House of Commons

Wednesday 20th June 2012 Commons Chamber

Wednesday 20 June 2012

The House met at half-past Eleven o’clock

Prayers

Wednesday 20th June 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 20th June 2012 Commons Chamber

The Secretary of State was asked—

[Bob Stewart (Beckenham) (Con)]

1. What steps he is taking to promote the benefits of Scotland remaining within the UK.

[The Secretary of State for Scotland (Michael Moore)]

As my right hon. Friend the Prime Minister has made clear, we believe that Scotland is stronger in the United Kingdom and that the United Kingdom is stronger with Scotland in it. Leading up to the referendum, the Government will produce detailed evidence and analysis to assess the benefits that Scotland gains from being part of the United Kingdom and the contribution that Scotland makes to our United Kingdom.

[Bob Stewart]

I thank the Secretary of State. Does he agree that the defence of Scotland, England, Wales and Northern Ireland will be greatly enhanced if we do not have a separate Scotland? Defence matters greatly to the whole of this country.

[Michael Moore]

My hon. Friend makes an important point. Over the next 18 months, civil servants will prepare detailed analysis and evidence that will show the basis of the arguments that we need to be involved in as Scotland confronts this great debate. Fundamentally, protecting our citizens is one of the most important parts of our role in government. We will also want to consider our position in the world and the economic benefits that we get from being part of the United Kingdom.

[Angus Robertson (Moray) (SNP)]

The Secretary of State and his Tory and Labour allies in the anti-independence coalition all say that they believe the constitutional status quo is not sustainable. With only days to go until the formal launch of the no campaign, will he outline to the House what joint proposals they have for further devolution? What powers will be devolved, and when?

[Michael Moore]

I hope that the hon. Gentleman has not got himself into trouble by mentioning the “independence” word, but he is a brave guy, so perhaps he thought it was a risk worth taking.

It is a bit rich for the hon. Gentleman to come here and ask questions of us, with our having just delivered the biggest transfer of financial powers from London to Scotland since the Act of Union. Every time we ask him what “independence” means, his proposals unravel.

[Angus Robertson]

Last time I looked this was Scottish questions—questions to the Secretary of State and the UK Government. I ask him for a second time: given that he and his allies say that the constitutional status quo is not sustainable, what specific joint proposals do they have for the further devolution of powers? He did not answer the question the first time I asked it. Will he please answer it now?

[Michael Moore]

I thought that the hon. Gentleman’s party had belatedly and even grudgingly welcomed the fact that the Scotland Act 2012 has now set in place the biggest transfer of financial powers north of the border, including borrowing powers, the Scottish rate of income tax and the transfer of stamp duty land tax. The debate to which he refers, which we all need to get on with, is the one about independence. That is why the UK Government are absolutely committed to ensuring that we get the necessary evidence and analysis, working with experts, academics and outside bodies to ensure that we are equipped for that great debate across the country.

[Sir Menzies Campbell (North East Fife) (LD)]

Does my right hon. Friend consider that Scotland being part of the United Kingdom is an important benefit in any international trade disputes? I particularly have in mind the efforts of the United States some years ago to restrict the import of the finest quality cashmere goods from his own constituency, in a dispute about bananas. Was the fact that Scotland was part of the United Kingdom an important factor in ensuring a proper resolution of that issue?

[Michael Moore]

My right hon. and learned Friend is absolutely right. It was critical to us in the borders, and to the producers of luxury goods the length and breadth of Scotland, that we were part of the United Kingdom. We had great clout within the European Union and could negotiate within the World Trade Organisation to get the right outcome. Our position in the world, the protection of our citizens and the future of our economy are the three key strands that we will examine to ensure that we are well informed in this great debate.

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

We heard it here first: the launch of the “Separatists for Devolution” campaign. Scottish National party Members do not like the word “separation” or the word “independence”, and they want to leave Britain in order to make us more British. What a ludicrous set of proposals.

[Mr Speaker]

Order. I think there was a question somewhere.

[Michael Moore]

I agree with the hon. Gentleman.

[Andrea Leadsom (South Northamptonshire) (Con)]

What representations has my right hon. Friend had on whether an independent Scotland would wish to join the euro?

[Michael Moore]

None, but it is a matter for the Scottish National party and Scottish Government to set out their proposals. They have singularly failed to do so.

[Margaret Curran (Glasgow East) (Lab)]

The Secretary of State may be aware that I received answers to parliamentary questions yesterday that indicate that although the Scottish Government argue that a separate Scotland will continue to use sterling, the Bank of England and UK financial regulatory institutions, they have not yet undertaken any work behind the scenes to explore those options—no correspondence has been sent, no questions have been asked and no discussions have taken place. Does he agree that the First Minister should spend less time in Hollywood and more time in Holyrood—[Interruption.] It was a good try. Given that the Scottish Government have made those statements on the economy and a separate Scotland, what steps has the Secretary of State taken to clear up the confusion and ambiguity of such claims?

[Michael Moore]

I agree with the hon. Lady that it is quite striking that the SNP and Scottish Government are curiously short on the detail as they set out their lifelong ambition to create an independent Scotland, and that they are not curious to ask more questions. I start from a simple point: Scotland is stronger within the UK and the UK is stronger for having Scotland as part of it. The economy is a key part of that argument.

[Margaret Curran]

I thank the Secretary of State for that argument. In such debates on Scotland, we have assertion, not argument, and fantasy rather than facts—the Scottish Government’s arguments cannot pass the most basic test of credible evidence. Will the Secretary of State and the whole UK Government therefore work with others to ensure that we have credible evidence and arguments that pass the test of objective and independent scrutiny to ensure that Scottish people get the arguments they deserve?

[Michael Moore]

I absolutely agree with the hon. Lady that it is important that this great debate is well informed by detailed evidence and strong analysis. That is why the Government are getting civil servants to work through the key issues and to engage with academics, think-tanks and other respected experts outside the Government to ensure we have all the evidence to inform the debate. As we do that over the next 18 months, I am confident we will show beyond doubt that Scotland’s place is much stronger as part of the UK.

[Sheila Gilmore (Edinburgh East) (Lab)]

2. What discussions he has had on the effect of the Scottish Government’s modern apprenticeship scheme on employment in Scotland.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

I am in regular contact with the Scottish Government on a range of issues. Later this week, the British-Irish Council is due to discuss the effectiveness of programmes and policies to support youth employment in Members’ respective Administrations.

[Sheila Gilmore (Edinburgh East) (Lab)]

In the Scottish Parliament last week, the Labour spokesperson on youth unemployment, Kezia Dugdale MSP, uncovered figures showing that of the 25,000 modern apprenticeships that the Scottish Government claim to have set up, more than 10,000 involved people who were already in work. Does the Minister agree that the Scottish Government should spend public money on creating additional jobs, and not just on rebadging jobs?

[David Mundell]

I share the hon. Lady’s concerns about how the Scottish Government seek to present facts. The facts of their responsibilities on employment matters are clear, and they have had £22 million of additional money in relation to youth contract consequentials. I should like them to focus on how they spend that money rather than on their obsession with the constitution.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I entirely understand, but I would like greater brevity from now on, to be exemplified by the hon. Member for Epping Forest (Mrs Laing).

[Mrs Eleanor Laing (Epping Forest) (Con)]

Is the Minister aware that almost every economic analysis shows beyond doubt that employment prospects in Scotland would be significantly reduced if Scotland were separate from the UK?

[David Mundell]

I absolutely agree with my hon. Friend, who I am sure will welcome with me the fact that employment in Scotland increased by 18,000 in the last period.

[Pete Wishart (Perth and North Perthshire) (SNP)]

I am sure that, like me, the Minister has witnessed the Labour party’s ridiculous and scurrilous campaign against what is undoubtedly one of the most successful modern apprenticeship schemes in Scotland. Seemingly, Labour Members’ complaint is against rules that they introduced themselves. Should the Minister not instead congratulate the Scottish Government on almost doubling the number of modern apprenticeships in the past year and on the extra £72 million of investment?

[David Mundell]

I noticed that the hon. Gentleman did not mention the word “independence”, so he is obviously on message. On unemployment in Scotland, including youth unemployment, the UK and Scottish Governments should work together.

[Mr Iain McKenzie (Inverclyde) (Lab)]

3. What steps he is taking to expand employment opportunities in Scotland.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

5. What steps he is taking to expand employment opportunities in Scotland.

[The Secretary of State for Scotland (Michael Moore)]

The Government are committed to creating the right environment for sustained economic growth to provide the basis for the creation of secure jobs.

[Mr McKenzie]

It should come as no surprise to the Secretary of State that unemployment in Scotland is at crisis level. The unemployment figures are unacceptable; in particular, the youth unemployment figures are disgraceful. If it were not for my council in Inverclyde—

[Mr Speaker]

Order. I just need a question from the hon. Gentleman.

[Mr McKenzie]

May I press on the Secretary of State and the Government the need to make reducing the unemployment figures in Scotland their absolute priority? Will he join—

[Mr Speaker]

Order. We are grateful, but we must move on.

[Michael Moore]

I agree that we must do everything possible to reduce unemployment, particularly youth unemployment, which, as the hon. Gentleman will recall, began to rise during the growth periods under the previous Labour Government. Through our measures, including the Work programme, the youth contract and our joint work with the Scottish Government, we have been bearing down on the problem, but I am happy to meet him to discuss the matter further, if he wishes.

[Sandra Osborne]

Is the Secretary of State aware that the Scottish chambers of commerce have today called for an expansion of infrastructure investment to help Scottish businesses? What will he do to ensure that this happens?

[Michael Moore]

The hon. Lady needs to recognise the serious steps we are taking to get the economy back on a secure path to growth, after what we inherited from her Government two years ago. We must also bear in mind the crisis in other parts of Europe. By cutting corporation tax, keeping interest rates as low as possible and introducing specific measures for Scotland, including the enterprise areas in Irvine, Nigg and Dundee, we are taking action to help the Scottish economy.

[Oliver Heald (North East Hertfordshire) (Con)]

Does the Secretary of State agree that by cutting corporation tax, reducing regulation and, at the same time, having the largest Work programme the country has ever seen, we are succeeding in Scotland, with 14,000 fewer unemployed people this month—the third month in a row?

[Michael Moore]

I certainly welcome the reduction in unemployment, but we need to recognise that things will continue to be challenging for people the length and breadth of Scotland and the rest of the UK. My hon. Friend is right, though, that our measures to get the economy back on the right track are fundamentally right and are the way to create secure jobs.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

Does the Secretary of State agree that Statoil’s decision to invest in the North sea and a further 300 jobs for Aberdeen is recognition that the Treasury’s positive new approach to encourage investment is bearing fruit?

[Michael Moore]

My hon. Friend is right. There have been significant announcements in the energy sector from Statoil, BP, Gamesa and others on the future of Scotland’s energy needs, not only in oil and gas but elsewhere. They recognise that that is an important part of what the Government are committed to and that Scotland is better for being part of the UK when it comes to delivery.

[Stewart Hosie (Dundee East) (SNP)]

I am glad that the Secretary of State welcomed the 14,000 fall in unemployment—that is good news—and I am sure he will also want to welcome today’s news on foreign direct investment into Scotland creating jobs, but of course he is right that we must create the right environment for businesses to employ people. That means downward pressure on costs, particularly fuel prices, which are recognised as one of the most significant cost pressures that businesses face. Will he therefore ask his Treasury colleagues to cancel the fuel duty rise planned for August?

[Michael Moore]

I point out to the hon. Gentleman that thanks to the Government’s actions in introducing the fuel duty stabiliser and abandoning the escalator we inherited from the Labour party, we are doing a lot to help motorists, and will continue to do so.

[Mr Speaker]

I remind the House that the clue is in the heading—“Questions to the Secretary of State for Scotland”.

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

Listening to the Secretary of State reminds us how totally isolated he is in Scotland in believing that the answer to this crisis of weak economic demand is harsher austerity over the next four years. Does he not accept that nearly twice as many people as on black Wednesday are being forced to work part time because there are not enough full-time jobs in our economy? Some 320,000 people in Scotland are struggling below the poverty line despite being in work, and real wages have fallen every month that this Government have been in office. Is that not the real explanation of why we face a double-dip recession, made in Downing street?

[Michael Moore]

It may suit the hon. Gentleman’s case, but he cannot be allowed to forget the legacy of his Government and the mess that we inherited two years ago, nor can the Opposition be allowed to be blinkered about the challenges around Europe and the world. We are ensuring that we create the right financial and economic conditions to get Scotland and the UK economy back on the right foot.

[Amber Rudd (Hastings and Rye) (Con)]

4. What recent discussions representatives of his Department have had with representatives of the Scottish agricultural industry.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

I meet regularly with representatives of the Scottish agricultural industry, including the National Farmers Union of Scotland and individual producers. I look forward to further direct engagement tomorrow, when I attend the royal highland show.

[Amber Rudd]

Does the Minister agree that those in the Scottish agricultural sector are better off with Scotland remaining part of the UK?

[David Mundell]

I absolutely agree with my hon. Friend. An independent Scotland would shrink our home market of 60 million consumers to a mere 5 million overnight. Farmers would be reliant on exporting their produce. Some 64% of Scottish beef was sold to the rest of the UK, as the first point of delivery, in 2011.

[Mr Mike Weir (Angus) (SNP)]

Perhaps the Minister could try answering a question about something that is actually the responsibility of the UK Government. Is he aware of the huge concern in the Scottish agricultural and horticultural sectors about the future of the seasonal agricultural workers scheme, which is due to expire next year? Has he made representations to the Home Office for the continuation of the scheme?

[David Mundell]

I note the hon. Gentleman’s concerns and I would be happy to meet him to discuss them further.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

6. What recent discussions he has had with the Scottish Government on youth unemployment.

[The Secretary of State for Scotland (Michael Moore)]

I meet with Scottish Ministers regularly to discuss a range of issues. On 15 March, Scottish Ministers joined me in Dundee for a joint-Government summit to discuss youth unemployment in Scotland, and we agreed to continue to work together on this important issue.

[Michael Connarty]

With the information that there was falsification going on in the apprenticeship schemes—with people already in work being counted as new apprentices—and with the offshore oil industry saying that it needs 44% of those with non-graduate technical skills to fill the spaces that are coming up in the industry, is it not time that the Secretary of State showed some leadership and called an all-party, all-Parliament forum in Scotland about unemployment and stopped the behaviour of the Scottish National party, which has been running a single-party state, with its Ministers wandering round having one-party meetings?

[Michael Moore]

I appreciate the length of time that the hon. Gentleman has spent working on this issue over his political career. I also believe that it is important that the parties can work together, because the origins of youth unemployment lie elsewhere, rather than just under this Government’s tenure. I am happy to work with him and others to ensure that we get all the best ideas focused on tackling youth unemployment.

[Jo Swinson (East Dunbartonshire) (LD)]

I welcome the Secretary of State’s recent visit to my constituency’s largest employer, Aviva in Bishopbriggs, which has 1,100 staff, and his support for my “Get East Dunbartonshire Working” initiative, which has helped to create 43 new employment and training opportunities in the local area since the end of April. What more can the Government do to ensure that businesses are aware of the support that is available, particularly through the £1 billion youth contract, to employ young people in particular?

[Michael Moore]

I thank my hon. Friend for the opportunity to pay a visit with her to the Aviva offices in her constituency, and I pay tribute to Aviva for the work it is doing with young people and others. It is very important that we do all that we can to support young people. That is why the youth contract is now in place, boosting work experience, increasing the number of wage incentives that are available and ensuring that the Scottish Government have support for more apprenticeships.

[Mr Speaker]

There is plenty of scope for an Adjournment debate, I think.

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

The Secretary of State recently visited my constituency. I wonder whether he could give us a progress report on how he has got on with the schools-industry liaison committees.

[Michael Moore]

I regret to inform the hon. Gentleman that I have not made as much progress as he would wish me to. I hope, however, that he will recognise the important support that we have given to Irvine, in the form of the enterprise allowances—the 100% capital allowances that are now available—and I will be happy to catch up with him on the school-industry partnership and the Scottish Government’s role in it any time soon.

[Iain Stewart (Milton Keynes South) (Con)]

Does my right hon. Friend agree that the plans to reform employment law will particularly encourage small businesses to take on more young people?

[Michael Moore]

As my hon. Friend will know, the employment law review will carry on through this Parliament, and I look forward to seeing the proposals that will come forward in due course.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

7. What steps he is taking to reduce energy prices in Scotland.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

The Government are committed to ensuring that consumers get the best deal for their energy usage, and have put in place measures to help to reduce household energy bills. In May, I held a summit in Rutherglen, bringing together the big six energy suppliers, Scottish consumer groups and the regulator, Ofgem, to examine ways of addressing this issue.

[Mr Clarke]

Over the past eight years, average energy prices have increased by 140% per household, while the increase in average income for households has been a mere 20%. What are the Government doing to respond to people’s worries—especially those of low-income families, elderly people and people with disabilities—and to deal with this onslaught on vulnerable people?

[David Mundell]

The Government are continuing the cold weather and winter fuel payments, and bringing forward the green deal. We are also working with voluntary organisations across Scotland to help them to support the most vulnerable people, so that they can access all the fuel-related benefits that are available to them.

[Mr Alan Reid (Argyll and Bute) (LD)]

Many islanders are telling me that the 5p fuel duty discount is not being passed on to the motorist. Will the Minister ask Her Majesty’s Revenue and Customs and the Office of Fair Trading to investigate this matter? They must ensure that this discount is passed on to the motorist in its entirety.

[David Mundell]

I am concerned to hear what the hon. Gentleman is saying, and I would be happy to meet him and other concerned island MPs to discuss the matter.

[Mr Edward Leigh (Gainsborough) (Con)]

8. What steps he is taking to reform central Government funding for the devolved Government in Scotland.

[The Secretary of State for Scotland (Michael Moore)]

As the coalition agreement sets out, we are committed to a review of public funding arrangements once we have dealt with the unprecedented deficit that we inherited from the previous Government.

[Mr Leigh]

Someone would need an intelligence as profound as that of Spinoza to understand central Government funding of Scotland, but it must be clear to even the most basic English person that not only do we have no say over education and health in Scotland while they run ours, but we pay over the odds for theirs. Should not the Scottish National party be careful what it wishes for when it calls for independence?

[Michael Moore]

My hon. Friend, more than most, understands the complexities of public spending in this country. I say to him, however, that our priority has to be to reduce the deficit, after which we can look at these issues again. I would also gently point out to him that within England there are quite large variations, and that the figure per head for spending in London is higher than in Scotland.

[Ian Murray (Edinburgh South) (Lab)]

10. Given that the Scottish Government have had no discussions with either the Chancellor or the Bank of England about having a place on the Bank’s Monetary Policy Committee—which would be a committee of a foreign country—does the Secretary of State agree that this is another fanciful assertion that cons the Scottish people?

[Michael Moore]

The hon. Gentleman is entirely right to highlight the fact that the Scottish Government are yet again making such assertions rather than producing detailed analysis and evidence, which is what this Government are determined to provide in this great debate. The Scottish Government seem willing and able to swap a good partnership for some kind of new dependency, and that is not right.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

9. What assessment he has made of the implications for the Scottish fishing industry of the recent EU Fisheries Council.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

The UK Government have worked hard to influence the content of the “General Approach” at the Fisheries Council. It would deliver positive benefits for Scotland’s fisheries and those who depend on them, and I welcome its commitment to manage fish stocks sustainably, to move towards more regionalised fisheries management and to ensure that discards are eliminated.

[Dr Whiteford]

I also welcome the progress that was made in Luxembourg last week, but does the Minister think that this would be an appropriate juncture in the process at which to introduce more transparency into fisheries management in the form of the UK Government making public the individuals and companies that hold fish quota here?

[David Mundell]

I agree with the hon. Lady that it is important for the UK Government and the Scottish Government to work well together, and the recent Fisheries Council is a good example of them doing that for the benefit of Scotland’s fishermen.

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

The hon. Member for Banff and Buchan (Dr Whiteford) is absolutely right: we need a register of active fishermen—[Interruption.]

[Mr Speaker]

Order. The House must come to order. The House should be listening to the Chair of the Select Committee on Environment, Food and Rural Affairs—listening with respect.

[Miss McIntosh]

—and fisheries. [Laughter.] The hon. Lady is absolutely right that, without a register, we do not know who are active fishermen in Scotland and who are slipper skippers.

[David Mundell]

Ministers both here in the UK Government and in the Scottish Government will have heard the comments of my hon. Friend, who is a respected contributor on such matters.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

11. What plans he has to mark the bicentenary of Dr David Livingstone’s birth in March 2013.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

I have met representatives of the Scotland-Malawi partnership to discuss the best way for the UK Government to mark this bicentenary. The Scotland Office will hold a commemorative event at Dover house. My officials will work with other interested parties to ensure that this anniversary is celebrated across the UK.

[Tom Greatrex]

I thank the Minister for his reply. Will he join me in supporting my invitation to the President of Malawi, Joyce Banda, to visit the UK during the bicentenary and as part of that visit to come to Blantyre, Lanarkshire, in my constituency?

[David Mundell]

I commend the hon. Gentleman for the role he has played in promoting the David Livingstone bicentenary, which has great resonance in his constituency. Yes, the Scotland Office will work with him and others to encourage the President of Malawi to come to Scotland.

The Prime Minister was asked—

[Dr William McCrea (South Antrim) (DUP)]

Q1. If he will list his official engagements for Wednesday 20 June.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

I have been asked to reply. My right hon. Friend the Prime Minister is attending the G20 summit in Mexico.

I am sure the whole House will wish to join me in paying tribute to those servicemen who have lost their lives in Afghanistan since the last Prime Minister’s Question Time, Lance Corporal James Ashworth of 1st Battalion Grenadier Guards and Corporal Alex Guy of 1st Battalion the Royal Anglian Regiment. Our sincere condolences are with their families and their loved ones. Last week, I visited our armed forces in Helmand where I was once again reminded of their exceptional work on behalf of this country. That work and these sacrifices must never be forgotten.

[Dr McCrea]

I join the Foreign Secretary in expressing our deepest sympathy to the families of our fallen heroes and pray God will comfort them.

The Belfast International air link into Heathrow is an invaluable asset to the economy of Northern Ireland. There are deep concerns, however, that this link is at risk, because the landing slots are allocated to carriers rather than to regional airports. Will the Government urgently publish an aviation strategy that ensures our international airport maintains its link with Heathrow?

[Mr Hague]

The Department for Transport will consult in the summer on our future aviation policy and ask for evidence on options about maintaining the UK’s status as an international hub for aviation. The hon. Gentleman is quite right that the London to Belfast link is important to the economy. There are currently more than 18,000 flights a year between the two Belfast airports and the five main London airports. I hope that he agrees that our steps to devolve power to set air passenger duty rates for direct long-haul flights departing from Northern Ireland will also boost investment and tourism.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

As my right hon. Friend will know from my recent letter to the Prime Minister, the situation at the Coryton oil refinery on the Thames is becoming increasingly difficult. In an attempt to support manufacturing, secure well-paid jobs and secure our UK fuel supplies, will he use the offices of the Prime Minister to secure an urgent summit, bringing together the heads of the Department for Business, Innovation and Skills, the Department of Energy and Climate Change and the Treasury to explore every single avenue possible to keep this refinery open?

[Mr Hague]

I know that this has been very disappointing news and that my hon. Friend has been very active on this matter. The work force and the local community have worked tirelessly to help the administrators to secure the long-term future of the refinery. We are keeping in close contact with the administrators, who are still looking at further options, and working with Thurrock council’s taskforce as well. The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry), has met representatives of the work force and local community. I will, of course, draw my hon. Friend’s remarks to the attention of the Prime Minister as well.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

May I join the Foreign Secretary in paying tribute to Lance Corporal James Ashworth of 1st Battalion Grenadier Guards and Corporal Alex Guy of 1st Battalion the Royal Anglian Regiment? They died serving our country with the utmost bravery, and we join the Foreign Secretary in sending our deepest condolences to their families and friends.

We know that there is still a long way to go before the people of Burma get the democracy to which they are entitled, but the fact that progress has been made is due to the extraordinary commitment and courage of one woman who has endured more than two decades of house arrest. Will the Foreign Secretary join me in expressing our utmost admiration for Aung San Suu Kyi?

[Mr Hague]

I absolutely will, and I think it highly appropriate to raise this matter during Prime Minister’s Question Time. I believe that I was the first European Foreign Minister to visit Aung San Suu Kyi and to visit Burma at the beginning of the year, and I found her, not only in reputation but in substance, an inspirational figure.

As the right hon. and learned Lady says, there is still a long way to go, not only in bringing democracy to Burma but in ending ethnic conflicts, one of which is still going on in Kachin state. We look to the Government of Burma to continue to travel on this road and to release remaining political prisoners, and I think that across all parties we look forward to giving Daw Aung San Suu Kyi a tremendous welcome tomorrow.

[Ms Harman]

I thank the Foreign Secretary for his answer. He was right to visit Burma when he did. We support the suspension of sanctions on Burma, but will he reassure us that the position of the British Government will remain that sanctions will be re-imposed unless there is sustained progress towards democracy and the rule of law?

[Mr Hague]

That is very much our position, and I have said so in terms to the Foreign Minister of Burma. Indeed, we have argued in the European Union that sanctions and other restrictive measures should not be lifted unconditionally, but should be suspended so that they can be re-imposed if necessary and if progress comes to a stop. They have been suspended for 12 months, and we will of course continue to review progress throughout that period.

Having met the President of Burma on my visit, I believe that he is absolutely sincere in his intentions, but there will of course be elements in the Government of Burma who are not so enthusiastic about these changes and who will be alarmed by the success of Aung San Suu Kyi and her party in recent by-elections. We will keep up the pressure, as well as the welcome, for these changes.

[Ms Harman]

I thank the Foreign Secretary for that answer, and for his commitment to keeping up the pressure for progress. Let me now turn to domestic issues, and specifically to the national health service.

This week a survey showed that 90% of primary care trusts are restricting access to treatment because of the financial pressure that they are under. That will hit older people particularly. How can the Foreign Secretary justify an elderly person with cataracts in both eyes being told that they can have surgery in only one of them?

[Mr Hague]

It is totally unacceptable if trusts are rationing on the basis of financial considerations. The NHS medical director has written to trusts telling them that the criteria for decisions must be only clinical and not financial. If evidence is found that they are ignoring that, the Secretary of State can intervene. The Department of Health will look into any cases in which trusts are using financial conditions for the purpose of decisions. Allegations have been made about this issue before, including under the last Government. The Department of Health is very clear about what it will do, and that should be welcomed throughout the House.

[Ms Harman]

But there is evidence and the Foreign Secretary is still not acting. This is not just about cataract operations: 125 different treatments are being rationed on grounds of cost, including hip and knee replacements. What does the Foreign Secretary say to an elderly patient who needs a hip replacement—“Wait in pain” or “Try to pay and go private”? What does he say?

[Mr Hague]

I say three things. First, I say what I said a moment ago when answering the right hon. and learned Lady’s question about rationing. Secondly, I say that arbitrarily restricting access to operations was not just happening under the last Government, but allowed under the last Government. In 2007, patients in Suffolk had to wait for a minimum of 14 weeks for routine surgery, and York NHS Trust was told by its primary care trust not to operate on non-urgent cases until they had waited for a minimum of 20 weeks.

Thirdly, I say to any of those individuals that their GP—their doctor—should be at work tomorrow, and not on strike. We on this side of the House encourage those doctors to go to work, and I hope that the right hon. and learned Lady and all those on her side of the House will say clearly today that those doctors should be at work tomorrow.

[Ms Harman]

We do not want patients to suffer, so we do not want the GPs to be going on strike, but we are proud of what we did in the NHS—more doctors, more nurses and cutting the waiting lists. It is always the same: Labour builds up the NHS and the Tories drag it down.

Today, the Foreign Secretary is saying that he is 100% behind the Government’s health plans, but it is a different story in his own constituency. Last month, he took to the streets, marching in protest against the NHS cuts. Let us remind ourselves of what the Prime Minister said about midwives. Just before the general election, the Prime Minister wrote for The Sun newspaper—because, professionally of course, they were all in it together—and said that

“we will increase the number of midwives by 3,000.”

Can the Foreign Secretary confirm that they have broken their promise on midwives?

[Mr Hague]

That was a long question, although I congratulate the right hon. and learned Lady on not having the shadow Chancellor here today, which does help everyone to hear and concentrate. [Interruption.] The Chancellor is at the G20; the shadow Chancellor is presumably doing another opinion poll on what people think of him—and by the way, we could have told him that for nothing. [Laughter.] More value under the Conservatives.

On the questions that the right hon. and learned Lady asked, I am glad that she says that GPs should be at work tomorrow. She should tell that to her own spokesman, the hon. Member for Hackney North and Stoke Newington (Ms Abbott), who said that she had “a lot of sympathy” with the British Medical Association and that there would be a lot of public support for the action it is taking. So there is a clear division across the Floor of the House.

It is perilous for the right hon. and learned Lady to go into the affairs of another constituency, because what is happening in my constituency is nothing to do with funding or health reforms. But I will tell her all about that separately, if she would like. She says that Labour Members are proud, but we are proud of what has happened in the NHS. Average waiting times for both in-patients and out-patients are lower than at the last general election; the best performance ever has now been attained for patients waiting after 18 weeks to be treated; the total number of qualified clinical staff is higher than at the election; there are 3,900 more doctors since the election; and hospital infections are at their lowest level since surveillance of them began.

[Ms Harman]

And he never answered the question about midwives, because before the election the then Leader of the Opposition was all “Yes we Cam,” but as soon as he became Prime Minister it is “No we can’t.” Services rationed, patients suffering and public satisfaction at a new low—that is the Tories on the NHS. The Prime Minister once told us that he could sum up his priorities in three letters—NHS. Isn’t it more like “LOL”?

[Mr Hague]

It obviously took a long time to think of that one. I have set out the achievements of the Government on the NHS. Even the King’s Fund, in its latest report, which has sometimes been quoted by the Opposition, says:

“There is no evidence of a…decline in service quality or performance”.

It also says:

“infection rates have not noticeably deteriorated—remaining relatively stable in…most measures…or, in the case of MRSA and C difficile, reducing.”

These are important achievements in the health service, and they are a contrast with the Opposition health spokesman saying in June 2010:

“It is irresponsible to increase NHS spending in real terms”.

They are also a contrast with the number of managers doubling under the Labour party; a contrast with Labour’s last year in power, when the number of NHS managers rose six times as fast as the number of nurses: and a huge contrast with the situation in Wales, where Labour is cutting NHS spending.

[Mr Peter Bone (Wellingborough) (Con)]

Given the appalling behaviour of Liberal Democrat Cabinet Members in not supporting the Secretary of State for Culture, Olympics, Media and Sport, would my preferred Deputy Prime Minister arrange a divorce from the yellow peril so that we can govern with Conservative policies as a minority Government?

[Mr Hague]

rose—[Interruption.]

[Mr Speaker]

Order. I am sure that Members, having heard the question, will wish to hear the answer.

[Mr Hague]

I am sure that they will, Mr Speaker. My hon. Friend’s bringing up of the subject of divorce might be deeply troubling to Mrs Bone, so we should all seek to reassure her immediately that he is talking only about a political divorce. As someone who helped to negotiate the coalition and who values enormously co-operation with the Liberal Democrats, I will not be advocating a divorce in the Government.

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

Q2. Will the Foreign Secretary confirm that, apart from Italy, the UK is the only country in the G20 in a double-dip recession?

[Mr Hague]

The fact of the matter is that the IMF now forecasts that in the coming year the British economy—[Interruption.] Opposition Members might not want to know what has been said by the IMF, but the shadow Chancellor—who is not here to make his hand gestures—has always said that we should take notice of the IMF. It says that in the coming year the British economy will grow faster than the German or French economy and that next year growth in the British economy will be similar to that of the United States and twice that of the eurozone. That would not be happening had we not brought the excessive deficits and debts of the previous Government under control.

[Esther McVey (Wirral West) (Con)]

In the light of the historic signing of a deal in China for record investment in Wirral Waters, the granting of the turnaround cruise terminal in Liverpool and the support for the automotive industries that has led to 1,000 more jobs at Jaguar and the saving of Vauxhall at Ellesmere Port, would the Foreign Secretary say that this Government have done more in two years to expand private enterprise on Merseyside than Labour did in its entire tenure?

[Mr Hague]

Well, yes, I would say exactly that and I point out that the success my hon. Friend describes is part of a process that in the last two years has seen British exports to Brazil going up 37%, British exports to China going up 61% and British exports to India going up 73%. That is happening because the British Government are out there championing British business, which the Labour party neglected to do.

[Mr David Hamilton (Midlothian) (Lab)]

Q3. Will the Secretary of State inform the House why, under the proposals for regional pay, he wants his nurses in Richmond, Yorkshire to be paid substantially less than nurses doing exactly the same job in Richmond, Surrey?

[Mr Hague]

The pay review bodies are now examining that issue, as the hon. Gentleman will know, and they will report next month, making their recommendations, which we can then all debate. The case for local pay was once made by a Chancellor of the Exchequer, who said that

“it makes sense to recognise that a more considered approach to local and regional conditions in pay offers the best modern route to full employment in our country.”—[Official Report, 9 June 2003; Vol. 406, c. 412.]

That Chancellor of the Exchequer was the hon. Gentleman’s near neighbour, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).

[Hon. Members]

Where is he?

[Mr Speaker]

Order. I am sure that Conservative Back Benchers wish to hear from one of their coalition colleagues. I call Tessa Munt.

[Tessa Munt (Wells) (LD)]

Q4. The Department of Health accepts that radiotherapy is the cheapest and most effective way of treating cancer. Despite that, the Department will spend more than £1.5 billion on cancer drugs this year and less than a third of that on radiotherapy. In the south-west, seven of our hospitals rely on charity to fund basic radiotherapy services. The cancer drugs fund is underspent—

[Mr Speaker]

Order. I want a one sentence question, and a short one.

[Tessa Munt]

So, will the right hon. Gentleman speak to the Prime Minister about authorising the investment of that unused money into radiotherapy so that hospitals in my region can cure cancer patients?

[Mr Hague]

My hon. Friend is right to point out the importance of radiotherapy. It is also important to stress that decisions on treatments should be made by clinicians on the basis of whatever is most appropriate for their patients. We are investing an additional sum of more than £150 million over the next four years to expand radiotherapy capacity. I know that she will welcome that, as well as the fact that more than 12,500 extra patients have benefited from the £650 million cancer drugs fund that this Government introduced.

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

Q5. The regional growth fund is the Government’s flagship scheme for boosting jobs and growth in the regions. A recent National Audit Office report criticised it for spending too much on projects creating too few jobs, with the cost sometimes being £200,000 per job. What are the Government doing about it?

[Mr Hague]

The hon. Gentleman’s region will benefit from the regional growth fund, including through £235 million from the fund. It is, of course, important that the money is spent effectively, and my ministerial colleagues will do their utmost to ensure that that happens, but it is also important to remember that his region benefits from many other things that the Government are doing, including infrastructure projects to support growth in the west midlands, and enterprise zones for Birmingham city centre and for the black country. These measures are much more likely to get regional growth going than the excessive tax and spending of the Labour party.

[Mel Stride (Central Devon) (Con)]

Q6. My constituent Ian Tapp has now lost 300 cattle to bovine TB, and that scourge has been exacerbated by the fact that the previous Government did precisely nothing about the problem. Although I recognise the sterling work that this Government have done, will my right hon. Friend reassure my livestock farmers that, when it comes to disease control regulations, there will be proportionality and nothing that is likely to detract from their livelihood?

[Mr Hague]

My hon. Friend raises an important point. Bovine TB is a devastating disease and one of the most serious challenges facing the British cattle farming industry. Last year, around 26,000 cattle were compulsorily slaughtered in England alone. The Department for Environment, Food and Rural Affairs will make an announcement tomorrow about how it intends to proceed on this subject. Cattle measures continue to be the foundation of our TB control programme, but it is clear that those alone are not sufficient in some areas, so I invite him to stand by for a further announcement tomorrow.

[Fabian Hamilton (Leeds North East) (Lab)]

The Foreign Secretary will be aware that His Holiness the 14th Dalai Lama of Tibet is in London today and that he will visit Parliament this afternoon. On such an auspicious day, will the right hon. Gentleman use this opportunity to restate the Government’s commitment to the human rights of Tibetans within China?

[Mr Hague]

In this country and the House, we believe in the universality of human rights. I often make that point to Chinese leaders, including in the annual strategic dialogue that I conduct with China. We also have a formal human rights dialogue with China and we do not shy away from raising any of these cases. Of course, like the previous Government, we see Tibet as part of the People’s Republic of China, but we also look for meaningful dialogue between representatives of the Dalai Lama and the Chinese authorities, and we will continue to support that.

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

Q7. The Government have made clear their commitment to root out tax avoidance by public officials and civil servants. Will the deputy—the Foreign Secretary—make it clear that the Government will be equally robust in rooting out tax avoidance by the corporate sector that does jobs for the Government, or that is employed by the Government?

[Mr Hague]

Absolutely, and I will not mention that slip to the Deputy Prime Minister—it is entirely between ourselves and these four walls.

In the Budget, the Chancellor set out clearly his absolute determination to deal with tax avoidance and to do so in the future without warning. If the Chancellor was here, I know that he would say that that applies to the corporate sector, too.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

Q8. If he will amend his policy on the benefit cap in respect of families with children.

[Mr Hague]

The Government believe that it is not reasonable or fair that households should receive a greater income from benefits than the average weekly wage for working households. In some cases it can be more than double the average household income. Our changes will mean that no family on benefits will earn more than a working family’s average salary, £26,000 a year for couple and single-parent households. This strikes the right balance between supporting families and providing incentives to work.

[Jim Fitzpatrick]

Rent levels in inner London and near Canary Wharf in my constituency are disproportionately high. Jobcentre Plus has written to 900 families in my constituency, who between them have 4,000 children, telling them that their benefits will be cut on 1 April by £200 a month on average. This will cause them either to rack up rent arrears or to have to move. Mayor Boris Johnson—

[Mr Speaker]

The hon. Gentleman should ask a question. One sentence.

[Jim Fitzpatrick]

Mayor Boris Johnson says he will not preside over the removal of the poor from inner London. Boris gets it: why don’t the Government?

[Mr Hague]

I know that the hon. Gentleman has long-running concerns about this and has frequently expressed them. It is important to stress that for all but the most expensive parts of London, at least 30% of all private rental properties will be affordable. In London, under the system that we inherited, 150 families were receiving housing benefit of more than £50,000 a year, and that is not acceptable to the taxpayers of this country in general. Our reforms are fair. Housing benefit will still be paid to meet rents of almost £21,000 a year. There is also a £190 million fund for discretionary payments to help local authorities with the changes, including assistance to renegotiate lower rents with landlords, but the principle remains, and I say it again, that it is not fair that people on housing benefit can afford to live in streets and homes that people out working hard are unable to live in.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

Q9. Wales is the only nation in the UK without a single yard of electrified rail track, thanks in part to the Labour party. As a former Secretary of State for Wales, could the Foreign Secretary persuade the Government that extending the track as far as Swansea, not just Cardiff, would be great for jobs, great for Wales, and somewhat cheaper than the current refurbishment of Tottenham Court Road station?

[Mr Hague]

I know that my right hon. Friend the Welsh Secretary is working hard on this. We are committed to electrifying more than 300 miles of railway routes, which compares with just 9 miles electrified under the previous Government—an interesting contrast in infrastructure investment. The Department for Transport is currently considering a business case for electrification between Cardiff and Swansea prepared in Wales, and I understand that the decision will be made by the summer. Of course, it will depend on whether it is affordable and on the assessment of competing priorities as well.

[Angus Robertson (Moray) (SNP)]

There is more work to do, but for the third month unemployment has reduced in Scotland, and for the second year in a row Scotland is the best performing location for foreign direct investment in the UK. Will the Foreign Secretary take the opportunity to congratulate the Scottish Government and Scottish Development International, which is the lead agency that secures foreign direct investment?

