor the results.
Sir Paul Beresford
That issue was raised with the previous Government. Some time between then and now, national commissioning of Combat Stress long courses was introduced. My hon. Friend is absolutely right about the recommendations of potential patients and about the other niche groups and niche courses. The Department of Health will need to look at the issue.
Oliver Colvile
I think that that is right. Local authorities also have to be involved. They will now take increasing responsibility for the matter. I was talking to the leader of my council last week, and she explained that until recently, the primary care trust had not been that interested in engaging on some of those big issues. I will be interested to know how that will happen. The whole story of mental health, as the right hon. Member for Salford and Eccles said, is an important issue.
We closely support our armed forces and veterans. Some of us—I happen to agree—are not convinced that we have handled the politics of what is going on in Afghanistan particularly brilliantly. However, if we are going to support our armed services, we must ensure that we look after them properly and that they come out with good results. How we deal with the issue of mental health will be paramount. As others have said, there are issues regarding licensing. In Plymouth, we have significantly more licensed premises than in Liverpool. That is a big issue. When people get depressed, they end up turning to alcohol and other substances. We must ensure that there is a joined-up and co-ordinated approach.
If we do not deal with the issue, we will have problems with our infrastructure, not only of the health service but of education. I heard a story that it is not mainly what comes out in the health stories but what happens in the home that is absolutely, utterly and desperately important. That is where all the problems kick off, and they do not become apparent until significantly later.
Mr Dobbin, thank you for allowing me to talk about the matter. I feel absolutely serious about the issue. It has been a great pleasure and honour to follow the right hon. Member for Salford and Eccles.
Ian Paisley (North Antrim) (DUP)
I, too, add my congratulations to the right hon. Member for Salford and Eccles (Hazel Blears) on securing this important debate today. Raising the profile of the matter will in itself do much to enhance public recognition of the issue, and she spoke passionately and poignantly about the need to achieve that.
The hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) made an excellent point in his comments, which is that we must cast the net a lot wider than the immediate conflicts that we are aware of in Iraq and Afghanistan. It will not be unusual for Members to hear me speak about what has happened in Northern Ireland. We have a walking community of forgotten heroes who have served the nation well and with gallantry, from the Ulster Defence Regiment, the Royal Irish Regiment, the British regular Army and the Royal Ulster Constabulary. Only today, as the situation has normalised, has there been a true opening and unfolding of the trauma and devastation in the lives of individuals who gave service to this nation, and the effect that the conflict had on their families. Families lived with service personnel who not only served our country but lived within the community that they were serving—it was a double impact. It is only now, in this new Northern Ireland, in a more peaceful society, that that is starting to unravel and unfold. We must ensure, as we have started to peel back the issue and look at what could be an appalling vista, that we as a country recognise that we have a responsibility to address the concerns that we are starting to discover.
Several former soldiers, from the Ulster Defence Regiment in particular, visited me in my constituency office. They had stopped serving in the late ’80s and early ’90s, and yet they were still talking about things that they saw that are impacting their lives now. They look back and recognise that the awful pictures that flash in their memory have had an impact on how they have lived their lives in the past 20 years, and on members of their community and family.
Mr Gray
What the hon. Gentleman is saying with great passion brings to mind an episode yesterday. My hon. Friend the Member for Beckenham (Bob Stewart) was entertaining on the Terrace of the House of Commons one of the widows from the outrage of Ballykelly all those years ago, when 20-odd souls were killed in a pub. My hon. Friend was reminiscing about how he cradled his lance corporal in his arms. His lance corporal had lost all four limbs before he died. What sort of effect does that have, not on my hon. Friend—I am glad to say—who is remarkably well-balanced, but on any less well-balanced soldier? What possible effect will that have on the rest of their lives?
Ian Paisley
The hon. Gentleman makes a very important point. I also had a constituent who visited me about this problem. He was a big, strong, tough frame of a man, but he was like a quivering autumn leaf when he started to tell me about what he had seen and what he remembered. Indeed, his constant memory was the sound of the scrape, scrape, scrape of the shovel that he had used to put his comrades and colleagues into a waste disposal bag after an outrage by the Provisional IRA. It is a burning memory that he will never forget and that woke him in the dead of night, leaving him soaked in sweat and crying out in fear, and yet it is a memory that he has had to bottle up and carry with him.
As a nation, we must take responsibility and recognise that there are things that can be done for these people we are talking about. They are not hopeless people; they are people whom we can actually give hope to, if, as the right hon. Member for Salford and Eccles said, we first help to remove the stigma, and help people to recognise that there is help available and that they will not be stigmatised by going for that help. In fact, that help will only be of benefit to this community, this nation and indeed the NHS, which will have fewer problems to deal with as the years go on.
I hope that the passionate words that the right hon. Member for Salford and Eccles put to this House this morning will be recognised and that we also recognise that post-traumatic stress disorder is not only about the immediate battles that we are aware of today but about the long-term problems that our country faces. More than 100,000 gallant soldiers from our nation passed through Northern Ireland in service and we are just starting to scrape the surface of this issue when we recognise that, 20 or 30 years after the conflict ends, there could be people who will come forward to say, “I have a problem because of what I saw, because of what I witnessed and because of what I went through as a serving personnel officer in Northern Ireland.” We must ensure that that issue is properly recognised.
The right hon. Member for Salford and Eccles spoke about the capacity to take on board the cases that will come forward. I want to see that capacity extended, to ensure that the needs of Northern Ireland and of the soldiers there are also taken on board. The Big Lottery Fund money—the £35 million—that has been brought to our attention today will be a welcome spend and of course it must include spending on people who served in Northern Ireland under Operation Banner, to ensure that their issues are properly addressed.
I want to make a final point about the issue of stigma. We need a public champion who can be identified with this issue and whose association with it will give a boost and encouragement to those soldiers who are sitting at home, and perhaps staring into an empty glass, contemplating self-harm or having a fight with their children or other family members. That public champion will give those soldiers the ability to say, “There is someone who can help me; there is an organisation addressing what has affected me, and I can now see that I have someone to shoulder this burden and someone who can be a help or a crutch”, at the most important time—when they are at their most vulnerable. I hope that that public champion can be identified.
In addition, I love the idea of a GI Bill or something similar for the UK. There would be so much opportunity with such a Bill that we could build on, and I think that we could do things even better than they have been done in the US because this is a nation of people who come up with even better ideas than people in other nations do. We could learn from what has been done in the United States and come up with something really tremendous. I hope that this debate itself acts as a springboard and is a very hopeful and positive start to something that we can take great pride in.
Stephen Gilbert (St Austell and Newquay) (LD)
Thank you very much, Mr Dobbin, for calling me to speak. It is a great pleasure to serve under your chairmanship.
I congratulate the right hon. Member for Salford and Eccles (Hazel Blears) on securing this very important debate and on the passionate way in which she outlined her case on behalf of her constituent.
I think that we all know that there are about 5 million veterans in the United Kingdom and that a further 20,000 personnel leave our armed forces each year. Having recently returned from a visit to British forces in Afghanistan—a visit I was joined on by my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile)—I will take a moment to praise the work of the men and women in our armed forces. They put themselves in harm’s way and they do a terrific job under very difficult circumstances. Of course, it is not only the right hon. Lady’s constituent who is a hero, although I am sure that he is a hero; all the men and women in our armed forces are heroes and heroines too.
In addition, I think that we all know that the transition from military life to civilian life will always be challenging. Of the 20,000 personnel who leave the armed forces each year, about 10%, or 2,000, are discharged for medical reasons and of that number about 10%, or 200, are identified as having one form of mental illness or another. That group of approximately 200 personnel are only 1% of the number of personnel who leave the armed forces each year, but these numbers that I am citing are not insignificant. Last year, 164 personnel had to leave the armed forces due to psychological problems and of that number 35 were diagnosed with post-traumatic stress disorder. We have heard a lot this morning about PTSD, but it is not the mental health illness that is most commonly experienced by armed forces personnel. Depression, anxiety and alcohol abuse are far more prevalent, especially among young men leaving the service early. Indeed, those young men who leave the armed forces within four years of enlisting have been identified as a particularly vulnerable group.
Susan Elan Jones (Clwyd South) (Lab)
I am most grateful to the hon. Gentleman for giving way and to my right hon. Friend the Member for Salford and Eccles (Hazel Blears) for securing this debate. Does the hon. Gentleman agree that one very important issue in this debate is homelessness among veterans, which is closely linked with other problems affecting veterans? When I worked for a housing charity in London, I was struck by the fact that I did not have to speak too long to people working in night shelters before they made the point that there is always a certain percentage of veterans who are homeless on our streets, and that homelessness is a problem that is related to the other problems affecting veterans.
Stephen Gilbert
I am very grateful to the hon. Lady for that intervention, and she could not be more right about that issue. I chair the all-party group on housing and I have made it a particular business of mine to look at homelessness; in fact, I have applied to speak in an Adjournment debate on that very issue, Mr Dobbin. When I talk to organisations such as Centrepoint or St Mungo’s, it is absolutely clear that there is a particular problem with people who leave our armed forces and who are unable to adapt to civilian life and stabilise their housing needs. The hon. Lady makes a point that I hope the Minister will find time to address when he winds up the debate.
Mr Gray
I just wanted to intervene on that particular point, before the hon. Gentleman moves on. It is often anecdotally said that there are more people living on the streets who are from a service background than there are civilians and it is also anecdotally reported that there is a higher proportion of people in prison from the armed forces than there should be. However, I suspect that there has not been a proper statistical analysis of either of those issues and perhaps one of the things that the Government could usefully do is to come up with some hard facts to establish whether or not the anecdotal reports about those issues are actually correct.
Stephen Gilbert
My hon. Friend steals one of the key points that I was going to ask the Minister to respond to, but hopefully the fact that we are both making the same point will be better than just one of us making it, and so I am very grateful to my hon. Friend for that intervention.
The risk of suicide in army males under the age of 24 is two or three times greater than that of young males in the same age group in the general population. A recent study of 9,000 veterans showed that 20% of them had symptoms of common mental health problems and that 13% had symptoms of alcohol misuse. The right hon. Member for Salford and Eccles is absolutely right that we should be entirely clear that mental health issues can affect anybody in any part of the population, and that we should try to move away from the stigma that is all too frequently associated with those issues. Indeed, it is my understanding that 25%, or a quarter, of British adults experience at least one diagnosable mental health problem in any one year, and that one in six experiences such a problem at any given time. Mental health problems are very pervasive in our society and we must tackle the taboo about discussing them.
I have spoken before in the House about the harm that alcohol abuse can cause, and that same study of veterans showed that 40% of the veterans who responded met the criteria for heavy drinkers; 27% of them met the criteria for very heavy drinkers; and 15% of them were classed as problem drinkers. Again, young men in the armed forces are more at risk than young men in the general population, with 36% of 16 to 19-year-olds in the armed forces drinking harmful amounts compared to just 8% of 16 to 19-year-olds in the general population.
It is right and proper that we do all we can to help those who have served our country, and not only while they are serving but after they leave the armed forces. That is why I welcome the recent pilots by the Department of Health and the Ministry of Defence to ensure that NHS health professionals have the appropriate support and available expertise to treat veterans with mental health problems. The four national health Departments, the UK Ministry of Defence and the charity Combat Stress have been working together closely to develop and pilot a new model of community-based mental health care, and I particularly welcome the fact that one of the pilots is in Liskeard in Cornwall, which is close to my constituency.
Nevertheless, we need to see what else we can do. At the moment, the support offered for the reintegration of former service personnel into civilian life is proportionate to the time they have served but, as we have seen, those with mental issues and other illnesses often need the most help, and we need to consider whether we have right the balance between the time we are putting into their transition and their needs. We also must ensure that when people leave armed forces medical care, their transfer into the NHS is seamless. My hon. Friend the Member for Plymouth, Sutton and Devonport made it absolutely clear that we need to look again at what happens to our reserve and territorial forces when they are demobilised, as they are increasingly part of our war-fighting mix. I welcome the previous Government’s reserves mental health programme, which aimed to tackle some of these issues.
We must redouble our efforts to raise awareness in the NHS, to help veterans who are concerned about their mental health. And it is not just within the NHS; there is an issue closer to the Minister’s own Department. The MOD’s website has only one link buried within it to a charitable organisation that can help with these kinds of issues, and I ask the Minister to undertake to see whether the website could be looked at, and the links made more prominent, so that people who are clicking through will be better signposted towards help.
In all the defence establishments that I have visited during the 18 months I have been an MP, and before that as a parliamentary candidate, I have seen awfully large numbers of posters, notice boards and other ways of conveying information to our forces, and I wonder whether they are being adequately exploited to signpost our armed service personnel to the help that they need. As my hon. Friend the Member for North Wiltshire (Mr Gray) pointed out, we need more analysis and research into the wider consequences, and into whether we are providing the seamless support that we should, and to families as well.
Our service personnel never let us down. We ask them to do a difficult job under very difficult circumstances and they are prepared to make the ultimate sacrifice, so it is vital that this Government maintain the military contract post their departure from uniformed service. We must not let them down either.
Mr James Gray (North Wiltshire) (Con)
I did not intend to speak, and I see the little time available to us, so if I may I will hold the House for just a few minutes before the shadow Minister does her bit and the Minister, from whom I very much look forward to hearing, speaks.
First, I pay a warm tribute to everyone who has spoken so far in the debate, in particular to the right hon. Member for Salford and Eccles (Hazel Blears). She and I might not agree on many subjects, but on this one I think we are entirely ad idem. Everything she said was absolutely right. This issue is terribly important and she has raised it in a timely way. I also pay particular tribute to my next-door neighbour, in constituency terms, my hon. Friend the Member for South West Wiltshire (Dr Murrison), whose seminal work on this subject fulfilled a coalition agreement commitment to do something about the mental health conditions of the armed services. His report was extremely good, and it has given the Government a series of pointers as to what they can now do about this terrible problem.
I think that we are unanimous about the fact that there is this problem. I was struck by a conversation I had yesterday with my hon. Friend the Member for Beckenham (Bob Stewart), who sends his apologies for not being here. He was having a drink on the terrace with a young lady who was the widow of one of his soldiers. He recounted how when he was digging into the pub in Ballykelly, she insisted on calling him “sir” throughout the time she was struggling to escape from the mud and dirt, and how he said, “You don’t need to call me ‘sir’ under these conditions. Your husband is dead beside you; we can forget the ‘sir’.” What kind of effect can that kind of episode, in which someone cradles a dying soldier who has lost all four limbs, have on those who are left behind? My hon. Friend is one of the most well-balanced individuals I know, and I am not for a second suggesting that he has any such problems, but how many people will have had similar experiences in Afghanistan and Iraq, and how many soldiers who have had such an experience know what effect it will have on them in later life?
I remember speaking to a 19-year-old sniper when I was visiting Afghanistan last year. I asked him, “How many confirmed kills have you got as a sniper?” and he replied, “I’ve got 34 confirmed, and a further 26 probables”, so something like 50 or 60. I asked, “Doesn’t that worry you?” and he said, “No, sir, it’s no trouble at all. It’s a blur at the end of the sight, and I pull the trigger and do my job and that’s that. It has absolutely no effect whatsoever.” Who are we to say whether when that young lad is 50 or 60 he will have some form of effect from that experience? It is therefore incredibly important that we address this grave issue. I pay tribute to Help for Heroes and to my constituents in Wootton Bassett and across the area, who have done great stuff with bereaved families and soldiers coming back from theatre of war with injuries, but this is a much more invisible problem. We should be just as aware of it, even though the average time before a patient realises his problem is 14 years after the incident, and it may well be 20 or 30 years. It is important that as a society we do something about the problem.
Having agreed that—I am sure that everyone here today will strongly be in agreement—it is much more difficult to say precisely what to do. It is very easy to say, “Isn’t this an awful problem? Mustn’t we do something about it?” Well, yes, but what do we actually do? Two or three interesting proposals have come up in the debate. The first, and as I come from the Territorial Army myself I think this is very important, is that we should ask the reserve forces carefully to consider precisely what they can do. Very often, TA people coming back from the theatre of war leave the reserve forces within a year or two. They do not particularly want to carry on much beyond that, and they then disappear into civilian life and are gone for ever. We do not know where they are or who they are, and they may well be suffering from these same problems. We must find a way of pinning down where our reserve forces go when they retire, and do something about it.
[Mrs Linda Riordan in the Chair]
The second problem that people talked about very convincingly earlier was that of stigma and of people feeling that they do not want to come forward, and I think that that particularly applies to the testosterone-filled young men we send off to war—and women to a degree, but not the testosterone. They come back and do not want to say, “I’m a bit daft. I’ve gone a bit loopy. There’s something wrong with me.” The ethos is not to say that, and we have to find a way of encouraging them to believe that it is a normal thing to do, that they can perfectly sensibly bring themselves forward and say, “I’ve got a problem here, and I need some help.”