[Mr Hague]

The hon. Gentleman is right to draw attention to the employment figures, which we must never be complacent about. There is always so much more work to do, but the right hon. and learned Member for Camberwell and Peckham (Ms Harman) did not ask about the figures, which show a quarterly fall in unemployment of 51,000, the rate of unemployment coming down in the quarter and, importantly, youth unemployment coming down by 29,000 in the past quarter, although long-term unemployment is still rising and remains a challenge. Scotland, as part of the United Kingdom, is an attractive place to invest. I congratulate many Scottish people and businesses on their work. They would have much harder work to do if Scotland were not part of the United Kingdom.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

Q10. While welcoming overseas students who come to this country to get a world-class education and then return home to benefit their countries, will my right hon. Friend look extremely sceptically on vice-chancellors who believe they cannot compete unless students are given an additional incentive to stay on in this country, legally or illegally, especially as last year 120,000 students sought and were granted the right to extend their stay here?

[Mr Hague]

Yes, as my right hon. Friend knows, the Government have introduced radical reforms to stamp out abuse and restore order to a student visa system that was out of control, making the immigration system easier for students, universities and the UK Border Agency. We are closing bogus colleges and regulating the remainder, restricting the right to work here and bring dependants and making sure that all but the very best go home at the end of their studies. On that basis, of course talented students from around the world are welcome here in the United Kingdom.

[Mr Denis MacShane (Rotherham) (Lab)]

As MP for Rotherham, may I welcome the fact that the right hon. Gentleman has realised his ambition, thwarted in 2001, and is now briefly in charge of the clattering train? As two Asian Nobel peace prize winners will visit the House of Commons this week, will he take the opportunity to invite a third, Liu Xiaobo, currently rotting in the Chinese gulag, who was awarded the Nobel peace prize last December, and will he mention his name, Liu Xiaobo, from the Dispatch Box, rather than referring to it in the human rights dialogue, and invite him to London next year?

[Mr Hague]

It is good that nice words about Rotherham are being exchanged at Prime Minister’s Question Time, so I welcome the right hon. Gentleman’s question. We do raise individual cases with the Chinese, often publicly, but I will assess which ones to raise and when to do so. The human rights dialogue we have with China is very important, and it is important that in China there is an understanding of our deep concerns about many of these cases. He can rest assured that I will be raising them.

[Mr Speaker]

The right hon. Member for Rotherham (Mr MacShane) has got his answer on Liu Xiaobo and will doubtless be content.

[Mr Christopher Chope (Christchurch) (Con)]

Q11. In the cause of deficit reduction, the Government are reducing police funding by 20% in real terms over four years. Can my right hon. Friend therefore assure me that, also in the cause of deficit reduction, he will insist on a reduction in our contribution to the European Union budget of more than 20%?

[Mr Hague]

Highly desirable though that would be, my hon. Friend is aware that that contribution is not determined by a single decision of Government; it is the balance between two large figures determined in other ways. However, he can rest assured that we will be far better at negotiating on this than were Opposition Members. When the shadow Foreign Secretary was Minister for Europe, the Labour party gave away £7 billion of the British rebate, for nothing in return—an abject failure of negotiation and leadership that we will not repeat.

[Phil Wilson (Sedgefield) (Lab)]

Q12. Does the Foreign Secretary agree with the hon. Member for Hexham (Guy Opperman), who was quoted in Newcastle’s The Journal as saying:“I see no economic argument for introducing regional pay”?

[Mr Hague]

I think that there is a variety of views on regional and local pay in all political parties—I pointed out earlier the views expressed by the former leader of the Labour party on local and regional pay. It is also worth pointing out that the previous Government introduced local pay into Her Majesty’s Courts and Tribunals Service in 2007.

[Heather Wheeler (South Derbyshire) (Con)]

Does my right hon. Friend agree how wonderful the announcement was about the investment in Derby for Rolls-Royce, which will mean future engineering jobs? Bombardier is looking for 44 new jobs and unemployment in South Derbyshire has gone down by 150 in the past two months.

[Mr Hague]

That is indeed good news, as my hon. Friend says. It is good news for investment in this country and for Derby and the surrounding area, and it is good news for the long-term security of this country that we are prepared to invest confidently in submarine technologies for the long term.

[John Cryer (Leyton and Wanstead) (Lab)]

Q13. How does the snoopers’ charter that the Government plan to introduce shortly differ from the 2009 proposals, which both governing parties opposed when they sat on the Opposition Benches?

[Mr Hague]

It differs enormously, because the previous Government’s proposal was to hold all data in a central database. Our proposal would require providers to hold on to their data. The hon. Gentleman uses the catchphrase “a snoopers’ charter”, but it is designed to be a criminals’ nightmare. If we do not update our ability to detect terrorism and criminality in this country, that will have a very serious effect, so I encourage the hon. Gentleman to look at this in detail. It is very important for maintaining law and order in the UK.

[Mr David Amess (Southend West) (Con)]

Q14. Is my right hon. Friend aware that the highlight of the Olympic torch relay will take place on 6 July, when it arrives in Southend to be met by a choir of 2,000 on the longest pier in the world, with its new, iconic building? Does he agree that the Olympic games are an opportunity for our country to come together and celebrate this Government putting the “Great” back into Britain?

[Mr Hague]

The arrival of the torch in Southend is one of the highlights, the other being the fact that today it is passing through Richmond, Yorkshire—and I would have dearly loved to be there to see it. But that is one of the highlights, and my hon. Friend is quite right: the Olympics are an enormous opportunity for this country. We are looking, through the Olympic games, to secure more than £1 billion of inward investment, to attract an additional 4 million visitors, including to Southend, and to use the games to inspire more young people to take up sport. It is a great moment for Britain.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Q15. We all know that the Prime Minister likes to “chillax” down the pub, but when it comes to Anglo-French relations should he not adopt a more sober approach?

[Mr Hague]

The Prime Minister always has excellent relations, in my experience, with any President of France, including with the new President of France. We should welcome and applaud the fact that the city in which we are sitting is the seventh largest for French people in the world, and they are of course welcome here in the United Kingdom whatever their Government are doing at home.

[Mr Speaker]

I understand why the right hon. Gentleman would have liked to have been in Richmond, but he has paid the price of fame, which is why he has had to be here instead, and we are extremely grateful to him.

We now come to a statement from the Secretary of State for Business, Innovation and Skills, Mr Secretary Cable. [Interruption.] Order. I know that Members are toddling out of the Chamber—quickly and quietly so that we can hear from Mr Secretary Cable.

Directors’ Pay

Wednesday 20th June 2012 Commons Chamber

12:37

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I welcome this opportunity to set out the Government’s proposals for directors’ pay. This follows extensive consultation with business and the investment community.

Since I first addressed the House on the issue, the Government have initiated a broad, national debate about shareholder activism, and this encouraged shareholders to become more engaged as owners of their companies during the so-called “shareholder spring”. We have also seen many companies engage constructively in the face of that opposition, and this is an important step in encouraging improved pay discipline.

There is, as I said then, compelling evidence of a disconnect between pay and performance in large UK-listed companies, and it is right that the Government act to address that market failure. Today I can therefore announce a far-reaching package of reforms that will strengthen the hand of shareholders to challenge excessive pay while not imposing unnecessary regulatory burdens.

We will give shareholders new powers to hold companies to account on the structure and the level of pay, and make it easier to understand what directors are earning and how that links to company strategy and performance. Shareholders will have a binding vote on a company’s pay policy, including their approach to exit payments, and, rather than being a one-off vote, for the first time there will be a real, lasting and binding control on pay.

A company will be able to make payments only within the limits that have been approved by a majority of shareholders, and this binding vote will happen annually unless companies choose to leave their pay policy unchanged, in which case the vote will happen a minimum of every three years. This will encourage companies to set out and stick to a clear, long-term pay strategy, and it will put a brake on the annual upward pay ratchet.

The policy should explain clearly how pay supports the strategic objectives of the company and include better information on how directors’ pay relates to that of the wider work force. There will be increased transparency on employee pay, including information that will show the difference between rises in directors’ pay and that of the employees. Indeed, employee views on pay are important. That is why I am proposing that companies report on whether they have taken steps to seek the views of their work force. As part of their policy, companies will have to spell out their approach to exit payments. When a director leaves, the company must publish a statement explaining to shareholders exactly what payments the director has received, and companies will not be able to pay more than shareholders agree.

Alongside the binding vote on pay, there will, as now, be an annual advisory vote on how the policy has been implemented, including all remuneration paid in the previous year. If a company fails the advisory vote, that will automatically trigger a binding vote on policy the following year. Both the binding and the advisory vote should be as strong as possible to keep up pressure on companies. I therefore welcome the CBI’s call for the Financial Reporting Council’s corporate governance code to be updated to codify current best practice whereby companies make a statement when a significant minority of shareholders vote against a pay resolution. This will publicly hold directors to account. Pay reports will be clearer and more transparent for investors. Companies will have to report a single figure for the total pay that directors received for the year, details of whether they met performance measures, and a comparison between company performance and chief executives’ pay.

The Government will shortly bring forward amendments to the Enterprise and Regulatory Reform Bill to introduce these reforms. In tandem, as good policy-making requires, we will publish for comment revised, simplified regulations setting out what companies must report on directors’ pay.

Lasting reform is dependent on business and investors maintaining this activism and developing and adopting good practice. The best companies and investors are already leading the way and acting as early adopters of these reforms. We welcome the close engagement of institutional shareholders and their willingness to use their voting powers. We want this to be sustained and we shall continue to monitor disclosure levels. Evidence suggests that more institutional investors are disclosing their voting records and that up to three quarters of these investors are now disclosing their votes. We will consider further action if the number of investors volunteering to disclose their voting records does not continue to increase.

In summary, this is a strong package of reform. It builds on the UK’s status as a global leader in corporate governance, it commands wide support from investors and business, and it addresses public concerns about directors’ pay. These proposals restore a stronger, clearer link between pay and performance; reduce rewards for failure; promote better engagement between companies and shareholders; and, overall, empower shareholders to hold companies to account through binding votes. We look forward to discussing the proposals further with the Business, Innovation and Skills Committee on 28 June and in the Public Bill Committee that will consider the Enterprise and Regulatory Reform Bill.

12:43

[Mr Chuka Umunna (Streatham) (Lab)]

I thank the Secretary of State for advance sight of his statement.

In the past decade, the value of FTSE 350 companies increased by 80% while the average total earnings of executives in those companies increased by 108%. So the evidence is clear: many of these rewards, as the Secretary of State said, are not linked to success or performance. This problem has grown over the past few decades under Governments of all persuasions. In fact, one has to go back to 1979 to find things more in proportion, with executive pay growing by 0.8% on average in the three decades since that year. It is imperative that we all do what we can to address this problem.

In government, rightly, we did not rush to legislation. It was right to see whether legislation could be avoided. When it became clear that that was not the case, in 2002 we made it mandatory for quoted companies to publish a separate directors’ remuneration report, and we gave shareholders the right to vote on remuneration through advisory votes. As the Secretary of State said, shareholders, to their credit, have been exercising those rights with some verve this year. That is very welcome, because change and reform must be led by them.

The Secretary of State outlined a number of proposals to assist shareholders in that endeavour. I welcome the binding vote on exit payments, the measures to simplify pay reports and the measures to increase transparency, but I have a number of concerns and questions in relation to the other things that he mentioned.

First, on the annual binding vote on future remuneration policy, it is deeply disappointing that having marched us all up the hill, the Secretary of State appears to be marching us back down again by performing a U-turn on his original proposal. Having proposed an annual vote, he now seeks one every three years, unless there is a change to the policy during those three years. Will that not incentivise boards to draft policy as broadly as possible to avoid anything other than a triennial vote? Exactly how does he define a change to remuneration policy? Who will be the arbiter in each company as to whether a change has occurred—the board or the shareholders? I know that bureaucracy has been raised as an objection to an annual vote, but given that there are many other annual votes, I am not sure whether that holds water.

Secondly, the Government should have been bolder on the majority that is required for a pay policy to be approved and gone for a 75% threshold, as opposed to a simple majority. Dominic Rossi, the chief investment officer of Fidelity Worldwide Investment, has said that such a threshold would

“ensure that companies consult widely with shareholders prior to a vote.”

He went on to say that it would give

“companies a clear mandate and the need for a clear majority also encourages all shareholders to express their views”.

Why does the Secretary of State not take heed of that advice?

Thirdly, the Secretary of State says that employees’ views on pay are important. If that is the case, why does he persist in standing in the way of the requirement for employee representatives to sit on board remuneration committees?

Fourthly, we fully support the introduction of an annual advisory vote on how remuneration policy has been implemented over the previous year. The Secretary of State said that the loss of such a vote would “automatically trigger a binding vote on policy the following year.” Will he clarify to which vote in the following year he was referring—the backward-looking vote that would usually have been advisory or the forward-looking vote on policy?

Finally, I too welcome the CBI’s call for the Financial Reporting Council’s corporate governance code to be updated. Will the Secretary of State consider requiring the FRC to produce an annual report on the operation of the UK stewardship code to keep shareholder activism and good pay and remuneration practices high on the national agenda in the years to come? It would be a great shame if it fell off the agenda.

[Vince Cable]

I thank the hon. Gentleman for his positive comments. It was useful that he started with a bit of history. It is worth recalling that in the 13 years of Labour Government, seven Secretaries of State occupied my job—eight if we include Lord Mandelson twice. In the seven years that followed the introduction of advisory votes, none of my predecessors thought it necessary to introduce a binding vote on pay, despite there being, as the hon. Gentleman acknowledged, a continuing trend for top pay to diverge from the performance of companies, let alone from the pay of employees.

The hon. Gentleman continues to raise the issue of workers on boards. I think that having workers on boards is an excellent idea. The question is whether it should be mandatory. If it was such a good idea, why did none of my predecessors do anything about it? Most of them were nominated by trade unions and one was a distinguished general secretary of a trade union. None of them took any action to implement the measure that the hon. Gentleman is demanding. I welcome employee participation and will expect a report back from companies on whether they have consulted their employees on pay.

There will be an annual vote if pay policy changes. The hon. Gentleman seems to find a problem with the idea that if nothing changes, a policy can last for a three-year period. I would have thought that he would see the obvious attraction of a system that encourages companies to think long term. As I understand it, he has just copied my example in setting up a report on long-termism. We want companies to think long term. Should they choose to use the three-year process and leave their policies unchanged, it would put a stop to the ratcheting of annual pay awards. That process would be a considerable improvement should companies choose to use it, but for the most part, as I have indicated, the vote will take place annually.

I personally believe that it would be desirable to have a 75% vote threshold in the advisory votes, and the FRC will pursue the requirement of a statement to the market. As the hon. Gentleman will know, the FRC is an independent body, and I do not mandate it, but I believe that having a higher threshold would be desirable in that case.

The hon. Gentleman specifically asked what the FRC was doing to strengthen overall corporate governance. It is pursuing investigations on a variety of issues such as how companies should formally respond when a significant minority oppose a pay vote, requiring all companies to adopt clawback mechanisms and the extent to which executives should serve on remuneration committees in other companies. Those are big issues, and subject to the FRC’s recommendations we will have considerable improvements in the corporate governance system.

These are radical changes, and I would have thought it would enhance the hon. Gentleman’s reputation if he was gracious enough to acknowledge that a major set of reforms has been undertaken.

[Mr Andrew Tyrie (Chichester) (Con)]

Banks have taken excessive risks, for which we have all paid. The Treasury Committee is now investigating that and has heard extensive evidence that senior bank executives have been rewarded excessively for taking those risks. What in these proposals specifically addresses the problem of systemic risk in our major financial institutions?

[Vince Cable]

As the hon. Gentleman knows in his important role as Chairman of the Treasury Committee, a separate set of regulations introduced by the Financial Services Authority deals with the link between the types of pay package that are introduced and systemic risk. Excessive bonusing has undoubtedly had an effect in the past, and as a result of the experience of the financial crash, those regulations have been tightened. Banks, as public limited companies, will be governed by the new regulations, and I imagine that after their experiences shareholders in our leading banks will want to ensure that forward-looking pay policies take proper account of the systemic risk of their institutions.

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

I broadly welcome the Minister’s statement and I welcome his agreement to appear before the Select Committee on Business, Innovation and Skills on 28 June to be further questioned on it. May I probe him on his comments about the disclosure levels of institutional investors? Currently, only 15% of asset management companies reveal their voting behaviour at shareholder annual general meetings. In the light of his statement, will he consider introducing legislation to ensure that that becomes 100%?

[Vince Cable]

I have already indicated in my statement that we are examining disclosure levels. There is an encouraging trend towards disclosure, and as the hon. Gentleman knows, the big weight of votes comes through the big pension and insurance companies. I have said that we will consider further measures if the current ones do not lead to the right trajectory, and his point is a useful one.

[Lorely Burt (Solihull) (LD)]

I very much welcome these proposals. The three-year binding pay policy will help to constrain the constant upward spiral in directors’ pay increases that we have seen in recent years. It has been suggested that the three-year pay policy agreement may turn out to be deflationary as growth improves in the economy and, hopefully, in companies. Does my right hon. Friend agree, and would he welcome that?

[Vince Cable]

My hon. Friend is right, and that was one point that institutional investors made when we consulted them. They saw that the option of having a three-year unchanged policy would be helpful in deflating top pay. She is right that the problem that we are dealing with is an upward spiral in which pay is often unrelated to performance and top executives are trying to get into the top quartile, where by definition they cannot all be.

[Mr Dennis Skinner (Bolsover) (Lab)]

Is the Secretary of State not singing a different song from the one that he used to utter from the seat where I am now? He used to talk about the balance between people on both sides in business—the trade unions and the bosses. Is the truth not that he has come here with a set of proposals that might have been okay some time ago, but that he has been tied hand and foot by the Tories in the coalition and even got rattled by being asked a few decent questions by the pleasant shadow Business Secretary? What a transformation.

[Vince Cable]

I know that the shadow Secretary of State is indeed very pleasant. I will concede that point. I did not think his questions were terribly good, but he is certainly very pleasant.

As for my performance when I used to sit in the seat where the hon. Member for Bolsover (Mr Skinner) is now, I did indeed warmly welcome Patricia Hewitt’s changes seven years before the end of the Labour Government. They were a big step forward, and they were helpful even though taken as a whole they were quite a weak package. What is happening today builds substantially on those proposals.

[Mr Peter Bone (Wellingborough) (Con)]

The Secretary of State’s proposals are unnecessary and will just be an additional burden on industry. Should he not concentrate instead on his day job? Gallay Ltd, in my constituency, has been waiting since February for an export licence and will lose an order to the Americans. Should we not have more action and fewer stunts?

[Vince Cable]

If there is a genuine problem with export licensing, I will be happy to address it, but only a very small proportion of exports are covered by the licensing regime. As the hon. Gentleman will know, they cover defence and national security, and it is important that we are careful in how—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sure the Secretary of State is going to mention directors’ pay as well.

[Vince Cable]

I thought the question was about export licensing, and I tried to address it.

[Mr Deputy Speaker]

Sometimes you can help people, but not all the time.

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

I welcome much of what the Secretary of State said, but the proof of the pudding will be in the eating. What difference will the changes make to the so-called directors—I call them the vermin—of the private equity world who took over Boots the Chemist five years ago and have now sold it off to the Americans? Will he announce how much money they have screwed out of this deal?

[Vince Cable]

This change deals with public listed companies, not with private equity. There is a whole set of separate issues to consider about the regulation of private equity companies and about tax policy, but this change is about public listed companies.

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

I welcome my right hon. Friend’s taking a reasonable approach on directors’ pay following consultation with business and investors. Does he believe that more power for shareholders and greater transparency will encourage more people to participate in companies’ meetings, get involved and buy company shares? That is surely what we all want—more shareholders and more involvement.

[Vince Cable]

That is absolutely right, and I congratulate shareholders who have become actively engaged in issues of pay policy for the first time in many years. I think one reason why they have been active is that they knew legislation to cement their position was coming.

[Tony Lloyd (Manchester Central) (Lab)]

The Secretary of State was quite right to castigate previous Governments for their complacency on top pay, which is now not simply a practical issue but a moral one. However, if he is honest I think he knows that his statement was timid. Is it not time that we had a high pay commission to consider how we begin to dismantle the obscenely high pay of the top-paid at a time when the poor are getting poorer?

[Vince Cable]

I have seen the work of the existing High Pay Commission, which I think is a voluntary body and which has made some good suggestions, many of which we have taken on board. If the community of investors, think-tanks and others were to come together to examine top pay, I would look with great interest at what it suggested.

[Esther McVey (Wirral West) (Con)]

I welcome the Government’s announcements on executive pay, especially after a decade of runaway executive pay. Does my right hon. Friend agree that it is imperative that board members understand that what they do has to be in the interests of not only employees, stakeholders and shareholders but above all else the long-term sustainability and well-being of the business, operating by ethical means?

[Vince Cable]

The hon. Lady is absolutely right—that is what the corporate stewardship code is all about. That initiative goes hand in hand with the others we are taking to ensure that companies operate on a long-term basis. British business has been undermined for far too long by short-term decision making, and we are trying to move it in the opposite direction.

[David Simpson (Upper Bann) (DUP)]

I broadly welcome the Government’s proposals, but on a practical matter, if a company were to default or not implement the legislation, what penalties could the Government impose on them?

[Vince Cable]

There is already a set of rules under the stewardship code. If companies fail to observe the binding vote, they will be making unauthorised payments. Very considerable liabilities can accrue to directors of companies that do that.

[Greg Mulholland (Leeds North West) (LD)]

I welcome the statement, and the Secretary of State is right to tackle rewards for failure. Surely the worst example is that of Enterprise Inns, which suffered a 96.6% decline in share values over five years. Over three years when share values declined by 80%, Ted Tuppen, the chief executive, thought it fit to reward himself with £850,000 in performance-related bonuses. Does my right hon. Friend agree that shareholders are only part of the answer? Thousands of businesses are being damaged by the pubco model, so will he pledge to uphold the will of Parliament and announce a review in the autumn? As everyone in the industry knows, the imbalance in that sector has not been changed by the so-called self-regulatory solution.

[Vince Cable]

The Minister who formerly had responsibility for pubs, who is now Secretary of State for Energy and Climate Change, had extensive debates with my hon. Friend on Enterprise Inns and the damage that the pubco model has done. The figures my hon. Friend produces are striking. I cannot understand why shareholders are not more active if there has been such a divergence between pay and performance. Perhaps he, with his formidable campaigning skills, will help them to be so.

[Stewart Hosie (Dundee East) (SNP)]

I thank the Secretary of State for his statement and early sight of it. He says: “Pay reports will be clearer and more transparent for investors.” Investors in large listed companies have the capacity to do such work, but has he no concerns about the potential unintended consequence that business investors will see that burden as a de facto requirement of any business in which they seek to invest? Is he not concerned that there might be too much work involved for smaller businesses that are seeking investment to grow?

[Vince Cable]

That is a perfectly correct statement of the balance we are trying to strike. We want investors and shareholders to be actively involved. In order to be so, they need to know what is going on and to have other information. I fully acknowledge that indirectly that has some regulatory impact. We have tried to strike the correct balance, and I believe we have done so.

[Mark Field (Cities of London and Westminster) (Con)]

The Secretary of State is right to identify the deep public distaste not just for rewards for failure but for general rewards for those who are not in any meaningful way risk-takers or entrepreneurs. How will he judge whether the policy has been a success over the next three years? When we are sitting here in June 2015, on what basis will he see today as a success?

[Vince Cable]

The hon. Gentleman is right to stress that we are talking not just about reward for failure but about the general escalation of the pay of top executives unrelated to company performance. It is not likely that we could produce a simple metric of how the policy will work through, but if annual or tri-annual reviews of policy are successfully implemented across companies, with well informed shareholders exercising their votes, I think that in a few years’ time we will see a good deal of restraint and more strategic thinking in the setting of pay policies. That is what we are trying to achieve.

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

Three years is an awful long time to pack in share options, mega-bonuses, huge share handouts, long-term incentive pay schemes and so on. Why not have an annual binding shareholder vote to stop top executive remuneration ballooning wildly out of control within a three-year grace period?

[Vince Cable]

Even if that perverse behaviour were to occur, there would still be the existing annual backward-looking advisory vote. If shareholders are dissatisfied, the company, subject to the Financial Reporting Council’s work, will be required to issue a statement, which will require a binding vote the following year. Checks and balances are built into the system to ensure that the abuses the right hon. Gentleman describes simply do not happen.

[David Rutley (Macclesfield) (Con)]

Does my right hon. Friend agree that there is a vital role for remuneration committees, and particularly their non-executive members, in re-linking rewards with positive performance in companies throughout the country?

[Vince Cable]

Yes, there is an important role for remuneration committees and the consultants who advise them. One thing I did not mention was the effort being made to ensure that fees for remuneration consultants are properly declared, so that there is more transparency in that aspect of the process.

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

I welcome the statement, not least because I proposed an amendment to the Finance Bill to the effect that we should introduce a binding vote. I appreciate that the Government were consulting during that period. However, the shareholder vote is a binary vote—a straightforward yes or no. Does the Secretary of State envisage a process in which shareholders can amend the pay policy, for example to introduce a ratio between the highest and lowest paid within companies?

[Vince Cable]

It will be possible for shareholders’ representatives to work out the ratio because of the information that will become available. We suggested that it would not be sensible to make that metric compulsory, because it can be misleading. I have previously described to the House the anomalies that can arise. A company with a large number of low-paid employees would have a big ratio, but a company that has outsourced such employees, which might be less socially responsible, will none the less have a better ratio, for entirely artificial reasons. We do not attach overriding importance to that measure, but the hon. Gentleman is right that it should not simply be a question of saying yes or no. Shareholders must engage with the company should there be a failure to pass a binding vote to produce a more satisfactory outcome. That is a process, not simply an event.

[Paul Uppal (Wolverhampton South West) (Con)]

I would be grateful if the Secretary of State could elaborate on the concept of long-termism that he has mentioned in a few of his replies. I ran a business for 20 years before I came to the House, and the best decisions I made were long-term ones. Only when we take a long-term view will we tackle mediocre performance head on.

[Vince Cable]

The hon. Gentleman is absolutely right. The big issue is essentially a cultural question—the evolution of business in the UK over a long period is central. That is why I set up the review under Professor Kay, which was supported by Sir John Rose and others. That will report in July. Some of its proposals—on, for instance, an end to quarterly reporting—will emerge in detail shortly.

[Mr David Winnick (Walsall North) (Lab)]

While millions of people are trying to make ends meet—far more than under the previous Government—why should we believe that the massive annual sums, amounting to millions of pounds, given to the heads of the banks and other organisations are likely to change? We are in an unfair society, and there is no indication that that will change in any way as a result of what the Secretary of State has told us.

[Vince Cable]

The proposal is not designed to solve all the problems of income and wealth distribution in society; it is designed to ensure that public listed companies operate responsibly, and that they are properly policed by their shareholders. The wider questions the hon. Gentleman raises involve tax and other policies, which I am sure we will debate on many other occasions.

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

I welcome the Secretary of State’s statement, but are we giving shareholders enough power quickly enough to stop companies providing a lot of executive pay for very poor performance?

[Vince Cable]

The measures in the Bill on the binding vote are strong ones. Whether they are implemented quickly enough depends partly on how quickly the House proceeds with the legislation. I would expect to see it coming into effect soon.

[Mark Durkan (Foyle) (SDLP)]

In welcoming the Secretary of State’s statement, may I caution against weather presenters claiming credit for the spring? On the three-year binding pay policies reported by institutional investors, will he ensure that they will not have elasticity and undue headroom built in? He recognises that there will be changes in the Enterprise and Regulatory Reform Bill, but on institutional investors does he envisage the possible need for changes in the Financial Services Bill?

[Vince Cable]

We are not proposing changes in the Financial Services Bill. Whether there is elasticity in the policy will depend on the shareholders: they own the companies and make the judgments, and they will ensure that the powers we are giving them are enforced in their companies.

On credit for the shareholder spring, I think the prospect of legislation has probably helped, although I would not claim credit for it. By passing these measures, however, we will ensure the spring is not a one-off event but is sustained; that is the purpose of what we are doing.

[Ben Gummer (Ipswich) (Con)]

I very much welcome the Secretary of State’s measured proposals to give shareholders, who after all own the businesses in which they have shares, greater control over top pay. Further to the question from my hon. Friend the Member for Bexleyheath and Crayford (Mr Evennett), does the Secretary of State agree that the best way to increase shareholder activism is to increase the number of shareholders, especially non-institutional ones? What measures are the Government taking to increase the number of private, non-institutional shareholders?

[Vince Cable]

The hon. Gentleman is right to stress the point that shareholders own the companies. That is self-evident but often overlooked, and they have often been treated as outsiders. Clearly, widening shareholding would be desirable, and we are considering a variety of ways of doing that, not least through encouraging employees to have shares in their own company. The Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for North Norfolk (Norman Lamb), and I will consider how to effect that in one of the companies for which we still have direct responsibility—the Royal Mail.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

There is growing evidence that a major contributor to the ratchet effect on directors’ remuneration is the role of remuneration committees. People are concerned about the very narrow base from which remuneration committees are drawn, and there have been recommendations to widen their membership. The Secretary of State has already indicated his support for having an employee on remuneration committees. If he does not make that mandatory, will he make mandatory a wider base from which to draw the membership of remuneration committees?

[Vince Cable]

I take the hon. Gentleman’s broader point that diversity among directors is critical to changing the culture of companies. At the moment, we are focusing on women on boards of companies, on which significant progress has already been made. That is part of the wider picture of having more diversity, and more employees, among directors.

[Ian Swales (Redcar) (LD)]

A large proportion of the population has a direct or indirect stake in the stock market. Does the Secretary of State believe that there is a link between the relatively poor performance of the stock market over the past 10 years and the increasing share of corporate wealth taken out by directors and senior managers?

[Vince Cable]

It is precisely the divergence between those two things that we are endeavouring to correct. My hon. Friend’s point is certainly true of the banking system, where very large salaries and bonuses have come at the expense of dividends. These reforms should help to correct that.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Today’s measures are welcome, but it should not just be a question of trying to stop the upward spiral of excessive directors’ pay; something needs to be done about the current excesses. When this measure comes into effect, will the Secretary of State urge companies to consider existing levels of directors’ pay? If that does not deal with the existing excesses, will he consider returning with other measures to drive them down?

[Vince Cable]

There is an important distinction between existing pay arrangements, which are governed by contract, and future pay policies, which will be the subject of binding votes, after which those contracts can be set on a fresh principle. There is a restraint on existing pay through the advisory vote, and, as I have set out, I envisage the disciplines around the advisory vote being strengthened by the statement, subject to the operation of the Financial Reporting Council.

[Jason McCartney (Colne Valley) (Con)]

When an employee and union representative at ITV in Leeds, I was dismayed to see the then boss of ITV, Charles Allen, receive millions in pay, perks and bonuses, while making a series of catastrophic business decisions that brought the company to its knees and saw the share price plummet. I am also dismayed to see that he is now sacking workers at Labour party headquarters. Does my right hon. Friend agree that work forces’ views on executive pay should be considered?

[Vince Cable]

They should be considered. If my predecessors had been as active as this Government have been in bringing forward this legislation, the Labour party would probably not be facing these redundancies.

[Mr Christopher Chope (Christchurch) (Con)]

I congratulate my right hon. Friend on securing this socialist measure through the coalition Government. Will he assure me that this will not drive UK-listed companies out of the UK? What will it do to encourage more companies to get listed in the UK?

[Vince Cable]

I am frequently accused of socialist tendencies by colleagues behind me, but the promotion of shareholders is a rather strange definition of socialism. There is not a shred of evidence to suggest that this will promote the outward movement of companies. Indeed, all the leading business associations and investor groups have welcomed what we are doing.

[David Mowat (Warrington South) (Con)]

In many quoted companies, highly paid employees actually earn more than directors. Will the Secretary of State consider extending at least the transparency aspect of this legislation to employees, as well as directors?

[Vince Cable]

I have identified that problem. It is particularly a problem in banks, where the so-called code staff, including traders, are sometimes paid more than their directors. That will be covered by the regulation on financial services, which is being strengthened in that respect. There are probably very few public listed companies outside the banking sector where the phenomenon the hon. Gentleman describes is real.

[Julian Smith (Skipton and Ripon) (Con)]

Will the Secretary of State talk a little more about the transparency proposals for paid consultants? Is it worth considering adding to that the fee structures and mechanics for executive search consultants in relation to board positions?

[Vince Cable]

I will happily give the hon. Gentleman more information on the detailed work done on the rules governing transparency in that sector. His point about executive search agencies is a new one—I had not encountered it before—and we will certainly consider it, but the principle of greater transparency is absolutely right.

[Gavin Williamson (South Staffordshire) (Con)]

Will my right hon. Friend assure the House that the Government, as a major investor in some of the country’s largest banks, will be a proactive investor and ensure that rewards reflect results in those banks?

[Vince Cable]

As my hon. Friend knows, the banks are governed by an arm’s length arrangement, through United Kingdom Financial Investments Ltd, but he will have seen that the pay and bonuses of senior executives, particularly at RBS, in the last season reflected the Government’s concerns about excessive pay in general.

[Bob Blackman (Harrow East) (Con)]

Will my right hon. Friend confirm that high-performing individuals in successful companies that perform within the proper corporate governance have nothing to fear from these proposals, but that those companies that do not follow best practice clearly do? Are the Government proposing guidance on what would be best practice?

[Vince Cable]

Guidance will be issued, particularly on what needs to be disclosed and how the legislation will be implemented. The starting point of the hon. Gentleman’s question is absolutely right. To make it clear, we have no objection to people being very well rewarded if their companies perform well. We want to see rewards for success.

[Richard Fuller (Bedford) (Con)]

I draw the House’s attention to my entry in the register of interests as a non-executive director of an alternative investment market-listed company. The Secretary of State is absolutely right to focus on the long-term perspective of compensation and to opt for a three-year, rather than a one-year, binding vote. Will he also emphasise another point about company performance? Often, the issue is relative company performance. When times are good, it is good for a chief executive officer to reflect, particularly in their equity performance, that their company is doing well, because all companies are doing well. I think, however, that the Secretary of State’s aim is that the best companies, doing comparatively well, should be better rewarded. Will he comment on that?

[Vince Cable]

That is a helpful point that is emerging from the study on long-termism, the analysis of which shows clearly that people’s overriding motivation in respect of remuneration changes with relative performance, but what actually matters is absolute performance.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Last but certainly not least, Charlie Elphicke.

[Charlie Elphicke (Dover) (Con)]

Thank you, Mr Deputy Speaker. I welcome this announcement, because power going to the shareholders and the business owners is how capitalism is supposed to work, yet it is essential that shareholders are able to exercise their votes in practice. Will the Secretary of State tell the House what action he has taken to ensure that brokerages communicate to their nominees—shareholder-owners—the fact that they have the right to vote at board meetings and are able to exercise it? What action he will take to address stock lending, which is all too often used to steal away votes from the real owners so that other people can use them instead?

[Vince Cable]

We are not taking specific action on brokerages, but it is clear that the increasing participation of shareholders reflects good practice and a favourable trend. To address the hon. Gentleman’s introductory comment, we are talking about capitalism working well and working properly, so perhaps he could have a word with his colleague sitting behind him—the hon. Member for Christchurch (Mr Chope)—about the difference between capitalism and socialism.

Points of Order

Wednesday 20th June 2012 Commons Chamber

13:20

[Greg Mulholland (Leeds North West) (LD)]

On a point of order, Mr Deputy Speaker. My constituent Fran Prenga is languishing in a Greek prison, in conditions that are clearly unacceptable and with normal standards of judicial process not having been followed. I have corresponded with the Foreign and Commonwealth Office on five occasions, and was told last Wednesday that I would receive a reply on Friday. I did not receive a reply then, so I called the office on Monday and was told that I would have a response yesterday, which I have still not received. I have therefore had no reply, despite the matter being incredibly urgent, to letters on 25 May, 1 June and 14 June. I have not even had an acknowledgment from the Secretary of State for Foreign and Commonwealth Affairs of letters dated 18 May and 14 June. Does he think—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I have certainly got the message. As the hon. Gentleman knows, that is not a point of order for me, but I am sure that everybody will have heard what he has said and that there will be a letter or that the matter will be taken very seriously, now that he has raised it on the Floor of the House.

[Mr Tom Harris (Glasgow South) (Lab)]

On a point of order, Mr Deputy Speaker. This morning The Guardian carried a report of the announcement by the Deputy Prime Minister that, after months of prevarication, the Government are to introduce mandatory carbon emission reporting by large companies. The Department for Environment, Food and Rural Affairs rushed out a written ministerial statement on the issue, but it was not available for Members to read until 19 minutes past 10 this morning. I know that you and Mr Speaker take a dim view of Ministers making announcements to the media rather than to this House. Have you received any indication from either the Secretary of State for Environment, Food and Rural Affairs or the Deputy Prime Minister of their intention to make a full statement to this House? Alternatively, can you recommend which newspapers we should take in order to keep abreast of the Government’s thinking?

[Mr Deputy Speaker]

The first part of the hon. Gentleman’s point of order is correct: we do take a dim view of such behaviour. This House should get the message first, before the newspapers. I can assure the hon. Gentleman that we are all listening to him, and the point has been echoed, once again, on all Benches and in all parts of the House.

Bills Presented

Bank of England (Appointment of Governor) Bill

Presentation and First Reading (Standing Order No. 57)

John McDonnell, supported by Mr Andrew Tyrie, Mr George Mudie, Mr David Ruffley, Mr Andrew Love, Andrea Leadsom, Teresa Pearce, John Mann, Mark Field, Stewart Hosie, Mark Durkan and Mr Graham Brady, presented a Bill to provide that the appointment and dismissal of the Governor of the Bank of England be subject to the consent of a Committee of the House of Commons; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 6 July, and to be printed (Bill 8).

Scrap Metal Dealers Bill

Presentation and First Reading (Standing Order No. 57)

Richard Ottaway, supported by Chris Kelly, Sir Tony Baldry, Graham Jones, Graham Allen, Simon Hughes and Caroline Lucas, presented a Bill to amend the law relating to scrap metal dealers; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 13 July, and to be printed (Bill 9).

Social Care (Local Sufficiency) and Identification of Carers Bill

Presentation and First Reading (Standing Order No. 57)

Barbara Keeley, supported by Heidi Alexander, Sir Tony Baldry, Annette Brooke, Alex Cunningham, Dr Hywel Francis, Mrs Sharon Hodgson, Diana Johnson, Stephen Lloyd, Caroline Lucas, Sarah Newton and Laura Sandys, presented a Bill to make provision about the duties of local authorities in relation to the sufficiency of provision of social care and related support; to make provision about the duties of health bodies in England in relation to the identification and support of carers; to make provision in relation to the responsibilities of local authorities, schools and higher and further education organisations for the needs of young carers and their families; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 7 September, and to be printed (Bill 10).

Mental Health (Discrimination) (No. 2) Bill

Presentation and First Reading (Standing Order No. 57)

Gavin Barwell, supported by Mr Charles Walker, Nicky Morgan, Oliver Colvile, Dr Julian Lewis, Sir Peter Bottomley, Alison Seabeck, Rushanara Ali, John Pugh, Hywel Williams and Gloria De Piero, presented a Bill to make further provision about discrimination against people on the grounds of their mental health; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 14 September, and to be printed (Bill 11).

Mobile Homes Bill

Presentation and First Reading (Standing Order No. 57)

Peter Aldous, supported by Stephen McPartland, Heather Wheeler, Natascha Engel, Sarah Newton, Annette Brooke, Andrew Miller, Steve Brine, Ian Paisley, Dr Sarah Wollaston, Rebecca Harris and Mr Robert Buckland, presented a Bill to amend the law relating to mobile homes.

Bill read the First time; to be read a Second time on Friday 19 October, and to be printed (Bill 12).