One thing we might want to think about doing is this. Some 10 or 15 years ago, our servicemen coming back injured from the theatre of war felt very uncomfortable being in civilian wards in Birmingham. No one is saying that they were not well looked after, but only a year or two after the conflicts began the previous Government introduced military-style care in Birmingham. Armed servicemen feel at home and relaxed in such an arena, and I think that something similar has to apply to mental health. Too many civilian mental health workers do not understand the problems, which may well present many years after the incidents that cause them. Particularly in areas such as mine and that of my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile), where there are very large numbers of armed servicemen, we have to find a way of saying to our primary care trusts, “This sort of problem is coming your way over the years. You have to find a quasi-military way of dealing with it. You have to realise that military life is different from civilian life and that these are different problems from civilian mental health problems, so let’s find a specifically military way of dealing with them. Let’s keep in touch with the armed services and find out precisely what they know about post-traumatic stress disorder and the rest of it, and let’s find a military solution to what is a military problem, albeit within a civilian environment.”
This has been a useful debate. We have raised the issue very satisfactorily and the armed services, which are aware of the problems, will, I think, be grateful to us for having done so. But it is very easy to do two things. First, it is easy to exaggerate the problem, and it would be useful if the Minister could initiate a statistical analysis of how many people it affects in a real sense. Earlier, we discussed prisons, alcohol and homelessness. How much of that is caused specifically by combat, and how much is in the normal run of human beings? There are 200,000 people in the armed services. A number of them will be drunken or homeless. That is the nature of the beast. How much of that is caused by military service, and how much is incidental to it?
So first, we must not exaggerate the issue. Secondly, we must not just take political capital from expressing our sympathy and concern; in debates such as this, we must make specific proposals about what we can actually do to lessen this problem in our society. I look forward to hearing from the shadow Minister and, perhaps more importantly, from the Minister, on what we can do about this dreadful problem.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
I, too, congratulate my right hon. Friend the Member for Salford and Eccles (Hazel Blears) on securing this debate on an important and topical issue. More importantly, I thank Neil for coming along today and allowing us to hear his story, which has both provided a context for our discussion and put a face on the issue that we are debating.
I welcome the opportunity to discuss these issues with the Under-Secretary of State for Defence, the right hon. Member for South Leicestershire (Mr Robathan). We have spent much time during the past year discussing the Armed Forces Bill and the armed forces covenant. The Bill has now received Royal Assent, so it is perhaps fitting that as we come to the end of the year, we are again discussing the welfare of our brave serving personnel and veterans and the impact on their families.
My right hon. Friend painted an honest and vivid picture of the problem of veterans’ mental health. It is easy to be preoccupied with the scenes from Afghanistan that we still see and not to pay as much attention to the issues facing service personnel and their families when they leave the forces or return from theatre. We know that they are skilled, highly trained and resilient people, but more than 180,000 personnel have served in Iraq, Afghanistan and elsewhere, as we have heard, and a significant number will have returned with mental ill health or will, sadly, go on to develop problems later in life. We should be prepared to deal with that and ensure that the right facilities and support are in place to diagnose and treat such conditions.
Significant progress has been made in recent years, particularly through mental health pilot schemes and work done since then, to improve support and treatment for personnel suffering from mental health problems, but no party has a monopoly on wisdom when it comes to improving services for our forces. We have all met constituents who have told us about their experiences. We have heard about some of those and about Members’ personal experiences of the issues.
I emphasise the importance of the current campaign by Combat Stress about the stigma attached to mental health, which my right hon. Friend mentioned. Combat Stress provides an invaluable service to veterans around the country. Its centres and outreach work allow veterans to get the help and support that they need in a specialised environment, along with other veterans going through similar experiences. Combat Stress’s “The Enemy Within” campaign seeks to tackle the stigma that, unfortunately, can be a barrier to people getting the support and help that they need.
However, the work of Combat Stress and of many other important organisations and charities such as the Royal British Legion should not give the Ministry of Defence or the Government an excuse to opt out of their responsibilities, or indeed ours. It is important that we do not view the services offered by the voluntary and charitable sector as a replacement for acting ourselves. Such organisations should complement, not replace, the services that the Government offer. The voluntary and charitable sector is facing a tough time at the moment. Forces charities are spared some of that pain by generous ongoing public support, but we should not assume that those services will always exist and will always have enough funding to run.
Government should decide what services they have a duty to provide and should fund them properly. The Government need not always be the vehicle to deliver those services, as we have heard, but they can fund experts such as Combat Stress to do so on their behalf. This Government should also consider how mental health services for veterans or anyone else who needs them can be guaranteed when their national health service reforms are removing accountability. Again, we have discussed that already.
Those in the forces are trained to be strong, resilient and able to push through any challenge that stands in their way. That does not lend itself easily to admitting that one needs help because of a mental health problem. My right hon. Friend highlighted the high proportion of veterans suffering from a mental health condition—a staggering 81%—who are embarrassed by or ashamed of their condition and do not feel able to come forward. We have also discussed the average length of time it takes people to present in search of support, which is about 13 years. I understand that there are examples of people who have waited up to 40 years to get help. We must do all that we can to change that situation. We cannot just let it continue.
Combat Stress has also provided detailed evidence involving cases of individuals who have faced marriage break-up, unemployment, social isolation or substance abuse, all because they were unable to deal with their mental health. My hon. Friend the Member for Clwyd South (Susan Elan Jones) mentioned homelessness as well. We should be concerned about the figures, and I agree that it is right that we should seek to quantify the problem. The figures show that, even though help and support exist, too many people still find the stigma far too great to overcome. Until we tackle that stigma, no matter what support is out there, there will be no real change. Combat Stress’s campaign focusing on the issue of stigma is vital.
We have spent much of this year’s parliamentary debates on the forces discussing legislating for the covenant, so it is welcome that we are now debating the substance of the issues covered by the covenant and what it should mean in practice. It is right that nobody who serves their country in the forces should be disadvantaged as a result of their service. In some ways, however, getting the Government to enshrine that in law was the easy bit. The Government must now take action to implement the covenant so that we can see what it means in practice. I would welcome information from the Minister about the planned implementation of the covenant and how the Government intend to ensure that Departments and public bodies audit and change their policies to give our forces, our veterans and their families a fair deal.
My right hon. Friend highlighted the need to recognise how many veterans suffer from mental health issues. My hon. Friend the Member for North Durham (Mr Jones), the previous veterans’ Minister, announced plans when he was in post for a veterans’ ID card. The card would have enabled veterans to be identified easily and to get priority NHS treatment.
As we have discussed, it is difficult to quantify the level of need. Without a tracking system for veterans, we will never be able to do so. My right hon. Friend has asked in written questions how many ex-service people are being treated for mental health problems on the NHS, but there is no record, so the Minister replying was simply unable to give an answer because the data do not exist. Being unable to quantify the problem makes the Government unable to quantify the true cost of treating mental illness among former members of the armed forces. Therefore, the true impact is unknown at the moment. A veterans’ card would enable the Government to track veterans and offer the right support to those who need it.
In the Armed Forces Bill Committee, on which the Minister and I both served, the Minister reiterated his opposition to introducing an ID card, but the Government agreed earlier this year to launch a veterans’ privilege card allowing veterans to access commercial discounts. That is welcome, but I urge the Minister to look beyond discount schemes and extend those proposals, and to use the card as a way to ensure that veterans can access the support that they require when they need it.
Mr Gray
I am puzzled as to why the deeply bureaucratic and complicated system of issuing 5 million people with a piece of paper would help those suffering from mental stress many years after service to come forward and ask for the help that they need. I am not certain as to why that is a solution to the problem under discussion.
Gemma Doyle
The proposals were not overly complicated. The initial proposal was to start issuing a veterans’ card to people who are leaving the services now, not necessarily to go back and identify the 5 million people, because, as the Minister has told me, he cannot identify them. If we do not start to make some changes, we will never be able to quantify the problems. When we are able to know who the people are, the right support and services can be offered to them and contact can be maintained where it is wanted to ensure that the services are being delivered. Then, when an individual presents with a mental health problem, they can clearly be identified as a veteran and we will be able to see the problem much more clearly.
Sir Paul Beresford
The point made by the right hon. Member for Salford and Eccles was that many of these people will not present themselves and do not understand the problems, and that asking them will not get the result that the hon. Member for West Dunbartonshire (Gemma Doyle) seeks. That is why I have insisted— I think this point was raised earlier—that the decommissioning that is done in the States, and to some degree here, might be the answer, without the paper.
Gemma Doyle
No one measure will sort out this problem—there needs to be a range of measures. I think that, taken together, the hon. Gentleman’s suggestion and mine would help to address the problem. I do not think that we will be able to quantify the issues unless the data and the systems are in place.
The hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) has already mentioned that it is important that we do not overlook the particular impact of deployment on the mental health of our reservists. Professor Simon Wessely of the King’s Centre for Military Health Research states that reservists who have served in Iraq or Afghanistan are three times as likely to suffer mental health problems as members of the regular forces. The Government’s Future Force 2020 plan suggests that the role of reservists is to increase substantially as a result of the reductions in the number of regular service personnel, so the Government must have the support in place to ensure that reservists are prepared to take on those extra responsibilities and that extra role, as well as guarantee that they have access to the correct mental health care and support when they return from deployments or are no longer mobilised.
As in the rest of the forces, there has been progress in recent years. The reservist mental health programme extended mental health support for reservists, but, with their role set to increase, the provision of support will have to be pointed in the right direction to cope with the increased number of reservists who are to be deployed. I would therefore appreciate an assurance from the Minister that the mental health care of reservists will be given due attention.
In conclusion, I again congratulate my right hon. Friend the Member for Salford and Eccles on securing this debate. We have heard of experiences from around the country, and they have illustrated the need for attention not to be diverted from the issue. The hon. Member for North Wiltshire (Mr Gray) asked what measures we can and should take to improve the situation. Combat Stress is asking for five things. I do not think that I can improve on them and would welcome the Minister’s comments on them. This debate has given us the opportunity to recognise the role that the NHS, the Ministry of Defence and Combat Stress play in supporting the mental health and welfare of our veterans. I pay particular tribute to Combat Stress, which, along with many other service organisations and charities, plays an outstanding role in support of the whole armed forces family, for which we should thank it.
The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)
This is a hugely important topic, so I am delighted that the right hon. Member for Salford and Eccles (Hazel Blears) has secured this debate. I thank all Members who have taken part. The right hon. Lady is a former Minister with responsibility for public health and therefore knows a lot about the issues. I am not in any way clinically trained, so I tread very warily around issues of mental health. We should be wary of making grandiose statements on a very complex situation. I certainly try not to tell clinicians how to address it.
There is, however, a good story to be told. A great deal of progress is being made and the subject has rightly received a lot of attention in recent years. Our armed forces are currently deployed in the most demanding areas of conflict, and we have a moral duty, not only as a Government but as a nation, to support and look after them, to care for them when they are injured and to maintain that care when they leave service. Mental health problems, as we have heard, may take some time to manifest themselves, in some cases many years after service. Mental ill health can be a truly debilitating condition. As several Members have mentioned, it still has a stigma attached to it, and I believe that there is a lot of common ground across the political parties to remove the barriers for those seeking the help that they so desperately need.
I acknowledge the work of the previous Administration in launching ex-service mental health pilots throughout the country during the previous Parliament. Such was their success that they continue in the NHS, which is leading the fight to ensure that those who need our help receive it.
Although I am responding on behalf of the Ministry of Defence, it has been the policy of successive Governments that the treatment of all health-related conditions and problems for those who have been in service is the responsibility of the national health service. I mention that because I deal very closely with the Minister of State, Department of Health, my right hon. Friend the Member for Chelmsford (Mr Burns), who from time to time makes comments in the House about zombies—some Members may have noticed that recently—that may have deflected us from his excellent work in the Department of Health, especially his close work with us on various issues, particularly mental health. Indeed, he and I together visited Combat Stress in Leatherhead about a year ago. The NHS and the MOD together have also set up armed forces networks to ensure that ex-service personnel in particular can access health care. Members have said that people do not understand what ex-service personnel need, but this should go some way to helping in the future.
To ensure a coherent approach across the Government, my right hon. Friend the Prime Minister asked my hon. Friend the Member for South West Wiltshire (Dr Murrison), who served as a medical doctor in the Royal Navy, to conduct a study into the relationship between the national health service and the armed forces, including former servicemen, in terms of mental health. It was a thorough examination of our procedures and led to my hon. Friend’s well-respected “Fighting Fit” report. If hon. Members have not read it, I commend it to them.
The right hon. Member for Salford and Eccles asked about our plans for the future. Essentially, they are based on that report. The former Defence Secretary, my right hon. Friend the Member for North Somerset (Dr Fox), announced on 6 October last year that we would accept all of the “Fighting Fit” recommendations. They include a scheme, beginning next spring, routinely to contact service leavers at the 12-month point after discharge to establish whether they have any health need for which they are having difficulty in accessing treatment. That is actually very difficult, because when people leave the armed forces, they often change address, move away, go abroad or do all sorts of other things. It is not as easy as one might think. In addition, we will enable those identified as having a mental health problem during service to continue to have access for up to six months to the MOD’s departments of community and mental health. That will help smooth the transfer of care from the MOD to the NHS. We have also enhanced service medical examinations to enable earlier identification of mental health problems.
One of the earliest “Fighting Fit” recommendations to be implemented is the new 24-hour helpline, which is run by the charity Rethink on behalf of Combat Stress and is funded by £200,000 from the Department of Health. It allows former personnel with mental health problems and their families to get specifically targeted support from people trained and experienced in dealing with serving and former armed forces personnel and their often complex mental health needs. It is a real success, and when I have met Combat Stress and its clients, I have seen for myself how important this enabling of the first step to seeking help really is. I telephoned the helpline shortly after it was set up because I am sometimes slightly sceptical about helplines, and I can assure hon. Members that it works.
Through working with Combat Stress, the NHS is also increasing the number of mental health professionals, with a focus on providing help to veterans with mental health problems. That provides the opportunity for veterans to be seen locally by NHS professionals who have a better understanding of veterans’ needs, working side by side with Combat Stress outreach teams and their extensive experience and knowledge.
To help with the process of removing the stigma, to which several hon. Members referred, the Government have introduced an online well-being network that is accessible to serving personnel, their families and veterans. It is called the Big White Wall and is staffed by professional counsellors, who can be contacted 24 hours a day, seven days a week. That social network, which is reflective of today’s society, allows individuals to engage with others who are in similar difficulty. The anonymity connected to that network allows for a free and frank exchange of experiences, with a view to generating a wider sense of support. The Big White Wall has logged 1,000 hits since going live, more than 40% of which are from serving personnel, which illustrates that it will be a success.
I must acknowledge the significance of Combat Stress’s collaborative approach with the NHS and the MOD, which was referred to by the right hon. Member for Salford and Eccles and others. I bought my Christmas cards this year and last year from Combat Stress, so I would like to think that I do my little bit personally to support it. My Department provided Combat Stress with £3 million in the financial year 2010-11 for the treatment of those in receipt of a war pension who require treatment for mental health problems caused by service.
Combat Stress was formed shortly after the first world war to help those returning from the battlefields, but it is as important today as it was then. Indeed, I first came across Combat Stress 25 years ago when I was serving. It was known then as the Ex-Services Mental Welfare Society. We have heard today about Neil Blower, a former serviceman who served his country in Iraq and Kosovo. He experienced difficulties after service, but received excellent help and support from Combat Stress. He has now become a published author. I wish him continued success, and I should say to the right hon. Lady that I found the quotation from his book very moving.
I accept that the Government cannot and should not do everything. Through the armed forces covenant, we are building partnerships between all arms of government—national and local—and with the NHS to deliver better support to the armed forces community. The hon. Member for West Dunbartonshire (Gemma Doyle), who speaks for the Opposition, mentioned all arms of government and how we need to bring them together. A report on the covenant will be published before Christmas.
We also need to work more closely with the charitable sector to get the right support to the right people at the right time. The covenant has the important principle of removing disadvantage. Any former serviceman who is ill as a result of their service can access priority treatment through the NHS—subject, of course, to the clinical needs of others. We continue to work closely with GPs to make that more widely known because there is an education issue. The Department of Health, working with the Royal College of General Practitioners, has put in place an e-learning package for GPs. That will increase awareness of the status of patients who are veterans, thus enabling more proactive monitoring of veterans’ mental health and helping to ensure that they receive the treatment that they deserve.
We acknowledge that, in some cases, it can take years for psychological problems to manifest themselves. It is therefore important that we recognise through-life responsibility to our armed forces and that we do all we can to increase awareness and reduce the potential for developing mental health problems in the future.
Hazel Blears
If the Minister’s plans to reduce stigma are successful—and I very much hope that they are—that will inevitably result in more people presenting for treatment and help and support. I specifically asked him what his estimate is of the increase in the number of people presenting for next year and the years after as troops withdraw from the theatres where they have been active and what plans he has to meet that increase in the number of people presenting. I would appreciate some detailed answers to those specific questions.
Mr Robathan
I was going to come to that, but we do not have estimates for the figures that may emerge because it is a very difficult clinical situation. Some people—mostly not qualified doctors—say that a tidal wave of mental health problems is coming. I do not know whether that is the case, but what I do know is that we must be ready for whatever comes, so that we can help ex-service personnel. That is the right way forward, but making estimates that must inevitably be guesses because they depend on individual situations would not necessarily be very helpful.