Family Justice (Transparency, Accountability and Cost of Living) Bill

Presentation and First Reading (Standing Order No. 57)

John Hemming presented a Bill to make provision regarding arrangements for children involved in court cases; to make provision about the transparency, administration and accountability of courts and case conferences; to require the promotion of measures to assist families and such other persons as may be specified to reduce the cost of living through lower fuel bills; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 26 October, and to be printed (Bill 13).

Antarctic Bill

Presentation and First Reading (Standing Order No. 57)

Neil Carmichael, supported by Martin Caton, Katy Clark, Zac Goldsmith, Dr Julian Huppert, Mr Bernard Jenkin, Charlotte Leslie, Caroline Nokes, Paul Uppal, Joan Walley, Dr Alan Whitehead and Simon Wright, presented a Bill to make provision consequential on Annex VI to the Protocol on Environmental Protection to the Antarctic Treaty; to amend the Antarctic Act 1994; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 2 November, and to be printed (Bill 14).

Prisons (Interference with Wireless Telegraphy) Bill

Presentation and First Reading (Standing Order No. 57)

Sir Paul Beresford presented a Bill to make provision about interference with wireless telegraphy in prisons and similar institutions.

Bill read the First time; to be read a Second time on Friday 6 July, and to be printed (Bill 15).

Prevention of Social Housing Fraud Bill

Presentation and First Reading (Standing Order No. 57)

Richard Harrington, supported by John Healey, John Mann, Stephen Pound, Mr William Cash, Mr Richard Shepherd, Mr James Clappison, Mr Edward Timpson, Karen Bradley, Andrew Griffiths, Caroline Nokes and Steve Brine, presented a Bill to create offences and make other provision relating to sub-letting and parting with possession of social housing; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 13 July, and to be printed (Bill 16).

Winter Fuel Allowance Payments (Off Gas Grid Claimants) Bill

Presentation and First Reading (Standing Order No. 57)

Mr Mike Weir, supported by Hywel Williams, Mr Nigel Dodds, Sarah Newton, Albert Owen, Mr Alan Reid, Ms Margaret Ritchie, Sir Robert Smith, Mr Angus Brendan MacNeil, Katy Clark and Dr Thérèse Coffey, presented a Bill to provide for the early payment of winter fuel allowance to eligible persons whose residences are not connected to the mains gas grid and whose principal source of fuel is home fuel oil, liquid petroleum gas or propane gas; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 7 September, and to be printed (Bill 17).

Prisons (Property) Bill

Presentation and First Reading (Standing Order No. 57)

Stuart Andrew, supported by Sheryll Murray, Jason McCartney, Martin Vickers, Kris Hopkins, Iain Stewart, Andrew Percy, Jessica Lee, Conor Burns, Amber Rudd and Karen Lumley, presented a Bill to make provision for the destruction of certain property found in prisons and similar institutions.

Bill read the First time; to be read a Second time on Friday 14 September, and to be printed (Bill 18).

Marine Navigation (No. 2) Bill

Presentation and First Reading (Standing Order No. 57)

Sheryll Murray, supported by Jackie Doyle-Price, James Wharton, Oliver Colvile, Ian Paisley, Charlie Elphicke, Martin Vickers, Stuart Andrew, Mrs Mary Glindon, Caroline Nokes, Dr Matthew Offord and Bob Stewart, presented a Bill to make provision in relation to marine navigation and harbours.

Bill read the First time; to be read a Second time on Friday 19 October, and to be printed (Bill 19).

Off-Road Vehicles (registration) Bill

Presentation and First Reading (Standing Order No. 57)

Lindsay Roy, supported by Mr David Anderson, Fiona Bruce, Mr Mike Hancock, Barbara Keeley, David Mowat, Fiona O'Donnell, Jim McGovern, Iain McKenzie, Sir Bob Russell, Graham Stringer and Valerie Vaz, presented a Bill to make provision for the establishment of a compulsory registration scheme for off-road mechanically propelled vehicles; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 26 October, and to be printed (Bill 20).

Presumption of Death Bill

Presentation and First Reading (Standing Order No. 57)

John Glen, supported by Ann Coffey, Sir Peter Bottomley, Zac Goldsmith, Sir Bob Russell, Mrs Madeleine Moon, Jeremy Lefroy, Fiona Bruce, Mr Jeffrey M. Donaldson, Dai Havard, Sir Alan Beith and Nicky Morgan, presented a Bill to make provision in relation to the presumed death of missing persons: and for connected purposes.

Bill read the First time; to be read a Second time on Friday 2 November, and to be printed (Bill 21).

Price Marking (Consumer Information) Bill

Presentation and First Reading (Standing Order No. 57)

Jo Swinson, supported by Mrs Linda Riordan, Mrs Anne McGuire, Laura Sandys, Justin Tomlinson, Jonathan Edwards, Caroline Lucas, Lorely Burt, Amber Rudd and Stephen Gilbert, presented a Bill to amend the Price Marking Order 2004 to simplify, consolidate and improve price marking legislation; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 2 November, and to be printed (Bill 22).

International Development (Official Development Assistance Target) Bill

Presentation and First Reading (Standing Order No. 57)

Mark Hendrick, supported by Alison McGovern and Mr Michael McCann, presented a Bill to make provision about the meeting by the United Kingdom of the target for official development assistance (ODA) to constitute 0.7 per cent of gross national income; to make provision for independent verification that ODA is spent efficiently and effectively; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 13 July, and to be printed (Bill 23).

Disabled Persons’ Parking Badges Bill

Presentation and First Reading (Standing Order No. 57)

Simon Kirby, supported by Chris Heaton-Harris, Paul Maynard, Paul Goggins, Karen Bradley, Mr Robert Buckland, Damian Hinds, Robert Halfon, Ian Swales, Mr David Blunkett, Stephen Lloyd and Richard Harrington, presented a Bill to amend section 21 of the Chronically Sick and Disabled Persons Act 1970; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 6 July, and to be printed (Bill 24).

General Anti Tax-Avoidance Principle Bill

Presentation and First Reading (Standing Order No. 57)

Mr Michael Meacher, supported by Sir Alan Beith, Sir Peter Bottomley, Tom Brake, Frank Dobson, Andrew George, Helen Goodman, Kelvin Hopkins, Martin Horwood, John Mann and Austin Mitchell, presented a Bill to introduce a principle that any financial arrangements made by a company or individual should not have as their primary purpose the avoidance of tax; to establish a statutory rule to apply in the assessment of such arrangements; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 14 September, and to be printed (Bill 25).

Transparency in UK Company Supply Chains (Eradication of Slavery) Bill

Presentation and First Reading (Standing Order No. 57)

Michael Connarty, supported by Tom Brake, Katy Clark, Mr Tom Clarke, Ann Coffey, Stella Creasy, Jim Dobbin, Mark Durkan, Dr Julian Lewis, Fiona Mactaggart, Jim Shannon and Jim Sheridan, presented a Bill to require large companies in the UK to make annual statements of measures taken by them to eradicate slavery, human trafficking, forced labour and the worst forms of child labour (as set out in Article 3 of the International Labour Organisation’s Convention No. 182) from their supply chains; to require such companies to provide customers and investors with information about measures taken by them to eliminate slavery, human trafficking, forced labour and the worst forms of child labour; to provide victims of slavery with necessary protections and rights; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 19 October, and to be printed (Bill 26).

European Communities Act 1972 (Repeal) Bill

Presentation and First Reading (Standing Order No. 57)

Mr Douglas Carswell, supported by Mr Philip Hollobone, Steve Baker, Mr Jeffrey M. Donaldson, Philip Davies and Mark Reckless, presented a Bill to repeal the European Communities Act 1972 and related legislation; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 26 October, and to be printed (Bill 27).

Opposition Day

Wednesday 20th June 2012 Commons Chamber

[2nd Allotted Day]

Disability Benefits and Social Care

Wednesday 20th June 2012 Commons Chamber

13:27

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I beg to move,

That this House believes that cuts to support for disabled people and carers pose a potential risk to their dignity and independence and will have wider social and economic costs; regrets that the Department for Work and Pensions has dropped the aim of achieving disability equality; whilst recognising that the disability living allowance (DLA) needs to be reformed, expresses concern that taking the DLA from 500,000 disabled people and contributory employment and support allowance from 280,000 former workers will take vital financial support from families under pressure; expresses further concern at the Work Programme’s failure to help disabled people and the mismanaged closure of Remploy factories; notes the pressing need for continuing reform to the work capability assessment (WCA) to reduce the human cost of wrong decisions; agrees with the eight Carers’ Week charities on the importance of recognising the huge contribution made by the UK’s 6.4 million carers and the need to support carers to prevent caring responsibilities pushing them into ill-health, poverty and isolation; and calls on the Government to ensure reform promotes work, independence, quality of life and opportunities for disabled people and their families, to restore the commitment to disability equality in the Department for Work and Pensions’ business plan, to conduct a full impact assessment of the combined effects of benefit and social care cuts on disabled people and carers, to reform WCA descriptors as suggested by charities for mental health, fluctuating conditions and sensory impairment and to re-run the consultation on the future of Remploy factories.

Once upon a time, the Conservatives liked to tell us that we were all in this together. Those words ring rather hollow today. After a Budget that gave us the granny tax and cuts to tax credits while giving a tax cut to millionaires, I think we can assume that the Chancellor was simply taking us for a ride. Yesterday, Bob Holman—the man who introduced the Secretary of State to Easterhouse—said it all. He said that he now had so much confidence in the Secretary of State’s belief that we were all in it together that he thought the Secretary of State should resign. Today’s debate is about many of the people Mr Holman stood up for. They are the one in four of our fellow citizens who are not all in it together with the Chancellor and the Prime Minister. They are not part of the Chipping Norton set. They do not get to go to the kitchen suppers. They are Britain’s disabled citizens. They are parents of disabled children. They are former workers, now disabled, who have paid in and paid their stamp and now find a Government determined to renege on a deal that they believed in.

In today’s debate on what I hope will be a consensual motion, there will be interventions from those on the Treasury Bench asking which cuts the Opposition support, and that is a perfectly reasonable line of argument. Let me deal with it at the outset. We do not believe that the spending review set out by this Government was wise. We warned of the risks of cutting too far and too fast. We also warned of the risks of a double-dip recession, and now we have one. The cost is astronomical. That is why the Chancellor had to explain to the House, in his last Budget, that he had to borrow £150 billion more than the Office for Budget Responsibility said Labour would have borrowed, as set out in our last Budget. In the Department for Work and Pensions, the bill for jobseeker’s allowance and housing benefit is now running out of control as a consequence of the Secretary of State’s failure to get people back into work, and £9 billion more than was originally forecast is now projected to be spent. Someone has to pay that bill, and the Government—the Cabinet and those on the Front Bench today—have decided that it should be paid by Britain’s disabled people.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

I am glad that the right hon. Gentleman has mentioned the disabled. Will he explain why Labour supports segregated employment—apartheid for the disabled—in Remploy? Are the disabled community not full members of society too?

[Mr Byrne]

I welcome the hon. Gentleman’s intervention, and I will talk about Remploy at length later in my speech. I hope that he will intervene on me again at that stage.

[Mr John Baron (Basildon and Billericay) (Con)]

Welfare reform is long overdue. Will the shadow Minister explain why, when his party was in government, it did not get to grips with this matter? On disability living allowance payments, for example, there was a complete lack of transparency regarding where the money was heading. The previous Labour Government had plenty of opportunity to reform welfare, but they failed to do so. Will he explain why?

[Mr Byrne]

The Labour Government introduced some of the biggest reforms of the welfare system that we have ever seen in this country. That is why Lord Freud, in his review of the changes that we had made, said that the progress that had been made was “remarkable”. The hon. Gentleman would do well to study his remarks.

I want to return to the point about who is to pay the bill for this Government’s failure. Every Chancellor, every Cabinet and every Government have to make a decision on how the load is to be carried. The point at the heart of this debate is that this Government have decided that much of the load must be carried by Britain’s disabled people. New research from the House of Commons Library, which I am publishing today, shows that over the course of this Parliament, disabled people in our country will pay more than Britain’s bankers. Indeed, in the final year of the Parliament, disabled people will be paying 40% more than the banks. That tells us everything we need to know about this Government’s values.

The House should be grateful to Carers UK, and to the eight carers week charities, for the service they have done us by setting out the combined impact of these decisions. Their conclusion is blunt:

“It is a scandal that the UK’s carers are being let down in this way.”

The situation that confronts us is not going to get better; it is going to get worse. Scope reminds us that universal credit—if it is ever introduced—will hit disabled people 30% harder than non-disabled households, and that the halving of support for disabled children will cut £1,300 from their families. The Government’s arbitrary 20% cut to disability living allowance risks plunging 500,000 families into a financial black hole.

[Alok Sharma (Reading West) (Con)]

The right hon. Gentleman is talking about the cuts; perhaps he will tell us how he would reform the budget. I believe that the Government’s reforms are very sensible. Will he also tell us how many Remploy factories were shut down while Labour was in power?

[Mr Byrne]

I invite the hon. Gentleman to intervene on me again when I talk about Remploy in more detail—[Interruption.] No, Remploy forms an important part of our motion, and it is right that we should have an informed debate on the matter. I assure the hon. Gentleman that I will let him have his say at that stage.

We believe that disability living allowance needs reform, and that an independent assessment is needed. We also believe, however, that the assessment should be designed first, and that the savings should be calculated afterwards. This Government have set an arbitrary, top-down financial cut, and they are now scrambling around trying to figure out what kind of assessment will deliver that cut. So little thought has gone into this that disabled people now face being tested for employment and support allowance, DLA and social care, as well as for a raft of other benefits. The testing alone will cost the taxpayer £710 million.

Surely we should be thinking harder about this. Surely we should be trying to determine what is the right assessment for DLA and ESA—which are different benefits—and asking how we can bring them together in a way that would be more convenient for disabled people and that would help them to secure the support that they need to live an independent life. Such a reform would save money. Indeed, when I was at the Treasury, my civil servants costed it and determined that it would save £350 million by 2015.

To this bleak picture we must, I am afraid, add more. Cuts to social care and to housing benefit will make the situation worse, £1 billion has now been cut from local council budgets for social care since this Government took office, and Ministers are still dragging their feet over long-term reform. Meanwhile, 1 million unpaid carers have given up work or reduced their hours, and four in 10 have fallen into debt, thanks to a system that does not work and is set to get worse.

[George Hollingbery (Meon Valley) (Con)]

I seem to recall that the Government announced some time ago that £3 billion would be transferred from national health service budgets to the social services sector each year. Is that correct, or is my recollection wrong?

[Mr Byrne]

The cut is from the Department for Communities and Local Government’s own figures. If the hon. Gentleman looks at the study published by the Association of Directors of Adult Social Services, he will see the reality of what is hitting social care services up and down the country and the vulnerable people they support.

The great tragedy of this story is that there might be some kind of explanation if this were all part of a grand master-plan to get disabled people back to work.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I am a little intrigued. The right hon. Gentleman stood at the Dispatch Box at the beginning of his speech and said that we were not cutting housing benefit enough. Labour let it run out of control; it nearly doubled in 10 years. The outturn, however, is that we will be spending £3 billion less than Labour would have done under their proposals. Now, however, he is saying that we are cutting housing benefit too much. He needs to make his mind up. He cannot have it both ways. Are we cutting it too much or too little?

[Mr Byrne]

This deserves better than a debating point from the Secretary of State. The fact that this Government have strangled the recovery—[Interruption.] Would the Secretary of State like to come to the Dispatch Box and repeat that?

[Mr Duncan Smith]

The shadow Secretary of State should make his mind up about what he is really saying. Half his Front-Bench team have been going around saying that we are socially cleansing London because we are being too fierce on housing benefit tenants, and he goes around telling us that we are not cutting enough. It is pathetic.

[Mr Byrne]

I am grateful that the Secretary of State decided to temper his language, in contrast to the crass words that he used from a sedentary position.

The truth is that the housing benefit bill is spiralling out of control because this Government have strangled the recovery and put unemployment up to its highest level since 1996. There are now more than 1 million young people out of work, and long-term unemployment is up 10%. A third of the people on the dole have now been out of work for more than a year, because of the catastrophic failure of the Secretary of State’s back-to-work programme. That is why the dole bill and the housing benefit bill are going up. He should be ashamed of the record that he has presided over.

[Stephen Hammond (Wimbledon) (Con)]

And all that from the gentleman who left us the note to say that there was no money left! Would he like to correct a statement he made earlier? This Government have already recognised that some of the eligibility criteria and some of the testing will need to be changed. They have stated that they are open to those changes, so will he correct his statement on the record?

[Mr Byrne]

I will believe it when I see it. As for the fiscal position, the hon. Gentleman will know that the Chancellor had to confess to the House that he was borrowing £150 billion more than would have been needed under Labour’s plans.

The truth is that there is no plan to get disabled people back to work. The reform of ESA is being so botched that 40% of people are winning their appeals, and those appeals are costing us £50 million a year. Charity after charity is saying that the descriptors used in the work capability assessment are failing. This is the point about reform: if we introduce changes, we have to adapt. We have to be flexible, and move as we learn. This Government are not doing anything. The charity Mind has so little confidence in the Government’s ability to get the reforms right that it has resigned from the advisory group. The Royal National Institute for the Blind has told me that someone who is totally blind can be found fit for work and put straight on to jobseeker’s allowance. That is why our motion, which I hope the hon. Member for Wimbledon (Stephen Hammond) will support, calls for the right reform of the work capability assessment.

Comments reported in The Guardian say that the Secretary of State has been warned by his civil servants running job centres that people are being pushed to suicide by the botched reforms of employment and support allowance—a system that costs us £50 million a year and in which 40% of people are winning their appeals. How can that reform be right?

[Harriett Baldwin (West Worcestershire) (Con)]

rose—

[Mr Byrne]

Perhaps the hon. Lady can tell us.

[Harriett Baldwin]

Would the shadow Secretary of State like to remind us who was the Chief Secretary to the Treasury when the work capability assessment was introduced and who it was that refused to listen to the arguments of the disability lobby to improve that test? This Government brought in the Harrington review, and they are implementing it.

[Mr Byrne]

Actually, Mr Harrington was appointed by the previous Government. The reform of ESA is right, but the point about reform is that we need to adapt and show flexibility. What the House needs to know this afternoon is that charities such as Mind have so little confidence in the Government’s ability to get it right that they are resigning from the process. I put it to the hon. Member for West Worcestershire (Harriett Baldwin) that that is not a vote of confidence.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Does my right hon. Friend share my view that the interventions of Conservative Members so far, in seeking to make cheap political points, do not represent at all the view of organisations for disabled people? Sense, for example, which speaks for deafblind people, said:

“We still remain very concerned by the overall aim of reducing the future DLA spend by over £1 billion.”

Are those not the worries that the House should be addressing?

[Mr Byrne]

Those are precisely the kinds of worries that the House should reflect on because this is a very difficult and sensitive area of policy. The Government are not attempting to prosecute reform with any kind of consensus at all. That is why charities are resigning and resiling from their administration.

To the picture of ESA reform, I am afraid we have to add the Work programme. Once billed as the greatest back-to-work programme designed by human hand it is now missing its target for disabled people by 60%. Charity after charity says that the number of people referred to them for specialist help to get back to work is minuscule and tiny. St Mungo’s and now the Single Homeless Project have even gone to the lengths of resigning from the programme altogether.

This Government’s contempt is not reserved for disabled people without a job. There is plenty of it to go around for people with a job, including those Remploy workers in factories to whom the Secretary of State said, “You don’t produce very much at all. They are not doing any work at all. They are just making cups of coffee.” I hope that, in the course of this debate, the Secretary of State will take the opportunity to resign—I mean apologise. [Interruption.] I may not give way to calls on that point, but I congratulate the Sunday Express on its campaign, highlighting the disgraceful treatment of Remploy workers. We all know that Remploy has to change—that is the point I would make to Conservative Members—but this Government have decided to press ahead, closing these factories at breakneck speed. These factories are in constituencies where twice as many people as the national average are chasing every single job. How can it be right to say to these factories that they have until Monday to complete a business plan that, if it is not successful, will see the closure of factories in communities that need jobs and cannot afford to lose them?

[Paul Maynard]

Let me give the right hon. Gentleman another chance to answer the question put to him earlier. How many of these factories were closed under the last Labour Government? I know what the figure is; I wonder whether he knows what it is.

[Mr Byrne]

I will not deny the fact that a number of factories were closed under Labour, but that was part of a reform programme that saw £500 million added in support for the future of Remploy. The point for the House this afternoon is this: the time given to help Remploy factories figure out a future is too short.

[Helen Goodman (Bishop Auckland) (Lab)]

Does my right hon. Friend agree with my constituent Christine Tyleman who wrote on behalf of the workers at the Spennymoor Remploy factory:

“I would be lost if I was not working. You cannot live on fresh air”?

In my constituency, the ratio is 9:1 of jobseekers to vacancies. Does my right hon. Friend agree that my constituent is completely realistic in her assessment of her situation?

[Mr Byrne]

My hon. Friend makes a very powerful point. For many Remploy workers, their place of work is more than simply a job; it is a community and it is vital to their life and well-being. In a community like my hon. Friend’s, where nine people are chasing every job, these people deserve real answers about a sustainable future.

[Mark Tami (Alyn and Deeside) (Lab)]

My right hon. Friend is absolutely right that Remploy gives disabled people the dignity of work. It has been shown that, without that, both their mental and physical health suffers, with all the problems that result from it.

[Mr Byrne]

Of course. My hon. Friend is absolutely right. We have seen reports today, debated in the media and in the House, about the pressure that the national health service is now coming under. When we drag and cut away support such as work and other vital benefits, people will, frankly, be thrown on the mercies of the health service—a health service that we know is terribly overstretched.

[Sheila Gilmore (Edinburgh East) (Lab)]

Does my right hon. Friend agree that after closures like this, people often end up on benefits? In my constituency, a Blindcraft factory, not Remploy, was closed by the then Lib Dem council. The majority of the people who worked there have not been found jobs in the wider economy, which would have been desirable, and they are back to being unemployed and sitting around at home.

[Mr Byrne]

My hon. Friend makes my point for me. When the reform of ESA and back-to-work programmes such as the Work programme are failing so badly, shutting these factories down without providing real answers about their future will, I am afraid, have terrible consequences in communities all over the country.

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

My right hon. Friend says that Remploy must change, which it must, but in Swansea it has been changing. In fact, the order books are—partly owing to my own engagement with major possible local clients—virtually full with increasing orders from universities, the private sector, health authorities and so forth, even when the Remploy central sales and marketing function has dismally failed. In view of the fact that, given a helping hand, Remploy can succeed, does my right hon. Friend agree that it is outrageous for the Secretary of State to make out that these people do not work and sit around drinking coffee? Should the Secretary of State not at the very least apologise—and if not, resign?

[Mr Byrne]

I very much hope that the Secretary of State will apologise shortly. I absolutely agree with my hon. Friend. What we need all over the country is leadership, ensuring that work continues in these factories.

[Ann Clwyd (Cynon Valley) (Lab)]

Eleven people are chasing every single job in my constituency, and there is no point in the Secretary of State going to Merthyr to tell people to get on a bus to Cardiff because there are no jobs in Cardiff either. After the last round of redundancies in the Remploy factory in the Cynon Valley in 1988, only one man ever found a job again. With unemployment now running at 9% in my constituency, I ask the Secretary of State again: where are the jobs? Tell us: where are the jobs for disabled people?

[Paul Maynard]

rose—

[Mr Byrne]

My right hon. Friend speaks powerfully. This underlines the importance of a series of tests that the Government must pass on Remploy. I shall come to that, but I give way for the last time to the hon. Gentleman.

[Paul Maynard]

I am listening carefully and I promise not to intervene again. Will the right hon. Gentleman clarify something for me? Is he arguing that disabled people should not be expected to be able to work in the wider workplace? The implications of that are a lowering of the expectations of the disabled community and suggest that all we all are fit for is to have a label placed around our necks and then be put out of sight and out of mind? Is that really what he is suggesting?

[Mr Byrne]

No, that is not my argument at all. My argument is very simple: disabled people have the same right to a job as everyone else, but at present the choice of where to work is being taken from many of them.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

When I visited the Edinburgh Remploy factory, the workers were not having coffee, but working hard and bringing in new business. Unfortunately, however, that is one of the factories that is due to be closed. In Edinburgh, where five unemployed people are chasing each vacancy, every single job is important. Would it not be better to take the best possible advantage of successful Remploy factories by building on what they have done so far, rather than throwing them on to the scrapheap as the Government are suggesting?

[Mr Byrne]

Exactly. Workers in Remploy factories are doing a good, proper job of work, and the least that they deserve is a Government who are serious about giving them a future in work.

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

Trentham Lakes Remploy factory in my constituency, which serves the very deprived area of north Staffordshire, is doing fantastic work for companies such as JCB, and is also working for the DWP in fulfilling contracts. Some of its workers have tried working in the outside environment during better times, but they have returned because they need not a separated environment, but a supported environment. Will my right hon. Friend pay tribute to the hard work that is done by people in places such as Trentham Lakes?

[Mr Byrne]

Let me echo my hon. Friend’s comment immediately. I do pay tribute to the work of people in Remploy factories, and I hope that the whole House will support that sentiment this afternoon.

[Anas Sarwar (Glasgow Central) (Lab)]

I met an inspirational young man in my constituency, Martin Dougan, who is now working as a sports presenter for Channel 4 News and ESPN. He told me that he had only found the confidence to take the job because of the support given to him by an assisted workplace employer. Does that not demonstrate the huge benefits that disabled people can enjoy if they are given the right support?

[Mr Byrne]

That is absolutely true. Disabled people need to be given the choice of work, and they need to be given a real future in Remploy factories when that is their choice.

[Stephen Hammond]

I thank the right hon. Gentleman for giving way again. He is being very generous with his time. I assume that he will accept, in the interests of accuracy, that the level of the overall specialist disability employment budget is to remain at £320 million, and that in the last two years the Government have increased the Access to Work budget. I think that Members in all parts of the House accept Access to Work.

[Mr Byrne]

What concerns me is where the savings from Remploy will go, and the fact that Access to Work is currently underperforming. That is the point that has been made to me by charity after charity.

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

The right hon. Gentleman will of course know that the £320 million specialist employment support budget is protected, and that any money coming from Remploy will be reinvested in it.

[Mr Byrne]

That is an important commitment, but I am afraid that it will be cold comfort to the workers in Remploy factories where business plans must be submitted by Monday if their future is to be ensured.

[Mr Frank Roy (Motherwell and Wishaw) (Lab)]

My right hon. Friend will know that the Wishaw Remploy factory is earmarked for closure. We have learned that article 19 public service contracts will be available to many Remploy factories, but it has now emerged that Remploy has not even contacted the local authorities to ask them about article 19. Is that not shameful?

[Mr Byrne]

It is shameful, but I am afraid that it is par for the course. After all, that announcement was smuggled out on a very busy day in the House. I believe that the Minister was forced to come to the House at the end of the business to make a statement that she should have been upfront about making.

[Several hon. Members]

rose—

[Mr Byrne]

I will give way once more, and then set out a number of principles of which I think the Government should approve.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

I am touched by the right hon. Gentleman’s concern for Remploy employees. I think that it is a good concern. Will he confirm, however, that the Labour Government presided over the closure of 28 Remploy factories?

[Mr Byrne]

That was part of a reform programme that included £500 million for modernisation. This is the point. Perhaps the hon. Gentleman is missing it. The argument that we are prosecuting this afternoon is not about whether Remploy needs to change. Remploy does need to change, but is now the right time for it do so, given that long-term unemployment is approaching 1 million? Where are the real plans to ensure that these factories have a future?

[Ian Lucas (Wrexham) (Lab)]

We are engaged in a consultation that has been taking place over a particularly difficult period. During the council elections, it was very difficult for councils to become engaged in the process, and in the course of the consultation the Department changed the terms that were available to staff and prospective purchasers. Will the Secretary of State recognise that businesses need a reasonable length of time in which to consider the facts, and will the Minister confirm that she has considered whether the decision may be legally challengeable?

[Mr Byrne]

Let me deal with my hon. Friend’s intervention by listing a series of practical measures and steps that I think that the Government could and should now take.

First, why do the Government not honour every letter of the Sayce report? Why do they not honour the recommendations of Liz Sayce that factories should have six months in which to develop a business plan and two years before a subsidy is withdrawn, that the viability of Remploy factories should be decided by an independent panel of business and enterprise experts—with trade union involvement—rather than by unilateral action from the DWP, and that expert entrepreneurial and business support should be provided to develop the businesses into independent enterprises? Each of those recommendations needs to be implemented.

Secondly—here I come to the point made by my hon. Friend the Member for Wrexham (Ian Lucas)—the full 90-day timetable for consultation should be re-started, given that the terms were radically changed halfway through the process.

Thirdly—this is relevant to the points that have been made about procurement—may I ask what steps the Secretary of State has taken to draw together local authorities, as well as central Government Departments, to ensure that any extra work that can be put in a Remploy factory is put in a Remploy factory? Surely we should be exhausting all those opportunities before we move on.

Fourthly, we should take a more flexible approach to each and every factory. The fact is that some factories will need more support in order to continue, while others will need less. And fifthly, we should review the subsidy per worker offered to Remploy workers, given that it may be different from the subsidy that is available under Work Choice.

If the Secretary of State is in any doubt about what these factories do, I will go and do a day’s work in a Remploy factory, and I hope that he will join me. I think that we should invite the Sunday Express as well, for good measure.

[George Hollingbery]

I am grateful to the right hon. Gentleman for being so generous with his time.

The subsidies involved in the two separate programmes, the Access to Work programme and the social model and Remploy, are not just different but wildly different. The average subsidy per person in Remploy is £25,000 a year, whereas the average subsidy in the support programme is £2,900 a year. Does the right hon. Gentleman agree that it would be much better for the money from Remploy to be redeployed in the Access to Work programme?

[Mr Byrne]

Where are the jobs that those people are going to go into? When factories are closing in constituencies where the average number of people chasing each job is twice the national average and the Work programme is failing disabled people, we have a problem that needs to be solved. We need practical steps to manage Remploy’s future.

Labour Members feel passionate about this subject. We are proud of the progress that we made for disabled people when we were in government. We appointed the first ever Minister for Disabled People, and we introduced the Disability Discrimination Act 2005, the Equality and Human Rights Commission, Supporting People, the new deal for disabled people, new strategies for disabled children, Valuing People, and the Equality Act. Poverty in disabled households fell by a fifth in the last three years of our Government.

We succeeded because we believed in co-producing policy with disabled people. It is a disgrace that Kaliya Franklin, Sue Marsh and the authors of the Spartacus report had to use freedom of information requests to draw out of the Government that the DWP’s response to the DLA consultation was so misleading. It is also a disgrace that the Government have dropped from their business plan the goal of securing equality for disabled people. They should now set about changing course. They should begin by introducing a combined, cross-governmental assessment of the impact of their reforms. I congratulate Scope on producing a “starter for 10” this week.

Labour Members believe that rights should be made a reality for disabled people. We will campaign for that justice throughout this Parliament and beyond, and I hope that the House will express its support by backing our motion this afternoon.

13:59

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

As the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) seems to be rather hazily acquainted with some of the facts and the reality of his time as Chief Secretary to the Treasury, perhaps I may take some time to recount to him some of the facts, in particular that spending on disability living allowance increased by 40% between 1998 and 2010 and that the welfare bill rocketed by the same amount. Indeed, in a decade of unprecedented growth and rising employment, improvements in the life chances of disabled people were, sadly, few and far between.

Members do not have to take my word for that. The hon. Member for Dagenham and Rainham (Jon Cruddas) has said:

“We need to address some home truths about the Labour government’s welfare changes…they have seriously eroded the protection of disabled people...The methodologies that underpinned much of our argument are questionable.”

Those are telling words. Labour’s something-for-nothing culture was more than just their Government borrowing money they did not have. They failed to tackle welfare reform. That has corroded people’s trust in the system, and it is disabled people who are left to deal with the fall-out.

[Sheila Gilmore]

The Minister will be aware that research shows that at least half of the 30%—or 40% now—increase in DLA payments was due to demographic changes. The Minister should not give an exaggerated picture of what has been going on.

[Maria Miller]

The hon. Lady will know that that 40% figure is an absolute truth. She will also know that the majority of the increase has nothing to do with demographics. She should look at the figures more carefully. Unfortunately, now that Labour is in opposition, it is more willing to engage in the petty politics we have just heard—points scoring—than in a meaningful debate about how to transform disabled people’s lives.

We must not forget that for disabled people independent living is about far more than disability benefits or social care alone: it is about individuals having choice, control and freedom in their daily lives; it is about attitudes, and making sure disabled people receive equal treatment; and it is about us in society, and the make-up of the communities in which we live. I hope that in the winding-up speeches Labour will answer more fully why it still believes in the segregated employment that my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) mentioned earlier.

[Mr Lee Scott (Ilford North) (Con)]

As we are discussing some of the most needy and underprivileged people in our society, does my hon. Friend agree that we should look at projects such as one that is running in my constituency, through which we, together with employers, the National Autistic Society and local parent groups, are going to get young people into work in front-line jobs—not hidden away? I thank my hon. Friend for the Government’s support for that project.

[Maria Miller]

I commend my hon. Friend for his work in this area. I hope to visit his constituency to see the work he has been doing, ensuring that the disabled people he represents have the job opportunities I know they want.

Shamefully, much of what we have heard today has been scaremongering. Nothing illustrates that better than the claim by the right hon. Member for Birmingham, Hodge Hill, as stated in the motion,

“that the Department for Work and Pensions has dropped the aim of achieving disability equality”.

That is an outrageous and unfounded claim, intended to frighten some of the most vulnerable people in society.

This Government enacted the Equality Act 2010, which applies to disabled people. Our approach is set out in our equality strategy, which states that

“equality will be a fundamental part of the Government’s programmes across the UK”,

and the DWP business plan explicitly states that we will

“enable disabled people to fulfil their potential”.

That is a clear and practical expression of how we have made equality a reality, rather than merely the warm words offered by the right hon. Gentleman.

[Mr Tom Clarke]

I mean no disrespect to the hon. Lady in pointing out that I expected the Secretary of State to speak for the Government. If he had, I was going to put the following point to him. Was he reported correctly when he was quoted as saying:

“In other words, do you need care, do you need support to get around. Those are the two things that are measured. Not, you have lost a limb…”?

Does the hon. Lady not accept that such language and insensitivity is doing untold damage to any attempt at reform?

[Maria Miller]

The right hon. Gentleman does a huge amount of work in this area, and I would not want to fall out with him. I know that we both believe that disabled people should be looked at as individuals, and that he does a lot of work to make that a reality. I do not want to categorise people simply because of a condition they have. People deal with their conditions in different ways. That is what the personal independence payment is all about. I hope we can continue to work on this matter with the right hon. Gentleman, and with many outside organisations, because we need to put right the previous Government’s failure to introduce any reforms.

Let me dispel some of the other myths we have heard, starting with those about Remploy. The right hon. Member for Birmingham, Hodge Hill knows full well that the programme Labour put in place was unsustainable, with more than £250 million in factory losses since its modernisation programme began. Labour set the unachievable target of a 130% increase in Remploy’s public sector sales in 2008, when the right hon. Gentleman, as Chief Secretary to the Treasury at around that time, must have known public sector spending was set to fall. Under Labour, very few additional contracts were won, and what is particularly shameful is that all this did nothing more than give people false hope. The modernisation plan was designed to turn factories around through a £550 million investment, yet it now still costs more than £20,000 to employ an individual in a Remploy factory and losses last year alone amounted to £65 million.

[Mr Byrne]

How many meetings has the Minister had with central Government Departments and local authorities to try to find new contracts for Remploy factories?

[Maria Miller]

The right hon. Gentleman knows that my predecessors and I have put a great deal of effort into looking for ways to get work into Remploy factories. He also knows that the DWP has awarded business to Remploy factories.

[Mr Frank Roy]

Why is it that since the closure of the Wishaw Remploy factory was announced, no one from Remploy has approached either North or South Lanarkshire councils about article 19 contracts under the relevant European Union directive?

[Maria Miller]

Obviously, we will want to look into all such issues. The hon. Gentleman and I have already had a number of conversations about his factory, and I applaud the work he does in supporting disabled people in his community, but I should also draw his attention to the facts I gave him before: there are many thousands of other disabled people in his community whom I want to make sure are getting support, and our reform of Remploy will help to achieve precisely that.

[Stephen Hammond]

For the sake of accuracy, can the Minister confirm that there is a period of transitional benefits for anyone leaving a Remploy factory? Can she also confirm that last year Remploy employment services found work for 15,000 disabled people whose disabilities are similar to those of employees at Remploy factories?

[Maria Miller]

My hon. Friend makes some important points, and we will ensure that support is in place for people affected by the announcements we are making. But what we are about is supporting thousands more disabled people into mainstream employment, and we have clear support for our approach from disabled people and from disabled people’s organisations.

Given that they had to be reminded, the Opposition seem to have forgotten that they closed 29 of these factories. The difference is that when they did that, little attempt was made to find any alternative buyers. Worse, the then Chief Secretary to the Treasury did nothing to put in place a comprehensive support package for those made redundant. Perhaps that is why so many Labour Members know that in their own constituencies many of the people affected by the previous redundancies did not get back into work, and perhaps Labour Members should hold their previous Chief Secretary to account for that. We should contrast that with the £8 million package of support that this Government are putting in place. That shows the importance that we attach to the measure.

[Geraint Davies]

Would the Minister not agree that the previous Government set aside £500 million specifically to support the modernisation of Remploy factories, not to do something else on access to work? She is saying, “We will raid all that money that was for those factories where modernisation was a success and we will put it somewhere else because we judge it to be more successful.” It is all very well saying that we should have support for access to work, which I agree with, but that money was meant for a purpose. It is being robbed out of the hands of Remploy workers, and they will not get another job in the current conditions.

[Maria Miller]

The hon. Gentleman just has to face the fact that at the end of the modernisation plan, which we are approaching, decisions will have to be made. Given the fiscal problems we faced when we came into government—the devastating state the country’s finances were in—we could well have made some very different decisions, but we chose not to do so. We chose to stick with Labour’s plan to modernise Remploy, and it has turned out that we had £65 million of losses last year and it still costs more than £20,000 to employ somebody in a Remploy factory. We simply cannot allow that to go on. What we want to do is ensure that that money is working harder. Indeed, the right hon. Member for Birmingham, Hodge Hill would have had to take the same decision.

[Mr Byrne]

The Minister has told the House:

“We want to make sure that Remploy factories are successful in the future.”—[Official Report, 18 July 2011; Vol. 531, c. 599.]

What exactly did she mean then?

[Maria Miller]

The right hon. Gentleman knows exactly what I meant: our very clear commitment is to work at ensuring that those factories can be set free from Government control. That is absolutely what we are doing. We are spending a great deal of time—we started in March—on the process for expressions of interest. We have received more than 60 such expressions in respect of factories throughout the country—I believe we have now received about 65—many of which have gone forward to business plans. We hope that many more will go forward successfully. That is my aim, and it is why we are taking time to do this and taking the time to talk to Labour Members about this issue.

Labour Members need to wake up to what is happening in their constituencies. The hon. Member for Bishop Auckland (Helen Goodman) intervened during the speech by the right hon. Member for Birmingham, Hodge Hill, and I should gently remind her that although there are, importantly, 41 disabled people working in the factory in her constituency, many, many more are not receiving that support. Yet, through employment services, we were able to support more than 500 individuals into mainstream employment, not into segregated factories. So I would rather take the £740,000 loss on the factory in her constituency last year and use the money to support the individuals in that factory into mainstream employment, so that we can actually have the sort of world that my hon. Friend the Member for Blackpool North and Cleveleys has been talking about.

[Helen Goodman]

rose—

[Maria Miller]

Could the hon. Lady—

[Helen Goodman]

The Minister was talking about my constituency so it would be reasonable if she were to give way. She talks about the other disabled people in my constituency. They comprise 5,320 people on employment and support allowance and incapacity benefit, and 650 people who are labelled “disabled”. Does she think those people are pleased with the cuts in benefits she is imposing?