I want to answer a few more of the right hon. Lady’s questions. We have mentioned stigma. It is our policy and that of the armed forces that mental health issues should be recognised properly and handled appropriately. Every effort should be made to reduce the stigma associated with such problems. Service personnel are given briefings before, during and after any operational deployment that explain the symptoms to look for and signpost the support services available. As well as medical officers, welfare staff, mental health personnel and chaplains also deploy to places such as Afghanistan and are available to provide help and advice.
One of the most successful recent innovations has been the introduction of trauma risk management—TRiM—which I have seen. That is a process of peer-group risk assessment, and mentoring and support for use in the aftermath of traumatic events. Such a process is undertaken as soon as possible after the event. That could happen, for example, after a patrol in a forward operating base. Evidence suggests that that process has been successful in increasing awareness and reducing the stigma attached to mental health disorders, which the right hon. Lady mentioned.
Away from the operational theatre, we provide a range of specialist care, primarily through 15 military departments of community mental health across the UK and four such departments in Germany. Those departments provide out-patient mental health care and are staffed by community mental health teams comprising psychiatrists and mental health nurses, with access to clinical psychologists and mental health social workers. In-patient care, when necessary, is provided regionally in specialised psychiatric units under a contract with the NHS.
To help our understanding of the issues that affect service personnel and those who have left the services, we fund a large-scale research project at King’s College, London on the experiences of those who are serving or who have served in Iraq and Afghanistan. Only last Monday, I spent the morning at King’s with Professor Simon Wessely and other academic staff who are undertaking that research. If anyone wishes to go there, I can arrange a visit because they are extremely on the ball and know an enormous amount about the subject, as one would hope. The project includes a large-scale study involving more than 20,000 participants, which is monitoring the effects of operational service compared with a cohort group that did not deploy.
In May 2010—the project was funded by the previous Government—the latest phase of that research confirmed that there is a continuing relatively low prevalence of probable post-traumatic stress disorder for the UK armed forces. Some 4% of respondents displayed symptoms of PTSD compared with other studies that show a range of rates between 3% and 7% in the general population. Recent evidence suggests that PTSD is likely to present at a peak of about three years, but we accept that it may be longer in some cases. It is therefore important that we recognise our through-life responsibility to our armed forces.
I will try to cover the questions asked by hon. Members. My hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) made some excellent points. The hon. Member for North Antrim (Ian Paisley) spoke with passion about the legacy of conflict in Northern Ireland. Having spent the best part of a year of my life on the streets of west Belfast, I have a very real understanding of and a great deal of sympathy with some of his points. The hon. Member for St Austell and Newquay (Stephen Gilbert) spoke with great feeling, but we should be careful that we do not see ex-service personnel as victims. They are very capable people, and the overwhelming majority of people who leave the services plough a pretty good furrow and get a job. I had to become an MP to get a job; nevertheless, most people get a pretty decent job after they have left the armed forces, and they do not want to be patronised.
My hon. Friend the Member for North Wiltshire (Mr Gray) added his experience of the Territorial Army and acknowledged the real difficulties that we face. On the reservists, he is absolutely right. I say gently to the hon. Member for West Dunbartonshire that we must understand—I think that she does understand—that many ex-service personnel do not want to be pursued. When they leave the armed forces, they do not want to be followed up.
The right hon. Member for Salford and Eccles particularly mentioned education. I will write to her if I may with the details, but I think that she will find that the further education scheme funded by the Department for Business, Innovation and Skills provides free tuition for service leavers undertaking a first qualification at that level. That gives ex-service personnel the opportunity for higher studies, which they may have been denied by military service. Furthermore, they can build up learning credits during service that can be used to fund education for up to 10 years after leaving service. However, I will write to her with the details on that.
In conclusion, there is consensus here. The right hon. Lady has raised a very important issue. We can never remove the exposure to trauma in operations, but we must do all we can to minimise the effects that that might have. TRiM on the battlefield gives the opportunity to discuss the shared experience of trauma, and that concept is continued with the Big White Wall. For some, medical intervention is required, which I have discussed, but we continue to address the recommendations made in “Fighting Fit.” All that is complemented by Combat Stress and other service charities. As we have heard, they do a huge amount to rebuild lives, and we are, as a Government and a nation, eternally grateful for that.
Arctic Convoy Veterans Medal
(12 years, 5 months ago)
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Caroline Dinenage (Gosport) (Con)
I am grateful to you, Mrs Riordan, for the opportunity to secure the debate. I want to speak about two words: “heroism” and “bravery”. They are words that we hear too often in modern language, yet their true meaning is absolutely personified by the gentlemen in the white berets. They are the Arctic convoy veterans of world war two. They are the men who risked their lives again and again on what Winston Churchill described as:
“the worst journey in the world.”
On a daily basis, they endured sub-zero temperatures—sometimes as low as minus 60°—and had to hack away at the ice and snow that covered the decks and external parts of their ships. One veteran said that he did not realise how cold it was until he accidentally grabbed a ladder, which removed all the skin on his hand. However, the weather was nothing compared to the continual aerial bombardment from German U-boats, battleships and planes that plagued each trip.
One grim feature of the campaign was the use of suicide flights. Fighter planes were flung into the air with the use of a catapult when enemy aircraft were sighted. With nowhere to land when they were shot or ran out of fuel, pilots were forced to crash into the sea and face almost certain death. A total of 78 convoys delivered 4 million tonnes of vital cargo and munitions to the Soviet Union, which allowed the red army to repel the Nazi invasion. The cost in terms of life was horrific. More than 100 vessels perished and 3,000 UK seamen were killed in the treacherous waters of the Arctic ocean as they undertook terrifying trips to keep Russia supplied and fighting on the eastern front. Nine per cent. of the seamen who took part were killed— the highest fatality rate of any maritime campaign in the war.
The cost, had the Arctic convoys not succeeded, would have been worse. Nazi Germany would very probably have won the second world war. Churchill had promised to supply Stalin “at all costs”. He knew that, if Russia fell, the full weight of the Nazi military machine would be targeted at the west. Yet, because Norway and the Baltic states had been captured by the Germans, the only way to get supplies to Russia was through the northern ports of Murmansk and Archangel, which are both inside the icy waters of the Arctic circle.
Were the convoy veterans honoured with a medal by their own country? After all, even Russia—the Soviet Union—awarded medals that acknowledged its gratitude to the surviving sailors, whom it regarded as heroes. No. The convoy campaign was the only major sea campaign of the second world war not to be honoured with a specific medal. Instead, it was included in the battle of the Atlantic, which was a separate campaign to keep Britain supplied during the German U-boat blockade. This is the biggest fallacy: the Arctic convoy veterans all qualified for the Atlantic star. Leave aside that the Atlantic is 800 miles away from the Arctic and a wholly different campaign. Uniquely for campaign medals, recipients of the Atlantic star had to fulfil a six-month qualifying period, as opposed to just one day for the Africa star, for example.
Penny Mordaunt (Portsmouth North) (Con)
I congratulate my hon. Friend on securing the debate. She mentioned the Africa star. Not only does the campaign star system allow for such a stand-alone medal—the Italy star is another example—but it permits recognition of a significant event, battle or sustained effort; for example, the one-off clasp, the 1939-1945 star, to commemorate the battle of Britain. Does she agree that there has been a worrying complacency on this matter, in that neither of those ready solutions has been proposed? Today, the Ministry of Defence’s own website does not even mention the convoys in the criteria for the Atlantic star.
Caroline Dinenage
My hon. Friend makes an excellent point and has worked extremely hard on this campaign, as we all have. There is a ready-made solution within the star framework. The complacency in relation to rewarding these extraordinary men is, in many ways, shameful.
Mark Lancaster (Milton Keynes North) (Con)
My hon. Friend is making a powerful point. Probably the most powerful point she has made is that the qualifying criterion for the Atlantic star was 180 days, which by modern standards is very long indeed. I think that for the Falklands it was one day. For the current operational service medal, it is only 30 days. In fact, if she were devilish, she could ask the Minister what the qualifying period was for his two medals.
Caroline Dinenage
I thank my hon. Friend for that very helpful intervention.
The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)
If one considers that the war went on for six years, and people then looked back and decided on the length of time required to qualify for medals, I think that that was a perfectly reasonable position. As I recall, Northern Ireland was 30 days, which was essentially a quarter of a four-month tour. Actually, if my hon. Friend the Member for Milton Keynes North (Mark Lancaster) thinks that accumulated service medals should take longer to acquire—does he have one, or is he about to get one?—he raises a sensible point, but the second world war went on for six years.
Caroline Dinenage
I am very pleased to be acting as a referee in this particular discourse.
Caroline Dinenage
In two moments, I will. I welcome the intervention from my hon. Friend the Member for Milton Keynes North, whom I think is still a serving member of the Army. I am sure that he very much represents the views of the service people of today, who recognise fully and fully appreciate the sacrifice that these gentlemen made.
Mr Mike Hancock (Portsmouth South) (LD)
I am grateful to the hon. Lady for giving way. Like others, I congratulate her on successfully securing the debate. She said that there were two words that she wanted to talk about. There are two other words that, unfortunately, have not been taken on board by the Government. One is gratitude—the gratitude of the nation to these men. The other is obligation—the obligation that successive Governments have refused to take up to honour these men with the medal they deserve. The Minister’s outburst belittled the importance of this debate, and I regret that he chose to make those statements. I believe that “obligation” and “gratitude” are the two things that the nation now needs to show these men while they are still alive.
Caroline Dinenage
I thank the hon. Gentleman for that intervention and echo everything that he has said. I know that he has also been a great supporter of the Arctic convoy veterans in their campaign for a medal.
Mr Andrew Smith
The hon. Lady has been generous in giving way. She is making a powerful and eloquent case. I just want to underline the strength of cross-party support for her campaign, and the support it enjoys among the wider British public, as the hon. Member for Portsmouth South (Mr Hancock) has said. We owe these veterans a vote of thanks, and we owe them a distinctive Arctic convoy medal.
Caroline Dinenage
I thank the right hon. Gentleman for that good intervention. He has, in many ways, hit the nail on the head.
The Minister talked about qualifying periods for medals. The Arctic convoys sailed in excessively awful conditions. It is important to point out that nobody could possibly have managed six months of continuous service in those horrific conditions. There were people who sailed on the convoys, and many who lost limbs in the horrific extreme cold, who did not serve long enough to qualify for the Atlantic star. The Atlantic star qualification—albeit perhaps inadvertently—was therefore set up in such a way as to make sure that nobody who only served in the Arctic convoys could qualify. The Arctic convoy veterans who did receive the Atlantic star—there were a good number of them—only did so because they had also been part of an Atlantic convoy during other parts of the war; they did not receive it purely on the basis of their serving in the Arctic campaign.
Why was the Arctic the only campaign of the second world war to be ignored? The most likely explanation is that, as world war two ended, the cold war began and our relations with the Soviet Union deteriorated. Fear of communism was growing internationally and it was somehow seen as inappropriate, or perhaps even unfashionable, to recognise the efforts of our country in supporting the Russians. In some ways, this whole incredible, valiant episode was just brushed under the carpet. It was only in the 1990s, after the end of the cold war, that this incredibly heroic band of gentlemen felt that they could put forward their case for a medal.
Commander Eddie Grenfell survived his ship being bombed five times, and being plunged into the icy water where life expectancy was just minutes. He somehow managed to get rescued from the water and then spent many months recovering in Murmansk hospital. He is now 91. Lieutenant-Commander Dick Dykes spent more time in the Arctic convoys than anyone else alive today. Such men are heroes, yet they are still fighting. Portsmouth’s The News has led a campaign for more than 10 years to get a medal for Eddie, Dick and the ever-dwindling band of brave men: only 200 now survive. The News might be the champion, but the cause matters not only to people in Portsmouth.
Mrs Mary Glindon (North Tyneside) (Lab)
I appreciate the hon. Lady securing the debate and congratulate her on that. My now dear departed uncle was on one of the convoys, and he was thrilled to be awarded the Russian medal, although our brave convoy veterans are not allowed to wear it on the same side as their other decorations. If the veterans can receive that medal from Russia, as they did several years ago with great honour here in London, should they not be honoured by our country?
Caroline Dinenage
The hon. Lady makes a super point and underlines the strength of feeling on the subject up and down the country. It is almost impossible to understand why our brave servicemen have been rewarded by other countries and not by our own. It is not only a local issue, as she pointed out. Loch Ewe, from where the convoys were launched, has a museum and an annual service of remembrance, and the Scottish Government are even considering including the story of the Arctic convoys in their national curriculum. When I raised the matter at Prime Minister’s questions in January, the incredible outpouring of support I received came from all over the world and from as far afield as Canada and Australia. The medal has the support of people in all walks of life, young and old, and nowhere more so than among our serving servicemen and women. Next year, a new diamond jubilee medal will be awarded to anyone who has completed five years of service in the military, whether on active service or not. Many of the young people in the armed forces in my constituency have said that, if it is only a matter of money, they will happily forgo their own medal in order to afford one for the Arctic convoy veterans.
Penny Mordaunt
I thank my hon. Friend for giving way to me for a second time. Is she aware that the £12.3 million estimate for an Arctic convoy medal is based on incorrect numbers of servicemen and costings? Looking at the actual costs of other medals and allowing for inflation and even design costs, which obviously would not have to be included, I am hard pushed to reach even £1.2 million.
Caroline Dinenage
I am grateful to my hon. Friend for that information, which further underlines the obstacles that are being put in the way of doing the right thing. The Ministry of Defence was asked to review the medals system in July 2010, and it took 16 months to get nowhere. However, time is of the essence. It is 70 years since the first convoys, and the remaining veterans are in their 80s and 90s; of the thousands who took part in the convoys, only 200 are yet alive.
Mr Mike Hancock
The hon. Lady is being enormously generous in giving way again. Is she, like me, unable to find a single precedent other than that of successive Ministry of Defence Ministers from all Governments against giving the medal?
Caroline Dinenage
Absolutely—I have yet to find anyone who finds the medal unpalatable, other than members of the MOD.
Does the Minister agree that enough time has already been wasted on reviews and delays? How long will the new independent review requested by the Prime Minister take, and when will it be completed? Finally, what are the scope and leadership of the review? According to the MOD, the details are expected to be released shortly—but “shortly” is not a period that we understand. What does it mean? Time is not on our side, and I ask him to be more specific. I understand that the MOD hides behind rules, protocols and precedents, but another criterion ought to take absolute priority: this is the right thing to do. Those men are not politicians, and at their age they should not have to fight for justice. It appals me that people who gave so much to ensure the freedoms that we daily take for granted should have to beg for the recognition that they deserve.
Successive Conservative leaders in opposition have committed to the medal without review. It is dreadful that it has to be reviewed again and again. I urge the Minister to ensure that it is done quickly. Time is not on the side of those brave gentlemen. It would be utterly disgusting were a medal awarded and no one was alive to receive it.
The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)
I thank my hon. Friend the Member for Gosport (Caroline Dinenage) for raising this important issue, and I congratulate her on securing the debate. She feels passionately about it, and we have discussed it in the past. There is no scintilla of difference between us about our respect for those of my father’s and her grandfather’s generation who served in the Royal Navy and the Arctic convoys in the second world war. It might be relatively cold outside, but as we sit here in our centrally heated comfort, well clothed and dry, it is difficult to imagine the conditions in which young men in their teens and 20s went to sea in the Arctic before we were born. I pay real tribute to their courage, resolution, determination and bravery when necessary—all those things were shown by the people whom we as a nation sent to war in the Arctic. We agree about that, and the question is what we should do about it.
I mentioned my father’s generation, and I was brought up immediately after the second world war, so I have a much closer feeling with it, if I may say so. My mother’s first husband was a glider pilot killed at Arnhem, and the courage and resolution shown by glider pilots were similarly astonishing. In the battle of Sicily more than half the glider force was dropped in the sea and almost all of them died, as far as I am aware, so then to get back in a glider and fly off to Arnhem and D-day was similarly incredibly brave. I pay tribute to all those from this nation who in the second world war did amazing things. Nothing that I say should detract from that. The Atlantic convoys, rather than the separate Arctic convoys, lost 3,500 merchant ships and 175 warships.
The position of the Government, which my hon. Friend mentioned, is that we will have a review. It was thought that the earlier review, to which she referred, was insufficient, and therefore we are putting in place another one, for which the terms of reference and the chairman have yet to be decided. I can, however, assure her that that work is most definitely happening at the moment. It is important that the decisions be made not by me or by Ministers but independently. Neither the Ministry of Defence nor I will have any hand in those decisions, which will be made by an independent chairman and group. It is important that politicians do not have such decisions at their fingertips. The truth is that politicians should not be involved in awarding medals.
Caroline Dinenage
I think that politicians ought to have the decision in their gift. If they should not, why did successive leaders of the Conservative party promise the medal to veterans while in opposition? It should not be subject to review and it does not need independent scrutiny to decide that this is the right thing to do. Politicians are perfectly capable of making the decision and making the right one.