[Maria Miller]

The hon. Lady will know that they will be pleased that they have a Government who have protected the specialist disability employment budget—£320 million—and we want to make sure that it is working better for more people. We estimate that we could support an extra 8,000 people into employment if we were to use the money in a more compelling way. None of this reform was the sort of reform that the right hon. Member for Birmingham, Hodge Hill was looking at.

Let us also consider the work capability assessment, as Labour Members raised it. They will know that we inherited the programme from the right hon. Gentleman, but it was a harder, harsher and tougher process than the one we have now put in place. Since taking office, this Government have brought in Professor Harrington to renew these arrangements. Furthermore, we have listened to and implemented all the recommendations made in his independent review. The changes softened the system—

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

rose—

[Maria Miller]

I hope that the hon. Lady will forgive me if I try to make a little more progress, as I know that we want to cover a number of issues in this debate.

These changes have softened the system and made it fairer for people, recognising that many people with a health condition want to work and can do so with the right support. We have asked Professor Harrington to continue to review this process for us and make recommendations, because for too long under the last Government people were written off on benefits.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

rose—

[Maria Miller]

If the hon. Gentleman could perhaps sit down and let me make some progress, we would be able to talk about the fullness of this debate. That would be a better way of doing it.

At the moment, some 900,000 people have been on incapacity benefit for a decade or more, many of whom will be disabled. This approach is not only unfair and unkind; it is also a waste of people’s potential.

[Tom Greatrex]

Is the Minister aware of the memo, published on The Guardian website this afternoon, from Paul Archer, the head of contact centres, headed “Supporting ESA customers”? It was sent to “all staff in operations” and it states:

“The consequences of getting this wrong can have profound results.

Very sadly, only last week a customer of DWP attempted suicide—said to be a result of receiving a letter informing him that due to the introduction of time-limiting contribution based Employment and Support Allowance for people not in the Support Group, his contribution-based Employment and Support Allowance was going to stop.”

Is it not time that the Minister and her departmental colleagues realised the seriousness of the implications of some of the decisions being taken by her Department and undertook a full inquiry into this incident and all other incidents where the real pressure being put on people is completely unfair?

[Maria Miller]

The hon. Gentleman is absolutely right to be concerned about such a difficult circumstance. I think he would only expect the Department to make sure that staff were handling such cases correctly. Of course every case like that is an absolute tragedy, and we want to make sure that the system works really well for the individuals concerned. I am sure that he will want to applaud the work that the Government are doing to try to make the system better. I repeat that the system we inherited was harsh and difficult, and we have softened that further.

[Kate Green]

rose—

[Maria Miller]

If the hon. Lady will forgive me, we need to make some progress in this debate or many hon. Members will not be able to contribute to it.

We are also reforming the disability living allowance, on which, again, the Opposition have failed to give any answers. Labour Members say they want reform, but the reality is that they have voted against reform every step of the way. As far back as 2005, the Labour Government found out that £600 million of DLA was being paid out in overpayments, yet they failed to do anything about it. In 2007, they found out that the independent living fund needed serious reform, but again they did nothing about it.

[Mrs Anne McGuire (Stirling) (Lab)]

The hon. Lady will know that—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I would ask the right hon. Lady to speak from the Dispatch Box.

[Mrs McGuire]

The hon. Lady knows full well that when the independent living fund was running into difficulty we established an investigation into it, we reformed the fund and we had Sheffield Hallam university carry out an independent review. She does not need advice from her Secretary of State on that one.

[Maria Miller]

The right hon. Lady is obviously a little sensitive on that point, perhaps because the fund was about to run out of money when we took over. We had absolutely no choice at all about the action we took and perhaps Labour Members should take a little more of the responsibility. They lost control of the situation for some of the most vulnerable groups in society and they must stand up and be accountable account for that.

[Mr Byrne]

By the end of the Parliament, nearly £3.5 billion will be cut from disability benefit yet only £2.5 billion net is being taken from Britain’s bankers. How can the Minister justify the disgraceful fact that the Government are taking more from disabled people than from bankers? Will she justify it now?

[Maria Miller]

The right hon. Gentleman should have taken that opportunity to apologise for writing the note saying that the country had no money left. Although he knows that the banks’ actions made a difficult problem worse, he, as someone who is well versed in economics, also knows that the real foundations of the problems of our country are the structural deficit that he left behind

[Mr Byrne]

So you cannot justify it?

[Maria Miller]

The right hon. Gentleman should perhaps keep quiet while listening to what the Government are doing.

The former Chief Secretary did not solve the problems. He and the then Labour Government ducked the important decisions when they were in power—[Interruption.] And now, as I think hon. Members can hear, he is ranting in opposition. Meanwhile, we are working hard to try to implement the new personal independence payment, which is on track for 2013, meaning that support for disabled people will be fairer. At the same time, we are doing much more to support disabled people into work, enabling them to have the same opportunities in life as anybody else: from the Work programme, in which where we are paying providers by results, to Work Choice, through which we are providing intensive back-to-work support for those facing the greatest barriers to employment, and the Access to Work scheme, through which we are investing more to help disabled people and employers with the extra costs of moving into work. None of that was done by the right hon. Member for Birmingham, Hodge Hill in his 13 years in government.

[Mr Baron]

My hon. Friend makes a strong case for reform. The all-party group on eye health and visual impairment had a very constructive meeting with the Minister about the need to ensure that those who have very serious impairment of sight do not lose access to the enhanced rate mobility element of the PIP at the same rate as wheelchair users. Will she continue to give consideration to the fact that we do not want to return to the pre-2009 anomaly?

[Maria Miller]

My hon. Friend makes a strong point and I thank him for inviting me to the all-party group to hear some of the concerns expressed to him and to other MPs. Many of my hon. Friends and many other hon. Members who are present in the debate will want to ensure that the new PIP works hard for people who are visually impaired or have a sight loss. They will also be very aware of the fact that the disability living allowance required primary legislation to be changed; it took some two years to change it, because of its inflexibility and inability to take account of the real challenges people with sight impairment have to endure in getting out and about. I can give my hon. Friend a firm assurance that my objective is to consider each individual and the challenges they face, not simply the condition they have. Many people with sight loss or sight impairment face significant mobility problems and my hon. Friend’s points are not lost on me.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

My hon. Friend, like me, will have constituents who have found themselves at the whip end of work capability assessments conducted by Atos. I hope that her PIP assessments will be a great improvement on that and that we have learned the lessons from Atos and the work capability assessment criteria set out by the previous Administration. Is she able to give me that commitment?

[Maria Miller]

We certainly need to ensure that lessons are learned from some of the problems we inherited on the work capability assessment. Many have already been learned and there is a clear read-across in the work we are doing. Although the PIP assessment is very different from the work capability assessment, there are many lessons to be learned.

[Kate Green]

The Minister is proposing to take a substantial proportion of the current DLA budget out of the new PIP budget—the figure we have heard is 20%—and to target the spending on people with a higher level of need. Does she not accept that reducing access to financial support for those with lower levels of need who are enabled as a result to remain in paid employment is a false economy and that prevention is probably better than cure in this case?

[Maria Miller]

I do not think that it can be a false economy to make a change that will see the end of £600 million going out in overpayments. The change is long overdue. We need a benefit that supports disabled people in a flexible, non-means tested way that is not related to their work status, with a firmer gateway to ensure that we get the money to the people who need it. That will mean that we are not left in the situation we are in now, where 70% of people have a benefit for life and there is no inbuilt way of reassessing that. We need to see an end to that inaccurate use of much-needed money.

[Jim Shannon (Strangford) (DUP)]

Will the Minister give way?

[Maria Miller]

If the hon. Gentleman will forgive me, I will make a little progress. I want to move on to an issue that I think he will find very important: the role of universal credit in our commitment to supporting disabled people. We know that universal credit is a vital part of how we will support disabled people in the future, delivering a welfare system that people finally understand.

Under the current system, some people face losing up to 96p in every pound they earn through tax and benefit withdrawals. There are seven different components associated with disability, paid at different rates with different qualifying conditions. It is little wonder that disabled people have been put off moving into work for fear of losing out under the benefit system. Under universal credit, support for the most severely disabled will remain unconditional, as it rightly should, but we will also see a more generous system of earnings disregards for disabled people and carers. When people are able to work, or choose to work in spite of their disability or health condition, work will pay. The Labour party had 13 years to make those changes, but again it dithered and failed to make the right decisions for disabled people. I hope that the hon. Member for Strangford (Jim Shannon) agrees that it would have been better if Labour had voted with us on welfare reform so that we had strong support for these important reforms.

[Jim Shannon]

May I cast the hon. Lady’s mind back to the issue of the appeals process, particularly for those on ESA? Can she assure us, and me as the Member for Strangford, that when people attend ESA appeals those on the tribunal will totally understand the issues of mental, intellectual and cognitive behaviour? I perceive that they do not and that because they do not a great many people are turned down. Is it not unusual that 40% of those who are turned down for ESA win their appeals? Perhaps that is proof of the need for change.

[Maria Miller]

The hon. Gentleman is absolutely right to bring up the challenges in ensuring that the right support is in place for people with fluctuating conditions, particularly those with mental health problems. That is why so much emphasis has been put on that in the reform of how the work capability assessment works and in other areas, too. In the reform of the DLA, we are focusing on that issue—

[Sheila Gilmore]

Will the Minister give way?

[Maria Miller]

If the hon. Lady lets me finish my reply to the last intervention, that would be helpful. We must ensure that across the board we recognise that for many people who are not in employment, mental health problems are the primary cause. We need much broader understanding of how to ensure that we help people with mental health problems to get into work, whether that is through the Work programme or the work capability assessment.

[George Hollingbery]

rose—

[Sheila Gilmore]

rose—

[Maria Miller]

I will give way to my hon. Friend, then to the hon. Lady, then I really must move on.

[George Hollingbery]

The Minister might be about to come on to the subject of carers—I imagine that she might wind up on that point—but will she confirm two points? Will she confirm first that households in receipt of DLA, and therefore afterwards PIP, will not be subject to the benefits cap and, secondly, that carer’s allowance will be awarded outwith universal credit?

[Maria Miller]

My hon. Friend is right to pick up on those details, because such details make a real difference to family life.

[Mr Byrne]

rose—

[Maria Miller]

Will the right hon. Gentleman let me finish my comments on this point? I think his hon. Friend the Member for Edinburgh East (Sheila Gilmore) was expecting to intervene, too, so perhaps a little more civility is called for.

My hon. Friend the Member for Meon Valley (George Hollingbery) is absolutely right to say that disability living allowance will not be counted within the benefit cap. People who are in receipt of DLA will not be subject to that cap. That is a really important point to make and it is the sort of detail that can make all the difference. The same is true of his comment about the carer’s allowance, which will be outwith universal credit although the universal credit will also recognise the important role that carers play. As this is carers week, we should pay tribute to their role in our communities and our constituencies. I also pay particular tribute to the work of the Minister of State, Department of Health, my hon. Friend the Member for Sutton and Cheam (Paul Burstow), to make more support available for carers, especially through carers’ breaks and by ensuring that carers are able to continue their important role.

[Sheila Gilmore]

I want to follow up on fluctuating conditions. Professor Harrington has been mentioned in the debate. He endorsed work carried out by charities on the fluctuating condition and mental health descriptors, so why have the Government chosen not to follow that up?

[Maria Miller]

We absolutely are following that up. I know that the hon. Lady follows such matters closely, so perhaps I need to ensure that she has more details, because I would have anticipated that she knew we are carrying out more work to ensure that there we have a robust evidence base, as she would expect.

I shall draw my remarks to a close. Given that this is an Opposition day debate, I had hoped that we would hear some clear ideas from the Opposition about what they would do; instead, we have heard the same confusion.

[Mr Byrne]

rose—

[Maria Miller]

The right hon. Gentleman was clear about what he would not do—he would not make reforms to DLA; he would not modernise Remploy; and he would not make the WCA fairer—but we heard nothing about what he would do. It is not much of an opposition when rant replaces engagement, when dithering replaces determination, and when there is such political opportunism, including attempting to intervene on someone who is trying to finish their speech. It is no wonder the Leader of the Opposition sacked the right hon. Gentleman as his policy guru; perhaps, for once, the Leader of the Opposition got it right.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. To facilitate as many hon. Members as possible, there will be a six-minute limit on speeches, with the usual injury time for two interventions.

14:31

[Ms Karen Buck (Westminster North) (Lab)]

The economic crisis that engulfed the developed world in 2008 was not, of course, caused by the number of people on disability living allowance. Indeed, the proportion of the population on out-of-work benefits fell between 1997 and the beginning of the crisis. Although reform is needed, that point gives the lie to the suggestion that the scale of the situation required us to introduce the kind of measures that are causing such distress and grievance to hundreds and thousands of people with disabilities throughout the country, and leading to such a number of appeals. That is evidenced by the terrible e-mail that emerged from the Department for Work and Pensions today.

Rather than discussing benefits, I want to talk about the social care agenda because, unlike the situation with working-age benefits, we face an emerging crisis in that area. Over two years, the Government have failed to make progress on a way forward on paying for social care, which would be of value to those who need that care and their families who worry about them. In addition, several events that are unfolding, especially in local government, are undermining the agenda.

We have heard from the Government about scaremongering, but nothing can compare with the advertising campaign that ran in the preamble to the general election that featured gravestones alongside a warning about the “death tax” that Labour would apply to fund a social care programme. If there was ever an example of an inability to hold a constructive debate about such a major challenge facing our country, that was it.

The costs of care have been increasing due to a rise in the numbers of the elderly and people with disabilities, as a result of progressive and thankful improvements in medical science. Those costs will double from £14.5 billion today to £27 billion by 2030, and there will be a 100% increase in the number of people who have to pay for their own care.

Changes are taking place in the national health service. A consultation will shortly be held in my NHS region on the closure of five out of nine accident and emergency units as part of a reform to the health service that is designed to move people away from hospitals and into social care in their communities. In itself, that is a positive development, but only if that social care is available and affordable, and we are seeing that the opposite is the case.

On the Sunday before the election, the Prime Minister said on Andrew Marr’s television programme:

“What I can tell you is any cabinet minister, if I win the election, who comes to me and says: ‘Here are my plans’ and they involve frontline reductions, they’ll be sent straight back to their department to…think again.”

After the election—on 28 February 2011—the Secretary of State for Communities and Local Government told the House:

“If councils share back-office services, join forces to get better value from their buying power, cut out excessive chief executive pay, and root out overspending and waste, they can protect key front-line services.”—[Official Report, 28 February 2011; Vol. 524, c. 13.]

I will leave it to the House to decide whether there has been a complete lack of understanding on the part of the Prime Minister and the Secretary of State, or whether this is mendacity, but we know that there has been a £1 billion cut from social care in local government. Councils are front-loading a 28% cut in Government support and producing graphs of doom showing that care costs will swallow up so much of local government’s agenda in the next 15 years that councils will be able to provide only care and waste collection services.

A quarter of Westminster’s £52 million savings programme has come from adult and social care. Some 3,000 older and disabled people have lost care, while £15 million has gone by reducing meals for older people and day care for vulnerable people by 50%. An adult social care survey ranked my local authority as one of the worst in the country. Mr Ash Naghani, one of my constituents, told a local newspaper:

“The attitude before last year was how my council could help you to become more independent and contribute to society…since last year, it’s been as if I’m not important any more. All they are talking about is ways to cut down my care package to see how much money they can save.”

In addition to the cuts in social care, the removal of the taxi card from everyone above a benefit threshold has taken away independence from elderly and disabled people who cannot use public transport. Many of them have pointed out that their savings from a frozen council tax are heavily outweighed by the amount they must spend on travelling now that they are without their taxi card.

Times are tough and the pressures of an ageing population are inescapable. Not all needs will be met, but we must avoid denying what is going on. The Government, however, continue to be in denial about the impact of local government cuts on front-line services, in denial about the reality of more intensive means-testing, and in denial about the extent to which the drip, drip of scepticism about the reality of disability, especially invisible disability, is poisoning the atmosphere, and even feeding into hate crime and abuse.

14:37

[Duncan Hames (Chippenham) (LD)]

We have certainly heard strong words in the debate, but a careful study of the motion suggests that it tells us about those areas on which the Opposition agree with the Government. It says that DLA “needs to be reformed” and that the work capability assessment, which was introduced in the final years of the Labour Government, is in “pressing need” of reform. It even suggests that the principle of the closure of Remploy factories is not in dispute, because I thought that the shadow Secretary of State, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), was asking whether now is the right time. There is also agreement throughout the House about the importance of recognising the contribution made by carers, and I suggest that such recognition is reflected by the £400 million that the Government found to support respite breaks for carers. We should clarify where there are points of disagreement.

All parties can agree that the Government’s aim should be to create a system that ensures that every disabled person is treated with dignity and respect, and that they have access to the services and support that they need to fulfil their potential. That is reflected in the aim in the Government’s business plan, although we do not know what change of approach that represents. Despite difficult economic times, that remains the Government’s intention, and Liberal Democrats have already made a difference to the policies that can help to make that a reality. Although we support a cap on the total amount of benefits that a household can receive, we considered it vital that the cap was set at the right level, to protect those who are unable to work through disability or ill health. That is why Liberal Democrats welcomed the original exemption of DLA from the cap, but pressed further to exempt all those in the support group of employment support allowance as well, to which the Government agreed.

Liberal Democrats in the Lords amended the qualifying periods for the personal independence payment to match the existing qualifying periods for disability living allowance. This should ensure that those who need support up front, perhaps to deal with the costs of a new condition, will get that support quickly. However, the principle remains that personal independence payments are a long-term benefit. On the Floor of the House I repeatedly highlighted a campaign in support of disability charities to get the Government to rethink—and ultimately abandon—the proposal to remove the mobility component from the disability living allowance of local authority-funded care home residents.

There is much on which we have been able to agree, but there is certainly still more work to do, especially on getting the work capability assessment right. Liberal Democrats support the plans of the independent reviewer, Professor Harrington, to develop new, evidence-based descriptors, covering chronic fatigue and pain, which would help better assess those with fluctuating conditions. During the exchanges earlier in the debate, I was amazed at the refusal to acknowledge that the work capability assessment as it was operating at the start of this Government barely two years ago was that created by the Labour Government. It relied too heavily on the contracted-out, face-to-face assessment performed by Atos, with decision makers just rubber-stamping a decision that Atos had made. I therefore welcome the Harrington proposals to give DWP decision makers more flexibility to look at evidence other than the Atos assessment in coming to their decisions.

[Tom Greatrex]

Will the hon. Gentleman give way?

[Duncan Hames]

I will happily give way because I hope we can at least agree that what was put in place by the previous Government was unacceptable and, in the words of the shadow Secretary of State, needed to be adapted.

[Tom Greatrex]

I am sure the hon. Gentleman will take the opportunity to remind the House that after the work of the Select Committee and after the pilot areas had highlighted a number of flaws in the system, it was his Government who put in place the migration of people on incapacity benefit to ESA through the work capability assessment. If the Government were so concerned about getting it right, perhaps it would have been a better course to make the changes to the system before starting the migration.

[Duncan Hames]

I have read speeches in Hansard from before I was elected when colleagues of mine pleaded with the previous Government to make changes to the work capability assessment that they were introducing. On the timing of those changes, they should have been made even before the present Government came to office.

I turn to the matter of Remploy. [Interruption.] Changes are being made now. It is worth noting—

[Ian Lavery (Wansbeck) (Lab)]

rose—

[Duncan Hames]

I have already given way and I have moved on to the subject of Remploy. It is worth noting that of the 6.9 million disabled people in the UK, fewer than 2,500 are supported by Remploy’s enterprise businesses. As we heard from the Minister, changes to Remploy are not cuts. Every penny of the £320 million budget that we are discussing will be reinvested in getting disabled people into work and supporting them while they are there, and rightly so. [Interruption.] I heard that clearly, and I am sure we will hear more about it later.

It is worth remembering, although the shadow Secretary of State found it difficult to do so, that Labour closed 29 Remploy factories as a result of a decision in 2008. Perhaps it was because the answer was “not more than 30” that the shadow Secretary of State was not able to bring that answer to us earlier. [Interruption.] Indeed. The figure was 29. Clearly, the Labour Front-Bench team did know the answer to the question.

The consultation referred to in the motion is still in progress, and it is not appropriate for us to deliver a verdict on it before it is completed. Proposals for commercially viable factories are still being considered, which may mean that redundancies will not be as extensive as has been reported. To call for a re-run of an ongoing consultation is premature and unwarranted.

There are some key areas on which I hope the Minister will be able to shed some light. What discussions has she had with unions and Remploy managers to ensure that those disabled people who are made redundant are made aware of, and are able to utilise, the support packages—almost £8 million, I believe—that are being made available? Will the Minister ensure that details of the bids to continue and sustain Remploy factories via other means are made public as soon as is reasonably possible in order to give some reassurance to those Remploy workers who will benefit? What discussions has the Minister had with the Remploy board and with voluntary and community groups about how to facilitate organisations wishing to continue Remploy factories as social enterprises? We have heard a great deal of sound and fury in this debate, but Members in all parts of the House need to support disabled people.

14:45

[Tom Greatrex]

I am glad to have the opportunity to speak in this important debate. I congratulate my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) on securing it as part of the Opposition day. If I had more time, there are many topics in the motion on which I would like to speak, but I shall limit my comments to the work capability assessment and, to some extent, follow on from the hon. Member for Chippenham (Duncan Hames) about some aspects.

The work capability assessment is a fundamentally important issue and I shall speak about some of the difficulties that I have encountered in trying to uncover the detail of the contractual conditions and information about the relationship between the Department for Work and Pensions and Atos Healthcare. I welcome the part of the motion that refers to the WCA. Members are aware of many of the concerns surrounding the work capability assessment. In an earlier intervention I made the point about the migration, so I will not repeat it. That, to me, sums up the fact that if the Government wanted to get it right, they would have done so before rolling it out further, and they would have applied the lessons from the pilot areas, Aberdeen and Burnley, and from the very good report from the Select Committee that followed from that.

All of us have many constituency cases to which we could refer. I have had a number, including a constituent with Parkinson’s disease who was assessed as fit for work, went through an appeal, won the appeal—as we heard, 40% of people do—and almost immediately underwent another assessment, was assessed as fit for work, went through another appeal and underwent a third assessment. People with fluctuating and other conditions are not necessarily well served by the work capability assessment. Parkinson’s, as Members know, is a progressive and incurable condition. Although people with Parkinson’s may have good days and bad days, in the case of my constituent he could not come to see me; I went to see him, and it was obvious that he was in severe discomfort and barely able to answer the door to let me into his flat.

To go through a process, win an appeal, be assessed yet again, and then repeat that whole sequence—this crosses over the period of the implementation of some of the changes recommended in the first Harrington report—strikes me as a waste of time and money, quite apart from the stress and anxiety that it causes individuals. Someone who has that condition is not going to get better. I am not saying that everybody with Parkinson’s is unable to work. Many people with Parkinson’s do, but once they get to a certain stage, they are not going to get better. To go through such stress and anxiety as they go round and round in the system does not help anybody get back into work, which is the stated purpose of the work capability assessment.

I support the work capability assessment and I think it is the right thing to do. Many of my constituents who have encountered problems have said that they object not to the assessment, but to the way in which that assessment is carried out. I want to make a few points about the contract between the DWP and Atos Healthcare. I know that I have made a thorough nuisance of myself to Ministers by tabling about 200 written questions about various aspects of that. I have done so because it is very hard to get to the detail. Although the high level contract has been published, every time I ask questions about some of the performance indicators, I get the blanket answer, “We cannot disclose that information for commercial reasons.”

In February this year a BBC Radio 4 programme uncovered the fact that there are potentially financial penalties for Atos within some of the conditions of the contract, yet I cannot get to the detail of those conditions. Some £110 million is being spent in carrying out the assessments, which lead to a huge number of appeals. Those are adding to the cost because the appeals are referred to the tribunals service, extra judges are being taken on and tribunals are being kept open at the weekend. The additional cost for this year will be £50 million to £60 million to get right what Atos has got wrong. Why is it in the interests of the public purse to pay that money in effect twice to get the right decision? I understand and will always accept that there will be decisions that are not necessarily right and that there needs to be an appeals process, but that volume of appeals in the system suggests that there is something wrong.

Why is Atos not being penalised through its contract for getting so many decisions wrong, because the decisions, although made by the decisions makers, are based on the assessment, and in many cases almost completely on them, and so we go round and round in this system? Why is it still the case that—perhaps the Minister can answer this point—after someone goes through an appeal and has another assessment, the information that the tribunal has to make its decision is not available for the next round of assessment? If this was actually about being fair, equitable and helping people, surely that information should be available so that those decisions are better informed.

I think that the root of the problems with the work capability assessment is the contract and the way the assessment operates. It is a great shame that this third report will be Malcolm Harrington’s last and that there will be someone else for the next two years. Perhaps the Minister could explain why that is the case and who will replace him. I have met him and understand that he has had some frustrations in getting some of the detail on the issues. He will be coming to Scotland in the near future to meet the citizens advice bureau in my constituency and understand some of the real issues. The Government must get this right. We are not against people being assessed, but they should be helped into work, not hounded.

14:51

[George Hollingbery (Meon Valley) (Con)]

I wish to speak briefly about four issues, the first of which is Remploy. Only 46% of disabled people are in employment, compared with 76% of non-disabled people, so there is a huge problem that must be addressed, but I think we have to ask ourselves whether an organisation that employs 2,800 people, compared with the 40,000 currently looked after by Access to Work, is the right answer to the question being asked. Furthermore, Remploy’s latest report, for 2010-11, shows that the DWP spent £68.3 million supporting Remploy that year, which equates to £25,000 a head, as I mentioned earlier, and that is £5 million more than in 2009-10, and more than 20% of the total budget available to help disabled people back into work. With the average cost of an Access to Work award at £2,900, as I also mentioned earlier, surely this differential is not sustainable.

We have already heard that Labour announced the closure of 29 Remploy facilities in 2008. I think it knew then, as I think it knows now, that this model is essentially unsustainable. The real issue is that money is much better spent on access to employment and the social model, as has been recommended by not only the Sayce review but many mainstream disability groups. We have to acknowledge that a scheme designed to help disabled ex-servicemen after the second world war is no longer fit for purpose in the modern environment.

What is so surprising about the motion is that it does not seem to recognise that the Government are simply continuing work that the previous Administration put in train, in addition to protecting the £320 million budget for specialist disability employment support.

Turning briefly to the work capability assessment, again we need to recognise some facts. WCA was introduced in 2007 as part of the Welfare Reform Act 2007 under John Hutton. It was then implemented over the following four years by three further Secretaries of State: the right hon. Member for Neath (Mr Hain), James Purnell and, finally, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper). In fact, in the previous nine years there had been eight different Secretaries of States for Work and Pensions, which does not suggest the greatest grip on the portfolio. None of those four Secretaries of State since WCA was introduced sought to change it. There were internal reviews in November 2007 and October 2009, but the Government did not implement them, although the current Government have done so.

Professor Harrington has been commissioned to advise on changing WCA. I am going to quote from the foreword to his second review, published in November last year:

“Even without Incapacity Benefit reassessment, the changes I proposed to the WCA system would have presented a big challenge… DWP rapidly adopted my proposals as policy and DWP Operations set about the necessary changes with energy and commitment. Atos, who are contracted to DWP for their part of the WCA, fulfilled their contractual requirements.

I have seen these improvements in the day-to-day running of both DWP Operations and Atos. This has taken time and some observers have told me that they have seen no change. I advise patience. The process of improvement is happening, but is not yet in evidence everywhere. It will take time to have the desired impact and the year three Review will closely monitor the impact of the changes and ensure there is continuing progress in improving the assessment.”

It is a clear, long-term commitment to making WCA work, and the observations from within say it is the right process. Again, we see that the Government are carrying on with a programme introduced by the previous Government and succeeding in improving the outcomes from it.

What about the replacement of disability living allowance with the personal independence payment? DLA was introduced 20 years ago and the world has changed enormously since. A great deal of credit has to go to the Opposition for some of those changes. The Disability Discrimination Act 1995 secured rights for disabled people, which were strengthened greatly by the Equality Act 2010 and a good deal of legislation and effort from the Opposition when they were in office. However, much has been changed in the past 20 years, including attitudes. The materials, machines and many other facilities available to disabled people have improved markedly, but DLA has not changed, and undoubtedly that is a mistake. It needs to change.

There is no objective way of assessing entitlement, no systematic reviews and there are significant over and under-payments. More than 70% of the DLA caseload has an indefinite award. PIP will be fairer and more objective, will deliver more consistent benefits and will be sustainable for the future. Support will be focused on those with the greatest need and a higher proportion of individuals will receive the highest rates under PIP than under DLA. It is odd that even the motion before us recognises that change to DLA is required, so what exactly are we supposed to be debating? I am increasingly puzzled.

Finally, I will say a word or two on carers. I acknowledge the enormous contribution that they make to our society. They are an absolutely vital part of the machinery that keeps this country ticking, and the Government recognise that. As I mentioned in an intervention, carer’s allowance will remain outside the assessment of universal credit. There will also be a carers element within universal credit which will not require the carer to be entitled to carer’s allowance. That is a welcome change. The Government have said that any carer who has regular and substantial caring responsibilities will be entitled to the extra carer amount.

The Labour party has not opposed the change to universal credit or, as far as I know, suggested any changes to the measures that apply to carers within it, so once again I find myself somewhat puzzled by the words of the motion. I am afraid that as I sit and sum all this up in my mind, I reach one inescapable conclusion: the motion is not so much something to be debated but a press release in search of an audience.

14:57

[Mr Frank Doran (Aberdeen North) (Lab)]

I am disappointed that the Minister focused mainly on scoring political points. She will be well aware, because my colleagues have made many representations to her, that Remploy workers see many problems with the process for the transfer of the factories, but she addressed none of those. It is the Opposition’s job to oppose, but she has ministerial responsibility and I would have liked to hear her view on some of the points that have been raised.

I will focus my remarks on the Remploy factory in my constituency and the broader context in which it is trying to function. The Aberdeen factory was scheduled to close in the most recent round of closures, but we managed to save it. In the past couple of years people in the factory, with the fine assistance of the manager, Mr Ben Mardall, have been planning to develop a programme that would see five or six types of business in the existing factory. Currently, the factory works in the textile business and furniture refurbishment; it also has a small market garden, which has been sponsored by BP, a canteen, and aspirations for a commercial laundry, and it is reaching out to other social enterprises in the area. I have organised a meeting quite soon with representatives of a number of those social enterprises to consider the development of a social enterprise hub. Added to the industries would be a development programme for work placements so that long-term unemployed and disabled people would have the opportunity to work, gain proper training and experience a variety of different types of work to improve their skills and build up a CV. We see the possibility of such a facility as an important contribution to the city’s resources. Remploy’s management have never been particularly commercially minded—I think this is the first time that any commerciality has been seen in the Remploy process.

Experience in the company is limited, but the management seem to have become completely hung up on commerciality and to have abandoned almost completely the principles of social service, which were the hallmark of Remploy’s previous 70 years’ operation. For example, the process for transferring the factories is long, cumbersome and often difficult to interpret. The management’s communication with the work force is in business-speak, convoluted and, most of the time, inaccessible to most workers, many of whom are vulnerable individuals. Many workers are completely bamboozled.

Most Remploy businesses and workers have had their hands held for the past half century—it is not the way in which I would operate, but it is the way in which Remploy has—and they are finding it difficult to understand what exactly is expected of them in order to move forward.

When the Government’s decision on Remploy was announced, social enterprises wanted to look at the factories and businesses that might become available, but they were told that they could not have access because a consultation period was under way. It may be hard to get these people who were interested in the factories back again.

There are also tight deadlines for the applications, and I know that many representations have been made to the Minister on this point. It is a virtually impossible timetable—partners have to be brought in and business cases put together, and finance has to be raised for any new start-up. It is worth remembering that the previous round of redundancies started with a consultation in May, ended in November and was not implemented until January—and the factories closed with redundancies in March. The 90-day period, which mirrors the consultation period on redundancy, is totally inappropriate to a business situation, so I hope that the Minister understands why we think that the Sayce report was much more realistic than the current arrangement about what to expect and what could be achieved.

There is also a growing sense also that the process is not there to help Remploy staff to move on and create new social enterprises, which many wish to do. There are also strong rumours of a likely management buy-out of the remaining 18 functioning factories, and of the work of the closing factories being transferred to those remaining factories, but that would diminish the viability of any social enterprise that might emerge out of the closing businesses. That is a serious conflict of interest for the board, so I hope that the Minister will examine the issue and consider whether new management, or at least arm’s length, independent consultants, should be engaged to consider the whole process of factory transfer.

In the meantime, I urge the Minister to take a more hands-on approach to what is happening to Remploy. She can change things. When the closures were announced, the press were extremely critical of the Government, even though the main problem lay with Remploy management over many years.

From years of contact with my local Remploy factory in Aberdeen and with others throughout the country, I know that there is potential for something very real and very positive to come out of this process. There is an opportunity for disabled people to run their own social enterprises and businesses, and to develop facilities to help others to find employment, which is what will happen at the Aberdeen factory if we are given the chance. All they need is a fair chance. They are not being given one by Remploy at the moment, and it is the Minister’s responsibility to ensure that they are.

15:03

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

I oppose the motion, muddled as it is, and support the Government, based on the principle, which underpins their benefits system reforms, that people should always be better off in work than on benefits; on the fact that disability living allowance needs to be reformed and overhauled for the benefit of the people who receive it; and on the fact also that the Government are increasingly committed to putting in place social care reforms and reforms that benefit carers and people who look after those with disabilities.

It is important to pay tribute to the previous Government’s laudable aims on a number of those objectives, and in that respect we are all Blairites. Tony Blair said, as we believe, that people should be better off in work than on benefits, that we have an over-complex benefits system, and that we live in a country where there is generational worklessness on many estates throughout the land. Those problems are all unacceptable, but it has fallen to this Government to tackle them, and it is a great pity that after the previous Government’s 13 years in power, many still exist and, in fact, became worse rather than better.

The principle that underpins the reforms under discussion is the idea that people should always be better off in work than on benefits. This Government have inherited an over-complex benefits system that is comprehensible only to experts, and the fact that it is so complicated means that the people most in need of benefits find it difficult to access the benefits to which they are genuinely entitled.

The system often lets down the most vulnerable in our society, too, and DLA is in great need of reform. People who have historically been categorised as disabled under the system that we inherited have sometimes been written off by it, even though we know that someone with a mental health problem, or with a physical illness, can greatly benefit from engagement in the workplace. The act of working, and of being part of the workplace, is an important part of the rehabilitation and medical care of somebody who suffers from a mental health condition.

[Sheila Gilmore]

The hon. Gentleman makes the mistake of confusing DLA with incapacity benefit, which has now become employment and support allowance. DLA is not a benefit that writes people off into unemployment; it exists to help people to meet the additional costs of disability, and many people who receive it are, indeed, in work.

[Dr Poulter]

I am not making that mistake at all. The point is that the previous Government’s benefits system put people in a category in which they were characterised as not fit for work, often for the long term. But it is important that somebody who has a mental health problem, or who has an intermittent or a lapsing physical illness such as multiple sclerosis, can, if they are able to, work. People with mental health problems—there is very good medical evidence to support this—often benefit from engaging in work. It improves their mental health and is an important part of their recovery.

[Mrs McGuire]

Will the hon. Gentleman therefore accept that DLA acted as a facilitator for some of those people to whom he refers and who needed to get into work? It met some of their extra costs, and, to echo my hon. Friend the Member for Edinburgh East (Sheila Gilmore), I think that he is confusing two different benefits. I hope that he will consider the exact point that he is making.

[Dr Poulter]

The point I am making is that the benefits system, which was complicated, wrote off a certain group of people. There were laudable aims, because it is right, for example, to give additional support to people with mental health problems, but an important part of their recovery also involves engaging in the workplace, often on a part-time basis and then, if suitable to that person, by moving on to more permanent employment. The previous system did not, however, help enough people with mental health problems to engage properly with the workplace. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) earlier represented the position of Mind, which has historically taken that position, in agreement with the comments that I have just made.

On support for, and reform of, the care system, my hon. Friend the Member for Meon Valley (George Hollingbery) said in an intervention that the Government are providing an additional £3.8 billion to the NHS to support better integration with social care. The key to improving and supplying better support for carers, and for other people who look after the long-term disabled, is to ensure that the NHS and social care services are better integrated.

We inherited from the previous Government a system of silo working, with the NHS traditionally working in one of them. For example, the payment-by-results system in many hospitals reinforces the fact that not enough attention is paid to the discharge of people with illness, or to the prevention of people becoming unwell in the first place, and what we need to move away from in the NHS, for financial and human reasons, is a crisis management service that fails to invest in proper preventive care. This Government have already put an additional £400 million into talking therapies, which will help to support people with mental health problems.

The £3.8 billion investment in the NHS to provide such integrated working with local social services will provide the support that carers need on the ground to make sure that many people with mental health problems and physical disabilities get the preventive care that they need. It will also provide an important link in making sure that the frail elderly and people with dementia are no longer inappropriately rushed into hospital but are better cared for and better looked after in the community, and that their carers get the care and support that they need, which keeps carers and patients well.

For all those reasons, the Government have a very strong programme that will deal with several of the problems that this country faces as a result of an over-complex benefits system. Their reform of the benefits system will help people with mental health problems and the long-term disabled to engage with the workplace, which is good for their mental health and their recovery. The reformed system will also ensure that the important role that carers play in health care and in social care is properly recognised and properly funded.

It is only under this Government that there has been a genuine approach to integrating health care. It is only through the establishment, through the health care reforms, of health and wellbeing boards that there will for the first time be a genuine joining up of social care, housing care and NHS care at a local level which will allow carers and the disabled, and everybody who is in need of a better and more joined-up community-based care, to be put together in the right way. Those are the very good principles behind the reforms to the health care and benefits systems, and I am proud to support the Government today.

15:11

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

I want to speak about one of the worst days that I have ever had as a Member of Parliament. On the day that workers at the Croespenmaen Remploy factory were told that it was to close, I was rung up by a union official and asked to go there to address them in their canteen. I remember standing in that canteen and telling them about the Government’s proposals to close their factory. I had been to that factory many times before when people were working to capacity, flat out, and had to come off the shop floor to speak to me because they were so busy. But on that day, everyone was there, and everyone was scared. They were worried, fearful and upset—and who could blame them? They were facing a bleak future in a local economy where 11 people are chasing every jobcentre vacancy and youth unemployment has gone up by over 250% in the past year.

The warm words of the Government are all very well when they say, “But we’re making an offer.” It seems strange to me that nobody ever gets sacked or made redundant any more—they are given an offer or future options to take. Well, the future that those workers face is very bleak. Things have been made worse by the crass comments of the Secretary of State. As we heard from my right hon. Friend the shadow Secretary of State, he said that people working in Remploy were good enough only to make a cup of coffee. He also said, “Let’s get away from the Victorian era of employment segregation.” Has he has ever visited a Remploy factory? Has he ever been round one of those modern facilities? Has he ever seen the skills that some of those people have when they operate woodworking machinery that cuts wood to within a fraction of an inch? These are really skilled jobs. If they are in sheltered employment, as he keeps saying, why do blue-chip companies such as BAE Systems want to take out contracts with them? The Government have presented Remploy as merely outdated and outmoded, whereas in my experience it is a modern, forward-looking company with a very motivated work force. If anyone wants further evidence of that, they should consider the fact that the workers at Croespenmaen tell me that they have had sales of £0.5 million since the closure announcement on 9 March. For a company that is supposedly failing, they are still motivated and still want to make things work.

As we face the end of the consultation on Monday, the question is what can be done. I say this: having changed the rules halfway through, the Government need to rip up the rulebook and start again. They could take on Liz Sayce’s recommendations and give the company six months to get a business plan together. When I spoke to the workers, they asked me, “How are we going to save our jobs and our factory, and talk to people who might want to take it over, if we only have three months?” Those workers should be given two years so that they can go about trying to save their business, and the Government should not take their funding away from them straight away and cut their legs off from under them, as they are proposing to do.

The cruellest thing about what is happening to the workers at Croespenmaen is that there is a solution for them. I remember my right hon. Friend the Member for Cynon Valley (Ann Clwyd), in Prime Minister’s questions, asking the Prime Minister whether he would devolve the Remploy budget to Wales for the next three years. At that time, he seemed quite optimistic, and gave them false hope, but when we had the official letter, we got a big fat no. Maybe, just for once, this arrogant, blind Government, who think they are right about everything, might have been proved wrong by those proud workers who are trying to save their factory, but we got a no, and they are facing a bleak future. We have already heard the Minister say that the disability budget is going to be ring-fenced at £320 million, so what do the Government have to lose by devolving that budget to the Welsh Assembly? The answer is absolutely nothing. To me, it is a no-brainer. If it works, that is great, because those 44 people in the Croespenmaen factory will keep their jobs. If it fails, the Government can do what they have always done and blame the Labour Government.

People are always saying that this is all about sheltered employment. As I said, the Secretary of State referred to segregated employment. It is not about employment; it is about something that the Tories used to say they represented—choice. There are people at Remploy who cannot go into mainstream work but want the choice of being able to stay at Remploy, and that choice is being taken away. I sincerely hope that when the Minister responds to the debate, he will think of all those people who are still worried about their future.

15:17

[Matthew Hancock (West Suffolk) (Con)]

One day, Mr Deputy Speaker, you, like me, God willing, will grow old. I want to concentrate on the UK’s care system for the elderly. We have heard much today about benefits and changes to Remploy, but I want to focus a bit more on something that was touched on earlier—the need to provide social care for our elderly and for those with permanent and long-term disabilities, and the urgent need for reform.

I am motivated in this by thinking not only of my own growing old—I hope—and of all those in this Chamber, but family experience and my experience of supporting a friend of my age who, at the age of 28, sadly had a stroke and is now confined to a wheelchair and has to live with permanent care. Supporting him, and starting a trust to support him, gave me the personal experience of trying to navigate the care system for those with permanent disabilities, and it brought into sharp relief the difficulties that that brings to many people who support disabled people, whether they are of what would otherwise be working age or in old age.

The Dilnot commission has been the most important step forward in this area for many years. Criticisms of inaction can be levelled not only at the previous Government but at previous Governments. This is an area where cross-party support and a lack of political tension is necessary.

Over the past decade, 200,000 people have sold their homes to pay for their care. Yet more people, who did not have assets, have had to survive with substandard care. BUPA has estimated that in a decade, there will be a shortfall of 100,000 care home places unless action is taken. In the same period that spending on the NHS has risen by about £25 billion, spending on social care for the elderly has risen by only £43 million. Given that 400,000 elderly people are in care homes and that more than £7 billion was announced for this area in the spending review, we need to ensure that Government support is focused and that financial support is brought in from wherever possible to strengthen this crucial sector.

I pay tribute to the work that the Minister has done to bring forward proposals and ensure that we are moving in the right direction. The introduction of carers breaks is a welcome step forward. I warmly welcome the linking of social care and health care budgets in the Health and Social Care Act 2012, which will tie together what have too often been disparate functions.

It is clear that there is also a need for reform in self-funding. There must be support for vulnerable elderly people who do not have access, but we must also ensure that those who do have access do not have to lose their home to pay for their care. The problem is the lack of an insurance market. We can insure all sorts of things in life. The moustache of Mervyn Hughes, the great cricketer, was once insured for £200,000, Kylie Minogue’s rear was insured for $5 million, Heidi Klum’s legs for $2 million and Cristiano Ronaldo’s legs for €100 million. However, I cannot take out insurance for the possibility that I will have to spend many years in social care. Nobody in this country can insure against the small chance that they will need very expensive care in their old age.

The problem is the uncertainty over the cost. For many of us, there will be no care costs at all. For most of us, the costs will be relatively small. For a small proportion of people, however, there will be very high and uncertain costs. There is a role for Government in ensuring that the market works in tackling the uncertainty. There is uncertainty over not only what the cost will be, but who will be hit with the cost.

That brings me to the final point about why this matter is so important. This is not only a practical problem, but a problem of values. Those who save hard and work hard for their whole life feel that they are penalised by a care system that takes away what they have worked for. Those who put money aside and save for their retirement look for a something-for-something system in which people get out according to what they put in. We must look after our most vulnerable and end the scandal of people being forced to sell their homes to pay for their care. I hope that we will come forward soon with serious proposals to take this injustice away.

15:23

[Ian Lavery (Wansbeck) (Lab)]

The Opposition motion highlights the many problems with disability benefits and social care. There is undoubtedly an attack on benefits for disabled people. Disabled people face many acute problems, many of which have been mentioned this afternoon. The changes to disability living allowance will impact on nearly 500,000 people. The problems associated with employment and support allowance will impact on nearly 280,000 people. We have not seen how universal credit or the personal independence payment will work, but I fear that there will be chaos in the benefits system when they are introduced.

I concur with what Members on both sides of the House have said about Atos. It is wholly inefficient and cannot operate the work capability assessment. Some might say that it is wholly incapable. The problem is not the work capability assessment, but the way in which it is carried out, including the way in which people have to tick boxes and the fact that people are being assessed by people who are probably not qualified to carry out such assessments. If I called for nothing else in this debate, I would call on the Government to look again at the way in which Atos is delivering the system on their behalf.

Like many other speakers, I want to focus on Remploy, which is very dear to my heart. The discussions and consultations between the trade unions, individuals, employers and the Government have been nothing but a shambles. I will ask a few questions of the Government about what will happen to Remploy. Each factory is being tret completely differently. They are all being given different advice on what is happening and about whether they are or are not in the consultation period.

I was outraged by the suggestion of the hon. Member for Blackpool North and Cleveleys (Paul Maynard) that Remploy was a form of disabled apartheid. That is outrageous. Remploy was established just after the second world war to look after disabled people, and we should be looking after disabled people now. Nothing has changed. For someone to suggest that it is disabled apartheid is outrageous.

The Remploy ethos was developed by George Tomlinson, who was an MP for a Bolton seat. He wanted there to be secure and open employment for disabled people. Remploy factories have given their employees an income, independence, self-respect and self-esteem. It is often said that society can be judged by how it looks after its most vulnerable people.

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

I am the Member of Parliament for Bolton South East and it was a Bolton MP many years ago who was involved in setting up the Remploy factories. I have visited the factory in my constituency on a number of occasions and the people there have told me that they take great pleasure in coming to work every day and getting a decent wage packet. They do not want handouts or disability benefits; they want the opportunity to work and to increase their self-respect. Does my hon. Friend agree?

[Ian Lavery]

I have met every member of the Remploy work force in my constituency and in Newcastle, and I wholeheartedly concur with my hon. Friend.

I will ask a number of questions in the short time that I have left. What is happening with the Remploy pension fund? Is it being closed or kept open? That is important to the people who work there. What is happening to the five-year modernisation plan that was put in place by Labour? Why is it being cut short? What about the huge management structure of people who are not disabled, who have been looking after the Remploy factories but have not implemented the modernisation plan? What is happening to the burdensome costs of that management structure?

Last year, there were 2,500 trainees in Remploy, and it is important that we get an answer to what will happen to them if, as we all believe, the Remploy sites are eventually closed. It is clear that the vast majority of the factories will close, if not all of them, which will mean the end of a working life for many people. Their health will decline. The Minister mentioned the problem of unemployed people who have mental health problems, and said that they should be taken off benefits and given a job. I cannot understand that. If someone who is unemployed has mental health problems and we take them off unemployment benefit and try to get them a job when there are no jobs available, that will be disastrous for them.

If people are taken out of work at Remploy, there will be a cost impact for the Government from what will happen to their health. The Government’s estimate is that benefits given to individuals in that situation could range from £10,200 to £27,000 a year. It is easy and cheaper to keep people in employment than to give them up to £27,000 a year of housing and other benefits. We should give them self-esteem and self-respect by allowing them to go to work, as every one of us enjoys doing.

I appeal to the Government to restart in full the consultation period, which started a few months ago. Things have changed rapidly since the beginning of the process, which makes it wholly unfair. We should restore dignity and self-esteem to people in Remploy and keep them in employment as far as we possibly can.

15:30

[Ms Margaret Ritchie (South Down) (SDLP)]

In supporting the Opposition’s motion, I should like to bring to the debate the perspective of Northern Ireland, where there are separate but basically parallel social security systems.

Our society owes an enormous debt to individuals and organisations that care for friends, family and loved ones. That does not just make our society richer, but in Northern Ireland alone unpaid carers are worth more than £4 billion to the local economy. However, although the Government pay lip service to the work that our voluntary sector does, they are undermining it at every turn through their welfare policies, including the new work capability assessment for employment and support allowance and the move to personal independence payments from the existing disability living allowance.

In Northern Ireland, it has been estimated that some £500 million will be removed from the welfare budget as a result of the Government’s policies. That is clearly a move designed to cut expenditure rather than a constructive reform of the benefit system. By taking away financial support and introducing more stringent qualifications for personal independence payments and the work capability assessment, the Government will take a degree of freedom away from many people. That will only increase the pressure on the thousands of carers who will be left to carry the slack on top of their already demanding role.

[Jim Shannon]

In Northern Ireland, we have more disabled people and more carers than elsewhere. Does the hon. Lady feel that the impact will be greater on people in Northern Ireland than on those in any other part of the UK?

[Ms Ritchie]

I agree, and when I was a Minister in Northern Ireland with direct responsibility for benefits, I saw every day of my working life the high proportion of people in receipt of benefits, particularly disability living allowance. That was a result of our divided and conflicted society and a legacy of the conflict itself, because we had a high proportion of people with mental illness. The new policies do not take that on board.

The Department’s subtext is clear—a presumption that many people receiving benefits do not need them. The Government claim that they are restricting the new benefit arrangements to those who need them most, but surely benefits should be granted simply to those who need them, without qualification. That is what any notion of the big society should be based on.

One of the main problems with the work capability assessment for employment and support allowance is the reasonableness of the mobility test. The test is whether a person can mobilise

“unaided by another person with or without a walking stick, manual wheelchair or other aid if such aid can reasonably be used.”

I know of constituents who have arthritis in their back, hips, legs and feet but are physically able to use a wheelchair. The test is hypothetical; even if a person has never been assessed for such a mobility aid, and such an aid has not been considered by their medical professional, they can be considered able to mobilise, despite their having a serious medical condition that would prevent them from mobilising without a wheelchair.

The incongruous element of the test is that, in many cases, a medical professional would not recommend a manual wheelchair for a condition such as arthritis, as it is a hugely life-changing and extreme intervention on someone’s mobility. Frustratingly, without the wheelchair element of the mobility test, many people with a physical illness would meet its criteria.

I am aware from constituents’ experiences at appeal tribunals that legal professionals also struggle with the lack of clarity on “reasonableness”. Such serious problems have left many facing uncertainty, which can cause severe stress to people who already face incredibly challenging circumstances.

[Jim Shannon]

I congratulate the hon. Lady on the comments she makes on behalf of those who are disabled. One issue with appeal tribunals is that doctors do not appear when they should, another is that people are asked whether they are mobile enough to get out of the building if there is a fire. If they say they cannot, they have to return home. Like me, the hon. Lady believes that those simple matters should be sorted out beforehand. Does she agree that a straightening of the appeal process is needed to make the process easier for applicants?

[Ms Ritchie]

Like me, the hon. Gentleman would agree that that is not the responsibility either of the Department for Work and Pensions in England or of the Department for Social Development in Northern Ireland; it is the responsibility of the Appeals Service in Northern Ireland. That is a separate organisation, and those questions need to be directed to it for a resolution.

The Government must acknowledge that the introduction of personal independence payments might have a different impact in Northern Ireland. Approximately 100 people per 1,000 currently receive disability living allowance, compared with 50 people per 1,000 in Britain. We simply cannot ignore the fact that Northern Ireland society is emerging, as I have said, from decades of conflict, which have left many people emotionally and physically scarred.

Northern Ireland also faces a common transition difficulty with Scotland, England and Wales. In Northern Ireland alone, some 117,000 people will have their cases reviewed on the introduction of PIPs, which will require the testing of more than 1,000 applicants a week. How will so many people be re-tested in a manner that is just, reasonable and fair? That is an enormous concern. It is especially worrying given the aforementioned fiasco of the introduction of the work capability assessments for ESA. As I have seen in my constituency, the number of successful appeals demonstrates what happens when the Government make ill-advised and poorly thought-out changes to the welfare system. I am extremely concerned that we will face exactly the same problems when PIPs are introduced.

Although it is important to pay tribute to carers this week, we must remember that they are carers for 365 days of the year. They are at the heart of our families and our society, and the Government should help them rather than introduce ill-considered and ideologically motivated welfare cuts that will do nothing more than simply increase financial stress and burdens, and many other burdens within the family and the community. I urge—even at this late hour—the Government to reconsider. The Social Democratic and Labour party firmly supports the Opposition motion.

15:39

[Sheila Gilmore (Edinburgh East) (Lab)]

A lot of strange things have been said by Government Members: they say that the Labour Government did nothing to reform benefits, yet say, “You invented the work capability assessment, so you’re responsible for it.” It cannot be both. As a new Member in 2010, I came here intent on criticising the implementation, not the principle, of WCA, regardless of who formed the Government. I made that clear in one of my first speeches. The fact that someone might think it a good thing, in principle, to carry out an assessment does not mean that the specific form of assessment we have been using has worked.

I want to talk, in particular, about how the change from disability living allowance to personal independent payments is likely to take place. I draw attention to a report published in Scotland and based on work by the Learning Disability Alliance Scotland, which took the proposed test, as published, and ran workshops with about 135 people with learning disabilities to see how the test would work in practice. It found that 12% of DLA recipients would not be awarded PIP. Given that there are 24,500 people with learning disabilities in Scotland, nearly 3,000 could be at risk of losing their entitlement.

The report refers to one case study involving a woman with Down’s syndrome living in the Gorgie area of Edinburgh. At the moment, she receives the low level of the care and mobility components of DLA, which makes a huge difference to her life. The care component means that she can cook meals with fresh food, which is particularly important to people with Down’s syndrome, and the mobility component allows her to get reliably to and from her part-time job in a local supermarket. She can afford the bus fares and can get a taxi if she makes a mistake or gets lost. The awards also help her to cover additional costs. For example, a learning disability means that sometimes she leaves the heating on by mistake and so has higher heating bills. Her DLA means that she can pay these bills without too much worry and difficulty. Under the proposed test, however, she scored only four points, which would mean her losing £41 a week, or £2,000 a year.

The report found that 30% of those in receipt of the mobility component and 40% of those in receipt of the care component would receive less under PIP. For example, Frankie, who lives in a small town in a small group home run by a voluntary organisation, receives nine hours of support a week from paid staff as part of his living accommodation. He has a learning disability, cannot read, has a long-term health condition that requires periods in hospital and has mobility problems. At the moment, he receives the medium rate care component and higher rate mobility component of DLA. Under the PIP assessment, he scored some points in some areas, such as living needs—he needs help using appliances and understanding written communications—but that amounted to only seven points. That means he would not get those benefits and would be £85 a week worse off—£4,400 a year.

[Yvonne Fovargue (Makerfield) (Lab)]

Does my hon. Friend agree that the changes to the legal aid system whereby access to welfare benefits advice will either be severely curtailed or not available at all will severely affect people’s attempts to appeal against these decisions, which appear perverse?

[Sheila Gilmore]

As my hon. Friend says, there are considerable problems with people being able to access legal advice on making appeals, but it is extremely difficult to access advice generally, given the cuts. We are certainly seeing that in my city, where the advice shop—one of the main advice centres—cannot see people for two weeks. Consequently, appointments are made two weeks in advance. Following an assessment result, people sometimes get a letter telling them that they have three weeks in which to appeal, yet it is difficult for them to get even basic advice in order to make an appeal. That is the reality that people are facing on the ground, so we need to look hard at the proposed tests.

Another important aspect of this debate—the Select Committee on Work and Pensions draw attention to this, and I hope that the Minister will consider it seriously—is that if we follow the pattern used with the employment and support allowance, people will be tested and re-tested, even though nothing in their circumstances has changed. One of the Select Committee’s recommendations was that limits should be placed on the number of re-tests under the new PIP. That is not to say that people should not be tested, but if they are re-tested constantly we may run into the problem of people having their next test virtually before they have finished their last test or their last appeal. That is not helpful, particularly for people with mental health problems, for example.

[Nadine Dorries (Mid Bedfordshire) (Con)]

Does the hon. Lady agree that there is a balance to be struck, in as much as those in long-term care—the very vulnerable people she is talking about—should perhaps not be subjected to re-testing in future, whereas the others are entitled to a face-to-face reassessment, and that that is what should happen?

[Sheila Gilmore]

I do not disagree with the hon. Lady, in the sense that there has to be the flexibility to look at people’s exact circumstances. The point I wanted to make is that we need to impose some limitations, because the stress of having to go through the process is extremely great for some people, and their illness can be made worse.

Although I have taken interventions, and therefore have extra time, I do not want to take up too much time, because one or two other people still want to speak. The Minister who opened the debate would no doubt respond by saying that we are scaremongering—that what we have described will not come to pass under the test and that everything will be fine. Indeed, she has gone further than that. She has said on numerous occasions that one of the reasons for having a new benefit and not simply changing DLA is that people who currently do not qualify—people with communications difficulties, she has suggested, or people with mental health difficulties—will now qualify under the new benefit. That suggests that more people will be entitled to PIP. I want to know how she can square that with making savings of the size that the Government say they want. If more people who do not currently receive the benefit will qualify, that suggests that even more people will claim than at the moment.

The Minister has also said that we should not worry about the tests because they are going to be a “conversation”, and are not really going to be a test. She has also said that we should not worry about the time limits on tests because a test should take as long as it takes. That all sounds wonderful, but I would like to know—the Minister has to answer for us—how it squares with cutting costs. Indeed, it will add to the administration costs, so is that included in the contract with providers? We do not really know what the terms of the contract are, and if those things are not in the contract, they will not happen. Therefore, for all the warm words about having conversations, being relaxed and the tests taking as long as they take, what the Minister has described will simply not happen unless we are given clarity on whether it is in the contract.

15:47

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

I will be brief. I was out of the Chamber earlier because I was in the Welsh Grand Committee.

People working in Remploy in particular, but also the disabled community generally, feel very much that they have been kicked in the teeth. They feel as if they are having to pay the price for the mistakes of the bankers. We all know that we had a deficit, but we also know that two thirds of it was caused by bankers, with the other third caused by the previous Administration investing more than they were earning at the time to keep growth going—and being successful in that. Now we have got zero growth and the deficit is going up.

[Maria Miller]

Will the hon. Gentleman give way?

[Geraint Davies]

No, I will not give way. I do not have time.

Let me turn to Remploy, which was set up after the war. When I started becoming actively involved with my local Remploy factory about a year ago, the orders it was receiving were not high enough. I went round to the Driver and Vehicle Licensing Agency, the local health service, the local university, and so on, and now the factory is working flat out, getting more and more orders. That just shows that if the central command in Remploy were more effective, the factories could be successful and could work.

As for the finances, yes, the previous Government closed 29 factories, but they also left a legacy of £500 million to modernise and reinvest. However, we now find that the residue of that—about £320 million—is being put elsewhere. It might be used to get people with disabilities into mainstream work, but that mainstream work does not exist, because of record unemployment and record numbers of people in part-time work, and we now have the Enterprise and Regulatory Reform Bill, which will enable employers to get rid of people who are weaker without tribunals and all the rest of it. It all stinks, to be honest.

In regard to the financial literacy of the arrangements, the average subsidy has dropped from £25,000 to £20,000, and it costs £10,000 in lost tax and benefits to put a normal person on the dole. Lord Layard has just produced a report on the cost of unemployment in terms of mental health, and it is clear that people in Remploy will end up with other difficulties that will put an enormous cost on the health service. There will be no real economic benefit at all.

Alongside that, there is uncertainty about the pension fund, the factories and the assets. The Welsh Government have, in good faith, offered to take over the factories. They have said, “We’ll have the subsidies if you let us use the factories and make this work. Let us use procurement positively and smartly to make it work.” Of course, the offer has been turned down, because success in Wales would illustrate that similar success could have been achieved in England, and the Government do not want to see themselves failing. This is just a case of asset stripping of the most vulnerable people in our society, and it stinks.

15:50

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

This has been a helpful discussion about policy, but the best policy is informed by our own experience of what is happening in our own constituencies. I want to put on record what my constituents are experiencing at the moment. In addition to surgeries, we now have an open-door policy four days a week, and in some ways I wish that we had not. Sometimes we want to hide, because we have been inundated with people who have problems with lost benefits.

I also help with disability living allowance appeals. This is not just about legal aid cuts; it is about the cuts overall. We have lost advisers in the area, so I represent people at DLA appeals, and we mainly win. That is not because of my articulateness, as you can tell; it is because once those presiding over the appeal see the people concerned, they can see that they have been wrongly assessed. Another problem is that people’s appeals are taking so long to arrange, once they have lost their benefits. They can wait for up to six months for their appeal, having lost their benefit, which is causing immense problems.

On the work capability test, I opposed the privatisation of the process and the bringing in of Atos, but if we are going to have a private company doing this work, we should at least be able to understand the contract involved. We should at least be given open access to what has been agreed with that company in our name, and be told what level of performance it is supposed to undertake. I am not sure what other Members have found, but when people come to see me, having gone through an Atos assessment, they tell me that they feel degraded, shamed and abused. I raised the point about suicides with the Secretary of State some weeks ago, and I was not exaggerating. Other Members will have experienced this as well. People come into my constituency office and tell me: “I can’t take any more of this. I’ve had enough.” I am really worried by the anecdotal reports of individual suicides, and it behoves the Government to monitor the situation and assess what is happening on the ground.

People have had enough of being called scroungers. We have seen the increase in hate crime towards people with disabilities because of the atmosphere that has been created by the media and by some politicians using loose language on this subject. Those people feel shamed, simply because they are claiming the benefits to which they are entitled. That is the experience in my constituency office at the moment, and it just goes on.

This is carers week. Other London MPs will also tell the House about constituents who have gone on to personal budgets, and that those budgets do not cover the wages of the carers whom we want to care for our people. It is virtually impossible to pay enough to get someone to stay overnight. Most of these arrangements have now been privatised, and people are getting a different carer coming in every day. The relationships with the carers have been broken down by this process.

Respite provision is now critical in my constituency, but what is my local Conservative council doing? It is closing the centres where people used to get respite. This is all part of the modernisation programme. It is closing three centres and modernising one. Of course, two of the centres that are being closed completely are in the most needy area of my constituency; a working-class area. It just goes on.

After the Southern Cross debacle, the company was broken up and some of the residential homes were given back to their original owners. I give this warning now: that arrangement is beginning to break down already, because the management in those individual homes are not competent to manage the process of disaggregation and the long-term planning of care. Why? The local authority role in providing those services has been so undermined and the resources have been cut, even for the management of those individual contracts. We are facing a crisis. A number of people are trapped in this whirlpool of deprivation, and it will be almost impossible to pull them out if we continue with these policies.

I went to the GMB conference last week, spoke to the manufacturing section and met many Remploy workers. They are now absolutely desperate, and they feel completely betrayed. They might not have agreed with the Sayce report, but at least there was a process there that they saw they were working through. That has now been torn up and everything in that report has been reneged upon. They feel absolutely vulnerable, with some saying, “We will not work again.”

In the early 1980s, I sat on the first committee established to remove restrictions against people with disabilities. It was called CORAD— the Committee on Restrictions against Disabled People. I was nominated to sit on it by the TUC. It took us 25 years before we secured anti-discrimination legislation. I congratulate the last Government on achieving that. I was one who wanted to mainstream employment. In fact, I was an ardent advocate of that; over the years, experience taught me that we always need an element of supported employment. That is what Remploy does well. What does it do badly? As my hon. Friend the Member for Swansea West (Geraint Davies) argued, the management have been abysmal. All the workers are saying is, “Listen to us; we can manage these resources more effectively than the current management, but we also need the support of the Government.” As my hon. Friend said, what happened to the commitments about public procurement that we were promised over the last two years? If it had not been for the individual efforts of people such as my hon. Friend and others, as exemplified today, no procurement would have happened because the Government have done nothing.

Finally, the Government should not think that this issue or these people are going to go away because they are not: these people are mobilising. We now have a disability movement in this country of which we have not seen the equal before. Black Triangle occupied Atos offices in Scotland; members of DPAC—Disabled People Against Cuts—chained themselves in Trafalgar square. These people are not going to go away. They will be in our face—and rightly so. I will support them, including if Remploy workers opt to buy their factories.

15:56

[Mrs Anne McGuire (Stirling) (Lab)]

I am delighted to welcome the contributions to this afternoon’s debate of my hon. Friends the Members for Aberdeen North (Mr Doran), for Islwyn (Chris Evans), for Hayes and Harlington (John McDonnell) who just spoke so powerfully, for Wansbeck (Ian Lavery), for Swansea West (Geraint Davies), for Edinburgh East (Sheila Gilmore), for Rutherglen and Hamilton West (Tom Greatrex) and for Westminster North (Ms Buck). They all made their contributions in their own distinctive ways. We have covered some of the areas identified in the motion.

I kick off by talking about the social care crisis, identified by the hon. Member for West Suffolk (Matthew Hancock) and highlighted by my hon. Friend the Member for Westminster North. I hope that we are now at a point in discussion where we can reach a cross-party consensus on social care. Both those Members identified the major difficulties. I think we should remember that it was my right hon. Friend the Leader of the Opposition who invited the Government to come into those cross-party discussions, having had a pretty bruising experience prior to the last general election when we thought we might have had a basis for moving forward. I certainly welcome the fact that we are treating this issue with the seriousness and urgency that it deserves. However, my image of the contribution of the hon. Gentleman is that he goes around working out how much people’s bottoms and legs can be insured for. He is not normally prone to humour, but I thought that was a bit of light-heartedness on his part.

The Minister with responsibility for disabled people paints a picture that, frankly, bears no relation to the reality of the lives of disabled people and their families and carers. When I heard her contribution, I wondered which world she was living in. She is a quiet and impressive speaker, although she showed today that she can sometimes be provoked. She somehow gives the impression that it will be all right on the night and that tens of thousands of people out there can be expected to say, “Well, that’s fine, Minister for Disabled People. We know that we are suffering”—as my hon. Friend the Member for Hayes and Harlington identified—“but we do not know what is in front of us; we have been vilified in the press, not just by media reporters, but by some ill-considered briefings from some politicians.”

The words of the Minister do not chime with the reality of what people are feeling out there. Over the past couple of years disabled people have been undermined and their confidence shattered, and they are living in a climate of fear. There has been an increase in hate crime. According to a recent report by the university of Glasgow for Inclusion London, the amount of negative reporting of disability in the print media has increased dramatically. People out there who are not claiming disability benefits now think that everyone who is claiming a disability benefit is a skiver. I hope that one day the Secretary of State will rebut the comments that are being made in some tabloid newspapers.

Let me dispel one or two of the myths that have been perpetrated here today. One is that lifetime and indefinite awards will never see the light of day again. In fact the lifetime award was replaced in 2000, because we recognised that it conveyed a mixed message. There has also been a dodgy use of statistics on all sorts of disability benefits, particularly by the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling). He said that 75% of incapacity benefit claimants were fit for work, but when the position was examined properly, the figure proved to be as low as 37%.

An image or background has been created to justify a welfare reform programme that is flawed, at least in its implementation. We talk in general terms about disabled people and those who receive disability living allowance, but hundreds of thousands of people who have arthritis, learning disabilities or psychosis rely on the additional cost payment provided by DLA for their everyday lives.

Let me deal very briefly with Remploy, which has already been dealt with extensively today. Yes, we had to wrestle with some of the difficulties—I am certainly not going to run away from that—but the Minister gave only part of the picture. Any Member who was in the House before the last modernisation programme for Remploy knows that we engaged in an extensive and lengthy consultation. All Members of Parliament had all the figures in front of them from the moment that we embarked on that modernisation programme. What we did not do was organise a 90-day consultation involving people who were already feeling vulnerable because of all the other stuff that was going on around them, and embark on a factory programme without building elements of support into it.

Particularly important is the cumulative impact, which has not been addressed today. The Joint Committee on Human Rights said in its report:

“Given the breadth of the current reforms, the Government should publish a unified assessment of the likely cumulative impact of the proposals”.

The Government replied:

“The ability to undertake cumulative analysis is limited because of the complexity of the modelling required”.

So a Government who have tens of thousands of civil servants in the DWP are telling disabled people that, despite all that expertise, they cannot put together a cumulative assessment of what is happening to their lives. I think that it is to the shame of the Secretary of State that he is not prepared to put the big picture out there in front of people. The Joint Committee also said that we were in danger of breaching our commitment under the United Nations convention on the rights of persons with disabilities by posing a threat to their right to independent living.

Let me put a very brief cumulative impact assessment before the House. The DWP’s own analysis concluded that the benefit cap would have a disproportionate impact on households containing a disabled person, which were

“more likely to be affected”.

The Prime Minister has always dodged and weaved on this, but the reality is that the sum will be reduced by half under the new universal credit. The “Counting the Costs 2012” report by Contact a Family found that it costs three times more to raise a disabled child, and 73% of its respondents said they believe welfare reform will make them poorer. Mencap says 32% of local authorities have cut day care services in the past three years. The cumulative effect is growing. Some 57% of people with a learning disability currently receive no services at all, despite being known to their social care departments. Disability Rights UK has highlighted how losing DLA will impact on disabled people’s opportunities to get a job.

[Matthew Hancock]

The right hon. Lady talks about the need to see the big picture. Will she therefore correct something the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) said in his opening speech? He said unemployment is rising, when today’s figures show a fall in unemployment and a rise in employment, and that should be welcomed.

[Mrs McGuire]

I know the hon. Gentleman from our days serving together on the Public Accounts Committee, so I know how good he is with figures, and how he can bandy them around. The reality is that £9 billion more will be needed to pay for unemployment benefit. That is the real statistic.

[Matthew Hancock]

indicated dissent.

[Mrs McGuire]

That is the real statistic. We in this House bandy figures around, but the reality is that we are talking about people who are finding themselves—day after day, week after week, month after month—being unable to get a job. That is the reality: 2.5 million unemployed.

[Ian Lavery]

In my constituency, and in the north-east region, unemployment has increased again, yet the Minister with responsibility for employment did not even turn up to a Westminster Hall debate today to respond to the comments of MPs from the north-east whose constituencies face serious problems. That is a total disgrace.

[Mrs McGuire]

And that is the issue this Government need to attend to. We have a crisis in social care. The directors of adult social care services have identified in excess of £1 billion of cuts to social care budgets.

What in this motion do the Government disagree with? It recognises there should be reform of DLA. It raises concerns about the WCA. It recognises the role of carers. It promotes independence, choice and control for disabled people. It asks the Department to restore, in writing, its commitment to equality for disabled people. It calls for a full cumulative impact assessment of the effect of what is happening on the lives of disabled people. It asks for reform of the WCA descriptors.

I always think it is faintly amusing that when we talk about disabled people in this House, Cabinet Ministers often find more time to talk among themselves—as some of them are doing now on the Treasury Bench—than to listen to the debate. I hope the Minister replying to this debate will recognise that this is a sensible motion that is looking for consensus, and that he will respond in keeping with that spirit of consensus.

16:08

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

First, I want to say on behalf of my colleague, my hon. Friend the Member for Basingstoke (Maria Miller), who has responsibility for disabled people, that she has had to attend a Westminster Hall debate to respond to the hon. Member for Sheffield, Heeley (Meg Munn). She would have liked to attend the conclusion of our debate, however.

Last week, the House debated mental health on a Backbench Business Committee motion, and it made a powerful statement about the need to challenge stigma in mental health—a topic we have also touched on today. That earlier debate was made all the more powerful by a number of personal stories told by Members on both sides of the House. It was a debate that will be long-remembered by those who participated, and I know from the many e-mails and letters I have received that it reached well beyond the usual suspects who avidly follow our proceedings. That is also the case in respect of some of the issues raised in today’s debate.

Let me begin by referring to an issue raised in the opening speech by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). It is an issue very dear to my heart as Minister with responsibility for mental health, and in respect of which the Government will shortly be coming forward with a suicide prevention strategy. I am talking about the issue of concerns that some constituents bring to our surgeries. I cannot talk about the individual case, but I will make sure that a ministerial colleague writes back to him once the details are known. What I can assure him and other hon. Members is that all staff are trained in dealing with vulnerable groups, including those with potential for self-harm. Occurrences of self-harm are rare, as are suicides. It is also worth saying that Atos has appointed mental health and cognitive intellectual champions to provide advice on handling any aspect of these cases, including dealing with cases of potential self-harm and suicide. I wanted to put that on the record because talk about suicide can itself be damaging, and I want to ensure that we address these issues correctly.

[Ian Lavery]

rose—

[Paul Burstow]

I have so little time—I have minus 10 minutes, in theory—that I would like to ensure that I respond to the points that have already been made.

Disability living allowance has been mentioned by a number of hon. Members. It is worth saying that Labour left the assessment process as a piece of unfinished business; it did not properly take into account all those with sensory, mental health and cognitive impairments. The move that this Government are making to the personal independence payment gives us the opportunity to ensure that we do take proper account of the impact of mental health needs and fluctuating conditions. The right hon. Member for Stirling (Mrs McGuire) said in her summing up that the Labour Government dealt with the issue of life awards in 2000. Yes they did—they changed the name to “indefinite awards”. Some 70% of those are still on the case load and they have just been given a different name. The reality is still the same.

The hon. Member for Edinburgh East (Sheila Gilmore) talked about PIP assessments, and I want to tell her that the Government are still considering the findings of the consultation on the assessment process. The consultation closed on 30 April and we will be publishing the response to it, along with the current consultation that we are doing on the detailed design, in the autumn, before this House properly debates those matters as part of the regulations.

My hon. Friend the Member for Chippenham (Duncan Hames) talked about Labour’s legacy of subcontracting out to Atos the decision-making process, and fettering, in a way, the way in which decision makers could act. He is absolutely right about that, which is why we have given back flexibility to decision makers. Indeed, we have moved away from the hard, harsh and tough approach taken on work capability assessments by the previous Government. We have taken the recommendations of Professor Harrington’s independent reviews seriously and implemented all of them. We are building on his recommendations, following his engagements with charities, on how we make sure that the assessment process is more accurate and does properly reflect fluctuating conditions and takes into account those with mental health conditions. Again, that point was raised by my hon. Friend.

[Sheila Gilmore]

rose—

[Paul Burstow]

I cannot give way during this debate. A question was asked about whether Professor Harrington will continue to undertake reviews. He will be conducting a third and final review—the legislation commits to two further reviews—but I think that after three reviews he gets time off for good behaviour. The Government are not telling him to go—if he wanted to stay, we would be happy for him to do so. The reality is that he has done a good piece of work on behalf of this Government and we want to make sure that that is followed through.

The hon. Member for Wansbeck (Ian Lavery) asked a number of questions, as did my hon. Friend the Member for Chippenham and others, about Remploy. Let me be clear about the consultation process: the objective is to preserve jobs. We made a number of announcements, on wage subsidies and on the £10,000 to support employee-led bids. We did that in response to expressions of interest that we have already received. Discussions have taken place between Remploy and bidders, as part of the normal commercial process. My hon. Friend asked about social enterprise businesses, and there has been engagement with them. The whole process will run for five and a half months. The previous Government’s modernisation plan was meant to turn this sector around, but we still face a £68 million loss, which is why we are making the changes that we are having to make now. My hon. Friend asked whether the consultation report will be published. Yes, it will. We are also making sure that when individual discussions take place with employees, there is a discussion about the contribution that the £8 million support package constitutes. The hon. Gentleman also asked a question about the accrued rights of existing members of schemes, and I can assure him that those will be protected.

The hon. Member for Aberdeen North (Mr Doran) made a very good point about independent advisory groups, and there will be one to examine all the business plans and advise the Remploy board prior to decisions being made about those plans. I also understand the importance of ensuring that any conflicts of interest are carefully handled, and my ministerial colleagues at the Department are certainly very focused on that.

I am the Minister responsible for social care and so I want to address those parts of the debate. We should be honest: successive Governments have failed to tackle social care. In the past 13 years, in a time of plenty, Labour failed to get a grip on the issue. We have a system in this country governed by laws that were written in the 1940s and look back to Poor Law principles. Social care and social work should enable disabled people, older people and their carers to live the lives they want to and that is why we will shortly set out a comprehensive overhaul of social care law in this country, placing people’s wellbeing at the heart of decision making and focusing on goals that matter to individuals. We will build on the excellent report by the Law Commission on social care law reform to ensure that we have a legal framework that supports a much more personalised approach.

As the Government consulted with charities last year and worked with families, carers and others, we heard many criticisms of the social care system we inherited. We heard a long and deep-seated set of concerns about the variability of quality, about people feeling bounced around different systems and not always getting the personalised support that they wanted, and about the system being focused too heavily on crisis and not enough on prevention. We will address those issues in the White Paper we will publish shortly.

My hon. Friend the Member for West Suffolk (Matthew Hancock) and others spoke about funding reform and we will publish a progress report on that matter. We certainly understand the point made in the debate about the unfairness inherent in the system we have today. The flaws in that system penalise thrift and hard work and lead to people facing catastrophic costs. Those hon. Members who have said that we need a cross-party solution are absolutely right and the Government are committed to talks so that we secure just that.

Some hon. Members have talked about social care funding. The truth is that the Government took some difficult decisions during the spending review, but they were the right decisions and social care budgets were protected through the investment of an extra £7.2 billion up until 2014. It is clear that councils that have broadly the same resources available are making very different decisions. Some are cutting services, but many are being smarter and are working with disabled people, older people and carers to come up with better ways of delivering care and support in their communities. Indeed, the most recent survey of councils by the Association of Directors of Adult Social Services found that councils were getting smarter and finding more efficiencies than they had in previous years, as well as fewer cuts. Indeed, this year 77p in every pound that councils have saved in social care budgets has come from smarter working and greater efficiency.

My hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) rightly talked about the need to break down the silos in health, social care and housing and we will break them down to ensure that people are not bounced around the system and are treated with the respect and dignity they deserve.

In conclusion, I want to talk about carers, who have been mentioned—rightly, as this week is carers week—by my hon. Friend the Member for Chippenham and others. It is right that we should pay tribute this week to the immense contribution of family carers, but, as others have said, we need to ensure that we do not focus on carers only in carers week. That is why the Government have committed £400 million through the NHS to provide breaks for carers and it is why we are requiring primary care trusts to draw up the plans to demonstrate how they will provide support to carers. This September, they will have to publish those plans and set out how breaks will be provided for carers as well as how many will be provided. Just this Monday, I had the opportunity to visit Crossroads Care in Cambridgeshire to see for myself the difference that those breaks make. A scheme has been introduced whereby GPs can prescribe carers’ breaks. We have discussed carers staying in employment, and tomorrow we will host with employers a carers summit to focus specifically on how we break down barriers so that we can ensure that carers do not feel tipped into crisis and find themselves out of work as a consequence.

The coalition Government are clearing up the mess left by the previous Labour Government—a huge deficit and an unbalanced, debt-ridden economy, after tough decisions had been ducked time and again. The Leader of the Opposition’s motion lacks vision. It shows Labour running away from its responsibilities and record, but the coalition Government are committed to reforming the way in which the country works so that people are in a situation in which work pays. We will ensure that disabled people are included in society and able to contribute to it, and that social care, after decades of neglect by successive Governments, is at long last reformed.

Question put.

16:19

Division 20

Ayes: 236

---

Labour: 218
Democratic Unionist Party: 5
Scottish National Party: 5
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Independent: 2
Alliance: 1
Green Party: 1

Noes: 298

---

Conservative: 258
Liberal Democrat: 38

[Madam Deputy Speaker (Dawn Primarolo)]

I now have to announce the result of a deferred Division on the motion relating to the draft regulations on community right to challenge. The Ayes were 282 and the Noes were 196, so the Question was agreed to.