Mr Robathan
Every Member in the Chamber, pace the hon. Member for Portsmouth South (Mr Hancock) who might possibly be an exception, was born after the end of the second world war. Politicians should not revisit decisions made in the past, second-guessing those who are not around to speak for themselves and who knew the details, were much closer to them than us and would have known people who had been on the Arctic convoys, perhaps losing friends or relations on that convoy, when we do not.
The current situation is that an independent review, into which I will have no input, will investigate. However, I would like to state the facts, which are what we should deal with. The Admiralty fleet order dated October 1946 refers to
“Qualifications for the Atlantic Star”
and states:
“After qualification for the 1939-45 Star by six months’…service, in areas defined below.
(A) Six months’…service afloat as defined in Section III”,
which included time in port, and
“(B) Service in home waters, service on the convoy routes to North Russian ports, service in the South Atlantic between the longitude of Cape Horn and longitude 20° E”.
The point was that the Admiralty was trying to have one medal to cover those issues. Whether that was right or wrong, it is wrong to say that the Arctic was ignored. It was not. It was mentioned in the Admiralty fleet order, and it was recognised, but I accept that whether it should have been recognised further is a matter for debate.
The campaign suggests that the Atlantic star is not enough, and I understand the strong feeling about that. I cannot understand what it was like to be in such appalling cold. However, it was also cold in the Atlantic, and I have mentioned the 3,500 merchant ships and 175 warships that went down. Most people who earned the Atlantic star must be very proud to have done so when so many died. One also reads of the deprivation on the Atlantic convoys. It was pretty tough going across the Atlantic being chased by U-boats, and many ships were sunk.
Penny Mordaunt
I do not believe that anyone here wants to get into a competition about who suffered most, although we must recognise the appalling conditions endured by the Arctic convoy veterans. The Minister is rightly sticking to the facts, but the facts are that the Arctic convoys were a separate theatre of conflict, and a precedent was set with the Canal medal. If it was thought that an error had been made, for understandable reasons—my right hon. Friend alluded to what they might be—we could revisit a decision. I do not believe that politicians should make those judgments, but it is our job to raise the concerns of our constituents throughout the country. There is a great feeling that we should revisit the facts, and there is a precedent for change if we think an error has been made.
Mr Robathan
I am saying that that determination is possible if people in the past got it wrong. We are saying in this debate that those in the Admiralty who determined who would receive medals got it wrong and that in some way we who were born after the second world war know better than those who were in that war. Actually, they were people like us, who are sitting in our centrally heated Chamber. Mountbatten was not on the Admiralty Board because he was Viceroy of India at the time, but he had commanded Kelly during the war, and ended up an admiral. That was not unusual for experienced people. We are in danger of saying that we should gainsay their knowledge and disparage their decisions, which were made by good people with experience.
Mr Robathan
No, I will not.
The intention post-war was not to cover everyone with medals. Medals in the UK mean something, and we pay tribute to the people in the Public Gallery who are showing the medals that they won through risk and rigour. My hon. Friend the Member for Gosport mentioned the USSR. Authoritarian regimes and dictators, such a Gaddafi and Saddam Hussein, often throw medals around. North Korean generals are covered with medal ribbons. We have traditionally taken the view in this country—hon. Members may disagree—that medals will be awarded only for campaigns that show risk and rigour.
Mrs Glindon
Veterans who hold the Russian Arctic medal may think the Minister’s comment about regimes that give away medals is disparaging. I hope that he recognises that. Under Winston Churchill, the Government discouraged the award of the Russian medal, but the fact that it was given and that the brave men who received it were recognised should be mirrored in this country. I should be pleased if he made a different comment from the one that he made earlier.
Mr Robathan
I apologise if my comment was taken in the wrong way. That was not the intention. I am not sure when the Russian medal was given to our veterans, but I believe that it was after 1990. There are not many Soviet survivors from the second world war, but generals in the Soviet army were covered in medals, which is not the tradition in this country. That is the point I was trying to make.
Caroline Dinenage
The Minister’s comment about the Russians giving out that medal disparages what the Russians clearly recognise as the unbelievable commitment and bravery of gentlemen such as those in the Public Gallery to whom he referred. We are now in the habit of giving out medals to people who have not committed acts of bravery. Next year, the Queen’s diamond jubilee medal will be given to people who may have spent five years driving a desk in the Ministry of Defence.
Mr Robathan
That is a fair point, but the diamond jubilee medal is a commemorative medal, not a campaign medal. That is the difference, but I agree with my hon. Friend. She made a reasonable point. I apologise again if she took my comment the wrong way. My point was that some regimes give out a large number of medals, whereas traditionally the United Kingdom does not.
I commend Commander Grenfell and his colleagues on their campaign. It seems to have started in 1997, which was 51 years after the Atlantic star was awarded, so I am not entirely clear what prompted it. Two Members in the Chamber have been on their parties’ Front Benches, and the last Government, under a lot of pressure, decided that they would award a special medal, but they awarded the Arctic star. In Portsmouth, The News stated, under the heading, “We’ve Won” and “Historic victory in long battle to win honours for heroes of the Arctic convoys”, that Commander Grenfell said:
“I am really very happy with what we have achieved. It has been a tough campaign, but we have finally got the recognition the Arctic veterans deserved.”
It also quoted the hon. Member for Portsmouth South who said:
“This is a tremendous result, and it is wonderful that the Arctic veterans have at last won recognition.”
I must tell Opposition Members, particularly the right hon. Member for Oxford East (Mr Smith), that their Government believed that the matter had been put to bed.
Finally, the facts are that the decision is not one for politicians. I have huge respect for my father’s generation, who gave up their youth in the service of our country and deserve to be continually respected. The Arctic convoy veterans served in the particularly appalling conditions of the Arctic, but we should not pretend that we know better than experienced people who had taken part in the second world war and who had served on Royal Navy ships at sea. A decision will be taken, rightly, by the medals review. It should not be a political decision; it should relate to those who look at all the facts, take a view dependent on their respect for our veterans and make their decision accordingly.
Police Stations (Overnight Staffing)
(12 years, 5 months ago)
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Ian Austin (Dudley North) (Lab)
I am grateful to have the opportunity to bring this matter to the House’s attention. [Interruption.]
Ian Austin
I am grateful to have the opportunity to ask the Minister a series of questions about the proposed evening closure of Dudley police station, and, as we can see from the presence of other Labour Members, other stations in the west midlands. I want to express my admiration and support for West Midlands police, led by our chief constable, Chris Sims—[Interruption.]
Mrs Linda Riordan (in the Chair)
Order. Could you wait until the public have left the Chamber?
Ian Austin
I think those in the public gallery have done their bit. They have every right to have their case heard.
Led by Chris Sims and his senior colleagues, the force has seen crime across the region fall over the last few years, but many of us are worried that the force will find maintaining its performance impossible, because it is being forced to cut its budget by £126 million over four years. It is losing 14.5% of its funding, one of the biggest cuts in the country. As a result, the force is losing 1,250 officers, recruitment has been frozen, and experienced and valuable officers are being forced to retire early because they have completed 30 years’ service. Other savings are being made in back office functions and administrative functions as well.
The force is now proposing that the front desk at Dudley and a number of other police stations be closed to the public during the evening or overnight. Dudley’s front desk has been closed to the public between 10 pm and 7 am for the last four years or so, but under the new arrangements the front desk would close at 6 pm and not open again until 10 am the next morning. I think it is fair to say that were it not for the need to save £126 million, West Midlands police would not have put this proposal forward. However, they have to make savings and they have put forward a number of arguments, which I will set out and deal with.
First, it is said that
“The review of front offices found that public demand is very low in the evenings and overnight and recommended that staff be redeployed back into contact centres to increase the efficiency of call handling.”
Secondly, the force will
“continue to provide 65 front offices open to the public; a service to local communities far wider than most other police forces offer across the country.”
Thirdly,
“households will never be more than four miles from a 24/7 police station”.
Finally, the force is looking for other locations in which to meet the public and more modern ways of communicating, such as Twitter and Facebook. The force has established a new appointments system so that officers will visit the public instead of expecting the public to come to them.
I am all in favour of new ways of communicating with people and having more locations in which the public can meet the police, but there are specific factors in relation to Dudley which I am not convinced the current proposals have taken into account. As soon as the proposals were brought to our attention, my colleague Councillor Shaukat Ali and I launched a petition asking that the proposal for Dudley police be dropped. The fact that more than 2,000 residents signed our petition in just a fortnight illustrates the level of local concern. Residents, businesses, publicans and students in the town all expressed their concern. The Central Dudley Area Committee held an emergency meeting and unanimously called for the proposal to be dropped.
There are a number of specific factors in relation to Dudley. First, the nearest station run by Dudley police for many will be at Brierley Hill, five or six miles away for many residents. Secondly, I receive frequent complaints about antisocial behaviour on estates near the town. Much of this obviously occurs during the evening, and people strongly value having a station open should they need it. Thirdly, Dudley is the largest town on the list and I do not think there is anywhere of similar size in the region that would not have a station open to the public in the evening.
I am all in favour of using new methods of communicating with people, but it is to the West Midlands force’s credit that it operates so many more open front desks than other forces. The fact that there is a busy and active, fully staffed station is very important to traders and shoppers.
Mr Jim Cunningham (Coventry South) (Lab)
My hon. Friend knows that we are in the same position in Coventry. It will be difficult for the public to get access to a number of police stations, particularly over the weekends, as a result of the reduction in hours. Not far from where I live is Chace police station, which is a major station for Coventry. More important, when anyone is arrested for alleged terrorism, they are normally held there until they are moved somewhere else. It is vital that the Minister take a serious look at this.
I do not know whether my hon. Friend has experienced another problem. At weekends, when crime is more likely, it is difficult to get a senior officer at these stations to talk about certain incidents that may happen in the centre of Coventry or in different locations in Coventry. Several police stations in my constituency, but equally in the other two MPs’ constituencies, will be experiencing the same thing. It is vital that people have an open police station at the weekends so that they can get to the people they want. It is no good leaving sergeants in charge.
Ian Austin
My hon. Friend is correct. There are various ways in which his and my stations could be kept open in the evenings and, in his case, at weekends by looking for savings in other areas. It would help if the force was not being forced to find this level of savings in the first place.
As in Coventry, specific factors in Dudley mean that it is important to have a station open in the evening. We have got £30 million being spent right now on new college and sixth-form buildings in the town centre, which will result in hundreds more young people in and around the town during the evenings. The new college includes a theatre, which will bring hundreds of visitors to the town at night. Our town centre market is about to be rebuilt, strengthening the town centre economy with, again, more activities in the evening. Several pubs and cafés and a wine bar are currently being refurbished. Much of the regeneration of the town centre is based on driving up trade and activity in the evening. Finally, there is strong public support for my campaign to open up the castle in the evenings during the summer for concerts and plays, which would bring thousands more people to Dudley during the evenings.
On the number of visitors, the force’s own figures show that a third of front desk enquiries come between 6 pm and 10 am. That is bound to increase as a result of our ambitions to boost the town’s night-time trade and visitor economy. In the light of these particularly local factors, I want the Minister to ask the force to reconsider this particular proposal. Not unreasonably, the chief constable says that if front desks are not closed, savings will have to be made elsewhere. I understand that, but I need to be convinced that all possible savings have been found from administrative and back office functions before front-line services such as Dudley’s front desk are cut.
Forces across the country buy pretty much the same cars and other vehicles, uniforms, protective clothing and equipment. They use similar computer systems and so on. Will the Minister explain why individual forces are still procuring cars, vehicles and equipment individually and separately instead of driving down costs by purchasing centrally and getting bigger and better deals for the taxpayer? Will he tell me why we have police, fire and ambulance services in the west midlands operating separately instead of merging some common functions? Why do they all need separate finance, human resources and PR departments, for example? Why have we got 40 separate local or regional police forces across England—four in the west midlands alone—all providing different and separate services instead of sharing expertise and knowledge, as well as administrative functions and computer systems, for example?
Rationalising such functions would save a fortune, but I can think of other savings that we could be making, too. Many of the areas I have listed are precisely the areas that we identified as part of the 12% efficiencies that we would have made over four years, rather than the 20% cuts that have been front-loaded and that are being imposed on police forces at the moment. Is it not the case that the Government’s decision to go much further and much faster has probably impeded forces’ abilities to make efficiency savings, which would take time to work out with other police forces, but would limit the impact on the front line? They are being forced to do these things more quickly and more severely. That has forced them into quicker but more damaging savings, such as reducing the number of front-line officers and closing stations in the evening instead of the administrative and procurement savings that I have suggested.
We should also consider why the police authority and force are based in costly offices in the middle of Birmingham city centre, which is probably the most expensive place to run a service anywhere in the west midlands. Like me, I am sure my hon. Friends the Members for Walsall North (Mr Winnick) and for Coventry South (Mr Cunningham) could identify offices in their own constituencies where services could be provided much more cheaply.
The Minister will no doubt say that he cannot do much about where the authority is based, but he ought to be ensuring that it has found savings from all the other areas before touching the front line. He can certainly do something about the way the police force is funded.
The police authority and leaders from all parties in councils across the region have made representations to Ministers on two specific issues. Although all police authorities have been subject to some reduction in the Government grant, authorities such as the West Midlands police authority have effectively been penalised because they kept precept increases to a minimum over the past few years. They are, therefore, more reliant on the Government grant compared with authorities such as Surrey, which increased precepts at a faster rate and are therefore less reliant on the Government grant.
Mr Jim Cunningham
My hon. Friend makes a comparison between the west midlands and Surrey. In the west midlands the authority relies on an 80% grant from central Government, whereas in Surrey it is the reverse. That shows a real disparity.
My hon. Friend also mentioned efficiencies. I do not have a lot of evidence, but once or twice I have noticed that during an incident such as the arrest of a person for causing a problem on a bus, it can sometimes take six police cars to surround that bus and remove the individual. When talking about efficiencies, perhaps that practice should also be examined.
Ian Austin
My hon. Friend is correct. Total spending power—the Government grant and the precept—in the west midlands will reduce by over 4% in 2011-12, compared with only 1.5% in Surrey. As the Minister will know, that position is exacerbated further by the application of grant damping, together with the “floors and ceilings” that have been applied every year since the last funding formula review. As a result, the West Midlands police authority will receive £27 million less than its full formula entitlement, whereas Surrey will receive £4 million more. It means that the West Midlands police authority, which has one of the highest policing demands in the country, will be forced to make the biggest percentage reduction in spending, while areas such as Surrey that have much lower need and demand will make the smallest reductions. As the West Midlands police authority says,
“this is neither fair, reasonable nor indeed equitable.”
Stations such as those in my constituency would not be faced with closure in the evening if the Government introduced arrangements that properly reflected the need and demand for policing services in the west midlands, and which treat that area and the people who live and work in it fairly and equitably.
I will suggest one other saving. Although I am not against elected police commissioners in principle, I am not sure how they will find enough things to keep them busy and in particular to justify their enormous salaries—I thought about that when I visited the police authority last week, and it is an interesting point. One argument that was recently advanced for police commissioners cited the great job that we were told the Mayor of London did during the recent riots. The Mayor of London, however, looks after a whole range of services and functions across the city, and has a much bigger area of responsibility than simply the police. I am not sure what police commissioners will do to justify being paid £100,000—as I understand it, the police commissioners in the west midlands will be paid £100,000, and they will be the best paid in the country. That seems an odd priority when resources are so scarce that we are losing 1,200 officers and face the evening closure of stations such as that in Dudley.
Finally, does the Minister think that the officers in question and my police station’s front desk are front-line services? I would have thought it difficult to identify anything more front line than a full-time police officer and a public inquiry desk. At the election, the Prime Minister promised that there would be no front-line cuts, and that any Cabinet Minister who proposed them would
“be sent straight back to their department to go away and think again.”
Does the Minister think that the cuts in question are front-line cuts, and will he do what the Prime Minister promised would happen under such circumstances and think again?
Mr David Winnick (Walsall North) (Lab)
I welcome the fact that my hon. Friend the Member for Dudley North (Ian Austin) has secured this debate because Bloxwich police station in my constituency is affected by this issue. My hon. Friend is right.
Mrs Linda Riordan (in the Chair)
Order. May I check that the hon. Gentleman has the permission of the Minister and Opposition spokesperson to speak?
The Minister for Policing and Criminal Justice (Nick Herbert)
Leave me time to reply.
Mrs Linda Riordan (in the Chair)
Please keep your contribution short, Mr Winnick.
Mr Winnick
I certainly will, Mrs Riordan. As the Minister knows, the West Midlands police force faces a devastating cut of 26% over the next few years. That is bound to affect it adversely both in the west midlands as a whole and in individual constituencies. As indicated, there will be 1,250 fewer police officers as numbers fall from 8,627 to 7,377. Moreover, there will be fewer members of police staff in other roles. That is the background to what is happening and the reason why certain cuts are taking place at the moment.
The decision to close Bloxwich police station after 6 pm each day cannot be justified. My figures show that on average, more than 30 residents visit the station at some stage during the time it will be closed. Furthermore, the fact that the police station is closed will lessen the feeling of security among the residents. There may be alternative ways of contacting the police, but that does not alter the fact that the police station will be closed when previously it remained open, and people are concerned about that.