[The Division list is published at the end of today’s debates.]

Regional Pay

Wednesday 20th June 2012 Commons Chamber

[Madam Deputy Speaker (Dawn Primarolo)]

I advise the House that Mr Speaker has selected the amendment in the name of the Prime Minister.

16:34

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House notes that the national pay review bodies have been an effective way of setting pay while allowing for appropriate regional and local variation consistent with the need to recruit, retain and motivate staff and to keep tight control of public spending; believes that seeking to alter existing frameworks for negotiating and setting public sector pay could increase costs for the taxpayer as well as exacerbating regional inequalities; further notes that unanswered questions about Scottish separation risk uncertainty for the thousands of staff employed in Scotland under UK-wide pay negotiations and bargaining mechanisms; further believes that co-ordinated national negotiations can also reduce uncertainty, help financial planning and reduce costly and time consuming bureaucracy, local negotiations and disputes; and opposes moves intended to weaken or dismantle efficient and stable arrangements for negotiating and setting public sector pay.

We have called this debate today to give Members on both sides of the House an opportunity to raise concerns and ask questions about the Government’s plans for regional pay and to send a message that there is no appetite among nurses, teachers, police officers or, indeed, businesses in our constituencies for disrupting or dismantling the systems we have in place and going down a path that would escalate costs to the taxpayer and exacerbate regional inequalities. We are giving the Government an opportunity to dispel the confusion that they have created, and perhaps to get out of the hole that they have dug themselves into by executing another of the U-turns that have become something of a speciality of late.

Last autumn, the Chancellor announced his desire to make public sector pay

“more responsive to local labour markets”. —[Official Report, 29 November 2011; Vol. 536, c. 802.]

At the time he described it as a “very significant reform”, and one newspaper said that the Treasury regarded it as

“one of the most important measures it can introduce to rebalance the economy.”

The Chancellor’s supporters were excited. The hon. Member for Tamworth (Christopher Pincher) said enthusiastically that

“a truly local…negotiating structure”

would make wage rates in economically depressed communities more competitive.

More recently, there have been signs that the Liberal Democrats and, perhaps, 10 Downing street have become worried about the new mess that the Chancellor has got them into, with signals given out that nothing is decided and, in the words of the Deputy Prime Minister,

“there is no proposal on the table”.

In response, the hon. Member for Cannock Chase (Mr Burley) has called on the Chancellor to “hold firm”, and the hon. Member for South Northamptonshire (Andrea Leadsom) has said that national pay bargaining is the reason why businesses are struggling at the moment.

[Kevin Brennan (Cardiff West) (Lab)]

My hon. Friend may not be aware of this, but the Federation of Small Businesses in Wales has also come out against the Government’s proposals for regional pay. Should it not be a warning to them that they are on completely the wrong path?

[Rachel Reeves]

I am not surprised at all, because in reality, if regional pay were introduced and pay were cut in Wales and in other areas of the country, businesses would suffer because people would have less money in their pockets to spend with local companies.

Given the concern that the proposal has caused, the Government have a responsibility today to clarify their position and their plans. Was the Chancellor right when he said that it is a “very significant reform”, or was the Business Secretary right today when he said that there is no question of the Government imposing lower pay on people simply because they happen to live in poorer parts of the country? Those mixed messages have created confusion: confusion about the degree of localisation and variation being proposed; confusion about whether the Government propose to differentiate pay into regions, zones or local markets, which could itself mean many different things; and confusion about whether national bargaining structures would be maintained, replaced with local bargaining processes or dispensed with altogether.

All that we have from the Government is the evidence that the Treasury has submitted, alleging that in many parts of the country public sector workers are paid upwards of 10% more than their private sector equivalents.

[John Robertson (Glasgow North West) (Lab)]

Does my hon. Friend agree that the confusion being caused by the regional pay strategy, added to the fact that so many people are unemployed—unemployment is growing in my constituency—and that we are trying to get people into work, raises the question, “What are the Government trying to do?”? Do they want to get people into work, or do they want to ensure that people have jobs that they can afford to live with?

[Rachel Reeves]

I thank my hon. Friend for that intervention. As a result of that confusion, many people who are in work are worried about spending money, because they are not sure what is going to happen to their pay, and that uncertainty is also making economic recovery harder to secure.

Comparing rates of pay in the public and private sectors involves a notoriously complex and controversial analysis. It is difficult to be sure that one is comparing like with like, because the jobs done by teachers, police officers or emergency workers have so few private sector equivalents.

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

My hon. Friend may be interested to know that inward investors to whom I have spoken are concerned to have decently funded public services in education and health; they do not want a GP in Swansea, for instance, to up sticks and go to Bristol. Does she agree that in many instances that analysis, concluding that different pay for the same job throughout the country will help the private sector, undermines the confidence of inward investors and is counter-productive?

[Rachel Reeves]

My hon. Friend speaks powerfully on behalf of his constituents in Swansea. In my area, many people commute from Bradford to work in Leeds and the other way round. Would their pay be determined by where they work or where they live? If the Government say that their starting point is these differentials, they cannot blame people for concluding that their ultimate aim is a reduction of 10% or more in the relative pay of public service workers in some parts of the country.

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

When there is regional bargaining, in which I was once involved in a trade union, the complexities mean that there are more likely to be added costs. Indeed, the situation is the opposite of everything that happens as a result of what was created in 1908 by Whitleyism.

[Rachel Reeves]

My hon. Friend is absolutely right, and I will come on to deal with some of the evidence that backs up his point.

[Mr Ben Bradshaw (Exeter) (Lab)]

This is not just a cause for concern in Scotland, Wales and the northern regions of England. There is also deep concern in the south-west, where we have the biggest gap between wages and house affordability. Any regional pay structure is bound to involve a huge transfer of public money from regions such as the south-west to the wealthy south-east, and that is exactly the opposite of what the Government should be doing.

[Rachel Reeves]

I thank my right hon. Friend for that intervention. Indeed, a 1% pay reduction for public sector workers in the south-west would cost that region £140 million a year.

If the Government were to achieve their objective of reducing pay to what they say is the equivalent in the private sector, a real-terms cut in pay, year after year for a decade or more, would be needed. It is no wonder, then, that people are worried and are calling on the Government to come clean on what their plans really are. It is no wonder that people think this is a deliberate attack on public sector workers and on the parts of the country that have already been hardest hit by the recession.

[Chris Ruane (Vale of Clwyd) (Lab)]

Regional pay was mentioned this morning in the Welsh Grand Committee, when I quizzed the Secretary of State for Wales about it. The terminology that Government Members are using is not “regional pay” but “local-facing pay”. I asked for an explanation of what local-facing pay was, but got no response. Does my hon. Friend agree that if local-facing pay is introduced, there will be sad faces in Wales and happy faces in Buckinghamshire?

[Rachel Reeves]

The problem is that the Government are being a bit two-faced, with one person saying one thing and another saying something else.

The reality is that we are in a recession made in Downing street and it is hitting some parts of the country particularly hard. I quote from a recent report by the Institute for Public Policy Research on the state of the northern economy:

“The double-dip recession has hit the North hard, with unemployment rising and business confidence falling. This lack of confidence among employers has maintained the hiring freeze across the North, implying that upward pressure on unemployment is likely to continue for the rest of the year.”

The difficulties faced by workers and businesses in many parts of the country as a result of the recession that this Government have landed us in are being made all the more desperate by the Government’s short-sighted decision to dispense with policies and processes put in place by the Labour Government to support more balanced development across the UK. This is a Government who got rid of regional Ministers, shot down regional development agencies, and cut back on vital regional investments such as the loan for Sheffield Forgemasters. The only regional policy that they have left is regional pay, which will take more money out of some of the most deprived areas of the country.

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

In the 1990s, Sweden moved from national pay scales to individual contracts. That was supported by the unions and resulted in a rise in some salaries for jobs where there was a shortage of workers—for example, kindergarten teachers—and it has been very successful. Is it not the case that other countries are moving to more competitive labour markets while we are moving backwards, as we did under the previous Government?

[Rachel Reeves]

I am sure that the 11,500 public sector workers in the hon. Lady’s constituency will know that she is sticking up for them.

[Mike Freer (Finchley and Golders Green) (Con)]

If the Opposition are so vehemently opposed to regional pay, will the hon. Lady be instructing Labour London MPs to give up their London weighting?

[Rachel Reeves]

I will come to the regional flexibility that is already in the system in inner and outer London for teachers and those in the health service. The point is that it is not necessary to dismantle the national system in this way to get the flexibility that we need.

We can imagine the impact that these changes might have on regional economies. If the north-east had a further year’s pay freeze imposed on it next year and the 1% increase that the Chancellor has announced was concentrated in more favoured areas, it would deprive the region’s economy of £78 million a year. If the same happened in other regions, Wales would lose £97 million a year, Yorkshire and the Humber £130 million, the south-west £140 million, as I said before, and Scotland £162 million.

Does the Minister really think that this policy will contribute to economic rebalancing? Is it really the best that the Government can come up with? Their only policy for jobs is to make it easier to fire people and their only policy for the regions is to cut the pay of public sector workers. It is no wonder that we are back in recession. It would be laughable if it was not so depressing.

There is no credible evidence to support the claim that the difficulties faced by the private sector are the result of national pay frameworks in the public sector.

[Margot James (Stourbridge) (Con)]

On that subject, the hon. Lady may be aware that the difference between private and public sector pay scales is as much as 18% in parts of the country. She talks about money being taken out of the economy, but does she not accept that if the pay scales were not so divergent, there would be additional private sector investment in those areas?

[Rachel Reeves]

I am sure that the 10,300 public sector workers in Stourbridge will be pleased to hear that the hon. Lady wants their pay to be cut.

Paul Callaghan CBE, the Sunderland technology entrepreneur and owner of the Leighton Group who was recognised in the recent Queen’s birthday honours list for services to the north-east, has said:

“I’m very concerned about the negative impact on the North East economy of regional pay rates.”

He went on to say that the

“freezing of regional public sector pay must reduce demand for local goods and services, further dampening an already depressed economy. I have seen no credible research to show that this move will have anything but a negative impact on both the region’s private and public sector.”

James Ramsbotham, the chief executive of the North East chamber of commerce, has said that

“the Government should be working towards making the economy more equal across the regions and not entrenching further disparity by reducing spending power in the North-East.”

The chief economist of the Welsh Government, in reviewing the impact of public sector pay rates on businesses in Wales, said that

“there is no credible academic evidence or research to indicate that crowding out has been happening in practice.”

[Mr Aidan Burley (Cannock Chase) (Con)]

I am glad that the hon. Lady read my quotation in The Daily Telegraph this morning. As she has read out a couple of quotations, perhaps I may read one back to her:

“location-based pay systems offer increased flexibility and a systematic approach to addressing recruitment and retention issues at a local level.”

That is from Unison’s policy paper “Location-based pay differentiation”, which was published in September 2011. Does she agree with Unison, which I understand is a donor to her constituency party?

[Rachel Reeves]

The hon. Gentleman should speak to the 9,500 public sector workers in his constituency. That number is substantially larger than his majority.

What families and businesses in these parts of the country need is not an even tighter squeeze on the wages of the people who are keeping their public services running, but a Government with a proper plan for jobs and growth who will work actively with businesses to get investment flowing into the sustainable, competitive, high-value industries of the future. That is what we need to improve living standards and economic opportunities in every part of the country.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

My hon. Friend has highlighted the enthusiasm of the hon. Member for South Northamptonshire (Andrea Leadsom) for these measures. It may be helpful to share with the House the fact that the same Member is asking for exemptions from the minimum wage for employers. Perhaps that is the real agenda here.

[Rachel Reeves]

I thank my hon. Friend for mentioning that. That is how the Government will get the economy moving again—by cutting the pay of the most vulnerable workers and introducing regional pay.

[Andrea Leadsom (South Northamptonshire) (Con)]

rose—

[Rachel Reeves]

It will be interesting to hear what the hon. Lady has to say to the 10,800 public sector workers in her constituency and whether she wants them to have a pay cut.

[Andrea Leadsom]

I am grateful to the hon. Lady. I was going to say that my 10,500 public sector workers will no doubt agree with me that the way to get our economy going again is by a private sector-led recovery, which requires that businesses begin to thrive. Does she accept that it is a private sector, business-led recovery that will turn around our economy?

[Rachel Reeves]

Perhaps those 10,500 public sector workers can give their verdict at the ballot box. Yes, we do need a private sector recovery, but we will not achieve that by cutting the pay of the people who deliver our public services.

[Phil Wilson (Sedgefield) (Lab)]

Can we put to bed the idea that public sector jobs crowd out private sector jobs? Between 2003 and 2008 the number of public sector jobs increased by 4.1% and the number of private sector jobs went up by 9.2%. That belies the case that the Government always make that public sector jobs crowd out private sector jobs.

[Rachel Reeves]

My hon. Friend makes a very important point.

[Ian Mearns (Gateshead) (Lab)]

Given the perverse logic that Government Members put forward, will my hon. Friend reflect on the fact that despite the disparity in public and private sector pay rates in the north-east of England, unemployment is going up? We might have thought that investment would be flooding in on the basis of cheap wages in the private sector.

[Rachel Reeves]

I thank my hon. Friend for that point and look forward to hearing what the Minister has to say in response.

As well as the business people and other experts whom I have quoted, the key stakeholders have made their views clear. Not just the trade unions but employers and independent experts have expressed concerns. For example, NHS Employers notes that employers already have

“the option to pay recruitment and retention premia”—

that is related to the point made by the hon. Member for Finchley and Golders Green (Mike Freer)—

“to address…specific labour market issues.”

It states that a move to local pay bargaining would

“raise issues of local capacity, increase administration costs and risk pay inflation as employers compete directly for staff on pay. Getting rewards wrong could have a significant impact on the quality of patient care and safety.”

The National Employers’ Organisation for School Teachers states that

“the existing four national zones, plus the flexibility to pay recruitment and retention supplements…provide an appropriate balance between national determination and local flexibility…the existing framework provides a reasonable level of autonomy to set pay”.

It reports that 84% of its members

“considered that the number of pay bands was appropriate to reflect local labour market conditions; only 7% thought this was not the case.”

The National Governors Association reports that it is

“not aware of any evidence that suggests making pay locally responsive would improve recruitment and retention.”

It points out:

“Low cost of living indices tend…to be associated with social deprivation; these areas may also…have difficulty attracting the best staff… As the Government is rightly concerned to narrow the attainment gap between those children from disadvantaged backgrounds and those who are not, bringing teachers’ salaries in line with local market conditions…would possibly be counterproductive and create recruitment difficulties that do not currently exist.”

The evidence is clear, and so are the views of the experts, but the Chancellor’s posturing has created real worries for public service workers around the country. Nurses, teachers and police officers are already suffering the effects of the pay freeze and being hit by the sharp hike in pension contributions, and like everyone else they are suffering the effects of the Government’s recession, unfair tax rises and cuts. Now, the Chancellor is threatening to impose policies that for many people in many parts of the country would mean real-terms cuts in their income, continuing year after year. That would force them to pay the price for the Government’s economic failures. The millions of workers who are keeping our public services going in difficult times, the majority of them women on modest wages, deserve better than that.

[Alison McGovern (Wirral South) (Lab)]

Does my hon. Friend agree that the people who are being hit by the speculation about regional pay are the self-same people being hit by the withdrawal of the regional development agencies and speculation about NHS funding? The total picture created by the Government is the crushing of demand and undermining of confidence in Wirral and Merseyside, the parts of the country that I represent.

[Rachel Reeves]

My hon. Friend speaks powerfully on behalf of her constituents in the Wirral, and I know they will appreciate that.

[Chris Williamson (Derby North) (Lab)]

Would my hon. Friend care to comment on the fact that yet again the Chief Secretary to the Treasury has gone AWOL? We have had debate after debate in which the Government have rolled out junior Treasury Ministers, and now he has ceded his responsibility to the Cabinet Office. Can my hon. Friend shed any light on what on earth is going on?

[Rachel Reeves]

Given that the policies have such big implications for the public purse, especially as anticipated costs go up because of the extra bureaucracy, I would have thought the Chief Secretary had a clear interest in them.

I suggest that Ministers take this opportunity to call a halt to this exercise, end the uncertainty and confusion and put people’s minds at rest. They did that for charities, churches and caravans, and even for pasties. As the Prime Minister has said:

“When you’ve got something wrong, there are two things you can do in government: you can plough on regardless, or you can say, ‘No, we’re going to listen, we’re going to change it’”.

I therefore hope the Minister listens to what Members say in today’s debate and changes course before the Government get into even greater difficulty. Trying to make public sector workers in hard-hit parts of the country the scapegoats for our economic problems is disreputable and divisive, and it is a distraction from the task to which the Government should be giving their full attention—a plan for jobs and growth that can get us out of the recession they have got us into.

16:54

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“notes the importance of recruiting, retaining and motivating staff and keeping tight control of public spending; further notes that the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath, first proposed a fair framework for local and regional flexibility for pay in his statement to the House of 9 June 2003; supports the Government in asking the widely respected independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets; and believes the Government is correct in awaiting the conclusions of those deliberations before making a decision on bringing forward proposals in respect of public sector pay’.

The shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), began by quoting the Chancellor, so let me quote the Chancellor a little more extensively:

“I can tell the House that the British economy is…better placed to recognise local and regional conditions in pay”.

He continued that, in future, we therefore plan that

“remits for pay review bodies and for public sector workers, including the civil service, will include a stronger local and regional dimension”.—[Official Report, 9 April 2003; Vol. 403, c. 283.]

That was the Chancellor in 2003, the previous Prime Minister. He set that proposal out at time when his advisers were the current Leader of the Opposition and the shadow Chancellor. I do not know whether the shadow Chancellor wrote that passage for the Budget speech—a lot of the Budgets around that time turned out to be “Balls”. Did he write it? Does he agree with it? If not, what has changed in the meantime? [Interruption.] It was clearly the best the right hon. Gentleman could do at that time. I shall come to the history behind the current Government’s approach, because the idea that it is a dramatic new departure is absurd. There is quite a long history, but we now have the opportunity to explore it.

[Huw Irranca-Davies (Ogmore) (Lab)]

Will the Minister give way?

[Mr Maude]

I shall get started, but I will give way to the hon. Gentleman in due course.

Let me begin by setting out the Government’s approach to this important issue. First, we believe there is a strong case for looking at introducing local market-facing pay and at how that can be done, but let me say clearly that our approach is not about ending national pay bargaining. Pay can be made more responsive to local labour markets within a national bargaining framework. Any benefits from localising pay can be realised without any need to get rid of national pay bargaining.

Secondly, the proposal is not about making further savings. We will continue to operate within tightly constrained overall public sector pay remits.

[Chris Williamson]

Will the Minister give way?

[Mr Maude]

I am going to make a little progress, but I will give way in due course.

Those pay remits are currently set at 1% a year. We need those constraints in order to address the appalling legacy of the biggest budget deficit in the developed world, which was left by exactly the people who now complain about its effects. Our approach is not about making further savings, but entirely about creating greater flexibility within those pay remit constraints.

Thirdly, this is not about cutting anybody’s pay. Even if we wanted to, we would not be legally able to do so.

[Huw Irranca-Davies]

rose—

[Mr Maude]

I will give way to the hon. Gentleman, who has been persistent.

[Huw Irranca-Davies]

Will the Minister speculate on why the Chief Secretary to the Treasury thinks the sun shines out the backend of this policy, while the Liberal Democrat leader in Wales has told him to stick it where the sun don’t shine?

[Mr Maude]

That was about as laboured a joke as I have heard in this place, but we will let the hon. Gentleman know.

Like the previous Government, we have said that it is important to look at the level at which public sector pay is set in each labour market over the longer term, which is why, in the autumn statement, the Chancellor announced that there was a case for considering how local pay could better reflect private sector labour markets. He invited the independent pay review bodies to consider the evidence, which is exactly what they are now doing.

[Mr Donohoe]

I do not know whether the Minister has ever been involved in wage negotiations, but if he looks at the public sector and then at the private sector, he will see that some multinational companies do national negotiations and do not have local rates. Is that not the case?

[Mr Maude]

They may well have national negotiations. If the hon. Gentleman had listened, he would have heard me say that our proposals do not involve a change to national pay bargaining mechanisms. Actually, though, plenty of companies have preferential pay rates in different parts of the country, as might well make sense in some circumstances. But he clearly did not listen to what I said earlier.

Pay decisions in the civil service, below the senior civil service, are delegated to individual Departments, so it is for each Department to consider the case as it applies to its own work force.

[Bill Esterson (Sefton Central) (Lab)]

It has occurred to me that Conservative Members were against the national minimum wage when it was introduced. Will the Minister confirm beyond doubt that this is not the thin end of the wedge and that there will not be any attempt to undermine the national minimum wage through regional pay?

[Mr Maude]

We have made it clear that we support the national minimum wage. That has been the case for a long time.

[Richard Burden (Birmingham, Northfield) (Lab)]

I am trying really hard to understand what the Minister is saying. Will he please tell me whether I have got this right—he does not want to dismantle pay structures or cut pay, but he does want to introduce bargaining and flexibility? Does that mean that there could be no pay cuts for any current or future employee as a result of that flexibility? What would that mean in the west midlands, where to get a house, someone has to raise a deposit of twice the average regional salary? In practical terms, is he talking about those pay levels rising or falling?

[Mr Maude]

The hon. Gentleman has failed to listen either to what the previous Prime Minister and Chancellor said, to what his own Government introduced or to what we have said, which is that this is not about regional pay, and nor has it ever been.

[Phil Wilson]

I think the Minister has been a bit selective in quoting Treasury Ministers in the previous Government. Treasury guidance notes put out by Ministers in 2003 also stated:

“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.”

In other words, the previous Labour Government were never going to do what this Government intend to do now.

[Mr Maude]

Given that the hon. Gentleman has not given me the chance to talk about our plans and approach, perhaps he will be patient and contain himself until that moment.

As I was about to say, nothing has yet been decided. Any proposals for each work force must be based on strong evidence. We want to hear from everyone with a contribution to make, and we are committed to making any future decision on the basis of evidence, which is the right way to approach the matter. That is why we have invited the various pay review bodies to consider the matter on that basis.

However, as I said earlier, we are not the only Government to think that there is a case for looking at this issue. The case was recognised by the last Government, and they gave it, I presume, serious thought. Indeed, in 2003, the then Chancellor announced a stronger local dimension to pay review body remits, noting that there was significant scope to increase the flexibility and responsiveness of public sector pay. He told the House:

“With this national framework for fairness in place, it makes sense to recognise that a more considered approach to local and regional conditions in pay offers the best modern route to full employment”.—[Official Report, 9 June 2003; Vol. 406, c. 412.]

Does anyone on the Opposition Benches disagree with that? It seems a considered and sensible approach to me.

[Fiona O'Donnell (East Lothian) (Lab)]

Will the Minister give way?

[Mr Maude]

I will not give way, if the hon. Lady will forgive me, because I need to make some progress and Back-Bench contributions are already likely to be constrained because the debate started rather late.

The then Chancellor also said that pay for the civil service should include a stronger local and regional dimension, while in that year’s Budget he set out

“action to increase regional and local flexibility in public service pay”.

As I have mentioned, the then Chancellor’s advisers included the current Leader of the Opposition and the current shadow Chancellor. It seems pretty opportunistic for Labour, at the 11th hour, to produce this motion, when its own Government took the public sector further down this path than we are at this stage contemplating.

Indeed, Labour did not just talk about localised pay; it actually introduced it. In 2007, the last Government introduced localised pay for civil servants across the courts service. They did so in response to the Treasury’s pay guidance, issued in 2007, at a time when, as far as I can make out, the current Leader of the Opposition was the Minister in the Cabinet Office responsible for civil service matters and the shadow Chancellor was the Economic Secretary to the Treasury. Yet that pay guidance, which went out across the civil service, asked Departments that operated across different locations to differentiate between pay levels across regional labour markets. Following that guidance, which was issued under the aegis of the current Leader of the Opposition and the current shadow Chancellor, the previous Government introduced localised pay in the courts service across the country. That was, if I may say so, a sensible and unusually well-judged move, and it has been successful.

[Chris Williamson]

rose—

[Mr Maude]

I am going to make progress now.

That policy was introduced at a time when those who are now on the Opposition Front Bench were intimately involved, so it is worth the House asking itself what happened. Did devilish civil servants somehow slide this wicked measure through, as the attention of the current shadow Chancellor and Leader of the Opposition was elsewhere, no doubt overly occupied in trashing the then Prime Minister?

Why is the shadow Chief Secretary to the Treasury taking up valuable parliamentary time attacking in opposition a policy that her own leaders actively promoted in government? It is not as if the Labour party immediately abandoned the idea in opposition that local and regional variations in the cost of living are important. In January, The Guardian reported that the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)—another previous holder of my post—told a private meeting of Labour MPs that housing benefit

“varies locally and so should a benefit cap”.

In fact, he was reported to have said:

“It makes much more sense to have localised caps…in different parts of the country”.

That revealed that the Labour party still recognises in private the very principle that it is today seeking to oppose. It is humbug, Madam Deputy Speaker. Yet again, the Opposition oppose policies that they introduced in government and that they still support in private.

We know what is behind this. It is the Labour party’s union paymasters who are calling the tune. We know that the Labour party ask their union backers which amendments to vote for and which to oppose. We know that under the current Labour party leader more than 80% of Labour’s donations come directly from trade unions—even more than under the last Prime Minister. No wonder Charlie Whelan boasted that it was Unite that won the current Labour party leadership. Yet again, it is Unison and Unite that are calling the tunes. But even the unions are confused on this matter. As my hon. Friend the Member for Cannock Chase (Mr Burley) said, Unison itself has made the case for local variations.

There is a serious case to be made for local market-facing pay. While private sector pay is typically set according to local markets, public sector pay is usually set on a one-size-fits-all basis at national level. As a result, public sector workers are often paid more than private sector workers in similar jobs in the same area. According to the Institute for Fiscal Studies, the overall gap between public and private sector pay averages 8.3%. However, the gap can be as low as virtually minimal in some places and as high as nearly 20% in others.

Academic research also shows that public sector pay is only 40% as responsive to local labour markets as private sector pay. That has potentially damaging consequences for the public sector and the economy. A one-size-fits-all system for public sector pay could limit the number of public sector jobs that could be supported in lower-cost areas. It militates directly against the relocation of public sector jobs to more deprived parts of the country. Private employers looking for staff to set up or grow their businesses might need to compete with much higher public sector wages. The evidence has yet to be examined, but the public sector could be crowding out the private sector in that way, and holding back the private sector-led recovery that the economy needs. Arguably, this makes private sector job creation less attractive. Importantly, it also makes it less attractive to move public sector jobs out of London and the south-east because, without any differential in pay rates to reflect the differential in living costs, it is much less easy to justify the relocation costs and loss of continuity that relocating inevitably involves.

So this approach is about investigating whether this could be another way of supporting local economies, by helping to provide more public sector jobs for the same level of spending and by helping the local private sector to become more competitive and to expand. This could help poorer areas to grow—[Interruption.] Exactly that point was recognised explicitly by the previous Prime Minister. He made exactly that argument. The hon. Member for Leeds West might want to argue with him, but we think that this is one of the few things on which he was right.

More broadly, this Government are determined to support regional private sector growth. Since the last election and the formation of the coalition Government, 843,000 private sector jobs have been created, and promoting regional growth—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am sorry, Minister. It is not necessary for Members on either side of the House, especially those on the Front Benches, continually to shout across the Floor. This is an important and heated debate—[Interruption.] I do not know why you are tut-tutting, Ms Bray; you have been doing a fair bit of shouting as well.

[Mr Maude]

We would have made better progress if, every time anyone stood up, the hon. Member for Leeds West had not recited the number of public sector workers in their constituency. She could just have laid the document before the House and we could have taken it all as read. It was a pretty poor substitute for an argument, but I suppose it was the best that she could do.

We are committed to supporting regional private sector growth. As I was saying, 843,000 private sector jobs have been created since the general election, and promoting regional jobs is at the very heart of our growth strategy. In the autumn statement, we announced an additional £30 billion of investment—

[Rachel Reeves]

Will the Minister give way?

[Mr Maude]

Only if the hon. Lady promises to read out the number of public sector workers in my constituency.

[Rachel Reeves]

I do not think that the Minister wants to cut their pay. Does he think that teachers in Horsham should be paid more than those in Leeds West?

[Mr Maude]

Under the hon. Lady’s own Government’s policy of introducing academies, it will increasingly be a matter for the management of those academies to set their own pay rates. So the policy that her Government set in train will, over time, lead to differentials coming into existence. Perhaps she will tell us whether she supports the policy of giving academies more freedom to make their own decisions—or is that another subject on which she is going back to her old, left-wing, statist ways?

[Rachel Reeves]

The last Labour Government did not give less money to schools in Leeds than they did to schools in Surrey. Is that this Minister’s policy?

[Mr Maude]

Under the last Government, a lot of schools in a lot of places found they were getting a lot less support than they were in other places—funny, that. The fact is that we announced an additional £30 billion of investment in major infrastructure projects across all regions of the UK, and in the Budget we laid out an additional investment of £420 million to stimulate local economic growth.

We have already taken considerable action to achieve strong sustainable and balanced growth that is more evenly shared across the country, but there is a lot more to do. It is not easy, but we have not shirked our responsibility and we will leave no stone unturned to promote a sustainable balance and fair private sector recovery across the UK. First and foremost, that has meant tackling the record deficit that we inherited, ensuring that the UK remains to the greatest extent possible insulated from the storm that undermines our eurozone neighbours. Public sector pay restraint has to play a vital role in that fiscal consolidation. At the same time, by considering the case for local public sector pay, we can ensure that we continue to have high-quality public services across the entire UK and help to support a private sector recovery. I commend the amendment to the House.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. A large number of Members wish to participate in the debate, so it is necessary to change the time limit to a maximum of five minutes for all Back-Bench contributions. It might be necessary to review that before the end of the debate and to reduce it further.

17:14

[Grahame M. Morris (Easington) (Lab)]

I was rather perplexed by the Minister’s response. My impression is that if it walks like a duck, talks like a duck and quacks like a duck, it is a duck. The Minister, however, says he is in favour of national pay negotiations, but wants to change how they are delivered regionally. As I say, I am confused about whether this is a U-turn, or is it two U-turns so that the Minister is facing in the same direction? It seems as if that is exactly what has happened.

Any decision to allow regional pay differences for low-paid workers in the public sector would only exacerbate the economic and social north/south divide. In fact, we recently had a Westminster Hall debate in which some of the relevant statistics and factors were put on the record. The announcement in the autumn statement that this was on the Government’s agenda came without any prior evidence base for such a move. When Ministers talk about how public sector pay might better reflect local markets, they mean only one thing—pay less to people in poorer areas such as ours.

Rebalancing our economy for the future and addressing the north/south divide should be a Government priority. However, these proposals for regional or local pay differentials—whatever the terminology—would simply entrench that divide. The north-east is facing a double-dip jobs crisis. Government policies of slash and burn in the public sector are hitting the north-east hardest, and the promised private sector-led recovery was always a Tory mirage. [Interruption.] Let me remind Conservative Members who are heckling from a sedentary position that the figures for the north-east show unemployment now standing at 145,000—up 8,000, providing a regional figure of 11.3%, which is an absolute disgrace. Regional pay in the public sector would only make things worse, turning the north-east, and indeed other peripheral regions, into low-pay ghettos.

[David Mowat (Warrington South) (Con)]

I thank the hon. Gentleman for giving way, as I have been trying to intervene for a while. He makes a point about the north/south divide, about which many hon. Members on both sides are concerned. Will he concede that in the last year of the previous Government, the gross value added difference between London and the north-east reached the highest level for a decade and a half? I do not think that was due to the present Government, so what was it due to?

[Grahame M. Morris]

I shall come to that point. Under the last Government, the GVA differential was considerably reduced over 10 years. I do not have much time, but if the hon. Gentleman reads the Hansard report of the Westminster Hall debate, he will find all the information there.

In trying to justify his proposals, the Minister mentioned the evidence base, as did the hon. Member for Stourbridge (Margot James). That worries me. Pay review bodies and police boards oversee a pay bill of about £95 billion, and any changes in the distribution of that money would have major consequences. The reverse multiplier and the taking of moneys from local economies are a huge issue, and the benefit changes have already had a terrible effect on the economy in the north-east.

I refer the Minister and the hon. Member for Stourbridge to the Government’s own evidence to the current review, which includes some key sets of figures that I found intriguing. According to that evidence, statistics from the Office for National Statistics on regional price levels relative to national price levels show that, if London is excluded, price levels throughout the United Kingdom vary by only 5.3%, from 97% in Yorkshire and the Humber to 102.3% in the south-east. In my region, the north-east, the price level is 98.2%. Those figures show the smallest variation in price increases throughout the United Kingdom. If the Government proceeded with their proposal to vary pay levels in the public sector, those in the poorest regions, such as the north-east, would be worse off while the wealthiest regions benefited to the tune of billions.

[Ian Mearns]

All of us in north-east England are calling for an economic stimulus to create demand and grow the economy. This measure would apply an economic sedative to regions such as ours.

[Grahame M. Morris]

I agree with my hon. Friend’s analysis.

The other likely negative impact of the Government’s policy is a brain drain from the regions with lower pay to those with higher pay. In my opinion, the Tory party has never understood the values and principles of our public services, which were founded on fairness and equity. What is truly outrageous is that Ministers waste their time targeting low-paid public servants when the real crisis is in the private sector. I believe that those are diversionary tactics, and that, if implemented, they would take more money out of the northern regions, which are already suffering from a lack of demand throughout our economies.

The United Kingdom is crying out for a serious new industrial policy that would reduce regional inequalities and close the north-south divide. A regional pay policy of the sort that the Government propose would only make the position worse, and it lacks an evidence base. Any comparison between public and private sector pay is a very crude measure. There are far more highly qualified workers in the public sector, there is a smaller gap between the top and bottom levels of pay, and there is a smaller gender pay gap. The majority of low-paid work in catering or cleaning, for example, is in the private sector. Similar roles in the public sector are often outsourced, which skews the figures still further.

The hon. Member for Warrington South (David Mowat) asked about figures relating to growth rates and relative performance. Under the last Labour Government, the rate of growth in my region, the north-east, went from being the lowest in any region during the 1990s to being the second highest during the last decade. Between the mid-1990s and the global economic downturn of 2008, employment growth increased by 11.2% in the north-east and by 9.2% nationally. Between 2002 and 2008, private sector employment in the north-east rose by 9.2% while public sector employment grew by 4.1%, a point made by my hon. Friend the Member for Sedgefield (Phil Wilson). Between 1999 and 2007, the number of businesses in the north-east rose by 18.7%, which compares favourably with London’s business growth of 19.6% during the same period.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman’s time is up.

17:24

[Mr Aidan Burley (Cannock Chase) (Con)]

First, I want to say how grateful I am to Her Majesty’s Opposition for choosing this topic for debate. Regional pay is an issue that has been swept under the carpet for far too long, and it is about time it was debated in this House. It is an issue that affects many businesses in my constituency, and local business leaders have repeatedly raised it with me since I first became an MP.

The simple truth is that private sector firms have to compete with public sector employers, who in many parts of the country currently offer a comparative premium on salaries, not to mention better pensions and other benefits such as job security. This means competition is distorted and the private sector is stifled because it cannot afford to employ new people or employ the best local people.

There is no way around the fact that private sector pay is, on the whole, set locally, and public sector pay is usually set nationally. It is simply a fact of modern life that public and private sector organisations compete for employees in different markets across the UK. The Opposition and their union supporters are quick to paint regional pay as an attack on the public sector or a race to the bottom, but that is offensive to the millions of people who work in low-paid private sector jobs. [Interruption.] This is not a race to the bottom; it is a race to reality—the reality of what people are paid in the real world. [Interruption.] Opposition Members who are chuntering from a sedentary position should remember that without a flourishing private sector in all parts of our country, there could be no public sector jobs, well paid or otherwise, because without the private sector, there could be no public sector. I therefore say this to Opposition Members: anyone who cares about the public sector should also care about creating the right environment for the private sector. That is why tonight’s debate is so important.

[Richard Burden]

The hon. Gentleman and I represent west midlands constituencies. Will he answer this simple question: does he want to bring down public-service pay in our region, and if so, by how much?

[Mr Burley]

I want the private sector in the west midlands to flourish. One of the most astonishing facts I have learned since becoming an MP is that between 1997 and 2007 the number of jobs in the private sector in the entire west midlands region fell. During the boom years of the hon. Gentleman’s Government, private sector employment went down, and I do not want to crowd out private sector growth in the west midlands. That is why this regional pay debate is so important.

I read an amazing article on the ConservativeHome website, with which I totally disagreed. It stated:

“Many Tory MPs with small majorities need to keep as many public sector workers onside as possible in order to keep their seats at the next election…For this reason, expect Lib Dems and low-majority Tory MPs to have grave concerns about any regional pay proposals—and expect the plans to be significantly changed or dropped altogether.”

Well, I am a low-majority Tory MP, and I believe this House is at its best when it is at its boldest, and I would be greatly saddened if everything we did was driven by narrow regard for our own majorities and saving our own skin and seats.

The fact that the shadow Chief Secretary to the Treasury, the hon. Member for Leeds West (Rachel Reeves), read out the number of state workers in each of our constituencies says all we need to know about Labour’s approach: stuff their mouths with gold and buy votes. That is the approach of the Labour party, and the hon. Lady did precisely that tonight.

We must do what is right for the country, and what is right for the country is for the Government to do everything they can to enable the private sector to flourish, so that it can pay the taxes that fund the vital public services that all our constituents rely on, not just fund the pay of the public sector workers who happen to live in our constituencies.

[Phil Wilson]

What advice would the hon. Gentleman give to his party colleague, the hon. Member for Hexham (Guy Opperman), who has a substantial majority and who has said that there is no economic case for regional pay?

[Mr Burley]

I am sure we will hear from my hon. Friend in due course, and I will let him make his own arguments, but in the very short time I have left I want to focus on the principle behind this debate, which is whether there are different costs of living in different parts of the country and, if so, whether that should be reflected in state pay. The simple answer to both those questions is yes.

Someone commented in response to the ConservativeHome article to which I have referred:

“Perhaps an experiment over a 2 year period to prove Regional Salaries are such a great idea? Begin with MPs and their staff. No doubt they will jump at the chance to lead by example?”

I propose to do exactly that. I have to hand the Independent Parliamentary Standards Authority bandings for accommodation expenditure—the amount that can be claimed by MPs to live in their constituency. Guess what? Yes, they vary by constituency. As MP for Cannock Chase I could claim £10,950 a year to pay my rent and bills, if I were to claim expenses for living locally, which I do not. The Member for Cambridge can claim £15,150—nearly 50% more than I can claim. The Members for North Somerset and North West Hampshire can claim £13,750, whereas the Member of North Swindon can claim just £12,350. So there we have it: there is regional variation in what MPs can claim to live, based on the cost of living in their area. If it is good enough for MPs, why should it not be reflected in the pay packets of other public sector workers?

Let us examine the arrangements for employing our staff. If I employ a senior caseworker in the London area, I have to pay him £23,000 to £31,000. If I employ him in my constituency, I have to pay him only £19,000 to £28,000. A senior parliamentary assistant can be paid up to £42,000 in London, whereas they can start on just £30,000 in my constituency. So the answer to the blogger is that MPs and their staff are already subject to regional variations in pay and allowances, and are living proof of the established principle of regional pay born out of different regional costs of living.

Let us put it the other way round: if the Opposition truly believe in national pay bargaining and public sector salaries being set nationally, will they intervene on me now to say that my staff in London should have their salaries reduced to match those of my staff in Cannock? Or should I be able to claim as much to live in a house in Cannock as to live a house in Cambridge? Of course not. Today’s debate is about whether public sector pay should be relative to private sector wages, and the simple truth is that it must.

The shadow Chief Secretary to the Treasury has said that regional pay will

“prove costly to the public purse and exacerbate regional inequalities”.

On the contrary, crowding out the private sector in the regions of our country is what will exacerbate regional inequalities, and setting a higher than locally appropriate wage bill means that public sector money is not allocated as effectively as it could be within local areas. I noted that she did not reply to the quote in my intervention, so I will repeat it to her now. Unison has said in its location-based pay differentiation paper of September 2011 that

“location-based pay systems offer increased flexibility and a systematic approach to addressing recruitment and retention issues at a local level.”

Government Members agree with Unison in that analysis, and I shall be interested to hear whether any Labour Members, many of whom will doubtless be taking donations from Unison to their constituency Labour parties, also do.

The Government are right to look at more local, market-facing pay and to end the anomaly of national pay bargaining—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I call Russell Brown.

17:32

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

Thank you, Madam Deputy Speaker. I regret that once again in this House I have to make mention of the fact that my constituency is a low-wage economy area. We talk about the “race to the bottom” and my locality does not have far to go in terms of it being a low-pay area. One of the greatest benefits to come to the area was the introduction of the national minimum wage in the late 90s. I sat on that Bill Committee, which sat through the night on more than one occasion. At that time, only one party was saying that we should have regional variations; I look across to the Liberal Benches because that was the case put by Lib Dem Members at that time. I am delighted that some on those Benches have had a change of heart.

Some 11,400 people are employed in the public sector in my area, which is some 28% of those employed in the constituency. We depend on the public sector in rural localities, so much so that there are occasions when we struggle to employ highly skilled people, be that in the NHS or in the local authority. The Government may be looking at reducing people’s salaries, but we already pay golden hellos for people to come to work in my area, such is the difficulty in recruiting quality people to the area.

The public sector pay arrangements support local and regional economies, ensure fairness and transparency, and support the whole concept of equal pay. When we introduced the national minimum wage in the late 90s, the greatest benefit came to those who were employed in the private sector. We went from scurrilously low wages of £1.50, £1.75 and £2 an hour to a wage that was recognised as being absolutely necessary to take people out of poverty. What came off the back of that? Additional money went into the local economy. It was calculated at the time that for every £1 million that went into a local economy, 39 jobs were created. What the coalition Government are considering would reverse that.

The hon. Member for Cannock Chase (Mr Burley) made his case and I would love to hear what he would recognise as reasonable pay for any kind of job. He said that between 1997 and 2007, private sector jobs went down in number. His party recognises those years as the years of plenty, so if such jobs went down in number then, where on earth are we going now? If he is dependent on the private sector to get this country back on its feet, I am afraid that he is living in dreamland.

The debate is about regional variation, so I want quickly to mention Scotland. Although Scottish Ministers set pay policy for devolved bodies, some 30,000 public sector workers in Scotland are employed by UK Departments and could be affected by the UK Government’s policy on regional pay. Furthermore, there are many unanswered questions about Scottish separation risking uncertainty for those thousands of staff employed in Scotland.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I would have liked to have been more supportive of what the hon. Gentleman is saying this afternoon, but I find the language and tone of the last part of his speech very disappointing. Does he welcome the minimum wage of £7.20 an hour that the Scottish Government introduced for public sector workers for whom they control pay?

[Mr Brown]

I mentioned that I was up through the night when the national minimum wage was introduced, and I must tell the hon. Lady that her colleague, Alasdair Morgan, who was the Member for Galloway and Upper Nithsdale at the time, was in his bed while the rest of us were battling for a national minimum wage in this country. She mentions the wage of £7.20 an hour and I am delighted that the SNP Government have followed the lead of Glasgow city council, which was where it originated.

The TUC has estimated that even a 1% reduction in public sector pay would hit 680,000 public sector workers. In Scotland, that would reduce incomes by £162 million. Again, I tell the hon. Member for Cannock Chase that if we take £162 million out of the local economy that must have an impact on private sector businesses. If we take the money out, the marketplace will collapse around it and further jobs will be lost.

I mentioned the Liberals and I am delighted that the hon. Member for Southport (John Pugh) is in the Chamber today. On 15 January this year, he said in the Financial Times that what the Government were considering was a “deliberate ploy” to fragment the public sector. He said:

“It is an unsound and untested economic theory to suggest that the national pay structure is crowding out private sector employment in the north and north-west.”

That goes for the length and breadth of this country. The proposals are a bad idea, verging on absolute insanity.

17:38

[John Pugh (Southport) (LD)]

I thank the hon. Member for Dumfries and Galloway (Mr Brown) for that introduction; I am not used to it.

The battle over regional and local pay is one, frankly, that in the current circumstances the coalition could do without. It would be a battle—a gruelling, energy sapping and pointless battle between and within parties. Even the Labour party is divided on its proposals for regional welfare. Opposition among the Liberal Democrats to the underlying principle and philosophy behind the suggestions is now widespread. We are not against the collection of evidence, but the evidence means that we are against the proposals. Shortly I and a number of colleagues will submit evidence that we hope will convince further. There was no problem recently getting 22 Liberal Democrat Members to sign a letter to The Times opposing regional pay, and of course those numbers were limited because our ministerial colleagues could not be asked to participate.

The politics of the proposal are lethal and divisive. It pits region against region, abandons the principle of equal pay for equal work, and treats the low-paid and local differently from the high-paid and mobile. The economics of it are nonsense, too, being bolstered largely by clichés and prejudice from the usual suspects—the Institute of Directors to name but one.

[Kelvin Hopkins (Luton North) (Lab)]

It is refreshing to hear some common sense from the Liberal Democrats. The hon. Gentleman might be aware that a survey reported by the CBI suggests that 94% of private sector employers are concerned, above all, about markets and consumer demand for their goods and services, and the proposal would reduce consumer demand.

[John Pugh]

That is certainly true, and a lot of UK national firms—building societies, banks and the like—do not have regional pay structures.

No one can dispute that reducing public sector pay in low-wage areas necessarily reduces the money spent, and therefore demand, in those areas. No one can dispute that putting relatively more money into the pockets of public sector workers in high-wage areas increases the money in circulation in those areas, and thus demand. Ultimately, economic division will be cemented in and, frankly, a good reason would be needed for doing that.

[Jacob Rees-Mogg (North East Somerset) (Con)]

The hon. Gentleman said that no one would dispute his points, but I will. If more private sector employment is created, greater total pay is created in the region, thus increasing demand.

[John Pugh]

That is my next point, because the only good reason for taking forward the approach would be if it was thought that it would improve private sector job opportunities in the poor regions on the basis that public sector jobs appear to be relatively well paid and crowd out private sector employment. If that is happening, one piece of essential evidence—one killer fact—is needed to show that, but it is not differences in the rates of pay in the two sectors, because that reflects a range of things such as job profiles and qualifications. We need evidence to show that as the number of public sector jobs increased in such regions, the number of unfilled vacancies for comparable employment in the private sector grew. That would be the clinching fact, but there is no such evidence. In fact, vacancies in the public sector in the north take longer to fill, because 50% of them are out for eight or more weeks compared with 15% in the private sector. Jobs that pay a living wage and for which skills exist get snapped up. Vacancies do not abound in the private sector except where there are definite skills shortages, and that is because of unemployment. There is no parallel difficulty with failing to fill public sector vacancies in better-off areas.

In the absence of that one piece of clinching evidence, which simply is not there, one could take a barrow-boy view that one could none the less get away with paying people less in the public sector in less advantaged areas, and especially get away with lower pay for the less well-paid, thus banking a cash saving for the state. I understand that argument, but it would be a wholly inappropriate way for a state to behave. It would be inappropriate for the state to discriminate simply by doing what can it get away with. We do not pay women or ethnic minorities less because they might be willing to work for less. If it was easy to get people to take the king’s shilling in the north, would we offer them sixpence instead?

[Mr Burley]

We already pay every public sector worker outside London less because of the long-established principle of the London weighting. Would the hon. Gentleman abolish the London weighting and pay everyone the same as people working in London?

[John Pugh]

The special housing problems connected with London have been recognised for about 30 years. No one is arguing about that—it is not what the Government are arguing for, and it is not what divides the House.

I have been in politics for quite a long time and worked hard in my region. I have met oodles of people, worried and fretted about regional regeneration, met industrialists, attended forums and spoken to experts. However, no one outside London has ever said to me, “Do you know what we want in this area? What we really need is regional pay.”

17:44

[Bill Esterson (Sefton Central) (Lab)]

Most business people I know want to pay well because they know that if they look after their staff, their staff will do a good job and help their businesses to thrive. If we apply the same principle to the public sector, paying people well and treating them well are both critical factors in delivering good public services, but undercutting pay, making it easier to fire people, and cutting 40,000 public sector jobs in the north-west are all decisions that sap morale and make people more fearful, making it less likely that services will be delivered well. It is also less likely that people will spend money when they are fearful, and that will harm the private sector businesses whose customers work in the public sector.

Many of my constituents work in the public sector and would like to know why regional pay is being proposed. For staff and their families in the north-west of England, regional pay would most likely mean that they would be paid less than colleagues elsewhere. There would be several consequences of such a change, and I shall explore some of the concerns about a move to local and regional pay.

The likelihood is that we would see regional inequalities made worse. Where unemployment is already high and where the recession has hit communities hardest, the introduction of regional pay would make matters worse. Lower pay in the poorest areas is what regional pay means, and the consequences are that the best performing staff would be able to earn more elsewhere. That means that it would be harder to recruit and to retain staff where they are most needed, unless the Minister wants to tell us that regional pay means higher pay in poorer areas. I do not think that is what we heard earlier.

Lower pay means less money going into the economy, again where it is most needed. Less money from lower pay means less money being spent in local businesses already struggling under the pressure of being in deprived areas suffering from a Downing street-made recession.

[Ian Swales (Redcar) (LD)]

Labour-led Redcar and Cleveland was one of the councils that failed to implement the April 2011 pay rise for low-paid workers, meaning that their workers are now paid less than those in other localities. Did the hon. Gentleman’s council implement the pay rise? What does he think about councils that did not?

[Bill Esterson]

The hon. Gentleman represents a Government who have cut the funds to councils in the north of England more than ever in history. Those cuts were front-loaded and we still have not seen the end of them, so he is not in any position to tell people on the Opposition Benches about the way that councils operate.

My hon. Friend the Member for Sedgefield (Phil Wilson) made the point that public sector jobs help to create private sector jobs. Indeed, there is research suggesting that every pound spent on public sector pay generates up to £1.50 elsewhere in the economy. When we consider the implications of regional pay, I start to see it as yet another way for the Government to make matters worse, not better, in the areas that need the most help. It will encourage staff, when choosing where to work, to go to the better-off areas and spend their money in places that have fared rather better in the recession.

I am sure Ministers take an evidence-based approach to their policies, so where is the evidence that a more fragmented system would be more efficient? A national negotiating system means a structured set of negotiations and a co-ordinated approach across regions. What, I wonder, is the analysis by Treasury Ministers of the cost of multiple pay review bodies at a local level? I wonder whether Ministers had made those calculations before they made their commitment in the autumn statement. It seems to me that we would see a complex and bureaucratic process for setting local pay that would take time and resources away from delivering vital public services.

If regional pay is introduced, it will mean lower pay in the north-west. In answer to the hon. Member for Redcar (Ian Swales), 40,000 jobs have already gone in the north-west as a result of cuts in the public sector. The north-west has seen twice the national average in cuts in jobs in the public sector, and any measure that cuts pay in the north-west will depress the economy and hit the living standards not just of the staff who lose pay but of the businesses that rely on them and of the people who work in those businesses too.

Lower pay for poorer regions will make it harder to attract the best staff and to keep them. It will mean less money for the staff and their families in already poor areas, and it will take more money out of the hardest hit local economies. As we have seen, the increased bureaucracy will mean higher costs.

The Government point to a gap between public and private sector pay, but the reality is that cutting public sector pay will make it easier for private sector employers, too, to cut pay in order to maintain the differential. In fact, the removal of money from the economy would put pressure on some private employers to do just that because of the depressing effect it would have on the economy. The Government say they want to rebalance the economy. If pay is cut in the poorest parts of the country for lower-paid and part-time public sector workers, many of whom have already lost their tax credits, the economy will be rebalanced all right, but not in a good way. It will be rebalanced so that it is further away from a fair and equal distribution than ever.

The Government should have nothing to do with regional pay. They should continue to work with the staff who do a good job serving our communities up and down the country. They should support those staff to ensure that they can continue to deliver excellent services, not undermine them by sapping their morale with such crazy suggestions.

17:50

[Guy Opperman (Hexham) (Con)]

My entire career has been spent being part of the national health service. My grandmother was an NHS matron, and I came into politics when the hospital in which I was born and which saved my mother’s life was threatened with closure. In 2011 I was diagnosed with a tumour and spent several weeks in London NHS hospitals. I saw all that was good in those hospitals and literally owe my life to the treatment I received. I will be for ever grateful.

If I took one thing in particular away from that experience, it was an understanding of just how many individuals are involved in making the whole process work. From the porter and the nurse to the physiotherapist, the care lady and the cleaner, everyone is just as important as each other. I think that all Members of the House should remember that when we talk about the public sector, we are talking about not only the unions and Unite but the care lady who looks after our mothers and the dinner lady who keeps our children safe at lunch time and provides them with food. It is much more personal than the dry debates we engage in.

There are two key arguments in the debate, the first of which is economic. Having worked as a legal aid barrister or state prosecutor for 15 years, I should declare that I, like many public sector workers, am still owed money by the state, notwithstanding the fact that I stopped working for the state on a legal aid basis two years ago. It was during that time that I saw the effects of local pay, as it is described, and took into account the argument of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)—as usual, he is absent from his place—who first contemplated it in 2003 and then forced it on the courts service in 2007.

As with so many of the right hon. Gentleman’s economic policies, I see little evidence that local pay was a success. I have tried to study the economic argument behind it, which is based on the Heckscher-Ohlin factor proportions theory and various academic studies performed by august institutions such as the London School of Economics. I do not support such arguments, which are obscure at best and have not been shown to work in real terms. Also—surely this is the crucial point—it is not supported by businesses in my constituency, none of which has come to me to press for it.

[Andrew Percy (Brigg and Goole) (Con)]

I agree entirely with everything my hon. Friend has said so far. The other reason we do not support regional pay is the facts. In my region, the Humber, we cannot get NHS workers to come and work and have to consider paying them more. A few years ago we could not get teachers to teach in the city of Hull and had to give them an enhanced salary to do it. Whatever the economics, the reality is that we cannot get some public sector workers to come to my region. How we would do that if we paid them even less is beyond me.

[Guy Opperman]

I also believe that regional pay is divisive and manifestly unfair. Members who read The Daily Telegraph today—obviously, that includes many on the Opposition Benches—will know that it has criticised me personally for leading the opposition to these divisive plans. It must be very rare to be criticised by The Daily Telegraph and praised by the hon. Member for Sedgefield (Phil Wilson) all on the same day. I was interested when I read on to find that its argument is that pay distortions are

“economically destructive. They make it harder for businesses in the regions to recruit workers at competitive wage rates and as a consequence they stifle enterprise.”

That is not what individual businesses, whether small or large, in my constituency and elsewhere in the north-east are saying to me, however.

This Government, like previous Governments in 2003 and 2007, are right to look at all potential options for boosting growth, and I have no difficulty with them referring the matter for consideration by the pay review body, but ultimately this will not find business support or create the prospect of business growth in the regions that we represent, and we should not support it if it becomes Government policy.

The majority of public sector workers in my region are doing their bit already. They are hard working, and along with the vast majority of my constituents they accept that the Government are right to reduce the deficit, to cut public sector spending, to reform public sector pensions, to freeze pay in some areas and to eradicate some of the non-jobs and excesses that we saw before 2010. That is accepted.

[David Mowat]

I agree with the thrust of my hon. Friend’s remarks. He cited the phrase “economically destructive”, but does he agree that what is also economically destructive is average public spending per head in London being 15% higher than in the north-west, and that if we wish to tackle the issue under discussion that would be a place to start?

[Guy Opperman]

I understand what my hon. Friend says and, to a degree, endorse it, but I do not accept that regional pay will be agreed to or supported by the public sector workers who are already experiencing their fair share of the problems that we all have to deal with.

What public sector workers and businesses want is continued investment in manufacturing, something that fell—effectively halved—under the previous Government; the groundbreaking reform of, and improvements to, our schools, and investment in the next generation; continued Government support for apprenticeships, the number of which in my constituency has doubled over the past year; and the maintenance of the Government’s focus on boosting exports, all of which are happening and making a difference to the regional economy.

I have always said that I will put the north-east first, and defending the pay and conditions of public sector workers in this economic climate is just as important as, if not more important than, building up the private sector. I do not deny that I come to this debate with strong opinions on what is economically right, but on this issue I have engaged with union leaders, businesses and local people, and others would be well advised so to do.

We need to be a one-nation coalition, and our focus should not shine too brightly on London and the south-east. We should represent all the people in our constituencies, from the dinner lady to the gentleman who employs 200 people; it is not an exclusive, either/or matter. On this issue, I look forward to the forthcoming visit to the north-east of The Daily Telegraph, which will doubtless come to question many businesses in my constituency.

I make it clear that I do not particularly support the policy under discussion, but I take no pleasure in these debates. This issue is too important to play politics with, so I hope that my friends on the Opposition Benches will spend more time with me, and with their union colleagues, making the case as to why regional pay is wrong, rather than trying to score cheap political points. This is about people’s jobs and pay packets, and I refuse to play any political games with those.

I will not, however, support the Government today, and if this matter were ever put forward as part of Government business, I would not support it.

17:58

[Chris Williamson (Derby North) (Lab)]

Make no mistake, Madam Deputy Speaker, the proposals for regional pay represent a naked ideological assault on public services and on public service workers. In my constituency, 11,800 people are employed in the public sector, representing more than 26% of its work force. Throughout Derby, 25,000-plus are employed in the public sector, and this is yet another example of the fact that this Government represent and stand up for the rich elite in our country, a Government who are prepared to give tax cuts to millionaires while forcing pay cuts on public sector workers.

I know from what Ministers have said that they want to weaken collective bargaining, but that makes no sense. It would be a wasteful approach to go down the road of regional pay because of all the duplication that would be necessary as a consequence of not having national pay bargaining regimes. It makes no economic sense either. Government Members have said that they see the economic recovery as being private sector led, but that ignores the symbiotic relationship between the public and private sectors. If huge demand is taken out of a local economy, that is bound to have knock-on implications for the private sector. This is a self-defeating proposition, because a private sector-led recovery will not be helped by attacking public service workers and undermining their salaries.

I am reading a book by Paul Krugman, a Nobel prize winner for economics, in which he says:

“disasters do happen; history is replete with floods and famines, earthquakes and tsunamis. What makes this disaster”—

the economic crisis that we are living through—

“so terrible—what should make you angry—is that none of this need be happening. There has been no plague of locusts; we have not lost our technological know-how; America and Europe should be richer, not poorer, than they were five years ago.

Nor is the nature of the disaster mysterious. In the Great Depression leaders had an excuse: nobody really understood what was happening or how to fix it. Today’s leaders don’t have that excuse. We have both the knowledge and the tools to end this suffering.”

I have not finished reading the book, but as far as I can see, he clearly does not recommend regional pay as a way of economic salvation.

I know that Government Members revel in the sobriquet, “Thatcher’s children”. However, back in 1993, when John Major was Prime Minister, the Government of the day considered regional pay but saw sense when the Treasury obtained an advice note about the proposition that said:

“At the extreme, local pay in theory could mean devolving 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.”

Do we really want a situation where a hospital such as Queen’s medical centre, down the road in my constituency, is competing for staff with the Royal Derby? I do not think so.

Over the past few weeks this Government have developed a penchant for U-turns. I would very much welcome a U-turn on this policy, which will be utterly counter-productive and undermine morale in public services, which has already been terribly undermined by the Government’s economically disastrous policies. It simply will not work. I say this to the Government: listen to Paul Krugman and other eminent economists, do a U-turn, and abandon these ridiculous proposals for regional pay.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. To ensure that more Members are able to participate in the debate, the time limit is being reduced to four minutes as from now. I call Jacob Rees-Mogg.

18:03

[Jacob Rees-Mogg (North East Somerset) (Con)]

Thank you, Mr Deputy Speaker. I am sorry that you reduced the time limit just before I got up to speak; I will not take it personally.

We have heard that there is no evidence of crowding out, so I thought that I would provide some from Brian Groom’s column in the Financial Times this week. To be fair, I will give both sides of the evidence that he cites, which comes from a man called Henry Overman of the London School of Economics, who found that

“in 2003-07, each extra 100 jobs in the local authority spurred the creation of 50 additional jobs in private sector services, but destroyed 40 jobs in manufacturing.”

Over the longer period of 1999-2007, however, he found that the 100 extra jobs in the local authority destroyed 80 jobs in manufacturing and did not produce any net increase overall through jobs and services. The focus on public service jobs is destroying private sector jobs. I urge Her Majesty’s Government to go much further and to abolish national pay bargaining altogether.

[Ian Swales]

I thank the hon. Gentleman for giving way and I am glad to be giving him an extra minute to speak. We are all familiar with the phenomenon of people connecting two disparate sets of statistics. Can he think of a mechanism by which adding 100 local authority jobs would destroy 80 jobs in manufacturing?

[Jacob Rees-Mogg]

The reason increased employment in the public sector destroys jobs in the private sector is that every public sector job has to be paid for by the private sector. The public sector creates no wealth. It spends wealth that is taxed from the private sector. If it does not come from tax immediately, it comes from delayed taxation through borrowing. That is the connection. Increasing employment in the public sector increases the burden on the private sector and destroys the ability of the private sector to compete globally.

[Andrew Percy]

I usually agree with my hon. Friend, but will he explain why a schoolteacher in Hull or Grimsby, who faces some of the most challenging schoolchildren in the country and even more challenging parents, should be paid less than a schoolteacher doing exactly the same job elsewhere in the country? That is the problem that my constituents have with this proposal.

[Jacob Rees-Mogg]

My hon. Friend makes a mistake in assuming that the policy will automatically lead to lower pay. Pay will be set by market forces. If it was difficult to employ schoolteachers in his constituency, teachers in that area would have to be paid more than the market rate until it had the required number of teachers.

[Andrew Percy]

There is not a bigger pot of money.

[Jacob Rees-Mogg]

Of course there is not a bigger pot of money, but if we allow competition to work, it will increase the local economy, which means that more money will be gathered in through council tax and the area will have the ability to pay more for the public sector that it needs.

The problem with what we are doing at the moment is that it impoverishes the poor. It keeps the poorest areas of the country poor for as long as possible. I know that Opposition Members and some of my hon. Friends are in favour of the current situation not because they want to keep the poorest areas poor, but for the most noble and romantic of motives. However, their noble approach to this issue is fundamentally wrong. They think that it is fair to ensure that everybody is paid the same, but if by doing that we destroy employment in certain areas and make more people dependent on the state, we are not acting in the broader interests of society.

[David Mowat]

My hon. Friend’s analysis would be 100% right if there were proof that higher public sector pay was crowding out private sector growth. I have not heard that argument being made.

[Jacob Rees-Mogg]

I gave a little bit of the evidence earlier, but it is the basic logic of economics that if there is a limited supply of labour and a high price is set for that labour in the public sector, it will be forced into the public sector rather than being available for the private sector.

If we set high wage rates for the public sector in the poorest areas of the country, the most able people will be attracted to the public sector, leaving them unavailable for the private sector, and it will set at an unaffordable level the rate that the private sector must pay to compete. The private sector will therefore move down to the south of England, where it is closer to so much other economic activity. If we want to create employment in areas of high unemployment, we have to make it attractive. It therefore has to be cheap. Otherwise, the magnetic pull of London and the region around it pulls employment down here. Those who really care about creating employment in impoverished areas should be in favour of getting rid of national pay bargaining.

National pay bargaining not only gets rid of competitiveness for the private sector, but pushes up all prices in the area. If there are highly paid public servants in poor areas of the country, the costs of housing and services are pushed up. The money that is spent by those people forces up prices and makes it increasingly difficult for the private sector to compete. That is the basic, unassailable logic of economics, and it will not be overcome by the mush of sentimentalism of those who think it is simply unfair to pay people different amounts. As my hon. Friend the Member for Cannock Chase (Mr Burley) said, we accept that principle in other areas, such as with the London weighting. We need to go much further so that every school and every hospital decides the pay rates that it will give its employees. We should make it as local as it possibly can be, and in that way we will allow the private sector to flourish and bloom, the economy to grow and our overall situation to improve enormously.

18:10

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

It was extremely interesting to hear the contributions of the hon. Members for Hexham (Guy Opperman) and for Brigg and Goole (Andrew Percy). All that I can say is that there is room for them on the Labour Benches should they wish to come across. We even have our own private section should they wish to make progress.

Tomorrow, the House will pay tribute to Aung San Suu Kyi, and no doubt Ministers and Government Members will be pushing forward to get their pictures taken with her for their press releases. They should remember what she has stood for—fairness for workers, regardless of their social background or where they come from. When Members are speaking to her tomorrow, perhaps they will remember that.

Any sensible, decent Government have a responsibility to promote fair employment, and that cannot be done by paying nurses, teachers, jobcentre staff and so on less to work in poorer parts of the country. Indeed, regional or local pay could mean two workers with the same skills and experience being paid differently in two different places even though they were doing the same job. It could worsen inequalities between regions by making it difficult to attract and retain skilled public sector workers in low-pay regions.

Local or regional pay could also work against equal pay. The gender pay gap is smaller in the public sector than in the private sector, and great progress has been made towards promoting equal pay through measures such as “Agenda for Change”.

Perhaps the Economic Secretary could answer a practical question. If an employee of the Ministry of Defence worked as a civil servant or engineer at Faslane and then was transferred to Portsmouth, would their pay vary accordingly either up or down? Who would pick up the administration costs if that were to happen?

The other major concern that people have is about the minimum wage. The Minister for the Cabinet Office has sought to reassure the House that regional pay will not have an impact on the minimum wage, but we have to remember that there are still Government Members arguing that there should be exemptions from the minimum wage. I am sure that there are a number of unscrupulous employers who will see regional pay as an opportunity to undercut people’s wages and exempt them from the minimum wage legislation.

The case for regional pay is not even backed up by evidence. I have spoken to a number of local employers in my patch, and, in the nearly 10 years I have been here, I have never had one employer come forward to say that the reason they have difficulties employing people is the lack of regional pay. That is a non-starter, so regional pay is not evidence-based at all. Perhaps the Economic Secretary will explain exactly where the evidence has come from.

I know that time is short and other Members want to speak, but I want to say in the nicest possible way to my colleague from the Scottish National party, the hon. Member for Banff and Buchan (Dr Whiteford), that nice person though she is, if the SNP’s ambition and aspiration is to pay a higher minimum wage in Scotland, it has had the opportunity to do so during the time it has been in government. Unfortunately, it has chosen not to do that. It therefore remains an aspiration, because the SNP has not implemented it. The few local authorities that have implemented it have had their budgets cut, which shows exactly what it is all about for the SNP. It does not care for the workers, it does not work for the workers and it very seldom turns up for the workers.

18:14

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

Our country’s human capital is becoming more vital to our growth and there is an increasing return to skills in jobs across the world. To have a flexible modern economy, it is vital we have a functional labour market in which there are clear signals about what skills we need and where we need them. The idea, in this day and age, that we can have a one-size-fits-all deal for all locations and all performances across the country is wrong.

We face growing international competition—interestingly, Opposition Members made no mention of what is going on around the world and the competitive pressures we face. Countries such as China, Brazil and India are developing highly skilled people, and the UK’s labour force is already 11% less productive than the G7 average. Western competitors such as Canada, Germany and Sweden are reforming their labour markets. In the 1990s, Sweden abolished national pay scales and gave everybody individual contracts. Salaries in professions that were short of supply rose, so kindergarten teachers’ and tax inspectors’ salaries went up. That did not happen overnight, but the change allowed for the adjustment. Places could get the workers they needed with the skills they needed. The contracts were supported by the unions, even though they had trepidations at first. Once individual contracts were in place, the unions acknowledged that they were a good thing.

There have been extensive labour market reforms in Germany, including the introduction of mini and midi-jobs and exempting small companies from labour regulations. Huge labour market reforms and a highly devolved system of wage bargaining were introduced in Canada in the mid-1990s.

Countries such as Sweden and Canada are not pay-the-bottom-price countries, but countries with highly skilled and flexible labour forces. That is what this country should aim for, rather than a one-size-fits-all model. Under the previous Government, there was greater centralisation, with the exception of academies. There was a national agreement on teachers’ pay and conditions in 2003, which made it much more difficult for schools to organise their work forces. The GP contracts signed in 2004 were disastrous. Such national pay bargaining has made our country’s labour force inefficient and damaged regional economies.

We have skill shortages in key professions. Schools in my constituency struggle to recruit maths teachers. They are subject to national pay scales, so they cannot pay the extra money they need to pay to get the teacher into the school. Therefore, students in my constituency lose out on vital education that they would have were the school allowed to change the wage scales.

My hon. Friend the Member for Cannock Chase (Mr Burley) made a good point about the private sector being crowded out. Paying people over the odds of their market wages in places where we could get better value for money is not the best use of public money. The money is not free; it comes from hard-working people who pay their taxes.

[Mr Burley]

Does my hon. Friend agree that paying people above what is necessary to retain and recruit them is economically inefficient, and that more public sector workers could be employed in her constituency with the same pot of money if people could be paid less?

[Elizabeth Truss]

I completely agree with my hon. Friend. Opposition Members do not acknowledge that this country’s unemployment rates are higher compared with countries that have taken action and reformed their labour markets, such as Germany. Those countries have reduced the differentials between different areas.

[Jim Sheridan]

Will the hon. Lady give way?

[Elizabeth Truss]

I want to continue because we have only a limited amount of time in the debate.

The Government need to be bold in their approach. We need to move from national wage bargaining to individual contracts, as Sweden did. That change was well received by the unions and public sector workers. We need to move to flexi-jobs, similar to German mini and midi-jobs, which have reduced unemployment by half since 2005. We need seriously to look at exempting small businesses with under 10 workers from some dismissal regulations, as Germany did—the change reduced unemployment. The time to take bold action is now.

18:19

[Jessica Morden (Newport East) (Lab)]

In the short time available, I want to talk about regional pay in Wales and my constituency.

Over recent weeks, we have been led to believe that the coalition is cooling on the idea of regional pay and that we might be heading for another U-turn. I hope so, but I welcome the chance to reiterate just how unfair, divisive and damaging such proposals would be for constituencies such as mine. If there is to be a change of heart, the message clearly has not got through to the Wales Office, which this morning mounted a valiant defence of regional pay in the Welsh Grand Committee, although the Secretary of State for Wales told us off for calling it regional pay; she said we should call it “local market-facing pay”—she had obviously read the crib sheet. Having listened to the Minister’s definition, which was as clear as mud, I am none the wiser.

Whatever it is called, it is fair to assume that it would not be good news for public sector workers. The direction of travel is clearly downwards. The First Minister for Wales, Carwyn Jones, was spot on when he said it was code for cutting pay in Wales. Wales has 399,000 public sector employees, but the Secretary of State admitted this morning that she would not be fighting their corner on this issue, despite the fact that her party opposes it in the Welsh Assembly—in fact, all parties in the Welsh Assembly are united in opposition to it.

Let us not forget that these are nurses, teachers and police officers who already face two years of pay freezes and job cuts and who will have to endure a further pay cut of 1%, not to mention the Government’s pension reforms.

[Mr Burley]

rose—

[Jessica Morden]

We are pushed for time, and if I give way, I will prevent someone else from getting in, so I will kindly say no.

We have had 9,000 public sector job cuts in Wales, and there are 39,000 more to come, according to the TUC. The stock argument for the Government’s proposal is that it would allow the private sector to grow by enabling it to compete with the public sector for staff. This is clearly nonsense in constituencies such as mine, where any move on regional pay would hurt the economy, including the private sector.

[Phil Wilson]

rose—

[Jessica Morden]

I will give way to my hon. Friend, because he will not get a chance to make a speech, whereas the hon. Member for Cannock Chase (Mr Burley) has already spoken.

[Phil Wilson]

I hope that the hon. Member for South West Norfolk (Elizabeth Truss) understands that Opposition Members know about globalisation and its effect on the private sector. Hitachi, a big global company, is coming to the north-east of England, but it is not considering local pay; it is considering sectoral pay rates and skills, and looking across the train-building industry. It is not looking locally.

[Jessica Morden]

I thank my hon. Friend for his intervention. I am sorry he has not had a chance to make his contribution. He is exactly right.

The TUC has estimated that a 1% reduction in public sector pay could result in £97 million being taken out of the Welsh economy. In constituencies such as mine, the public and private sectors are inextricably linked, and money taken out of the public sector hurts the private sector. Members should not just take our word for it; over the past few weeks, the Federation of Small Businesses in Wales has come out in opposition to regional pay. We saw this firsthand in Newport, when the Government were forced to concede over closing Newport passport office with the possible loss of 300 jobs. The Government conceded then that the closure would have a huge impact on our local economy, and many small local businesses were right at the heart of the campaign to keep the passport office open, because they knew full well that their livelihoods depended on it.

There are 23,000 public sector workers in Newport. It has a lot of public sector jobs precisely because of the previous Government’s policy, following the Lyons review, of moving jobs from the south-east to rebalance the economy. As a result, our major employers, as well as the NHS and the local authority, are the Office for National Statistics, the Prison Service and the Intellectual Property Office, to name but a few. This has been a boost to our city and is a real success story. As an ONS worker said to me recently, however, does paying him less mean that the private sector in Newport will suddenly be clamouring for statisticians? We both thought not.

Of course, regional pay is plain unfair. I have a border constituency. If I have two teachers in my constituency, one working in Caldicot, the other in Bristol, with the same skills and experience but paid differently, that is clearly unfair. Let us remember that these people are not hugely well paid—they are often on wages of about £20,000—and would find it difficult to move jobs if this measure was implemented.

Finally, comparing private and public sector pay is not comparing like with like. There are more people with higher qualifications in the public sector than in the private sector, and women, who make up 64% of the public sector work force in Wales and 87% of part-time workers, have very much benefited from the previous Government’s efforts on equal pay. I ask the Government please not to target these women and roll back progress on them. Regional pay, local market-facing pay, or whatever the Government want to call it, will be a race to the bottom on lower pay, and create higher unemployment and more business failures. It is a real pity that we do not have a Secretary of State for Wales willing to stand up and say that.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I have eight Members to call and about 16 minutes left.

18:24

[Stephen Gilbert (St Austell and Newquay) (LD)]

I have struggled with two things during this debate. The first is finding anything that the Minister said earlier that I agreed with; the second is finding anything that the Opposition spokesperson said that I did not agree with. However, you will be pleased to know, Mr Deputy Speaker, that I have managed to resolve both struggles. I do not think it fair or right for our Opposition colleagues, however passionately they care about the issue, to be opportunistic in their pursuit of it. I also found two things that the Minister said that I agree with. First, I am pleased that the Government are clear that no decision has been taken yet on this issue. The second thing I welcome is the fact that any decision the Government take will be evidence-based. Like other hon. colleagues, speaking from all parts of the House today, I am sure that when the evidence is in and the process is complete, it will show that the proposal is not one that the Government should go forward with.

I would welcome local pay bargaining and regional pay if it meant that we were able to pay the hard-working nurses, firemen and policemen in my constituency more money. The reality, as my hon. Friend the Member for Brigg and Goole (Andrew Percy) said, is that there is no extra money around. We know from what the Minister said earlier that this proposal is not a revenue-saving measure. There would have to be a redistributive effect, using what is in the current pot. That means that there would be some winners, often in areas that are already wealthy, and some losers, principally in communities and constituencies such as mine.

Cornwall is one of only four parts of our country that qualify for poverty-related grants from the European Union. My constituents face many significant challenges already, with the decline of traditional industries, high housing costs, high water costs, high fuel costs, a lack of opportunity and too few skilled jobs. It is sad to think that the 57,000 public sector workers in Cornwall could be facing another challenge. These people are valued in our community, and I will not let Members from any part of this House play one part of our community off against another. We must not let this debate come down to a division between the public and the private sectors. For a healthy community we need both, and we need them to be working in tandem.

I do not often disagree with my hon. Friend the Member for Cannock Chase (Mr Burley), but I fear that if we went forward with this proposal, we would see a race to the bottom in Cornwall. That is why I will not support the Government this evening. Indeed, the public sector in Cornwall offers some of the fairest pay available. With five people chasing every job, introducing local pay, regional pay or local market-facing pay—or whatever we are calling it this evening—could, I fear, have not only a damaging effect on our hard-working public servants, but a deleterious effect on the local economy. As my hon. Friend the Member for Southport (John Pugh) said earlier, some people have suggested that as much as £1.7 billion could be lost from the poorest parts of our communities. The money lost would be money that would otherwise have gone into the private businesses that we are also keen to see thriving on our high streets, thereby making recovery and growth in our economy still harder.

I hope that the Minister will be able to shed some light on this point in her closing remarks, but I cannot see how moving to local, regional or local market-facing pay could be less bureaucratic and burdensome than the current arrangements. It seems to me a statement of the obvious that moving to such a system would be more complicated and harder to introduce.

The ramifications of the proposed change for Cornwall are great, and I will oppose it every step of the way.

18:28

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

As with so much of what this Government are doing, the proposal that we are discussing is tainted by their incompetence and their inability to think things through and fully understand—or, indeed, accept—the perverse outcomes that will result. We have seen it with council tax benefit, housing benefit changes and the rushed strategic defence and security review.

Despite the view commonly held, the south-west has serious poverty. There was a reason why Cornwall had objective 1 status and is a convergence area. Plymouth had the poorest ward in the country in the 1990s. We may not have the dark satanic mills of the north, but there are certainly massive disparities in wealth, which will be further exacerbated should this proposal be rolled out nationally.

The Minister mentioned the previous Government’s consideration of differential pay rates. Indeed, the coalition seems to be clinging to that argument and using it as a security blanket, an excuse for its attempt to take this proposal further. The idea was not extended beyond the Court Service, and there are clearly good reasons for that.

[Mr Burley]

Will the hon. Lady give way?

[Alison Seabeck]

No, sit down. You’ve had your opportunity.

There are other historical examples of this policy. In the 1990s, the Conservative Government asked the NHS to look into the subject, but after a year’s work, it could find only a 0.1% variation between the regions. That was not the best way for the NHS to spend its time and money.

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

Will my hon. Friend give way?

[Alison Seabeck]

Yes, of course.

[Hon. Members]

Oh!

[Gemma Doyle]

I am grateful to my hon. Friend for giving way. Some Members have had longer to speak in the debate than others. Like her, I am outraged by the suggestion that my constituents should be paid less for doing their job than those in other areas. Does she agree that, if nationalist Members were to get their way, they would achieve overnight what the Tories and Lib Dems are seeking, because public sector workers in a separate Scotland would have no guarantees whatever on their wages?

[Alison Seabeck]

I thank my hon. Friend for her intervention. She is not going to have an opportunity to make a speech, owing to time constraints, but I am sure that the Scottish people will have heard her comment.

Median pay in the south-west is already £14 a week less than the national average. Many of the public sector workers there have also been the subject of pay freezes, pay caps or pension contribution increases, all of which have reduced their spending power. Plymouth is a city that is heavily dependent on the public sector; the hospital is the largest employer. There is real concern there about the damage that a decision to reduce wage levels in the region, or locally, could have on an economy that is just about keeping its head above water.

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

We have heard a lot about the private sector from Government Members, but does my hon. Friend believe that it would be instructive to note that many large national private sector employers have pay bargaining practices that are not dissimilar to those of the public sector?

[Alison Seabeck]

Indeed; I shall touch on that point briefly later.