We started a petition to protest about what was happening, and there was not the slightest reluctance by anyone to sign—I would have been surprised if there had been. I know that the Minister is checking the figure I gave about the number of people who go to the station—that is the average figure that has been publicised; if it is not the most accurate figure, so be it. The fact remains, however, that until now and before the cuts were announced, the police station remained open and its closure was never suggested. The only reason the station will close after 6 pm every day is that indicated by my hon. Friends. I hope that, when looking at the situation in Dudley and Coventry, the issue of Bloxwich station and whether it can remain open will also be considered.
Finally, I sent the petition to the police authority with a supporting letter, and I believe that there should be a genuine consultation exercise in which people are asked their views. If the Minister wishes to challenge what I have said about the need for Bloxwich police station to remain open, let a genuine consultation exercise be held in Bloxwich, and other areas of my constituency that use that station, so that people can express their views.
The Minister for Policing and Criminal Justice (Nick Herbert)
I congratulate the hon. Member for Dudley North (Ian Austin) on securing this debate. I recognise that the availability of the police is a matter of concern to his constituents, and the Government share that concern.
Police visibility and availability is important, and we want to see more police officers on the streets preventing and cutting crime, rather than sitting behind their desks. We must, however, recognise that policing today reaches people through many means, not just police stations, and we must be careful not to confuse buildings with the visibility and availability of the police, which I fear may be behind public concern.
I know that the hon. Gentleman recently attended a meeting of the West Midlands police authority at which it considered a report by the chief constable on the proposed operating hours for the force’s public inquiry offices, and he also mentioned the petition that he presented. As I understand it, the views expressed by petitioners will be taken into account as a response to the police consultation. The consultation period will continue until 15 January, after which time all responses will be considered. Such decisions are taken locally and not by the Government.
In his report for the authority meeting, the chief constable made plain the force’s commitment to a visible and accessible service to the public:
“Providing a visible and accessible service to the public is core to the approach West Midlands Police takes in delivering its mission of ‘Serving our communities and protecting them from harm.’ West Midlands Police must deliver reductions in its budget of £126 million, but in making these savings we have been clear that we will still offer the protection the public demands, but the way services are delivered must change.”
The approach described by Chief Constable Sims reflects the core challenge that the police service faces—to reduce costs while maintaining and, indeed, improving public services. The Government have no option but to reduce public spending. As a service spending £14 billion a year, the police can and must make their fair share of the savings needed. I think that there is cross-party agreement that the police can make savings; we may disagree about the amount.
The hon. Member for Dudley North and his hon. Friends raised the issue of the funding for the west midlands. Of course, I will revisit the damping decisions to be made in relation to the third and fourth years of the spending review. I understand the point that the hon. Gentleman is trying to make. I have said before that we decided that an even cut across police forces was the only fair solution, because otherwise we would be penalising forces that were already taking more from local taxpayers than others. These are difficult decisions, but we decided that that was the fairest solution. I repeat that we want to move away from damping to full implementation of the formula as a proper reflection of policing need. It is difficult to do that when funding is falling, because it means that other forces would have to pick up the bill and receive a deeper cut than the level proposed by the Government, and those forces would not regard that as fair. Nevertheless, I will continue to consider these matters and have just reassured the chair of the police authority and the chief constable that I will do so. As I continue to take the decisions about individual allocations, I will pay the closest attention to the points being made.
My absolute priority is to ensure that the police service retains and enhances its ability to protect and serve the public, but for that to happen, business as usual is no longer an option for police forces and authorities. A fundamental redesign of police force organisation is needed. This cannot be about salami-slicing police resources. Her Majesty’s inspectorate of constabulary has shown that a significant proportion of the police work force are not working in front-line roles—that is certainly true in the west midlands—and that there is wide variation among forces when it comes to the availability and visibility of officers to the public whom they serve. That is evidence that forces can do much more to manage their resources better in order to prioritise front-line services. I know that the very good chief constable in the west midlands has embarked on that mission. He is focusing on the redesign of policing that is necessary to deliver a high-quality service to the public, given that resources are diminishing.
The test of the effectiveness of a force cannot be the total amount being spent on it or the total number of staff it employs—or how many police stations it has or when front counters are open. There is no simple and automatic link between those things and how accessible the police are or how crime is being fought. The effectiveness of a force depends on how well the resources available are used.
It is plain from the report provided by the chief constable to the police authority last week that West Midlands police have devoted more of their resources to managing contact with the public than similar forces have, but without reaching the productivity levels that could be achieved. The cost of that approach is not only financial; it constrains the ability of the force to return officers to the visible policing that the public want. The changes proposed will enable the force to deliver a £1 million saving on the cost of managing contact with the public. They also involve redeploying officers and staff to make better use of their time and skills, rather than staffing police counters at times when few people use them—I will come to that point. Staff from the sites with reduced hours will be redeployed into contact centres, which will improve call handling, and police officers will be released to other duties, so the proposals about which the police are consulting involve changing the balance of resources to improve the way in which the police respond to the public through the channels by which and at the times at which the public actually contact the police, rather than preserving a service in places where and at a time when the public rarely use it.
West Midlands police have found that, during the daytime, on average only two people an hour visit each front counter. Many of those visitors are solicitors visiting the custody facilities or are people whom the police have asked to attend, such as in relation to bail or production of documents. The proposed new opening hours for a number of station front counters will meet two thirds of existing demand, which is concentrated in daytime hours.
I note that the hon. Member for Dudley North has said that one third of front-desk inquiries come between 6 pm and 10 pm. It is worth him looking at the graph produced by the police that shows the actual demand at Dudley police station. I have just been looking at it. He may be right that one third of the inquiries come between those times, but let us look at the actual number of people making visits—those who choose to come in, not those who have been asked to come in by the police, because clearly they could be asked to come in at a different time. I think that the hon. Gentleman knows what the numbers are. At 6 o’clock, the average number was 0.3—0.3 people came in. It was 0.4 at 7 o’clock, 0.4 at 8 pm and 0.2 at 9 pm. At 10 pm, it was zero. During daytime hours, when the counter will remain open, the peak number of visits to Dudley police station came at 2 pm. I wonder whether the hon. Gentleman knows how many people came in at that peak time. One person came in. We need to understand the scale of the numbers of visits, what hon. Members are asking for and the impression that may be being given to local people of what the changes to the service mean.
The hon. Member for Walsall North (Mr Winnick) referred to Bloxwich police station. He is right: there is a little more demand on Bloxwich police station out of hours. I do not know whether his figure of an average of 30 is right. It does not look correct on the figures that I have, but I am happy to take what he says at face value. I can tell him that the peak number of visits in the daytime occurred at 4 pm and that two people came in. At 10 pm, the start of the out-of-hours service that he was concerned about, it was one person. Therefore we need to get all of this in context.
I have consistently said—this view is shared by chief constables—that we must find a new range of strategies for the police contacting the public. There are very good examples up and down the country of forces doing far more with their money—getting more bang for the buck—by finding new ways of contacting the public. Whether that is through the new opportunities that various media present, whether it is through contact centres on our new non-emergency number, 101, where people can get hold of the police, whether it is through the internet or whether it is the contact that the police can have through things such as supermarket surgeries, where they can meet thousands of people, rather than the very few who may come in to a police station, it is incredibly important that we realise that there are many more innovative ways by which contact can be maintained.
Nick Herbert
If the hon. Gentleman will forgive me, I must make one or two final points in response to the hon. Member for Dudley North. I hope that he understands.
Nick Herbert
I agree with the hon. Member for Dudley North about the importance of driving savings where we can to ensure that front-line activity is protected. That should be our shared ambition. I am committed to it, and so, I know, is Chris Sims. All the things that the hon. Gentleman mentioned are exactly the areas where we are doing that. We are driving hard on procurement. On police vehicle procurement, which he mentioned, the Police Act 1996 (Equipment) Regulations 2011 came into force in March. That means that all forces must now buy vehicles through a national procurement framework. We have identified some £380 million-worth of savings that could be achieved by police forces through better use of IT and procurement. That is a very good example of what the hon. Gentleman was talking about. The point about interoperability was also right. He mentioned interoperability between the blue-light services. We are encouraging forces to collaborate and share services. He will know about the innovative proposals that West Midlands police have in relation to business partnering. We are encouraging the 43 forces to share services and reduce back-office costs. I strongly agree with the hon. Gentleman about all that, and chief constables are working on it.
The hon. Gentleman raised the issue of police and crime commissioners. I am pleased that he said that he was not against them in principle. I know that Labour is now calling for candidates, and I have no doubt that we will be putting up a candidate in the west midlands. I do not know whether the hon. Gentleman plans to run. The truth is that there will be no greater running cost with the police and crime commissioner than there was with the authority. We are absolutely determined about that. There is no reason why the police and crime commissioner should cost more. I believe that it will be a full-time position, because it will involve the important job of holding the force to account, which the authority currently does. It will be vested in one person, rather than the whole authority, so I think that it will be a full-time job in a big force area. We have just decided that it will involve responsibility for victim services as well.
The police and crime commissioner will do the very important job of holding the force to account and being the voice of the people. They will provide a voice for exactly this kind of exercise and pay attention to public concern, but if I were the police and crime commissioner for the west midlands, I would be looking very hard at the proposals that the chief constable has made. I would be looking at the numbers and saying, “Actually, they make sense, given that we need to make savings and improve the visibility and availability of officers by innovative means.” When we look at the actual number of visits that hon. Members have talked about, does it really make sense to be saying that making the changes is scandalous and wrong and that the service will not be the one that the public need? I suggest that, if people re-read the report, they will see that the proposal is not an unreasonable one for the chief constable to make. I understand why hon. Members raise these issues. I believe that our objectives are the same, but I also believe that in this case they should be supporting the chief constable in his endeavours.
Zimbabwe
(12 years, 5 months ago)
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Andrew Selous (South West Bedfordshire) (Con)
It is a pleasure to serve under your chairmanship, Mrs Riordan. I am extremely grateful to Mr Speaker for granting me this debate.
Zimbabwe is an independent sovereign country, but one with which the United Kingdom has strong historical ties. We therefore have a duty to work for the best outcomes for the people of Zimbabwe, because to ignore what is going on there is to condone it.
Let me give a little vignette of what life is like in Zimbabwe. Last week, I was sent the story of a Christmas lunch in Zimbabwe, which, with your permission, Mrs Riordan, I will quickly read out:
“Half way through lunch two police details came to the gathering and informed us that we had not asked for police permission to have the gathering. The member of staff at whose house we had gathered and myself were taken to the local police station where we were detained for over two hours before being released with a stern warning. We had apparently ignored a law requiring permission to have a gathering at a private house!”
That is a measure of the level to which Zimbabwe has sunk.
There are seven issues I want to address, but first let me give a little context in respect of recent events. About 4 million Zimbabweans have set up camp over the border in South Africa. They are refugees from their country because of what has gone on there. That figure represents 20% to 30% of Zimbabwe’s entire population, including the worldwide diaspora of Zimbabweans.
There have been terrible violence and brutality. In 1983 and 1984, there were the massacres of the Ndebele people—the first major post-independence dispersion of Zimbabweans. This was black-on-black violence, and tens of thousands of people were displaced. They fled initially to the second city of Bulawayo, while others left for Botswana and South Africa. This crime against humanity was quickly forgotten by the rest of the world.
The land invasions that began in 2000 were, effectively, a Government-sanctioned looting spree and a desperate election ploy in reaction to the rapid rise of the Opposition Movement for Democratic Change. ZANU-PF was prepared to annihilate vital organs of the economy to win the election. Agricultural productivity declined by 80% between 2002 and 2008. Zimbabwe used to produce about 330,000 tonnes of wheat a year; last year, it produced 11,000 tonnes, and this year, it produced 10,000 tonnes.
Andrew Selous
I give way to my hon. Friend, who is an expert on agriculture.
Neil Parish
I was an election observer in 2000. At that time, the farms were being overrun. It was not just the white-owned farms that were affected, but all the black workers who were driven off them. Ever since, there has been virtually no production on that land. Zimbabwe should be one of the bread baskets of Africa; instead, it has to import food. Everything we can do to bring about change and some sense in Zimbabwe would be great.
Andrew Selous
I am really grateful to my hon. Friend for getting that on the record.
There were three years of national food deficit in the 20 years from independence to the beginning of the land invasions, and those three years were actually years of severe drought. In the other years, the country maintained an export surplus. Since 2000, when the land invasions started, there have been 11 consecutive years of food deficit.
There are now 1 million AIDS orphans out of a resident population of about 11.5 million. One child in four has lost one or both parents to AIDS. Meanwhile, up to 500,000 of the 1 million farm workers who were removed from white farms have died as a result of a combination of malnutrition and inadequate health services.
Water supply and sewerage systems are wholly inadequate, and one of the largest outbreaks of cholera in world history took place in 2008, infecting 100,000 people and killing more than 4,000.
The country’s jails became concentration camps. For many people, a petty offence of false conviction became a death sentence. Indeed, in 2009, six people starved to death in their cells.
The first major issue I want to concentrate on is the prevention of violence and intimidation in the run-up to the general election. In the 2008 elections, polling station results were used to target areas of Opposition sympathy. Huge groups of militia roamed the countryside, beating, burning and killing people at random. Torture bases were established—nightmarish places where the innocent were afflicted for days at a time.
In this period, more than 200 people were killed, thousands were beaten—hundreds of them now have lifelong disabilities—and tens of thousands were displaced. This was revenge and pre-emptive action rolled into one. The message driven home was that people’s choice in the second round of the vote was literally between President Mugabe or death. Rightly or wrongly, the MDC decided to pull out of the election with a week to go, hoping to spare people further suffering.
The International Crisis Group in southern Africa warns that there is a real danger that ZANU-PF will employ violence again to force people to vote. As we know, there must be an election before 2013. Reports in the independent press and statements by Opposition parties indicate that violence is already escalating significantly across the country.
On 10 November, Southern Africa Report, the South African Development Community’s bulletin of political and economic intelligence, announced that the Zimbabwe Defence Force had taken delivery, via an African intermediary, of the first of several consignments of Chinese small arms and equipment—a deal said to have been negotiated by Defence Minister Emmerson Mnangagwa. The consignment included 20,000 AK47 automatic rifles, uniforms, 12 to 15 trucks and about 21,000 pairs of handcuffs.
Given the escalating pre-election violence and ZANU-PF’s consistent history of initiating country-wide campaigns of violence to force the electorate to vote for President Mugabe, international observers and monitors are essential, and I will press the Minister to respond to that point when he replies. Additionally, a peacekeeping force, which could be deployed in the country at least three months ahead of an election, particularly in rural areas, would help to protect the lives, livelihoods and homes of vulnerable communities. The peacekeeping force should be required to remain in place after the election to prevent violent retribution.
We need to look at reform of the security forces in Zimbabwe, because even under the multi-party Government, the armed forces remain central to all aspects of life. The Joint Operations Committee, which is a non-statutory body, is made up of President Robert Mugabe’s inner circle, and it remains antagonistic to the unity Government with Morgan Tsvangirai and the MDC. It is also distrustful of non-military politicians, even in President Mugabe’s own ZANU-PF party.
The security forces’ access to economic opportunities has strengthened their bond with President Mugabe and their willingness to defend the status quo. While conventional military capacity and competence have declined massively since the 1990s, Zimbabwe’s security forces remain a major and arguably the central obstacle to the resolution of the country’s political instability. Unless the security sector is reformed, violence initiated by ZANU-PF is likely to continue, making the holding of free and fair elections problematic at the very least.
On racism, there are further steps that we can take. Is it not a pity that Zimbabwe does not look across the border to Zambia, one of whose vice-presidents, Dr Guy Scott, happens to be white and a democratically elected politician? Would it not be good if Zimbabwe had the same spirit as Zambia and took the same action?
Zimbabwe actually signed the United Nations convention on the elimination of all forms of racial discrimination on 13 May 1991. That bound Zimbabwe to allow its people full and equal enjoyment of human rights and fundamental freedoms, as well as the right to property and protection before the law. It also condemned racial propaganda and hate speech. Unfortunately, it does not allow for individuals to activate procedures to get the UN to ensure compliance; it needs a fellow signatory United Nations state to do that.
For more than a decade, the Zimbabwe Government and ZANU-PF have been allowed to get away with demonstrably defying the treaty. No signatory state has called for an investigation. No signatory state has asked for the 18-member sitting committee of independent experts to be activated and to go to Zimbabwe. No signatory state appears to care enough about racial discrimination in Zimbabwe to do anything about it. Frankly, many people find that hypocritical.
What would the benefits be of a signatory state getting the UN committee to investigate under article 11 of the convention? The committee would undoubtedly act as a deterrent for continued acts of abuse in the land programme and the indigenisation programme, just as the habitat investigation acted as a deterrent to stop the further destruction of hundreds of thousands of homes by state bulldozers back in 2005. It would help protect the region’s judiciary, by taking the issue to an independent UN body, and it would provide the west with a defence against the fantastical charges of neo-colonialism when it raises concerns about racial issues. It would provide any future democratic Government with support to resolve the land issue in Zimbabwe. It would also help to restore much needed investor confidence in the country.