More than 18,000 people in Plymouth work in the public sector. In my constituency, a massive 25% of the working population do so—one in four people—and to dampen pay rates could be devastating. The Government’s suggestion that it is easy to compare private sector and public sector jobs is absolute nonsense. In the south-west, large swathes of people work in the hospitality and agriculture sectors, earning very low wages. There is no simple read-across, and I would ask the Government to consider that fact carefully.

[Mel Stride (Central Devon) (Con)]

Will the hon. Lady give way?

[Alison Seabeck]

No, I am afraid that I cannot. Perhaps one of the hon. Gentleman’s colleagues will allow him to intervene on them later.

In his autumn statement, the Chancellor talked about private sector pay being set in accordance with local labour markets. That is not true. As my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) has just pointed out, some of the most successful companies in the country, including large retailers, banks and telecoms companies, use similar national pay structures.

There is genuine concern among businesses in my constituency that any decision to cap or lower public sector pay will lead to problems for them, in that there will be less demand for their goods and services as families pull in their horns.

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

Will my hon. Friend give way?

[Alison Seabeck]

I am afraid not; my hon. Friend has only just arrived in the Chamber.

A representative of one business has commented to me:

“As I see it, the lot in power have proved that they don’t get reality.”

Because the south-west is very beautiful, we have a large number of second homes. They push the cost of housing up to levels on a par with those in the south-east, but our salaries are lower and so the mortgage multiplier for our potential homeowners is astronomical. That can be crippling for people desperate for a home; the effect is felt not only in Plymouth but in the rural south-west. That point was well made by my right hon. Friend the Member for Exeter (Mr Bradshaw).

In the South Hams, the house price to income ratio is around 17:1. In the Cotswolds, it is even higher, at closer to 19:1, and those figures were taken at the depth of the recession in 2010. We should remember that many of the public sector workers who work in Plymouth and Exeter live in areas such as the South Hams. They might have struggled to get a mortgage on their dream home in better times, and they will be disproportionately hit by this Government’s proposals on regional pay. The housing market will not allow them to sell their home and move—I am sure that my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) was going to make this point— particularly when new affordable homes are not being built. What are those people to do, when their pay is either cut or frozen and meeting their mortgage payments becomes increasingly difficult? They will stop spending in local shops, hotels and pubs, and on entertainment. That will provide a direct hit on the local economy.

This was a complex matter for the NHS to consider all those years ago, and I urge the Government to be aware of the complexity of boundaries and of the additional costs involved in the work required to ensure that the proposal is consistent and does not lead to poaching or leapfrogging. They are on a hiding to nothing on this one; it will create anomalies and provide yet another example of their incompetence. Every time this happens, however, it is not the Chancellor or the Paymaster General and his mates who are affected, but low-paid working people such as teachers, nurses and midwives.

18:35

[Guto Bebb (Aberconwy) (Con)]

I come to this debate with a question mark over whether I can support this policy. I share my doubts with many Conservative Welsh Assembly Members. However, I shall not support the Labour motion today, as it is, to say the least, an example of double standards that is quite surprising even by this House’s standards. In common with the hon. Member for Newport East (Jessica Morden), I have spent most of today in the Welsh Grand Committee, where we discussed regional pay for a long time. I found the comments of the right hon. Member for Delyn (Mr Hanson), who is not in his place, quite surprising. He was vocal in his criticism of the concept of regional pay, yet when he was a Minister in the previous Labour Government, of course, he was responsible for bringing in regional pay in the courts service.

When I debated the matter with the new shadow Secretary of State for Wales on Radio Wales, the hon. Member for Pontypridd (Owen Smith) said that what was done to the court service was not regional pay, but zonal pay. Zonal pay is clearly acceptable to the Labour party, but not regional pay. It should be noted that the five levels of zonal pay within the service vary by 23% for people doing the same work. I thus find the Labour party’s comments and its anger on this issue surprising, given that it introduced this proposal for the service in 2007. What is more, the Labour Government did the same for Department for Work and Pensions staff back in 2003. That is why I am surprised that Labour Members view these proposals with such horror.

When the hon. Member for Derby North (Chris Williamson) calls on the Government to make a U-turn, I am absolutely staggered. How can a Government make a U-turn on a proposal to consult and to do some research? I would have thought that Members would be proud of a Government who say, “Before we enact a policy, we will do the research and ensure that we come to the table with the facts.” If those facts show a strong argument for changing the current situation, that argument can be made, but to say no to doing the research is, to say the least, extremely surprising.

Other comments made in the debate are worth mentioning. I listened very carefully to my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) and I was quite taken by his passionate argument in favour of localised pay. The key question I would ask is this. I have a constituency that depends fairly significantly on the public sector, but one that also has a comparatively low-paid economy in respect of the tourism sector. My concern is the fact that we have open borders for the movement of workers from across the European Union and that what has tended to happen in my constituency is that comparatively low-paid jobs have been filled by people from other parts of Europe who are willing to come into this country to work. I question whether, with those open borders, the expected effect of having a more local pay bargaining structure would work as my hon. Friend envisaged. That is the question I have, but I am sure that the research we undertake will show whether that is the issue or not.

We have heard a lot in the debate about Labour Members’ concern for the lower-paid public sector workers, and I share it. My only question, as someone who sat on the Welfare Reform Public Bill Committee for several weeks and contributed to many of the debates on the welfare reform agenda, is how Labour Members can make so much capital in today’s debate about their support for lower-paid public sector workers, when they were more than happy to argue in debates about the benefits cap for a regional benefits payment structure. If they genuinely support people on lower salaries and lower incomes, I wonder why they did not defend the benefit recipients in my constituency when they were more than happy to defend union members who happen to work in the public sector.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I call Phil Wilson, who has one minute.

18:38

[Phil Wilson (Sedgefield) (Lab)]

Thank you, Mr Deputy Speaker, for that generous offer.

We have heard from Government Members that, on the one hand, we introduced regional pay, yet on the other hand that we have a one-size-fits-all system, making it either one or the other. As far as I am concerned, this is not about public sector versus private sector; it is about what is fair for people in whatever sector they happen to work in. Let us think about the situation in County Durham. Unemployment in Sedgefield has risen by nearly 25% in the last year, and the number of people out of work for more than six months has risen by 100%. Moreover, 120,000 households in County Durham will be hit by benefit changes which will take £151 million from the local economy. The average wage is £418 a week, which is well below the national average. Regional pay will not benefit local businesses, because there will no longer be any drive for people to buy anything that is manufactured or created in the area. As for the idea that there are no national pay schemes in the private sector, Tesco has one and so has Nissan. They will not be looking only at local pay rates; they will be looking at the sector in other parts of the country as well, and also at skills.

I believe that this proposal is ideologically driven, and that it makes no economic sense whatsoever. I agree with the hon. Member for Hexham (Guy Opperman). Early-day motion 55, which I sponsored, was signed by Members on both sides of the House, and it is clear that there is a great deal of cross-party opposition to the measure. I strongly urge the Government to withdraw it and to think about what is fair to not just the public sector but the private sector, because this measure will damage both sectors if it goes ahead.

18:41

[Margaret Curran (Glasgow East) (Lab)]

This has been a lively and revealing debate, in which Members on both sides of the House have made promising speeches. I pay tribute to my hon. Friends the Members for Easington (Grahame M. Morris), for Dumfries and Galloway (Mr Brown), for Sefton Central (Bill Esterson), for Derby North (Chris Williamson), for Paisley and Renfrewshire North (Jim Sheridan), for Newport East (Jessica Morden), for Plymouth, Moor View (Alison Seabeck) and for Sedgefield (Phil Wilson), who spoke with commitment and determination. I shall refer to Government Members later in my speech.

The lines were clearly drawn in this interesting debate. I was reminded of my youth, when I listened to the great Thatcherites on the other side of the Chamber. So much for detoxification: the Thatcherites are back in power, revealing that the main purpose of this policy is to drive down the wages of public sector workers throughout the United Kingdom.

[Mr Donohoe]

In an intervention I said that Whitleyism was a good thing. I did not realise that John Whitley was one of the predecessors of Mr Speaker in this august body and a Liberal Member of Parliament, and was responsible for the introduction of national wage negotiation. Does my hon. Friend not think that he was right?

[Margaret Curran]

I thank my hon. Friend for, as ever, making a stunning intervention.

The debate has another Scottish dimension. It is very disappointing that only one Scottish National party Member is present. The point was made earlier that the fastest way to break up national pay bargaining in the United Kingdom is to break up the United Kingdom, and that should be remembered.

[Dr Whiteford]

Will the hon. Lady give way?

[Margaret Curran]

Very briefly.

[Dr Whiteford]

We heard this afternoon that the idea of regional pay was first mooted by a Labour Chancellor, the hon. Lady’s friend the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who, as others have noted, is not present. It is a particular kind of brass neck to rewrite history quite so blatantly.

[Margaret Curran]

While we are on the subject of party leaders, perhaps the hon. Lady, who is a member of the SNP, will tell us why the First Minister of Scotland is very clear about the levels of corporation tax that will be paid in Scotland and what banks will pay, but never seems to be able to tell us what the level of public pay in Scotland will be. Is it not time that the SNP was clear about that?

The debate has also featured the now predictable undermining of Government policy by the Liberal Democrats—or so it would seem from the outside. We must ask ourselves exactly what is going on in this Government. We have omnishambles and U-turns, splits in briefings, and the announcement of a policy one day only for it to be questioned minutes later. The shadow Chief Secretary to the Treasury and I both have the pleasure of shadowing Liberal Democrat Ministers, both of them Scottish at that, but where are they today?

I have been in the House for only a short time, but I have learnt one thing. When the Minister for the Cabinet Office and Paymaster General is at the Dispatch Box, it is a clear sign that the Government are in trouble , so we have to ask ourselves why the Lib Dems are not prepared to do their job by coming to the Chamber and defending this Government—are they off the hook just because they are Lib Dems?

[Mike Freer]

Will the hon. Lady give way?

[Margaret Curran]

I do not have time.

To be fair, the disagreements over the Government’s approach are not just between Lib Dems and Tories; there are also differences within the Tory party itself, as was made clear by the hon. Member for Hexham (Guy Opperman), in what was a powerful and sincere contribution.

In a recent vote in the Welsh Assembly, the Tories voted against regional pay and pointed out the damage they thought it would do in Wales. Tory Finance spokesperson Paul Davies stated:

“As a group, we have not seen any evidence at all of the benefits of introducing a regional pay system in the United Kingdom.”

In the now-infamous Budget, the Chancellor clearly signalled support for the break-up of the national pay negotiating machinery. Have we now reached a stage where the Chancellor of the Exchequer cannot command support among the Tories in the Chamber, or, indeed, the country?

As we have heard in this debate, there are grave concerns about the real purpose behind the Chancellor’s comments. As many Members have said, it appears that the Government wish to deliver a cut in the cost of public sector employment on the dubious premise that it will produce a private sector recovery and economic growth throughout the UK.

[Mel Stride]

Will the hon. Lady give way?

[Margaret Curran]

I do not have time.

As has been pointed out in the debate, the Government have not produced a shred of evidence that a pay bargaining free-for-all would increase the number of private sector jobs, deliver more vibrant local economies or open up access to jobs or opportunities. In fact, the chief economist of the Welsh Government recently demonstrated that age and gender can be as significant factors as local geography, and that if we were to address regional pay differences, we would need to introduce disproportionate changes and reduce the pay of low-paid women. So much for the Tories embracing gender equality!

Perhaps we can hope that the Government will listen to the sensible calls that have been made on this, so that the U-turn on regional pay that has been hinted at becomes a reality. Perhaps the absence of the two Lib Dem Cabinet Ministers augurs well in that regard. The last thing we need in these very difficult times is to drive down wages even further based on the age-old fallacy that the public and private sectors are always to be in competition with each other.

The hon. Member for Cannock Chase (Mr Burley) implied that public sector workers do not have real jobs. That tells us all we need to know about Tory attitudes to police officers and teachers. I call on the Minister to dissociate herself from those comments.

The Opposition motion should be supported by all Members who do not want to exacerbate the north-south divide, who want to ensure that we maintain fairness in public sector pay, and who want to stand up for the interests of working people from Cardiff to Newcastle to Dundee. They should challenge this Government and support the Opposition motion.

18:48

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

This has been an interesting and lively debate. My hon. Friend the Member for Cannock Chase (Mr Burley) rightly disavowed a race to the bottom and instead seeks a race to reality. On the other hand, the hon. Member for Dumfries and Galloway (Mr Brown) thinks private sector rebalancing is dreamland. My hon. Friend the Member for Hexham (Guy Opperman) made a thoughtful, and personal, contribution. My hon. Friend the Member for South West Norfolk (Elizabeth Truss) raised international examples in a very well-informed contribution. My hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) talked of the need for an evidence-based approach and eschewed opportunistic and divisive debate, hints of which we have heard this afternoon.

We also heard from my hon. Friend the Member for Aberconwy (Guto Bebb), who referred to days that we shared on the Welfare Reform Bill and wondered why the Opposition did not support the idea of capping benefits. Perhaps they may tell us today why they favour regionalising benefits but not pay.

Let me talk about what this Government have done, as I wrap up this debate. As my right hon. Friend the Minister for the Cabinet Office and Paymaster General said, this Government greatly value the work and dedication of public sector staff. However, at a time when private sector workers are living with falling wages and job uncertainty, and given the wider pressures we face on the public finances overall, there is a strong case for public sector pay bill restraint. This is why, at the autumn statement, we announced that public sector pay awards will average 1% for the two years following the end of the current public sector pay freeze.

It is also important to look at how public sector pay is set over the longer term. This is why, at the autumn statement, the Chancellor announced that there was a case for considering how local pay can better reflect private sector labour markets and invited the independent pay review bodies to consider the evidence. They will report back from July, and the Government will then consider their proposals. Nothing has yet been decided, and as my right hon. Friend the Minister for the Cabinet Office said, any proposals for each work force will need to be based on strong evidence.

However, it is clear that there is a case for looking at the issue. The pay review bodies have been asked to consider ways to recruit, retain and motivate suitably able and qualified staff across the UK.

[Margaret Curran]

rose—

[Miss Smith]

Perhaps the hon. Lady is going to tell me that she is not in favour of that.

[Margaret Curran]

Can we make it clear that I do not think the Chancellor was suggesting just that more research should be undertaken when he made his statement? Does the hon. Lady believe that a police officer in Hexham should be paid more or less than a police officer in Norwich?

[Miss Smith]

I will say, for the hon. Lady’s benefit, what I have already said: I look forward to the results of the research that the pay review bodies will be doing.

The gap between public and private sector pay varies significantly around the country, with the Institute for Fiscal Studies calculating a variation of up to 18%. That situation could needlessly limit the number of jobs, including perhaps those of police officers, that the public sector can support, and therefore the services that can be supplied. In addition, it could lead to unfair variations in the quality of public services through higher vacancy and turnover rates in some areas. Finally, it could also hurt the private sector, which often needs to compete for staff with the public sector. The CBI has said that it is essential to compete and that the Chancellor was right to ask for the exploration of the issue.

The need for pay levels that reflect local labour markets was of course recognised by the previous Government, when they took forward pay reform in the courts service. I will just dwell on that, because it has been discussed this afternoon. I suspect that the hon. Lady is not familiar with the fact that staff were given a choice about whether to opt in or out of that reform at that time, and the opt-in rate rose to 97% over 12 months. That is something to be welcomed. Let me jog memories further. The then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who is again not in his place, set out plans. He said that in our country

“it makes sense to recognise that a more considered approach to local and regional conditions in pay offers the best modern route to full employment.”

Labour Members will wish to reflect on those words.

[Jim Sheridan]

May I remind the hon. Lady that the previous Government introduced the national minimum wage? Does she agree or disagree with the hon. Member for South Northamptonshire (Andrea Leadsom), who seeks exemptions for employers to exclude people from the minimum wage?

[Miss Smith]

I agree with what my right hon. Friend the Minister for the Cabinet Office said earlier, which was that this Government and the Conservative party fully support the national minimum wage.

[Mr Russell Brown]

rose—

[Miss Smith]

Does the hon. Gentleman still think that we are all in dreamland when we seek to support the private sector?

[Mr Brown]

I have no doubts in my mind that some are. The hon. Lady says that the Conservative party supports the national minimum wage, but will she guarantee that it will not be frozen for years to come?

[Miss Smith]

If I tried to answer that question, I suspect that I would soon end up outside the scope of the debate. It is particularly important to note that we need to consider the evidence, which the Chancellor has asked for by asking the pay review bodies to consider the question. That evidence would come into the answer to the hon. Gentleman’s question.

[Bill Esterson]

rose—

[Miss Smith]

I will not give way. The hon. Gentleman should rest his foot, as I had to myself several months ago. I wish him well and a speedy recovery.

It is somewhat troubling that shadow Ministers have not been able to explain whether they think it is good for small businesses in their constituency that the public sector pays 7.5% more overall than the private sector. They have not been able to explain, as I have mentioned, why they favour regionalising benefits and not pay. Perhaps they will surprise us all and stand firm against attempts to appease the unions, wait for the pay review bodies’ reports and take a mature decision based on the evidence available. That is what this Government will do. We do not seek to cave in to those who have given around £15 million to the Labour party in recent times.

The introduction of local and market-facing pay could help poorer regions, which I know Members on both sides of the House would welcome. It could do that by providing more public sector jobs for the same level of investment and by helping the local private sector to become more competitive and to expand. Tonight’s debate should not be about regional pay, about ending national pay bargaining or about cutting anybody’s pay. The Government recognise that public sector pay is a complex issue that varies significantly between public sector work forces.

[Margaret Curran]

Will the Minister explain at what level market-facing pay would be set for a police officer?

[Miss Smith]

The motion rests on a misrepresentation of the notion of regional or local, and the hon. Lady is attempting a second misrepresentation by bringing police officers in at this point, when the debate ought to be about the NHS and teachers, and the civil service where pay is under the control of central Government. She should know that.

Let me return to what the Government have done and complete my comments. The Government recognise that public sector pay is a complex issue that requires an evidential approach and varies significantly between public sector work forces. That is why we have asked the independent pay review bodies to consider the issue and why any decision will be based on the evidence. That is why we look forward to the outcome when the review bodies report next month.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.

18:58

Division 21

Ayes: 226

---

Labour: 217
Democratic Unionist Party: 3
Independent: 2
Social Democratic & Labour Party: 1
Alliance: 1
Green Party: 1

Noes: 286

---

Conservative: 246
Liberal Democrat: 39

Question put forthwith (Standing Order No. 31(2)), That the proposed words be there added.

19:11

Division 22

Ayes: 286

---

Conservative: 247
Liberal Democrat: 38

Noes: 232

---

Labour: 215
Scottish National Party: 5
Democratic Unionist Party: 3
Plaid Cymru: 3
Independent: 2
Social Democratic & Labour Party: 1
Alliance: 1
Green Party: 1

The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).

Resolved,

That this House notes the importance of recruiting, retaining and motivating staff and keeping tight control of public spending; further notes that the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath, first proposed a fair framework for local and regional flexibility for pay in his statement to the House of 9 June 2003; supports the Government in asking the widely respected independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets; and believes the Government is correct in awaiting the conclusions of those deliberations before making a decision on bringing forward proposals in respect of public sector pay.

Business without Debate

Wednesday 20th June 2012 Commons Chamber

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Representation of the People

That the draft Electoral Registration Data Schemes Order 2012, which was laid before this House on 9 May, be approved.—(Michael Fabricant.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Criminal Law

That the draft Sexual Offences Act 2003 (Notification Requirements) (England and Wales) Regulations 2012, which were laid before this House on 5 March 2012, in the previous Session of Parliament, be approved.—(Michael Fabricant.)

The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 27 June (Standing Order No. 41A).

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Social Security

That the draft Social Security (Civil Penalties) Regulations 2012, which were laid before this House on 14 May, be approved.—(Michael Fabricant.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Criminal Law

That the draft Sexual Offences Act 2003 (Remedial) Order 2012, which was laid before this House on 5 March 2012, in the previous Session of Parliament, be approved.—(Michael Fabricant.)

The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 27 June (Standing Order No. 41A).

Community Hospitals (North-East)

Wednesday 20th June 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Michael Fabricant.)

19:25

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

In December 2011, the Minister of State, Department of Health, the hon. Member for Sutton and Cheam (Paul Burstow) told me:

“Local community hospitals provide a vital community resource to support patients in need of rehabilitation, recuperation and respite care”,

and that they support

“a rapid return to independence and good health.”—[Official Report, 12 December 2011; Vol. 537, c. 560W.]

It was a pleasant surprise to find myself agreeing with him. Unfortunately, community hospitals, especially those in my constituency and in the north-east, are facing ever more challenges.

Hospitals such as East Cleveland hospital and Guisborough hospital play an essential role in the communities that they serve. My constituents prefer and would ordinarily choose to receive care near their home and their family, whether it be palliative, minor injuries or maternity care. That is also the case elsewhere in the north-east and north Yorkshire, where my colleagues and local residents have been speaking out to protect and extend the services in their local community hospitals and district general hospitals, which are increasingly under threat.

Demographic change means that we are increasingly dealing with social care. Given that community hospitals tend to be truly local and cherished, and the need for health and social care to be seamlessly integrated, it should be painfully obvious that local community hospitals are able to provide effective liaison between NHS staff and local adult social services, especially when discussing arrangements for the discharge of elderly patients and their continued need for community-based care facilities and services. The Government are, at least nominally, following the previous Labour Government’s good example of recognising the importance of patient choice.

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

The hon. Gentleman is giving a powerful speech that rightly highlights the importance of community hospitals. Does he, like me, regret the fact that more than 3,000 beds in community hospitals were closed by the last Labour Government? Does he recognise that only a huge campaign across this House made them see the error of their ways and reverse their savage cuts to this most vital of local assets?

[Tom Blenkinsop]

Any intervention in this debate must be put in the context of the fact that more than £600 million from my region is going to be relocated to the south-east. I know that, as a Yorkshire MP, the hon. Gentleman will be concerned about the news of the cuts to Yorkshire’s health care services that came out only today in The Northern Echo. We can talk about the whys and wherefores of that, but there is certainly a kernel of truth in it. Community hospitals and secondary hospitals, such as James Cook university hospital on the border of my constituency, are having to consolidate and centralise their services far more than has been the case before.

[Alex Cunningham (Stockton North) (Lab)]

I congratulate my hon. Friend and fellow Teesside MP on securing this debate. I know how hard he works on behalf of his constituents to secure access to the services that they need, particularly health services. Is he surprised that there will be more cuts, particularly in the light of the £50 million that it is costing to reorganise the NHS on Teesside?

[Tom Blenkinsop]

I am not surprised, to be honest. A couple of days ago, the Newcastle Journal reported that a freedom of information request had demonstrated that even after the NHS redundancies that we have seen, which I think cost approximately £60 million, a further 1,000 nurses are set to be cut in the north-east region.

The role of community hospitals is as important as ever. Despite the apparent importance of community hospitals, I fear for the future of hospitals such as those in Brotton and Guisborough in my constituency, the five other community hospitals of the South Tees Hospitals NHS Foundation Trust, and the trust’s district general hospital, the Friarage, which is at the heart of the Foreign Secretary’s constituency. All those hospitals are seeing a reduction in services as a consequence of the Government’s health reforms and austerity package—whether the reduction of minor injuries provision, the closure of the Chaloner ward at Guisborough hospital or the downgrading of maternity and paediatric services at the Friarage, which even the Secretary of State has branded “unacceptable”.

Ultimately, communities, patients and employees recognise that only so many services can be cut before the future of the hospitals themselves is brought into question. They are concerned that the Government are failing to do anything whatever to prevent those reductions in services. [Interruption.] I give way to the hon. Member for Redcar (Ian Swales).

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. May I suggest to the hon. Member for Redcar (Ian Swales) that if he wants to intervene, it is better if he actually stands up rather than waving his hand?

[Ian Swales]

Thank you for your advice, Mr Deputy Speaker.

I congratulate my neighbouring MP, the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), on securing this important debate. My daughter was born in Guisborough hospital in his constituency, but that would no longer be possible as the maternity unit closed in 2006. The withdrawal of services from older community hospitals, and the failure to put services into new community hospitals such as Redcar, are top-down decisions. Does he support more locally based commissioning driven by clinicians?

[Tom Blenkinsop]

I believe in an excellent quality of service, and yes, it was regrettable that the maternity unit at Guisborough hospital was closed. As the hon. Gentleman will know, my predecessor fought to save that service. In fact, there was a wide campaign by the local trust and all local politicians to keep it open. Unfortunately, more people opted to use the maternity services at James Cook hospital, which was part of the choice agenda that all parties believe in. I am sure the Minister does as well.

[Jim Shannon (Strangford) (DUP)]

Will the hon. Gentleman explain why some Members, when they are outside the House, support petitions to retain hospitals and community services, but in the House vote to stop them?

[Mr Deputy Speaker]

Order. I allowed the intervention, but I am not sure what the connection is between the north-east and Northern Ireland.

[Tom Blenkinsop]

The current Prime Minister, when he was Leader of the Opposition, identified Northern Ireland and the north-east as areas where the public service cuts should primarily take place. That is the similarity. Of course, the north-east leads all other regions in the United Kingdom on exports, so there was some smoke and mirrors in that argument. There are indeed a number of Members who are introducing petitions against the closure of health services, including a number who are in the Cabinet.

The centralisation process is well under way at Guisborough hospital, in my constituency, and that is just one example of what is happening across the north-east. The hospital has already been forced to operate a reduced service owing to staffing pressures, opening only from 9 am to 5 pm on weekdays and 8 am to 8 pm at weekends instead of the usual round-the-clock service. The Chaloner ward there is an eight-bed unit providing palliative, post-operative and respite care, with dedicated nursing care for a variety of medical conditions. There is also an out-patient suite and a minor injuries unit. Closing the Chaloner ward could eventually mean the end of the hospital. The maternity service has already been lost, and closing the ward would leave only a residual out-patient service and the Priory ward on the site. East Cleveland hospital, in the Brotton area of my constituency, offers even more limited services than Guisborough, and I have often spoken to constituents who have been forced to seek treatment elsewhere.

My main concern is that hospitals such as Guisborough and Brotton will become marginalised owing to a continuous reduction of funding from South Tees Hospitals NHS Foundation Trust, as more and more services are consolidated at James Cook university hospital. It takes nearly an hour to reach that hospital by bus from Guisborough, and even longer from the more rural parts of my constituency—and that is under the very generous assumption that such bus services will still be available.

It may be politically expedient for some to argue that such decisions are solely the responsibility of the relevant trust and are somehow detached from being the responsibility of central Government, but they are unfortunately a worrying national trend. No one trust can take the blame, and the scrutiny must instead be of the Government who force them into such a position. For example, I have read that in Sutton,

“a cloud has gathered over St Helier”

district general hospital, where accident and emergency services are under threat, to such an extent that the Minister of State, the hon. Member for Sutton and Cheam, has started a petition against the closure in his own constituency, despite the fact that it seems to be part of a broader pattern that is perhaps caused by his own Department’s policies.

Given all the campaigns that are emerging throughout the country to save services at local hospitals, I find myself asking why there seems to be such a decline in the provision of services. Despite the Government’s localism agenda, it appears that services are becoming more centralised to larger hospitals, leaving community hospitals with empty beds and abandoned wards.

[Dr Phillip Lee (Bracknell) (Con)]

Does the hon. Gentleman agree that the consolidation of acute and emergency services, and the reconfiguration of services in the north-east and across the country, are about not just the cuts and austerity to which he refers—I do not agree with him on that—but the changes in how health care is provided? Does he also agree that the community hospitals that he seeks to support are best placed to deliver chronic care, not acute care?

[Tom Blenkinsop]

There is an element of truth in what the hon. Gentleman says, but I will come to that when I make suggestions. Community hospitals have a role as part of an overall package, but I have seen an erosion of those services in my locality. The reason I have introduced this debate is that a pattern is emerging in the north-east and across the country in how services are allocated by trusts.

[Guy Opperman (Hexham) (Con)]

I applaud the fact that the hon. Gentleman has introduced this debate on behalf of north-east community hospitals. I want to address the issue of the quality of the service provided by them. We retain maternity services in Hexham. The service is so popular that Northumbria Healthcare NHS Foundation Trust has said that it is hopeful that more women will choose to have their babies there. Does he agree that that is an example of a community hospital going forward?

[Tom Blenkinsop]

I praise the hon. Gentleman—it sounds like the services in his constituency are going forward and doing very well—but I am addressing the broader pattern in my local area and elsewhere. Some worrying trends are a symptom of the Health and Social Care Act 2012, which I opposed vociferously—that is on the record.

The future of community hospitals is being plunged into uncertainty because of the 2012 Act. With responsibility for commissioning health care services now falling to clinical commissioning groups, and with primary care trusts being axed, centralisation is a real temptation both for the CCGs and for the foundation trusts that have taken over responsibility for the management of primary care hospitals in Teesside.

Another future scenario for community hospitals is the possibility of privatisation. As cuts are made, commissioning groups could look outside the NHS to provide their services. That happened in Suffolk in March, where Serco won a £140 million contract to manage, among other things, the area’s community hospitals. Neither the public, who cherish their NHS, nor workers, want that, and there is a concern that such deals are made solely to save money and not necessarily to improve patient care. In the north-east, where health inequalities are most pronounced, such moves could lead to a significant decrease in the quality of service offered, and to a loss of any long-term strategic vision that might exist to tackle such deeply ingrained public health problems.

When I challenged the Prime Minister about the future of community hospitals and district general hospitals at Prime Minister’s questions last week, all he did was cite a supposed increase in funding to the “primary care trust” in my constituency—he is so oblivious and out of touch that he failed to realise there are, in fact, two primary care trusts: NHS Redcar and Cleveland, and NHS Middlesbrough.

Regardless of what spin the Government put on the state of the NHS, it is clear that the NHS throughout the country is struggling financially. In GP magazine earlier this week, research collected through a series of Freedom of Information Act requests showed that nine out of 10 trusts find themselves “rationing” care such as cataract surgery and knee and hip operations. If trusts have to do that, there is clearly an issue with funding, despite the Government’s assertions, especially when trusts such as Redcar and Cleveland have to spend tens of millions of pounds to deal with the consequences of the 2012 Act.

I worry that many trusts, when faced with the real possibility of having to reduce clinical services, will turn towards centralising them and taking them away from community and district general hospitals. They will certainly be wary of extending the services offered in such hospitals. Redcar primary care hospital, which is in the neighbouring constituency of the hon. Member for Redcar (Ian Swales), needs such an extension, but the localisation agenda is threatened by the lack of funding necessary to pursue it.

The Health Secretary and Prime Minister need to remember the pledge they made in 2007 to protect district general hospitals, and to listen to what communities, patients and medical professionals are saying about the importance of securing the future of community hospitals. It would take some of my constituents, such as those in Cowbar, 45 minutes by car or around three hours by public transport to reach the large hospital 20 miles away into which services are being consolidated. I imagine the situation is even worse in more rural parts of the north-east and north Yorkshire. That is clearly not acceptable. Individual members of the Government, such as the Foreign Secretary and Minister responsible for care services, have been critical of the effect of the Department of Health’s policies on the provision of services in local hospitals following campaigns by angry and worried constituents, but it is time for the rest of the Government and the other Health Ministers to act. Steps need to be taken, and funding provided, to ensure that patients have the choice to receive as many services as is medically possible in hospitals near their homes, not as a replacement to care at home or in more specialised hospitals, but to complement it.

19:39

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

I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this debate, and I pay tribute to NHS staff in his constituency, who do so much for the health and well-being of his and other hon. Members’ constituents.

Robust community services are a vital element of emerging models of care, providing treatment to patients closer to home and improving health outcomes. The Government remain committed to extending and improving access to care and treatment in the community and at home. This includes sharing best practice to enable the smooth discharge and transition of patients from acute settings to robust community services, allowing them to be cared for closer to home.

Community hospitals play an important role in that process. The care that Guisborough hospital provides includes rehabilitation and follow-up care in a community setting. Community hospitals have the potential to make considerable efficiency savings in the local health economy by shifting care, diagnostics, minor injuries and outpatient services, among others, from acute hospitals to the community. They provide both planned and unplanned acute care and diagnostics services for patients closer to home, support best practice in reducing the need for admission to acute hospitals and contribute to the local community by providing employment opportunities and support for community-based groups.

Those are a few reasons the community estate is a core part of the NHS. It can help to transform care pathways, moving care from acute settings to community settings. Local investment in this type of facility is part of a dynamic service model that supports health and well-being for the whole community. The hon. Gentleman will be aware that under the transforming community services programme, responsibility for community services was transferred from primary care trusts to NHS and other providers. To this effect, South Tees Hospitals NHS Foundation Trust took over the operation of Guisborough hospital in April 2011.

The transfer of community services enabled the NHS to develop new innovative models of care using local multi-disciplinary, clinically led teams to improve services and health outcomes for local patients, families and communities. This has enabled the NHS to be creative in its approach to delivering community services. However, I fully appreciate the context within which all NHS organisations operate. They have to provide high quality services while remaining sustainable and efficient in making the best use of limited resources. The Government recognise this challenge, which is why we have protected NHS funding and are increasing funding in real terms during this Parliament.

In the hon. Gentleman’s constituency, Middlesbrough PCT will receive an allocation in 2012-13 of more than £299 million, which is an increase of more than £8 million, and Redcar and Cleveland PCT will receive more than £269 million, which is an increase of more than £7 million. Despite this generous settlement, however, the NHS needs to do more. It needs to find up to £20 billion of efficiency savings over the same period to meet the rising demand for NHS services and to continue to invest in new technologies and drugs to help meet these demands.

We will not dictate from the centre how efficiency savings should be achieved. Decisions about local health services should be made as close to local people as possible. Local NHS commissioners are best placed to identify the scale of the financial challenge and the opportunities for making savings, while driving up and maintaining quality. Every penny of those savings can be reinvested in front-line services and health care.

[Guy Opperman]

An example of that, I would suggest, is Haltwhistle hospital in west Northumberland, which has been rebuilt by the local NHS trust to provide a hospital facility and an integrated care facility. Does the Minister agree that that is a good example of the Department and the trust supporting a community hospital?

[Mr Burns]

I am extremely grateful to my hon. Friend, because I understand that the campaign for that decision was kept up for more than 25 years. I congratulate NHS North of Tyne, Haltwhistle council and the friends of the hospital, as well as my hon. Friend, for all their work in ensuring that it is finally happening.

[Tom Blenkinsop]

It is good to hear that every penny saved will go back into the NHS. My main fear is that the new funding calculations that the Secretary of State for Health is proposing will be based not on deprivation but on age, which means that, as shown by studies by Durham university—a fine institution in my region—more than £600 million of the health funding that is currently given to north-east health services would be redirected south.

[Mr Burns]

I certainly note the point the hon. Gentleman makes, and I have read a number of his local newspapers, in which he and a number of his hon. Friends have been making it too. I am delighted that he accepts my argument that every single penny that is saved from the £20 billion of efficiency savings—which, of course, we inherited from the last Government and accepted, because it was the right policy to pursue—will be reinvested in the NHS.

I think the hon. Gentleman attended Health questions on 12 June, at which the right hon. Member for Newcastle upon Tyne East (Mr Brown) raised the funding formula and the basis for it with me. I explained that a variety of factors, of which health is one, will determine the allocation of funding—just as it was determined under his Government—and that the question was also being looked at by an independent body. I have seen the newspapers, and I fully appreciate that the hon. Gentleman and his hon. Friends are trying to drum up a storm by suggesting that they are going to be hard done by. However, if he reads the answer I gave to his right hon. Friend the Member for Newcastle upon Tyne East in Hansard, I hope it will reassure him, on reflection, about the current situation.

[Mr Graham Stuart]

The Minister will recognise that community hospitals in the north-east, as well as in Beverley and Holderness, were starved of funding under the last Government. We saw gross distortions in funding, as the formula used deprivation as a way of pouring funding into urban areas, where there were young people who, regardless of their social background, were not in need of health funding. That starved the community hospitals serving ageing populations, which did need the funding. What we need is not reverse gerrymandering, but health funding that follows clinical health need. We did not have that under the last Government, who starved rural community hospitals of funding. I congratulate the Minister on having the courage to face down the vested interests of the Labour party.

[Mr Burns]

Let me return my hon. Friend’s compliment in kind by saying that I am grateful for the valid points he makes. He knows as well as I do that this Government, under the leadership of my right hon. Friend the Member for Witney (Mr Cameron), are totally committed to community hospitals. I know that he will also be reassured that, unlike with the last Government, there is no question whatever of this Government gerrymandering the funding formula.

I know that the hon. Member for Middlesbrough South and East Cleveland is aware of the scale of the challenge facing his local NHS. Like every local NHS economy, the NHS organisations that commission and provide services in his constituency must take some fairly tough decisions to deliver sustainable health services in future. Let me also say to him—in the nicest possible way, because I respect him—that we are in the situation of protecting the NHS budget and giving it a modest real-terms increase, given our commitment to the NHS, simply because of the economic mess that we inherited, thanks to the actions of his Government, under the stewardship of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). That meant that there was not enough money to sustain the levels of real-terms investment that might have been available earlier this century.

I turn now to Guisborough hospital. I am aware that Chaloner ward, which provided palliative care and rehabilitation, closed permanently in February 2012. I am advised, however, that services were transferred to the hospital’s larger Priory ward, which I am assured has adequate room and staffing to continue to provide high quality care. I understand that the decision to close Chaloner ward was based on the need to deliver services safely, efficiently and effectively, as the ward had been under-utilised and was not making the best use of nursing resources. Staff were engaged on the decision. In fact, they advised closure—I hope that the hon. Gentleman heard that. The staff advised closure, and staff at the ward were redeployed within Guisborough hospital and to the nearby Redcar primary care hospital.

I am also aware that temporary changes were made to the opening times of the minor injury unit at Guisborough hospital. The MIU now opens between 9 am and 5 pm from Monday to Friday, and between 8 am and 8 pm at weekends. I understand that patients requiring treatment outside those hours use Redcar hospital, local GP walk-in centres or the accident and emergency department at the James Cook university hospital. I have been informed that the MIU is staffed by a small team of nurses, and that the changes enabled the unit to continue to provide a safe service for patients. I also understand that the South Tees Hospitals NHS Foundation Trust is looking at whether other staff can provide support to the unit.

I have been informed that, in the longer term, South Tees Hospitals NHS Foundation Trust is reviewing the provision of acute and community services across all its sites, including Guisborough hospital. The review is aimed at ensuring the future safety, quality and sustainability of services. The trust has been working with GPs, commissioners and local authorities to establish models of care that will enable more patients to be cared for at home and avoid unnecessary admissions to hospital—whether at the larger acute hospital, James Cook, or community hospitals such as Guisborough. Once that work is completed, the trust expects to take a more definitive view of the future role of community hospitals such as that at Guisborough. It is not yet clear when the review will conclude. However, I am assured by the local NHS that there are no plans in the near future for further service changes at Guisborough hospital. I hope that that will reassure the hon. Gentleman. Should there be any changes in the longer term, once the trust has completed its review of service provision, local stakeholders and the public will be engaged in this process. He might be aware that my right hon. Friend the Secretary of State has set out strengthened criteria for service changes. Any proposals for major service change need to be assured by the local NHS against the Secretary of State’s four tests for service change and, when necessary, to be subject to public consultation.

I am aware that the hon. Gentleman met the chief executive of South Tees Hospitals NHS Foundation Trust to discuss these matters in February 2012. I also understand that the trust provides him with regular briefings on these issues, and I hope that he finds that helpful and useful in formulating his views on the provision of health care in his area. I hope that being briefed personally by his local health service providers will allow him to have a more open mind in regard to what is actually going on in the NHS, rather than simply accepting the propaganda that all too often distorts his views. I strongly encourage him to continue that dialogue with the trust as it completes its review of service provision.

Question put and agreed to.

19:54

House adjourned.

Division 19

Ayes: 282

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Conservative: 234
Liberal Democrat: 42
Democratic Unionist Party: 5
Alliance: 1

Noes: 196

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Labour: 190
Plaid Cymru: 2
Independent: 2
Green Party: 1