I am concerned about the Zimbabwean Government’s consistent refusal and failure to recognise international legal judgments. For example, the international and regional court of the SADC tribunal, which the SADC Heads of State suspended in May due to pressure from President Mugabe and ZANU-PF, needs international support to become a functioning court once more. Individual states must be held accountable in future, so that the rule of law and human rights can be promoted in the SADC region. Pressure needs to be exerted on policy makers, to ensure that the SADC treaty and protocol are not changed in the August 2012 SADC summit, and I hope that the United Kingdom will be active in ensuring that. Without an international regional court, there is little hope of effective accountability or economic development being able to take place in the region. Furthermore, significant economic development cannot take place without respect for property rights, human rights and the rule of law, something with which the UK Government are already properly concerned in their international development policy.
I want to turn to the Marange diamond fields. I am grateful to the hon. Members who have joined me for the debate. They may be aware that participants in the Kimberley process agreed to relax the ban on export sales last month, subject to an adequate verification regime being in place. The European Union, the United States and Canada switched from opposition to the ban to abstention. The human rights group, Global Witness, is leaving the Kimberley process in protest at that decision. It is estimated that last week’s diamond auction could raise about $300 million US dollars. Contacts that I have in Zimbabwe commented earlier this week as follows:
“The situation is worse now than it has even been, the needs are spiralling. The theft of the diamonds has sadly given ZANU-PF a new lease of life and the future looks grim. There is no reason to think that when Mugabe dies the position will improve.”
That gloomy prognosis for Zimbabwe directly relates to the sales of diamonds from the Marange mine.
Ian Paisley (North Antrim) (DUP)
Does the hon. Gentleman agree that although the picture may look grim, as the wave of life eventually laps from Mr Mugabe, there is a significant opportunity for that country to re-establish and redevelop itself and put in place the democratic structures that ought to be?
Andrew Selous
I am grateful to my hon. Friend for attending the debate and intervening. Like him, I am an optimist; I think that Zimbabwe can have a fantastic future, given its agricultural productivity, the resources of its people and its natural advantages in the region. The challenge for us is to help the political process to allow that to happen, so I agree with the point that he made.
On the treatment of Zimbabwean Anglicans, hon. Members may know that the Archbishop of Canterbury, Rowan Williams, was recently accompanied in Zimbabwe by bishops, not only from Zimbabwe, but from South Africa, Tanzania, Botswana and Malawi, all of whom were absolutely horrified at what has been happening to Zimbabwe’s Anglicans. Since 2007, Anglican congregations have suffered systematic harassment and persecution at the hands of the police, often in direct contravention of court rulings. A report, which was handed to President Robert Mugabe, outlined details of that litany of abuses, which include false imprisonment, violence and denial of access to churches, schools, clinics and mission stations.
In the dioceses of Harare and Manicaland, properties belonging to the Anglican province have been misappropriated. It is a matter of the greatest sadness that Zimbabwean Anglicans are being prevented from continuing their work supporting local and often very needy communities with health care and education. Their priests and people are being denied access to their own clinics and schools. Many such institutions have been taken from Zimbabwe’s Anglicans, and are now under corrupt or poor management, being rapidly run into the ground and stripped of their assets. Details of that unwarranted activity and its impact on local communities were presented to President Mugabe in a report by Archbishop Rowan Williams. Every week, tens of thousands of Anglicans are denied their basic right to worship, because of the lies and falsifications propagated by the now excommunicated former bishop, Dr Kunonga, and his associates.
I have concerns about how the sanctions might be being evaded in Zimbabwe, and I ask that the Minister look into that. A glaring issue is that nationals of countries, including the UK, that have applied the sanctions—both individuals and companies—have continued to support the regime and nothing has been done about them. The British Government and others punish ZANU-PF, but fail to police their own citizens and, according to my sources, that includes companies such Old Mutual.
ZANU-PF officials have been able to externalise huge quantities of funds through share swaps between the Zimbabwean and London stock exchanges. Old Mutual has joint ventures with the Government of Zimbabwe that started before the formation of the unity Government, yet nothing is done. Moreover, those investments are directly connected to gross human rights abuses. Old Mutual has shares in a joint venture on the diamond fields where more than 200 panners in rags were gunned down from helicopters to clear the decks for investors. There are numerous reports of ongoing abuses. I understand that Old Mutual claims that any regrettable events predate its involvement.
The Central African Mining and Exploration Company purchased land from the Zimbabwean Government believed to have been extorted from another mining company and, in doing so, poured tens of millions into the pockets of the regime at a time when it needed election resources. What action can the British Government take on those issues?
The final words of my contribution should come from two black Africans, not a white Englishman.
Kate Hoey (Vauxhall) (Lab)
I congratulate the hon. Gentleman on securing the debate. Before he concludes, will he say something more about sanctions and restricted measures? He understands, as does the Minister, that the EU will decide what will happen with sanctions in February. Does he agree that it must be handled incredibly carefully and that we must not rush into removing any of those restricted measures, unless there is real evidence that it will make a difference to the political framework of getting a peaceful resolution and a free and fair election?
Andrew Selous
I welcome the comments of the hon. Lady, who is chair of the all-party group on Zimbabwe. She is right; the current regime has concerns about the sanctions. I think that they are partially effective. Her comments are wise, and I hope that the Minister will heed her words.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I congratulate my hon. Friend on securing the debate. Does he recognise that South Africa is vital to getting a political solution in that part of southern Africa? A very big problem for President Zuma is that President Mugabe is still seen as a war hero and as the last war hero from the great struggle in the first place. That has made life difficult for President Zuma in trying to deliver.
Andrew Selous
My hon. Friend is absolutely right, and on hearing the remarks of former Archbishop Desmond Tutu, with which I intend to conclude, he will hear that he is also in agreement with him on that point.
Our own Archbishop of York, John Sentamu, was born in Uganda in 1949. A former lawyer, he incurred the wrath of the dictator, Idi Amin, because of his judicial independence, and was locked up for 90 days three weeks after his marriage. In a speech in 2007, he described how he had been
“kicked around like a football and beaten terribly”.
He is a man who has suffered in a similar way to many Zimbabweans. He went on countless marches to campaign for the end of the unilateral declaration of independence of Ian Smith and calls Zimbabwe
“a scourge on the conscience of the entire world”.
He is disappointed by the African Union’s response to Zimbabwe. He calls for the UN to make Zimbabwe a priority, saying:
“If it does not, the blood that is spilled will also be on their hands.”
He has also called for President Mugabe and his officials to be brought before the International Criminal Court.
Desmond Tutu is Archbishop Emeritus of South Africa. He said that the incomprehensible greed, appalling lack of compassion and unspeakable cruelty demonstrated by the Zimbabwean elite contradict the classical African concept of ubuntu—the essence of being human. He described the
“state-orchestrated crimes against humanity on a massive scale countrywide”
and said that Zimbabwe’s plight is all our plight and that
“to ignore its suffering is to condone it.”
I look forward to hearing what action the UK Government will take, particularly on election observers, the outstanding SADC legal judgements, action in the United Nations, the integrity of the sanctions regime and the Marange diamond fields.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)
First, I congratulate my hon. Friend the Member for South West Bedfordshire (Andrew Selous) on securing this debate, and I praise him for his concise and compelling speech. If I do not answer all his points, I shall write to him after the debate.
The timing of the debate is certainly opportune—ZANU-PF is currently holding its conference in Bulawayo, and it has an important few days ahead of it. Next year and early 2013 will be a pivotal time for Zimbabwe. The actions that ZANU-PF and other political parties take in the next 18 months will have a huge impact on the shape of Zimbabwe’s future.
Our policy at such a crucial moment can be summed up simply: we want to do all that we can to support the Zimbabwean people’s aspirations for a more democratic, stable and prosperous country. To set out what that means, it might be useful for me to provide a brief update on the situation on the ground and the role that the UK is playing.
It is important to recognise that the reform process has not stood still. Although movement is slow and can often be obscured by events, progress has been made. The economy, under the stewardship of the quite excellent Finance Minister Tendai Biti, continues to show signs of robust recovery. He forecast an impressive 9.5% growth in 2012 in his budget speech last week. There is a lively media, and newspapers that are openly critical of the Government are sold every day on the street corners of Harare. The provision of basic services has improved out of all recognition, supported by the important contributions of the Department for International Development and others in the donor community. Textbooks are now in every secondary school, medicines are in hospitals, and food is on the shelves. Zimbabwe has come a long way since its nadir in 2008, and we can be proud of the role that we have played.
There has also been progress, but not as much, in the political arena. Constitutional reform is moving forward, and although the process has been tough and slow, there seems to be no doubt on any side that a new constitution will be adopted before the next elections. There will almost certainly be a referendum on the new constitution early next year.
However, despite those green shoots of progress, there are considerable causes for concern. There are still those in Zimbabwe who seek to erode the reform process to retain their personal hold on power. The promising figures of the budget mask an unsustainable over-spend in public sector salaries. Violence and intimidation targeting activists from civil society and both Movements for Democratic Change continue, especially at the hands of the Chipangano militia group in Harare. Partisan political bias within the state security mechanisms threatens to undermine Zimbabwe’s democratic foundation, as has been demonstrated by the cancellation of four Movement for Democratic Change-Tsvangirai rallies by the police last month. A particularly acute illustration of that concern is the recent death threat made by an alleged state security officer to an MDC-T Member of Parliament, in response to points raised about the Marange diamond fields in a parliamentary debate. My hon. Friend the Member for South West Bedfordshire also gave other examples.
Ian Paisley
I would like to put on record my thanks to the Minister for his kindness and his good work and briefing that he has given many of us across the House on Africa and African issues.
Recently I had the opportunity of hosting Roy Bennett here. Will the Minister consider arranging for his officials and himself to receive a briefing from Roy Bennett about some of the ongoing party persecutions in Zimbabwe?
Mr Bellingham
I am grateful to the hon. Gentleman for raising his meeting with Roy Bennett. I also had the chance to meet Roy Bennett when he was here, about six weeks ago. He gave us a fairly comprehensive report, which we have seen. We will look at any other report he produces, because we have great admiration and respect for him.
My hon. Friend the Member for South West Bedfordshire mentioned Marange diamonds. I would like to touch briefly on the recent Kinshasa agreement of the Kimberley process. It was the result of considerable diplomatic effort by the European Union and our partners, and we played a full role in it. I believe that the outcome, although not perfect, is a reasonable one for both Zimbabwe and the KP. We went into the negotiations with clear red lines on what we would not compromise on, and they remained intact in the final deal.
Under the terms of the agreement, Zimbabwe can export only diamonds from the Marange region that comply with KP standards. We need only to look at Minister Biti’s budget statement to see the importance of that revenue to the Zimbabwean Treasury. Furthermore, the agreement establishes a credible and independent monitoring mechanism to ensure that the standards are respected, which includes a role for civil society. The EU, Canada and other countries were pivotal in driving that forward. The United States abstained, but we were satisfied with the outcome because our red lines were kept in place.
I will say something about the subject of land and the continuing practice of illegal farm invasions. Such abuses are once again increasing in frequency. It causes privation not only to farmers and their workers, who are being forced from their land, but to the entire agricultural sector of Zimbabwe. As my hon. Friend pointed out, tobacco yields are down 38% on 2000 levels, and wheat yields are down a staggering 82%. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) said, the fact that a country of Zimbabwe’s agricultural potential still requires food aid for its citizens is quite appalling, and it is a result of destructive and vindictive land policies.
It is not only the UK that judges such actions to be illegal and in contravention of the global political agreement; it was also the judgment of a 2008 Southern African Development Community tribunal, which ruled in favour of three Zimbabwean farmers, including the late Mike Campbell. The demise of that tribunal was a retrograde step for regional law, but despite its suspension, the ruling was upheld by a South African court this June.
We have always recognised the central importance of the land question to Zimbabwe, which is why we contributed to a land redistribution programme immediately after independence. While we have never accepted the allegation that the UK alone should fund compensation for land redistribution, we remain willing to engage other donors in a land reform programme in Zimbabwe that is transparent, fair and pro-poor. We regard a land audit, as provided for in the GPA, to be a necessary first step in the process, and the EU made it clear some time ago that it was willing to fund such an exercise.
Continued farm invasions are symptomatic of a wider disregard for human rights, which extends to those of different political and religious persuasions. I welcome the suggestion made by my hon. Friend the Member for South West Bedfordshire on the UN convention, and I will write separately to him. I want to assure the House that the Zimbabwean Government are under no illusions of our strong condemnation of the ongoing abuses.
The enduring uncertainty over the timing of the next elections is at the centre of much of the abuse. Under the terms of the existing constitution, elections must be held by June 2013. What is crucial is that polls, when held, are preceded by the necessary reforms and avoid the devastating levels of violence that were seen in 2008. To that end, the UK fully supports the efforts of SADC, particularly those of South Africa and President Zuma, as they work with all three main Zimbabwean parties to agree a path to the finalisation of the GPA and a road map to elections. I assure my hon. Friend that the road map will include key items, such as provision for proper observers and monitors, a fully independent electoral commission and an electoral roll that is fit for purpose. As he pointed out, it is vital that the police and army stay out of the electoral process.
Regional engagement is essential. No country exists in a vacuum. I certainly agree with my hon. Friend that the recent Zambian election provides an impressive regional role model to follow. We, as outsiders, have only a secondary role to play, but I assure Members that we have been absolutely explicit in assuring the southern African region of our commitment to and full support for their efforts. We stand ready to do more if called upon, and have made clear, for example, our willingness to participate in the provision of international monitors.
As for the EU’s targeted measures, we have made it crystal-clear—I say this clearly to the hon. Member for Vauxhall (Kate Hoey)—that we stand ready to revisit the measures only in response to concrete changes on the ground.
Zimbabwe is facing an absolutely critical time. Lessons must be learned from what has happened elsewhere in Africa, including northern Africa. A free and fair poll, which respects the will of the democratic majority of Zimbabweans, should follow the example of Zambia—
Written Ministerial Statements
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Ratcliffe-on-Soar Power Station
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The Attorney-General (Mr Dominic Grieve)
On 13 July 2011 a written ministerial statement was presented to both Houses setting out the decision by Keir Starmer QC, to ask the Chief Surveillance Commissioner and retired Court of Appeal judge, Sir Christopher Rose, to conduct an independent inquiry following concerns about the non-disclosure of material relating to the activities of an undercover police officer and suggestions that the CPS had suppressed evidence in relation to the Ratcliffe-on-Soar power station protest cases.
The Director of Public Prosecutions committed to making public the findings of the independent inquiry and a copy of Sir Christopher Rose’s report has today been placed in the Libraries of both Houses. The report is also available online at www.cps.gov.uk.
Sir Christopher has concluded that although there were individual failings, there was no deliberate or dishonest withholding of information by the prosecution. More detailed conclusions can be found within the report.
Sir Christopher has recommended that more explicit guidance be included in the prosecution team disclosure manual, a recommendation which the Crown Prosecution Service (CPS) have agreed to adopt. In addition and in light of the report, the Director of Public Prosecutions has decided that specific training should be delivered to all senior lawyers in the CPS casework divisions and complex casework units about the proper handling of cases involving undercover officers. All chief Crown prosecutors and any staff who chair CPS case management panels should undergo the same training.
Sir Christopher worked in tandem with the IPCC in this matter sharing all relevant information. Sir Christopher’s inquiry focused on the CPS’ handling of the Ratcliffe-on-Soar power station protests. The IPCC are conducting their own inquiry which will be published in due course.
Anti-avoidance Regulations
(12 years, 5 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are determined to reduce tax avoidance in order to protect the Exchequer, which provides funding for public services, and maintain fairness for the taxpayer.
Accordingly, the Government are announcing today that regulations have been laid to clarify the time at which companies with foreign currency loan relationships or derivative contracts and matched foreign currency shares, ships or aircraft come within the provisions of the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (the disregard regulations).
These regulations put beyond doubt that companies can only defer foreign exchange gains and losses under the disregard regulations from the date that they have a foreign currency loan relationship or derivative contract which is matched with shares, ships or aircraft. The regulations will apply to shares, ships or aircraft which are matched on or after 6 December 2011.
The clarification follows disclosure of an avoidance scheme in which companies claim to permanently defer foreign exchange gains on foreign currency loan relationships and derivative contracts by retrospectively designating the loan relationship as a hedge of newly acquired foreign currency share capital. The regulations will prevent future avoidance in this area and protect significant amounts of revenue.
Further details have today been published on HMRC’s website, together with the regulations, technical note and tax information and impact note.
Bank Remuneration Disclosures
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The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government have today launched a consultation on a mandatory requirement for the largest UK banks and foreign banks operating in the UK to publish the details of the level and composition of remuneration of their eight highest-paid senior executive officers. The first disclosures would be made in 2012, in respect of the 2011 financial year.
In February 2011, the Government announced an accord between the UK Government and major UK banks under the name “Project Merlin”. As part of this announcement, the Government committed to consulting on extending the remuneration disclosures of the highest-paid non-board executives made under Project Merlin to major UK banks from 2012 onwards.
Remuneration practices in the financial services sector have incentivised excessive risk-taking in some cases, contributing to the severity of the financial crisis. While a number of UK, international and European initiatives have led to improvements in the alignment of risk and reward in the financial services sector, more detailed remuneration disclosures for the highest-paid senior executives at the largest firms will provide better oversight of incentives. This information will encourage improved shareholder governance and enhance public scrutiny, which, in turn, is expected to facilitate better decision making by boards in relation to senior executive pay.
These proposals have been designed to minimise potential costs and external impacts, including the impact on privacy. A full explanation of the regulatory changes and draft implementing provisions is set out in the consultation document and impact assessment. The consultation will be published on the HM Treasury website, and the consultation period is scheduled to end on 14 February 2012.
Following consideration of responses to this consultation, the Government will take a decision on whether amendments to the draft legislation are required, before publishing a summary of responses document and laying final regulations before Parliament during summer 2012.
Draft Legislation for Finance Bill 2012 and Tax Policy Update
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The Exchequer Secretary to the Treasury (Mr David Gauke)
Following Budget 2011, the Government consulted on a number of tax policies. Today the Government are publishing the responses to these consultations alongside draft clauses for legislation to be included in Finance Bill 2012. This fulfils our objective to confirm the majority of intended tax changes at least three months ahead of publication.
The draft clauses will be open to technical consultation until 10 February 2012.
Details of the clauses published today are set out in the overview of draft legislation document, which also includes tax information and impact notes for each measure. All publications will be available on the HMT and HMRC websites.
The Government are making additional changes to tax policy. Legislation will be introduced in the Finance Bill 2012 to:
provide that visiting EU forces and their civilian staff receive the tax treatment to which they are entitled under the EU status of forces agreement. Similar treatment already applies to visiting North Atlantic Treaty Organisation (NATO) forces.
exempt from income tax payments of the continuity of education allowance to service personnel in the armed forces.
ensure that individuals provided with security enhanced cars are not unfairly impacted by the abolition of the £80,000 cap on the cash equivalent of the benefit on company cars.
exempt from UK taxation, money earned by non-resident footballers and team officials in relation to the Champions League final in 2013, which will be held at Wembley.
ensure that existing tax rules dealing with tax adjustments arising on a change in accounting policy continue to apply following the expected changes to UK generally accepted accounting practice in 2012. The legislation will apply to changes in accounting policy where accounts are prepared after 1 January 2012.
introduce a lower rate of 20% of the full rates of climate change levy for supplies of taxable commodities used in the recycling of steel and aluminium, from 1 April 2012.
make consequential amendments to stamp duty land tax reliefs arising from provisions of the Health and Social Care Bill.
make further changes to the capital allowances anti-avoidance rules that apply to transactions involving plant or machinery following the announcement on 12 August 2011 to close down a loophole in the legislation.
take a power to modify the stamp duty land tax disclosure of tax avoidance schemes regime to facilitate both the removal of the grandfathering rules for certain avoidance schemes using the sub-sale rules and the removal of the property valuation thresholds for disclosure.
provide double taxation relief for remote gaming duty, general betting duty and pool betting duty following the announcement on 18 July 2011 of a review of remote gambling taxation.
amend the bank levy to ensure that the liabilities of joint ventures are correctly aggregated into a foreign banking group or a relevant non banking group’s chargeable equity and liabilities; to ensure that double taxation relief can be restricted where the amount of a foreign bank levy subsequently is reduced; and to amend the powers allowing the rules for the exchange of information with foreign authorities to work as intended. The changes to the rules on joint ventures will have effect for chargeable periods ending on or after 1 January 2012.
The Government will propose amendments in Finance Bill 2013 to two pieces of legislation designed to protect the UK tax base. These are contained in sections 714 to 751 of the Income Tax Act 2007 (transfer of assets abroad) and section 13 of the Taxation of Chargeable Gains Act 1992 (gains on assets held by foreign companies closely controlled by UK participators). A further announcement will be made around Budget 2012 and the Government intend to publish a consultation including draft legislation at that time.
The Government also announce the withdrawal of five extra statutory concessions and a consultation on supplementary legislation for two concessions. The withdrawals will have effect from the beginning of the 2013-14 tax year. Further details are available on the HMRC website.
The Government have also tabled two further written statements today which:
set out legislation for Finance Bill 2012 which has effect from today; and
provide further details on non-domicile taxation and the statutory residence test.
Draft Legislation for Finance Bill 2012: Measures with Immediate Effect
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The Exchequer Secretary to the Treasury (Mr David Gauke)
This Government are committed to creating a fair tax system and will take the necessary steps to prevent the loss of tax revenues.
The Government are announcing today measures which will protect the Exchequer and maintain fairness in the tax system. The legislation for these measures will have effect from today and will be included in Finance Bill 2012.
The protocol on announcements made outside scheduled fiscal events, published at Budget 2011, sets out the criteria the Government will observe when changing legislation with immediate effect. The Government are acting in accordance with the protocol in announcing the following changes to legislation.
Lloyd’s stop-loss insurance
Legislation will be introduced to ensure that all premiums payable by corporate members of Lloyd’s in respect of member-level stop-loss reinsurance shall be deducted for tax purposes in the same period in which the profits to which they relate are recognised. The legislation will apply to all premiums paid in respect of policies taken out on or after 6 December 2011 to remove the benefit of the current mismatch without further delay.
Scope of the supplementary charge
The Government are introducing legislation, taking effect from 6 December 2011, to prevent a potential loss of tax by ensuring that the supplementary charge applies to ring-fence chargeable gains and to confirm that the scope of the supplementary charge matches that of ring-fence corporation tax.
Section 171a of the Taxation of Chargeable Gains Act 1992 will be amended to provide that an election cannot be made to transfer a ring fence chargeable gain from a company carrying on a ring fence trade to a company not carrying on a ring fence trade.
Section 330 of the Corporation Tax Act 2010 will be amended to put beyond doubt that supplementary charge is charged by reference to all of the ring fence profits of a company that are chargeable to corporation tax; that is by reference to its chargeable gains in addition to the trading profits arising to the company as a result of its ring fence trade.
Further details have today been published on HMRC’s website, together with the proposed draft legislation and tax information and impact notes.
The Government have also tabled two further written statements today which:
set out legislation for Finance Bill 2012 and updates on tax policy; and
provide further details on non-domicile taxation and the statutory residence test.
Non-Domicile Taxation and Statutory Residence Test
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The Exchequer Secretary to the Treasury (Mr David Gauke)
At Budget 2011, the Government announced a package of reforms to the taxation of non-domiciled individuals and their intention to introduce a statutory definition of tax residence.
Following consultation, the core reforms to non-domicile taxation will be included in Finance Bill 2012 as announced and draft legislation is published today. This comprises the introduction of a higher £50,000 annual charge, a new relief to encourage business investment and technical simplifications to some aspects of the existing non-domicile rules.
The legislation of Statement of Practice 1/09, which is one of the simplifications to the existing non-domicile rules, will be taken forward in Finance Bill 2013 to take effect from April 2013.
The consultation on tax residence raised a number of detailed issues which will require careful consideration to ensure the legislation achieves its important aim of providing certainty for individuals and businesses. The Government will therefore legislate the statutory residence test in Finance Bill 2013 to take effect from April 2013 rather than April 2012. It will introduce any reforms to ordinary residence at the same time. This will give time to consult thoroughly on the detail of these changes well in advance of implementation.
The Government are committed to the form of the statutory residence test outlined in consultation. They will make a further announcement around Budget 2012 when it will publish their response to the recent consultation together with a further consultation on policy detail and draft legislation.
This will ensure that the full package of measures announced at Budget 2011 will be implemented in a two-step programme that will be completed in Finance Bill 2013. The Government remain committed to making no further substantive changes to these rules for the remainder of this Parliament.
The Government have also tabled two further written statements today which:
set out legislation for Finance Bill 2012 and updates on tax policy; and
set out legislation for Finance Bill 2012 which has effect from today.
Government Olympic Executive Quarterly Report, December 2011
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The Minister for Sport and the Olympics (Hugh Robertson)
I am publishing today the Government Olympic Executive’s Quarterly Report—“London 2012 Olympic and Paralympic Games Quarterly Report December 2011”. This report explains the latest budget position as at 30 September 2011, and outlines some of the investments which are being made to capitalise on the London 2012 Olympic and Paralympic games.
The anticipated final cost (AFC) of the Olympic Delivery Authority’s (ODA) construction and infrastructure programme is £6.856 billion. This is a decrease of £394 million since July—including £333 million that the ODA has returned to DCMS for transformation work to be carried out by the Olympic Park Legacy Company (OPLC), and savings of £61 million. On a like-for-like basis with previous reports, which included the transformation work in ODA’s programme, the ODA’s AFC stands at £7.189 billion.
The ODA has achieved £42 million of savings in the quarter, taking the total amount of savings achieved since the November 2007 baseline to over £910 million. Construction of the venues and infrastructure for the games is 92% complete with the majority of venues on the Olympic park now complete. Contracts for the sale of the Olympic village to Delancey/Qatari Diar (QDD) joint venture have been exchanged generating a net benefit of £14 million above the previous forecast.
With just over eight months to go until the opening ceremony of the London 2012 Olympic and Paralympic games, we are in a strong position and the list of completed venues now includes the velodrome (nominated for the RIBA Stirling Prize 2011), the main stadium, the handball arena, the basketball arena, the aquatics centre and the international broadcast centre (IBC). During the “One Year to Go” celebrations at the end of July, the completed aquatics centre was unveiled to the public and diver Tom Daly marked the occasion by taking the first official dive into the pool.
The consistent and careful management of the London 2012 programme has enabled us to fund additional security requirements, and invest in projects to help drive economic growth and tourism as a result of the games, all while staying within the £9.3 billion public sector funding package (PSFP).
The Home Office and LOCOG have undertaken detailed analysis of the venue security staff that will be needed across the UK across a range of London 2012 venues next summer. Our priority is to deliver a safe and secure games therefore we have allocated an additional £271 million for venue security. This figure includes the recruitment and training of 23,700 venue security personnel based on more than 100 competition and non-competition venues across the UK.
We are confident that the core safety and security programme can be delivered within the £475million announced in December 2010’s spending review settlement. In order to test the effectiveness, resilience and decision-making capability of key games-time structures and processes, we have also apportioned a further £2.8 million for games-time command, co-ordination and communication testing.
Historically, the opening and closing ceremonies are some of the most memorable and enduring spectacles from every Olympic and Paralympic games. They represent a unique opportunity to showcase the creative talent of the host nation to a global audience of billions. The four ceremonies will have an equivalent airtime value estimated at between £2 billion and £5 billion. To ensure that the UK capitalises on this opportunity, the Government have made available up to £41 million to LOCOG (£7 million of which is Government-held contingency) to support the delivery of the four Olympic and Paralympic ceremonies.
The Government have also allocated £25 million from the PSFP for domestic and international campaigns to drive economic benefits, including tourism, from the games. The “GREAT” campaign launched by the Prime Minister in the autumn and led by VisitBritain, will promote the UK as a destination for tourism and inward investment in key overseas markets. Run in partnership with UKTI, FCO and British Council we estimate that this campaign will attract an extra 800,000 visitors, generating around £400 million of additional spend per annum, as well as attracting £1 billion worth of additional trade and investment. The 70-day Olympic torch relay is a unique opportunity for each of our regions to showcase their culture and heritage to a national audience. Funding of up to £4 million has been released so that we can use the tour to increase domestic tourism across the UK. Through the domestic tourism campaign, it is estimated that 5.3 million additional short break nights will be generated by 2015, creating around £480 million of additional consumer spending.
I would like to commend this report to the members of both Houses and thank them for their continued interest in and support for the London 2012 games.
Copies of the Quarterly Report December 2011 are available online at: www.culture.gov.uk and will be deposited in the Libraries of both Houses.
EU Ban (Keeping of Hens in Conventional Cages)
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The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
I know many members of the House have been following progress on the implementation of the EU-wide ban on the keeping of hens in conventional cages. I, therefore, want to take this opportunity to update the House and explain how the ban will be enforced by DEFRA and the devolved Administrations.
Council Directive 1999/74/EC, which lays down minimum standards for the protection of laying hens, bans the keeping of hens in conventional (“battery”) cages from 1 January 2012. This represents one of the most significant welfare advances across the EU and DEFRA, along with the devolved Administrations, has been working hard to see it effectively implemented across the European Union.
The Government acknowledge the sterling job that the UK egg industry has done in preparing for the ban and the very big investment made in converting to other production systems, demonstrating its commitment to animal welfare, which is also a serious consideration for many consumers when purchasing food. The vast majority of UK producers will be compliant by 1 January 2012.
It is a different story across Europe. 13 of the 27 member states have said that they will not be ready. There could be about 50 million hens that will still be in conventional cages across the EU in unacceptable conditions on 1 January 2012.
We want to protect our producers who have invested some £400 million in converting out of conventional cages, equivalent to spending £25 per hen housed. To this end, I have met with the Commission a number of times over the last year in an attempt to find a solution. A reliance on infraction proceedings against non-compliant member states will not be enough to deal with the negative impact that non-compliance would cause and that additional enforcement measures would need to be put in place to prevent market disturbance. In September, the Secretary of State wrote jointly with nine other concerned member states to the European Commission urging them to act quickly. At the October Agriculture Council, the Commission indicated that despite their efforts an intra-Community trade ban was not legally possible.
The Commission then turned to looking for a robust enforcement approach that avoids large numbers of producers having to close down their operations and the destruction of millions of hens and non-compliant eggs, while at the same time protecting all those producers who have complied with the ban and implemented a flagship animal welfare issue. While I never wished to see the 2012 deadline delayed, I was willing to explore the idea of a practical solution which would give some protection to UK and other compliant producers, by ensuring eggs from illegal cages did not leave the country of origin.
There was a meeting at official level on 29 November, where the Commission said that the early stages of pre-infraction procedures had already begun with non-compliant member states. The idea of a gentleman’s agreement will not be progressed, but the Commission has asked for action plans from all non-compliant member states, many of whom supported keeping non-compliant eggs within national borders. The Commission’s Food and Veterinary Office missions will be targeted at the beginning of 2012 at non-compliant member states and all member states have been asked to submit lists of compliant and non-compliant producers.
We have decided that the UK enforcement strategy to deal with non-compliance with the conventional cage ban will be robust.
The Government have thoroughly investigated the possibility of taking unilateral action and bringing in a UK ban on all imports of egg and egg products which have been produced in conventional cages in other member states. However, given the very significant legal and financial implications of introducing such a ban, coupled with practical difficulties in enforcing it, it is not a realistic option.
Instead, DEFRA and the devolved Administrations will be adopting the most robust enforcement approach available to us within the legal constraints that exist. Risk-based surveillance to ensure imported shell eggs from other member states have been produced in compliance with the cage ban will be in place from 1 January. The Animal Health and Veterinary Laboratories Agency (AHVLA) is the body responsible for enforcing the conventional cage ban in Great Britain. Its knowledge of the industry and those importing eggs, coupled with an understanding of a member state’s level of compliance will define the level of surveillance.
AHVLA surveillance on imports of shell eggs will use ultraviolet light analysis to identify batches of caged eggs that are not from an enriched cage environment. This technique has successfully been used to date to identify caged eggs within batches described as being produced in alternative systems, for example, free-range. It has not up until now been used to specifically identify different types of caged egg production, but we have had the technique independently validated and it can be done. This technique will be used as a marker to prompt further action. Once suspected non-compliant shell eggs are identified, AHVLA will contact the Competent Authority in the originating member state and ask for confirmation of the system of production.
If they are found to be from an illegal system, they will be prevented from being marketed as class A eggs and would be sent for processing (i.e. be treated as class B eggs)—if indeed any UK processors would accept them. If the eggs were found to be from a compliant system, the eggs would be released.
We believe this scrutiny will mean importers will make greater efforts to ensure the source and integrity of the eggs they import, given the economic disadvantage that would follow if they were importing illegally produced eggs. We have no wish to hinder legal trade or disadvantage compliant producers wherever they are in Europe and we are quite happy to use member states’ own lists of compliant producers, which AHVLA can check against and which will mean that these consignments are less likely to be held up.
However, the import of processed egg, principally in liquid or powdered form, is less easy to trace as the supply chain is less transparent and more challenging to audit. Because of a loophole in the egg marketing regulations, we cannot prohibit the marketing of any eggs produced in conventional cages from 1 January 2012 which are sent to processing (whether sent as ungraded or class B), nor can we prohibit the use of any products made from such eggs. We will continue to press in Europe to get this loophole closed, but until then we are taking steps to establish as much compliance as is possible with the conventional cage ban for egg products by working closely with the food industry.
An essential part of the UK’s enforcement strategy is to ensure that retailers, egg processors, food manufacturers and the food service industry have stringent traceability tests in place to ensure that they are not using non-compliant eggs from either the UK or from other member states. Once again, our industry has risen to that challenge.
Retailers, food manufacturers, food service companies and processors have come out publically in support of UK egg producers. The British Retail Consortium has guaranteed that conventional caged eggs will not be bought by the major retailers or used as ingredients in their own brand products. They have put in place stringent traceability tests to ensure that they will not be buying conventional caged eggs. Retailers that have made this guarantee are Marks and Spencer, Morrisons, Asda, J Sainsbury, Co-operative Group, Tesco, Waitrose, Iceland Foods, Greggs, Starbucks and McDonald’s. Many food manufacturers and food service companies have also given a similar guarantee for eggs or egg products. They include: Premier Foods plc, Marlow Foods Ltd, United Biscuits, Ferrero UK, Apetito, Allied Mills, Allied Bakeries, Burton’s Biscuit Company, Speedibake, Dairy Crest, The Silver Spoon Company, Westmill Foods, Compass, Baxter Storey, and Sodexo. The following egg processors have also signed up to not sourcing conventional caged eggs from 1 January 2012: Manton’s, Noble Foods, Framptons, Fridays, Oaklands Farm Eggs, Lowrie Foods, and the UK Egg Centre. We are in discussion with others who we hope to be able to add to this list.
The UK is 82% self-sufficient in egg and egg products, with the remaining 18% coming from other member states. Of the 18% of egg and egg products being imported, approximately 50% will be imported as shell egg and 50% imported as egg product (liquid or powder). The fact that we have managed to get the majority of UK processors on board, reduces the likelihood of non-compliant egg products being imported and demonstrates that full traceability is possible and should not be used as a justification by others to say that it is not.
Ultimately, it will be for the Competent Authority in each member state to take responsibility at source for ensuring that their producers no longer keep hens in conventional cages post 1 January 2012. If a retailer purchased eggs from a conventional cage that are marked incorrectly as class A, without exercising appropriate due diligence, they would be committing a marketing offence. The caterer, processor or product manufacturer might also be guilty of aiding and abetting such an offence if they knowingly purchased eggs purporting to be class A which derive from illegal cages.
The Government will also do their bit to protect compliant producers. We will be making necessary changes to the Government Buying Standards mandatory criteria to ensure that eggs produced in conventional cages, are not used in any form whether this is fresh, powdered or liquid.
Given our commitment to support compliant producers, we will also be taking tough action against any UK producers found to have laying hens in conventional cages after 1 January 2012. The AHVLA have visited the vast majority of known cage producers to remind them of the need to comply with the conventional cage ban when it comes into force at the end of the year and at the same time find out producers’ intentions, as to whether they will cease production or convert to alternative systems. Similar action has also been taken by Scottish Government officials and officials in the Department of Agriculture and Rural Development in Northern Ireland. This has helped to build a picture of where remaining non-compliance may be found and thus where risk based inspections should be targeted in the UK from 1 January 2012. All producers targeted by the intelligence led risk analysis will be visited at the beginning of next year. If contraventions are found at the time of the visit, they will be dealt with using provisions within the Welfare of Farmed Animals (England) Regulations 2007, which implements Council Directive 99/74/EC, and the egg marketing regulations. A compliance notice will be issued immediately to ensure that conventional caged eggs do not go into the class A market, preventing the producer from benefiting from the production of illegally produced eggs and prosecution will be considered. Similar action will be taken as appropriate in Wales, Scotland and Northern Ireland.
We will be monitoring the situation carefully in the new year and will not hesitate to raise matters in Europe if any issues arise. I, together with my ministerial colleagues in the devolved Administrations, intend to continue urging the Commission to learn lessons from this experience with the conventional cage ban to avoid the same kind of problems occurring next year, leading up to the EU ban on the use of sow stalls on 1 January 2013.
The Draft Immigration (Biometric Registration) Regulations 2012
(12 years, 5 months ago)
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The Minister for Immigration (Damian Green)
The Government are today laying before the House the draft Immigration (Biometric Registration) Regulations 2012. These will complete the roll-out of biometric immigration documents, known as biometric residence permits (BRPs), to all in-country categories of foreign nationals applying to extend their stay in the UK for over six months from 29 February 2012, including settlement, recognised refugees and protection categories.
This is required for the UK to comply with EU regulations (European Council Regulation (EC) No. 1030/2002 of 13 June 2002 Regulation, amended in April 2008 by Council Regulation (EC) No. 380/2008) that the UK opted in to and which lay down a uniform format for residence permits for third-country nationals. The UK Border Agency has been rolling out biometric immigration documents, known as biometric residence permits, by immigration category since November 2008.
We have made significant progress since the roll-out of biometric residence permits began in September 2008 and will complete the in-country roll-out three months before the EU deadline.
The roll-out to overseas applicants coming to the UK for more than six months and to in-country applications made prior to a biometric registration requirement needs significant infrastructure and system changes. No major technical changes are to be made to systems during the accreditation period of the games which runs from 30 March 2012 to 8 November 2012, to ensure that the integrity and robustness of our systems is maintained during this critical time.
For the overseas roll-out of biometric permits, we will return to Parliament with our plans, including policy proposals, for the final stage of the roll-out which will be after the accreditation period of the 2012 Olympic and Paralympic games. To manage the changes required to roll out to any migrant who applied in-country before a requirement to apply for a biometric residence permit, we will continue to issue a sticker (vignette) as evidence of leave until 1 December 2012. Any migrant granted leave of more than six months from this date will be required by these regulations to apply for a biometric residence permit if they have not done so already.
To manage the increased volumes of applicants registering their fingerprints and digital facial image, I am pleased to announce that the UK Border Agency has awarded the contract for delivering third-party enrolment to the Post Office Ltd.
Biometric residence permits simplify the checks that the UK Border Agency, employers and public service providers need to undertake to confirm immigration status and eligibility to entitlements in the UK. Our plans to introduce an automated online employers checking service for biometric residence permits from spring next year will make it even easier for employers to conduct quick and easy real-time checks on the validity of the document.
I can confirm that we are publishing the impact assessment for the changes on the UK Border Agency website and I will arrange for a copy to be placed in the House Library.
Criminal Records Regime Review (Government Response)
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for the Home Department (Lynne Featherstone)
I have today placed in the Library of the House the report by Mrs Sunita Mason, the independent adviser for criminality information management, of phase 2 of her review of the criminal records regime, as well as the Government’s formal response to both phases of that review.
I published Mrs Mason’s phase 1 report on 11 February, alongside the Protection of Freedoms Bill. The Bill includes a number of proposals which reflect recommendations from that first report and which will improve the proportionality and efficiency of the employment vetting systems centring on the Criminal Records Bureau (CRB). I am pleased to publish today Mrs Mason’s phase 2 report, which addresses wider criminal records issues such as definition, management and international exchange. I am grateful to Mrs Mason for her contribution to this important agenda, which encompasses two central objectives for the Government—rebalancing civil liberties where necessary and maintaining effective, efficient and affordable public protection arrangements.
The Government accept the large majority of Mrs Mason’s recommendations, either unconditionally or in principle. Full details are in the response document.
The significant improvements to the Criminal Record Bureau’s processes which the Government have brought forward in the Protection of Freedoms Bill will, I believe, substantially reduce the cost and administrative burdens involved in pursuing necessary employment checks. And as such, they are also supportive of other key Government priorities such as the growth agenda and the employment law review. They will also ensure greater protection of applicants’ rights as only relevant and accurate personal information will ever be disclosed by the police. For example, we are giving the applicant the opportunity under these revised CRB processes to review and, if appropriate, dispute any information held about them by the police prior to it being disclosed to an employer. We have also included a provision to make the CRB process less burdensome on all concerned by introducing a new, online status checking capability that will in effect mean individuals can reuse their certificates for different employers across the same work force and so will no longer need to apply for a new certificate every time they want to take up a new role. This will have a positive impact on business, making it significantly easier for employers to take on staff in relevant sectors.
We do not accept Mrs Mason’s recommendation to scale back significantly eligibility for criminal records checks. The Protection of Freedoms Bill is already being used to reduce very substantially the scope of “regulated activity” from which people can be barred. Against that background we think it is important to retain the capacity to apply for criminal records checks in relation to a broader set of sensitive roles.
We accept in principle Mrs Mason’s recommendation that there should be a clear time scale for the police to make decisions on whether there is relevant information that should be disclosed on an enhanced criminal record certificate. However, we do not accept that the certificate should be issued at the end of a defined period where information is still being considered by the police, as that could pose significant risks to public protection.
In response to Mrs Mason’s phase 2 recommendations, for now we intend to maintain the current arrangements for holding criminal records on the police national computer, while ensuring the controls on accessing those records are sufficiently strong. At the same time, we will take her steer in terms of providing a clearer definition of what constitutes a criminal record and reviewing precisely which convictions and other disposals should be recorded on national systems. Looking further forward, and following establishment of the long-term arrangements for the management and delivery of the PNC services after the NPIA has been closed, we will consider the need for alternative options for sharing and managing criminal records. Similarly, we will review and update the strategy for international exchange of criminal records.
I am clear that, taken as a package, the implementation of Mrs Mason’s recommendations will make a key contribution to our commitment to scale back the criminal records regime to common-sense levels.
Forfeiture Rule and Law of Succession
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
I am today announcing that I have made an order to bring sections 1, 2 and 3 of the Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Act 2011 (the Act) into force on 1 February 2012. The Act implements, with modifications, recommendations of the Law Commission.
The Act amends the law of succession in England and Wales where a person disclaims (that is, rejects) an inheritance or is disqualified from receiving an inheritance by reason of the forfeiture rule. The forfeiture rule is defined in section 1 of the Forfeiture Act 1982 as meaning the rule of public policy which in certain circumstances precludes a person who has unlawfully killed another, or unlawfully aided, abetted, counselled or procured the death of that other, from acquiring a benefit in consequence of the killing.
In both these situations, the Act has the effect that the person who disclaims or whose inheritance is forfeited is treated, for the purpose of deciding who may inherit, as having died immediately before the testator or intestate. This will have the effect on intestacy that persons claiming through the person who is deemed to have died, such as his or her children, will be able to inherit. Where there is a will, the identity of the person entitled to the property instead of the person who is deemed to have died will depend on the terms of the will.
The Act also amends the law so that a child is able to inherit his or her parent’s interest in an intestate estate, where the parent dies neither married nor civil partnered before the age of 18 and the child is alive at the time of the intestate’s death.
Parliamentary Written Question (Correction)
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Scotland (David Mundell)
I regret that the written answer given to my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) on 15 November, Official Report, column 665W, contained an error. The answer stated that the TaxPayers Alliance applied for permission to bring judicial review against the Secretary of State for Scotland in respect of the Glasgow Commonwealth Games Act 2008 (Games Association Right) Order 2009. This is not correct. The application for permission to bring judicial review was made by Big Brother Watch and not by the TaxPayers Alliance.
The correct answer is as follows:
David Mundell: In the last Parliament there were two applications:
(1) Derek Traynor and James Fisher raised petitions for judicial review against the Secretary of State for Scotland and Scottish Ministers in respect of the Scottish Parliament (Elections etc.) Order 2007. The applications were unsuccessful at first instance in the Court of Session, the petitioners appealed, and the appeals remain pending at their request. The legal costs incurred by the Secretary of State for Scotland to date are £4,555.50.
(2) Big Brother Watch applied for permission to bring judicial review against the Secretary of State for Scotland in respect of the Glasgow Commonwealth Games Act 2008 (Games Association Right) Order 2009. The application was refused. The Scotland Office’s legal costs were £7,080. The Scotland Office applied for costs against the applicant. Costs were awarded in part and they have been paid.
There have been no applications for judicial review against the Scotland Office since May 2010.
Railway Stations (Access for All)
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Transport (Norman Baker)
Improving access to Great Britain’s railway stations is a key priority for this Government. I am therefore pleased to announce today a further £37.5 million of “mid-tier” Access for All funding for projects requiring up to £l million of Government support. This forms part of the wider £370 million Access for All programme launched in 2006 which will deliver an accessible, step-free route at 148 key stations. Rail passengers will benefit from better access through the provision of new lifts, ramps, raised “easier access humps” on platforms as well as new accessible toilets.
Major improvements will take place at stations across the country including at London Paddington, St Austell, Stratford, Stratford-upon-Avon and Ystrad Mynach. Network Rail will also receive funding to add tactile edge paving at 27 stations and £5 million to provide “easy access humps” to reduce the stepping distance between the platform and the train. The full list of successful stations will be made available on the Department for Transport’s website.
All work at the stations will be completed by March 2014.
We are also taking the opportunity to increase the funding allocated to train operating companies. This funding will increase from £5 million a year to £7 million a year for the next three years, beginning in April 2012. It is based on the number of stations that they manage and is used to deliver smaller scale or more locally focused access improvements at stations.
Finally, I have agreed to release £57 million from the existing budget earlier than planned to allow the accelerated delivery of obstacle-free routes at 27 stations.
Business Plan (Update)
(12 years, 5 months ago)
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The Secretary of State for Transport (Justine Greening)
The Department for Transport’s business plan says that, following the consultation on high-speed rail which was held earlier this year, we would complete the analysis of consultation responses and announce our subsequent decisions to Parliament in December.
Since taking up office in October I have been considering the issues, raised as part of the consultation and additionally have listened to the views of hon. Members. In order to ensure that my decision is based on a careful consideration of all relevant factors, I have concluded that I should allow myself until early in 2012 to announce my decisions. I am therefore notifying the House that I will not be making a further statement on the subject of high-speed rail this year, but I expect to announce my decisions in January.
Defending Against Piracy (UK Ships)
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Transport (Mike Penning)
The rise in the number of incidents involving pirates in certain parts of the world has highlighted the need to ensure UK-flagged vessels are able to adequately protect themselves against such threats. Evidence shows that ships with armed guards are less likely to be attacked and taken for ransom, and the House will be aware that the Prime Minister confirmed last month that the Government now recognise the use of private armed guards as an option to protect UK registered ships and their crews from acts of piracy. This applies in exceptional circumstances as defined below:
when the ship is transiting the high seas throughout the high-risk area (an area bounded by Suez and the straights of Hormuz to the north, 10°S and 78°E); and
the latest “Best Management Practices” is being followed fully but, on its own, is not deemed by the shipping company and the ship’s master as sufficient to protect against acts of piracy; and
the use of armed guards is assessed to reduce the risk to the lives and well-being of those onboard the ship.
I am therefore today, publishing interim guidance to shipping companies on the use of armed guards onboard UK flagged ships. This guidance covers, among other things, the factors to be included in the risk assessment, advice on selecting a private security company, and a requirement for the shipping company to produce a counter-piracy plan and submit a copy to my Department.
A private security company (PSC) employed to put armed guards on board UK ships will require authorisation from the Home Office for possession of any prohibited firearms as defined in the Firearms Act 1968 (as amended). Checks will be carried out by the Home Office and police into the PSC and its personnel before an authorisation is granted.
The guidance to shipping companies and the Home Office process for authorising the possession of prohibited firearms are both interim and will be reviewed within 12 months so that they reflect continuing national and international work to ensure high standards in the provision of armed guards in the maritime domain.
Roads Classification
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I am pleased to announce that, following consultation, the Department will be devolving responsibility for roads classification and aspects of the primary route network from April 2012.
This marks the first major revision of these systems since the first Wilson Government, and represents a major decentralisation of power. It will greatly improve the ability of local authorities to make changes on their roads, and greatly reduce the amount of central Government resource needed to run the system.
Under the new system:
Local authorities will have control over roads classification decisions in their area, determining which roads should be “A” roads, “B” roads, etc.
Local authorities will be able to set the roads used by the primary route network (“A” roads with green signs), while central Government retain oversight of the whole system.
Central Government will continue to look after the strategic road network.
For roads classification and the primary route network, the Department for Transport will reduce its role to handling appeal cases and any disputes which might arise between local authorities, leaving local authorities to manage their roads in the manner they judge most effective.
As part of the consultation, we also took the opportunity to examine whether there might be better ways to link the management of the system with sat-nav technology. The Department will be taking this work forward, and will make a further statement in the new year.
Remploy (Annual Report)
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)
The Remploy annual report and financial statements 2011 are published today. Copies will be placed in the Libraries of both Houses and will be available in the Vote Office and the Printed Paper Office later today. Electronic copies will be available on the Remploy website:
http://www.remploy.co.uk/about-us/corporategovernance/annualreports.ashx
I have written to the chairman of Remploy formally approving the agreed 2011-12 performance and resources agreement between the Department and the company, as follows:
Target Description | Target |
|---|---|
To live within the company’s financial means in the 2011-12 financial year and achieve: | |
operational funding result of | £97.7 million |
modernisation of the business within a cost of | £5.4 million |
Factory businesses to achieve: | |
an operating result (loss) of | £52.5 million |
cost per disabled employee of | £24,000 |
Employment Service business to achieve | |
an operating result of | £28.2 million |
total job outcomes of | 18,000 |
—of which total disabled job outcomes | 16,500 |
—of which Work Choice job outcomes | 7,500 |
—of which other Grant-in-Aid funded outcomes | 1,000 |
—of which other disabled job outcomes | 8,000 |